A stressed nursing home operator looks at a computer while on the phone
Credit: sturti/Getty Images Plus
A stressed nursing home operator looks at a computer while on the phone
Credit: sturti/Getty Images Plus

Proposed staff minimums, increased enforcement activity and a ‘chilling’ stance on private investment raise concerns about keeping the doors open.

With the Biden administration leading a historic charge to reshape U.S. nursing homes, providers are left wondering how the details will ultimately impact daily operations. 

The reform package, first floated in February, includes more than 20 initiatives that, together, could affect the most meaningful change in long-term care in at least 35 years.

Many of the efforts are in direct response to COVID-19 and the sharp focus it brought to nursing homes. But observers say consumer advocates and others leading the charge don’t understand the conditions that made nursing homes and their residents so vulnerable to the pandemic’s ravages.

Chief among those is an antiquated payment system that appears to be largely left out of the reform conversation, at least for now. 

Providers “really want to make lemonade” out of the extra attention post-pandemic, said Karl Steinberg, M.D., immediate past president of AMDA – The Society for Post-Acute and Long-Term Care Medicine. But some fear pushing broad change without adding resources may pit quality and accessibility against each other.

Staffing has become such a burden that many providers continue to limit admissions for lack of workers. It’s against that backdrop that the Centers for Medicare & Medicaid Services is planning a first-ever federal minimum staffing requirement. 

“Staffing is great. Having more staff is even better, but we don’t know exactly where these staff people are going to come from,” Steinberg said at AMDA’s annual conference in March. “I’m not sure spending $500 million sucking nurses into being surveyors is really going to help get nurses to work in nursing homes.”

His reference was to a specific White House strategy to beef up enforcement activities, which would almost inevitably involve hiring some working nurses away from the frontlines. It was the only initiative that included a budget line.

Other hallmarks of the administration plan include tying staffing adequacy to payment; reducing shared rooms to promote privacy and infection control; and ramping up ownership oversight. Achieving all of the initiatives would be a massive undertaking, requiring significant bureaucratic and legislative lifts. CMS has said providers will have a full comment period to provide input on any proposed rules. But worry is already mounting about a consumer-driven lean.

“Even before COVID, there were a lot of ideas about how to change aspects of nursing homes. Now there’s this pressure to do something, to give people the feeling that something will be done, even though I think nursing homes have done a lot over the last couple years,”  said attorney Christine L. Stanley, a partner at Quintairos, Prieto, Wood & Boyer, P.A. “To say it simply, yes, I think it will have a chilling effect.” 

Private equity attack 

CMS plans to target private equity and chain investors by making ownership ties clearer. A new database of owners and operators would be accessible to licensing bodies across states and “highlight previous problems with promoting resident health and safety.” The administration also will ask Congress to give CMS the authority to require “minimum corporate competency,” a move that could bar those without it from obtaining Medicare and Medicaid provider agreements.

“Private equity firms have been buying up struggling nursing homes, and research shows that private equity-owned nursing homes tend to have significantly worse outcomes for residents,” a fact sheet provided by the White House said. It reported firms’ investment in nursing homes “ballooned” from $5 billion in 2000 to more than $100 billion in 2018. 

The American Health Care Association pushed back against that rhetoric, arguing that 63% of nursing homes belong to operators with 10 or fewer facilities, of which 31% are single properties.

“Since 2015, nursing homes make up an extremely small portion of private equity capital and deals (less ​than 10%) in the entire healthcare system,” AHCA said. “Private equity in healthcare is shifting away from nursing homes and into more lucrative sectors.”

Attorney Howard Sollins, leader of the long-term care practice at Baker Donelson, warned against treating all investors as bad actors. He said the government needs to better understand how critical private investment is for improving the physical environment of nursing homes. Punishing those who make profits also would likely drive needed investment away from the sector, observers warned.

“The money has to come from somewhere, and it’s not going to come from the government,” Stanley said. “I’m not sure they’ll be able to regulate private equity because I think they (investors) will just leave. There are other investments to be made than nursing homes.”

Reform packs punitive punch

Sollins said the administration’s stance on private equity sends a signal that owners can no longer play a “passive” role regarding on-the-ground operations and services. 

The administration said it also intends to come down harder on consistently poor performing facilities, regardless of ownership, starting with an expansion of the Special Focus Facility program that “will make its requirements tougher and more impactful.” CMS is also considering making per-instance penalties the default for non-compliance and increasing those penalties up to $1 million (currently the ceiling is $21,000), a move that would require Congressional approval.

Sollins said the federal government should instead focus on a more collaborative process between surveyors and nursing homes.

“You want to increase staffing, make capital improvements, address performance issues, increase accountability but still [take] up to $1 million in an instance out of a facility?” Sollins asked. “It just seems inconsistent.” 

Premium on privacy

One initiative providers and consumers could both embrace would be reducing room crowding. The White House said CMS “will explore ways to accelerate phasing out rooms with three or more residents and to promote single-occupancy rooms.”

Not surprisingly, the Green House Project, whose model is centered around clusters of single rooms in a shared neighborhood, is encouraging the administration to make private rooms a requirement of participation in Medicare and Medicaid. But others argue such alternatives work better in theory than in reality, citing obstacles such as low operating margins, construction and financing costs, and regulatory roadblocks.

Adam Berman, president and CEO of the nonprofit Massachusetts-based Legacy Lifecare, called financing and reimbursement “the No. 1 problem to solve” to spur private-room conversion. John Ponthie, managing member of the for-profit Southern Administrative Services, suggested a government-backed lending program for construction of alternative models, incentive grants and pay differentials for private-bed care. Increased civil monetary penalties could be a prime funding mechanism, he said.

Staffing strategy

CMS officials said providers should expect a proposed minimum staff rule within a year, following  “rigorous” study of the issue. While some providers embrace the concept of staffing minimums — acknowledging higher ratios can lead to better outcomes — they argue the timing is terrible.

“We cannot meet additional staffing requirements when we can’t find people to fill the open positions nor when we don’t have the resources to compete against other employers,” said Katie Smith Sloan, LeadingAge president and CEO. 

Stanley warned efforts could backfire if CMS develops a minimum without a broader understanding of how operators plan for coverage by accounting for patient acuity, non-nursing care, nighttime activity levels and other factors. Meeting a broadly applied minimum could force some to average out care, or worse.

Stanley anticipates a rule tied to payment will drive some providers to take skilled beds off line, converting shares of their facilities to dialysis, behavioral health or other, less regulated services.

“Facilities are starting to divest of services,” she said. “Our aging population just gets larger and larger, and the market is there. You could say that the money is there. But it may be that the actual facilities cannot meet market demand. I don’t know where those folks are going to go.”

Danielle Brown contributed to this story.