Medicare’s proposal on nursing home staff is ‘insanity,’ key expert says

Some of the country’s top Medicare experts aren’t sold on a new Biden administration plan to enforce stricter staffing requirements in nursing homes. 

Current federal law requires nursing homes to have a registered nurse on duty for 8 consecutive hours per day, 7 days a week, and to have a licensed nurse — either an RN or licensed practical nurse — on site 24/7. Last month, Medicare proposed new rules that would require long-term care facilities to have an RN on site 24/7. They would also need to have minimum staffing ratios of 0.55 RN hours per resident day and 2.45 nursing assistant hours per resident day.

But such a rule could create more problems than it solves, according to Congress’s official Medicare advisors, the Medicare Payment Advisory Commission, which reviewed the rule at a Thursday meeting.

“Recommending a staffing requirement that something like 80% of facilities cannot comply with is I think best described as the definition of policy insanity,” said commissioner Brian Miller, a health policy researcher and assistant professor at Johns Hopkins University. 

About 41% of nursing facilities were below the proposed minimum ratio for RNs and 68% were below the proposed ratio for nursing assistants, MedPAC principal policy analyst Kathryn Linehan told commission members, citing CMS data from the second quarter of 2021.

Turnover is also high, Linehan said. As of the fourth quarter of 2022, the median 12-month staff turnover rate in nursing homes was 53%. One-quarter of facilities reported turnover rates greater than 64%, meaning almost two-thirds of their staff left in a 12-month period. For-profit nursing homes had higher rates of turnover. 

The staff report also showed that freestanding nursing homes — the 97% of nursing homes located outside of hospitals — have had double-digit Medicare margins for more than 20 years. 

“Something’s wrong here,” said commissioner Lawrence Casalino, an emeritus professor in the Weill Cornell Medical School. “If people are taking home 26% profits and they have high rates — maybe higher than 53% — of staff turnover, they’re not paying staff enough. They’re just taking the money for themselves.” 

Commissioner Lynn Barr, director of the Barr-Campbell Family Foundation, said she thinks the high turnover rate shows Medicare might need to pay more to be able to provide the level of quality that’s needed. She also said she supports the idea of requiring nurses in the buildings at all times. 

“It’s a skilled nursing facility,” Barr said. “We need a nurse in the building.” 

What makes the issue particularly tricky is the murky ownership structure behind nursing homes, where often one entity owns the real estate and another the operations, said commissioner Tamara Konetzka, a University of Chicago professor. That makes it hard to tell how the public dollars are flowing, and even harder to make policy recommendations.

Commissioner Betty Rambur, interim dean and professor at the University of Rhode Island College of Nursing, said she’s never been in favor of nurse staffing ratios. She said she views it as a regulatory response to a market failure. Other components, like skill mix, are more important, Rambur said. 

Miller, of Johns Hopkins, said policies on direct care spending tend to be “massively manipulated” by the industry. He cited the Affordable Care Act rule requiring health insurers to spend a certain amount of their premium dollars on members’ medical care as an example. In that case, insurers are getting around it through vertical integration, or growing profit by buying up other lines of business. 

The better plan, Miller said, would be to develop a list of quality and outcome measures that are important and tie Medicare reimbursements to those. 

In the end, the group was not certain about how best to move forward. MedPAC chairman and Harvard Medical School professor Michael Chernew concluded the conversation by noting there are a lot of policies that affect Medicare patients, but that doesn’t mean Medicare is always best suited to solve those problems. 

“This might be a case where there are really good policies to put in place, but it might not be through the Medicare set of levers,” he said.