Increased nurse salaries have eaten away at many facilities’ bottom lines.

You’ve heard of audits for regulatory compliance, right? What about audits for how money is used? What if you were mandated to spend your money on direct care?

Well, that is exactly what President Biden proposes. The Biden Administration is considering a requirement that the nation’s 15,500 nursing homes spend most of their payments from Medicaid on direct care for residents, and limit the amount that is used for operations, maintenance, and capital improvements (or diverted to profits).

This strategy, which has not yet been formally proposed, is among several steps officials are considering after the COVID-19 pandemic hit vulnerable nursing home residents especially hard. The Centers for Medicare & Medicaid Services (CMS) has requested public comments on a possible direct-care spending mandate in its proposed update of nursing-home payment policies and rates for next year.

A direct-care spending mandate is yet another example of overregulating to the detriment of facilities. I understand the premise – to force nursing homes to provide care to Medicaid recipients instead of expanding or fixing the leaky faucet. But what is the penalty for not following it? There will be penalties. The upshot will be paying money to the government if an auditor determines that you haven’t spent enough on direct care.

So, these nursing homes then would have even less for direct care, because they are busy paying the government.

Nursing homes and hospitals are also suffering from staff shortages. Nursing tenure has decreased over the last year, as staffing shortages persist, with newly hired nurses covering more 12-hour shifts at healthcare organizations. A recent study found that “Between March 2021 and March 2022, the median nursing tenure declined by 19.5 percent in all U.S. regions, from 3.38 years to 2.78 years.” In the meantime, “The number of shifts covered by new nurses increased across the country, with the most significant increases occurring in the South and West.”

This nursing shortage is also causing significant financial distress, because nurses’ salaries are at an all-time high. My good friend Tracey is an ER nurse for a Raleigh hospital. Since COVID, her salary has tripled.

Increased nurse salaries have eaten away at many facilities’ bottom lines. Travel nurses who work in intensive-care units, in particular, have found COVID-19 to be lucrative: according to data from Vivian Health, their weekly wages have more than doubled, from roughly $1,750 to roughly $3,500, between early 2020 and early 2022.

Going forward, expect audits on how money is spent, not just whether your documentation is compliant.

Programming Note: Listen to Knicole Emanuel’s live RAC Reports every Monday on Monitor Mondays at 10 Eastern.

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