Key takeaways
- CMS final rule places unprecedented staffing burden on nursing facilities
- Waivers and exemptions available, but ability to obtain them unclear
- Compliance with facility assessment changes required by August 8, 2024
In a long-anticipated rule submitted for public inspection on April 22, 2024, the Centers for Medicare & Medicaid Services (CMS) finalized the minimum staffing standards for Medicare and Medicaid certified long-term care facilities.
The final rule is part of the administration’s focus on nursing home reform and comes a year after President Biden issued Executive Order No. 14095 requiring the U.S. Department of Health and Human Services (HHS) to consider actions that would reduce staffing turnover, which is associated with negative impacts on safety and quality of care.
In this client alert, we review the details of the rule and what Medicare and Medicaid certified long-term care facilities will need to do to comply with its provisions.
Introduction
This is the first major change to the requirements for long-term care facilities’ participation in Medicare and Medicaid involving staffing and facility assessments in more than eight years. In the preamble to the rule, CMS itself acknowledges that the changes in the rule will require “more than 79 percent of nursing facilities nationwide” to increase staffing. CMS also admits that the newly finalized provisions governing staffing requirements for registered nurses’ (RN) and nurse aides’ (NA) hour per resident day (HPRD) are more stringent than any currently existing state requirements.
- In sum, the final rule requires long-term care facilities to ensure the following, except if an applicable waiver or exception is granted:
- Implement new facility assessment provisions (42 C.F.R. § 483.71)
- Have an RN onsite 24 hours a day, 7 days a week and available to provide direct resident care (42 C.F.R. § 483.35(b)(1) and (c)(1))
- Have an overall minimum standard of 3.48 total nurse staff HPRD, which must include a minimum of 0.55 hours by RNs and 2.45 hours by NAs (42 C.F.R. § 483.35(b)(1)(i) and (ii))
Implementation and broad provisions of the rule
The rule, which is scheduled to be published in the Federal Register on May 10, 2024, was finalized with only a few meaningful changes from the text that was proposed in September 2023. The rule will take effect on June 21, 2024 and will be implemented on that date with some notable exceptions.
The facility assessment provisions will be implemented by August 8, 2024, 90 days after the rule is published in the Federal Register. CMS has begun the effort to change the forms that are required to report that information already in an information collection request notice that was placed in the Federal Register on April 16, 2024. That notice has a June 17, 2024 comment deadline, which sets it up to have changes to the collection requirements effective in time for the implementation date of the facility assessment provisions.
The remaining provisions that have later implementation dates involve the staffing requirements. The requirement to have an RN on site 24 hours a day, 7 days a week and available to provide direct resident care has an implementation date of May 11, 2026 for non-rural facilities and May 10, 2027 for rural facilities. Similarly, the specific HPRD requirements have an implementation date of May 10, 2027 for non-rural facilities and May 10, 2028 for rural facilities.
The rule continues the statutory waivers (with modifications to reflect the increased requirements) and hardship exemptions available for some facilities. However, it is not clear whether facilities will qualify for those waivers and what the process for reviewing and approving applications for those waivers and exemptions will look like.
The rule provides no additional funding to facilities for compliance. Moreover, there is a wide discrepancy between CMS’ cost estimates and industry cost estimates for compliance with the rule. This, as well as some of the other remaining open questions in the rule, could lead to litigation or legislation and could also be impacted by later sub-regulatory guidance.
Statutory authority for rule
CMS states that it received “a small number of comments” on the agency’s authority to promulgate these broad-sweeping requirements. CMS asserts that its authority is based on various provisions of the Social Security Act (SSA), in particular, subsections of sections 1819 and 1919 of the SSA, permitting CMS to issue regulations “relating to the health, safety, and well-being of residents as the Secretary may find necessary.” CMS also claims that these requirements will require facilities to provide services to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident.
CMS explicitly does not rely on the provisions of the SSA and implementing regulations that require a facility to provide licensed nursing services on a 24-hour basis and use the services of an RN at least 8 consecutive hours a day, 7 days a week. Those basic requirements – and the related waiver authorities – remain in place, while CMS claims instead to focus on the health and safety provisions of the SSA noted above for its authority for the final rule.
Three key mandates
The final rule centers on three key mandates that CMS imposes on facilities that wish to continue to participate in Medicare and Medicaid: (1) the staffing standard; (2) the 24/7 RN requirement; and (3) the facility assessment provisions.
The staffing standard
The staffing standard is slightly different from the standard that CMS proposed in September 2023. It includes an overall minimum standard of 3.48 total nurse staff HPRD. CMS identified this amount as an alternative in the proposed rule in September, and it is now finalized as the minimum standard. Within that 3.48 HPRD, a minimum of 0.55 hours must be delivered by RNs, and 2.45 hours must be provided by NAs. The remaining 0.48 hours can be provided by any combination of RNs, NAs, Licensed Practical Nurses (LPNs), or Licensed Vocational Nurses (LVNs). In the final rule, CMS seemingly acknowledges the important role of LPNs and LVNs in facility care, but instead of recognizing their services as licensed professional nursing hours, CMS simply includes their hours in the catch-all for the overall minimum standard and finalizes an increased standard.
HPRD is measured by dividing the number of hours worked by each type of staff on a given day by the total number of residents as calculated by CMS. This number is reached without regard for case mix at the facility because, as CMS claims, there is currently insufficient data to use case mix as a determining factor. According to CMS, these are the minimum standards for all facilities. If a facility has a case mix that tends toward residents with more acute needs, that facility will be expected and required to provide a higher level of care and thus will likely have to employ a greater number of RNs and NAs.
For staff other than RNs, CMS has different approaches based on the level of training required. NAs, under the staffing standard rule, include certified nurse aides (CNAs), aides in training, and medication aides or technicians. However, a nurse aide does not include anyone who furnishes services to residents only as paid feeding assistants as defined elsewhere in the regulations. Likewise, if an individual is a CNA but is performing a different function (e.g., as an activity director), their hours would not count toward the minimum standard.
The 24/7 RN requirement
The current facility staffing regulations require an RN to be onsite 8 consecutive hours a day, 7 days a week (§ 483.35(b)(1)). An existing statutory waiver for Medicaid Nursing Facilities (NFs) and Medicare Skilled Nursing Facilities (SNFs) – currently set out at 42 C.F.R. § 483.35(e) and (f) and to be redesignated as § 483.35(f) and (g) – permits the state (for NFs) and the secretary (for rural SNFs) to waive this requirement to provide the services of an RN for more than 40 hours a week, including the director of nursing (DON).
The new 24/7 RN requirement is just what it sounds like: it requires that a facility have an RN on site in every facility 24 hours a day, 7 days a week. The RN must be able to provide direct resident care. To qualify under this provision, the onsite RN can be that facility’s DON as long as that person is available to provide direct resident care. This requirement for both NFs and SNFs is an increase from the currently applicable 8 hours per day of RN attendance that is in both the statute and the current regulations.
The additional 112 hours of RN staffing time that is added by this rule can be waived in whole or in part either through the currently existing statutory waiver process or by a newly added hardship exemption provision. The statutory waiver process, described in the newly redesignated regulations at § 483,35(f) and § 483.35(g), permits a rural SNF or NF to waive all 112 additional hours of the RN staffing requirements as well as an additional 16 hours of the statutory minimum if they can show that they are unable to staff an RN on-site for more than 40 hours a week.
However, according to comments on the final rule, CMS has acknowledged that such a waiver is difficult for many facilities to obtain, and for SNFs is limited to those in rural areas. To that end, the new rule provides a hardship exemption that allows any facility to apply for up to 8 hours a day of relief from the new 24/7 requirement (i.e., 56 hours per week). We discuss this exemption process in more detail below.
Any facility that receives a waiver from the 24/7 RN requirement must still have an RN, nurse practitioner, physician assistant, or physician ready and on call to respond immediately to telephone calls from the facility.
Compliance with staffing standards
According to the final rule, compliance with the staffing requirements is judged through survey observations and payroll-based journal (PBJ) data. CMS had proposed in the September 2023 proposed rule to limit determinations of compliance with HPRD requirements to the most recent available quarter of PBJ system data submitted. However, the agency decided not to finalize the approach at that time.
Each of the minimum staffing requirements is evaluated separately, so compliance with one of the staffing requirements does not mean compliance with all of them. Additionally, CMS emphasizes that the requirements in the final rule are minimum floors, and the expectation is that facilities will exceed these minimum levels, with the amount of excess only determined by the acuity of resident needs at the facility.
CMS has also indicated that these minimum standards will be reevaluated over time, and the expectation is that they will eventually be increased.
Exemptions from minimum standards
As mentioned above, in addition to the statutory-based waivers that are currently available to facilities, under this rule, facilities may qualify for a hardship exemption from these new minimum staffing requirements. These exemptions are only available as hardship exemptions and have five criteria for a facility to qualify: (1) unavailable workforce, (2) good faith efforts to hire, (3) documentation of a financial commitment to staffing, (4) published notice of exemption status, and (5) individual notice of exemption status. A chart setting forth the available statutory waivers and regulatory exemptions is attached.
Unavailable workforce
The first criterion to apply for a regulatory hardship exemption is a showing that there is insufficient workforce available to meet the minimum staffing requirements. This is done by showing a nursing workforce per labor category that is a minimum of 20 percent below the national average for that applicable nurse staffing type, as calculated by CMS, using Bureau of Labor Statistics and Census Bureau data. It is unclear how often CMS will update this data. In response to public comments, CMS deleted a provision in the proposed rule that would have required the facility to be 20 miles from another facility as determined by CMS.
Good faith efforts to hire
A facility must also show that it engaged in a “good faith effort” to hire sufficient staff to meet the minimum staffing requirements. This includes showing that the facility has been unable to hire, despite diligent effort, including offering at least prevailing wages to recruit and retain appropriate staff.
While this standard seems rather subjective, CMS has indicated that it will look to the facility assessments as well as the facility’s documented hiring plan to measure the good faith effort. Additionally, CMS has indicated that the information will also be verified through job listings, documented job vacancies, and data on the average wages in the metropolitan statistical area where the facility is located.
Financial commitment to staffing
The requirement to document a financial commitment to staffing is asserted in the final rule with very little guidance as to what would qualify. CMS explicitly did not adopt a rule similar to what some states require, which would set a threshold percentage of revenue or operating spending to be spent on staffing.
CMS does not give much more information than to say: “We believe that the financial commitment criterion will lead facilities to evaluate their financial commitment to staffing while leading CMS to better understand facility investment in staffing and the implications of expanding the requirement by establishing a threshold, requiring additional documentation, or other modifications.” However, the agency does mention that possible spending thresholds will be considered during future rulemaking.
Disclosure and notice requirements
In the final rule, CMS added new disclosure requirements of exemption status. If a facility obtains a waiver under the rules, it must post a notice of its exemption status in a prominent place in the facility. Additionally, the facility must provide an individual notice of its exemption, including the degree to which it is not in compliance with the rule, both to future and current residents as well as to the Long-Term Care Ombudsman.
After a facility obtains a waiver, CMS will also post that exemption status on its Cost Compare website along with a note on the degree to which the facility is not in compliance.
Eligibility/process for a waiver
A facility will not be eligible for a waiver under the rules if it (i) has failed to submit PBJ data, (ii) is a Special Focus Facility, (iii) has been cited for widespread insufficient staffing with resultant resident actual harm or a pattern of insufficient staffing with resultant resident actual harm, as determined by CMS, or (iv) has been cited at the “immediate jeopardy” level of severity with respect to insufficient staffing within the 12 months preceding the survey during which the facility’s non-compliance is identified. This lack of eligibility will not impact the facility’s ability to obtain a waiver under the statute for all RN hours over 40 hours per week since this rule does not purport to eliminate or modify that waiver.
The process for obtaining a waiver or exemption is not clearly spelled out in the new rules. However, in the preamble, CMS makes it clear that a facility cannot request a special survey to determine its eligibility for a waiver. Instead, the waivers will be granted as part of the regular survey process, such as a standard recertification survey. (There is also an oblique reference to ”the survey during which the facility’s non-compliance is identified” in the hardship exemption.) According to CMS, and as reiterated in public statements following issuance of the rule, this is both to conserve state survey resources as well as to allow the surveyor to have a complete picture that will make them aware not just of the need for a waiver but also of any other deficiencies of the facility that could result in a denial of a waiver.
This process for obtaining a waiver or exemption strikes us as bad policy because a facility is operating even though it knows that it is not in compliance with the requirements for participation. Quarterly PBJ data may also indicate non-compliance. Furthermore, the facility may reasonably take the position that it cannot come into compliance with the staffing standards and is eligible for a waiver or hardship exemption, but it will not be able to have that status confirmed by the state survey agency until it has been operating that way for potentially a substantial amount of time and then cited for a non-compliance at the survey. This is one of many practical issues that should be addressed through sub-regulatory guidance.
The facility assessment requirement
The final rule requires facilities to include in their annual assessments statements that gauge their ability to sufficiently provide staff that meets the needs of their residents. CMS makes it very clear that while the minimum staffing standards presented in the final rule are a floor, they are not also a target amount. A facility needs to evaluate its current staffing needs based on resident population and the acuity of that population’s needs.
Remedies
The rule provides that enforcement actions may be taken against facilities that are not in substantial compliance with the federal conditions of participation. The remedies that may be imposed include, but are not limited to, the termination of a facility’s provider agreement, denial of payment for new admissions, and civil monetary penalties.
CMS indicated that it would provide more robust guidance on how compliance will be assessed as the implementation dates of the staffing requirements approach. The agency also noted that the proposed 2025 Skilled Nursing Facility Prospective Payment System rule includes some adjustments to civil monetary penalties that, if finalized, would provide CMS with additional enforcement flexibility, including issuing both per instance and per day civil money penalties from the same survey.
Preemption
CMS states that the final rule will only have preemptive effect where a state law only requires a minimum staffing floor below the level in the final rule. In that case, CMS argues, a facility that is in compliance with the federal standards will necessarily also be in compliance with the state standards. Additionally, CMS notes that it is not aware of any state that has a maximum staffing level prescribed by state law. However, the agency notes, if a state were to pass such a law and the maximum were below the standards set forth in the rule, the final rule would preempt that state law.
For states that have a higher minimum staffing level, CMS explicitly disclaims any preemptive effect that would allow a facility to bring its staffing levels down to the lower federal level.
Funding and workplace challenges
CMS has acknowledged that the final rule may create some funding and workforce challenges for facilities, and it claims to take steps to remedy those concerns. Among those steps are programs that CMS is planning to develop to urge more individuals to go into nursing careers. Specifically, CMS discusses a program of financial incentives, such as tuition reimbursement, that could help to influence an individual’s decision to go into a nursing profession.
CMS also points out that the implementation dates for the rule are staggered in such a way as to allow facilities to prepare and recruit needed staff. Additionally, according to CMS, there is the hardship exemption process in the rule that is potentially available to a facility that cannot comply with the rule. As noted, it is unclear in practice whether facilities will be able to meet what are, in many cases, subjective determinations of workforce challenges.
Impact on health system generally
The rule is expected by industry members to have a substantial impact on the health care system generally. The need to hire more staff could result in some nursing facilities being forced to limit admissions or unable to continue operations. That could, in turn, lead to difficulties for hospitals and other acute care facilities seeking placements post-discharge, and potentially post-acute care patients living in arrangements that have even less around-the-clock-care, which could result in higher levels of hospitalization and urgent care.
CMS is fairly dismissive of these concerns, saying instead that it expects facilities to comply with the requirements and again asserting that facilities with higher staffing levels will have better outcomes and less re-hospitalization of their residents.
State Medicaid agency reporting
In addition to all of the minimum staffing requirements, the final rule also contains a provision that requires a state Medicaid agency to report on the percentage of payments for Medicaid-covered services in both nursing facilities and intermediate care facilities for individuals with intellectual disabilities that are spent on compensation for direct care workers and support staff.
This provision will not be implemented until May 10, 2028, four years after the rest of the final rule takes effect.
Preparing for the rule
As noted above, facilities will have until August 8, 2024 before the facility assessment provisions take effect and then will have almost two years after that before any of the staffing provisions are implemented. However, that does not mean that facilities should wait to start the compliance process. This is even true if there is litigation that could result in even a temporary halt of the effectiveness of the final rule. In preparation for the August 8 implementation date, facilities should begin to assess current staffing levels and begin the process of recruiting staff where needed.
Facilities should also begin to look at their operations to determine whether they are eligible for any waivers or exemptions – either under the statute or the regulations. This should include considering whether any past survey findings could prevent them from claiming eligibility for a waiver.
In preparation for the documentation that will be requested for any waivers or exemptions, facilities should consider the paperwork that they keep on hand about staffing levels, staffing plans, or good faith efforts to recruit staff, and, if there is insufficient documentation of those processes, they should start to remedy those lacunae.
Finally, facilities should pay close attention to the sub-regulatory guidance coming from CMS. Throughout the final rule, CMS indicates that it will provide more guidance as it approaches the implementation dates. Often such guidance comes in the form of Frequently Asked Questions, guidance documents, and other publications that do not rise to the level of being published in the Federal Register.
To that end, and for any other compliance challenges, the authors of this client alert and the other health care lawyers at Reed Smith stand ready to help you navigate this new regulatory path. Do not hesitate to reach out to us.
In-depth 2024-090