DOH Releases Draft Regulations on Nursing Home Minimum Direct Care Spending and Minimum Staffing Hours
The Department of Health (DOH) has released draft regulations to implement laws enacted earlier in the year mandating that nursing homes maintain minimum spending levels on resident care and minimum levels of nursing hours per resident per day. LeadingAge NY advocated against the enactment of the legislation but was ultimately unsuccessful. The regulations will be considered by the Public Health and Health Planning Council (PHHPC) on Oct. 7th and will be published for comments prior to adoption.
LeadingAge NY submitted comments to the PHHPC and the Department providing a real-world context for the regulations, including a discussion of the inadequacy of Medicaid rates and the lack of available staff. In addition, we highlighted both fundamental and technical flaws in the statute and regulations. In particular, we pointed to the harmful effects of including capital reimbursement and other pass-through and non-resident care funds in the definition of “revenue” for purposes of calculating the minimum spending requirement. We also noted that the minimum hours statute and regulation ignores variations in resident acuity and need.
The following is a summary of the regulations:
Minimum Direct Care Spending Requirement
The regulation carries out the statutory mandate to require nursing homes to expend 70 percent of revenue on direct resident care and 40 percent on "resident-facing staffing." In addition, the statute and regulation cap any surplus of revenue over operating and non-operating expenses at no more than 5 percent of those expenses. These requirements are applicable to spending on and after Jan. 1, 2022. Excess revenue must be remitted by Nov. 1st of the following year, and any funding will be dedicated to the Nursing Home Quality Initiative (NHQI).
The regulations define "Revenue" as "total operating revenue from or on behalf of residents of the residential health care facility, government payers, or third-party payers, to pay for a resident's occupancy of the residential health care facility, resident care, and the operation of the residential health care facility” as reported on annual Medicaid cost reports. "The average increase in the capital portion of the Medicaid reimbursement rate from the prior 3 years” is excluded from revenue.
“Direct resident care” is defined to include most expenses reported in Non-Revenue Support, Ancillary, and Program Services categories on the Medicaid cost report other than administrative, fiscal, and capital-related costs. The language specifies that “administrative costs (other than nurse administration), capital costs, debt service, taxes (other than sales taxes or payroll taxes), capital depreciation, rent and leases, and fiscal services” are not counted as direct resident care spending.
"Resident-facing staffing costs" are defined to include those reported in Ancillary and Program Services categories of the Medicaid cost report (i.e., nursing, therapy, medical services).
For purposes of calculating the amount spent on direct resident care and resident-facing staffing, "contracted out" nursing expenditures are reduced by 15 percent. "Contracted out" is defined as "services provided by registered professional nurses, licensed practical nurses, or certified nurse aides who provide services in a residential health care facility through contractual or other employment agreement, whether such agreement is entered into by the individual practitioner or by an employment agency on behalf of the individual practitioner. Such agreement may be oral or in writing."
The legislation exempts Continuing Care Retirement Communities (CCRCs) and facilities authorized to primarily care for designated specialty populations such as children, people requiring behavioral interventions or neurodegenerative services, or individuals with HIV/AIDS. A facility serves "primarily" a specialty population if at least 51 percent of its certified beds are designated for people with the specialized needs. Facilities that serve other specialized populations may apply for a waiver.
In addition, DOH may waive the requirements on the basis of unexpected or exceptional circumstances. DOH may also agree to exclude certain revenues from, and include certain expenses in, the calculation, if the facility demonstrates that they were incurred due to a natural disaster or the revenue is extraordinary and non-recurring (e.g., legal settlements or insurance payments).
If a facility did not submit a 2019 residential health care facility cost report, it must provide the Department with data on the facility’s direct resident care and resident-facing staffing expenses, along with a written certification attesting that all data reported by the facility is complete and accurate. If the data is not submitted within a reasonable timeframe, DOH must use the facility's previous cost report data.
Minimum Nurse Staffing Hours
Beginning Jan. 1, 2022, the minimum nurse staffing regulation requires nursing homes to employ or retain, at a minimum, certified nurse aides, registered professional nurses, licensed practical nurses, or nurse aides in sufficient numbers to maintain the following daily staffing hours per resident:
- From Jan. 1st through Dec. 31, 2022, daily average staffing hours equal to 3.5 hours of care per resident per day by a certified nurse aide, registered professional nurse, licensed practical nurse, or nurse aide. Out of that 3.5 hours, no less than 2.2 hours of care per resident per day may be provided by a certified nurse aide or a nurse aide, and no less than 1.1 hours of care per resident per day shall be provided by a registered professional nurse or licensed practical nurse.
- Beginning Jan. 1, 2023 and thereafter, daily average staffing hours equal to 3.5 hours of care per resident per day by a certified nurse aide, registered professional nurse, or licensed practical nurse. Out of that 3.5 hours, no less than 2.2 hours of care per resident per day shall be provided by a certified nurse aide, and no less than 1.1 hours of care per resident per day shall be provided by a registered professional nurse or licensed practical nurse.
A nurse aide is an individual who is included in the nurse aide hour component of the Centers for Medicare and Medicaid Services (CMS) Payroll-Based Journal (PBJ) but has not yet been certified as a certified nurse aide (e.g., a nurse aide trainee or temporary nurse aide). A nurse aide does not include volunteers or those individuals who furnish services to residents only as feeding assistants. An individual cannot be counted as part of nursing staff while performing administrative services, as defined for purposes of the PBJ. Individuals who are attending training and are not available to perform their primary job duties cannot be counted.
Compliance with the minimum nursing staff requirements will be determined on a quarterly basis, as determined by the Department, by comparing the daily average of the number of hours provided per resident per day using the most recent data available from the PBJ and the facility’s average daily census on a daily basis.
The Department is required to impose a penalty of up to $2,000 per day for each day in a quarter that a facility fails to comply with the minimum nursing staff requirements, unless mitigating or aggravating factors exist. Although the staffing requirements take effect on Jan. 1, 2022, civil penalties cannot be imposed until April 1, 2022. The Department may reduce penalties, to an amount no lower than $300 per day in a quarter that a facility is non-compliant, if the Department determines that extraordinary circumstances faced the facility (e.g., a natural disaster; a national, state, or local emergency affected the facility; or the facility experienced a catastrophic event that caused physical damage to the facility or impaired the ability of facility personnel to access the facility; or that an acute labor supply shortage of nurse aides, certified nurse aides, licensed practical nurses, or registered nurses exists in the area in which the facility is located; or that a verifiable union dispute exists).
The Commissioner is required to issue a quarterly determination regarding the existence of an acute labor supply shortage of nurse aides, certified nurse aides, licensed practical nurses, or registered nurses in any Metropolitan or Nonmetropolitan Area of New York State. The fact that the facility is located in an area experiencing an acute labor supply shortage pursuant to this clause is not a mitigating factor unless the facility demonstrates reasonable attempts to procure sufficient staffing during the period of non-compliance and that it has taken steps to ensure resident health and safety notwithstanding any labor supply shortage, such as discontinuing admissions, closing units, or transferring residents to another appropriate facility.
The regulation also provides some information concerning the $64 million (State share) included in the budget for nursing homes. It directs the Department to determine which nursing homes are anticipated to be in compliance with minimum spending requirements and whether those homes must expend additional funds to comply with the minimum hours regulation. Those nursing homes that will be required to expend additional funds to comply with the minimum hours regulation will be eligible to receive from the Department additional funds to hire nursing staff necessary to achieve the minimum nursing staff requirements.
After consideration by the PHHPC, the regulations will be published in the State Register for comments prior to final adoption. LeadingAge NY will be submitting additional comments as part of the formal comment period. We welcome feedback from members to inform our comments.
Contact: Karen Lipson, klipson@leadingageny.org, 518-867-8838