Webinar Recap: Understanding Rate Caps and Controlling Staffing Costs in Long-Term Care

understanding rate caps

As more state regulators explore rate caps for nurses, many in long-term care see an opportunity to bring workers back in-house and slash staffing costs. But even if new legislation passes in your state, it won’t take effect overnight, nor will it provide a cure-all for the staffing issues plaguing our industry.  

In our recent webinar with McKnight’s, Sean Carney, VP of Client Services at IntelyCare, and Marcia Proto, Executive Director at The Connecticut Center for Nursing Workforce, discussed the current landscape of rate caps, the potential impact on long-term care facilities, and strategies for maintaining adequate staffing levels without overpaying agencies. The newly proposed federal staffing mandate was frequently referenced throughout the discussion, as rate caps have a major impact on how the mandate will play out, and vice versa. 

You can access the 60-minute presentation recording by filling out the form below. If you don’t have time to watch the full webinar, scroll down for a detailed recap of the questions posed during the webinar, and the responses given.

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Q: What are rate caps, and how do they impact the staffing landscape in long-term care? 

Rate caps are the result of legislation that sets a maximum limit on the charges temporary nurse staffing agencies can impose on healthcare facilities for their services. Rate caps aim to control costs, ensure fair compensation, and promote transparency within the healthcare staffing sector. 

Rate caps vary by state, but common regulations included in rate cap legislation are: 

  • Maximum billing rates linked to regional wage standards 
  • Transparency requirements for pricing structures 
  • Mandated workers’ compensation coverage 
  • Reporting obligations, including employee data 
  • Quality-of-care oversight and investigations 

Massachusetts and Rhode Island have passed rate cap legislation. Four other states have proposed legislation: Michigan, California, North Carolina, and Florida. 

By implementing rate caps, governing agents are attempting to put parameters around the use and cost of contingent labor and ensure transparency around how billing and quality assurance processes are handled. With the CMS rule on minimum staffing requirements coming down the pike across the country over the next few months, and the newer volume of data collection in long-term care coming out of the post-COVID world, rate caps on contingent labor are things that every state should expect to see addressed sooner rather than later. 

Q: Who benefits and who is negatively impacted by rate cap regulations? 

The intent of implementing rate caps is to help level the playing field amongst providers and help long-term care facility owners control costs. These are benefits, but there are some negatives that arise as a result of rate cap regulations as well. 

Over the last several years, contingent staffing companies became a safety net for the labor force that was running from long-term care. Long-term care nurses and aides were finding their worth in question, the ability to be in a flexible work environment wasn’t available, and wages at the time weren’t what they wanted them to be. Contingent labor companies were able to catch the folks who were leaving long-term care, offer them the flexibility they were looking for, and bring them back to the workforce. 

Today, the long-term care industry is still struggling to find enough folks to hire, train, and bring into their buildings to meet staffing minimums and deliver quality patient care. As rate caps get implemented, the workforce may take a hit again as per diem and temporary positions become less attractive due to lower wages. 

Questions about where labor will come from amid these changes and how to retain the people facilities already have need to be considered. Long-term care facility owners should find out from their state workforce centers what their supply really looks like and how those folks are going to be distributed and utilized as rate caps roll out. Addressing these big questions will impact how the industry can maintain care quality moving forward. 

Q: How does the proposed staffing mandate potentially impact rate cap setting or other state efforts that are going on? 

Long-term care operators work hard to strike a balance between providing optimal wages for their staff and a caring environment for their residents, but their efforts have to be supported by reimbursement. The proposed federal staffing mandate needs to include the proper amount of reimbursement for facilities if they are going to be able to offer the wages, education, and culture needed to retain the workforce. Combined with rate caps, the federal staffing mandate could be disastrous for long-term care if the ripple effects are not carefully considered and planned for. 

One of the best ways long-term care facilities can prepare for the federal staffing mandate to go in effect is to offer flexible work to those who are looking for it, full-time work to those who want it, and proper training, education, and professional development opportunities for everyone. Owners and operators will have to work harder than ever to attract and retain the staff they need, but if they can provide working arrangements that suit their workforce, and if they can show that they are invested in them, managing staffing costs overtime will become easier and meeting the mandate requirements and dealing with the new reality of rate caps will not be as disruptive. Having a plan is paramount. 

Q: Why does organizational culture become more important as internal and contingent rates start to align? 

Culture is critical to hiring and retention. If nurses can’t go where the money is, they are going to go where the culture is better. 

There are several things long-term care facilities can do to foster a positive organizational culture: 

  • Foster professional growth and continuous learning. 
  • Embrace flexibility in work arrangements. 
  • Implement employee-centric well-being programs
  • Recognize nursing professionals’ individual contributions. 
  • Create paths for long-term loyalty and career advancement. 

As compensation discrepancies level out, developing a strong culture is the way for facilities to maintain adequate staffing levels. 

Q: What are some real-world examples of how rate caps have impacted healthcare facilities in Massachusetts over the past year and in Rhode Island this summer? 

In situations where both the nursing workforce and the long-term care facilities were educated about the changes coming their way, they were able to prepare, adjust wages accordingly, and attract the contingent labor workforce to come on board and work with them full time. Thanks to transparent communication with their workforce, they fared better than those who didn’t take the time to prepare. 

Salary compression – which is what nursing professionals many think rate caps are – when there are a variety of other staffing challenges in existence, can create a very bitter workforce. Facilites need to look at the implications of rate caps beyond wages; what do they mean for your existing staff, your ability to recruit, and your ability to work with external staff? How does it ultimately impact the care your residents will receive? 

Facilities also have to look at the composition of their workforce and identify the competencies needed. How many experienced nurses do you have? How are you working with nursing schools to attract and retain new nurses? How are you balancing all of this with contingent staff, when needed? 

Thinking about these things, acting on them, and being transparent with your staff underscores the importance of staff culture. If you take the time to prepare, you are showing that you care and that you are committed to everyone’s success and well-being. That will go a long way to help minimize any potential negative impacts of rate caps on your facility.

Looking for a Trusted Partner?  

You can count on IntelyCare to be a partner to you, to treat our nurses and aides well, and to help you provide outstanding patient care. Talk to us today to learn how we can help you safely supplement your workforce


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