The Centers for Medicare & Medicaid Services (CMS) has issued a long-awaited final rule aimed at reforming nursing home staffing and operations. While much of the media coverage has focused on staffing mandates for long-term care facilities, the rule carries critical compliance and reimbursement implications for the broader post-acute care sector.

Key Takeaways for Non-Hospital Providers:

1. Minimum Staffing Standards (Applies to SNFs):

   CMS will now require nursing homes to meet minimum staffing levels, including:

   • At least 0.55 hours per resident per day of RN care
   • At least 2.45 hours per resident per day of nurse aide care

   These levels are in addition to the current requirement to have a licensed nurse on duty 24/7. While this technically applies to skilled nursing facilities (SNFs), the ripple effect is clear: contracting arrangements, staffing vendors, and interdisciplinary support providers will face increased scrutiny.

   Action for Compliance: SNF-affiliated vendors and outsourced providers should review their staffing contracts, ensure accurate timekeeping systems, and prepare for increased CMS and surveyor oversight.

2. Workforce Assessment and Contingency Planning Requirements:

   All nursing homes including those not directly subject to the minimum staffing rule must conduct an annual facility-wide assessment of staffing needs and develop contingency plans. CMS emphasizes “evidence-based tools” and local workforce conditions.

   Compliance Tip: This is the next evolution of the facility assessment introduced under the 2016 Requirements for Participation. Providers must integrate this updated staffing analysis into their quality assessment and performance improvement (QAPI) programs and maintain documentation for survey readiness.

3. New Medicaid Payment Transparency Measures:

   Effective 2026, nursing homes participating in Medicaid must submit detailed ownership and financial reporting, including:

   • Compensation to owners and related parties
   • Spending on direct care vs. administrative costs
   • Financial relationships with vendors and service entities

   This provision reflects growing federal concern about private equity investment and related-party transactions in long-term care.

   Reimbursement Watch: Providers should anticipate increased scrutiny of their cost allocations and service arrangements, particularly management services, therapy contracts, and any joint ventures.

4. Quality Measures Will Tie to Staffing Data:

   CMS intends to adjust Five-Star Quality Ratings to reflect compliance with the new staffing thresholds and will publish compliance data online. While this is not a direct payment policy change, the reputational and referral implications are significant.

   Strategic Planning Tip: Behavioral health operators who partner with or refer to SNFs must monitor how these ratings affect patient placement, network adequacy, and value-based arrangements.

5. Fraud & Abuse Signals – Related Party Risk and False Claims:

   The final rule indirectly reinforces DOJ’s and OIG’s recent posture: transparency in ownership, vendor arrangements, and staffing sufficiency are not just compliance issues. These are potential False Claims Act triggers.

   Compliance Counsel Advisory: Providers working in the post-acute space should conduct internal reviews of their staffing documentation, related party agreements, and financial reporting. CMS and DOJ are aligned in targeting operators that overbill or misrepresent staffing adequacy while underdelivering care.

Final Thoughts: This rule marks a significant policy shift toward elevating staffing standards and financial accountability in nursing homes. While hospitals aren’t the focus here, ancillary and behavioral health providers who touch this space especially in managed care networks or value-based care need to prepare for greater transparency, tighter referrals, and more intensive audit exposure.

Read the full CMS rule here: Federal Register Final Rule – CMS-3442-F

If you are a compliance officer, operator, or vendor working with long-term care providers and need assistance navigating the implications of this final rule, contact Parrella Health Law at 857.328.0382 or reach out to Chris directly at cparrella@parrellahealthlaw.com.