A new law in Illinois requires nursing homes to submit change of ownership plans that clearly delineate how the buyer will ensure consistent staffing throughout the transition.
Provider groups and investors around the country will be closely watching to see how the law will affect building operations, and if it helps maintain or improve quality, as envisioned by state officials.
It is the latest in a coast-to-coast trend of states adding new layers or players to the nursing home sales process. Those changes, which have largely increased financial information required from all parties involved in a purchase, have been said to draw out the length of transactions at a time when some nursing homes need quick saving.
The Centers for Medicare has also issued several changes to increase its oversight of and provide more public transparency during ownership changes. Sales have increased post-pandemic, at the same time the national spotlight remains focused on care quality.
A working paper often cited by CMS found that private equity ownership decreased hours of frontline nursing staffing by 3%, while a Health affairs paper found that in the two to three years after a real estate investment trusts took a stake in a nursing home, registered nurse staffing levels declined by as much as 6%.
But another, more recent study showed that nursing home ownership changes did not cause erosions in care quality.
In Illinois, the head of the state’s largest long-term care provider organization said the group remains in a wait-and-see mode as to how the new regulation will play out after helping negotiate it to a better form.
“There was tremendous pressure from the administration and [consumer] advocates on it, as well as upwards pressure from rank-and-file advocate legislators on their leadership to move this,” Matt Hartman, president and CEO of the Illinois Health Care Association, said in an email to McKnight’s Long-Term Care News last week. “We were in a position of having to try to negotiate to make it as amenable as possible for providers.”
Senate Bill 3115, which was signed into law Aug. 2, requires facility owners to submit to the state Department of Public Health a transition plan detailing staffing levels and how resident care will be maintained during the period after a sale or merger. The department has said that changes in ownership have taken place without a clear plan in place, according to a press release from Sen. Julie A. Morrison (D-Lake Forest), the bill’s lead author.
“Medical staff have been at dangerously low levels during past transitions,” Morrison said. “The responsibilities of making sure a nursing home facility is properly staffed and that residents are taken care of does not go away just because of a change in ownership.”
Hartman said the association eliminated several provisions that could have been harmful to facilities, including quadrupled fines. The association also negotiated for simplified care plans and clarification of liability on the part of either the original owner or the acquiring party.
He and colleagues also went a few rounds with legislators and advocates over the state’s use of high-risk designations, which were adopted in 2011 and allow surveyors to increase penalties. Those should be limited to instances in which there is a “great potential” for harm or harm that occurs to a resident, Hartman said. The new law has a stricter set of requirements for how that designation is to be used – something that patient advocacy groups and regulators keep trying to apply to a wide range of actions.
While the new regulations could delay sales, Hartman said he hopes the changes they negotiated into the law will ease any potential hang-ups.
“We believe that the more prescriptive language surrounding what is required of the transition plans will allow providers in these circumstances a quick learning curve as they adapt to the new requirement,” he said. “We are generally skeptical of new regulations that don’t have clear, quality resident improvements as an intended outcome, or some real-world indicators that an otherwise unaddressed issue would have negative impacts on care.”
Wisconsin nursing home providers will not see funding boost in $258m funding plan
By John Roszkowski
Most nursing home providers in Wisconsin will not see a funding increase as part of a $258 million plan to raise wages for home and community-based senior care providers in the state, although some skilled nursing organizations could receive additional money if they provide those services.
Gov. Tony Evers, D-Wisconsin, announced he was directing the Wisconsin Department of Health to use American Rescue Plan Act funds already designated for HCBS to create and fund a minimum fee schedule, effectively raising wages for direct care workers and providers serving older adults and individuals with disabilities in assisted living facilities and home based settings.
Wisconsin will join 20 other states that have a minimum fee schedule for HCBS providers, including neighboring states like Illinois, Iowa, Minnesota and Michigan.
The governor’s plan, which is scheduled to go into effect Oct. 1, would establish minimum amounts that managed care organizations (MCOs) must pay providers for certain adult long-term care services, such as adult family homes, community-based residential facilities, residential apartment complexes, supportive home care agencies and self-directed home care.
Rene Eastman, vice president of policy and finance for LeadingAge Wisconsin, said the minimum fee schedule is only for HCBS and would not directly benefit nursing-home providers, unless they also operate any assisted living services or supportive home services.
“It’s really for assisted living. It’s not for nursing homes,” he said.
Eastman noted that family MCOs have been required to fee-for-service rate for nursing homes for many years and she noted that the new money that is being provided through the American Rescue Act can only be used for home and community-based services.
“I don’t think nursing home providers are saying this money should have gone to nursing homes instead,” she said.
Linda Eastman, president and CEO of LeadingAge Wisconsin, said there is “no competition” between nursing homes and community-based providers for the additional funding.
“Thankfully, Wisconsin Medicaid’s cost-formula for reimbursement is based on a median facility cost,” Eastman said in a news release. “Fortunately, the legislature and Governor Evers invested in Nursing Homes in the last biennial budget with increased reimbursement rates.”
However, she acknowledged minimum staffing requirements at the state and federal levels are putting increased pressure on nursing home facilities to raise rates to recruit and retain staff.
“For Medicaid rates starting July 1, 2015, the target for direct-care nursing costs increased 7.6%, reflecting the fact that Wisconsin nursing homes paid higher nursing wages and invested more nursing hours per resident day on their 2023 cost reports than their 2022 cost reports,” she said. “We expect this trend to continue, and for the minimum staffing rule in particular to place increasing upward pressure on Medicaid rates.”
Meanwhile, Michael Pochowski, president and CEO of the Wisconsin Assisted Living Association, called the funding announcement a “lifeline” for many Wisconsin assisted living providers, saying that it will have “huge” effects on provider financial stability and quality care.
“While the funding is still lower than what providers experience in actual costs and wages, this additional funding is a major step in the right direction and will help with stemming the tide of providers dropping out of the Medicaid Family Care program or having to close facilities and programs due to financial losses and the challenge of hiring-quality staff,” Pochowski told McKnight’s Senior Living last week.
