Biden Nursing Home Agenda Progresses as Industry Prepares for 2023

For the nursing home industry, 2022 will go down as a historic year, in no small part because the Biden administration announced a comprehensive list of nursing home reforms.

The proposals include provisions for minimum staffing requirements, increased financial transparency for operators, and programs to target ‘bad actors’ with financial penalties and increased scrutiny.

Not all of the provisions, such as the staffing minimum, have taken shape yet. As the calendar turns to 2023, Skilled Nursing News asked industry leaders to respond to the changes the industry has seen over the past year, and look toward what the administration still seeks to accomplish.

Staffing minimum ratios may fall short

Perhaps the most controversial of Biden’s proposed reforms is a minimum staffing ratio mandate, which is still being studied by the Centers for Medicare & Medicaid Services (CMS). Although increasing registered nurse staffing was found to reduce COVID-19 cases and deaths, for operators already struggling to recruit and retain workers, enacting staffing minimums seems impossible.

“We have supported the minimum staffing ratios; however, there’s no possible way you can have minimum staffing standards when we already have less than minimal staff. I mean, we can’t make up people,” National Association of Health Care Assistants (NAHCA) CEO Lori Porter said.

Porter said there are solutions that could advance those federal initiatives to bring more staff into nursing homes, if policymakers look at what subject matter experts could bring to the table, including the implementation of a federal system to fast-track new CNAs.

“We need a half a million CNAs like yesterday,” Porter said. “So, our frustration has been that we have not gotten the support we need from the administration to be able to provide this scaled platform to recruit, certify and place new CNAs. The mechanisms are there. The platform is built and ready but each state has its own requirements around the CNA certification course.”

Creating a more streamlined process for becoming a CNA and getting placed in a facility could be the first step in addressing the staffing crisis, Porter believes. Currently, CNA licensure is awarded by the state, not federal government, and each state has its own stipulations.

Porter said utilizing all the resources that are already in place will help strengthen the pipeline.

“There needs to be a platform that’s available to every state,” she said. “Everything is automated. You enroll, you’re vetted, if you make it through, you move on through to the didactic portion. And then we would pair them with a skilled nursing center to get to do their clinical portion.”

Likewise, the American Health Care Association/National Center for Assisted Living (AHCA/NCAL) said that increasing staffing minimums would require substantial and consistent government resources as well as concerted staff recruitment and retention programs.

“We are urging policymakers to direct meaningful aid and policies that will help us build a pipeline of dedicated caregivers for our nation’s seniors,”a spokesperson for the organization said in an email.

Just last week, Maureen Westfall — a regional RN with Stellar Senior Living — penned an op-ed arguing that an unfunded federal staffing minimum would be impossible to meet for skilled nursing facilities. Stellar’s 12 Colorado communities currently have more than 240 job openings, she emphasized.

“Increasing staffing minimums at the federal level would cost nursing homes approximately $10 billion each year and 187,000 new nurses and nurse aides,” Westfall wrote in her piece, which appeared in Colorado Politics.

Increasing Medicaid reimbursement rates is a “pivotal first step” in addressing workforce challenges, she wrote.

Medicaid rates have trended positively in many states in 2022, providing a significant silver lining in a year that has been marked by severe challenges in labor and other areas.

Greater financial transparency ‘leveling the playing field’

The Biden administration has been critical of private equity involvement in nursing homes, calling out the role of private equity and real estate investment trusts (REITs) as a “dangerous model.”

In April, the Centers for Medicare & Medicaid Services (CMS) released a database which provides information on mergers, acquisitions, consolidations and changes of ownership from 2016-2022 for nursing homes enrolled in Medicare.

Among the key findings in the data, there were 348 changes in ownership among hospitals and more than 3,000 among skilled nursing facilities between 2016 and 2021. The database, which will be updated quarterly, also provides some details about the status of facility owners, such as whether they are a holding company or a consulting firm.

CMS said the data could be used to better understand the impact of nursing home ownership trends.

“Private equity and other private investment firms have purchased SNFs; in some cases, new owners have sold the real estate assets to another entity under their control and then released the building back to the original facility with substantial management and consulting fees,” CMS said in its announcement.

Lisa Sanders, Director of Media Relations at LeadingAge, which represents nonprofit aging services providers, said the organization supports the administration’s efforts to increase financial transparency.

“We consider it a leveling of the playing field,” she said, as non-profit providers already disclose ownership as a part of their tax status.

But the focus on private equity ownership in particular remains a hot-button issue as 2023 approaches.

Nursing home industry leaders such as Sabra Health Care REIT CEO Rick Matros have argued that the White House has used the term “private equity” too liberally, as a catch-all for diverse types of private capital.

Former CMS Administrator Seema Verma is another prominent voice speaking out against the fixation on private equity’s role in the industry, arguing that such efforts are a “colossal waste of time” and will not drive quality improvements. And a recent Health Affairs article by industry leaders affiliated with Nexus Insights stressed that loans guaranteed through the Department of Housing and Urban Development (HUD) are a much more important source of capital for nursing homes.

“It is HUD—much more than private equity—that provides the substantial capital to operators looking to build, refinance, or remodel nursing homes. In 2021 alone, nursing-home operators received a majority of the $4.9 billion in loans made under the HUD program,” they wrote.

Meanwhile, the media continues to shine a spotlight on the relative lack of transparency related to nursing home ownership. This week, the Philadelphia Inquirer raised the issue in an article about the transfer of 147 nursing homes from a joint venture between Welltower (NYSE: WELL) and ProMedica to a JV between the REIT and Integra Health.

An ‘all-government’ approach to address poor performers

There are 88 nursing homes, about 0.5% of all nursing homes in the country, designated as Special Focus Facilities, a program meant to strengthen scrutiny over poorly performing nursing homes.

In October, CMS issued further requirements and harsher financial penalties for facilities.

The newest requirements prevent facilities from graduating the program until they address citations and demonstrate improvements in quality. CMS has also said it will consider terminating federal funding for facilities that don’t improve, and will advise state survey agencies to look at compliance history and staffing numbers when determining whether a facility should participate in the program, putting more facilities at risk of penalization.

The program has engendered some improvements. Eagle, Idaho-based Cascadia purchased three SFF properties and “graduated” them from the program. Yet industry experts fear the punitive nature of the program – and the dearth of federal funding – will not improve outcomes in the long-term.

“We support initiatives to improve care and underperforming nursing homes. And we have said for a long time that we agree that those that do not demonstrate progress should close,” Sanders said, adding that current reimbursement rates do not sufficiently cover the cost of care.

ACHA stated that while the program is supposed to identify facilities in need of improvement and assistance, the federal government does not provide any assistance or additional resources to help these facilities address issues.

“Escalating citations and penalties have neither helped turn these facilities around nor prevented other facilities from becoming chronic poor performers,” the organization told Skilled Nursing News in an email. “The survey system needs to adopt this process to make meaningful changes for the residents in these facilities.”

ACHA and LeadingAge proposed a five-step process to better address poorly performing facilities, which includes the development of a turn-around plan and the financial and other resources necessary to effectively implement the plan, which could serve as a system improvement agreement with CMS.

Sanders said an ‘all-government’ approach would be needed to fully address poor performers, with concerted focus on building and maintaining the aging services workforce with assistance from the Department of Education and theDepartment of Education.

“That could mean immigration reform, bringing in more people. It could mean [increasing] the reimbursement rate or developing programs for training that include wraparound services for the direct care workforce,” she said.

While the administration’s reforms have caused the industry some heartburn and consternation, and worry about what might take shape in 2023, nursing home providers also have benefited from government action in the last year.

Perhaps the most impactful move has been the continuation of the Public Health Emergency and the decision to increase overall Medicare payments to SNFs in the coming fiscal year.

“These decisions made by the Administration were critical actions to help stabilize the profession and ensure our vulnerable residents have access to necessary, quality care,” AHCA told SNN.