States like New York have modified their staffing mandate to reward nursing homes for avoiding costly staffing agencies, although operators don’t find this legislation particularly rewarding, especially now that the national minimum staffing mandate has been finalized.

Stu Almer, CEO of Gurwin Healthcare in New York, said such legislation isn’t helpful given the ongoing workforce shortage and continued operator reliance on agency staff in the state. And other sector leaders say that there simply isn’t enough labor to go around to actually benefit from this addition to the state staffing mandate.

“Where would we get the [in-house] staff from? That’s really the issue. It really doesn’t change anything unless we have a labor pool.” he said. “Legislation against agency use only harms us.”

In Pennsylvania, the implementation of agency legislation passed in 2022 has been slow going, said Zach Shamberg, president and CEO of the state Health Care Association (PHCA). But, the intent of the law isn’t so much to reduce dependency on staffing agencies but more to hold such companies to the same standards and the same level of accountability as long-term care providers.

Just like in New York, there’s still an ongoing dependency on staffing agencies in PA as a result of the state’s staffing mandate, which is set to further increase minimum staffing levels in July. The agency legislation requires staffing agencies to register with the state’s Department of Health and validate health care credentials of contracted employees, as well as create policies and procedures for agencies to abide by.

Legislation that would impact agency pricing is really what’s needed, said Almer. Shamberg echoed this, saying that a cap on what staffing agencies can charge is the next challenge to tackle in the state, given that skilled nursing providers are at the mercy of government reimbursement.

“I want to be clear, we’re not trying to disrupt the free market. We just want legislators to recognize the taxpayer dollars are the primary payer source for this care,” said Shamberg.

PHCA has seen certain staffing agencies price gouge providers, and have seen rate caps work in other states like Minnesota for decades.

“We’ve seen many situations where the cost is very high. We’re seeing a lot of very heavy charging on the part of agencies,” said Almer. “Unfortunately, many of us are still very dependent on agencies … we don’t see that going away – there will always be a need for agency use in clinical care. That waxes and wanes but for right now, although it’s improving, we’ve had so much dependence on it that the cost is extreme.”

Of Gurwin’s two nursing homes, one doesn’t use agency and another is very dependent on such staff, he said. It all comes down to geography.

Agency dependency

Realistic operators anticipate it will take years to regrow the workforce – barring any immigration policy changes – all while there is limited monetary support for the finalized federal staffing rule. There’s got to be a stopgap.

Ultimately, Almer doesn’t want to see agency use go away completely. He wants agencies to support operators when they need them. At the same time, providers need more stable, quality staff who remain with the organization, and the presence of agency staff discourages consistency.

Growth will also depend on competition from other health care areas too, with hospitals and home care aiming to catch the same staff, both clinical and nonclinical, said Almer. There will always be a need for agency in the nursing home industry but hopefully the dependency will wane with time.

“There’s always some area where there’s a clinical shortage,whether it’s LPNs, or physician assistants, pharmacists, it always changes over time. It’s just never been so pervasive across all clinical disciplines,” said Almer. “We’re not talking about a six-month crunch, we’re talking about a four-year crisis. It’s getting better, thankfully. But there is a long-term need for agency.”

Almer knows agency usage is waning in general, with agency companies reaching out daily to operators, saying they can support the needs of a given facility.

It’s a “barometer” Almer uses to gauge agency dependency. Six months to a year ago, it was the other way around – providers were calling agencies to fill shifts, and staffing companies were maxed out on usage.

Agency use in current industry climate

Almer said issues around 1099 workers, or independent contractors, doesn’t matter if the rate is the same. He doesn’t see this discrepancy as an issue for nursing homes. This take differs from other providers and leaders in the nursing home industry, who see misclassification as an area ripe with litigation issues.

Pennsylvania’s Act 128 allows staffing agencies to classify workers as independent contractors or W2 employees, but malpractice insurance is required regardless, Shamberg said, along with dishonesty bonds per employee and maintaining workers’ compensation for all health care personnel.

Earlier this month, a senate bill was introduced to classify staffing agency workers as W2 employees only. The legislation has potentially wide sweeping ramifications for staffing agencies across the state, he said. That bill hasn’t moved since being referred to a committee for review.

“We’re certainly starting to see at the state and federal level a real push to make sure that employees are classified correctly, and that more and more employees, staffing agencies or not, are W2, full-time employees,” said Shamberg.

In terms of regulation including the federal minimum staffing rule, Almer said that most facilities can’t meet the daily minimum requirements, and the need for agency is very important when they can’t fill the gap.

“The more that regulators at both state and federal levels continue to mandate increased staffing requirements, the more providers will inevitably have to rely on staffing agencies to fill those shifts,” said Shamberg. “We’ve said it for years, we’ve said it since the beginning of the pandemic.”

Pennsylvania went from mandating 2.7 hours per resident day to 2.87 HPRD in July 2023, and will go up further to 3.2 HPRD this July. In New York, 3.5 hours of care are required per resident per day by a CNA, LPN or registered nurse.

On the federal level, the final rule mandates a minimum of 3.48 hours per resident per day (HPRD) of total staffing, with specific allocations for registered nurses (RN) and nurse aides.

This standard encompasses 0.55 HPRD of direct RN care and 2.45 HPRD of direct nurse aide care. CMS said that facilities can use a mix of nurse staff, including RNs, LPNs/LVNs, or nurse aides, to meet the additional 0.48 HPRD. Meanwhile, facilities can avail exemptions to the new final federal rule if they are located in an area with a shortage of health-care workers and meet good faith efforts to hire more nurses and aides have failed.

Unlike New York or the federal level, there are no good faith efforts providers can submit in Pennsylvania, where operators can prove that they have in good faith tried to fill shifts to meet the staffing standard.

“There’s no acknowledgement of last-second call offs. More and more providers are being given deficiencies or citations for missing a shift and they’re also being more and more reliant on the staffing agencies to fill those shifts if they don’t have enough full time employees,” said Shamberg.

And, filling that gap comes at a great cost. Operators in New York aren’t reimbursed substantially to cover the cost of a minimum staffing requirement – it’s a “vicious cycle,” said Almer.

“Just because we have more funding does not make us less dependent on agency use. There has to be a labor pool out there, there has to be incentives for facilities and opportunities for us to hire and retain staff,” said Almer.

Fines associated with the minimum staffing mandate in New York are a distraction, he said, from fixing the real problem. It makes an already challenging environment even more so. Most facilities have been receiving notices of fines for some time now, he said, with dates when a facility didn’t meet the staffing requirement.

Currently, nursing homes in New York can be fined a potential maximum of $2,000 per day if they’re unable to meet the mandate. Associations including LeadingAge NY challenged the imposition of fines but the lawsuit was dismissed in January.

“Everyone’s receiving these because it’s virtually impossible for everyone to meet [the state mandate] on a daily basis. We receive these notices, we have an opportunity to challenge it, and indicate what we’re doing to address the staffing situation,” he said.

It’s a draining and time consuming exercise for New York providers that doesn’t provide them with more staff, opportunities or grants to do more with schools or educate folks coming into the industry, he said.