Friday Feature: Housekeeping
TGIF! Time for a bit of housekeeping. This site’s first post was on March 27, 2009. Today, there are nearly 500 posts on the site, separate from other stuff like presentations, downloads, etc. Across the fifteen years I have worked on the site, posting, etc., I can’t even begin to measure how many views or hits the site has had. Suffice to say, lots. Readers and followers come from all over the world, as far away as China and Japan, and as close to home as Canada. Not always sure what brings folks here from those far places, but I hope they find a nugget or two worthy of their time (and virtual travel).
I had some fun today, for just a few minutes, looking back at the posts from the early days. Fascinating how some things have changed yet, lots hasn’t. Topically, I am covering a lot of the same issues around Medicare, Medicaid, economics, and government policy. The numbers today are bigger with respect to the economics and the policy a bit more contrived but still, healthcare remains totally fascinating to me. I doubt I will ever run short of subject matter.
So, for the next few days to perhaps as long as a week, I will not be posting on the site as it is time to clean out and reorganize this “closet”. It may actually go down for a day or two and when it pops back-up, it may look a bit different and have some new stuff, but the content will be there. I may introduce an archive for the older stuff…who knows. After fifteen years and nearly 500 articles/posts, the time has come to clean-up and refresh and maybe reinvigorate, Reg’s Blog! TGIF and SYOTOS (see you on the other side).
FTC Bans Employment Non-Compete Provisions – Healthcare Implications Aplenty
On Tuesday, the Federal Trade Commission issued a final rule effectively, banning non-compete agreements, provisions, etc. for employees, including executives. The final rule contains separate provisions defining unfair methods of competition for the two subcategories of workers.
- Specifically, the final rule provides that, with respect to a worker
other than a senior executive, it is an unfair method of competition for a person to enter into or
attempt to enter into a non-compete clause; to enforce or attempt to enforce a non-compete
clause; or to represent that the worker is subject to a non-compete clause. - The final rule provides that, with respect to a senior executive, it is an unfair method of
competition for a person to enter into or attempt to enter into a non-compete clause; to enforce or
attempt to enforce a non-compete clause entered into after the effective date; or to represent that
the senior executive is subject to a non-compete clause, where the non-compete clause was
entered into after the effective date.9
The full text of the Final Rule is available here: noncompete-rule
Under the rule, existing non-compete provisions (contracts, terms, etc.) for most workers will not be enforceable. Non-competes for senior executives, employees in policy-making positions, earning more than $151,164 per year, can remain in-force. Employers are barred from entering into or trying to enforce any new non-competes, going forward, even for senior executives. The rule is silent however, on non-disclosure provisions, non-solicitation provisions, and other security type, anti-competitive provisions.
The concern for employers as expressed by groups such as the U.S. Chamber of Commerce is that businesses invest time and capital in developing and training staff and the non-compete provides protections against loss of the investment to other competing businesses and industries. An example of the business argument is here via the Business Roundtable: https://www.businessroundtable.org/business-roundtable-opposes-ftcs-noncompete-ban-files-lawsuit-challenging-final-rule
From a healthcare perspective, non-compete agreements and provisions are common, especially among certain classes of employees or for certain businesses such as staffing agencies and contractors (therapy, food services, environmental services). Physician groups overwhelmingly use non-compete provisions, especially those that contract directly with hospitals or other providers (think hospitalists, E.D. groups, radiology groups). Therapy contractors use non-compete provisions extensively. Frankly, I have not seen a therapy contractor that did not have non-competes as part of their business model for their therapists, along with non-solicitation terms for the provider.
Staffing agencies that “hire or employ” nurses, nursing assistants and then in turn, rent the staff or provide the staff for open positions at hospitals, nursing homes, hospices, home health agencies, etc., use non-compete provisions as part of employment. Note, not all agencies do as some serve as clearing houses rather than employers – think gig workers.
The reactions to the rule are many, pro and con. Per the California Medical Association, “Non-competes are a widespread and often exploitative practice imposing contractual conditions that prevent employees from taking a new job or starting a new business. Non-competes often force workers to either stay in a job they want to leave or bear other significant harms and costs, such as being forced to switch to a lower-paying field, relocate, or leave the workforce altogether. An estimated 30 million workers—nearly one in five Americans—are subject to a noncompete”. Between 37% and 45% of physicians are affected by non-competes, according to the American Medical Association.
The FTC claims that the rule will have a positive impact on healthcare costs ($194 billion), though their research as cited, is far from definitive, focusing only on physician level employment. The claim is that non-competes force consolidation and then in turn, drive-up healthcare prices. Most healthcare cost growth today, however, is demand driven (older adults, more chronic disease), heavily influenced by labor scarcity. Non-competes, in existence or not, will not influence the supply of nurses, CNAs, therapists, pharmacists, etc. The FTC cited research is here: https://www.aeaweb.org/articles?id=10.1257/app.20180078
Yesterday, the day after the rule was issued the U.S. Chamber 0f Commerce filed a suite in Tyler, TX, joined by The Business Roundtable, the Texas Association of Business and the Longview Chamber of Commerce. Another suit was filed by Ryan LLC, a global tax services company, in the Northern District of Texas, also challenging the rule and the FTC’s authority to issue the rule. The Business Roundtable includes chief executives from long-term care pharmacy Omnicare parent CVS Health, the Carlyle Group, CBRE Group and several pharmaceutical companies and consultancies. The Chamber suit is available here: Complaint-Chamber-v.-FTC-E.D.-Tex
I will continue to track this topic as it proceeds via litigation and possible, Congressional intervention. The implications for the healthcare industry are plentiful.
Wednesday Feature: Massachusetts Nursing Home Residents Set to Transition to Community Living with $1 Billion Settlement
Happy Hump Day! Last week, the Lieutenant Governor of Massachusetts, Kim Driscoll, announced the settlement of a class action lawsuit filed against the state by six disabled nursing home residents. The suit was filed in 2022 alleging that the state underfunded community-based care options, trapping them in nursing homes despite their wishes to return to community settings, such as Assisted Living. The settlement text is here: Marsters Settlement Agreement
There is a touch of irony to this suit that I caught concurrent with my post on Monday regarding the Medicaid Access final rule. The rule, aside from desiring to assure HCBS payments are primarily spent on direct caregivers (80%), is part of an initiative to expand Medicaid HCBS/waiver slots. Typically, as many as 20% of slots are used by older adults and/or disabled individuals to purchase Assisted Living services vs. nursing home care. This case’s core is the argument that if the state spent more money directly on HCBS programming, certain eligible residents would not be forced to reside in nursing homes.
The terms of the settlement call for the state invest $1 billion over the next eight years in housing programs to help certain nursing home residents (Medicaid) move into community-based care. This effort also creates rental vouchers for persons with disabilities, as well as for the development of new care settings (non-institutional). Residents will be able to transition to a setting (Assisted Living) with 24/7 supervision and support, to their own home or with a family member at the family member’s home, or a public housing setting, with home health/home care supports provided. What is not clear at this point, is how many existing nursing home residents, applicable to the class, could actually transition to Assisted Living.
The Massachusetts Office of Health and Human Services spends more than $5.8 billion annually through MassHealth and HCBS waivers on long-term services and supports, including personal care, home health and adult day programs (per the State).
A representative from the Massachusetts Senior Care Association, stated that the provisions in the agreement likely would not lead to a significant flow of nursing home residents into assisted living residences. For that kind of movement to occur, Massachusetts would need to join other states that have extended the Frail Elder Waiver to include assisted living.
Below is a summary of the current Massachusetts Frail Elder Waiver program and what it covers (courtesy of the American Council on Aging – https://www.medicaidplanningassistance.org/masshealth-frail-elder-waiver/ )
The Frail Elder Waiver (FEW) provides a wide variety of home and community-based services (HCBS) for elderly Massachusetts residents who are at risk of being institutionalized (being placed in a nursing home). Long-term services and supports received are specific to the needs and circumstances of the program participant. For example, in-home personal care assistance, homemaker services, a personal emergency response system, and a medication dispensing system might be approved for a senior who lives alone to promote independent living. In contrast, a program participant living with an informal family caregiver might be eligible for respite care, such as adult day care. Specific to persons with Alzheimer’s disease or a related dementia, a program participant may be eligible to receive a home-based wandering response system.
Program participants can receive services in their home, the home of a relative or caregiver, an adult foster care home, or in congregate housing (shared living). Services cannot be provided in institutional or residential settings, such as nursing home facilities, assisted living residences, or rest homes (similar to assisted living), with the exclusion of short-term respite care.
CMS Final SNF Staffing Rule
Late yesterday, CMS released the draft of the Final Rule consistently defined as the “staffing mandate rule”. Earlier in the day, I wrote a post about the final staffing rule and the final Medicaid access rule. At the time, CMS had only notified everyone about the final rule(s) contents via a press release. The actual text is now public and available here: Final SNF Staffing Rule 4 22 24
The final rule text is 379 pages but (probably) only about half of the pages have meaningful content – other pages are regulatory language, text of the comments during the comment period, etc. From my review, the salient content elements SNFs need to pay attention to are as follows.
- The rule updates and provides additional specificity regarding the regulatory element known as the Facility Assessment.
- F838 §483.70(e) Facility Assessment: The facility must conduct and document a facility-wide assessment to determine what resources are necessary to care for its residents competently during both day-to-day operations and emergencies. The facility must review and update that assessment, as necessary, and at least annually. The facility must also review and update this assessment whenever there is, or the facility plans for, any change that would require a substantial modification to any part of this assessment.
- Per CMS in the Final Rule…
- Facilities must use evidence-based methods when care planning for their residents, including consideration for those residents with behavioral health needs.
- Facilities must use the facility assessment to assess the specific needs of each resident in the facility and to adjust as necessary based on any significant changes in the resident population.
- Facilities must include the input of the nursing home leadership, including but not limited to, a member of the governing body and the medical director; management, including but not limited to, an administrator and the director of nursing; and direct care staff, including but not limited to, RNs, LPNs/LVNs, and CNAs, and representatives of direct care staff as applicable. The SNF must also solicit and consider input received from residents, resident representatives, and family members.
- Facilities are required to develop a staffing plan to maximize recruitment and retention of staff.
- The Final Rule provides clarity to the gap between the 3.48 nursing hours per patient day requirement and the specific requirement that .55 of the PRD (or Resident Per Day – RPD) be RNs and 2.45 be CNAs, leaving a .48 per day gap. CMS indicates that the additional .48 can be made up of any combination of RN, LPN/LVN, CNA, or CMA (medication assistant).
- With regard to the RN requirement on each shift, seven days per week, CMS has indicated that some of this time can be the hours of the Director of Nursing or other administrative nurse, provided that these hours allow for direct patient care.
- CMS has provided a phase-in period for facilities to meet the staffing standards. The periods differ for urban facilities vs. rural facilities.
- For Urban facilities,
- Phase 1 — Within 90 days of the final rule publication, facilities must meet the facility assessment requirements.
- Phase 2 — Within two years of the final rule publication, facilities must meet the 3.48 HPRD total nurse staffing requirement and the 24/7 RN requirement.
- Phase 3 — Within three years of the final rule publication, facilities must meet the 0.55 RN and 2.45 NA HPRD requirements.
- For Rural facilities (as defined by OMB),
- Phase 1 — Within 90 days of the final rule publication, facilities must meet the facility assessment requirements.
- Phase 2 — Within three years of the final rule publication, facilities must meet the 3.48 HPRD total nurse staffing requirement and the 24/7 RN requirement.
- Phase 3 — Within five years of the final rule publication, facilities must meet the 0.55 RN and 2.45 NA HPRD requirements.
- For Urban facilities,
- CMS has provided hardship language or allowances for facilities incapable of meeting the staffing level standards (after the phase in-period). The waiver is temporary and conditional. The facility must provide evidence via documentation of efforts to recruit and maintain staff as well as the financial commitment made to recruit and retain staff.
- The facility is located in an area where the supply of RN, NA, or total nurse staff is not sufficient to meet area needs as evidenced by the applicable provider-to-population ratio for nursing workforce (RN, NA, or combined licensed nurse and nurse aide), which is a minimum of 20% below the national average, as calculated by CMS using data from the U.S. Bureau of Labor Statistics and the U.S. Census Bureau.
- The facility may receive an exemption from the total nurse staffing requirement of 3.48 HPRD if the combined licensed nurse and nurse aide to population ratio in its area is a minimum of 20% below the national average.
- The facility may receive an exemption from the 0.55 RN HPRD requirement, and an exemption of eight hours a day from the RN on-site 24 hours per day for seven days a week requirement, if the RN to population ratio in its area is a minimum of 20% below the national average.
- The facility may receive an exemption from the 2.45 NA HPRD requirement if the NA to population ratio in its area is a minimum of 20% below the national average.
- Prior to being considered, the LTC facility must be surveyed for compliance with the LTC participation requirements. Facilities that are granted an exemption will be required to: 1) post a notice of its exemption status in a prominent and publicly viewable location in each resident facility; 2) provide notice of its exemption status, and the degree to which it is not in compliance with the HPRD requirements, to each current and prospective resident; and 3) send a copy of the notice to a representative of the Office of the State Long-Term Care Ombudsman. CMS will indicate if a facility has obtained an exemption on the Medicare.gov Care Compare website.
- Facilities are not eligible for an exemption if any one of the following is true:
- They have failed to submit their data to the Payroll Based Journal System.
- They have been identified as a special focus facility (SFF).
- They have been identified within the preceding 12 months as having: widespread, or a pattern of, insufficient staffing that resulted in actual harm to a resident; or an incident of insufficient staffing that caused or is likely to cause serious harm or death to a resident.
Regulation Monday: SNF Staffing Mandate and Medicaid Access Rule
Just announced this morning, CMS has finalized two hotly debated proposed rules into final rules. The final rules involve the SNF staffing mandate proposed last year and the Medicaid Access Rule, requiring 80% of payments for Medicaid HCBS programs go to compensation for direct care workers. The Medicaid Rule follows the original proposed rule while the staffing mandate INCREASES the number of total hours (per day) from 3.0 to 3.48 – .55 hours for RNs and 2.45 hours for CNAs (direct care). I haven’t seen final rule text published but when it is, I will post it. For now, here is the Whitehouse Fact Sheet on both final rules: Staffing and Medicaid HCBS Fact Sheet
The staffing rule is by far, more contentious than the Medicaid rule. I wrote about the original proposed rule with the rule text in the post, last September. The post is here: https://rhislop3.com/2023/09/01/cms-releases-rule-on-snf-staffing-mandate/ Aside from the hours per day requirement, CMS left in the requirement that each SNF must have an RN on-site, seven days per week, twenty-four hours per day.
In a released statement from the American Health Care Association, Mark Parkinson, president of the Association stated the following. “It is unconscionable that the Administration is finalizing this rule given our nation’s changing demographics and growing caregiver shortage. Issuing a final rule that demands hundreds of thousands of additional caregivers when there’s a nationwide shortfall of nurses just creates an impossible task for providers. This unfunded mandate doesn’t magically solve the nursing crisis.”
The most perplexing part, for me, of the staffing mandate rule is that CMS has a government funded study from Abt and Associates that plainly states that a per hour, per day mandate will not improve care yet will cost SNFs millions of dollars per year. The Abt Study is here: Abt-Associates-CMS-NH-Staffing-Study_Final-Report_-Apndx_June_2023
The Bureau of Labor Statistics indicates that there are 190,000 registered nurse openings current, and that number will increase. The median age of RNs is 46 years. More than one-quarter of registered nurses report that they plan to leave nursing or retire over the next five years.
CMS in the original proposed rule estimated a cost of $4 billion annually, but other estimates started at $6.8 billion and have moved upward due to inflation. CMS has so far offered no funding for its staffing initiative beyond a one-time, $75 million allotment. CMS has said the funds could be used to market nursing home jobs and create incentives to help CNAs pay for training.
Bills exists in both houses of Congress that could block the rule. For now, one provider group (AHCA) said it could sue to stop implementation should the final rule be unworkable. As SNFs already teeter on the edge of survival, rural and ex-exurban acutely so, the CMS mandate timing seems rather foolish. As I have written before, you can’t mandate something that doesn’t exist and assume that compliance will occur.
The Medicaid Access bill is about increasing senior access to Home and Community Based Care, namely Medicaid waiver slots. A major part of the proposal, in theory, is to “support and stabilize the direct care workforce” in-home and community-based settings. In addition to requiring 80% of payments go to direct care workers in the form of compensation, States will be required to be more transparent in how much is paid for services and how rates for service were set.
When the proposed rule (Medicaid Access) came out late last summer, concerns regarding the affordability of the 80% measure were raised, particularly if additional federal matching money did not occur. Similarly, because the proposed rule text lacked specificity, Assisted Living providers, a large segment of the HCBS for Medicaid seniors, didn’t know if the 80% rule applied to them and in totality or in a proportional element.
CMS in the proposed rule stated that it is proposing to require a minimum percentage requirement for homemaker, home health aide, and personal care services because these services “would most commonly be conducted in individuals’ homes and generally community settings’ but then separately stated that it is soliciting comment on facility-based residential services and other facility-based round-the-clock services”. The Final Rule text hopefully, will clarify this element.
My concerns then and now, especially until I can see the text of the Final Rule, are two-fold. First, twenty percent for all other expenses associate with caring for Medicaid HCBS residents is thin at best. Care and case management expenses along with other expenses could and likely will, exceed twenty percent. This will have the opposite effect on creating more care opportunity. If providers cannot effectively function with even a tiny margin, they will either reduce slots or stop participating altogether.
Second, the final rule will codify quality measures. It will be interesting to see how CMS does this and when, reporting will become mandatory. My concern is that as of the proposed rule, additional funding is not included for the implementation of quality measures. Medicaid HCBS is chronically underfunded now. Increasing costs associated with the program is not a winning strategy to get more providers into the program and to increase slot availability (waivers).
Friday Feature: Back to the Future and Care Rounds
TGIF! A frequent reader sent me a note earlier in the week and asked if I would drop in more clinically oriented stuff from time to time. I asked for details, and she said stuff “that is germane to patient care and operational improvements – QA/QI stuff”. So, today’s post is by request, sort of.
I ran across a little case study piece from Sound Physicians about their work in a North Texas teaching hospital to improve patient satisfaction or HCAHPS. HCAHPS are patient surveys about their care that translate into scores. The acronym stands for Hospital Consumer Assessment of Healthcare Providers and Systems. The post-acute cousin is found in Home Health and Hospice as they use a similar survey methodology known CAHPS (Home Health Consumer Assessment, Hospice Consumer Assessment…). The data gathered is publicly posted for each provider (Medicare participating).
CAHPS surveys follow specific principles in their design. The surveys are designed to assess the experiences of large patient samples. Experience surveys focus on what and how patients experienced or perceived key aspects of care, not whether they were satisfied with their care. “Patient experience surveys focus on asking patients whether or how often they experienced critical aspects of health care, including communication with their doctors, understanding their medication instructions, and the coordination of their healthcare needs“, per the CMS CAHPS website ( https://www.cms.gov/data-research/research/consumer-assessment-healthcare-providers-systems ). Some surveys (home health, hospital, hospice) can impact reimbursement, typically as a VBP (Value Based Purchasing) measure.
In this case study and at this hospital in Texas, Sound was the hospitalist group (https://soundphysicians.com/). Sound and the hospital were apparently interested in improving their HCAHPS scores. For whatever reason, patient participation and provider engagement with the survey process was low.
To improve the HCAHPS scores via increased participation and patient engagement, Sound implemented Multi-Disciplinary Rounding (MDR). This acronym, MDR, is the cause of the Back to the Future title of this post. From their presser, “Sound’s medical director and clinical performance nurse (CPN) implemented leadership discharge rounding with patients. They visited patients nearing discharge to ask them a series of questions about their care and experience during their stay. Two months after implementing leadership rounding, the team also implemented a more formalized approach to multidisciplinary rounds (MDRs), coordinating care and discharge for patients who were ready to go home”. Sound’s press release/case study piece is available here: 202306_HM_MDR_HCAHPS_Case_Study
Per Sound, within a month of the rounding program, HCAHPS scores improved. By using the rounding approach, the team was able to connect with 85 to 90 percent of their patients which, prior to the rounding process, only 25 percent of patients were seen. Not too surprising, over a six-month period, HCAHPS score showed an 8.4% improvement and lengths of stay for patients decreased by almost a day (.8). According to Sound and their experience, “seeing these patients on or near their date of discharge as part of their rounding process, the team was able to uncover barriers to a timely discharge, such as whether the patient had called their family to let them know they’d been cleared to leave, needed transportation,
or had received their medication and dosage instructions“.
Heading ‘back in time’, last year I wrote a post about care coordination. It is available here: https://rhislop3.com/2023/05/08/major-upgrade-needed-care-coordination/ Within that post is a presentation I was part of in 2017 on care coordination. The presentation is also available on the Presentations page, titled care-coordination-updated. The program was presented at LeadingAge’s Annual Meeting and Convention in New Orleans that year.
My point is this. Care rounds are not new and, in some cases, were being effectively used to improve outcomes, reduce lengths of stay, reduce rehospitalizations, and improve patient experience many, many years ago (almost a decade ago). It’s great that Sound used this approach to improve experience and ultimately, improve outcomes (it seems) as well. More providers should try it.
Care coordination, as I have done it and watched it integrated at a high level, can produce significant improvements in patient experience and care outcomes, particularly at the discharge point. When cost matters, reducing redundancies and improving rehospitalization rates can produce important savings. Reputationally, patients that have a good experience and great outcomes, become ambassadors and more important, are less likely to be litigants (or their families and significant others). Feel free to grab the presentation and adapt the tools that are in it! TGIF and enjoy the weekend! I know I certainly will.
Challenges Persist in Staffing for U.S. Life Plan Communities and Skilled Nursing Facilities
Monday, Fitch Ratings dropped a Non-Rating Commentary about staffing challenges in Life Plan and SNF organizations. Per the release, “Though growing for some time, payrolls for U.S. life plan communities (LPCs) and skilled nursing facilities (SNFs) are still well off the pace needed to reach a full post-pandemic recovery.”
Bureau of Labor Statistics (BLS) data indicates that Life Plan and SNF employment is declining toward a point where private sector jobs and employment have recovered, post-pandemic. While the payrolls for Life Plan and SNF have risen for the past 24 months, they still remain 6% to 8% (Life Plan, SNF) below pre-pandemic levels. Healthcare and Social Assistance job opening have declined since March of 2022 (from 9.6% to 7.8%) to the same period in 2024. The elevated rate however, of 7.8% is higher than the average openings rate between 2010 and 2019 of 4.2%. The corollary concern is that ongoing occupancy recovery in both sectors could be slowed by lack of staff. The Fitch Release is here: Fitch Release on Payroll Recovery 4 15 24
Top among concerns for CEOs and to a lesser extent, investors in healthcare, has been labor or staffing. The reality remains that there simply are not enough qualified workers to meet the growing demand. As I’ve watched Federal jobs reports and job data, the economic disconnects are becoming more plain almost by the day. https://rhislop3.com/2024/02/07/wednesday-feature-healthcare-job-growth-and-the-economic-disconnect/
- An aging population, one that presents (per person) with advancing chronic diseases (diabetes, heart disease, etc.), demands and consumes more healthcare.
- Within this aging population are healthcare workers, now retiring and adding to the demand.
- U.S. population trends evidence a lower birthrate, today approximating the rate of retirement (as one person turns 65, one person is born). This birthrate does not generate sufficient population growth to accommodate job demands. In the last jobs report from March, U.S. born employment decreased and foreign born increased. Our overall labor pool (domestic, U.S. born) is shrinking. March 2024 Jobs Report
- While immigration numbers add to the potential labor pool, the skill match is not indicative today, of immigrant labor arriving with healthcare skills and qualifications need to fill the jobs created.
A recent report from Kaiser on the trends in healthcare employment provides a solid analysis on what has happened and what is happening (with respect to labor). The report is available here: KFF Trends in Health Sector Employment
The pandemic caused a seismic shift in employment in the U.S. Lockdowns and closures/forced volume reductions disaggregated labor in all industries. Healthcare was do different as elective procedures were fallowed. and consumer fear or hesitation pushed folks away from even necessary services and screenings, fearful of contracting COVID. Staff that were on the cusp of retirement hastened their separations, now permanently removed from the workforce as full-time labor.
As is typical, healthcare jobs have recovered quicker than many industries. Additionally, healthcare remains more recession proof than other industries, leading to a more lasting recovery. Even during COVID, healthcare job losses were less pronounced than other industries. In April of 2020, health employment fell to 14.9 million from 16.2 million the year prior (-8.2%), while non-health employment fell by -14.0%. Total health employment in February, pre-pandemic, was 16.5 million.
In 2023, 10.8% of people employed in the U.S. worked in healthcare. This proportion has grown across prior decades, from 7.5% in 1990 to 10.6% in 2010, remaining fairly stable since. Healthcare and government as sectors, are today, the two largest employers. One could easily assume however, that healthcare generates more employment via related industry elements such as pharmaceutical companies, computer companies (think EPIC, and CERNER), insurers (Humana, United, Aetna), etc. All of these industry sub-sets consume healthcare labor such as nurses, pharmacists, and therapists.
As the Fitch release noted, where labor weakness persists in terms of employed staff is in senior living and post-acute care. SNF employment is down from pre-pandemic levels and job growth the same. Some of this is due to flatter demand, some due to lower utilization (patient days via length of stay are down), and the rest is due to lower bed counts and facility closures.
From an economic perspective, the share of healthcare provider budgets committed to labor has increased. Not surprising, wages for employees have as well. Average weekly wages for employees of in other industries increased by 20.6% from $979 (February 2020) to $1,181 by January 2024. Healthcare employee average wages, generally slightly higher, have increased 20.8%, from $1,038 (February 2020) to $1,254 in January 2024. This is a function of scarcity and demand.
The increases in average healthcare wages have not been equally distributed among provider settings. SNF employees have seen the slowest recovery in employment post- pandemic but have seen some of the highest average wage increases. Among skilled nursing care employees, average earnings rose by 26.5% between February 2020 and January 2024, from $671 to $849 per week. NOTE: SNF employees tend to be somewhat lower paid than their peers in other settings.
Physician offices which saw the largest increase in employment post the pandemic have seen the lowest average wage increases. Average earnings rose by 12.3% between February 2020 and January 2024, from $1,443 to $1,620 per week. Hospital staff experienced a 20.3% increase between February 2020 to January 2024, from $1,269 to $1,527 per week.
Wednesday Feature: Budget Stuff…Cubed
Happy Hump Day! Busy day so far but wanted to sneak this post in, wrapping up the last two days of posts on budget (federal, Medicare) stuff. This being the third day and post on budgets (and last for a while, I promise), the title fits – cubed.
- https://rhislop3.com/2024/04/15/monday-budget-day/
- https://rhislop3.com/2024/04/16/medpac-report-to-congress-a-wrap-with-monday/
What follows is a different take, and a pretty detailed one, on President Biden’s budget proposal as the same pertains to healthcare. The information comes from Becker’s Hospital CFO Report, a publication I get and follow (fairly close). It was originally posted online on March 11. I have not edited the content. The piece was written by Madeline Ashley, Kelly Gooch and Alexis Kayser, and the title is “Biden’s $7.3 Trillion Budget: 16 Healthcare Takeaways”. Enjoy, and Happy Hump Day!
President Joe Biden proposed a $7.3 trillion budget March 11, including various initiatives to lower healthcare costs and an $800 million investment in hospital cybersecurity protection.
16 healthcare takeaways:
1. Medicare. The proposed budget would extend the solvency of the Medicare hospital insurance trust fund indefinitely. The trust fund is projected to run out in 2031. The budget would extend the life of the trust fund via an increase to the Medicare tax rate on Americans making more than $400,000 a year and directing revenue from the Net Investment Income Tax into the trust fund.
President Biden proposed allowing Medicare to negotiate lower prices for drugs — beginning with 10 of the costliest, most widely used drugs used to treat blood clots, cancers, arthritis, diabetes, and other issues. The budget would also limit Medicare Part D cost-sharing for high-value generic drugs, such as those used to treat hypertension and hyperlipidemia, to $2 per month, at most, for Medicare beneficiaries.
2. Medicaid. The proposed budget includes $150 billion over a decade to strengthen and expand Medicaid home and community-based services. Additionally, it makes permanent the expanded premium tax credits that the Inflation Reduction Act extended and provides “Medicaid-like coverage” to individuals in states that have not adopted Medicaid expansion. There are 10 states that have not expanded Medicaid. The proposed budget also prohibits enrollment fees and premiums in the Children’s Health Insurance Program.
3. Opioid overdose epidemic. President Biden requested $1.6 billion in supplemental funding for 2024 in HHS to expand substance use prevention, treatment, harm reduction, and recovery support services to address the opioid overdose crisis.
The proposed budget also boosts funding for the State Opioid Response grant program and invests in a new technical assistance center to strengthen health providers’ understanding and treatment of women’s mental health and substance use.
4. Maternal health and health equity. The proposed budget includes $376 million to support the ongoing implementation of the White House Blueprint for Addressing the Maternal Health Crisis to reduce maternal mortality and morbidity rates, and address the highest rates of perinatal health disparities. This is an increase of $82 million above the 2023 enacted level. The proposed budget also expands Medicaid maternal health support services during the pregnancy and postpartum period by incentivizing states to reimburse doulas, community health workers, peer support initiatives, and nurse home visiting programs, among other providers, and requires all states to provide continuous Medicaid coverage for 12 months postpartum. More than 40 states have already extended postpartum coverage.
5. Telehealth internet access. Noting how crucial the internet is for Americans needing healthcare access through services like telehealth, the budget builds on the $2 billion for USDA broadband programs and provides $122 million for the ReConnect program, which gives loans and grants for broadband access in underserved areas, like tribal areas.
The budget also includes a supplemental request of $6 billion for the Affordable Connectivity Program to continue into 2024, with the administration working with congress to secure 2025 and beyond additional funding. It includes the allowance of banning unwarranted telehealth and certain outpatient commercial insurance service “facility fees”.
6. Cybersecurity: The budget notes that from 2018 to 2022, there was a 95% increase in large data breaches reported to HHS. It provides $800 million to help “high need, low-resourced” hospitals cover costs associated with implementation of HHS cybersecurity practices, along with $500 million for an incentive program to “encourage all hospitals to invest in advanced cybersecurity practices.” It also sets aside $141 million to bolster protection of HHS’ systems and information.
7. Supply chain: The budget zeroes in on the domestic medical supply chain, investing $75 million in the Administration for Strategic Preparedness and Response to manufacture more “essential medicines, medical countermeasures and critical inputs in the United States.” It also sets aside $12 million to strengthen the FDA’s capacity to identify and address potential disruptions and shortage threats, and installs a new office to coordinate HHS’ supply chain efforts for drugs, biologics, medical devices and critical foods.
8. Reproduction and women’s health. The budget provides $594 million, up $37 million from 2023, for the U.S. Agency for International Development-directed high-impact and lifesaving voluntary family planning and reproductive health programs and America’s voluntary contribution to the United Nations Population Fund.
The Biden administration also proposed the transformation of government funding at the National Institutes of Health for women’s health research through developing new excellence and innovation in women’s health centers nationwide. The budget would double the existing Office of Research on Women’s Health at NIH funding. It also sets aside funding for expansion in paid family and medical leave programs through the Social Security Administration for up to 12 weeks of leave for circumstances like bonding with a new child, finding safety from domestic violence, dating violence, sexual assault, or stalking.
9. Cancer moonshot: President Biden proposes an increase of more than $2 billion for agencies supporting his “Cancer Moonshot” goal, which aims to reduce the cancer death rate by at least 50% over the next 25 years. The budget requests that the funding be distributed across the National Cancer Institute, FDA, CDC and Advanced Research Projects Agency for Health. It also institutes additional mandatory funds for the Indian Health Service beginning in 2026.
10. Public health infrastructure: To improve the country’s ability to respond to emerging health threats, the budget sets aside $9.8 billion for the Prevention and Public Health Fund — an increase of $499 million from the 2023 enacted level. It also asks for $20 billion in mandatory funding for HHS public health agencies to support biodefense.
11. Gun violence: Over the next decade, President Biden’s budget invests $2.5 billion in the CDC to support an “evidence-based community violence initiative,” which aims to address causes of violence in communities and reduce related health inequities. It also requests $60 million for gun violence research between the CDC and NIH.
12. Mental health access. The budget features an array of mental health investments, including a combined $216 million in mental health programs for students. It also invests money in suicide prevention and brings an additional $50 million to the children’s mental health initiative. The budget features $1 billion for behavioral health providers to advance technology adoption and engagement. It sets money aside for primary care and mental healthcare services in rural areas as well.
13. Organ donation: The budget includes funding for the Securing the U.S. Organ Procurement and Transplantation Network Act, signed into law in 2023, which aims to modernize the organ transplant system and increase access to donor organs. It requests funds to make the system more “agile, user friendly, accountable, and equitable,” and to facilitate and encourage transfers for Medicare beneficiaries by expanding support for living donors.
14. Disease treatment and prevention. The budget allots funding for infectious disease treatment and prevention including HIV, vaccine-preventable disease, and hepatitis C. It proposes a national program expansion of testing, screening, prevention, treating, and monitoring hepatitis C infections, with a focus on high infection level populations. The budget proposes a new vaccines for adults program and expansion of vaccines for children program.
15. IHS and rural healthcare: The budget requests $8 billion in discretionary funding for the Indian Health Service — a 12% increase from the 2021 enacted level — to cover clinicals services, preventative health, facilities construction, contract support costs and tribal leases. It also proposes that all resources become mandatory in 2026, and requests that the Special Diabetes Program for Indians is reauthorized and receives increased funding.
In addition, the budget notes that more than 60 million Americans live in rural areas, and invests in additional assistance for rural hospitals: including direct primary care and mental healthcare services.
16. Veterans’ healthcare: Through 2025, President Biden requests $24.5 billion for the Cost of War Toxic Exposures Fund, which covers healthcare and benefits delivery for veterans exposed to certain environmental hazards. The ask is $19.5 billion above the 2023 enacted level.
The budget also provides a total of $134 billion in VA medical care for 2025, including a $2 billion investment for non-recurring maintenance to improve medical facility infrastructure.
MedPAC Report to Congress: A Wrap with Monday?
Yesterday I wrote a post on President Biden’s healthcare budget. Today, I thought a quick visit back to March and MedPAC’s Annual Report to Congress on payment and program adequacy would be a good “wrapper” – for now.
Every year, MedPAC (the Medicare Payment Advisory Commission) reports to the Congress in March on the Medicare fee-for-service (FFS) payment systems, the Medicare (MA) program, and the Medicare prescription drug program (Medicare Part D). The report covers payment adequacy and other program elements pertinent to budget, access, etc. This year, the report looked at the near-term consequences of the end of the COVID public health emergency (PHE) and higher-than-usual inflation, and the longer-term effects of program spending on the federal budget and the program’s financial sustainability. Note the italics, especially in light of yesterday’s post. From the Executive Summary of the report, a couple of key points to note are,
- The Commission’s goals for Medicare payment policy are to ensure that Medicare beneficiaries have access to high-quality care and that the program obtains good value for its expenditures.
- The Commission recognizes that updating base payment rates alone will not solve what has been a fundamental problem with FFS Medicare’s payment systems—that providers are paid more when they deliver more services, whether or not those additional services provide value.
- Historically, FFS payment systems have seldom included incentives for providers to coordinate care over time and across care settings. To address these problems, broad payment reforms must be implemented expeditiously,
coordinated across settings, closely monitored, and scaled when appropriate.
Points 2 and 3 are things that I have harped on and written and lectured about for years (decades actually). The Executive Summary is available here: Mar24_ExecutiveSummary_MedPAC_Report_To_Congress_SEC
Within the report, the most interesting chapter, to me, is the first. It is an overview of the program but more so, a discussion of economics of Medicare and the constructs for funding and how the same, impact the overall budget. Again, think about and reflect to the discussion yesterday regarding Mr. Biden’s budget. The first chapter is available here: Mar24_Ch1_MedPAC_Report_To_Congress_SEC
What the Commission notes, and has for years, is that the Medicare program is fundamentally unsustainable as it presently is configured. I have said this for decades. The program continues to rely heavily on general revenue transfers (income tax revenue) for solvency. The premium contributions and Medicare tax revenue are insufficient to cover the program costs.
A myriad of reasons exists for this funding problem, but the largest contributing factor is demographic. The program continues to grow via more seniors accessing and using benefits than workers remaining in the economy, paying taxes. Further, Part B premiums, the largest contributor to overall cost, are far insufficient to fund the Part B outlays/expenditures. Note, this has been true for many, many years.
Program solvency is thus at risk and inflation and employment characteristics, contribute to the pace at which, insolvency will arrive. For example, seniors aged 65 may be entitled to Medicare benefits but if employed with health insurance, may choose to defer program participation until their employment career ends (retirement). An economy that contracts in terms of full-time employment, hastens the pace in which 65-year-olds and older, discontinue benefit providing employment, accessing Medicare for insurance coverage. The recent BLS jobs report for March shows a decline in full-time jobs.
What we are seeing is Medicare spending accelerate, consistent with healthcare spending. The healthcare spend in the U.S. in terms of total dollars, is greater in amount than the GDP of all other world nations save China. It also is outpacing, GDP growth. This kind of spending economically, is impossible to sustain over time. System-wide reforms and entitlement reforms are long overdue.
Below are the summarized report recommendations concerning fee-for-service reimbursement, Medicare Advantage, and Rural Emergency Hospitals. The report press release covering this detail is available here: March_2024_MedPAC_Report_Press_Release_SEC
- MedPAC is recommending a higher FFS payment update in 2025 for acute care hospitals and physicians and other health professional services. No payment changes from the current law payment for outpatient dialysis providers. Eliminating the payment update for hospice providers. Payment reductions (rate cuts) for three post-acute care sectors (skilled nursing facilities, home health agencies, and inpatient rehabilitation facilities).
- For Medicare Advantage, the current payment system requires reform. Advantage plans received more dollars in Medicare spending for their beneficiaries than comparable spending. Over the past several years, the Commission has made several recommendations to improve the program. These recommendations call for the Congress and CMS to make reforms to address imbalances related to coding intensity, replace the quality bonus program, establish more equitable benchmarks, and improve the completeness of encounter data. MedPAC also favors the inclusion of private insurance plans in the program.
- Rural Healthcare is focus within the report. The Consolidated Appropriations Act, 2021 (CAA) created a new designation, the rural emergency hospital (REH). The object is to help rural communities maintain access to emergency care. Declines in inpatient volume have diminished the impact of Medicare’s inpatient-centric support for rural hospitals. REHs do not provide inpatient care but must meet several other criteria. They must have an emergency department that is staffed 24/7 and a transfer agreement with a Level I or Level II trauma center. They are paid fixed monthly payments from Medicare (approximately $270,000 per month, totaling $3.2 million per year in 2023), in addition to rates of 105 percent of standard outpatient prospective payment system rates for emergency and outpatient services. MedPAC was charged with making a payment recommendation for REH but as of the report date, not enough information was available. REH participation has been slow in terms of program growth. More specifics on REHs is in this post: https://rhislop3.com/2024/01/16/rural-hospital-program-extra-cash-for-emergency-and-outpatient-services-stuck-in-neutral/
In a follow-up post, I will go into greater detail on the post-acute and hospital segment recommendations (with relevant chapters from the report). I will also post the full report but caution, it’s a beast to download at 561 pages.
Monday = Budget Day
As much as politics consumes the news, little on policy is included. Most days, the political stuff such as trials, Congressional hearings, back and forth tabloid (almost) stuff is front and center, missing is the “meat”. Reminds me of the 80’s Wendy’s commercial titled, “Where’s the beef?” https://www.youtube.com/watch?v=riH5EsGcmTw
While I know that the national election, inclusive of the President, all House seats, and one-third of the Senate is six months plus away, today seemed like a good day to frame some of the bigger issues, namely the budget issues and healthcare. To start, I’ve grabbed President Biden’s budget proposal. The whole proposal/plan is available here and the healthcare stuff starts on Page 77. Biden budget_fy2025
As is typical of these proposals, they are vague missing significant details and the numbers, tough to follow as they are full of economic assumptions. What is clear is that this budget proposal advances an existing trend – deficit spending. One of the larger battles today economically, is controlling inflation. The leading cause of inflation is government spending growing faster than GDP growth and in amounts greater than tax revenues can offset. The Congressional Budget Office forecasts a $1.85 trillion deficit for FY 2024 (ends 9/30/24).
Reviewing the proposal, I was struck more by what is not in it with regard to healthcare than what is included. The inclusions, frankly, are more expansion on existing themes for President Biden such as expanding the Affordable Care Act, particularly the Medicaid elements, and adding additional drugs to the list subject to government negotiation. The Fact Sheet Summary of the Healthcare Provisions https://www.whitehouse.gov/briefing-room/statements-releases/2024/03/11/fact-sheet-the-presidents-budget-protects-and-increases-access-to-quality-affordable-healthcare/
Some notables in the proposal are,
- Increasing the Medicare tax on individuals making over $400,000 from 3.5% to 5%. Directing revenue from the Net Investment Income Tax into the HI Trust (Medicare).
- Adds $150 billion over 10 years to improve and expand Medicaid home and community-based services (these are primarily defined as the HCBS waiver slots).
- Increases funding for senior nutrition services and meal programs by 8 percent above 2023 level, and 21 percent over 2021 levels.
- Move funding for nursing home surveys from discretionary to mandatory beginning in 2026, and increase funding to cover 100 percent of statutorily-mandated surveys.
- Adds $275 million over 10 years to the Department of Labor to monitor large group market health plans are complying with mental health and substance use disorder requirements (mental health parity).
- Budget proposes to establish a national, paid family and medical leave program administered by the Social Security Administration to ensure that all eligible workers can take up to 12 weeks for adoption or birth of a new child, care for a seriously ill loved one, recover from a serious illness, manage situations due to a loved one’s military deployment, find safety from domestic violence, dating violence, sexual assault, or stalking, or take up to three days bereavement time for the death of a significant other. No dollars are attached to this provision.
- Funding for the VA medical care system of $134.0 billion in 2025, an $11.5 billion increase over the 2023 enacted level.
As I mentioned earlier, this budget is as notable for what is not included (more so in my opinion) than what is included. My short list of BIG MISSES is below.
- Medicare Advantage payments are higher than they need to be (higher than modeled premium levels for Parts A and B under fee-for-service) and in turn, plans are generating significant profits. Now I am not opposed to plans being profitable but I am opposed to contributing to the demise of Medicare solvency when the same is not necessary. Reform is needed and this budget does nothing.
- The budget advocates and advances Medicaid spending but does nothing to adjust how Medicaid is funded. It is well past time for Medicaid’s funding to shift to a block grant program and to allow states to address their resident needs effectively and efficiently.
- Physican payment reform is long overdue, and Congress (plus the President) have kicked the idea down the road too many times to count. The present system lacks inflation updates and is required to be budget neutral. Congress is considering various proposals to deal with some of the underlying issues in the Physician Fee Schedule (such as the budget neutrality requirement and the lack of an inflationary update). The President’s budget could push this work faster.
- Telehealth and Hospital-at-Home Extensions tied to major Medicare waivers put in place during the COVID public health emergency (PHE), They are set to expire. With respect to telehealth, the main waivers granted since the PHE relate to the originating site requirement and the geographic restriction. If telehealth waivers expire, the benefit under Medicare would be mainly restricted to rural areas, and patients would be required to visit a facility in most cases to receive a telehealth service (not available at home). The hospital-at-home model is also extremely popular, as it allows patients to receive hospital-level services at home via telehealth and in-person visits.
- The budget does nothing significant in terms of reforming Medicare in terms of costs, financing, and/or programmatic elements. One such opportunity is around site-neutral payments. In the Bipartisan Budget Act of 2015, established options for equalized payments for services furnished at many off-campus hospital outpatient departments to the amounts paid for those services when furnished in a physician’s office or ambulatory surgical center. Similar opportunities exist between SNFs and LTACHs and IRFs.
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