Minimum Staffing Rule Will Squeeze Nursing Home Margins

New minimum staffing requirements for nursing homes will squeeze margins for operators already dealing with rising costs and a nursing shortage as occupancy levels have recovered during the past two years.

After eight months of review, the Biden Administration on Monday published its final rule governing staffing at long-term care facilities, requiring that nursing homes provide at least 3.48 hours of care per resident per day.

The standard also requires that at least 0.55 hours of care must come from registered nurses and requires nursing homes to have an RN onsite and on duty at all times. The new minimum staffing rule is the first update of the care standard since 1987.

The final rule is actually tougher than the three-hours-per-day standard the Centers for Medicare and Medicaid Services (CMS) proposed in September, when the federal agency estimated that about three-quarters of nursing homes in the U.S. would have to increase staffing in order to meet that standard.

When it issued the new rule this week, CMS estimated that 79% of nursing homes will have to increase staffing. The cost to do so will range from $1.5 billion to $6.8 billion, CMS estimated.

The final rule will be phased in, with rural facilities getting up to five years to comply. Non-rural facilities will be required to meet the hourly care standard and 24/7 RN requirement within two years, and to comply with 0.55 RN threshold within three years after the rule’s publication date, Healthcare Dive reported.

Mark Parkinson, CEO of the American Health Care Association (AHCA), declared in a statement Monday that it is “unconscionable” to finalize the new rule in the middle of a shortage of caregivers.

“This unfunded mandate doesn’t magically solve the nursing crisis,” Parkinson said.

At the end of 2022, the Biden Administration said it would revisit a 2001 proposal from the CMS to require that nursing homes deliver 4.1 hours of nursing care to every resident every day, the equivalent of one nurse for every seven residents on day and evening shifts.

Administration officials said a new standard was needed because inadequate staffing at nursing homes contributed to the staggering death rate from COVID-19 at long-term care facilities at the beginning of the pandemic.

The AHCA estimated that a 4.1-hour rule would have added more than $11 billion to the cost of operating the nation’s 15,500 nursing homes and required an additional 191,000 nurses and nurse aides. AHCA estimated that up to 450,000 nursing home residents could be at risk of displacement if skilled nursing facilities are unable to scale up their staffing.