Biden sets new staffing rules for nursing homes

The Biden administration announced it has adopted new minimum staffing rules for nursing homes. But the regulations appear to be giving facilities time to comply.

In addition, the administration also requires home health agencies to allocate at least 80 percent of their Medicaid payments to employee compensation. States would have the flexibility to adjust the rules for small and rural home care providers.

Nursing facilities that receive federal funding through Medicare and Medicaid (in fact, all of them) will be required to employ sufficient staff to provide at least 3.48 hours of daily care to each resident. This includes a minimum of 2.45 hours of nursing assistance and 0.55 hours of registered nurse assistance. The remaining staff time could be filled with RNs, assistants, or licensed practical nurses (LPNs). Facilities must also have an RN available 24 hours a day, seven days a week.

The White House says the new rule requires a facility with 100 residents to have at least two RNs and at least 10 nursing assistants, as well as two additional healthcare workers per shift. Facilities that care for patients and residents with higher needs will need to increase their staffing levels beyond minimum requirements.

Exemptions

However, the new requirements will be phased in over several years, and facilities in communities experiencing direct care workforce shortages will receive waivers if they can demonstrate a good faith effort to hire. Facilities will be required to communicate any delays or waivers to consumers.

Although the White House announced its decision to finalize the new rules on April 22, the specific rules have not yet been made public. The government first proposed the standards last fall and received tens of thousands of responses, both pro and con.

Operators that fail to meet standards could lose Medicare and Medicaid funding, effectively putting them out of business.

How many will meet the standards?

The research organization KFF estimates that the average nursing facility provided 3.77 daily staff hours per resident in 2023, slightly more than the new CMS rule. However, nurse time would need to be increased slightly to meet the requirements for these staffers. KFF found that workforce levels remained below 2020 levels in 2023, after declining during the pandemic.

However, the averages appear to mask wide variation in staffing levels across facilities. In a separate 2023 report, KFF estimated that about half of facilities would meet the RN requirement, while only 28% would meet the new standard for nurses. Overall, only about one in five nursing facilities would meet the combined minimum standards. The Centers for Medicare and Medicaid Services (CMS) estimates that about a quarter of facilities would currently meet minimum nursing requirements, including the 24/7 on-site rule.

The American Health Care Association, the trade group that mainly represents for-profit nursing homes, says about nine in 10 facilities will fail to meet at least one of the staffing requirements. A third of facilities would not meet all three standards.

The industry insists it cannot support new workforce needs with the payments it receives from Medicare and Medicaid. However, recent research shows that many facilities use related-party transactions and other accounting tricks to keep reported profits low. So many can probably afford to hire more staff.

Some AHCA supporters in Congress have moved to block the rules, while some consumer advocates have demanded a minimum of 4.1 hours.

A complicated connection

The Biden administration explicitly links low workforces to low quality. In its fact sheet, the White House says that “too many nursing homes chronically understaff their facilities, leading to substandard or unsafe care.”

However, the story may be more complicated. Many researchers have concluded that while low staffing levels may be associated with poor nursing home quality, it does not necessarily cause these problems. Rather, they can be a kind of canary in the coal mine, where facilities that cut back on nurses and aides also fail to meet other quality standards. For example, the facilities may be outdated, the food may be inadequate or unhealthy and the quality of physiotherapy may be poor.

At those facilities, operators can shift dollars away from other services to meet minimum staffing levels of nurses and aides, or find other ways to play with the new rules.

Likewise, employee turnover can be at least as important as employee size. A well-run facility with high-quality staff may be able to perform better than a facility that meets the prescribed staff size but has consistent staff turnover.

The new home care rules only apply to Medicaid operators. States, which set their own rules for Medicaid, will have to make public what they pay for home health care services and how they set those rates. They will also have to establish a rate-setting advisory panel that includes patients, families and direct care providers, although it is not clear how much authority these organizations would have.

The nursing home rules are a first attempt to establish staffing standards for facility care. It is important to see how they are implemented and whether they actually improve the quality of care.

Full disclosure: I am an unpaid board member of a nonprofit senior living organization that operates nursing facilities.