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Facing mounting regulatory and funding pressure, more providers are working to sweeten swiftly changing rules

As many states have moved to tighten regulations in lockstep with the federal focus on nursing home reform, there’s often been an unexpected guest at the negotiating table.

Provider associations and individual nursing home leaders are making inroads in their long-futile attempts to be present where the rules are made, often sitting alongside worker and patient advocates who have more traditionally driven policy.

The pandemic put many providers in the unusual position of being on the same side as powerful unions, both of them lobbying for resources to make facilities safer during COVID-19 outbreaks.

It makes sense to continue those alignments, said Zachary Shamberg, president and CEO of the Pennsylvania Health Care Association, who helped negotiate a 17.5% Medicaid hike for the state’s 700 nursing homes after a stagnant nine years.

“As we’ve talked about the state budget, as we’ve talked about a new regulatory outlook, patient advocates, provider advocates and worker advocates have all been at the table expressing their concerns and their ideas,” he said, noting current efforts to influence the state’s first revamp of nursing home regulations in more than 20 years.
“With this new regulatory proposal, we’ve come to find some common ground that is going to further providers, further our workforce and further quality care for our residents,” he said.

Provider groups are playing a bigger role in helping lawmakers and regulators understand how proposals affect operations, whether they might accurately address targeted concerns, and alternatives that might help providers and residents.

Much of that work comes in the form of advocacy for state funding, with provider stories playing a key role in securing critical Medicaid rate increases.

Part of the struggle remains uniting operators who face a variety of financial and operational challenges, often dictated by region or ownership type. Fran Kirley, president and CEO of Nexion Healthcare and a former chair of AHCA’s political action committee, told McKnight’s earlier this year that his company is one of about a dozen working together to convince Texas lawmakers to pass its first permanent Medicaid increase in eight years.

“One of the challenges is [developing] a singular, consistent message,” said Kirley, who also operates SNFs in Louisiana and Mississippi. “There are different ownership structures in these states. Louisiana and Mississippi are really more mom-and-pop driven organizations, while Texas has more lease-hold companies like we are, a lot of companies that are large.”

His informal lobbying group has put aside those differences to sell lawmakers on the value proposition of higher funding for skilled nursing.
And in Ohio, provider advocates are hoping recent non-budget talks about quality improvement payments, rebasing and even possible bed reduction strategies will lead to ongoing collaboration on issues at the heart of care quality.

“The quality program is the carrot,” LeadingAge Ohio President and CEO Susan Wallace told McKnight’s. “The other issue is how you address bad actors. We shouldn’t ever be adopting policies across the entire sector to address problems in a smaller segment. That’s how regulation grows and grows and becomes incredibly burdensome.

“If we can get past the payment conversation, I’d really like to talk about what we need to do with our survey processes, and are there other steps where we can assist the state of Ohio in identifying those problem facilities and moving them out of the space, frankly.”

Funding first, more rules next?

This bold tone on self-regulating bad actors is increasing among providers, a tacit recognition that mounting pressure will catch up with the sector one way or another.

Whereas provider groups might once have simply tried to defeat legislation dictating how they operate, Shamberg said today’s leaders need to remain part of the conversation to help counter stereotypes that nursing homes are poorly run or bleeding residents dry.

“There’s something to be said for providers stepping up, being vocal on an issue like this, for standing up and not allowing the bad actors to speak for the entire industry,” Shamberg said. “When indictments are announced or allegations [surface], it destroys the momentum we’ve built and all the hard work we’ve done. It destroys the credibility the last few months have brought with it.”

Of course, access often comes with tradeoffs, in this case a willingness to accept future obligations in exchange for much-needed support.

Ohio is likely to move from four to seven long-stay quality metrics in its quality incentive program, but providers also have expressed willingness to support the restoration of an occupancy metric. High occupancy shows satisfaction, Wallace noted. Low occupancy, however, could cost providers bonus points that equate to real dollars. They might surrender some beds to boost their scores, and that’s an outcome leaders are willing to consider in exchange for better funding.

“It’s not something we want to take away, but if you can boost your payment score by giving up a few beds, maybe that’s a good thing overall for Ohio,” Wallace said.

Pennsylvania followed other Northeastern states and hammered out an agreement requiring 70% of total spending go toward resident care and related costs starting in 2023. In addition to that, the state’s healthcare associations embraced the state’s first staffing ratios for CNAs and LPNs.

“We believe that will lead to more accountability on the provider end and also better or higher quality care for our residents,” Shamberg said.

Pennsylvania had considered going to a 4.1 per patient, per day standard, which PHCA estimated would have required 7,000 new workers and $400 million more in wages. But the governor’s office brought together stakeholders to reach an alternative, and achievable, goal during some six months of talks. By 2025, providers will be expected to have 3.2 hours of nurse coverage per patient, per day.

As part of regulatory talks, PHCA now is narrowing in on change-of-ownership rules that could make it tougher for new corporations, REITS or other investors to gain a foothold in the state.

Logistical insights

Providers want a voice in a process that has recently been changed in Kansas, Oregon and other states looking to avoid receivership catastrophes like the one that followed the 2018 collapse of Skyline Healthcare.

Just how to spot and control potential failures is up for debate. But lawmakers and policymakers benefit from allowing providers to participate in the legislative and rulemaking process, said Hedy Silver Rubinger, partner and head of the healthcare practice at Arnall Golden Gregory. She helps skilled nursing and other providers navigate the various change of ownership and change of management processes in place across the states. She’s also involved in efforts to manage reform.

“The reason you either want a trade association or providers at the table is because they provide insight into how these laws and policies apply in practice,” Rubinger said. “A provider or trade association can help explain to lawmakers what makes sense from a business and operational perspective. This involvement helps to ensure that the resources of both providers and regulatory bodies are used effectively.”

When it comes to changes of ownership, a process already well established federally for Medicare or Medicaid participants, misguided state regulations could stymie business, she said.

“We want to encourage the continued injection of capital in the industry,” Rubinger added. “Regulatory bodies also need to be mindful of their own resources necessary to receive and process information required for changes of ownership. As the information requested in filings becomes more extensive, the state regulatory agencies are naturally obligated to deploy additional resources to assess the resulting filings in a timely manner.”

While providers understand their obligation to comply with the regulatory process and ownership disclosures when properties change hands, Rubinger said, they also want an efficient process. Finding a balance between a rubber stamp and a process so lengthy it discourages buyers is a key push Shamberg is making with his lawmakers.

Opportunity for common ground

In Ohio, Wallce is using a series of conversations taking place outside of the budget process to better educate lawmakers for the next session and to iron out new incentives that drive change.

“The challenge, of course, is that there are only a handful of experts in this space in any given state that know both the methodology and also sort of the policy and politics side of it,” Wallace said. “It becomes very hard to weed through these incredibly intricate policy areas when you’re also competing for time with education reform or other human services reform.”

The post-COVID era is an ideal time to engage in deeper conversations about future change, she said, but also to bring up workforce issues, ongoing challenges with agency and other factors that might impede reform. The process of refining the measures-based incentive system is revealing other areas that might be easy to align on, too.

For instance, Ohio has a cost-based capital component that doesn’t encourage providers to reinvest in physical plant. Wallace has proposed moving that to a fair rental value-type calculation that would make more sense given federal pressure to innovate physical spaces and reduce dependency on shared rooms.

“We’ve got our necks out in front of the pack in terms of putting more money behind quality,” Wallace said. ”The question is, what do we fund?”