At a time when staffing and funding regulations for nursing homes are ramping up at both the state and federal levels, one state is reconsidering its demands on long-term care spending.
Oklahoma law mandates that nursing homes direct 70% of new Medicaid funding toward direct care spending. Senate Bill 1417 would alter that rule — allowing facilities more flexibility by providing subsidies for nurse aide training and promotions, and by taking into account the costs incurred by complex resident case mixes.
If passed, state regulators would begin adjusting the required direct care payment percentage to reflect high case mix expenses at facilities starting in July 2025. The overall result would be less reimbursement funding required to go specifically toward staffing and more toward the rising costs of care and wages.
With those costs rising across the nation, providers may have reason to be hopeful that some lawmakers are inclined to add more flexibility back into the reimbursement system.
Steven Buck, president and CEO of the Care Providers Oklahoma, told McKnight’s Long-Term Care News that his organization is still reviewing the bill, but is cautiously optimistic about the reimbursement changes.
“We appreciate the Oklahoma Health Care Authority for its desire to explore modernizing reimbursement methodologies to ensure the highest quality of care is delivered to our most vulnerable citizens,” he said Tuesday. “We will always engage in discussions that advance the quality of care in our homes.”
A potential trend
States such as New York, New Jersey, Pennsylvania and Massachusetts have similar direct-care spending requirements for nursing homes. The Centers for Medicare & Medicaid Services also released an even higher 80% Medicaid direct care spending rule for home care providers at the same time it released its nursing home staffing mandate in April.
CMS may be setting up a similar strategy for national nursing home spending with the inclusion of new Medicaid transparency rules in its final nursing home staffing rule.
Direct care spending rules are intended to improve care quality in facilities by requiring them to invest a certain amount in areas such as staffing. However, provider leaders have often warned that such regulations do more to harm providers than to tangibly improve care quality, especially when implemented without coinciding additional funding and support for the sector.
Similar rules implemented in Pennsylvania in 2022, for example, have left many providers worried, according to Zach Shamberg, president and CEO of the Pennsylvania Health Care Association
“Based on a recent PHCA member survey, 38% of our owners/operators revealed that they are very concerned about meeting the 70% requirement, while 31% are somewhat concerned,” Shamberg told McKnight’s Long-Term Care News. “These results further highlight the differences between facilities: what the necessary Medicaid reimbursement rate needs to be to invest in and support care, which facilities might have rent or lease payments, and which facilities might have other higher costs that aren’t calculated as resident care but are necessary to operate.”
While PHCA hopes to increase wages and recruit more workers, providers’ concerns are heightened by the current volatile state of the economy and regulatory environment for long-term care, Shamberg pointed out.
“Ultimately, what we do know is that implementing more restrictive regulations at a time when providers are trying to stabilize their operations in order to sustain care is not ideal, and could very well jeopardize the sustainability — and existence — of many facilities,” he said. “It’s important for any state that has a rule like this to recognize the current operational struggles and better support providers, so providers can adequately support the state’s residents.”
Contentions continue
Consumer advocates in Oklahoma have urged lawmakers to reject SB 1417, saying the state should ensure a greater portion of new funding goes straight to facilities with higher staffing levels, thus incentivizing staffing increases.
“SB 1417 would eliminate the only assurance we now have that any new funding is directed to providers committed to quality staffing,” wrote clinical social worker Ruth Tatyrek in the Oklahoman. “Direct care staffing is the single most important determinant of quality care.”
Only 6% of Oklahoma facilities currently meet all three requirements of the CMS staffing mandate — most frequently due to a need to hire more registered nurses, leaders say. The national healthcare worker shortage has proven especially difficult to overcome in primarily rural states.
