Earlier today, the U.S. Department of Labor finalized a rule that dramatically expands overtime eligibility for millions of salaried workers. The release of the rule comes a day after the Centers for Medicare and Medicaid Services (CMS) released final rules that would impose new requirements on Medicaid Home and Community Based Services (HCBS) providers and establish federal staffing requirements on long-term care facilities.
Argentum will be covering the impact of the rules on assisted living communities during tomorrow's Argentum Advocates member briefing. The session will also share updates on on new long-term care workforce legislation and the forthcoming “Health Over Wealth Act,” calling for greater transparency and accountability for private equity in health care, including assisted living.
Argentum Advocates Member Briefing
Wednesday, April 24, 2024
2:00 PM ET
Read more for a detailed summary of the new rules:
Overtime Rule:
The U.S. Department of Labor's rule to increase the threshold for employees to be eligible for overtime clarifies which employees are executive, administrative or professional employees, who are then exempt from overtime pay.
Effective July 1, 2024, the salary threshold will increase to the equivalent of an annual salary of $43,888 and increase to $58,656 on Jan. 1, 2025. The July 1 increase updates the present annual salary threshold of $35,568 in the 2019 overtime rule update. On Jan. 1, 2025, the rule’s new methodology takes effect, resulting in the additional increase. In addition, the rule will adjust the threshold for highly compensated employees. Starting July 1, 2027, salary thresholds will update every three years, by applying up-to-date wage data to determine new salary levels.
In comments that Argentum and the American Seniors Housing Association jointly issued last fall, we called for the withdrawal of the proposed rule and have it replaced by a rule that sets the salary level no higher than the 20% threshold in the lowest income states; bonus incentives to not be capped and be more flexibly allowed, with a better safe harbor for inadvertent mis-calculations; highly compensated salary standard be maintained at the current level and the salary levels for both to not be indexed. Further, we jointly requested the review of the salary threshold be allowed for a rulemaking process to solicit stakeholder input and closely reflect current economic conditions and for the Department of Labor to allow for a rational phase-in period for employers.
HCBS Compensation Requirement:
The Ensuring Access to Medicaid Services Rule was issued with an intent to strengthen safeguards to ensure health and welfare, promote health equity for people receiving Medicaid covered HCBS, and achieve a more consistent and coordinated approach to the administration of policies and procedures across Medicaid HCBS programs. The 1,005-page final rule is scheduled to be published in the Federal Register May 10.
Argentum was disappointed that CMS chose to move forward with these sweeping new regulations that require 80 percent of state payments for certain home and community-based services (HCBS) be allocated to compensation for direct care workers.
We are continuing to analyze the final rules, and specifically, how the Medicaid rule impacts assisted living communities that provide HCBS services. However, as in the initial draft of the rule that was published last year, there remains a lack of clarity on how the final rule will apply to assisted living. As the implementation date has been pushed back from four years to six, Argentum will continue to analyze the language as well as reiterate to the Administration the harm that this rule could have on seniors in assisted living; namely, that it could force assisted living communities to either reduce HCBS services they are currently providing, or cease participation in the Medicaid program altogether, which ultimately would have a negative impact on direct care workforce participation and Medicaid beneficiary access to care.
While we support policies to increase the number of caregivers and to improve Medicaid reimbursement for HCBS providers, we are concerned that these mandates may not effectively achieve these goals and could potentially have unintended negative consequences for both seniors and caregivers.
In our July 2023 comment letter to CMS, Argentum supported the stated goals of the proposed rule to improve access to care for Medicaid beneficiaries and to address shortages in the direct care workforce. However, we expressed concern that the proposal to require that 80% of state payment for certain HCBS be allocated to compensation for direct care workers was not the right approach to address workforce shortages or to increase access to services for Medicaid beneficiaries.
We also indicated that the proposed rule was ambiguous, making it unclear whether, and to what extent, the policy would apply to assisted living or similar residential facilities that provide HCBS under state Medicaid programs. While Argentum appreciates that CMS incorporated some flexibilities in response to stakeholder feedback, we remain concerned that without also addressing inadequate reimbursement rates, the rule may make it difficult, if not impossible, for these communities to continue to serve vulnerable residents.
By some estimates, assisted living saves Medicaid upwards of $40 billion annually. This rule could lead to the unnecessary utilization of Medicaid skilled nursing care in more restrictive settings and at substantially higher cost, placing further financial pressure on federal and state Medicaid budgets.
Minimum Staffing Standards for Long-Term Care Facilities:
The Minimum Staffing Standards for Long-Term Care Facilities and Medicaid Institutional Payment Transparency Reporting would establish federal staffing requirements on skilled nursing facilities (SNFs). The rule applies only to Medicare and Medicaid-certified SNFs, and not residential senior living communities. However, it would have a potentially devastating impact on the senior care sector more broadly.
A federal minimum staffing mandate threatens to reduce the available pool of essential caregivers that assisted living and other senior living communities depend on; a federal minimum staffing standard will not create more caregivers; it will simply further exacerbate the current shortage.
Argentum encouraged CMS to reconsider implementing the rule and instead focus on efforts to strengthen the long-term care workforces through policies to assist in training, recruiting and retaining staff, including, but not limited to, addressing the nationwide nursing and caregiver shortages, as well as attracting both to the profession; investing in developing full-time, dedicated caregivers instead of costly agency or temporary staff that would be required to comply with a staffing mandate; and recruiting and retaining LTC and senior living professionals by offering loan forgiveness, tax credits, apprenticeship opportunities, immigration reform and other incentives.