Latest Pa. budget provides support for nursing homes, but work remains

For decades, a state budgeting maneuver known as the Budget Adjustment Factor, or BAF, reimbursed nursing homes below the cost of care. Regulators would determine payments depending on dollars allocated under the state budget, often at a rate that left operators shorthanded. 

In a budget that neglected to tackle looming policy questions, lawmakers chose not to eliminate the BAF, a long-time goal for providers, but opted to set a floor at 86% — above the current 79% — starting in 2027.

Over the next two years, nursing homes will receive an additional $162 million through the state formula, with a federal match of $215 million. Having a minimum gives facilities greater flexibility to budget, making their income more predictable, Pezzano said. 

“The fluctuation of the floor can be tremendous, and it’s something that happens on a quarterly basis,” he added. “Imagine what that does with your ability to forecast, to budget, to develop programs. You (now) know that at least you can count on that 86% of your allowable costs (being) covered.”

In a rapidly aging state, the fifth-oldest in the country, the need for long-term services is only growing. The number of residents over the age of 84 is expected to triple by 2050, but capacity is shrinking as nursing homes close or decertify beds.

Inadequate funding — especially through Medicaid, which funds care for more than 70% of nursing home residents — was just one of three roadblocks for operators identified by LeadingAge, alongside workforce shortages and consumer preferences. 

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The General Assembly also declined to revisit staffing ratios or tackle delayed Medicaid approvals, all items on LeadingAge’s wishlist. 

“We’ve got priorities now for continued momentum,” beyond steady funding, Pezzano continued. “I would say that we lobbied just as hard to reform staffing ratios and that didn’t happen.”

Not enough nurses

The long-term care sector struggles to recruit and retain qualified staff amid a nationwide nursing shortage exacerbated by the COVID-19 pandemic. 

“Attracting people is a real priority, and we really need to work better together to attract people to see that there is really meaningful work, satisfying work to be done in long-term care,” said Pezzano.

One method would expose high school students to the field, allowing juniors and seniors to earn school credit while working in a facility — Senate Bill 116, which creates that pathway, passed the chamber unanimously in February.

In addition, Sen. David Argall (R-Schuylkill) authored two more measures  to shore up long-term care staffing, both of which have passed the chamber. Senate Bill 114 would allow students to take a certification exam “upon completion of relevant coursework,” while Senate Bill 115 offers an “alternative competency exam” as a replacement for potential hires who might not have a high school diploma or GED. 

All three proposals  have LeadingAge’s support and await action in the House. 

Pezzano said “overly prescriptive” staffing ratios added to the difficulty, setting minimum requirements for patient care using a formula based on hours worked, types of licensed staff and the number of residents. Operators chafed at the requirements under a national version, which proponents say would improve care, and the federal government reversed course late last year.  

Cheila Martinez, a former certified nursing assistant and now housekeeper at Spruce Manor in Reading, said quality resident care “depends on the entire nursing home team,” from nurses to laundry staff. 

“When any part of that team is short-staffed, residents feel the impact and workers burn out,” Martinez continued in a statement sent through her local union. 

As an SEIU union member, Martinez and others pushed for the updated reimbursement “because resident care requires much more money to stabilize the workforce,” saying her local contract gives workers the right to bargain over new public funding. 

“I’m lucky to work at a Saber facility, where workers and management have built a strong partnership that works together to improve care and job standards,” she added. “But not every nursing home operator is like Saber.”

She called for the legislature to pass an accountability measure like the one proposed by Rep. Dan Frankel (D-Allegheny), which doesn’t yet have a bill number. The accompanying memo focuses on transition periods between operators and owners, and requires state approval before new companies take over. 

However, Martinez’s union seeks more emphasis on accountability to make sure staffing ratios are enforced. 

“We will also continue to work hard to improve the ownership and operator regulations so that Pennsylvanians can trust their state taxpayer dollars are going where they belong,” she concluded.

Beyond institutional care

Long-term care encompasses more than nursing homes, which are the most expensive and intensive version of care. The budget barely touched pay for home health visits — a long-time goal for advocates — but did include a rate increase for Living Independence For the Elderly (LIFE). 

The LIFE program had 8,446 unique participants as of last summer, but growth has been stagnant despite the state’s aging population. 

Pezzano, whose organization represents LIFE operators as well as skilled nursing facilities, called the program a “value-based solution” that allows individuals to age at home but still have access to certain health services. 

“This program really is the most cost-effective way to care for people. It costs a fraction of what it costs to stay in a nursing home,” said Pezzano.

Families who might not know about LIFE or other homecare options might use a nursing home as “a default setting,” Pezzano continued. 

“People don’t want to think about getting older, and the absolute last thing you want to think about is being older and not well. So people put it off, and then individuals and their families are forced to make really important decisions under duress because there isn’t a plan for it,” he added.

The program received  a 3.9% increase, equal to $7 million. A proposal from Sen. Dan Laughlin (R-Erie), Senate Bill 482, tries to spread awareness about LIFE by requiring more organizations to share information with Medicaid enrollees. 

LIFE, home health and skilled nursing facilities were all part of one larger interconnected “ecosystem,” continued Pezzano, noting that housing shortages complicate care as well as delayed Medicaid approvals. 

“We have really been deliberate in introducing the whole concept of needing to look at aging services as an ecosystem,” he said. “We’re very sensitive to the fact that it’s not just about advocating for skilled nursing facilities. Because what you do in skilled nursing facilities will impact LIFE, will impact home health, homecare.”