AHCA’s CEO: Nursing Homes Must Prepare for ‘Massive’ Staffing Mandate Battle, Adapt to Managed Care ‘Mega-Trend’

Nursing homes are past the “nightmare” caused by Covid-19, but now are facing “a real business problem” that could be considerably worsened by the coming federal staffing mandate.

That’s according to Mark Parkinson, CEO and president of the American Health Care Association/National Center for Assisted Living (AHCA/NCAL). He spoke Tuesday of the urgent need to battle the staffing mandate even now, before the proposal drops. And he also described the dangers and opportunities that the “mega-trend” of managed care is creating for nursing home operators.

Parkinson struck an upbeat note related to occupancy, saying, “The census picture right now continues to be challenging, but I think we’re on the verge of it being quite a bit better in my view.”

Since the beginning of 2021, occupancy has been recovering in fits and starts for an overall “excruciating slow” pace, to remain at about 3.5% below pre-pandemic levels currently, Parkinson shared.

But Parkinson said labor shortages are still plaguing the nursing home industry even as other subsectors in health care have recovered, and any regulation that fails to account for this crisis will be disastrous as the industry remains short of more than 200,000 workers.

“We’re just not seeing [the worker shortage] recovered,” he said. “It is ridiculous to enforce a staffing mandate … when you’ve got this kind of data. It’s ridiculous to create one in D.C. when you’ve got this kind of data.”

Parkinson shared these views in his opening remarks at the annual conference for New York State Health Facilities Association and New York State Center for Assisted Living (NYSHFA/NYSCAL).

Staffing mandate: ‘It will happen’

The proposed staffing minimum may be a shortsighted policy, and yet, Parkinson said it will likely be approved, and his organization is making a concerted effort to push back against it.

“We know that it will happen,” Parkinson said, adding however, “It’s not a done deal. It’s a proposed rule that we have the opportunity to comment on and to fight, and we will.”

The finalized rule will likely not be solidified until sometime in 2024, he predicted, and until then the battle to modify and “make this rule better” and even challenge it from being implemented is underway.

On the grassroots level, AHCA/NCAL has generated more than 7,000 “unique” comments as opposed to “form” comments and has plans to increase the number to 10,000, in addition to addressing the issue with legislators on Capitol Hill, as well as policy makers. The nursing home advocacy group has also run television ad campaigns within Washington, D.C., besides lobbying members of Congress.

“We’ve given them specific turnkey solutions on all of this stuff,” Parkinson said. “So the fight won’t be over. We’re going to have to run this massive campaign after the rule comes out.”

The Centers for Medicare & Medicaid Services (CMS) has in the past floated that nursing homes should deliver at least 4.1 hours of care to every resident each day, although most nursing homes function at levels well below that figure. The federal agency is expected to release its proposed rule some time this spring.

“And it’s very possible that the number will be 4.1,” Parkinson said, of what the staffing mandate in that proposed rule could be. However, several factors could succeed in blocking the minimum staffing proposal from being implemented, with legal challenges also potentially on the table.

And so, Parkinson said, it’s also important for the industry to focus on strategies such as making a staffing minimum be contingent upon the labor shortage being over, whether non-nursing staff is counted in the minimum limit, and funding for the endeavor. Parkinson has long argued that it will cost the industry an arm and a leg to fund the staffing mandate, with the estimated costs being $750,000 for every nursing home, according to AHCA estimates.

According AHCA/NCAL’s figures, which are based on payroll-based journal (PBJ) data, the sector would need to hire 191,000 nurses. This means that an average building would have to hire about 12 nurses at a time when it’s difficult to get even one or two, Parkinson said. In short, nearly any proposed mandate will be impossible to achieve.

To make it easier for facilities to calculate how many nurses they will need to hire in order to achieve a 4.1 PPD figure, AHCA has created a resource that he encouraged AHCA’s members to use.

Besides lacking a definitive timeline, if the staffing mandate is approved, its enforcement is unclear, such as the nature of penalties – whether facilities will incur fines, shutdowns or reduction in star ratings.

“We need them to make this reasonable enough … this is so critical to the sector, that unlike most rules, we’re fighting it before it comes out,” said Parkinson. “I really think that if we stay together and fight hard on this, we will eventually win this minimum staffing fight. So that’s where we stand.”

‘The mega trends’

The quickened pace of managed care – a trend that cuts into profits for the nursing industry given that these plans pay less and are linked to shorter stays at SNFs – is something that SNFs also need to be concerned about. In fact, they need to strategize against the growth of the managed care plans, he said.

In its early days, Medicaid managed care grew by 1% annually and over the last decade or so it has grown by 3%, Parkinson said, so that over 50% of older Americans will soon likely be covered under a managed care policy.

Considering that the plans haven’t been universally associated with better health outcomes, policy makers are beginning to back off from supporting their rise, he said. And so AHCA’s lobbying efforts are succeeding in slowing managed care’s growth.

Moreover, to prevent external Medicaid managed care programs from eroding the nursing home industry’s profits, AHCA has worked with providers to facilitate their own group networks that can administer their own managed care plans.

“Individually, [providers] may or might not be able to have the leverage to negotiate with the managed care companies, but coming together as networks, they were seeing some success,” he said.

I-SNPs are a way to gain control

Parkinson also advocated for providers to take charge of their own destinies by embracing the financial risks and rewards of Medicare Advantage Institutional Special Needs Plans (I-SNPs).

“We have the ability to do that too. We have the ability to take on the risk of taking care of these folks. Doing it for a cost, taking care of them at a cost that’s cheaper than what the government would have spent, and therefore … getting the benefit of population health management,” Parkinson said. “What CMS is willing to pay us is pretty significant.”

Federal payouts average about $2,500 a month, he said.

“[T]he outcome for the resident is amazing clinical results,” he noted. “The folks that are signed up in these I-SNPs do great. We’re providing them the kind of care that we dreamed about.”

Parkinson highlighted the resources that AHCA/NCAL has to help providers set up their population health management strategies, including setting up an I-SNP. Or, a program that doesn’t require providers to set up as an insurance provider such as the ACO REACH program, which is currently in the works.

He advised three ways providers can set up an I-SNP. The first is by becoming an insurance company, which is a difficult route considering that the insurance laws are different in every state and facilities have to retain enough capital reserves. The second way is to set up a network, including a network of skilled nursing facilities (SNFs) and other health care providers. And then the third way is to join an I-SNP via a large insurance company such as UnitedHealth or Humana.

“Regardless of where you think that you would fall on the spectrum, [an I-SNP] is an incredible opportunity,” he said.

Even though there are a little over 100,000 residents of the total 1.7 million residents in nursing homes in I-SNPs at the moment, Parkinson believes this figure will grow steadily in the next few years.

“If we attack this and embrace it as an opportunity, there will be several hundred thousand people in these plans in the next five to 10 years,” he said. “And the way that we can survive in the future as Medicaid pressures grow and grow and grow is to figure out and embrace this opportunity in population health management.”