Support for the concept of critical access nursing homes is growing among providers, but it has yet to gain much traction among industry leaders or the politicians who would need to create such a safety net for seniors and people with disabilities.

Such a program could bring more stability to a struggling subset of nursing homes, much as it has for about two-thirds of the nation’s rural hospitals.

Certified critical access hospitals are paid based on their costs, rather than on patient lengths of stay or services. This creates a reliable funding source to help sustain providers with potentially low patient volumes. The special designation originated in the 1990s after a string of rural hospital closures in the previous decade.

A similar program has never been created for nursing homes, but some providers believe now could be an ideal time. Many skilled nursing operators, especially those in some rural states, were squeezed hard by stagnant Medicaid rates even before the pandemic. Now, they are inching ever closer to closure amid continuing COVID-19 precautions and staffing shortages.

“Policymakers need to understand ‘rural’ doesn’t mean low-cost. We are unique and the unique needs for providing care in rural communities need to be addressed,” said Mark McKenzie, CEO of Focused Post-Acute Partners, which operates 29 skilled nursing communities in Texas. Twenty of those are in rural areas, some in towns with as few as 3,000 residents. “Years ago, it wasn’t a detriment to be a rural SNF provider, but COVID process mandates had a real and lingering negative impact on staffing and overall costs.”

Solution for mounting costs?

While McKenzie said he has seen the idea of a SNF critical access program creep into more conversations since raising the issue with McKnight’s Long-Term Care News last fall, he said it’s not driving enough significant political discourse yet. Many providers and state advocacy groups remain focused on other priorities: immediate increases in Medicaid funding and an expected to staffing ratio, to name a few.

Bloomberg Law reported on the concept Wednesday morning, noting that nursing home groups are “calling” for such a designation.

A LeadingAge spokeswoman told McKnight’s there was significant interest in a critical access program among that organization’s members. 

“Increasingly, for too many older adults and families — particularly those who live in less populated areas — access to and availability of the much-needed 24/7 care that nursing homes provide is no longer an option,” said Katie Smith Sloan, president and CEO. “Multiple issues, from insufficient reimbursement that does not cover the cost of care, and continued staffing challenges plus rising operating costs — for recruitment, wages, as well as inflation-fueled price increases for food and other commodities — are simply too much for some providers. They cannot keep their doors open.”

A critical access nursing home program “could help to level the playing field” for operators in rural areas where it can be even more challenging and expensive to hire required workers, and where closures are already sending displaced residents far from home for needed care.

Without the kind of stability a critical access payment reform could bring to rural providers, McKenzie said, “skilled nursing facilities will close and that will create an enormous gap in local access. If that happens, families may be 45 to 90 miles from the next long-term care setting.  That is really shortchanging rural communities.”

Other priorities first

While American Health Care Association President Mark Parkinson was quoted extensively in the Bloomberg article, a spokeswoman for the nation’s largest provider group told McKnight’s it doesn’t have a formal proposal on the concept.

AHCA has been busy advocating for state-rate increases and potential staffing solutions, which it says are the main influences on closures nationwide.

Bloomberg characterized Parkinson as saying a critical access program for SNFs could be a “life line,” even if it paid just 1% on top of operating, which is how participating hospitals are funded.

McKenzie said he would “absolutely” participate in a plan with those conditions.

“It enhances our ability to ensure access to these populations, as well as enhances our ability to recruit — which I could do with that 1%. However, exploration of a different methodology should be considered as well. If providers are in an environment with an adequate Medicaid rate, a Critical Access designation could include targeted funding just [for] administrative costs and labor, as an example,” he said. 

He acknowledged that the effort to drive policy forward on this could be stymied by a perception that a rural program would take federal dollars away from other providers.

But some see value in protecting access in urban areas too. A report last month from LeadingAge LTSS Center urged lawmakers to pursue financing and other solutions that support challenged urban operators.

Also, a report commissioned by AHCA early last year found that facilities most likely to close during the pandemic tended to be smaller, with fewer than 100 beds, and in urban settings where residents rely on Medicaid.

For any new payment designation, providers would be beholden to Congress. CMS has no authority to create classes of providers outside of its current payment rules.

“Before there is movement in this direction — if it gains momentum — we need a practical definition of a Critical Access SNF and a clear understanding how any reimbursement adjustment would be managed,” McKenzie said.