Though a costly national nursing home staffing mandate proposed Friday offers no new financial support for operators, it could trigger more reporting requirements as the federal government tries to spur states into increasing their Medicaid outlays.

The Centers for Medicare & Medicaid Services’ rule would require each state to calculate and submit to CMS the share of each nursing home’s Medicaid dollars being spent on direct care worker and support staff wages and benefits. The information gleaned through this “Medicaid Institutional Payments and Payment Transparency” provision would be made public. 

CMS said it also is considering adding a requirement to capture and make public an average statewide per diem, or daily, rate paid to providers.

By using both data points, the agency then could dictate a required minimum percentage that would have to be spent to pay direct care and support staff. 

“We believe that gathering and sharing data about the amount of Medicaid dollars that are going to the compensation of workers is a critical step in the larger effort to understand the ways we can enact policies that support the institutional care workforce, which plays an essential part in the economy, efficiency, and quality of institutional services,” the agency said in its Federal Register posting.

“We believe that compensation levels are a factor in the creation of a stable workforce, and that a stable workforce will result in better qualified employees, lower turnover, and safer and higher quality care,” it added.

The American Health Care Association had as recently as April encouraged CMS to adopt such a mechanism for the skilled nursing sector. That followed a CMS proposal regulating how states fund home- and community-based services.

The April rule for HCBS requires that at least 80% of Medicaid payments for personal care, homemaker and home health aide services be spent on compensation for the direct care workforce. CMS acknowledged Friday it was not yet proposing a minimum percentage to be spent at nursing homes because it does not have “adequate information” to determine such a minimum percentage, “nor what impact requiring a minimum percentage would have on Medicaid institutional payments.”

CMS said it expected the transparency requirement would lead some facilities to increase staffing independent of the proposed minimum staffing standards. The agency, however, does not have the ability to mandate state Medicaid spending levels on skilled nursing.

Provider organizations have long pointed to state Medicaid rates as being insufficient to support quality care. The American Health Care Association has descried chronic gaps in funding that typically short facilities 20% to 30% percent of the costs.

On Friday, providers bristled at the idea of additional regulatory requirements without any new revenue stream.

“We support financial transparency and the gathering of information to ensure adequacy of rates, however, this isn’t going to help nursing homes meet these new standards or increase wages,” AHCA said in a statement emailed to McKnight’s Long-Term Care News Friday afternoon. “CMS is missing the bigger picture — we must address chronic Medicaid underfunding and invest in long-term care.”

The reporting requirements wouldn’t be triggered for four years after the rule is finalized, meaning the increased visibility wouldn’t come until after many nursing homes had had to hire additional RNs and increase their daily nursing provision to 3.0 hours per patient day.

Without a distinct revenue stream or added daily reimbursement, providers will be left to seek more funding from the states where they work — without any requirement that they oblige. 

“States play an incredibly important role in Medicaid funding levels,” LeadingAge President and CEO Katie Smith Sloan said in an email to McKnight’s. “Should this mandate be implemented as proposed, states’ importance will only increase, as the Centers for Medicare & Medicaid Services has said that providers are expected to bear the burden of the costs of mandates, unless payors increase rates to cover cost. The anticipated aggregated cost impact of the proposed mandates are, according to CMS, projected to reach into the billions. Providers alone cannot — and should not be expected to — shoulder this financial burden.” 

Costly estimates speak to need

If the rule were to proceed as proposed, providers would rack up major bills in the meantime. In its official accounting Friday, CMS listed the proposed cost of the staffing mandate as $32 million in the first year; $246 million in year two; $4 billion in year three and $5.7 billion annually by year 10.

Those estimates are based on a 3.0 hour per patient per day standard, a rule that triples each facility’s required registered nurse coverage to 24 hours daily; and more extensive facility assessment requirements.

Nate Schema, president and CEO of the Good Samaritan Society, said he supported the increased transparency as far as it would reveal how well states support skilled nursing.

“As a provider who serves in several different states today, we see the vast and stark differences in reimbursement in those states. It’s an important first step, but we obviously believe additional reinvestment is needed,” he told McKnight’s. “The study that CMS conducted illustrates that … and I think those numbers are low.”

The government’s cost projections pale in comparison to those estimated privately by national consulting and advisory firm CliftonLarsonAllen. Just last week, the firm projected a 4.1-hour standard would have cost providers $11.7 billion annually. CLA had not issued a new cost estimate based on a 3.0 calculation but was working on doing so late Friday.

The only funding mentioned in CMS’s announcement Friday morning was $75 million for workforce development initiatives. Schema called those a “drop in the bucket” compared to what was needed for “meaningful solutions.” 

Proposal ‘a joke,’ will not happen

Marc Zimmet, CEO of Zimmet Healthcare Services Group and a 35-year veteran of the skilled nursing reimbursement world, said he didn’t expect the rule would ever be enacted as proposed.

“On the reimbursement element, honestly it’s such a joke, it’s so ridiculous that it’s almost insulting to everybody to discuss it. It’s the arbitrary nature of all of it, but especially, the concept of pegging spending to a specific amount of revenue,” Zimmet told McKnight’s. 

“The administration can’t ignore it. They can’t pay for it. They can’t compel states to fund it, and they can’t help find staff. … It can’t happen. This is fantasy, and it upsets me.”

Instead, he said, the provisions in the rule distract from more serious concerns, such as how states and the federal government can move away from “arbitrary” funding mechanisms and reform rate construction to ensure quality and access regardless of government payer.

CMS has invited specific commentary on provisions in the Medicaid transparency rule, including whether it should adopt a minimum threshold to be spent on worker pay.

Comments on all sections of the staffing mandate will be due by Nov. 6.