Proposed Rule Versus the Final Rule
The final rule contains four main aspects: (1) an enhanced facility assessment (EFA), (2) 24/7 RN requirement, (3) hours per resident day (HPRD) requirements, and (4) the hardship exemption.
Enhanced Facility Assessment (EFA)
Prior to the final rule’s promulgation, LTCs were already required under federal regulation to assess staffing conditions to better serve resident needs. However, the enhanced facility assessment requires feedback for resident behavioral needs through active participation by LTC leadership, management, and direct care workers. This updated EFA requirement is effective as of August 8, 2024, a date 30 days past the initial implementation date provided in the proposed rule.
24/7 RN Requirement
The 24/7 RN requirement mandates an RN on site 24 hours per day, seven days a week, at LTCs. This is a 16-hour daily increase from the previous rule requiring an RN to be on site at least eight consecutive hours per day, seven days a week.
The proposed rule embraced this same 24/7 RN requirement. However, the final rule allows for a hardship exemption from this requirement, permitting LTCs to have an RN on site for 16 hours per day, seven days a week, should the LTC be able to comply with the requirements for the hardship exemption. See more below on the requirements to meet this exemption.
Like the proposed rule, the final rule maintains the same implementation dates for the 24/7 RN requirement: May 2026 for urban LTCs and May 2027 for rural LTCs.
HPRD Requirement
The final rule requires a minimum nursing staffing standard of 3.48 HPRD of nursing care, with at least 0.55 RN HPRD and at least 2.45 nurse aid (NA) HPRD. The remaining 0.48 HPRD may be fulfilled by any nursing staff type. HPRD is calculated by dividing hours worked by each type of staff over the total number of an LTC’s residents.
The proposed rule contained an HPRD requirement. However, the final rule requires 0.48 HPRD more than the proposed rule. The HPRD requirement is scheduled to take effect in May 2027 for urban LTCs and May 2029 for rural LTCs. These timing requirements mirror the proposed rule.
Hardship Exemption
The HHS Secretary, through CMS or the state, determines LTCs’ eligibility for an exemption based on several criteria. This is determined during the standard recertification survey and is re-determined each time the recertification survey occurs. The exemption determination departs from the proposed rule, suggesting the determination would renew annually if the LTC continued to meet the exemption.
The exemption criteria vary for each requirement. Overall, there are four requirements the exemption looks at: (1) location, (2) good faith efforts to hire, (3) demonstrated financial commitment, and (4) transparency/disclosure of exempt status.
The final rule differs from the proposed rule in three respects concerning the hardship exemption: (1) elimination of the distance requirement, (2) addition of a transparency requirement, and (3) application of the hardship exemption to both HPRD and 24/7 RN. The final rule departs from the proposed rule in its elimination of the distance standard for the location requirement. Instead, under the location requirement, CMS determines the exemption based on a provider-to-resident population ratio. As for the transparency requirement, it mandates LTCs to provide notice of its exemption status to the public and residents alike. Lastly, the final rule permits the hardship exemption for both the HPRD and 24/7 RN requirement, where the proposed rule only permitted the hardship exemption for the HPRD requirement.
The Payroll Based Journal (PBJ) is part and parcel for CMS’s tracking of LTCs compliance with the final rule. The PBJ is a public journal outlining the number of hours employees of LTCs work each day and the number of residents within each LTC. Failure to comply with the PBJ requirements can disqualify LTCs from the hardship exemptions should an LTC fail to submit PBJ data in accordance with 42 C.F.R. § 483.70(p) (2024).
Texas
Plaintiffs
The named plaintiff, the American Health Care Association (AHCA), is the largest association in the nation representing post-acute and long-term care providers. AHCA is suing on behalf of those post-acute and long-term care facilities participating in Medicare, Medicaid, or both to prevent “the economic and other injuries” it anticipates the final rule will impose on LTCs. Other plaintiffs include nonprofit entities, state associations, and nursing facilities.
At the core of AHCA’s claim is the lack of congressional authority granted to CMS to promulgate the 24/7 RN and the HPRD requirements. As to the 24/7 RN requirement, AHCA alleges that the longstanding 8/7 RN requirement fails to reconcile with the final rule’s adoption of a mandate three times as demanding. The organization also contends that the statutory authority HHS relies on is being read too broadly. In response, HHS cites the Secretary’s authority to impose “other requirements relating to the health and safety of residents,” LTC facility requirements for high standards of resident well-being, and LTC facility requirements to enhance resident quality of life. As for the HPRD requirement, AHCA reiterates much of the same argument, categorizing the change as a CMS policy choice, one inconsistent with the Congress’s judgment.
AHCA asserts that Congress should be the body to authorize said changes, not the executive agency of CMS. The organization fails to address, however, the nature and extent of the injuries it alleges even if Congress authorized the final rule.
Nonetheless, in addition to the lack of authority to promulgate the final rule, AHCA invokes the Major Questions Doctrine, citing the economic and political significance of the final rule’s requirements. On the economic side, they indicate that over three-fourths of LTC facilities will be required to increase staffing levels because of the final rule. AHCA indicates that no changes to the minimum staffing requirements have been made since 1990, asserting such “history” contradicts any claim of congressional intent to delegate these requirements to CMS.
Finally, AHCA cites the final rule as arbitrary and capricious agency action in violation of the Administrative Procedure Act (APA). They assert this “one-size-fits-all standard” is unreasonable considering the varying resident needs at LTCs across the country while simultaneously ignoring local staffing needs. In the end, AHCA reiterates the unworkability of the final rule, citing the three main requirements as unachievable. They foresee facilities across the United States closing due to an inadequate supply of RNs and NAs, despite the hardship exemptions.
Overall, AHCA contends the “massive, unfunded staffing mandate” is both unreasonable and unreasonably explained, contrary to the APA’s requirement precluding arbitrary and capricious rules. In AHCA’s view, the final rule is irreconcilable with the statutory authority granted to CMS, constitutes arbitrary and capricious agency action, and is simply unfeasible considering economic realities across the United States.
Defendant
HHS relies on various sections of the United States Code as providing the Secretary with the authority to promulgate the final rule. Citing United States Supreme Court precedent, HHS asserts this broad authority granted to the Secretary permits the promulgation of the final rule so long as the final rule maintains a reasonable relation to the purpose(s) of the enabling legislation. This “reasonable relation” standard is the test HHS works throughout the first part of its argument when asserting the final rule is within the Secretary’s authority. Interestingly, within this first part, HHS cites CMS’s history of protecting resident health and safety at LTCs, absent citation(s) supporting the specific numerical requirements cited in the final rule.
24/7 RN Response & HPRD Response
HHS asserts the 24/7 RN requirement is an example of the Secretary utilizing CMS’s express authority to “fill up the details of the statutory scheme” based on the statutes cited in the Final Rule. Therefore, the HHS position is that under the Federal Nursing Home Reform Act (FNHRA), the Secretary has delegated authority that is reasonably related to resident health and safety to adopt the 24/7 RN requirement. As a result, HHS claims AHCA’s issue with the 24/7 RN requirement rests on arbitrary and capricious standards, not a lack of statutory authority.
AHCA argues that HHS’ 24/7 RN requirement is inconsistent with the present 8/7 RN requirement. HHS supports its requirement by claiming that for AHCA to prevail, the words “at least” must be read out of the statute entirely. This is because the 8/7 RN requirement is a minimum standard and the Secretary has discretion to increase this requirement by rule to 24/7 RN coverage.
HHS recites a similar argument for the HPRD requirements. Regarding both requirements, HHS references the Supreme Court’s rejection of an “exceeding authority” argument in Biden v. Missouri. There, the Court rejected the notion of the Secretary exceeding his “health and safety” authority regarding a regulation related to the COVID-19 pandemic. Relatedly, HHS counters AHCA’s “history” argument by asserting that the recent literature and study allowed HHS to come to an evidence-based conclusion about the requirements and final rule generally.
Major Questions Doctrine Response
HHS labels the AHCA’s invocation of the Major Questions Doctrine as a backup plan. HHS asserts that AHCA misapplies the doctrine and incorrectly emphasizes the economic and political consequences of the final rule while ignoring the legal test governing doctrine cases.
HHS nonetheless doubles down on AHCA’s political and economic significance argument. HHS indicates FNHRA grants CMS the authority to fill up the statutory details of the Secretary’s “health and safety” power. Therefore, HHS asserts, the final rule cannot be an issue of political significance if Congress has promulgated health and safety power to CMS and the Secretary. Additionally, on the economic vein, HHS distinguishes this case from Missouri on doctrine grounds, concluding the impact is miniscule compared to the total workforce impact in the Texas and Iowa cases.
Arbitrary and Capricious Standard Response
In short, HHS asserts the final rule is compliant with the deferential standard of arbitrary-and-capricious review. First, HHS responds to AHCA’s contention of the lack of information, saying that increasing staffing will result in increases in resident standard of care by citing various studies. Second, HHS relies on updated data and the PBJ as the sources for providing the data to effectuate the final rule.
Additionally, in response to AHCA’s “one-size-fits-all” contention, HHS implores the Court to read the final rule’s requirements as a floor rather than a ceiling. Rather than subscribing LTCs to the minimum requirements, in HHS’s view, the final rule permits LTCs to assess their own needs and adjust above the standard accordingly. Relatedly, HHS argues that AHCA ignores the hardship exemptions embedded in the final rule, another example of flexibility.
In the end, HHS’s state compliance challenges cannot provide the basis for rendering an agency decision as arbitrary and capricious. HHS submits that AHCA fails to trigger the arbitrary and capricious standard of one relying on “improper factors, fails to consider key information, offers a decision that the record does not support, or lacks plausibility.”
Status of the Case
The complaint in this case was filed in May 2024, with an amended complaint filed in June 2024. The case of State of Texas v. United States Department of Health and Human Services. et al. consolidated with this present case in September 2024, citing similar parties, claims, and demands for relief. Interestingly, the State of Texas, in this Consolidation Order, cites an article discussing five states with current minimum nurse staffing mandates like the final rule. Based on a Kaiser Family Foundation Health News analysis, the article indicates those states with stricter minimum staffing mandates presently face an uphill battle to comply with those state mandates due to staffing shortages. Additionally, the article cites the closure of an LTC facility in East Providence, RI, due to “unsustainable Medicaid reimbursements.” Each of these issues mentioned in the article are issues that AHCA takes issue with. Conversely, “Service Employees International Union” submitted an amicus curia in support of HHS, highlighting its support for the final rule as a measure to address the nursing staff shortage in LTC facilities and, therefore, improve resident care. Nonetheless, a decision should be forthcoming as cross-motions for summary judgment have been filed, and the parties await the court’s decision.
Iowa
Plaintiffs
Like in the Texas case, the Iowa case plaintiffs argue the final rule is a Biden-Harris Administration policy failing to meaningfully address the challenges faced by LTCs, while simultaneously increasing compliance costs for the LTC industry. The plaintiffs adopt this policy position based on the study conducted after the Biden-Harris Administration’s decision to change LTC community operations to improve resident care.
Without reiterating much of what is discussed above, Iowa plaintiffs highlight the flexibility found in the requirements prior to the implementation of the final rule. Such flexibility, Iowa plaintiffs claim, allowed for each LTC facility to serve residents according to the individuals’ needs, while also maintaining staff at a level commensurate with residents’ needs.
In sum, the Iowa plaintiffs say the final rule exceeds the statutory authority of CMS, violating the Major Questions Doctrine, presenting nondelegation concerns, and constituting arbitrary and capricious agency action. Regarding the excess of statutory authority argument, the Iowa plaintiffs assert Becerra’s reliance on various miscellaneous statutory provisions fails to provide actual authority for Becerra to alter longstanding law with such specificity. As for the Major Questions Doctrine, the plaintiffs rely on the nearly $43 billon compliance cost the final rule will have on the nursing home industry. The Iowa plaintiffs assert the Major Questions Doctrine should be implicated, citing the economic impact coupled with the immense change the final rule will bring to LTCs.
Regarding nondelegation concerns, the plaintiffs allege the final rule contains no intelligible principle from Congress to guide the Secretary to regulate the health and safety of LTC residents. Lastly, the Iowa plaintiffs argue that the final rule is not reasonable nor reasonably explained, and therefore, runs afoul of the APA requirement against arbitrary and capricious agency action. The plaintiffs indicate Becerra’s reliance on the study and other literature is not a reasonable rationale for the final rule. As part of arbitrary and capricious review, a court must set aside agency action failing to consider relevant factors or providing evidence of an error of judgment. The relevant factor here CMS failed to account for: compliance costs.
One different aspect in the Iowa case is the plaintiffs’ “Contrary to Law” claim. This claim is within the same subsection of the APAs “arbitrary or capricious” standard. Here, the Iowa plaintiffs allege the final rule is not in accordance with law because it drastically changes the previous, long-standing 24/7 RN and HPRD requirements.
Another small but notable difference is the Iowa plaintiffs distinguishing the applicability of the hardship exemption for the 24/7 RN requirement and HPRD requirements. In doing so, the plaintiffs indicate the hardship exemption applies only for both the 24/7 RN requirement and the 0.55 RN HPRD requirement in the case of Medicaid. Even then, the Iowa plaintiffs claim, the hardship exemption is too rigid a test to meaningfully relieve LTCs of the requirements of the final rule.
In sum, the Iowa plaintiffs seek to preliminarily enjoin implementation of the final rule. They cite irreparable harm in the form of compliance and administrative costs associated with the final rule, despite the 24/7 RN requirement and HPRD requirements not actually going into effect until two or more years in the future. The Iowa plaintiffs argue that a preliminary injunction as crucial due to EFA requirements already being in place, as well as LTCs having to incur costs now to be in compliance once the final rule 24/7 RN and HPRD requirements take effect.
Defendant
HHS wastes no time attacking the Iowa plaintiffs’ ability to succeed on their plea for a preliminary injunction. Becerra cites broad rulemaking authority as Secretary as well as rulemaking authority regarding LTCs. More specifically, HHS cites “responsibility” as Secretary under a provision of the United States Code to meet health and safety requirements for residents of LTCs.
In an effort to bolster the authority of the Secretary and CMS, HHS relies on United States Supreme Court authority and Eighth Circuit case law, contending it maintains a “reasonable relation” to the previously cited law. HHS alleges such broad authority, coupled with an expansive reading of the health and safety power, is all but dispositive to indicate the lack of arbitrary and capricious nature of the final rule.
In short, HHS also contests the 24/7 RN and HPRD requirements, as well as Major Questions Doctrine implication, again relying on its main assertion of authority to promulgate the final rule. Additionally, HHS attempts to dispel the Iowa plaintiffs’ nondelegation concern, citing various United States Supreme Court cases upholding Congress’s delegation under broad powers such as “health and safety.”
Lastly, HHS cites to the record in support in support of final rule adoption because: (1) CMS relied on information over various years, including the study to support the final rule’s adoption, and (2) the final rule is compatible with HHS’s and CMS’s well-established minimum staffing position. Alternatively, even if it is not, HHS claims, change here was well reasoned because of updated research and studies. Additionally, HHS asserts the final rule allows for flexibility, reiterating the position taken in the Texas case.
HHS contends that any harm to Iowa plaintiffs is economic at heart and self-imposed. In HHS’s view, Iowa plaintiffs’ main contention is compliance issues. These compliance issues relate to staffing issues not caused by the final rule, rather, they are a reality that the Iowa plaintiffs must address in the need to improve resident health and safety.
HHS concludes that the Iowa plaintiffs fail to establish imminent and irreparable harm and similarly fail on a balancing of the harms and public interest, a factor test to be considered when the government is the opposing party.
Preliminary Injunction: Denied
The Iowa plaintiffs’ motion for a preliminary injunction was denied on January 16, 2025. The next day, they appealed the order.
The court references the Dataphase factors for consideration of a preliminary injunction, most notable here, the threat of irreparable harm and likelihood of movant’s success on the merits. The court recognizes the momentous costs the final rule will have on LTCs in the form of both administrative and compliance measures. However, the court indicates due to the implementation dates occurring in the future, with the earliest being May 2026, the claimed financial harms based on the administrative and compliance burdens are too speculative to render a preliminary injunction as the proper remedy.
The court indicated that the Iowa plaintiffs’ contention of costs being incurred now because of the 24/7 RN requirement and HPRD requirement are not clear, as only LeadingAge South Carolina indicated a current staffing shortage and one facility’s inability to fill an open RN position via a declaration.
As for the EFA requirement, the court indicates the Iowa plaintiffs make a showing of irreparable harm, however, ultimately it agrees with HHS, stating that the Iowa plaintiffs fail to meaningfully address irreparable harm regarding the EFA requirement.
In conclusion, the court reasoned that the extraordinary remedy of a preliminary injunction simply was not necessary here to prevent irreparable harm. Nonetheless, the court recognized the urgency of the issue(s) and set due dates for dispositive motions for March 3, 2025.
The Future of the Final Rule Under the Trump Administration
Various news outlets, including The New York Times, Modern Healthcare, Becker’s Hospital Review, McKnight’s Long-Term Care News, and many others, all indicate the nursing home industry’s hope the Trump Administration may rescind or at least issue an executive order deferring indefinitely the enforcement of the minimum nursing staffing mandate.
In the meantime, as the final rule makes its way through the courts of Texas and Iowa, it is yet to be seen whether the current administration will continue to defend the final rule. However, one thing is for sure: CMS and HHS view the final rule as a solution to the years of struggles faced by LTCs. Conversely, the LTCs maintain that the staffing mandate is nothing more than an overpriced, unfunded mandate and unjustified Band-aid attempting to cover up the complexity of LTC quality of care issues.
