CLA Estimates $6 Billion Annual Cost for Nursing Home Staffing Mandate

While not surprising — yet still poorly received by nursing homes — the Centers of Medicare & Medicaid Services (CMS) released its finalized mandatory nursing home staffing rule in late April. It includes multiple staffing requirements plus enhancements for facility assessments. Implementation dates start within 90 days and extend over five years.

The biggest concerns for nursing homes revolve around lack of sufficient staff and finances to meet the new requirements. Read CLA’s analysis of the rule’s likely impact on nursing homes across the nation and get a better idea of where your organization stands.

National impact

Throughout the rulemaking process, CLA has estimated the financial costs and the number of staff needed to meet the various proposals. Now that the final rule has been released, CLA estimates to implement the rule today would cost $6 billion dollars nationally and require over 101,000 additional employees.

These estimates are based on the rule’s four distinct staffing requirements:

1. 3.48 total hours per resident day (HPRD)
2. 2.45 nurse aide HPRD
3. 0.55 registered nurse (RN) HPRD
4. 24/7 RN on site

Requirement	Estimated Annual Cost ($ in millions)	Estimated Full Time Equivalent
Nurse Aide Hours per Resident Day of 2.45	$3,526	77,366
RN 24/7 & RN Hours per Resident Day of 0.55	$2,169	23,395
Total Hours per Resident Day of 3.48	$61	783
Total	$5,756	101,544

CLA used payroll-based journal data as of Q4 2023 and annual Medicare costs reports released by CMS as of April 2024. The analysis used employed hours and hourly wage rates as well as contract hours and hourly wage rates. CLA analyzed the rule’s impact as if it were in effect today.

Nationally, the state median for nursing aide HPRD is 2.18, which is less than the required 2.45 HPRD. For RN 24/7 onsite, the state median was 84%. The RN HPRD state median meets the 0.55 RN HPRD requirement and a median of 3.62 for total HPRD exceeds the 3.48 requirement.

CLA Analysis — National Impact

Nurse Aide HPPD of 2.45	Registered Nurse 24/7	Registered Nurse HPPD of 0.55	Total HPPD of 3.48
State Median	State Median	State Median	State Median
Reported Qtr. HPPD 2.18	Pct of days met in Qtr. 84%	Reported Qtr. HPPD 0.55	Reported Qtr. HPPD 3.62
Estimated Annual Total Cost to Meet Proposed Mandate $5.756bn

State cost impacts

CLA found urban states tend to fare better than rural states. A primarily urban state shows a $167 million impact whereas a primarily rural state has a $629 million impact. On average, rural states need to hire far more nursing staff to meet the mandate’s requirements.

For the urban state, the largest problem area is meeting the required 2.45 nurse aide HPRD. Currently, the median is 2.06 HPRD. For the 24/7 RN requirement, the median was 95% meeting the requirement. For the RN HPRD and total HPRD, the median was higher than the required minimum.

CLA Analysis — State Impact (Primarily Urban State)

Nurse Aide HPPD of 2.45	Registered Nurse 24/7	Registered Nurse HPPD of 0.55	Total HPPD of 3.48
State Median	State Median	State Median	State Median
Reported Qtr. HPPD 2.06	Pct of days met in Qtr. 95%	Reported Qtr. HPPD 0.60	Reported Qtr. HPPD 3.64
Estimated Annual Total Cost to Meet Proposed Mandate $167M

In the primarily rural state, the medians are far lower across all four requirements. For nurse aide HPRD, the median is 1.88, well under the required 2.45. The 24/7 RN requirement median was 47%, RN HPRD median was 0.33 and total HPRD median at 3.19.

CLA Analysis — State Impact (Primary Rural)

Nurse Aide HPPD of 2.45	Registered Nurse 24/7	Registered Nurse HPPD of 0.55	Total HPPD of 3.48
State Median	State Median	State Median	State Median
Reported Qtr. HPPD 1.88	Pct of days met in Qtr. 49%	Reported Qtr. HPPD 0.33	Reported Qtr. HPPD 3.19
Estimated Annual Total Cost to Meet Proposed Mandate $629M

Mounting opposition — lawsuit filed

CMS provides its own analysis in the final rule as well, indicating an overall economic impact of approximately $53 million in year one, $5.8 billion in year 10, and $43 billion over the 10-year period. CMS indicates facilities are responsible for these costs and provides less than $100 million in funding in the final rule.

All of this is part of why nursing home associations and nursing homes sued the federal agency. The lawsuit alleges the final rule is “arbitrary and capricious” and “creates impossible-to-meet standards that will harm thousands of nursing homes and the vulnerable Americans they serve.”

Further, the lawsuit indicates CMS is imposing “irrational and unattainable staffing levels.” The lawsuit was filed in Texas and seeks an injunction to permanently stop implementation of the rule.

Corollary activities to stop the mandate are occurring on Capitol Hill, including advocacy and a Congressional Review Act (CRA) resolution. There is bipartisan concern with the final staffing mandate, but enacting CRA legislation may be difficult in an election year and with a divided Congress.

Should a CRA pass both chambers, it would still need the president’s signature for enactment — unlikely since this topic has been a priority for the Biden administration. If vetoed, Congress would need a two-thirds majority to override it. Regardless, strong votes, election results, and advocacy could all impact the outcome.

How we can help

As the legal and legislative processes work their ways out, CLA continues to recommend analyzing the final rule to understand the specific impact on your facility. Additionally, the required facility assessment enhancements are still due within 90 days, or August 8.

Beyond working on your facility assessments, CLA can also help you with:

• Assessing staffing gaps at each facility
• Initiating an operational assessment
• Updating your strategic plan as warranted
• Modeling the financial impact for your organization

For more information, review CLA’s webinar and blog post.

Contact us

Learn how the final rule impacts your facility and get help with the required assessments. Complete the form below to connect with CLA.