Maintaining staff is the ultimate goal in the evolution of the change of ownership of a nursing home

A new law in Illinois requires nursing homes to submit ownership change plans that clearly outline how the buyer will ensure consistent staffing during the transition.

Supplier and investor groups across the country will be watching closely to see how the law will affect construction operations and whether it helps maintain or improve quality, as state officials envision.

It’s the latest example of a trend sweeping from coast to coast as states add new layers or players to the nursing home sales process. Those changes, which have greatly increased the financial disclosures required of all parties involved in a purchase, are said to be lengthening the length of transactions at a time when some nursing homes need a quick bailout.

The Centers for Medicare Services has also issued several changes to increase its oversight and provide more public transparency during ownership changes. Sales have surged in the aftermath of the pandemic, while national attention remains focused on quality of care.

An oft-cited CMS working paper found that private equity ownership reduced frontline nursing hours by 3%, while a Health Affairs paper found that in the two to three years after a real estate investment trust acquired a stake in a nursing home, registered nurse staffing levels declined by as much as 6%.

But another, more recent study showed that changes in nursing home ownership did not cause erosions in the quality of care.

In Illinois, the head of the state’s largest long-term care provider organization said the group remains in wait-and-see mode to see how the new regulation will play out after helping negotiate it into better shape.

“There was tremendous pressure from the administration and (consumer) advocates, as well as upward pressure from grassroots advocacy legislators on their leaders to move forward with this,” Matt Hartman, president and CEO of the Illinois Health Care Association, said in an email to McKnight Long-Term Care News last week. “We were in a position where we had to try to negotiate to make it as convenient as possible for the suppliers.”

Senate Bill 3115, which was signed into law on Aug. 2, requires facility owners to submit to the state Department of Public Health a transition plan detailing staffing levels and how resident care will be maintained during the period following a sale or merger. The department has said ownership changes have occurred without a clear plan, according to a news release from Sen. Julie A. Morrison (D-Lake Forest), the bill’s lead author.

“Medical staffing has been at dangerously low levels during previous transitions,” Morrison said. “The responsibilities of making sure a nursing facility is adequately staffed and that residents are cared for don’t go away just because of a change in ownership.”

Hartman said the association eliminated several provisions that could have been detrimental to the facilities, including quadrupling fines. The association also negotiated simplified care plans and a clarification of liability for both the original owner and the acquiring party.

He and his colleagues also sparred with lawmakers and advocates over the state’s use of high-risk designations, which were adopted in 2011 and allow inspectors to increase penalties. These should be limited to cases where there is a “high potential” for harm or damage to occur to a resident, Hartman said. The new law has a stricter set of requirements for how that designation should be used — something that patient advocacy groups and regulators are still trying to apply to a broader range of actions.

While the new regulations could slow sales, Hartman said he hopes the changes they negotiated in the law will ease any potential hurdles.

“We believe more prescriptive language around what is required in transition plans will allow providers in these circumstances a rapid learning curve as they adapt to the new requirement,” she said. “In general, we are skeptical of new regulations that do not have as their intended outcome clear, quality improvements for residents, or some real-world indicators that an otherwise unaddressed issue would have negative impacts on care.”

Wisconsin nursing home providers will not see a funding increase in the $258 million funding plan

By John Roszkowski

Most nursing home providers in Wisconsin will not see a funding increase as part of a $258 million plan to boost wages for home- and community-based senior care providers in the state, although some skilled nursing organizations could receive additional money if they provide those services.

Gov. Tony Evers, D-Wis., announced that he was directing the Wisconsin Department of Health to use American Rescue Plan Act funds already designated for HCBS to create and fund a minimum fee scale, effectively raising wages for direct care workers and providers who serve older adults and people with disabilities in assisted living facilities and home settings.

Wisconsin will join 20 other states that have a minimum fee for HCBS providers, including neighboring states such as Illinois, Iowa, Minnesota and Michigan.

The governor’s plan, which takes effect Oct. 1, would set minimum amounts that managed care organizations (MCOs) must pay providers for certain adult long-term care services, such as adult family homes, community-based residential facilities, residential apartment complexes, supportive home care agencies, and self-directed home care.

Rene Eastman, vice president of policy and finance for LeadingAge Wisconsin, said the minimum rate is only for HCBS and would not directly benefit nursing home providers unless they also operate assisted living or supportive home services.

“It’s really for nursing homes, not for assisted living facilities,” he said.

Eastman noted that family-run MCOs have been required to charge per service in nursing homes for many years and noted that the new money being provided through the American Rescue Act can only be used for home and community-based services.

“I don’t think nursing home providers are saying this money should have gone to nursing homes,” he said.

Linda Eastman, president and CEO of LeadingAge Wisconsin, said there is “no competition” between nursing homes and community providers for additional funding.

“Fortunately, Wisconsin’s Medicaid reimbursement formula is based on the median cost of facilities,” Eastman said in a news release. “Fortunately, the legislature and Governor Evers invested in nursing homes in the last biennial budget with higher reimbursement rates.”

However, she acknowledged that minimum staffing requirements at the state and federal levels are putting increased pressure on nursing homes to raise fees to recruit and retain staff.

“For Medicaid rates as of July 1, 2015, the direct care nursing cost target increased by 7.6%, reflecting the fact that Wisconsin nursing homes paid higher wages to nurses and invested more nursing hours per resident day in their 2023 cost reports than in their 2022 cost reports,” she said. “We expect this trend to continue and for the minimum staffing rule in particular to put increasing upward pressure on Medicaid rates.”

Meanwhile, Michael Pochowski, president and CEO of the Wisconsin Assisted Living Association, called the funding announcement a “lifeline” for many Wisconsin assisted living providers and said it will have “enormous” effects on provider financial stability and quality of care.

“While funding is still below what providers are experiencing in actual costs and wages, this additional funding is an important step in the right direction and will help stem the tide of providers leaving the Medicaid Family Care program or having to close facilities and programs due to financial losses and the challenge of recruiting quality staff,” Pochowski said. McKnight Senior Living Residence last week.