Skilled nursing providers might get a welcome relief from New York’s heightened regulations tomorrow, when Gov. Kathy Hochul (D) could sign legislation lessening penalties for facilities that do not meet two new financial requirements. 

Lawmakers want to take pressure off facilities struggling to hire enough permanent staff and relying on expensive staffing agency nurses and nurse aides instead. A bill passed by both houses Wednesday amends a recent law that forces nursing homes to spend at least 70% of revenues on direct care, with at least 40% of that going toward resident-facing staff. Another rule also put in place a 5% profit cap.

Under a bill passed unanimously by both houses Wednesday, those not meeting the 70-40 requirement but can prove they’ve reduce their use of agency would pay less in penalties when they exceed the profit cap.  

New York is one of several states that are reconsidering, at least partially, their attempts to  implement new staffing and fiscal transparency rules, given persistent workforce shortages that are leaving positions unfilled and driving up costs. Rhode Island also said this month that it is not enforcing a new nursing homes staffing mandate, widely touted by state officials months ago as one of the most demanding in the nation.

That states are struggling to compel compliance may not bode well for the realistic roll out of a federal minimum staffing rule, expected to be published any day.

“We continue to face a severe nursing home staffing crisis,” Stephen B. Hanse, president and CEO of the New York State Health Facilities Association, told McKnight’s Long-Term Care News. 

The 5% profit cap is under attack on several fronts. The state’s nursing home providers’ associations are suing to overturn it and other recent provisions. Under current law, facilities must turn over any profits above 5% to a state “quality pool” that is then redistributed through Medicaid to all in-state facilities. Nursing homes that exceed 5% in profits are also fined $2,000 per day. 

Under the pending legislation, nursing homes that have 50% or less staffing agency usage and further reduce that by 30% or more during the year could see that penalty cut by as much as half.

Facilities with 50% or less staffing agency usage that reduce that by at least 20% but less than 30% would be eligible for a 25% reduction in fines. Facilities that reduce their dependence on staffing agencies will also get a break on how much money must be turned over to the state if they exceed 5% in profits. 

LeadingAge President James W. Clyne, Jr., told McKnight’s Long-Term Care News that 97% of his association’s members are meeting the 70-40 rule. Hanse acknowledged that the vast majority of the more than half of the state’s 614 nursing homes that are out of compliance with that rule are in his membership ranks. 

“Providers want full-time staff and not to have to utilize agency staff,” Hanse said, adding that staffing agencies are charging three to four times higher what a full-time employee would earn for temporary staff.  “The use of agency staff can often correlate with poorer outcomes for residents because they can’t identify changes in conditions.”

Both Clyne and Hanse said that providers would be able to reinvest any money saved on penalties back into facilities to promote better efforts to retain and hire staff.