Should nursing homes be told how to spend public funds? Some say yes
Last winter, as the coronavirus was still tearing through Connecticut’s nursing homes, lawmakers introduced a raft of legislation aimed at making the facilities safer.
A few key bills succeeded – measures that permit the use of cameras and other technology in nursing homes so families can keep an eye on their loved ones; that allow residents of long-term care facilities to designate an “essential support person” who may enter a nursing home in spite of visitor restrictions; and that increase the minimum required staffing hours to 3 per resident each day, up from 1.9, even though most facilities already meet or exceed the 3-hour benchmark.
In three neighboring states, however, leaders enacted even more drastic reforms. New York, New Jersey and Massachusetts adopted policies setting requirements for how much nursing homes must spend on resident care and limiting what they can spend on other expenses, such as administrative costs and salaries.
In New York, nursing homes must spend at least 70% of their revenue (from Medicaid, Medicare, and private payers) on care for residents starting next year. At least 40% of that must go toward staffing for direct care.
Massachusetts’ edict requires nursing homes to apportion 75% of their revenues for resident care, and a mandate in New Jersey compels those facilities to spend 90% on resident care, though regulators have suggested that the rule apply only to Medicaid revenue.
The states’ requirements mark the first time that nursing homes have been told how to spend funds from the government and residents, according to Kaiser Health News. The mandates are intended to ensure residents receive the care they need and to reduce breaches of quality standards.
In Connecticut, advocates are watching those policies play out, and some are recommending that similar reforms be taken up here when the legislature convenes in February.
“Not everyone puts the residents’ needs first. Many do, but not everyone,” said Mairead Painter, the state’s long-term care ombudswoman. “Making that the priority, I think, is essential.”
“Often, you’ll see money going out for management fees and rent, things like that,” she said. “And it’s disproportionate to the hands-on care.”
Anna Doroghazi, associate director of advocacy and outreach for the AARP in Connecticut, said her organization supports introducing a bill here that would dictate percentages to be spent on resident care, with 70% being “a good floor” to consider.
“At the end of the day, we count on nursing homes to provide a certain level of care. And if we can ensure that the care is provided by better targeting the money that goes into nursing homes, we should do that,” she said. “We owe older residents and disabled people the care that they deserve, especially because so much of what’s paying for that care is taxpayer money.”
Medicaid covers the cost of about 70% of all nursing home care provided in Connecticut, while Medicare covers about 15%.
Nursing home leaders say they are opposed to any such edict. They point to what they believe are already good measures for accountability in spending – including annual cost reports that facilities are required to file with the state (which feature revenue, expenditure and balance sheet information) and cost caps that restrict how much money nursing homes can receive to pay for various expenses, such as direct and indirect care; administrative costs linked to maintenance and operations; rent; and capital charges. The cost caps are intended to limit excessive payments.
Additionally, the state Department of Social Services conducts annual audits of nursing home spending. All for-profit facilities must also file profit-and-loss statements from related parties that receive $50,000 or more from the nursing homes.
“The cost caps, the reporting system, the limitations on related parties and the lack of any evidence … that excessive profiteering is going on in Connecticut’s system just don’t set up in a way where this becomes the answer,” said Matthew Barrett, president and CEO of the Connecticut Association of Health Care Facilities, which represents 145 of the state’s 209 nursing homes.
Mag Morelli, president of LeadingAge Connecticut, which represents many of Connecticut’s nonprofit nursing homes, praised the state’s existing cost-control measures.
“It’s not like our rate-setting system is uncontrolled,” she said. “The state has a record on a year-by-year basis of how you’re spending your Medicaid money.”
Barrett said imposing such a rule would have unintended consequences. For example, severely restricting what nursing facilities can spend on capital improvements could have an impact on residents’ quality of life. If a nursing home needs a new heating, ventilation and air conditioning system, they might be unable to purchase it.
“Limiting spending, which could have the potential to hinder the important improvements in buildings that must be made and that nursing homes are making every single year, is a major problem and would have a real impact on quality of care,” Barrett said.
Increasing staffing levels for direct care is a goal Connecticut legislators tried to achieve this year, with limited success. Lawmakers had proposed boosting the mandatory minimum staffing hours – time that a nurse or certified nursing assistant spends directly with a resident – to 4.1, up from 1.9.
But the state’s Office of Fiscal Analysis estimated it would cost at least $200 million to bring all nursing homes in line with that proposal. The mandatory minimum was instead increased to 3 hours, and the estimated price tag fell to $600,000 to $1 million because most homes already cleared the 3-hour standard.
Nursing home leaders raised concerns about meeting the higher staffing levels in part because of a labor shortage in the industry. Nationally, employment across nursing homes has fallen by 14 percent, or 221,000 jobs, since the beginning of the pandemic, according to an October report by The American Health Care Association and National Center for Assisted Living. “Long-term care facilities are suffering from [a worse] labor crisis and job loss than any other health care sector,” the organization wrote.
Those concerns are still fresh for administrators.
“Forced distribution – without addressing any of the resources associated with it, let alone the staffing shortages that are being experienced right now – seems destined to fail,” Barrett said.
State Rep. Jonathan Steinberg, a co-chair of the legislature’s Public Health Committee, said lawmakers have not ruled out raising a bill that would dictate a percentage to be spent on direct care, but more analysis is needed.
“We as legislators are often extremely frustrated that, particularly in the health care arena, so much of the money we put toward it does not necessarily end up in direct care,” he said. “The amount spent in administration or ancillary expenses often means that we just don’t have enough money applied at the point where it’s needed most.”
Lawmakers still have to research how other states arrived at their percentages, he said, and whether Connecticut would benefit from a similar formula.
“Because surrounding states are doing it, part of me would just as soon have them beta [test] it and see what the results are before we pull the trigger,” he said.
In New Jersey, Long Term Care Ombudswoman Laurie Brewer supported the state’s new mandate requiring a percentage of revenue be used for resident care. She said the edict will bring greater transparency and help reshape priorities to the benefit of residents.
“It seems like a no brainer, right? You want most of the money to go towards caring for the people. That’s why you exist,” she said. “But there’s a reason why big corporations and hedge fund managers are interested in long term care. There’s a massive amount of public funding that goes into long term care.”