NJ tries to help nursing homes by capping cost of ownership

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As hosts to those most vulnerable to Covid in the nation’s first and hottest viral hotspot, New Jersey’s nursing homes were destined for a tragic experience. In the early months of the pandemic, nursing home residents accounted for 40% of the state’s casualties. More than 9,000 people living or working in such facilities have died from Covid.

State government-run veterans’ homes have had some of the worst results. Yet earlier this year, as the pandemic waned, Governor Phil Murphy’s administration publicly attacked private nursing homes and threatened a crackdown. The state comptroller’s office attacked the 15 lowest-rated Medicaid care facilities, said 14 of them were for-profit companies or owned by private equity groups, and warned that if they don’t improve the quality of their care, the administration could push Medicaid to cut its care coverage for about 2,000 of their clients.

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That’s harsh from an administration that recently paid $53 million to settle claims related to the deaths of family members at veterans’ homes across the state. The threat from the state was also serious, as most nursing homes rely on state-funded Medicaid for at least 60% of their revenue. Meager Medicaid payments are already overburdening state nursing homes with a loss of more than $400 million a year on Medicaid patient care.

We’ve urged state officials to delay changes to nursing home regulations until they better understand the industry, lest they make long-term care less safe, more expensive and harder to find. “These are private companies. We don’t know where all the public funds are going,” Laurie Brewer, the state’s long-term care ombudsman, said at the time. “We need to do more to fully understand the finances of this industry.”

Several months later, the state government is gearing up to offer the industry a carrot instead of a stick.

Last week, the Assembly’s Committee on Aging and Elderly Services approved a bill to limit increases in rent operators pay for their properties. Unless rent increases are limited, nursing homes could be forced to pay unnecessarily high rates that could complicate tenant care, Brewer told the Senate Health, Human Services and Senior Citizens Committee.

The Senate version of the bill sets a 4% cap on annual rent increases. The Assembly panel cut that in half, to just 2%.

Possibilities for higher rent increases are built into the bill. A claim of more than 2% may be submitted to the state Department of Health. If the department cannot find a valid reason to grant the higher rent increase, the decision can be appealed to the Superior Court.

We appreciate the legislators’ desire to help New Jersey’s long-term care facilities. They have long faced the near impossible challenge of providing regulated quality care, competing with other healthcare providers for workers and accepting the most modest government reimbursements as the bulk of their income.

Even before the pandemic caused a widespread shortage of workers and disrupted nursing homes in particular, state officials pressured them to provide more caregivers per client than they could afford or even find. For certified nursing assistants who provide 90% of care, turnover was extremely high – 75% to 100% per year in some establishments – before Covid strongly discouraged working there.

Price controls, however, are not the right way to help the industry. With inflation above 8%, a 2% rent cap could easily reduce the number of long-term care beds in the future, and even result in some leases not being renewed.

Reducing the cost of compliance with care home regulations would instead help care homes now and leave the industry better able to provide the extent and level of care that society wants for its aging population.

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