United States Government Accountability Office Report to Congressional Requesters MEDICARE July 2021 Additional Reporting on Key Staffing Information and Stronger Payment Incentives Needed for Skilled Nursing Facilities On August 10, 2021, this report was corrected to display the first page of written comments from the Department of Health and Human Services, which appears on page 52. GAO-21-408 July 2021 MEDICARE Additional Reporting on Key Staffing Information and Stronger Payment Incentives Needed for Skilled Highlights of GAO-21-408, a report to Nursing Facilities congressional requesters Why GAO Did This Study What GAO Found In 2019, Medicare spent nearly $28 Medicare covers short-term care for residents in about 15,500 skilled nursing billion on care provided to 1.5 million facilities (SNF) after a hospital stay. GAO’s analysis of 2019 staffing data found beneficiaries in SNFs—a type of that almost all SNFs frequently met a federal requirement for a registered nurse nursing facilty that provides residents (RN) on site for 8 hours per day. Fewer SNFs frequently met two other staffing short-term rehabilitation care after a measures that specify different numbers of nursing hours per resident per day. hospital stay rather than long-term For example, about half of SNFs frequently met Centers for Medicare & Medicaid nursing home care that Medicare does Services (CMS) case-mix measures—hours worked per resident that vary based not cover. SNFs must meet federal on the medical needs of each SNF’s residents—that CMS uses to set SNF standards to participate in Medicare. staffing ratings. Further, about one-quarter of SNFs frequently met staffing CMS rates SNFs on factors such as thresholds for minimum RN and total nurse staffing that a CMS staffing study staffing and quality of care and publishes its ratings on the Care identified as needed to avoid quality problems. SNFs are not subject to these Compare website. quality thresholds for ratings or as requirements, but many stakeholders have recommended that they be used as SNF staffing thresholds. GAO was asked to examine SNF staffing and rates of critical incidents. Percent of Skilled Nursing Facilities (SNFs) That Met Registered (RN) Nurse Staffing This report examines (among other Requirement or Measures, 2019 objectives): SNF performance on staffing measures, CMS reporting of staffing information on Care Compare, and Medicare payments for critical incidents. GAO analyzed CMS staffing and critical incidents data, information on Care Compare, and Medicare claims data for 2018 and 2019. GAO also interviewed CMS officials and other stakeholders such as key researchers and beneficiary groups. What GAO Recommends Congress should consider directing the Secretary of the Department of Health CMS reports certain key staffing information—such as RN overall staffing and Human Services to implement hours—on its Care Compare website, but does not report other important appropriate payment reductions for information. For example, GAO found that average RN staffing hours decreased SNFs that generate Medicare spending about 40 percent on weekends, but CMS does not directly report this information. on potentially preventable critical This limits the ability of beneficiaries to make informed choices among SNFs incidents. GAO is making three when choosing a facility. recommendations, including that CMS report more staffing information on GAO estimated that in 2018 Medicare spent over $5 billion on critical incidents Care Compare. HHS agreed to report that CMS defines as potentially preventable—which are mostly about 377,000 weekend decreases in nurse staffing hospital readmissions occurring within 30 days of the SNF admission. Current levels, but did not agree to report law directs CMS to make reductions of up to 2 percent to certain SNFs’ minimum nurse staffing thresholds payments to incentivize them to improve care, but does not address additional needed to ensure quality of care. GAO reductions. Experts have noted that payment incentives under current law may continues to believe both are not be sufficient to motivate SNFs to improve their staffing, which in turn could important, as discussed in the report. lead to reductions in critical incidents. Without stronger payment incentives, Medicare is unlikely to reduce the billions in spending on potentially preventable View GAO-21-408. For more information, contact Jessica Farb at (202) 512-7114 or critical incidents or the patient harm that can occur from them. farbj@gao.gov. United States Government Accountability Office Contents Letter 1 Background 6 Almost All SNFs Frequently Met the Federal RN Staffing Requirement, while Fewer SNFs Frequently Met CMS Staffing Measures, Particularly on Weekends and for RNs 16 CMS Reports Certain Key Staffing Information on Care Compare, but Does Not Include Information on Weekend Staffing Levels or Related to Minimum Staffing Thresholds 20 SNFs with Low RN Staffing Levels Generally Had Higher Rates of Critical Incidents 25 Medicare Spent an Estimated $5 Billion on Potentially Preventable Critical Incidents, Indicating Absence of Strong SNF Payment Incentives to Reduce Them 28 Conclusions 30 Matter for Congressional Consideration 31 Recommendations for Executive Action 31 Agency Comments and Our Evaluation 31 Appendix I Characteristics of Skilled Nursing Facilities (SNF) with Low Average Staffing and Decreased Weekend Staffing 34 Appendix II Scope and Methodology 39 Appendix III Additional Analysis of Skilled Nursing Facility Staffing Levels and Measures 44 Appendix IV Use of Contract Nurse Staff by Skilled Nursing Facilities, 2019 47 Appendix V Optional Methodologies to Determine a Targeted Level of Savings for Medicare 48 Page i GAO-21-408 Skilled Nursing Facilities Appendix VI Comments from the Department of Health and Human Services 51 Appendix VII GAO Contact and Staff Acknowledgments 56 Tables Table 1: Measures for Nurse Staffing In Medicare Skilled Nursing Facilities (SNF) 9 Table 2: Percent of SNF Admissions That Resulted in Critical Incidents for Skilled Nursing Facilities (SNF) with the Lowest and Highest Average Annual Registered Nurse (RN) Staffing, 2018 and 2019 26 Table 3: Characteristics of Skilled Nursing Facilities (SNF) with Lowest and Highest Registered Nurse (RN) Staffing and Percentage Differences, 2019 35 Table 4: Characteristics of Skilled Nursing Facilities (SNF) with Highest and Lowest Percentage Decreases in Registered Nurse (RN) Average Annual Weekend Hours per Resident Day, 2019 36 Table 5: Characteristics of Skilled Nursing Facilities (SNF) with Lowest and Highest Total Nurse Staffing and Percentage Differences, 2019 37 Table 6: Characteristics of Skilled Nursing Facilities (SNF) with Highest and Lowest Total Nurse Weekend Decreases and Percentage Differences, 2019 38 Table 7: Average Adjusted Hours per Resident Day at Skilled Nursing Facilities (SNF) by Nurse Type and Total Nurse Staffing, 2018 and 2019 44 Table 8: Skilled Nursing Facility (SNF) Use of Contract Staff by Nurse Type, 2019 47 Table 9: Examples of Medicare Payment Reduction under Skilled Nursing Facilities (SNF) Value-Based Purchasing Program, Compared to Medicare Payments for Excess Hospital Readmissions, 2018 50 Page ii GAO-21-408 Skilled Nursing Facilities Figures Figure 1: Example of Centers for Medicare & Medicaid Services (CMS) Determination of Staffing Rating for a Hypothetical Skilled Nursing Facility 13 Figure 2: Percentage of Skilled Nursing Facilities That Met the Centers for Medicare & Medicaid Services Case-Mix Staffing Measures for Registered Nurse Staffing in 2019 17 Figure 3: Percentage of Skilled Nursing Facilities That Met Quality-Related Registered Nurse Staffing Thresholds in 2019 18 Figure 4: Average Adjusted Skilled Nursing Facility Staffing by Nurse Type, by Day of Week, 2019 19 Figure 5: Percent of Skilled Nursing Facility (SNF) Admissions with Hospital Readmissions and Emergency Room Visits within 30-Days of SNF Admission by Registered Nurse (RN) Staffing Group, 2018 27 Figure 6: Monthly Percentage Change in Hours per Resident Day at Skilled Nursing Facilities (SNF), by Nurse Type and Total Nurse Staffing, 2018–2019 45 Figure 7: Percentage of Skilled Nursing Facilities That Met Centers for Medicare & Medicaid Services (CMS) Case- Mix Staffing Measures for Total Nurse Staffing in 2019 46 Figure 8: Percentage of Skilled Nursing Facilities That Met Centers for Medicare & Medicaid Services (CMS) Quality-Related Thresholds for Total Nurse Staffing in 2019 46 Page iii GAO-21-408 Skilled Nursing Facilities Abbreviations CMS Centers for Medicare & Medicaid Services ER emergency room Five-Star System Five-Star Quality Rating System HHS Department of Health and Human Services HPRD hours per resident day PBJ payroll-based journal RN registered nurse SNF skilled nursing facility VBP Value-Based Purchasing This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately. Page iv GAO-21-408 Skilled Nursing Facilities Letter 441 G St. N.W. Washington, DC 20548 July 9, 2021 The Honorable Ron Wyden Chairman Committee on Finance United States Senate The Honorable Charles E. Grassley United States Senate Medicare covers short-term skilled nursing and rehabilitation services provided to beneficiaries generally after a qualifying stay of at least 3 days in an acute care hospital. In 2019, Medicare spent nearly $28 billion for care provided to 1.5 million Medicare beneficiaries in about 15,500 skilled nursing facilities (SNF), which are a type of nursing facility that provides the short-term, temporary care for beneficiaries after a hospital stay. 1 To help ensure that Medicare SNF residents receive quality care, the Centers for Medicare & Medicaid Services (CMS), an agency within the Department of Health and Human Services (HHS), defines the quality standards that SNFs must meet in order to participate in Medicare. Federal law also requires SNFs to meet certain standards for nurse staffing in most circumstances—specifically, SNFs must have one registered nurse (RN) on duty for at least 8 consecutive hours, 7 days per week, and offer 24-hour licensed nurse staff services sufficient to care for all residents provided by RNs or licensed practical nurses. 2 Research has demonstrated a relationship between nurse staffing and quality outcomes for residents in SNFs. For example, a 2001 study—that we refer to as the CMS staffing study—identified minimum SNF nurse-to- resident staffing levels required to ensure quality care and avoid 1The majority of SNFs (more than 90 percent) also provide long-term care services to Medicaid and private pay residents. A SNF’s staff provides services generally to all residents of a facility regardless of whether the residents are beneficiaries of Medicare or Medicaid, or are private pay residents. 242 U.S.C. § 1395i-3(b)(4)(C)(i); 42 C.F.R. § 483.35 (2019). Page 1 GAO-21-408 Skilled Nursing Facilities potentially preventable hospital readmissions and other poor outcomes. 3 In addition, a 2013 study by the HHS Office of Inspector General noted that hospital readmissions can result in billions of dollars in additional Medicare program spending because Medicare pays hospitals for these incidents in addition to payments made to SNFs for the care that they provide. 4 In August 2020, the HHS Office of Inspector General also raised questions about fluctuations in 2018 SNF staffing levels and whether this variation was appropriately captured by CMS’ rating system for consumers. 5 Further, in September 2020, an independent commission of experts that CMS assembled to address safety and quality in nursing homes in light of the Coronavirus Disease 2019 (COVID-19) pandemic— which we refer to as the Nursing Home Commission—noted long- standing staffing challenges that significantly contribute to current gaps in resident care. 6 CMS has developed a rating system to help beneficiaries select SNFs based on their quality of care and nurse staffing levels, and it publishes these ratings on its Care Compare website—which incorporated the former Nursing Home Compare website in December 2020. 7 Starting in April 2018, in response to a requirement in the Patient Protection and Affordable Care Act, CMS began basing staffing data used in this rating system on actual payroll-based journal (PBJ) staffing data instead of SNF 3Centers for Medicare & Medicaid Services (CMS). Report to Congress: Appropriateness of Minimum Nurse Staffing Ratios in Nursing Homes Phase II Final Report. Baltimore, MD: CMS; 2001, (hereafter referred to as the “CMS staffing study”). CMS identified these minimum staffing thresholds in response to a provision in the Omnibus Budget Reconciliation Act of 1990. Pub. L. No. 101-508, § 4801(e)(17)(B), 104 Stat. 1388, 1388- 218 (1990).These thresholds have been validated in more recent studies for some nurse types. 4Departmentof Health and Human Services, Office of Inspector General, Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (Washington, D.C.: November 2013). 5Department of Health and Human Services, Office of Inspector General, Some Nursing Homes’ Reported Staffing Levels in 2018 Raise Concerns; Consumer Transparency Could Be Increased (Washington, D.C.: August 2020). 6MITRE, Coronavirus Commission on Safety and Quality in Nursing Homes: Commission Final Report, PRS Release Number 20-2382 (September 2020). 7InDecember 2020, CMS began using a new Care Compare website that merged eight healthcare compare tools, including Nursing Home Compare. For purposes of our report, we are referring to the nursing home component of Care Compare. Page 2 GAO-21-408 Skilled Nursing Facilities self-reported staffing data. 8 This change allows CMS to collect staffing information from all Medicare-certified SNFs for various types of staff, including RNs, licensed practical nurses, and nurse aides. 9 You asked us to examine staffing levels, the characteristics of SNFs with low staffing rates, and the relationship, if any, between staffing levels and critical incidents—including hospital readmissions—for Medicare residents receiving SNF care. This report 1. describes SNF performance on selected staffing measures in in 2019; 2. examines the extent to which CMS reports key staffing information on Care Compare; 3. describes the relationship, if any, between staffing and the rate of critical incidents; and 4. examines the spending Medicare incurred for potentially preventable critical incidents and the implications for Medicare SNF payment policy. Our report also describes the characteristics of SNFs that had low average annual staffing rates or decreases in weekend staffing for RN and total nurse staffing. (See appendix I.) To describe SNF performance on selected staffing measures, we analyzed publicly-available PBJ quarterly data from CMS for 2018 and 2019—the most recently available at the time of our study—for about 14,423 of the over 15,500 SNFs nationwide (93 percent) that had reported staffing data for at least three of the four quarters in each year. The PBJ data provide information on daily staffing levels for each nurse type: RN, licensed practical nurse, and nurse aide, as well as for total nurse staffing for each SNF. We used the PBJ data to determine each SNF’s performance relative to three staffing measures—the federal requirement for RN staffing; CMS case-mix staffing measures based on residents’ need at each SNF; and quality-related thresholds from the CMS staffing study that identified minimum staffing thresholds needed to 8Pub. L. No. 111-148, §§ 6103, 6106, 124 Stat. 119, 704, 712 (2010) (codified, as amended, at 42 U.S.C. §§ 1320a-7j(g), 1395i-3(i)). 9On March 23, 2020, CMS temporarily waived the requirement for SNFs to submit PBJ data due to the Coronavirus Disease (COVID-19) pandemic, and ended the waiver on June 25, 2020. Page 3 GAO-21-408 Skilled Nursing Facilities avert quality problems. 10 Additionally, we interviewed seven stakeholders knowledgeable about SNF staffing and quality issues, including key researchers, advocates for long term care facilities and for consumers of long term care, and representatives of the Medicare Payment Advisory Commission. While not necessarily representative of all perspectives on these topics, our selected stakeholders represent leading and diverse views, and have published extensively on issues related to our reporting objectives. We also interviewed CMS officials and reviewed the Nursing Home Commission’s recommendations on nursing home staffing and quality of care. 11 To examine the extent to which CMS reported key staffing information on Care Compare, we reviewed the statutory requirements for information to be included on Care Compare and the system’s goals, reporting and development of information from Care Compare and the staffing rating system technical guides, staffing data submission and collection requirements in the PBJ Policy Manual, and CMS memoranda to state survey agency directors on the agency’s plans for (among other things) Care Compare reporting on turnover and tenure. We then compared the reported information on staffing from the Care Compare website to these various requirements and guides, as well as determined the extent to which CMS reports information on weekend staffing levels and any quality of care thresholds, such as those in the CMS staffing study. We also examined the use of contract and employed staff for each nurse type for all SNFs that reported this information in 2019. Additionally, we interviewed CMS officials and the stakeholders knowledgeable about 10See Appropriateness of Minimum Nurse Staffing Ratios. SNFs are not required to meet the case mix measures although CMS uses them to help determine SNF staffing ratings. While CMS does not use the CMS staffing study thresholds, researchers and others suggest the thresholds be used for SNF ratings or as minimum staffing requirements for SNFs. For example, stakeholders we interviewed—including a researcher and advocates for consumers of long term care—support the CMS staffing study thresholds for use in SNF ratings or as staffing requirements. Others have also suggested they be used by CMS—see Charlene Harrington, et al., “Appropriate Nurse Staffing Levels for Nursing Homes,” Health Services Insights, vol. 13 (2020); Charlene Harrington et al., “The Need for Higher Minimum Staffing Standards in U.S. Nursing Homes,” Health Services Insights (2016); Lori Smetanka, “Promoting Elder Justice: A Call for Reform; Hearing Before the U.S. Senate Committee on Finance,” National Consumer Voice for Quality Long-Term Care (July 23, 2019); Institute of Medicine, Keeping Patients Safe: Transforming the Work Environment of Nurses (Washington, D.C.: National Academy of Medicine, 2004). 11MITRE, Commission Final Report. Page 4 GAO-21-408 Skilled Nursing Facilities SNF staffing and quality of care that we identified earlier about staffing information. To describe the relationship between staffing and the rates of critical incidents, we used publicly available CMS data from Care Compare, for each SNF, on the percentage of residents who had what CMS defines as a potentially preventable hospital readmission or an outpatient visit to the emergency room (ER) within 30 days of the SNF admission date during calendar years 2018 and 2019. 12 (These were the most recent SNF-level available data at the time of our analysis.) We grouped SNFs into 10 groups based on their average annual RN and total hours per resident day (HPRD), and compared the rates of critical incidents for SNFs in the lowest and highest staffing groups respectively. To examine the spending that Medicare incurred for critical incidents in 2018 we used data from multiple sources. Specifically, we obtained data from CMS on residents admitted for short-stay SNF admissions in 2018 who had a potentially preventable hospital readmission or an ER visit within 30 days of the SNF admission date. 13 (The resident-level data was the most recently available complete data at the time of our analysis). We next examined 2018 Medicare claims data to determine Medicare payments for these readmissions and ER visits. We reviewed Medicare payment policies to assess the extent to which these potentially preventable critical incidents and Medicare’s spending on them is consistent with the agency’s goal of reducing readmissions, ensuring quality care, and being a prudent purchaser of services. We assessed the reliability of the various datasets we used for our objectives by reviewing relevant CMS data documentation, performing manual and electronic tests of the data to identify any outliers or anomalies, and comparing the data with other published sources where available. For example, to assess the reliability of PBJ data, we compared 12The 30-day hospital readmission measure only includes potentially preventable or unplanned readmissions. For example, planned readmissions such as admissions for inpatient chemotherapy are excluded. CMS identifies these planned admissions based on diagnoses or procedure codes included on the payment claim. Hospital readmissions also include observation stays—outpatient hospital stays in which patients receive medical services to assess whether they should be admitted to the hospital or be discharged. CMS calculates these rates of critical incidents based on Medicare claims data. CMS also adjusts these rates to account for differences in demographics, functional status, and medical conditions of residents that could account for different rates of critical incidents across SNFs. 13Short-stay residents are those who have a SNF stay that is 100 days or less. Page 5 GAO-21-408 Skilled Nursing Facilities our calculations of nurse HPRD to those that CMS publicly provides on Care Compare. We determined that these datasets were sufficiently reliable for the purposes of our reporting objectives. For additional information about our methodology for conducting these analyses, see appendix II. We conducted this performance audit from September 2019 to July 2021 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Background SNF Characteristics SNFs are a type of facility that provides short-term, temporary care for residents undergoing medically necessary rehabilitation treatment after a hospital stay. For example, a SNF resident could be recovering from a surgical procedure such as a hip or knee replacement or from a medical condition such as a stroke. Unlike facilities that provide a residence for people in need of round-the-clock care that Medicare does not cover, SNFs treat residents that typically have the potential to function independently after a limited period of care. SNFs therefore generally have multidisciplinary specialized staff such as rehabilitation specialists, physical therapists, and occupational therapists, among others. SNFs participating in Medicare are required to comply with federal standards and CMS contracts with state agencies to send surveyors to conduct initial and follow-up visits to assess such compliance. The majority of SNFs are located in urban areas, have been in operation for at least 20 years, and have between 51 to 200 beds. Nearly all SNFs are certified for participation in Medicare and also provide Medicaid services. Most SNFs (96 percent) are freestanding (not attached to a hospital), and about 70 percent of SNFs are for-profit. 14 SNF Nurse Staffing SNFs employ three types of nursing staff: RNs, licensed practical nurses, and nurse aides. The responsibilities and salaries of these three types of nurses are based on their levels of education. 14SNF characteristics determined by GAO analysis of 2019 PBJ staffing data. Page 6 GAO-21-408 Skilled Nursing Facilities • RNs have at least a 2-year degree and are licensed in a state. Because of their advanced training and ability to provide skilled nursing care, RNs are paid more than other nursing staff. Generally, RNs are responsible for managing residents’ nursing care and performing complex procedures, such as starting intravenous feeding or fluids. • Licensed practical nurses have a 1-year degree, are also licensed by the state, and typically provide routine bedside care, such as taking vital signs. • Nurse aides generally work under the direction of licensed practical nurses, have at least 75 hours of training, and have passed a competency exam. Nurse aides’ responsibilities usually include assisting residents with eating, dressing, bathing, and toileting. They typically have more contact with residents than other nursing staff, thus providing the greatest number of hours of care per resident day—a measurement of nursing care. Nurse aides are generally paid less than RNs and licensed practical nurses. The mix of nurse types that SNFs employ is generally related to the needs of the residents served. For example, a higher proportion of RNs may be employed to meet residents’ needs in SNFs that serve more residents with acute care needs or in SNFs with specialty care units (such as units for residents who require ventilators for assistance with breathing). However, as we reported in 2016, SNFs may not be able to achieve their ideal staffing of the various nurse types based on resident need due to, for example, high turnover among licensed practical nurses and nurse aides. 15 As we additionally reported in 2016, staffing decisions may also be driven by financial goals. Nurse staffing represents the largest component— about 53 percent—of SNFs’ operating costs, according to a 2019 analysis of SNF industry trends. 16 For-profit SNFs generally have a goal of making profits that are distributed among their owners and stockholders, and several studies have demonstrated that for-profit SNFs generally have lower nurse-to-resident staffing ratios compared with nonprofit SNFs, 15See GAO, Skilled Nursing Facilities: CMS Should Improve Accessibility and Reliability of Expenditure Data, GAO-16-700 (Washington, D.C.: Sept. 7, 2016). 16See CliftonLarsonAllen Wealth Advisors, LLC, 34th SNF Cost Comparison and Industry Trends Report (2019). Page 7 GAO-21-408 Skilled Nursing Facilities likely allowing them to increase their profit margins by reducing their personnel costs. 17 Staffing Standards and There is no federal requirement specific to the minimum number of Quality of Care nurses needed per number of residents for SNFs. CMS does not require SNFs to have a minimum number of nurses per resident, citing concerns that a mandated ratio could result in unintended consequences such as facilities staffing to the minimum and stifling staffing innovation. In a 2016 Final Rule, CMS stated that it would instead require SNFs to conduct an annual facility assessment through which they would make staffing decisions after taking into account resident needs and staff ability to provide care. 18 We therefore considered three other measures for SNF nurse hours of staffing for purposes of our report: one is a federal requirement for a minimum number of RN hours, one is used by CMS for rating SNFs, and one (which is tied to quality of care), is not used, though it stems from a CMS study and has been recommended for use as SNF staffing thresholds—see table 1. 17Forexample, see Charlene Harrington et al., “Nurse Staffing and Deficiencies in the Largest For-Profit Nursing Home Chains and Chains Owned by Private Equity Companies,” Health Services Research, vol. 47, no. 1 (2012); Charlene Harrington et al., “Ownership, Financing, and Management Strategies of the Ten Largest For-Profit Nursing Home Chains in the United States,” International Journal of Health Services, vol. 41, no. 4 (2011); and The Henry J. Kaiser Family Foundation, Overview of Nursing Facility Capacity, Financing, and Ownership in the United States in 2011 (Washington, D.C.: The Kaiser Commission on Medicaid and the Uninsured, June 2013). 18See Medicare and Medicaid Programs; Reform of Requirements for Long-Term Care Facilities, 81 Fed. Reg., 68753 – 68759 (Oct. 4, 2016). CMS officials informed us that the agency had not updated its position since this final rule. Page 8 GAO-21-408 Skilled Nursing Facilities Table 1: Measures for Nurse Staffing In Medicare Skilled Nursing Facilities (SNF) Centers for Medicare & Medicare Federal requirementa Services (CMS) case-mix CMS quality-related Staffing measure 8 consecutive hours a day, 7 Hours per resident day (HPRD) At least 0.55 HPRD for RN staffing and days a week for registered calculations that vary based on 3.55 HPRD for total nurse staffing for nurses (RN). Additionally, 24 demographics and medical SNF admissions (shorter than 90 hours a day for licensed nursing conditions of residents in each SNF. days).b services which are sufficient to meet the nursing needs of its residents. Purpose Enacted in 1987 to improve CMS originally developed case-mix CMS conducted a congressionally- standards of care in nursing staffing measures to determine SNF mandated study to determine if an homes.c payments. CMS now uses these appropriate minimum ratio of nurses to measures for rating SNFs’ staffing on residents could be determined from its Care Compare website. To data. The study identified the hours per compare SNFs fairly, CMS adjusts resident day thresholds below which reported staffing for differences in residents are at substantially increased residents’ varying medical risk of quality problems. conditions.d SNFs are not required to meet these SNFs are not required to meet these thresholds but knowledgeable measures—but CMS uses them to stakeholders endorse them and determine SNF staffing ratings on its recommend their use for SNF staffing Care Compare website. thresholds.f Data used to Not available The measures were based on a The study was based on cost and develop the study using a sample of 205 SNFs quality data from a representative measure representing approximately 10,000 sample of over 5,000 SNFs in 10 states. residents in 15 statese Key limitations The requirement is not tied to The measures are too low due to two The CMS staffing study that reported identified by the number of residents (e.g., it key limitations: First, the study’s the thresholds was published in 2001, stakeholdersf is the same for a 60-bed facility sample of nursing homes was not although stakeholders have noted that or a 600-bed facility); their representative of all nursing homes. the thresholds have been validated in medical conditions; or quality of Second, the study recorded the more recent studies and are therefore care outcomes. average time nurses spent on care still relevant. The requirement does not activities, but did not examine if the identify adequate RN staffing care provided was sufficient to avoid levels needed to care for nursing quality problems. home residents. Source: GAO analysis of Centers for Medicare & Medicaid Services information. | GAO-21-408 a CMS may waive this requirement under certain conditions. See 42 U.S.C. §§ 1395i-3(b)(4)(C)(ii); 42 C.F.R. § 483.35 (2019). b The CMS staffing study identified higher staffing levels for long-stay residents (those 90 days or longer) of 0.75 HPRD for RNs and 4.1 HPRD for total nurse staffing. See Centers for Medicare & Medicaid Services (CMS), Report to Congress: Appropriateness of Minimum Nurse Staffing Ratios in Nursing Homes Phase II Final Report (Baltimore, Md. CMS; 2001). c Some states require a minimum number of nursing hours per resident per day, while others require a minimum number of nursing staff relative to the number of residents. Some states’ requirements apply only to licensed nurses, while others apply to nurse aides as well. d For example, a SNF that treats residents that are much older or with more complex medical conditions than the average SNF would require more nurse staffing than the average SNF. Page 9 GAO-21-408 Skilled Nursing Facilities e See Iowa Foundation for Medical Care, Staff Time Resource Intensity Verification (STRIVE) Project (Sept. 1, 2011). See Charlene Harrington, et al., “Appropriate Nurse Staffing Levels for Nursing Homes,” Health f Service Insights, vol. 13 (2020); Charlene Harrington et al., “The Need for Higher Minimum Staffing Standards in U.S. Nursing Homes,” Health Services Insights (2016); L. Smetanka, “Promoting Elder Justice: A Call for Reform; Hearing Before the U.S. Senate Committee on Finance,” National Consumer Voice for Quality Long-Term Care (July 23, 2019); Institute of Medicine, Keeping Patients Safe: Transforming the Work (Washington, D.C.: National Academy of Medicine: 2004). In addition, stakeholders we interviewed (including a researcher and advocates for consumers of long term care) support the CMS staffing study thresholds for use in SNF ratings or as staffing requirements. Numerous studies have explored the relationship between nurse staffing and quality of care and found that low nurse staffing is linked with poorer outcomes and higher rates of critical incidents. 19 A number of organizations have therefore suggested CMS could use the minimum daily staffing thresholds identified in the CMS staffing study because the study identified minimum thresholds below which higher rates of critical incidents were observed. 20 Critical incidents have been examined by the HHS Office of Inspector General and other stakeholders because they are viewed as a measure of nursing home quality. Specifically, preventable hospital readmissions or outpatient ER visits may be indications of potentially poor or inadequate care in the SNFs. 21 An HHS Office of Inspector General 2014 study noted that critical incidents can create additional problems for vulnerable medically frail residents because they • often occur during nights or weekends with limited prior planning of the hospital readmission, and staff who are not familiar with the residents’ history may end up providing care; • can disrupt the residents’ SNF care plans and present greater potential for residents’ stress and disorientation; and 19For example, H. Lin, “Revisiting the Relationship between Nurse Staffing and Quality of Care in Nursing Homes: An Instrumental Variables Approach,” Journal of Health Economics, vol. 37 (2014); and J. He et al., “Nurse Staffing and Patient Outcomes: A Longitudinal Study on Trend and Seasonality,” BMC Nursing (2016). 20Harrington et al., “The Need for Higher Minimum Staffing Standards,” and Smetanka, “Promoting Elder Justice.” 21Planned hospital readmissions such as for maintenance chemotherapy and rehabilitation are not examined because they are expected to occur. Page 10 GAO-21-408 Skilled Nursing Facilities • can result in billions of dollars in additional Medicare program spending because Medicare pays hospitals for these incidents in addition to SNF daily payment rates. 22 CMS has also reported—for example, in its technical guide for its staffing rating system and in memoranda to state survey agency officials—that nurse staffing has a strong impact on the quality of care nursing homes— which include SNFs—deliver. For example, in a 2018 memorandum, CMS reported the results of its study that found that as RN hours increased, nursing facilities had better performance on three quality measures used in its staffing rating system. 23 Care Compare and the Since 1998, CMS has reported information related to the quality of CMS Five-Star Quality nursing homes on a public website—originally on the Nursing Home Compare website, and as of December 2020, on its Care Compare Rating System website. The goals for the website include helping consumers compare nursing home quality and assisting them in finding other information about nursing homes. CMS has increased the amount of information reported on the website over time—initially it reported information about nursing home characteristics and nursing home health inspection results. Later, CMS began reporting additional information, for example, the ratio of nursing staff to residents. Federal law now requires that staffing information be included in the public website as part of the information provided for comparisons of nursing homes. 24 The website must include, for each SNF, data on the hours of care provided daily for each resident, which is expressed as hours per resident per day, based on direct care 22Department of Health and Human Services, Office of Inspector General, Adverse Events in Skilled Nursing Facilities: National Incidence Among Medicare Beneficiaries, OEI-06- 11-00370, (February 2014). 23See CMS memorandum QSO-18-17-NH, April 6, 2018. 2442U.S.C. § 1395i–3(i). The staffing data must be provided in a format that is clearly understandable to consumers of long-term care services and allows consumers to compare differences in staffing between facilities and with state and national averages. Page 11 GAO-21-408 Skilled Nursing Facilities staffing information from payroll data submitted by SNFs in PBJ, including information on staffing tenure and turnover. 25 To further assist beneficiaries in selecting SNFs, in 2008 CMS included on its website a Five-Star Quality Rating System (Five-Star System) that rates all Medicare-certified SNFs on several dimensions including nurse staffing levels and quality of care. According to CMS, the primary goal of the Five-Star System is to provide beneficiaries with an easy way to understand nursing home quality and distinguish between high- and low- performing nursing homes. Specifically, the Five-Star System assigns each nursing home an overall “star” rating, ranging from one to five. Nursing homes with five stars are considered to have much above average quality, while nursing homes receiving one star are considered to have much below average quality. 26 The overall star rating is based on ratings for three separate components including staffing and quality measures. To determine staffing ratings, CMS first calculates the hours per resident day (HPRD) for RN and total nurse staffing based on data reported in the PBJ system. Next, CMS adjusts this reported HPRD to account for differences in case-mix (which reflect the level of residents’ nursing staff needs based on the complexity of their medical conditions). CMS then compares the adjusted RN and total nurse HPRD for each SNF to staffing thresholds that it sets for each to determine the staffing rating, and assigns the appropriate ratings for RN and total nurse staffing. Finally, CMS averages the RN and total nurse ratings, rounding towards the RN rating if the two ratings are different—see figure 1. 25SNFs are required to submit direct care staffing information based on payroll and other verifiable and auditable data regarding the category of work a certified employee performs, resident census data and case mix, and employee turnover and tenure as part of PBJ data. See 42 U.S.C. § 1320a-7j(g). While the statute does not define turnover or tenure, the Bureau of Labor Statistics generally defines turnover as separation of an employee from an establishment, and tenure as a measure of how long an employee has been with a current employer over a specific time period. 26In April 2018, CMS announced that it would automatically downgrade a SNF’s staffing star rating to one star if it reported no RN hours for at least seven days within a quarter. In April 2019, CMS revised this rating downgrade and now downgrades the staffing rating if no RN hours are reported for at least four days within a quarter, and increased the threshold a facility must exceed to obtain a five star staffing rating. Page 12 GAO-21-408 Skilled Nursing Facilities Figure 1: Example of Centers for Medicare & Medicaid Services (CMS) Determination of Staffing Rating for a Hypothetical Skilled Nursing Facility As with staffing ratings, the Five-Star System’s quality ratings are based on the extent to which SNFs’ performance on various quality measures— such as measures of rates of critical incidents—meet metrics set by CMS that are adjusted for residents’ demographics and clinical conditions. Medicare Coverage of and Medicare covers SNF care for beneficiaries who need daily skilled Payment for SNF Care nursing care or therapy for conditions related to a hospital stay of at least 3 consecutive calendar days, if the hospital discharge occurred within a specific period—generally, no more than 30 days—prior to admission to the SNF. For qualified beneficiaries, Medicare will pay for medically necessary SNF services, including room and board; nursing care; and ancillary services, such as drugs, laboratory tests, and physical therapy, for up to 100 days per incidence of illness. In the Balanced Budget Act of 1997, Congress established a SNF prospective payment system under which SNFs receive a daily payment rate that covers almost all services provided to Medicare beneficiaries Page 13 GAO-21-408 Skilled Nursing Facilities during their stay. 27 CMS adjusted the daily payment rate according to the SNF’s case-mix (or residents’ nursing staff needs for care based on assignment to one of the 66 resource utilization groups) and geographic variation in labor costs. The daily rate covers the cost of nursing, therapy, ancillary services such as drugs, laboratory tests and imaging, with greater payment for a resident assigned to a group requiring more care. 28 As required by statute, CMS makes two adjustments to SNF daily payment rates. Specifically: • Starting October 1, 2018, CMS began implementing the SNF Value- Based Purchasing (VBP) program to incentivize SNFs to improve their quality of care. 29 Under the program, CMS is required to withhold 2 percent of adjusted daily payments across all SNFs each year and redistribute between 50 and 70 percent of the withheld payments back to SNFs as incentive payments based on their performance in controlling the number of hospital readmissions occurring within 30 days of discharge from the initial hospital stay to a SNF. 30 (CMS 27Pub. L. No. 105-33, § 4432, 111 Stat. 251, 414 (1997) (codified, as amended, at 42 U.S.C. § 1395yy(e)). 28Payment rates are updated annually for each fiscal year to reflect changes in the costs of goods and services used to provide SNF care. 29The Protecting Access to Medicare Act of 2014 required the Secretary to establish a SNF readmission quality measure and SNF Value-Based Purchasing (VBP) program using the readmission measure. Pub. L. No. 113-93, § 215, 128 Stat. 1040, 1048 (2014) (codified, as amended, at 42 U.S.C. § 1395yy(g)-(h)). All SNFs that are paid under Medicare’s prospective payment system are included in the program currently. However, the Consolidated Appropriations Act, 2021 provides for the exclusion of SNFs for which there are not a minimum number of cases or measures on or after October 1, 2022. Pub. L. No. 116-260, div. CC, title I, § 111, 134 Stat. 1182, 2945 (2020). 30CMS has set that percentage at 60 percent. The remaining 40 percent of withheld payments is counted as savings to Medicare. SNFs receive incentive payments based on the higher of two performance scores: an improvement score that is based on the extent to which SNFs reduced their rates of unplanned readmissions over a defined period of time; and an achievement score that is based on each SNF’s rate of unplanned readmissions relative to a benchmark. For example, incentive payments for fiscal year 2020 were based on the extent to which SNFs had reduced their rates of unplanned readmissions in fiscal year 2018 compared to fiscal year 2016. The Consolidated Appropriations Act, 2021 authorizes the Secretary to apply up to ten additional quality measures in the SNF Value-Based Purchasing program on or after October 1, 2023. Pub. L. No. 116-260, div. CC, title I, § 111, 134 Stat. 1182, 2945 (2020). CMS is currently evaluating which measures might be appropriate to consider within this authority. The Act does not make any changes to the 2 percent withhold or the thresholds for redistribution of the withheld payments to SNFs. Page 14 GAO-21-408 Skilled Nursing Facilities redistributes 60 percent of the withheld payments; the remainder is returned back to the Medicare program as savings). SNFs with low performance scores do not receive any incentive payments (essentially experiencing an up to 2 percent reduction in their per diem payments). According to CMS data, 9,878 of the 15,202 SNFs (65 percent) participating in the program in fiscal year 2020 had payment decreases of up to 2 percent while 2,909 SNFs (19 percent) received payment increases of up to 3.1 percent. 31 • In addition, under the SNF Quality Reporting Program, starting in fiscal year 2018 SNFs were required to submit data on certain quality measures, including rates of hospital readmissions within 30 days of discharge from the SNF. 32 CMS is required to reduce the annual payment update by two percent for SNFs that do not submit data in accordance with the statute. 33 31The remaining 16 percent had no change in their payments. In 2019, about 72 percent of 15,305 participating SNFs received payment decreases of up to 2 percent while the remaining SNFs had increases of up to 1.6 percent. The incentive payments were based on reductions in SNFs’ rates of unplanned readmissions in calendar year 2017 compared to calendar year 2015. 32See 42 U.S.C. §§ 1395yy(e)(6), 1395lll. 3342 U.S.C. § 1395yy(e)(6)(A)(i). Page 15 GAO-21-408 Skilled Nursing Facilities Our analysis of SNF staffing data shows that in 2019 almost all SNFs— Almost All SNFs nearly 99 percent— frequently met a federal requirement to have at least Frequently Met the one RN on site at least 8 hours per day. 34 Throughout this report, we define “frequently met” as meeting the requirement 80 percent or more of Federal RN Staffing days in a year. Of the small number of SNFs that did not have an RN Requirement, while onsite every day, the majority recorded RN absences for 5 or fewer days within the year. These trends were generally similar in 2018. See Fewer SNFs appendix III for average SNF staffing levels for RNs and other nurse Frequently Met CMS types and changes in these levels over time. Staffing Measures, Compared to the federal RN requirement, fewer SNFs frequently met Particularly on CMS’s staffing measures adjusted for case-mix, which are specific staffing levels that CMS calculates for each SNF based on the severity of Weekends and for their residents’ medical conditions. Specifically, nearly half of SNFs RNs frequently met (80 percent or more of days in 1 year) these case-mix staffing measures for RN staffing, while 9 percent of SNFs infrequently met (19 percent or fewer days in 1 year) these measures during this period. (See fig. 2.) Total nurse staffing (RNs and all other nurse types) followed similar trends. These trends were generally similar in 2018. While SNFs are not required to meet these measures, which can vary by facility, CMS uses these measures to calculate staffing star ratings on Care Compare. 34Absent a waiver, SNFs must also have licensed nurse staffing on site 24 hours a day. Our study focused on the federal requirement for RN staffing because studies have shown the strongest link between RN staffing and quality compared to other nurse types. For example, see H. Lin, Revisiting the Relationship. Page 16 GAO-21-408 Skilled Nursing Facilities Figure 2: Percentage of Skilled Nursing Facilities That Met the Centers for Medicare & Medicaid Services Case-Mix Staffing Measures for Registered Nurse Staffing in 2019 Note: CMS calculates case-mix staffing measures for each individual skilled nursing facility (SNF); these measures specify the number of hours per resident per day for each type of nurse based on the severity of residents’ medical conditions in each SNF. Compared to the federal RN requirement and CMS’s case-mix staffing measures, in 2019, fewer SNFs frequently met quality-related thresholds identified by the CMS staffing study. These thresholds are minimum staffing levels that the study identified as needed to avoid poor quality of care. 35 Specifically, about 24 percent of SNFs frequently met (80 percent or more of days in 1 year) this threshold for RN staffing in 2019 while another 26 percent of SNFs infrequently met this threshold for RN staffing. (See fig. 3.) Total nurse staffing followed similar trends; see appendix III for additional information on total nurse staffing at SNFs in 2019 relative to quality-related thresholds. In addition, trends in 2018 were similar to 2019 trends. Although SNFs are not required to meet these thresholds, stakeholders have endorsed them and recommended that they be used in SNF ratings or as minimum staffing thresholds. 35Appropriateness of Minimum Nurse Staffing Ratios in Nursing Homes. The minimum staffing levels identified in the study are 0.55 HPRD for RN staffing, and 3.55 HPRD for total nurse staffing. Page 17 GAO-21-408 Skilled Nursing Facilities Figure 3: Percentage of Skilled Nursing Facilities That Met Quality-Related Registered Nurse Staffing Thresholds in 2019 Note: CMS conducted a Congressionally-mandated study, Appropriateness of Minimum Nurse Staffing Ratios in Nursing Homes, which in 2001 identified minimum staffing thresholds—the hours per resident day below which residents are at substantially increased risk of quality problems. Our analysis of PBJ data also found that in 2019 less than one-third of SNFs had RN weekend staffing that frequently met CMS’s case-mix staffing measures. A smaller share—12 percent—of SNFs had RN weekend staffing that frequently met the quality-related RN staffing threshold identified in the CMS staffing study, while over 60 percent of SNFs had weekend staffing that infrequently met the threshold during this period. This performance reflects the fact that average RN staffing hours decreased over 40 percent on weekends, more than double the decrease for any other nurse type. (See fig. 4.) As with other staffing trends, decreased weekend staffing trends in 2018 were similar to 2019 trends. Page 18 GAO-21-408 Skilled Nursing Facilities Figure 4: Average Adjusted Skilled Nursing Facility Staffing by Nurse Type, by Day of Week, 2019 Page 19 GAO-21-408 Skilled Nursing Facilities CMS Reports Certain Key Staffing Information on Care Compare, but Does Not Include Information on Weekend Staffing Levels or Related to Minimum Staffing Thresholds CMS Reports Some Key CMS reports certain key staffing information on Care Compare as part of Staffing Information on its Five-Star System reporting. This information is reported as part of the star staffing rating component for a SNF, and is updated quarterly. 36 For Care Compare Such as example, along with a SNF’s star ratings for total and RN staffing, CMS Staffing Ratings, but Not reports the hours worked in relation to the number of facility residents— Other Information Such as the HPRD—for a SNF’s total number of licensed nurses, and separately Weekend Staffing Levels reports the HPRD for RNs, licensed practical nurse/licensed vocational nurses, nurse aides, and physical therapist staff. 37 For the nurse total and for each nurse type, CMS also reports the corresponding national average HPRD, and the average HPRD calculated for the state where the SNF is located. However, CMS does not report other required key staffing information on Care Compare. Specifically, CMS does not currently report data on SNF staff turnover and tenure that the agency is required to report on its website. Staffing measures such as turnover and tenure can be linked to quality of care, such as staff turnover leading to poorer quality outcomes, according to stakeholders we interviewed that included an expert on staffing and quality of care and advocates for consumers in facilities such as nursing homes. CMS officials said that they have been analyzing information on turnover with available PBJ data and are establishing 36PBJ staffing data are reported quarterly, so new staffing measures and ratings are calculated and posted quarterly. 37Total nurse HPRD staffing includes RN, licensed practical nurse, and nurse aide staffing. The ratio is expressed as hours and/or minutes. Page 20 GAO-21-408 Skilled Nursing Facilities turnover rates for nursing staff, but have not yet reported these data due to other pressing priorities related to responding to COVID-19, especially for nursing homes. 38 They noted that they are likely to report data on staff turnover and tenure on Care Compare in 2021. CMS officials also said that they have been examining SNF use of contract staff (temporary staff from contracting agencies employed in lieu of permanent staff), but the agency does not have plans to establish a corresponding metric at this time because SNFs’ use of contract staff tends to be low—no more than 3 percent of nurse staff are contract staff. The numbers of staff employed as contract staff is included in SNF’s PBJ data reported to CMS, though it is not required to be reported on Care Compare. For more information on the distribution of contract staff, see appendix IV. Additionally, while we found that SNF nurse staffing decreased on weekends compared to weekday staffing for all nurse types, but more significantly for RN staffing, CMS does not report weekend staffing levels on Care Compare. Currently, beneficiaries attempting to select the best SNF for their needs would not be able to consider the stability of staffing throughout the entire week by using the information available on Care Compare, which is contrary to the website’s goal to help beneficiaries choose quality SNFs. 39 CMS also does not incorporate information on weekend staffing in its staffing ratings on Care Compare. According to CMS officials, the agency has considered incorporating information on weekend staffing levels but has not done so because SNFs with low weekend staffing also tend to have low average staffing levels. Therefore, according to CMS officials, these SNFs would have already received a 1-star staffing rating on Care Compare. Officials said that incorporating weekend staffing fluctuations into ratings would not be of any additional benefit to consumers; rather, providing too much information could confuse rather than help them. 38We were unable to determine rates of staff tenure and turnover because SNFs are not required to report employee start and termination dates in the PBJ system. However, CMS officials told us that they have been measuring these rates by tracking the dates on which hours worked were first reported and when they were stopped for each employee in the PBJ system. 39The primary goal of Care Compare is to provide residents and their families with an easy way to understand nursing home quality and distinguish between high and low-performing nursing homes. Page 21 GAO-21-408 Skilled Nursing Facilities However, our analysis shows that SNFs’ Care Compare ratings are not a reliable indicator of their weekend staffing levels. Although we found that SNFs with lower staffing ratings (1 or 2 stars) often had weekend nurse staffing that was lower than what was indicated by their CMS case-mix measures, we also found this to be true among some SNFs with higher staffing ratings. Specifically, in 2019 nearly 3,000—or 31 percent—of SNFs with Care Compare ratings of 3 or more stars had average weekend staffing hours that were lower than CMS case-mix staffing hours for RN staffing. 40 Further, the SNFs with staffing hours that were lower than CMS case-mix staffing hours on weekends tended to staff below the staffing hours to a large degree. For example, we found that the SNFs with a 3-star rating had, on average, weekend RN staff who worked 0.28 HPRD, whereas the comparable RN case-mix measure was 0.37 HPRD, a 24 percent difference. In other words, we found that these RN staff on average worked about 17 minutes per resident each weekend day, compared to the case-mix measure average of 22 minutes. We also found that some SNFs with equivalent staffing ratings had different levels of weekend staffing. For example, we found two SNFs in Massachusetts that had the same 3-star staffing rating, though one had RN staffing on weekends consistent with its weekday staffing, while the other experienced an average drop in RN staffing of nearly 70 percent on weekends. By not assessing the feasibility of incorporating information about decreases in weekend staffing into the ratings on Care Compare, CMS potentially limits Medicare beneficiaries’ or their representatives’ ability to make more fully informed choices among SNFs, and potentially avoid risks of critical incidents associated with low weekend staffing. 41 One stakeholder we interviewed from a national nursing home patient advocacy coalition, as well as CMS officials, told us that decreases in staffing, particularly for RNs, could lead to critical incidents. According to this stakeholder, this is because, unlike other nurse staff, RNs are 40For this comparison, we compared reported weekend staffing to the CMS case-mix staffing quarterly averages, since daily case-mix staffing hours were not uniformly available for all SNFs and quarters. GAO determined that case-mix staffing hours do not tend to differ from weekdays to weekends. 41In 2016, we made four recommendations, including that adding information to the Five- Star rating system could benefit consumers trying to differentiate between high- and low- performing nursing homes. HHS agreed with three of the four recommendations, and, as of July 2019, had implemented three of the four recommendations. GAO, Nursing Homes: Consumers Could Benefit from Improvements to the Nursing Home Compare Website and Five-Star Quality Rating System, GAO-17-61 (Washington, D.C.: Nov. 18, 2016). Page 22 GAO-21-408 Skilled Nursing Facilities uniquely qualified to clinically assess and address changes in residents’ conditions and take action to help avoid critical incidents. Similar concerns were recently reported by the Nursing Home Commission that addressed nursing home safety and quality in light of COVID-19. Specifically, in its September 2020 report the Nursing Home Commission stated that RNs address sudden clinical changes that require, among other things, assessment, intervention, and possible transfer of the resident to a higher level of care, but that RNs are insufficiently present in nursing homes, especially during weekend hours. 42 Staffing Information We also found that CMS does not report minimum staffing thresholds Reported on Care below which SNF residents are at increased risk of quality problems, such as the total nurse and RN thresholds identified in the CMS staffing study. Compare Does Not By not reporting such information on Care Compare, CMS limits Include Comparison of beneficiaries’ ability to make informed choices about care quality when SNF Staffing to Minimum selecting a SNF—a key CMS goal for Care Compare. Staffing Thresholds for Quality of Care The CMS staffing study was published in 2001 and while two stakeholders we spoke with said its staffing thresholds continue to be valid, another stakeholder suggested the study could be updated because of changes in acuity among facility residents since its publication, among other things. The stakeholder stated that these changes could result in higher, or lower, minimum staffing thresholds than those identified in the 2001 study. Other researchers have long recommended that CMS should use the thresholds in the study to set minimum staffing thresholds for SNFs. The Nursing Home Commission’s 2020 report echoed longstanding stakeholder concerns that SNF staffing should be closely tied to minimum quality of care standards. In a principal recommendation related to staffing, one action step calls for CMS to issue guidance based on recent research that defines updated, acuity-adjusted, evidence-based, and person-centered minimum care standards. The action step further stated that these standards should specify hours of care per resident per day during normal and emergency operations, and require nursing homes to adhere to these standards. 43 Additionally, the report stated that if no recent research existed for CMS to use, it should commission a study to establish the evidence base for this guidance. In its September 2020 42MITRE, Coronavirus Commission on Safety and Quality. 43See principal recommendation 6A and its action steps in MITRE, Coronavirus Commission on Safety and Quality, 55. Page 23 GAO-21-408 Skilled Nursing Facilities response to the Nursing Home Commission report that broadly outlined the actions the agency had taken in response to the COVID-19 pandemic, CMS did not identify any efforts related to this action step. Regardless of whether it uses thresholds from the CMS staffing study or another source, CMS could provide an additional comparison measure for Care Compare users by including quality of care staffing thresholds. Additionally, CMS does not incorporate information on the extent to which SNFs meet minimum staffing thresholds below which SNF residents are at increased risk of quality problems into its ratings on Care Compare. While CMS recently increased the staffing HPRDs needed for each SNF to receive a specific star rating, CMS can award 3-star ratings to SNFs with staffing levels that fall below the CMS staffing study thresholds. 44 For example, the CMS staffing study threshold of 0.55 HPRD for RN staffing is within the updated 3-star RN staffing rating range of 0.508-0.730 HPRD. Additionally, based on CMS’s rating methodology for calculating a SNF’s overall star staffing rating, a SNF could provide 3.108 HPRD of total nurse staffing and 0.508 HPRD of RN staffing—the lowest HPRD within each of the respective 2- and 3-star rating ranges—and receive a 3-star overall staffing rating, though the HPRDs are below the CMS staffing study thresholds. 45 For example, the SNF could have total staffing of about 3 hours and 7 minutes (3.108 HPRD), which is 26 minutes less than the CMS staffing study minimum threshold for total nurse staffing of 3 hours and 33 minutes. By not assessing the feasibility of incorporating information about a specific quality of care threshold into the ratings on Care Compare, CMS limits beneficiaries’ ability to make informed choices about care quality when selecting a SNF. 44Specifically, CMS examined PBJ staffing data and Medicare claims data to determine the relationship between staffing levels and hospital readmissions and emergency room visits within 30 days of SNF admissions. Based on this study CMS raised the thresholds for most staffing ratings. For example, CMS raised the minimum threshold to receive a 3 star staffing rating for RN staffing from 0.383 hours per resident day to 0.508 hours per resident day. 45The overall staffing rating is based on the combination of RN and total nurse staffing ratings. Usually the overall staffing rating is the average of the two staffing ratings; however, in cases where the average is not a whole number, the overall staffing rating “rounds towards” the RN staffing rating. As an example, a SNF’s average is 4.5 if it earns 5 stars on RN staffing and 4 stars on total staffing, and with rounding toward the RN staffing, the SNF would receive a 5-star overall rating. See Centers for Medicare & Medicaid Services, Design for Nursing Home Compare Five-Star Quality Rating System: Technical User’s Guide (July 2020). Page 24 GAO-21-408 Skilled Nursing Facilities Our analysis of CMS data on critical incidents showed that SNFs in the SNFs with Low RN lowest RN staffing group (that is, in the lowest of 10 groups ranked by Staffing Levels their average annual RN HPRD) had higher rates of critical incidents than SNFs in the highest RN staffing group (that is, in the highest of 10 groups Generally Had Higher ranked by their average annual RN HPRD) in 2018 and 2019, after Rates of Critical adjusting for differences in the medical conditions of residents across SNFs. 46 Incidents Specifically, in 2018, about 23.6 percent of SNF admissions in the lowest RN staffing group resulted in a hospital readmission within 30-days of the SNF admission date compared with 21.3 percent of SNF admissions in the highest RN staffing group (see table 2).This higher rate translates to about 2,265 hospital readmissions. Similarly, about 12.4 percent of SNF admissions in the lowest RN staffing group resulted in an ER visit within 30-days of the SNF admission date compared with 10.5 percent of SNF admissions in the highest RN staffing group. This higher rate translates to about 1,624 ER visits. These trends were similar for both types of critical incidents in 2019. 47 46CMS determined that all of these hospital readmissions were potentially preventable. CMS does not determine whether ER visits are potentially preventable. 47We found a similar relationship between total nurse staffing and rates of critical incidents as for RN staffing, although the differences in hospital readmissions between the highest and lowest groups were smaller for the total nurse staffing groups than for the RN staffing groups. For example, about 22.8 percent of SNF admissions in the lowest total nurse staffing group resulted in a hospital readmission compared to about 21.4 percent in the highest total nurse staffing group in 2018. However, the rates of critical incidents did not always decline as total nurse staffing increased. Page 25 GAO-21-408 Skilled Nursing Facilities Table 2: Percent of SNF Admissions That Resulted in Critical Incidents for Skilled Nursing Facilities (SNF) with the Lowest and Highest Average Annual Registered Nurse (RN) Staffing, 2018 and 2019a Percent of SNF admissions that resulted in a hospital readmission within 30-days of the SNF admission dateb 2018 2019 SNFs in the lowest of 10 groups ranked by their average annual RN hours per resident day 23.6 23.0 SNFs in the highest of 10 groups ranked by their average annual RN hours per resident day 21.3 21.3 Percent of SNF admissions that resulted in an emergency room visit within 30-days of the SNF admission datec SNFs in the lowest of 10 groups ranked by their average annual RN hours per resident day 12.4 11.7 SNFs in the highest of 10 groups ranked by their average annual RN hours per resident day 10.5 9.8 Source: GAO analysis of Centers for Medicare & Medicaid Services (CMS) data. | GAO-21-408 a Critical incidents are hospital readmissions or emergency room (ER) visits that occurred within 30- days of the SNF admission date in 2018 and 2019 respectively. The lowest RN staffing group includes SNFs that GAO identified as having the lowest 10 percent of RN hours per resident day in each year respectively. Hospital readmissions and ER visits are adjusted by CMS for differences in the medical conditions of residents across SNFs. The highest RN staffing group includes SNFs that GAO identified as having the highest 10 percent of RN hours per resident day in each year respectively. b CMS determined these readmissions were potentially preventable. c CMS does not determine whether ER visits are potentially preventable. Moreover, the percent of SNF admissions that resulted in both types of critical incidents declined as RN staffing increased across the 10 staffing groups, further illustrating the relationship between RN staffing and critical incidents—see figure 5. Page 26 GAO-21-408 Skilled Nursing Facilities Figure 5: Percent of Skilled Nursing Facility (SNF) Admissions with Hospital Readmissions and Emergency Room Visits within 30-Days of SNF Admission by Registered Nurse (RN) Staffing Group, 2018 Page 27 GAO-21-408 Skilled Nursing Facilities Our analysis of CMS critical incidents and Medicare payment data found Medicare Spent an that Medicare spent about an estimated $5.2 billion on potentially Estimated $5 Billion preventable critical incidents in 2018, mostly for hospital readmissions that occurred within 30 days of the SNF admissions. 48 Specifically, of the on Potentially approximately 1.7 million SNF admissions in 2018, about 22 percent Preventable Critical resulted in a hospital readmission within 30 days of the SNF admission date, for a total of about 377,000 readmissions. Medicare spending on Incidents, Indicating these readmissions was about $5.04 billion, based on an average Absence of Strong payment rate of $13,367 per readmission. Similarly, 10 percent of SNF admissions had an ER visit within 30 days of the SNF admission date, for SNF Payment a total of about 169,250 ER visits. Medicare spending on these ER visits Incentives to Reduce was about $125 million based on an average payment rate of $741 per ER visit. This spending is inconsistent with CMS’s responsibility to be a Them prudent purchaser of health services, since CMS considers the hospital readmissions to be potentially preventable. 49 CMS currently has a program to incentivize SNFs to lower their hospital readmission rates. 50 By law, under the SNF VBP program, SNFs may experience decreases of up to 2 percent in the daily payment rates that Medicare makes for care that SNFs are expected to provide if they do not control their hospital readmission rates. However, the law does not authorize additional reductions. 51 As our analysis shows, despite these reductions SNFs generated over $5 billion in additional Medicare spending on hospital readmissions. In addition, the 2 percent reduction may not be sufficient to incentivize SNFs with lower RN staffing to increase their staffing because the 48Potentially preventable readmissions are unplanned readmissions. They do not include planned readmissions such as for maintenance chemotherapy and rehabilitation because these readmissions are expected to occur. (CMS does not determine a similar measure for ER visits since ER visits by definition are unplanned). 49As noted earlier, CMS does not determine whether ER visits are potentially preventable. 50This program does not pertain to ER visits. 51The Consolidated Appropriations Act, 2021 authorizes the Secretary to apply up to ten additional quality measures in the SNF Value-Based Purchasing program on or after October 1, 2023. Pub. L. No. 116-260, div. CC, title I, § 111, 134 Stat. 1182, 2945 (2020). CMS is currently evaluating which measures might be appropriate to consider within this authority. However, the Act does not make any changes to the 2 percent withhold or the thresholds for redistribution of the withheld payments to SNFs. CMS officials confirmed that the only payment reductions that CMS makes are those that are required under the SNF VBP program. Page 28 GAO-21-408 Skilled Nursing Facilities additional staffing costs they would have to incur (particularly for RN staff) could outweigh the 2 percent reduction in payments. For example, in 2018, a SNF in the third lowest average annual RN staffing groups had 85 SNF admissions for which it received total daily Medicare payments of about $1.4 million. About 21 percent of these SNF admissions resulted in a hospital readmission. The SNF therefore experienced a 2 percent reduction in its 2020 payments totaling about $25,000. If the SNF hired at least one additional RN to improve its staffing and thus reduce its rate of readmissions, it would need to spend about $75,000—which according to the Bureau of Labor Statistics was the median annual salary of an RN as of May 2020. The additional staffing cost is triple the 2 percent reduction in its payments. Thus, the SNF could decide that it would be more cost- effective to have its payments reduced than to hire additional staff, which limits the effectiveness of the current payment reductions. 52 CMS could use the existing mechanism of the SNF VBP program to incentivize SNFs in making the needed reductions in their rates of critical incidents to achieve CMS’s targeted level of savings. For example, with authority from Congress, CMS could withhold more than 2 percent of SNF aggregate payments, and implement steeper reductions for SNFs that generate a high proportion of the additional spending on hospital readmissions. Research has shown, and CMS has acknowledged, that reducing hospital readmissions is important for quality of care and patient safety as well as reducing the cost of care and generating cost savings to Medicare. Specifically, CMS stated that it developed the hospital readmission measure that is used in the SNF VBP in response to research that found hospital readmissions to SNFs were expensive and, in addition to being costly, readmission to a hospital interrupts a SNF patient’s therapy and care plans, causes anxiety and discomfort, and exposes the patient to hospital-acquired adverse events such as health care associated- infections. 53 Without more robust payment incentives Medicare will likely continue to incur excess spending, thereby limiting its ability to be a 52A recent study, partly funded by CMS, also concluded that payment incentives (and, by the same token payment reductions) under the SNF VBP program were unlikely to motivate SNFs to hire more skilled RN staff, although higher levels of RN staffing were associated with better performance (incentive payments) in the SNF program. In comparison, substitution of RN staff with lower skilled staff such as LPNs was associated with worse performance (payment reductions). See L.C. Daras, et al. “Nearly One In Five Skilled Nursing Facilities Awarded Positive Incentives Under Value-Based Purchasing”, Health Affairs, vol. 40, no. 1 (Jan. 27, 2021). 53RTI International, Skilled Nursing Facility Readmission Measure (SNFRM) NQF #2510: All-Cause Risk-Standardized Readmission Measure Draft Technical Report, CMS Contract No. HHSM-500-2013-13015I Task Order HHSM-500-T0001 (March 2015). Page 29 GAO-21-408 Skilled Nursing Facilities prudent purchaser of health care services, and medically frail SNF residents may continue to suffer potential harm from these critical incidents. While it may not be feasible for all SNFs to totally eliminate their potentially preventable critical incidents—that is, eliminate all of the readmissions and ER visits—in a given year, our analysis shows that even small incremental improvements could yield large savings. For example, if all SNFs—including those with lower RN staffing—had reduced their rates of critical incidents by 2 percentage points in 2018, Medicare could have avoided almost 34,000 hospital readmissions and ER visits, thus saving the program about $476 million in 2018. See appendix V for more information on savings that could be generated for the Medicare program based on reductions in the rates of critical incidents at SNFs. CMS has taken certain steps to improve reporting and rating of nurse Conclusions staffing levels in SNFs on the Care Compare website. However, our review found opportunities for improvement in both of these areas. For example, because the agency does not report ratings information on SNF weekend staffing levels, this limits beneficiaries’ ability to make informed choices among SNFs that may have the same staffing rating but different levels of weekend staffing. Similarly, because CMS does not provide a comparison of SNF’s RN and total staffing hours to specific quality of care thresholds, staffing ratings may not allow beneficiaries to understand whether SNFs are providing the minimum staffing needed to avert quality of care problems. Further, by assessing the feasibility of incorporating into its Five-Star System ratings information about weekend staffing levels and quality of care staffing thresholds, CMS would be better positioned to ensure that Care Compare is fully meeting its stated goal of helping consumers easily understand nursing home quality and distinguish between high- and low-performing SNFs. Moreover, existing payment reductions that CMS implements for SNFs that do not control their hospital readmission rates may not be strong enough. For example, since nurse salaries account for a large share of total operating costs, reductions in staffing can generate profits that outweigh the 2 percent payment reductions required under the SNF Value-Based Purchasing program. Without stronger payment incentives for quality care, Medicare may continue to incur excess spending because of potentially preventable critical incidents for residents receiving care at SNFs. Page 30 GAO-21-408 Skilled Nursing Facilities Congress should consider directing the Secretary of HHS to implement Matter for additional reductions in payments to SNFs that generate Medicare Congressional spending on potentially preventable critical incidents—hospital readmissions and ER visits that occur within 30 days of the SNF Consideration admissions—either through the SNF Value-Based Purchasing program or some other vehicle, including, as needed, making any appropriate modifications to enable HHS to take action. We are making the following three recommendations to CMS: Recommendations for Executive Action The Administrator of CMS should report weekend decreases in RN and total nurse staffing levels on the Care Compare website. (Recommendation 1) The Administrator of CMS should report minimum RN and total nurse staffing thresholds below which SNF residents are at increased risk of quality problems—such as thresholds that are similar to those identified in the CMS staffing study—on the Care Compare website. (Recommendation 2) The Administrator of CMS should assess the feasibility of incorporating into the Five-Star System staffing ratings information on weekend decreases in RN and total nurse staffing levels, and minimum RN and total nurse staffing thresholds below which SNF residents are at increased risk of quality problems—such as those that were identified in the CMS staffing study. (Recommendation 3) We provided a draft of the report to HHS for its review and comment. Agency Comments HHS provided written comments, which are included in appendix VI. HHS and Our Evaluation also provided technical comments, which we addressed as appropriate. HHS concurred with the first recommendation to report weekend decreases in RN and total nurse staffing levels on the Care Compare website. HHS did not concur with the second recommendation and stated it concurred with the third but raised concerns, as discussed below. Specifically, HHS did not concur with the draft report’s second recommendation to report on the Care Compare website minimum RN and total nurse staffing thresholds below which SNF residents are at increased risk of quality problems—such as those identified in the CMS staffing study. HHS stated that staffing measures on Care Compare are currently tied to quality because staffing ratings were recently adjusted to reflect the relationship between staffing and hospitalizations. HHS also noted that that the thresholds identified in the CMS staffing study may no Page 31 GAO-21-408 Skilled Nursing Facilities longer be appropriate because the study was completed in 2001—prior to the collection of PBJ data—and that updating the study would be an expensive and resource-intensive undertaking. As we discussed in the report, researchers and stakeholders have long recommended the need for minimum staffing thresholds for SNFs, including the Nursing Home Commission’s 2020 report, which calls for CMS to commission a study to establish these standards if no recent research exists. We acknowledge the agency’s concerns about the age of the CMS staffing study. We are not recommending that CMS use the thresholds in this study and we have revised the wording of the recommendation to focus on the importance of establishing minimum thresholds similar to those in the staffing study. However, as we also discussed in the report, these thresholds have been widely endorsed. Additionally, as one stakeholder noted, updating them may result in higher thresholds since resident acuity has changed since the study was published. We recognize that establishing minimum staffing thresholds may be resource-intensive. However, doing so will provide Medicare beneficiaries with important information on the quality of care provided at SNFs, which would be consistent with the Commission’s recommendation as well as CMS’s goals to provide beneficiaries with an easy way to understand nursing home quality and distinguish between high- and low-performing nursing homes. In its letter, HHS stated it concurred with the third recommendation to assess the feasibility of incorporating information on weekend RN and total nurse staffing levels into the Five-Star System staffing ratings. However, HHS noted that, to determine minimum RN and total nurse staffing thresholds below which SNF residents are at increased risk of quality problems, HHS would need to conduct an extensive analysis, as discussed above. Nevertheless, as discussed in our report, SNFs can receive a 3-star rating yet have staffing levels that fall below the CMS staffing study thresholds. Without information on minimum thresholds needed to provide quality care, beneficiaries will be limited in their ability to make fully informed choices about quality of care when selecting a SNF. Finally, in its technical comments on a draft of this report, CMS stated the CMS staffing study did not identify minimum staffing levels; rather, the study identified a threshold where, once met, there were no additional levels of quality observed. However, the CMS staffing study itself, along with researchers and other organizations, refer to these thresholds as minimum levels. Additionally, CMS stated that GAO mischaracterized its case-mix methodology, which does not calculate a measure or benchmark, but rather, calculates the average level of staffing Page 32 GAO-21-408 Skilled Nursing Facilities experienced by facilities with residents of similar acuity in the 2001 staffing study. However, in its general comments to GAO, HHS stated that each facility’s staffing measure is adjusted based on the expected level of staff needed given the number and acuity of residents in the facility. By definition, the expected level of staff needed (or case-mix staffing) is therefore a facility-specific measure and not an average. Further, as we note in the report, other researchers who have published extensively on SNF staffing issues have also used this measure to assess the adequacy of nurse staffing in SNFs. As a result, we did not revise our draft to address these concerns. As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution of it until 30 days from its date. At that time, we will send copies to the Secretary of Health and Human Services, the Administrator of the Centers for Medicare & Medicaid Services, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staffs have any questions about this report, please contact me at (202) 512-7114 or farbj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix VII. Jessica Farb Director, Health Care Page 33 GAO-21-408 Skilled Nursing Facilities Appendix I: Characteristics of Skilled Nursing Appendix I: Characteristics of Skilled Nursing Facilities (SNF) with Low Average Staffing and Facilities (SNF) with Low Average Staffing Decreased Weekend Staffing and Decreased Weekend Staffing This appendix provides details of our analyses to describe the characteristics of SNFs that had low average annual staffing (nurse staff hours per resident per day), and large weekend decreases for registered nurse (RN) and total nurse staffing in 2019. 1 Table 3 shows the characteristics of SNFs in the lowest and highest average annual staffing groups for RN staffing. Table 4 shows the characteristics of SNFs in groups with the lowest and highest percentage of weekend decreases in RN staffing. Table 5 shows the characteristics of SNFs in the lowest and highest average annual staffing groups for total nurse staffing. Table 6 shows the characteristics of SNFs in groups with the lowest and highest percentage weekend decreases in total staffing. Characteristics of SNFs with low average RN staffing. Our analysis of 2019 payroll-based journal (PBJ) staffing data showed that SNFs in the lowest RN staffing group (lowest 10 percent in terms of RN staffing) were more likely to have certain characteristics compared to SNFs in the highest RN staffing group (highest 10 percent)—see table 3. For example, a higher proportion of SNFs in the lowest RN staffing group • were of for-profit ownership, 2 • were located in the South, 3 and • were medium in size (contain 51 to 100 beds). 1Total nurse staffing includes RNs, licensed practical nurses, and nurse aides. 2We have previously reported that for-profit SNFs generally have less nurse staffing than those of nonprofit or government ownership. See GAO, Skilled Nursing Facilities: CMS Should Improve Accessibility and Reliability of Expenditure Data, GAO-16-700 (Washington, D.C.: Sept. 7, 2016). 3Forthe purposes of our report, we used the United States Census Bureau definition for geographical regions. Page 34 GAO-21-408 Skilled Nursing Facilities Appendix I: Characteristics of Skilled Nursing Facilities (SNF) with Low Average Staffing and Decreased Weekend Staffing Table 3: Characteristics of Skilled Nursing Facilities (SNF) with Lowest and Highest Registered Nurse (RN) Staffing and Percentage Differences, 2019 In percent Proportion of SNFs with the Proportion of SNFs with the lowest RN staffing highest RN staffing SNF characteristic (lowest 10 percent) (highest 10 percent) For-profit ownership 87 33 Southern region 70 13 Medium size 69 29 (51 to 100 beds) 10 to 20 years in 27 14 operation Medicare and 100 88 Medicaid certification (compared to Medicare only) Freestanding 99 90 (compared to hospital-based) Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-21-408 Note: Percentage differences between the highest and lowest staffing groups are affected by rounding. Additionally, SNFs with any missing characteristic data—about 4 percent—are not included. Some stakeholders we interviewed also generally stated that SNFs with low average staffing tended to have these characteristics, particularly for- profit SNFs. One stakeholder we interviewed told us that staff represent the highest operating cost for SNFs, which creates a profit incentive to provide less staffing. Other stakeholders’ research found that low staffing is more likely to be associated with for-profit SNFs than with nonprofit or government-owned SNFs, which our analysis supports. 4 However, one stakeholder also stated that staffing problems are industry-wide: for-profit facilities may have lower staffing relative to other ownership types, but nonprofit SNFs that provide relatively higher staffing do not necessarily provide enough staffing to ensure quality outcomes. Characteristics of SNFs with Decreased Weekend RN Staffing. More SNFs in the group with the greatest RN weekend staffing decreases (bottom 10 percent) compared to SNFs in the group with the smallest decreases (top 10 percent) were larger in size, 4D.C. Grabowski, D.G. Stevenson, and F.Geng, “Daily Nursing Home Staffing Levels Highly Variable, Often Below CMS Expectations,” Health Affairs, vol. 38, no. 7, (2019). Page 35 GAO-21-408 Skilled Nursing Facilities Appendix I: Characteristics of Skilled Nursing Facilities (SNF) with Low Average Staffing and Decreased Weekend Staffing • located in the western region, and • had been operating 10 to 20 years. However, certain characteristics that distinguished SNFs with low average staffing—including for-profit ownership and Medicare and Medicaid certification—were not observed for SNFs with large decreases in staffing over the weekend. (See table 4.) Table 4: Characteristics of Skilled Nursing Facilities (SNF) with Highest and Lowest Percentage Decreases in Registered Nurse (RN) Average Annual Weekend Hours per Resident Day, 2019 In percent Proportion of SNFs with Proportion of SNFs with the largest RN weekend the smallest RN weekend decreases decreases SNF characteristic (highest 10 percent) (lowest 10 percent) Large size 54 38 (more than 100 beds) Western region 19 5 10 to 20 years in operation 23 14 Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-21-408 Note: Percentage differences between the highest and lowest staffing groups are affected by rounding. Additionally, SNFs with missing characteristic data are not included. Characteristics of SNFs with Low Average Total Nurse Staffing. Compared with SNFs in the highest staffing group for total nurse staffing, SNFs in the lowest staffing group for total nurse staffing were more likely to be • of for-profit ownership, and • located in the South, although to a markedly less degree that was true for RN staffing. Specifically, there was a 7 percentage point difference in the proportion of SNFs in the lowest and highest staffing groups for total nurse staffing, compared to a 57 percentage point difference for RN staffing. This suggests that SNFs in the lowest staffing group for total nurse staffing may be substituting RN staff for other type of staff so that their total nurse staffing is not as different in the lowest and highest staffing groups. Page 36 GAO-21-408 Skilled Nursing Facilities Appendix I: Characteristics of Skilled Nursing Facilities (SNF) with Low Average Staffing and Decreased Weekend Staffing Table 5: Characteristics of Skilled Nursing Facilities (SNF) with Lowest and Highest Total Nurse Staffing and Percentage Differences, 2019 In percent Proportion of SNFs with the Proportion of SNFs with the lowest total nurse staffing highest total nurse staffing SNF characteristic (lowest 10 percent) (highest 10 percent) For-profit ownership 87 29 Southern region 35 28 Medium size 63 31 (51 to 100 beds) Medicare and 100 87 Medicaid certification (compared to Medicare only) Freestanding 100 89 (compared to hospital-based) Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-21-408 Note: Percent differences between the highest and lowest staffing groups are affected by rounding. Additionally, SNFs with missing characteristic data are not included. Characteristics of SNFs with Decreased Weekend Total Nurse Staffing. The characteristics of SNFs with the largest decrease in total nurse staffing on weekends were different from SNFs with the largest decreases in RN staffing on weekends—see table 6. For example, more SNFs with the largest decreases in total nurse staffing on weekends were • located in the western region, and • had been operating more than 30 years. Page 37 GAO-21-408 Skilled Nursing Facilities Appendix I: Characteristics of Skilled Nursing Facilities (SNF) with Low Average Staffing and Decreased Weekend Staffing Table 6: Characteristics of Skilled Nursing Facilities (SNF) with Highest and Lowest Total Nurse Weekend Decreases and Percentage Differences, 2019 In percent Proportion of SNFs with Proportion of SNFs with the the highest total nurse lowest total nurse weekend weekend decreases decreases SNF characteristic (highest 10 percent) (lowest 10 percent) Western region 38 8 More than 30 years in 54 37 operation Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-21-408 Note: Percentage differences between the highest and lowest staffing groups are affected by rounding. Additionally, SNFs with missing characteristic data are not included. Page 38 GAO-21-408 Skilled Nursing Facilities Appendix II: Scope and Methodology Appendix II: Scope and Methodology This appendix describes the scope and methodology used to examine three of our four objectives: (1) the extent to which skilled nursing facility (SNF) staffing levels compared with federal and other staffing measures in 2019; (2) the relationship (if any) between staffing and critical incidents; and (3) the extent to which Medicare incurred additional spending on critical incidents in 2018 and the implications for Medicare SNF payment policy. The appendix also describes the methodology used to determine the characteristics of SNFs that had low average annual staffing or large decreases in weekend staffing. Examining How SNF To determine how SNF nurse staffing levels compared with federal and Staffing Levels Compared other staffing measures, we analyzed publicly available payroll-based journal (PBJ) quarterly staffing data from CMS. These data provide With Federal and Other detailed staffing information from all Medicare-certified SNFs for various Staffing Measures types of staff, including registered nurses (RN), licensed practical nurses, and nurse aides. We analyzed data from 2018 and 2019—the most recently available data available at the time of our analysis. Specifically, • We analyzed PBJ quarterly data for 2018 and 2019 for about 14,423 of the approximately 15,500 SNFs nationwide (93 percent) that had reported staffing data for at least three of the four quarters in each year. We calculated actual nurse hours per resident day by dividing the reported daily staffing hours by the daily number of residents for each nurse type: RN, licensed practical nurse, and nurse aide, as well as for total nurse staffing for each SNF (the sum of these 3 nurse types). 1 • We then compared daily actual SNF staffing to three staffing measures—the federal requirement for RN staffing, CMS case-mix staffing hours for each SNF that are based on its residents’ need, and quality-related staffing hours thresholds that were identified in a CMS staffing study as being the minimum staffing hours needed to avert quality problems. 2 We calculated the percent of days in each year that SNFs’ actual staffing hours met each of the three staffing measures and grouped SNFs into the following four categories: frequently met (80 percent or more of days in 1 year), somewhat frequently met (50 percent to 79 percent of days), somewhat infrequently met (20 1Hours per resident day is a commonly used measure of the ratio of staff to residents that CMS uses for reporting SNF staffing on Care Compare. In this report, we also use the term ‘staffing levels’ to refer to hours per resident day. 2See Appropriateness of Minimum Nurse Staffing Ratios in Nursing Homes. Page 39 GAO-21-408 Skilled Nursing Facilities Appendix II: Scope and Methodology percent to 49 percent of days), and infrequently met (19 percent or less of day). 3 • We also calculated average staffing hours for each nurse type by day of week across all SNFs and determined the extent to which staffing hours dropped on the weekend. To adjust reported staffing for differences in the case-mix across SNFs, we used quarterly case-mix hours—specific nursing hours per resident day that CMS calculates based on residents’ medical needs in each SNF—as reported on Care Compare. We followed the agency’s methodology to develop standardized case-mix adjusted staffing levels as outlined in CMS’s technical user’s guide. 4 In addition, we interviewed seven stakeholders knowledgeable about SNF staffing and quality issues including key researchers, advocates for long term care facilities and for consumers of long term care, and representatives of the Medicare Payment Advisory Commission. While not necessarily representative of all perspectives on these topics, our selected stakeholders represent leading and diverse views, and have published extensively on issues related to our reporting objectives. We also interviewed CMS officials and reviewed the Nursing Home Commission’s recommendations on nursing home staffing and quality of care. 5 Relationship Between To determine the relationship between staffing and rates of critical Staffing and Rate of incidents, we first grouped SNFs by deciles (10 percent increments) based on their average annual case-mix adjusted RN and total nurse Critical Incidents staffing (from PBJ data). We then calculated the average rate of these critical incidents for each of the ten RN and total staffing groups and compared the rates of critical incidents in the lowest staffing group with that of the highest staffing group. 3These categories have been used in other research on SNF staffing. For example, see Grabowski DC, Stevenson DG, Geng F. Daily Nursing Home Staffing Levels Highly Variable, Often Below CMS Expectations (2019). 4Centers for Medicare and Medicaid Services, Design for Nursing Home Compare Five- Star Quality Rating System: Technical User’s Guide (July 2020). 5MITRE, Coronavirus Commission on Safety and Quality in Nursing Homes: Commission Final Report, PRS Release Number 20-2382 (September 2020). Page 40 GAO-21-408 Skilled Nursing Facilities Appendix II: Scope and Methodology Examining the Extent to To determine the additional spending that Medicare incurred for critical Which Medicare Incurred incidents in 2018, we used data obtained from CMS as well as publicly available data on critical incidents from the Care Compare website. Additional Spending on Specifically: Critical Incidents • We obtained data from CMS on short-stay SNF admissions in 2018 that had a potentially preventable hospital readmission or emergency room (ER) visit (or both) within 30 days of the SNF admission date. 6 (The resident-level data was the most recently available complete data at the time of our analysis). We next examined 2018 Medicare claims data to determine total and average Medicare payments for these readmissions and ER visits. • We used data obtained from CMS, Medicare claims data, and publicly available CMS data from Care Compare to calculate Medicare total spending in 2018 and potential savings from reductions in the rates of readmission and ER visits for each individual SNF. 7 We calculated total Medicare spending by first multiplying each SNF’s actual rates of readmissions and ER visits respectively by its total number of SNF admissions and summing these across all SNFs. We then multiplied the total number of readmissions and ER visits by the average respective payment for each that we had calculated from Medicare claims data. • To estimate potential savings from reductions in the rates of critical incidents, we developed several options. • Under one option, we calculated the total number of readmissions and ER visits that would have been avoided if these rates were reduced by 2 percentage points across all SNFs. We then multiplied the number of readmissions and ER visits that would have been avoided by the average payment for each that we had calculated from Medicare claims data and summed them to estimate total savings for readmissions and ER visits combined. • Under another option, we determined the number of readmissions and ER visits that would have been avoided if SNFs actual rates 6Short-stay residents are those who have a SNF stay that is 100 days or less. 7Starting April 2016, CMS began including data on the rates of potentially preventable hospital readmissions and ER visits for each SNF based on Medicare claims data and used these data in its quality ratings of SNFs on Care Compare. CMS reports data on the actual rates as well as risk-adjusted rates of these measures. Risk-adjusted (or expected) rates take into account differences in residents’ demographic and clinical characteristics across SNFs. Page 41 GAO-21-408 Skilled Nursing Facilities Appendix II: Scope and Methodology of readmissions and ER visits did not exceed their predicted or risk-adjusted rates that CMS had developed based on the demographics and other characteristics of each SNF’s residents. 8 We estimated savings for all SNFs whose actual rates exceeded their risk adjusted rates, as well as savings for a subset of SNFs in the lower RN staffing groups that we had developed for earlier analyses in this report. We focused on these staffing groups because of our finding that the rate of critical incidents is generally higher for SNFs in the lower RN staffing groups than for SNFs in the higher RN staffing groups. Therefore, it would be appropriate to direct efforts to SNFs in the lower RN staffing groups to incentivize them to improve their RN staffing and rates of critical incidents. Specifically, • For all SNFs, we multiplied the ‘excess’ rate for each SNF by its number of SNF admissions to derive the excess number of readmissions and ER visits for each SNF. We then summed the total number of excess readmissions across all SNFs and multiplied the total by the average payment for a hospital readmission that we had calculated from Medicare claims data. We did the same for ER visits. We then summed the total excess payments for hospital readmissions and ER visits combined. • For SNFs in the lower RN staffing groups, we summed total excess payments for hospital readmissions and ER visits combined for SNFs in the lower RN staffing groups. See appendix V for the results of the analysis for the second option. 8Rates of potentially preventable critical incidents can vary across SNFs due to risk factors that are beyond the SNFs’ control—for example, differences in the severity of residents’ medical conditions or demographics. To properly compare SNFs, CMS adjusts for this variation by calculating risk-adjusted rates of critical incidents. CMS does this by examining potentially preventable critical incidents that occurred across all SNFs in a given year and running a regression to identify the risk factors that predict the probability of these critical incidents occurring for an individual SNF based on the characteristics of its residents. SNFs whose actual rates of critical incidents exceed their risk-adjusted rates are considered to provide poorer quality care while those whose actual rates are below their risk-adjusted rates are considered to provide higher quality care. Page 42 GAO-21-408 Skilled Nursing Facilities Appendix II: Scope and Methodology Examining the In addition, to determine the characteristics of SNFs that had low average Characteristics of SNFs annual staffing and large decreases in weekend staffing for RN and total nurse staffing in 2018 and 2019, we used CMS’s “Provider Info” and with Low Average Annual “Provider-of-Service” files—publicly-available files on the CMS website. Staffing or Large Specifically: Decreases in Weekend Staffing • We examined available data on SNF characteristics, such as ownership type (for-profit, nonprofit, or government) and bed size (the number of certified beds within each SNF). We grouped SNFs by deciles (10 percent increments) based on their average annual staffing, adjusted for case-mix, from lowest to highest staffing. • We then compared the characteristics of SNFs in the lowest staffing group with those in the highest staffing group. Similarly, to determine characteristics of SNFs with large decreases in weekend staffing, we grouped SNFs into deciles based on their weekend staffing decreases, and compared the characteristics of SNFs in the group with the largest (average) weekend staffing decreases with those of SNFs in the group with the smallest average weekend staffing decreases. For all data used in these analyses, we interviewed knowledgeable officials and reviewed related CMS documentation. Based on these steps, we determined that the data were sufficiently reliable for the purposes of this report. Page 43 GAO-21-408 Skilled Nursing Facilities Appendix III: Additional Analysis of Skilled Appendix III: Additional Analysis of Skilled Nursing Facility Staffing Levels and Measures Nursing Facility Staffing Levels and Measures Table 7 provides information on the average staffing levels at skilled nursing facilities (SNFs) in 2018 and 2019 for each nurse type, measured as hours per resident day. Figure 6 shows the percent change in hours per resident day from month to month for each nurse type, measured as the percent difference between months. Figures 7 and 8 show the frequency with which total nurse staffing at SNFs met Center for Medicare & Medicaid Services’ (CMS) Case-mix Measures and CMS staffing study thresholds, respectively. Table 7: Average Adjusted Hours per Resident Day at Skilled Nursing Facilities (SNF) by Nurse Type and Total Nurse Staffing, 2018 and 2019 Calendar Registered Licensed Nurse Total nurse year nurse practical nurse aide staffing 2018 0.62 0.87 2.31 3.80 2019 0.64 0.87 2.29 3.80 Source: GAO analysis of Centers for Medicare & Medicaid Services (CMS) data. | GAO-21-408 Note: Hours per resident day is a commonly used measure of the ratio of staff to residents that CMS uses for reporting SNF staffing on Care Compare. Page 44 GAO-21-408 Skilled Nursing Facilities Appendix III: Additional Analysis of Skilled Nursing Facility Staffing Levels and Measures Figure 6: Monthly Percentage Change in Hours per Resident Day at Skilled Nursing Facilities (SNF), by Nurse Type and Total Nurse Staffing, 2018–2019 Note: Hours per resident day is a commonly used measure of the ratio of staff to residents that CMS uses for reporting SNF staffing on Care Compare. Page 45 GAO-21-408 Skilled Nursing Facilities Appendix III: Additional Analysis of Skilled Nursing Facility Staffing Levels and Measures Figure 7: Percentage of Skilled Nursing Facilities That Met Centers for Medicare & Medicaid Services (CMS) Case-Mix Staffing Measures for Total Nurse Staffing in 2019 Note: CMS calculates case-mix staffing measures for each individual skilled nursing facility based on the severity of their residents’ medical conditions. Figure 8: Percentage of Skilled Nursing Facilities That Met Centers for Medicare & Medicaid Services (CMS) Quality-Related Thresholds for Total Nurse Staffing in 2019 Note: CMS conducted a Congressionally-mandated study, Appropriateness of Minimum Nurse Staffing Ratios in Nursing Homes, which in 2001 identified minimum staffing thresholds—the hours per resident day below which residents are at substantially increased risk of quality problems. Page 46 GAO-21-408 Skilled Nursing Facilities Appendix IV: Use of Contract Nurse Staff by Appendix IV: Use of Contract Nurse Staff by Skilled Nursing Facilities, 2019 Skilled Nursing Facilities, 2019 Our analysis of 2019 payroll-based journal staffing data reported to the Centers for Medicare & Medicaid Services showed that the use of contract staff (temporary staff from contracting agencies employed in lieu of permanent staff) for all nurse types combined was relatively low on average across all skilled nursing facilities (SNF)—no more than 5 percent. However, this rate varied across SNFs, ranging from no contract staffing to over 25 percent for each of the different nurse types. Moreover, at least 2,694 SNFs (about 19 percent) used contract staff at rates of more than 5 percent, and of these, at least 270 SNFs (about 2 percent) used contract staff at rates of more than 25 percent across all nurse types (see table 8). Table 8: Skilled Nursing Facility (SNF) Use of Contract Staff by Nurse Type, 2019 Number and percentage of SNFs for each nurse typea Rate of contract staff use Registered nurse Licensed practical nurse Nurse aide All nurse types 0 – 5% 12,470 (86%) 11,786 (82%) 11,866 (82%) 11,729 (81%) 5.1 – 10 895(6) 953 (7) 1,022 (7) 1,243(9) 10.1 - 15 414 (3) 509 (4) 571 (4) 641 (4) 15.1 - 20 240 (2) 356 (2) 357 (2) 324 (2) 20.1 - 25 140 (1) 233 (2) 225 (2) 216 (2) 25.1 or more 266 (2) 586 (4) 382 (3) 270 (2) Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-21-408 Note: Contract staff are temporary staff from contracting agencies employed in lieu of permanent staff. a Some percentages may not total to 100 percent because of rounding. Page 47 GAO-21-408 Skilled Nursing Facilities Appendix V: Optional Methodologies to Appendix V: Optional Methodologies to Determine a Targeted Level of Savings for Determine a Targeted Level of Savings for Medicare Medicare This appendix describes potential Medicare savings that would have resulted in 2018 if skilled nursing facilities’ (SNF) actual rates of critical incidents did not exceed their risk-adjusted or predicted rates. The appendix also provides an illustration of why existing payment incentives that CMS has under the SNF Value-Based Purchasing (VBP) program may not be sufficient to incentivize SNFs to improve their staffing and rates of critical incidents. Examining Potential Medicare Savings from Reducing Actual Rates of Critical To Their Risk- Adjusted Rates Potential Savings from Under this option, we examined potential Medicare savings if SNFs Reducing Actual Rates of (whose actual rates of critical incidents were higher than CMS’s risk- Critical Incidents to Risk- adjusted rates) were to reduce their actual rates to their risk-adjusted Adjusted Rates for All SNFs rates of critical incidents. CMS develops risk-adjusted rates based on a regression model that examines potentially preventable critical incidents occurring in a given year across all SNFs, and predicts the probability of their occurrence for individual SNFs based on the characteristics of the SNF’s residents. 1 SNFs whose actual rates are higher than their risk-adjusted rates generate ‘excess’ hospital readmissions and emergency room (ER) visits. Our analysis showed that Medicare could have saved about $426 million in 2018 if all SNFs had reduced their actual rates of critical incidents to their risk-adjusted rates. Almost half of the approximately 12,800 SNFs for whom data were available had actual rates of critical incidents that exceeded their risk-adjusted rates, resulting in about 30,400 excess readmissions and almost 26,540 excess ER visits. Potential Savings from Under this option, we examined potential savings if SNFs in the lower Reducing Actual Rates of registered nurse (RN) staffing groups reduced their rates of critical Critical Incidents to Risk- incidents to their risk-adjusted rates. As we described earlier in this Adjusted Rates for SNFs in report, the rates of critical incidents are related to RN staffing. Lower Registered Nurse Specifically, SNFs in the lower RN staffing groups had higher rates of Staffing Groups critical incidents than SNFs in the higher RN staffing groups. Further, a 1CMS develops these risk-adjusted rates to account for variation in rates of critical incidents across SNFs that may be due to factors beyond their control, such as SNFs’ resident demographics and severity of medical conditions. Page 48 GAO-21-408 Skilled Nursing Facilities Appendix V: Optional Methodologies to Determine a Targeted Level of Savings for Medicare higher proportion of SNFs in the lower RN staffing groups had rates of critical incidents that exceeded their risk-adjusted rates. For example, the proportion of SNFs whose actual rates of hospital readmissions exceeded their risk-adjusted rates in the lowest RN staffing group was 54 percent compared to 42 percent in the highest RN staffing group. Therefore, it might be appropriate to focus on SNFs in the lower RN staffing groups. We found that if SNFs in the lower five RN staffing groups had reduced their rates of critical incidents to their risk adjusted rates, Medicare could have saved about $204 million in 2018. Illustration of Potential As described earlier in this report, under the SNF VBP, CMS is required Insufficiency of Existing to make reductions of up to 2 percent in SNFs Medicare payments depending on how well they control their rates of hospital readmissions. Payment Incentives to However, despite these payment decreases, our analysis showed that Reduce Rates of Critical about half of SNFs had excess hospital readmissions. Excess Incidents readmissions occur when actual readmission rates exceed SNFs’ risk- adjusted readmission rates. For example, we found that one SNF in the lowest RN staffing group experienced a payment reduction of about $153,000 although it generated almost $414,000 in excess Medicare payments for readmissions. To fully offset this amount, the SNF would need to have a payment reduction of about 5.4 percent (see table 9). Similarly, another SNF in the lowest RN staffing group had a payment reduction of about $86,000 although it generated about $273,000 in excess Medicare payments for readmissions. To fully offset this amount, the SNF would need to have a payment reduction of 6.3 percent. Page 49 GAO-21-408 Skilled Nursing Facilities Appendix V: Optional Methodologies to Determine a Targeted Level of Savings for Medicare Table 9: Examples of Medicare Payment Reduction under Skilled Nursing Facilities (SNF) Value-Based Purchasing Program, Compared to Medicare Payments for Excess Hospital Readmissions, 2018 SNF A SNF B Total payments to SNF 7.6 million 4.3 million Payment reduction under SNF Value-Based Purchasing program (2 percent) 153,000 86,000 Actual rate of hospital readmissions 27.6% 33.3 Risk-adjusted rate of hospital readmissions 20.8% 25.3 Total number of excess hospital readmissions 31 20 Average Medicare payment for a hospital readmission 13,367 13,367 Total Medicare payments for excess hospital readmissions 414,000 273,000 Payment reduction needed to offset excess spending 5.4% 6.3% Source: GAO analysis of Centers for Medicare & Medicaid Services (CMS) data. | GAO-21-408 Notes: Payment decreases are for fiscal year 2020, based on the extent to which SNFs reduced their rates of hospital readmissions in fiscal year 2018 compared to fiscal year 2016. As required by law, CMS implemented a SNF Value-Based Purchasing Program in 2018. CMS is required to withhold 2 percent of adjusted daily payments across all SNFs each year and redistribute a certain portion of those withheld payments back to SNFs as incentive payments based on their performance in controlling the number of hospital readmissions occurring within 30 days of discharge from a prior hospital stay to a SNF. All SNFs that are paid under Medicare’s prospective payment system are included in the program. We defined excess hospital readmissions as hospital readmissions that occur when actual hospital readmission rates exceed SNFs’ risk-adjusted readmission rates. Page 50 GAO-21-408 Skilled Nursing Facilities Appendix VI: Comments from the Appendix VI: Comments from the Department of Health and Human Services Department of Health and Human Services Page 51 GAO-21-408 Skilled Nursing Facilities Appendix VI: Comments from the Department of Health and Human Services Page 52 GAO-21-408 Skilled Nursing Facilities Appendix VI: Comments from the Department of Health and Human Services Page 53 GAO-21-408 Skilled Nursing Facilities Appendix VI: Comments from the Department of Health and Human Services Page 54 GAO-21-408 Skilled Nursing Facilities Appendix VI: Comments from the Department of Health and Human Services Page 55 GAO-21-408 Skilled Nursing Facilities Appendix VII: GAO Contact and Staff Appendix VII: GAO Contact and Staff Acknowledgments Acknowledgments Jessica Farb, (202) 512-7114, farbj@gao.gov GAO Contact In addition to the contact named above, Karen Doran, Assistant Director; Staff Iola D’Souza, Assistant Director; Ashley Dixon; Alexandre Massey; Caitlin Acknowledgments Scoville; Richard Lipinski; and Julie Flowers made key contributions to this report. Also contributing were Jennifer Whitworth and Vikki Porter. (103789) Page 56 GAO-21-408 Skilled Nursing Facilities The Government Accountability Office, the audit, evaluation, and investigative GAO’s Mission arm of Congress, exists to support Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the American people. GAO examines the use of public funds; evaluates federal programs and policies; and provides analyses, recommendations, and other assistance to help Congress make informed oversight, policy, and funding decisions. GAO’s commitment to good government is reflected in its core values of accountability, integrity, and reliability. The fastest and easiest way to obtain copies of GAO documents at no cost is Obtaining Copies of through our website. Each weekday afternoon, GAO posts on its website newly GAO Reports and released reports, testimony, and correspondence. 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