On November 3rd, 2023, University of Pennsylvania Leonard Davis Institute of Health Economics (LDI) Executive Director Rachel M. Werner, MD, PhD submitted a public comment in response to a Request for Information (RFI) from the Centers for Medicare and Medicaid Services. This RFI sought comments on minimum staffing standards for long-term care facilities and Medicaid institutional payment transparency reporting. 

Werner notes that requiring transparent reporting of average wages, employment status for workers, and facility payment rates from both fee-for-service and managed care systems and, ultimately, setting minimum percentages of payments that should support staffing would advance visibility into payment policy and improve the quality of care for Medicaid beneficiaries.

Views expressed by the researchers are their own and do not necessarily represent those of the University of Pennsylvania Health System (Penn Medicine) or the University of Pennsylvania.

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Rachel M. Werner, MD, PhD
Executive Director, Leonard Davis Institute of Health Economics
Robert D. Eilers Professor of Health Care Management and Economics
Professor of Medicine
University of Pennsylvania

November 3, 2022

Via Electronic Submission

Centers for Medicare and Medicaid Services
7500 Security Boulevard
Baltimore, MD 21244

RE: CMS–3442–P

Medicare and Medicaid Programs; Minimum Staffing Standards for Long-Term Care Facilities and Medicaid Institutional Payment Transparency Reporting

Dear Madam or Sir,

Thank you for the opportunity to comment on proposed rule CMS–3442–P, “Medicare and Medicaid Programs; Minimum Staffing Standards for Long-Term Care Facilities and Medicaid Institutional Payment Transparency Reporting.”

I am Executive Director of the Leonard Davis Institute of Health Economics and Professor of Medicine at the University of Pennsylvania Perelman School of Medicine as well as the Robert D. Eilers Professor of Health Care Management and Economics at the Wharton School and a physician at the Philadelphia VA. My research examines the effects of health care policies on health care delivery, using methods designed to draw causal inference from observational data and I am a national expert in nursing home quality of care. I am an elected member of the National Academy of Medicine and recently served on the National Academies’ Committee on
the Quality of Care in Nursing Homes which produced the 2022 report The National Imperative to Improve Nursing Home Quality: Honoring Our Commitment to Residents, Families, and Staff.

Summary

As a researcher of long-term care quality and the relationship of payment practices to high quality patient care I support the proposals in this NPRM to set minimum standards for staffing at long-term care facilities receiving Medicaid payment and to improve transparency related to Medicaid payments to nursing homes and their relationship to direct care and support staff at these facilities. My comments here are directed at further strengthening the reporting requirements, to best achieve CMS’ statutory responsibility for ensuring safe and quality care in long-term care facilities. In sum, in addition to the important elements proposed in the NPRM,
requiring transparent reporting of average wages, employment status for workers, facility payment rates from both fee-for-service and managed care systems and, ultimately, setting minimum percentages of payments that should support staffing would advance visibility into payment policy and improve the quality of care for Medicaid beneficiaries.

§ 442.43 (a) Payment Transparency Reporting Definitions Should be Written to Prevent Gaming

The proposed transparency reporting is an important improvement in the availability of Medicaid payment data and will advance understanding of the institutional care workforce and help improve access to high quality care for Medicaid beneficiaries. The rule proposes requiring annual reporting by States at the delivery system level and by facility. This frequency and level of detail appropriately balances the need for actionable information with administrative burden.

The definition of compensation should be written to prevent gaming by nursing home owning companies that contract directly with long-term care institutions.¹ The definition should ensure that when there are related-party transactions–for example, the nursing facility contracting with a staffing agency also owned by that nursing home–that only payments received by the direct care or support workers count as compensation. For example, the definition of “compensation” and/or “benefits” could clarify that it excludes any payment that is not directly received by the worker or excludes any payment that is retained by a related party or contracted agency.

§ 442.43 (b) Additional Reporting Requirements Would Advance Understanding of NF Payment Practices

Base and Supplemental Payments Should be Reported Separately

The rule proposes reporting of the proportion of all Medicaid payments that are spent on compensation for direct care workers and support staff but seeks feedback on whether there is value in separate reporting of the share of payment spent on the base payment and the share of the aggregate payment (base + supplemental payment). Separate reporting would help advance the goals of the regulation and improve visibility into States’ statutory obligation to make Medicaid payments that are sufficient to enlist enough providers so that high-quality LTSS (Long-term Services and Supports) are available to the beneficiaries who want and require such care. The separate roles of the base payment and supplemental payments are important to understanding how Medicaid payments support nursing facility staffing.

All Nursing Facilities Receiving Medicaid Payments Should be Included in Reporting

The NPRM requires all facilities receiving Medicaid payment to be subject to the reporting requirements. This is the appropriate approach to support robust transparency. Exclusion of providers that are, for example, below a defined threshold of Medicaid beneficiaries served or payment received could disincentivize providers from providing care to Medicaid beneficiaries to avoid reporting requirements or create other unintended consequences.

Reporting Should Include Median Hourly Wage

The transparency reporting would be strengthened by further requiring States to report on median hourly wage for direct care workers and median hourly wage for support staff. Reporting median wage will support improved public transparency within a state and support cross-state comparisons. Additionally, reporting on median wage by part- and full-time status and contracted vs. employee status would allow policymakers to better understand the relationships between Medicaid payment, provider employment practices, and quality of care.

Reporting Should Include Medicaid Payment Rates

The purpose of this section of the proposed regulation is to inform efforts to address the link between sufficiency, consistent with States’ statutory obligation under section 1902(a)(30)(A), of the payments being received by the institutional direct care and support staff workforce and access to and, ultimately, the quality of services received by Medicaid beneficiaries. This goal would be advanced by further requiring States to make publicly available information about the underlying fee-for-service payment rates for nursing facility and ICF/ IID services. The workforce data required in the NPRM would be most meaningful if it can be reviewed in conjunction with average nursing facility and ICF/IID FFS per diem payments by provider and also rolled up into a statewide average, showing base and supplemental rates separately for both. Additionally, it would be best to also report average payment rates within managed care delivery systems, perhaps derived from rate setting data that plans already provide to States. The addition of public reporting of nursing home Medicaid payment rates would support cross-state and national analysis, advancing the public and policymakers’ understanding of the relationship of Medicaid nursing home payments, staff compensation and quality of care.²

CMS Should Set a Minimum Share of Payments for Compensation for Direct Care and Support Staff

The transparency reporting required in the NPRM will advance understanding of the relationship between Medicaid payment, staff compensation and, ultimately, quality of care, but given the market for care in nursing homes and ICF/IIDs, transparency and market incentives are not strong enough to ensure adequate payment for long-term care workers. Accordingly, CMS should conduct further rulemaking to set a minimum share of payments that must allocated to compensation for direct care workers and support staff. Decades of research about nursing home finances, operations, and ownership have demonstrated that such a requirement is necessary to ensure that Medicaid payment rates and methodologies are economic and efficient and consistent with meaningful beneficiary access to safe, high-quality care, or otherwise necessary for the proper and efficient operation of the State plan.³

§ 442.43(d) States Should Be Required to Make Reported Data Accessible

In order to further CMS’ and States’ statutory responsibility for oversight of the long-term care services received by Medicaid beneficiaries, the required data should be presented on a single website and in a downloadable format that supports use of the data, to support analysis by the public, researchers and other interested parties in advancing understanding of the relationship between Medicaid payment, facility staffing and high quality patient care within and across states.⁴

§ 442.43(f) Implementation of the Reporting Requirements Should Be Completed in Two Years

The current proposal at § 442.43(f) to provide States with 4 years to implement these requirements in FFS delivery systems following the effective date of the final rule is unnecessarily long. Balancing the importance of this issue and the magnitude of the regulatory and other changes States and long-term care providers will need to make to comply with the reporting, it is reasonable to expect that States and providers should be able to comply within two years of the effective date of the final rule.

Thank you again for the opportunity to submit these comments. I can be reached at rwerner@upenn.edu if you have questions.

Sincerely,

Rachel M. Werner, MD, PhD

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References

1. Harrington, C., L. Ross, and T. Kang. 2015. Hidden owners, hidden profits, and poor nursing home care: A case study. International Journal of Health Services 45(4):779–800. https://journals.sagepub.com/doi/10.1177/0020731415594772. See also Rau, J. 2018b. Care suffers as more nursing homes feed money into corporate webs. The New York Times, January 2. https://www.nytimes.com/2018/01/02/business/nursing-homescarecorporate.html
2. Rachel M. Werner, R. Tamara Konetzka, “Reimagining Financing and Payment of Long-Term Care,” Journal of the American Medical Directors Association, Volume 23, Issue 2, 2022, Pages 220-224, https://www.sciencedirect.com/science/article/pii/S1525861021010173?via%3Dihub
3. Ibid.
4. Tamara Konetzka R, Yan K, Werner RM. Two Decades of Nursing Home Compare: What Have We Learned? Medical Care Research and Review. 2021;78(4):295-310. doi:10.1177/1077558720931652

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