Is Staffing the Key to New Dollars?

"We will provide adequate staffing if you give us the money" could become the new industry argument for more Medicare and Medicaid dollars--a welcome option, since Medicare problems caused by the hated 1997 Balanced Budget Act (BBA) have been painfully obvious for the past three years. In recent weeks lawmakers from both sides of the political aisle, from Senator Charles Grassley (R-IA) to Congressman Henry Waxman (D-CA), have suggested tying additional reimbursement to hiring of staff to deliver better resident care. Of course, the question will always remain: Are sufficient personnel available?

Not to be "outstaffed" by Congress, President Clinton got into the act, and in the process reversed his earlier emphasis on more frequent inspections and stiffer civil money penalties.

In his weekly radio address to the nation on September 16, broadcast from The Washington Home, a nonprofit facility in the nation's capital, Clinton launched a new program. "While the majority of nursing homes today provide excellent care, too many of our seniors and Americans with disabilities in homes, in too many of those homes, are not getting the proper attention they deserve," Clinton said. He added, "According to current research, the number one culprit is chronic understaffing. When there are too few caregivers for the number of patients, the quality of care goes down."

In the final months of his presidency, obviously not winding down on the long-term care issue, Clinton unveiled the features of his plan--legislation he will propose to Congress that would:

* Create $1 billion in competitive grants over five years to boost staffing levels. States applying for funds would be required to develop, through an open public process, a proposal to enhance staff recruitment and retention efforts; establish career ladders for certified nursing assistants (CNAs); provide increased training for staff; or conduct other staffing initiatives to ensure improved patient outcomes as approved by the Secretary of Health and Human Services. States could also use a portion of the funds to reward nursing facilities with exemplary quality-of-care records.

* Impose immediate penalties on nursing facilities placing residents at risk and reinvest these funds in the new grant program.

Also, to enhance consumer awareness, Clinton would require facilities to provide the Health Care Financing Administration (HCFA) with detailed information on their current staffing levels, including the total number of hours; coverage levels per shift; identification of staff (as CNAs, LPNs or RNs); and the average wage rate for each class of employees. This information would be posted for the public to review in individual facilities, as well as on HCFA's Nursing Home Compare Web site at www.Medicare.gov/NHCompare/home.asp.

Clinton directed HCFA to complete its comprehensive study on staffing ratios within 12 months and develop and publish federal regulations establishing minimum staffing levels no later than September 1, 2002. As part of this process, HCFA will concurrently evaluate whether any changes in federal reimbursement are necessary to implement the new staffing standards established by the report.

Although at loggerheads with the Clinton administration over its July 1998 Nursing Home Initiative, which emphasized enforcement, the industry reacted to the president's newest initiative with guarded optimism. Said American Health Care Association (AHCA) Chief Operating Officer Rick Abrams, "We believe that achieving optimal staffing in America's nursing homes is one of the most important healthcare challenges facing America." In light of AHCA's new staffing proposal in August, Abrams said, "We applaud the Clinton administration for its proposal that advances the process of meeting this challenge." The heart of the AHCA proposal urges that Medicare and Medicaid "be fully funded to give the long-term care profession the resources to attract and keep qualified people."

The American Association of Homes and Services for the Aging (AAHSA), of course, couldn't be happier that Clinton chose one of its member's facilities as the place from which to make his radio address. AAHSA Board Chair Mary Alice Ryan said, "Recent Medicare cuts, low Medicaid payments and today's tight job market make it difficult for nursing homes to find qualified staff.... AAHSA appreciates the president's recognition that nursing homes doing a good job should be rewarded. We should ensure that those providers who have earned it receive the resources they need to continue to set the standard for quality care to our nation's elderly."

Leap-frogging HCFA on the staffing issue, Clinton's plan came as a surprise. HCFA Administrator Nancy-Ann DeParle had a wait-and-see attitude on staff mandates when she testified at a July 27 Senate Aging Committee hearing that HCFA awaits completion of a government-funded study, perhaps in a year, to "determine the costs and feasibility of implementing minimum staffing requirements. However, there's obvious wiggle room in Clinton's plan. The deadline he set for publishing minimum staffing 1evels is nearly two years away, well beyond the end of his term of office in January. Thus, his successor and the nation's governors for Medicaid will decide if a mandate is feasible.

More New Money Proposed for Medicare

More money would be pumped into the Medicare system under the Skilled Nursing Facility Care Act of 2000 (S3050) introduced by Senators Orrin Hatch (R-UT), Judiciary Committee chairman, and Pete Domenici (R-NM), Budget Committee chairman. As this column went to press, the bill was among measures pending to correct the effects of the BBA--effects that both the senators and the nursing home industry insist were not fully addressed by the 1999 Balanced Budget Refinement Act (BBRA) with its increases in Medicare payments.

Actually, the bill revisits somewhat the idea that HCFA has underestimated the market basket index. In August 1999, the two lawmakers had urged an upward adjustment as part of another bill that included the BBRA RUG increases.

Earlier, President Clinton had decided that the BBA went too far, proposing as part of his fiscal 2001 budget that nursing homes be given the full market basket update for 2001. They were scheduled under the law to receive a 2.8% market basket minus one. The Hatch/Domenici bill suggests that even the full update would be insufficient, calling for HCFA to make necessary adjustments in the SNF market basket index to better account for annual cost increases in providing skilled nursing care to medically complex patients. Also, since HCFA's review and adjustments as provided under the bill would not be immediate, the legislation would increase the inflation adjustment by 4% in each of fiscal years 2001 and 2002.

Despite the fact that the congressional General Accounting Office (GAO) has continued its "no need to worry" mantra, Hatch, in introducing his bill, noted that 7 of the 93 nursing homes in Utah are operated by Vencor and have filed for Chapter 11 protection. He said, "Clearly, we need to be concerned about the prospect of these nursing homes going out of business, and the consequences that such action would have on all residents--no matter who pays the bill." Added Domenici, "In my home state of New Mexico, the number is nothing short of alarming. Nearly 50% of the nursing facilities are in bankruptcy."

While the GAO might say that bankruptcies aren't a problem nationally, in certain areas of the country, some very powerful members of Congress would disagree.