Heritage CEO praises lawmakers and industry reform bills
The head of a large long-term care company based in Bloomington said lawmakers did good work on nursing home reform in the spring session. One measure, more than a year in the making, will annually put $700 million more into the revenue stream (HB 246).
Heritage Enterprises CEO Ben Hart said lawmakers went a long way toward addressing a decades old Medicaid funding crisis in the nursing home industry. Raising state reimbursement rates based on staff ratios and quality ratings will help a lot, he said.
"Just for our system facilities, we believe it will probably raise our rate somewhere in the neighborhood of $35 per day. It won't get us to break even. We were probably underfunded by about $70 per day per Medicaid resident," said Hart.
Last fall, Hart had told WGLT the imbalance between cost and reimbursement rate was so large that increasing numbers of facilities would likely close after the pandemic hit them hard, driving up costs and creating labor shortages. He said the new legislation is a large step forward even if it does not cover the entire cost of Medicaid patient services.
“We're able to make up margin on private-pay patients, people paying out of pocket, as well as the Medicare system,” said Hart, adding it it will have a ‘"catalyst effect" in reducing pressure on out-of-pocket rates and other revenue sources.
The legislation creates a bed tax collected from nursing homes that will leverage additional federal Medicaid reimbursement. The increase flows back to care providers.
The measure goes to the governor with solid bipartisan support.
There's $85 million in the bill for wage hikes for employees of long-term care facilities, such as certified nursing assistants (CNAs) who provide a lot of the direct care to residents. Hart said he hopes that will make those positions more attractive and reduce personnel shortages, though he does not yet know the rules are for allocating those dollars based on staffing levels.
“From our company perspective, and my personal perspective, the CNA position has long been the backbone for long- term care. We've been proponents of the idea that should become less of an hour-to-hour or paycheck-to-paycheck job, and really a true career for CNAs,” said Hart. “This particular component of the Medicaid funding bill will help take a step in that direction."
The rules for handing out that money will be drafted through a process with the Illinois Department of Health Care and Family Services and the bipartisan legislative Joint Committee on Administrative Rules (JCAR).
“The other important party that has been at the table on this particular component of the legislation has been the labor unions with the Service Employees International (SEIU) being the main leader in that,” said Hart.
There's an ownership reporting component to the bill, too. Lawmakers said they wanted to know when large investment firms have significant ownership stake.
“I'm a fan of transparency. And I think the public has a right to know, especially in health care, when we're taking care of people's lives, who is behind that…who is responsible for their loved one,” said Hart.
Hart said finding adequate staff remains a challenge and that will likely persist. Many facilities around the state currently have empty beds they are not allowed to fill because they do not have enough workers to comply with staff/patient ratio requirements.
That has accelerated an industry niche occupied by agencies that employ nurses who can be sent to hospitals and nursing homes on a temporary basis. Last fall, Hart remarked those agencies often engage in predatory practices, poaching nurses and then turning around and offering them a spot in the same facility at triple the price. He said the nurses do not see all of that, but until now it has been difficult to determine how much.
He said another measure approved by lawmakers on the final day of the session (HB 4666) requires more transparency in that sector by reporting the breakdown of what goes to the nurse and what goes to the agency, and places limitations on recruiting tactics and the mobility of workers.
“One of the things that was a very common practice was that in contracts with health care providers, nurse agencies would have what they call non-competes as well as buyout fees, or what they called conversion fees,” said Hart. “These were often $20,000 and $25,000, just to re-employ the nurse that you had weeks before."
He said eliminating non-competes is good for workers who can better know their own value and better for long-term care companies that will have the opportunity to match salaries before losing workers to the temp agencies.
That too will help, but Hart said he expects wages for nurses and for CNAs will continue to rise based on the existing shortage in those positions.
“This better transparency in the payment model will help everyone make better decisions that are in the best interests of the health care system, as well as the employee themselves,” said Hart.