The Biden administration is considering a requirement that the country’s 15,500 nursing homes spend most of their payments from Medicaid on direct care of residents and limit or divert the amount used to improve operations, maintenance and capital.
If adopted, it would be the first time the federal government has insisted that nursing homes devote the lion’s share of Medicaid dollars to care for residents.
The strategy, which has not yet been formally proposed, officials are considering a number of steps after the Kovid-19 epidemic hit particularly vulnerable nursing home residents. In the first 12 months of the epidemic, at least 34% of those killed by the virus lived in nursing homes and other long-term care facilities, although residents of those facilities make up less than 1% of the US population.
Medicaid, the federal-state health insurance program for low-income people, pays 62% of the bill for long-term care residents in nursing homes. In 2019, it totals 50.8 billion. Medicare, which covers short-term nursing home visits for older adults or people with disabilities, spent $ 38.2 billion that year. (Officials did not include Medicare payments in the discussion of their direct care spending order.)
Dan Sai, deputy administrator and director of the Medicare and Medicaid Services Center, told KHN that “the most important element” of good care is adequate staff.
CMS has requested public comment on the Nursing Home Payment Policy and the proposed direct update of rates for next year, and the potential direct care spending mandate. Tsai spoke about it at a meeting with Illinois state officials, nursing home staff, residents and relatives in Chicago in April.
Studies have found a strong link between stuffing levels and care. CMS does not require a certain number of nurses and other staff members, although some states do.
“We want to make sure that the dollars go directly to caregivers to ensure high-quality care,” Tsai told KHN.
To get a government paycheck, nursing homes must follow dozens of requirements to ensure high-quality care. They may be punished for the violation. But federal investigations have found that inspectors may miss serious issues and that inspections consistently do not meet CMS standards. Infection control has been one of the most common violations.
In his request for public comment, CMS asked a number of questions, including: “Is there evidence that resources may be used for stuffing instead of being used for expenses that are not necessary for quality patient care?”
Federal interests follow legislation enacted in three states – Massachusetts, New Jersey and New York – to make spending on care compulsory. At least 75% of the revenue of nursing homes for Massachusetts must be spent on the care of residents. Nursing homes in New Jersey must spend at least 90% of Medicaid’s money on residential care and not more than 5%. New York mandates that at least 70% of nursing home income – including payments from Medicaid, Medicare and personal insurance – be used to care for residents and at least 40% be paid for direct care pay for “residential-oriented” workers. . Profits are limited to 5%. All three states have promised to increase Medicaid payments in compliance with the law.
In April, the National Academy of Sciences, Engineering and Medicine Nursing, in a report on improving home care, supported direct care spending strategies.
“When you take public dollars, those dollars should be returned directly to care,” said David Grabowski, a professor of healthcare policy at Harvard Medical School and a member of the committee that wrote the report. “We hope that the nursing home will give the best judgment on the right share of labor and materials and capital expenditure to create the highest quality in the true sense of the word, but it did not happen. So this recommendation is really an opportunity to build some railways. “
National nursing home industry groups oppose such a requirement, which comes at a challenging time because many facilities are facing staff shortages. In New York, two trade associations and nearly half of state homes have filed two lawsuits for blocking state spending directives.
Staffing is already the “No. 1 expense” for nursing homes, says Stephen Hans, president and CEO of the New York State Health Facilities Association, which represents 350 nursing homes and leads a case. “We are a hands-on industry.”
The 239 nursing homes involved in the association’s lawsuit claim that if New York law were enacted in 2019, the facilities would be forced to pay an additional $ 824 million in direct care to residents or return that amount to the state.
Hans objected to state nursing home administrators telling them how to do their job. “For example, you could have an amazing diet program, and this law would make it mandatory for you to lay off diet workers and hire front-line workers to meet staff needs,” he said.
The parties to the lawsuit argue that forcing employers to spend more money on direct care has less money to maintain their benefits and the quality of care will suffer. They claim that Medicaid does not cover the cost of caring for residents. Advocates on behalf of residents say the benefits could hide their profits by paying extra money to related businesses owned by them, such as laundry or food service companies.
Although a spending order is new for nursing homes in all three states, it has become routine for health insurers across the country. Under the “Medical Loss Ratio” provision of the Affordable Care Act, health insurance companies must spend at least 80% of the premium on the medical care of the beneficiaries. A maximum of 20% can be spent on administrative costs, executive pay, advertising and profits. Companies that exceed the limit must return the difference to the beneficiaries.
In addition to direct care spending orders, Tsai said CMS is interested in a slightly different approach to running in Illinois, which has changed nursing home regulations this year. Its Nursing Home Rate Reform Act raises Medicaid funding and then requires at least 70% of staff to be employed in each home, which the state’s analysis shows needs residents. The state then verifies that the facility complies using pay and other data. If not, the difference will be deducted from his subsequent payments.
“There are states across the country that are trying a range of approaches to ensure that the dollar in the system from the nursing benefit reimbursement rate is actually – one way or another – getting adequate, high-quality stuffing,” Tsai said. “That is our primary goal.”
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