Care homes pay ‘exorbitant’ agency fees to comply with minimum staffing requirements


The state’s minimum staffing laws are colliding with soaring agency costs, with some facilities forced to continue or increase the use of expensive temporary staff to meet state requirements.

The dissonance is particularly felt in states like New York, which has the largest Medicaid reimbursement deficit in the nation, according to Stephen Hanse, president and CEO of the New York State Health Facilities Association (NYSHFA).

“The costs are exorbitant,” Hanse said. “This low reimbursement rate has a direct impact on providers’ ability to recruit and retain a workforce or, in the absence of one, to truly seek out an agency.”

Hanse said the average cost for a Medicaid resident is $265 a day, but the average reimbursement in New York is $211 a day. Meanwhile, Hanse said agencies are in some cases charging state SNFs up to $70 an hour for certified practical nurses (CNAs).

New York State’s staffing requirements were originally scheduled to go into effect in January of this year, but were delayed until April by Governor Kathy Hochul.

While other industries face similar issues, Hanse said, the nursing home industry is a direct care industry that needs a “strong, dynamic workforce” who is not just not there.

According to Andrew Aronson, president and CEO of the Health Care Association of New Jersey (HCANJ), New Jersey facilities have seen “explosive” agency use since the state implemented its own minimum requirement. in terms of personnel.

The state requires one CNA for every eight residents during day shifts, one direct caregiver for every 10 residents in the evening, and one for every 14 during night shifts.

“These facilities should have their minimum number of CNAs working when polled,” Aronson added. “To get that body count in, they depend on the agencies to do that.”

Such state mandates come at a time when the Biden administration has set its sights on minimal federal staffing in nursing homes.

The Centers for Medicare & Medicaid Services (CMS) should conduct a study to determine the level and type of staff needed, and propose a new standard within a year.

Compliance pushes NFCs to continue using agencies

New York’s Dual Staffing Law requires 3.5 hours of care per resident per day by a CNA, LPN, or RN. State care homes must also spend at least 70% of their revenue on direct patient care and 40% of that on resident staffing efforts.

Of the 3.5 hours, no less than 2.2 hours of care must be provided by a certified practical nurse (CNA) or nurse’s aide. At least 1.1 hours of care must be provided by a registered nurse (RN) or licensed practical nurse (LPN).

Conservatively, the state’s minimum staffing law would cost the industry about $800 million based on data from the 2020 cost report, Hanse added, and 7,500 workers would have had to work. present on April 1 in all positions.

The state has set aside $64 million this year for its minimal staffing efforts, but it’s unclear how those funds will be allocated, Hanse said. The funding “is nowhere near” helping the industry offset those costs, he noted.

Hanse said the 70/40 rule is particularly blunt given a provision to reduce the agency’s use in the eyes of the state. In other words, if a staffing agency charges an institution $100 per hour for a clinician, the institution cannot say that this agency member cost them $85 per hour.

Facilities are unable to recoup full agency costs under this rule.

The law also states that operators of state nursing homes are required to return all profits over 5% to the state, regardless of the quality of care or whether the operator has suffered losses during the previous years.

State nursing home reform legislation was first introduced by former Governor Andrew Cuomo in 2021 to improve nursing home transparency and hold bad actors accountable.

“The staff is not there. [There has been] years of disinvestment in long-term care,” Hanse said. “The previous administration cut approximately $1.5 billion from long-term care, which directly impacts providers’ ability to compete in the marketplace.”

Nationally, around 15.2% of the nursing home workforce has left since the start of the pandemic. In March alone, the sector lost 2,500 jobs, according to a report by the US Bureau of Labor Statistics.

Operators have yet to see how the laws will be implemented, Hanse said. The state has not issued further guidance despite the law taking effect on April 1.

“These laws that have been implemented do not reflect the realities of New York’s post-pandemic workforce,” Hanse said. “The efforts of providers, the incentives to promote the recruitment of new employees, it’s a fight. They are not there.

Of the state’s 614 nursing homes, about two-thirds cannot meet the minimum, Hanse said. NYSHFA and its members believe it will take “much more” than a law on the books – it will take invested effort to recruit and retain workers.

Flexible staffing standards versus unsustainable minimums

In New Jersey, nursing homes have faced state-mandated staffing minimums since February 2021. Governor Phil Murphy signed the bill into law in October 2020.

At the same time, New Jersey has a fixed Medicaid payment system — as costs rise, whether for agency CNAs or hiring more CNAs to meet staffing ratio, the Medicaid rates must be adjusted by the legislature, Aronson said.

The state passed a 10% increase in Medicaid rates after enacting minimum staffing, Aronson noted, while direct care staffing rates increased nearly 30% between 2020 and 2021.

A change in policy means the agency could stick around longer than industry leaders would like, Lisa Grabert, a professor at Marquette University, told SNN.

“Some people thought we might see less use of recruitment agencies as the pandemic subsides. Now that this policy is changing, we may not see it diminish as much as I think a lot of people thought,” she added.

Marquette University College of Nursing This Month published a debate-style article on legislation to regulate nurse recruitment agencies amid opportunistic companies charging – sometimes – triple what staff are paid.

“It looks like some states have been slightly more aggressive than where CMS initially wants to start with this,” Grabert said of staffing ratios in New Jersey and New York.

Aronson sees the federal reform as potentially more “flexible” compared to his own state mandate tying hours to a specific role – the certified practical nurse (CNA).

With more flexibility, providers would be able to meet the needs of residents by hiring specialist staff who would take into account comorbidities within a specific community or population, Aronson added.

“If I have a nursing home which is a very specialized institution, with a lot of acute needs, let’s say a [ventilation] unit, I can staff it with doctors or medical assistants (PAs), a pulmonologist or specially trained nurses,” Aronson said.

Aronson believes that at the federal level, CMS isn’t just looking at CNAs — they’re looking at direct care staff as a whole. New Jersey, focusing only on CNAs, has a minimum staffing requirement that hasn’t improved the quality of care, he said.

“Many of Biden’s proposals have already been implemented or reviewed in New Jersey…the federal staffing ideas they are considering are much more flexible than New Jersey’s ANC staffing ratio,” Aronson said.

Nursing homes with a less acute population could be staffed with more CNAs, fewer specialist staff, he said.

“By giving providers this flexibility, you allow them to decide what they need to meet the needs of their own residents,” Aronson added.

Florida recently passed a change to its minimum staffing law doing just that – opening up its staffing ratio to more positions beyond typical LPNs, CNAs, and RNs.

“In New Jersey, it’s hard to argue that a CNA staffing ratio is going to improve the quality of care when you’re talking about buildings [that house] residents with high acuity. It is not the CNAs that determine the quality in these buildings,” Aronson said.


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