Following up on CMS’s initial estimate that the Minimum Staffing Mandate would cost around $4 billion for skilled nursing facilities (and $40.6 billion over the first 10 years), CliftonLarsonAllen (CLA) released a competing study that put that cost nearly 60% higher, at around $6.8 billion. The American Health Care Association/National Center for Assisted Living’s President and CEO Mark Parkinson quickly responded to the results (in advance of them being released), saying, “What CLA’s analysis confirms is that this proposed rule is deeply flawed, and the Biden Administration has woefully underestimated the feasibility and cost of this unfunded mandate.”
The proposed rule from CMS mandates hours per resident day (HPRD) for two disciplines: registered nurses (RNs) at 0.55 HPRD and nurse aides (NAs) at 2.45 HPRD. In addition, the rule would require an RN to be on-site 24 hours a day, seven days a week and able to provide care as a separate requirement from the HPRD requirement. CLA estimated that 72% of facilities, or 10,532 facilities, did not meet the NA requirement, 48% (7,057 facilities) did not meet the RN requirement, and 80% (11,729 facilities) did not meet the RN 24/7 requirement. That in turn would result in an additional 80,077 NAs and 15,180 RNs to meet the HPRD requirements, plus 6,897 RNs to meet the 24/7 requirement.
Utilizing Payroll-Based Journal (PBJ) data and hourly rates from Medicare cost reports, CLA then estimated the cost of the additional staff necessary to meet the staffing requirement, as well as the costs associated with the additional staff. Part of the reason for the disparity in cost estimates, CLA notes, was because of the fiscal year cost reports utilized in the calculation. CLA utilized the most currently available reports, including some FYE 2022 reports, which represent higher compensation costs than FY 2021. The realities of inflation and staff scarcity in 2022 and 2023 would almost certainly put those costs at a much higher level, so in several years when the mandate is being gradually implemented, the $4 billion estimate may seem like peanuts, on a relative basis, of course.
Acknowledging that finding that staff may not be feasible for every facility, CLA also estimated the resident impact, since facilities would have to turn away patients if they did not have the appropriate workforce. The NA requirement would impact 186,920 patients, the RN requirement would impact 147,167 patients, and the 24/7 requirement would impact 96,528 patients, or more than 287,000 total patients. That represents about 25% of the sum of patients in facilities that would not meet the mandate, according to CLA’s study. These facilities that do not meet the staffing minimum also tend to be majority-Medicaid, many of which also are not profitable (59% as of a 2022 CLA study). Suddenly having to discharge patients, or limit new admissions, would not be conducive to those facilities remaining in business, to say the least.
Parkinson added, “The only way to come up with this large amount of money is through the Medicaid system.” And as of now, CMS has no planned funding mechanisms to support increased hiring, except for its $75 million nurse education allotment.
There is still a comment period for the mandate, and changes will almost certainly be made to the rule, which will be gradually implemented. And other studies conducted by stakeholders in the industry will surely highlight the worst-case scenarios. But if the Biden Administration and Congress are expecting the owners and operators to make up the difference in cost, there will be little incentive for private capital to keep acquiring, investing in and renovating the bulk of facilities that are older with mostly Medicaid censuses. Then who loses? The patients, and their families.
