Nursing home payment reform drives $700 million to improve staffing, quality of care

By Editor | April 13, 2022 |

By PETER HANCOCK | Capitol News Illinois

A bill that would inject more than $700 million annually into Medicaid-funded nursing homes to increase staffing levels and improve quality of care unanimously cleared the Illinois House on Thursday, one day after clearing the Senate.

It will head to Gov. JB Pritzker who praised its passage in a statement after the House vote.

Illinois has long been home to some of the most understaffed nursing homes in the country, a problem that was magnified during the COVID-19 pandemic when long-term care facilities became major centers of transmission.

The Illinois Department of Public Health estimates that nearly 8,000 nursing home residents and 100 staff members have died of the disease since the pandemic began. That’s roughly 24 percent of all the COVID-19-related deaths recorded in Illinois as of Wednesday.

Officials from the Department of Healthcare and Family Services, which administers Medicaid, have said much of that was due to understaffing and poor quality of care in Medicaid-funded facilities, especially in those that serve low-income residents and people of color, where residents are often housed together.

“Imagine ourselves in the year or two prior to COVID, and if we had known it was coming, whether we would have considered resident safety, room crowding, and staffing to have been urgent issues,” HFS Deputy Director Andy Allison told a legislative committee in October. “We lost – this is hard for me – thousands in our nursing homes. I don’t think there’s anyone in the country who would not at that point have said, this is urgent. And I think the point is nothing has changed, except that now we know just how bad it can be.”

Since around the time the pandemic first struck, HFS has been working on a new funding model that would reward nursing homes for increasing staff levels and provide additional money to raise wages for certified nursing assistants, the people who provide the most day-to-day direct care to residents.

That new system, known as a Patient Driven Payment Model, or PDPM, has been the subject of intense negotiations for the past two years between state agencies, senior citizen advocates and the nursing home industry.

But House Majority Leader Greg Harris, D-Chicago, announced Wednesday morning that an agreement had finally been reached, and it passed the Senate unanimously later that evening.

“It’s a big victory, and it will bring a lot more accountability to the long-term care industry,” Harris said during a Statehouse news conference.

Most of the funding for the plan, an estimated $515 million, would come from an increased bed tax the state levies on nursing facilities to generate money that is then used to draw down additional federal Medicaid matching funds.

Of that, $360 million would be used as incentive payments for nursing homes to increase their staffing levels up to or beyond certain target levels. Those targets are determined by what’s known as the Staff Time and Resource Intensity Verification, or STRIVE study of the federal Centers for Medicare and Medicaid Services.

Those incentive payments begin when a facility reaches 75 percent of its STRIVE target and increase incrementally with each full percentage point increase that a facility attains, up to a maximum of $38.68 per patient day.

Another $85 million would be used to subsidize annual wage hikes for CNAs based on their years of experience. Those would start with a $1.50 per-hour bump for those with one year of experience, increasing annually to a maximum of $6.50 per hour for those with at least six years of experience.

Another $70 million would be used to reward facilities that demonstrate improvement on certain quality measures.

The bill also calls for spending another $202 million in combined state and federal funds to raise the base per-day reimbursement rate the state pays nursing homes by $7, bringing it to $92.25 per resident day, plus another $4 per day for facilities serving an above-average percentage of Medicaid patients.

Additionally, the bill requires nursing facility owners to report annually the names of all individuals and organizations with an ownership interest in the facility, a change prompted by the growing number of facilities owned by private equity funds, a trend that some studies have suggested is linked to lower quality care.

One provision the nursing home industry negotiated into the bill is an 18-month phase-in period during which all facilities would be reimbursed as if they were at 85 percent of their STRIVE target.

The new payment system is spelled out in a Senate amendment to House Bill 246. It passed out of the Senate on Wednesday, 58-0, and the House on Thursday 113-0.

“For 45,000 vulnerable seniors in nursing homes across the state, the passage of HB 246 will mean improved care and accountability in the places they call home,” Pritzker said in a statement. “For the first time, increased funding for nursing homes will be tied to staffing levels at these facilities, ensuring new funds go directly to improving care for our seniors instead of profit for owners and allowing us to hold bad actors accountable. This legislation is the product of more than a year of hard work led by my Department of Healthcare and Family Services along with our partners in the General Assembly, stakeholders, and industry leaders. I applaud their work to protect our seniors and the leadership of Senator Gillespie and Representative Moeller to move this bill forward in the General Assembly.”

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government and distributed to more than 400 newspapers statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.