July 23, 2020

Reforms Needed After Systemic Flaws in Nursing Homes Worsen Outcomes from COVID-19

By Marianne Udow-Phillips and Robyn Rontal
Now is the time to consider fixing a flawed system

Now is the time to consider fixing a flawed system

The challenges of coping with a deadly coronavirus outbreak in nursing homes drive home the need for systemic change. The COVID-19 pandemic has disproportionately affected nursing home residents and staff, and illness and fatalities will likely continue to mount until effective treatments and vaccines are available. As of June 18, 2020, long-term care facilities in the U.S. reported more than 240,000 cases and 50,000 deaths from COVID-19. That means less than 1 percent of the population resides in long-term care facilities yet residents and workers account for about 40 percent of all COVID-19 deaths in the U.S. Now is the time to examine systemic issues that have plagued nursing homes and led to tragic outcomes, and consider deep reforms that would improve the quality of care and life for residents. 

Concerns about the quality of care in nursing homes are not new or specific to COVID-19. Various studies and regulatory oversight have identified long-standing issues with infection control and staff shortages in nursing homes.[1] In 2017, approximately 40 percent of Medicare/Medicaid-certified nursing facilities surveyed by state regulators had at least one infection control program deficiency, the most common deficiency reported to the Centers for Medicare and Medicaid Services (CMS).[2], [3] In six states -- California, Michigan, Illinois, Missouri, Mississippi, and Delaware -- infection control deficiencies were reported in more than half of all  facilities.

Oversight Issues

COVID-19 has also highlighted deficiencies in the current quality oversight and regulatory processes. For example, CMS has rated nursing homes on quality since 2008 using a star ratings system intended to help consumers choose a facility based on a defined set of quality measures.[4] The coronavirus outbreak underscored the limits of the star rating system. In early CMS data, nursing homes with high star ratings failed to demonstrate significantly lower rates of COVID-19 cases compared with facilities with low star ratings.[5]

COVID-19 has also brought into sharp focus the lack of data captured at the state and federal level about nursing homes. Consumers have had difficulty learning the number of COVID-19 cases and deaths in particular facilities. Data collected by officials is often confusing, inconsistent, and incomplete.[6]  Without comprehensive and accurate data, interventions to improve outcomes and quality are limited. Also, consumers have difficulty discerning how risky a particular facility might be.

A recent study from Harvard University noted that larger facility size, greater percentage of African American residents, urban location, and non-chain status were significantly related to increased probability of COVID-19 cases, whereas CMS five-star rating, prior infection violation, Medicaid dependency, and ownership were not.[7]

Opportunities for Improvement

Long-standing research, along with what we’ve learned from the COVID-19 outbreak, provide a strong road map for improvement opportunities in nursing homes.[8] Among the reforms:

       Regulatory changes are needed to provide better oversight of the quality and procedures within nursing homes. CMS has already begun to make some regulatory changes.[9], [10]

      Enhanced data reporting and information systems are essential for states and local officials to know where to target resources in crisis situations and for staff, families, and individuals to have more transparency about the risks within particular nursing homes. CMS and states are beginning to require and publish this data.[11]

       Resources, including more personal protective equipment, more guidance on best practices, and assessment tools for compliance with infection control need to be directed at nursing homes to help keep residents and staff safe from infection.[12], [13] CARES Act and other funds have been set aside for these purposes.[14]

        The physical structures of nursing homes need to change. Smaller environments with fewer residents have been shown to curb spread of infection.[15]

Moreover, the financing of nursing homes in America needs to be reimagined. Unlike many other countries, the U.S. has no comprehensive approach to long-term care. Nursing homes in the U.S. perform multiple roles, from short-term rehabilitation of an acute injury or illness to long-term custodial care. These services are paid for through multiple funding streams with different rules, payment levels, and criteria for coverage. Because funding comes from a variety of payers, all with different rules around eligibility, quality measures and reimbursement incentives, nursing homes have designed structures that may not be in the best interest of public health.[16] For example, many nursing home patients have both Medicare and Medicaid coverage. Because Medicare and Medicaid cover different services with different rules, there is no one entity that is responsible for the oversight, quality of care or cost of the entire care for these patients within a nursing home.

Funding Levels

Today, Medicare and most private health insurance plans cover only a skilled level of post-acute care at nursing homes. Medicare covers acute skilled nursing and rehabilitative care for a maximum of 100 days per illness, within 30 days of a hospital stay that lasted at least three days (the three-day requirement is currently being debated but the requirement for nursing home care being limited to post-acute inpatient care is not).  

 Medicaid is the only public funder of long-term care that does not require nursing home care to be connected to a hospital stay. But while Medicaid’s coverage is broad, its payment is low. Private insurance also exists for long-term care, but very few seniors have such coverage and benefits are often limited. About 13 percent of people aged 65 and older are estimated to have private long-term care insurance.[17]   

Private-pay residents pay approximately 25 percent more per day for nursing home care than Medicaid pays; Medicare pays almost double the Medicaid rate for nursing home residents receiving rehabilitation services.[18], [19] Therefore, long-term care facilities must make sure that there are enough Medicare and private pay residents in their facilities, with higher margins than Medicaid, for financial solvency. Facilities that are more reliant on Medicaid residents are more likely to close, have lower-paid staff, and face more staff shortages and turnover.[20]

 Nursing homes have employed a variety of strategies to attempt to stay solvent, including selling their facilities to private equity and leasing them back.[21]  These strategies may work in the short term to provide liquidity but mean that nursing homes have less ability to restructure their physical plants than they would if they maintained ownership of their facilities

Moving Forward

A better model of care would segment nursing home facilities and care to target specific types of need. In this model, there would be nursing homes designed to work with residents in need of shorter-term, acute care with a focus on enabling a return to independence at home or in the community. There would also be separate facilities designed to provide subacute care services with a different physical design for residents who need long-term support for activities of daily living. Facilities oriented to subacute care can have more physical separation and smaller patient units since clinical oversight is less critical.

   Such a structure could be better integrated with hospital systems to take a population health approach. In this approach, new models of care that have developed through the COVID-19 experience to date, like telehealth and hospitals at home (i.e. hospital level of care provided in a patient’s home) could be better deployed through an integrated system with nursing facilities.[22]

 Such a rethinking of nursing home structures would also require a rethinking of Medicaid reimbursement, Medicare coverage, and private health insurance.[23] Better coordination between Medicare and Medicaid is needed, with an emphasis on the population that is eligible for both Medicare and Medicaid (the “duals”) so that innovative approaches can be taken and care and coverage can be seamless and coordinated. Also, new models of private coverage will be needed to ensure that our aging population does not become destitute when long-term care services are needed.

   New and promising models are developing along these lines:

  • Medicare Advantage Special Needs Plans (SNPS) are a model to build upon 
  • Expansion of eligibility in proven, effective programs like Programs of all Inclusive Care for the Elderly (PACE), which provide care in the community as an alternative to nursing homes
  • New approaches to Accountable Care Organizations can be used to encourage better integration of hospital and nursing home care
  • States are experimenting with conflict-free “options centers” to provide consumers with more transparent information to better navigate the long-term care services and programs in which they are eligible
  • CMS has allowed states to apply for innovation waivers for Medicaid long-term care as part of the response to COVID-19. These new waiver models, such as Michigan’s MI Health Link program, provide more integration of acute and long-term care with strong care management and can be built upon to provide a stronger long-term care system for the future

Seniors want to remain at home and be as independent as possible for as long as possible.  COVID-19 has vividly exposed the cracks in our current system. What we’ve learned can be used to point the way to a future of integrated design changes and a comprehensive public policy framework for long-term care. 

Investment in this system will be needed. But given the mass casualties and harm stemming from COVID-19 in the current environment, an investment is one we must make now and into the future.

About the authors:

Marianne Udow-Phillips is founding executive director of the Center for Health and Research Transformation (CHRT) at the University of Michigan and served as director of human services for the state of Michigan from 2004 – 2007

Robyn Rontal is director of data analytics for the Center for Health and Research Transformation (CHRT) at the University of Michigan and former director of the healthcare value division at Blue Cross Blue Shield of Michigan, the state’s largest Medicaid insurer

[1] Joshua M. Wiener, “An Assessment of Strategies for Improving Quality of Care in Nursing Homes,” The Gerontologist 58, no. 2 (2003): 19–27, accessed June 22, 2020, https://doi.org/10.1093/geront/43.suppl_2.19.

[2] Infection Control (F441): The facility must establish and maintain an Infection Control Program designed to provide a safe, sanitary and comfortable environment and to help prevent the development and transmission of disease and infection.

Charlene Harrington et al., Nursing Facilities, Staffing, Residents, and Facility Deficiencies, 2009 through 2016 (San Francisco, CA: KFF, 2018), https://www.kff.org/report-section/nursing-facilities-staffing-residents-and-facility-deficiencies-2009-through-2016-appendix/

[3] Chidambaram, Data Note: How might Coronavirus Affect Residents in Nursing Facilities?

[4] Cristina Boccuti, Giselle Casillas, and Tricia Neuman, Reading the Stars: Nursing Home Quality Star Ratings, Nationally and by State (Menlo Park, CA: KFF, 2015), http://files.kff.org/attachment/issue-brief-reading-the-stars-nursing-home-quality-star-ratings-nationally-and-by-state#:~:text=In%202008%2C%20the%20Centers%20for,nursing%20home%20in%20their%20area.

[5]  Ginger Christ, “CMS Star Ratings Don’t Indicate COVID-19 Deaths, Data Show,” Modern Healthcare, June 9, 2020, https://www.modernhealthcare.com/safety-quality/cms-star-ratings-dont-indicate-covid-19-cases-deaths-data-show.

[6]  Dena Bunis, “Nursing Homes Ordered to Disclose COVID-19 Cases, Deaths,” AARP, May 7, 2020, https://www.aarp.org/caregiving/health/info-2020/nursing-homes-to-publicly-disclose-coronavirus.html.

[7] Hannah R. Abrams et al., “Characteristics of U.S. Nursing Homes with COVID ‐19 Cases,” Journal of American Geriatrics Society, (2020), accessed June 22, 2020, https://doi.org/10.1111/jgs.16661.

[8] Institute of Medicine (US) Committee on Improving Quality in Long-Term Care, summary to Improving the Quality of Long-Term Care, eds. GS Wunderlich and PO Kohler (Washington, DC: National Academies Press, 2001), https://www.ncbi.nlm.nih.gov/books/NBK224506/

[9] On March 3, 2020, the DOJ launched the National Nursing Home Initiative to coordinate and enhance civil and criminal efforts to pursue nursing homes that provide grossly substandard care to their residents.

US Department of Justice, “Department of Justice Launches a National Nursing Home Initiative,” News release, (March 3, 2020),  https://www.justice.gov/opa/pr/department-justice-launches-national-nursing-home-initiative.

[10] On June 1, 2020, CMS announced that (i) funding to States based on the Coronavirus Aid, Relief and Economic Security (CARES) Act will be tied to performance on nursing home infection control surveys and (ii) the penalties for nursing home infection control deficiencies will be increased to between $5,000 - $20,000 per instance. “COVID-19 Survey Activities, CARES Act Funding, Enhanced Enforcement for Infection Control deficiencies, and Quality Improvement Activities in Nursing Homes,” CDC, accessed on June 24, 2020, https://www.cms.gov/files/document/qso-20-31-all.pdf.

[11] On June 4, 2020, CMS started posting COVID-19 nursing home cases and deaths and targeted inspection results on Nursing Home Compare. Data will be updated weekly. Nursing homes are required to report COVID-19 data to the CDC and to notify residents, resident representatives, and families.

CMS, “Nursing Home COVID-19 Data and Inspections Results Available on Nursing Home Compare,” News release, (June 4, 2020), https://www.cms.gov/newsroom/press-releases/nursing-home-covid-19-data-and-inspections-results-available-nursing-home-compare

[12] “Coronavirus Disease 2019 (COVID-19) Preparedness Checklist for Nursing Homes and other Long-Term Care Settings,” CDC, accessed on June 22, 2020, https://www.cdc.gov/coronavirus/2019-ncov/downloads/novel-coronavirus-2019-Nursing-Homes-Preparedness-Checklist_3_13.pdf.

[13] On May 6, 2020, CMS issued updated guidance to State survey agencies for infection control surveys that include a new assessment tool, the COVID-19 Focused Survey for Nursing Homes. “Interim Final Rule Updating Requirements for Notification of Confirmed and Suspected COVID-19 Cases Among Residents and Staff in Nursing Homes,” CMS, accessed on June 24, 2020, https://www.cms.gov/files/document/qso-20-29-nh.pdf.

[14] On May 22,2020, HHS announced the distribution of $4.9 Billion in relief funds directly to SNFs. Nationally, all facilities with six or more certified beds will receive a baseline payment of $50,000, plus an additional $2,500 per bed. These funds can be used to address needs such as staffing, workforce training, testing, reporting, acquiring personal protective equipment, and other expenses directly related to the pandemic. HHS, “HHS Announces Nearly $4.9 Billion Distribution to Nursing Facilities Impacted by COVID-19,” News release, (May 22, 2020),

https://www.hhs.gov/about/news/2020/05/22/hhs-announces-nearly-4.9-billion-distribution-to-nursing-facilities-impacted-by-covid19.html.

[15]Paula Span, “How to Improve and Protect Nursing Homes From Outbreaks,” May 22, 2020, New York Times. https://www.nytimes.com/2020/05/22/health/coronavirus-nursing-homes.html

[16]David C. Grabowski, “Medicare and Medicaid: conflicting incentives for long-term care,” The Milbank Quarterly 85, no. 4 (2007): 579-610, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2690349/

[17]CBO, Rising Demand for Long-Term Services and Supports for Elderly People.

[18] MedPAC, Skilled Nursing Facility Services Payment System (Washington DC: MedPAC, 2019), http://medpac.gov/docs/default-source/payment-basics/medpac_payment_basics_19_snf_final_sec.pdf?sfvrsn=0

[19] “Medicaid Coverage of Nursing Home Care | When, Where and How Much They Pay,” American Council on Aging, last modified on January 7, 2020, https://www.medicaidplanningassistance.org/medicaid-and-nursing-homes/.

[20]  Alex Kacik, “COVID-19 Pandemic Proves to be a Pivotal Moment for Senior Care,” Modern Healthcare, June, 6, 2020, https://www.modernhealthcare.com/post-acute-care/pandemic-proves-be-pivotal-moment-senior-care

[21]Kacik, “COVID-19 Pandemic Proves to be a Pivotal Moment for Senior Care.”

[22]David C. Grabowski, and Vincent Mor, “Nursing Home Care in Crisis in the Wake of COVID-19,” JAMA (2020), accessed June 22, 2020, doi:10.1001/jama.2020.8524.

[23]Michael L. Barnett and David C. Grabowski, “COVID-19 is Ravaging Nursing Homes. We’re Getting What We Paid For,” Washington Post, April 16, 2020, https://www.washingtonpost.com/opinions/2020/04/16/covid-19-is-ravaging-nursing-homes-were-getting-what-we-paid/.