Health Reform WK-EDGE Nursing homes need major renovations to address problems revealed by COVID-19
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Wednesday, September 2, 2020

Nursing homes need major renovations to address problems revealed by COVID-19

By Robert B. Barnett Jr., J.D.

A new report suggests that COVID-19 has revealed longstanding problems in nursing homes, which will require an infusion of money to improve the system.

Realigning Medicare and Medicaid payments, increasing the number of on-site clinicians, establishing minimum nurse staffing standards, and encouraging resident-centered models of care are among the suggestions for addressing the current shortcomings in nursing home care, according to an issue brief from The Commonwealth Fund. Although the nursing home problems predated COVID-19, the pandemic has starkly revealed the system’s shortcomings. Representing 0.4 percent of the U.S. population, nursing home residents have accounted for 42 percent of the COVID-19 deaths.

Background. The issue brief identified home health care’s systemic problems as a broken payment model, low quality of care, ineffective regulation, and a lack of transparency.

Broken payment model. Nursing homes treat: (1) Medicare beneficiaries who stay for short periods to rehabilitate after surgery or illness and (2) Medicaid beneficiaries who are long-term residents. Because Medicare pays more generously than Medicaid, nursing homes need a sufficient number of Medicare beneficiaries to "cross-subsidize" the Medicaid residents. As a result, nursing homes in areas primarily serving Medicaid patients tend to have the poorest care, the lowest staffing levels, and the greatest likelihood of closing.

Solution. The issue brief suggests adjusting Medicaid rates by paying "a higher rate commensurate with the costs of delivering high-quality, long-term care to frail older adults." Because these higher payments may overextend the states, for their portion of the Medicaid payments, the issue brief raises the possibility of federalizing Medicaid nursing home payments.

Low quality of care. The broken payment model also impacts the quality of care provided at nursing homes. Nursing homes "do not typically invest in having clinicians on site, which means that sick residents often have to be transferred to the emergency department or hospital for treatment." Nursing homes also have difficulty attracting quality workers, who prefer better paying jobs at retail establishments and fast food restaurants.

Solution. The issue brief recommends a model of care that integrates medical care and social services for residents, including having more clinicians working on-site. Recommended models include the Medicare Advantage Institutional Special Needs Plan and nursing home-led accountable care organizations. The brief also recommends using wage floors and wage pass-throughs to require that a fixed share of Medicare and Medicaid reimbursement dollars find their way to the caregivers.

Ineffective regulation. The U.S.’s primary approach to addressing nursing home quality has been regulation. The Nursing Home Reform Act in 1987 and the Affordable Care Act in 2010, however, have been the two most recent regulatory efforts. Recent reports have discovered "substantial lapses in oversight, and enforcement processes across multiple states." The regulatory process is "often disconnected from what residents and their advocates say they want from nursing homes."

Solution. The issue brief suggests that the U.S. may need a national minimum staffing standard and increased efforts to recruit and retain staff in nursing homes. One regulatory option would be to tie nursing home regulation to quality improvement efforts. Resident-centered models have been shown to improve care, but they tend to exist only in wealthier areas. To expand resident-centered models to lower-income areas, Medicaid could pay higher rates for nursing home services and invest in retrofitting outdated facilities.

Lack of transparency. CMS produces the Nursing Home Compare website, but it has been criticized as inadequate.

Solution. The issue brief contends that Congress could require that the Nurse Home Compare website contain more useful information, including resident satisfaction scores, whether clinicians are present on-site, the availability of private rooms, and similar quality-of-care measures.

The one common thread in the issue brief’s recommendations is the need for an infusion of money to address "our historical underinvestment in nursing homes," an underinvestment that has been revealed by the tragic COVID-19 numbers. If the country is serious about addressing the problem, it is "going to take resources."

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