The Centers for Medicare and Medicaid Services (CMS) have taken numerous actions in response to the coronavirus pandemic. Importantly, some are actions to assist with continued access to care and many to ensure the safety of residents and staff. Initial responses included restricting visitors to skilled nursing facilities and changing the rules for covered facility stays. Patients who remain in the hospital fewer than three days may now receive Medicare-reimbursed skilled nursing care. The following are the summaries and links to CMS for further details. 

CMS Approves 12 Additional State Medicaid Waivers to Give States Flexibility to Address the Coronavirus Disease 2019 (COVID-19)

CMS approved an additional 10 state Medicaid waiver requests, bringing the total number of approved waivers for states to 23. The waivers offer states new flexibilities to focus their resources on combatting the outbreak and providing the best possible care to Medicaid beneficiaries in their states.

In addition, CMS also approved one additional Appendix K Amendments request to existing Home and Community Based Services (HCBS) Waivers under Section 1915 (c) of the Social Security Act (Act), bringing the total to 3 approved waivers to date. Appendix K is a tool states may use to temporarily modify approved HCBS Waivers during emergency situations.

https://www.medicaid.gov/state-resource-center/disaster-response-toolkit/federal-disaster-resources/index.html  

https://www.medicaid.gov/state-resource-center/disaster-response-toolkit/hcbs/appendix-k/index.html

New Guidance Regarding Enhanced Medicaid Funding for States – Federal Medical Assistance Percentage (FMAP)

CMS has released new guidance under the Families First Coronavirus Response Act that provides states with more federal Medicaid funding during the COVID-19 pandemic. This includes a 6.2 percentage point FMAP increase which all states are eligible for provided they meet certain requirements. This is effective beginning January 1, 2020 and extending through the last day of the quarter in which the public health emergency declared by the Secretary of Health and Human Services for COVID-19 ends.

https://www.medicaid.gov/state-resource-center/downloads/covid-19-section-6008-faqs.pdf

CMS is Prioritizing and Suspending Certain Surveys

CMS is prioritizing surveys by authorizing modification of timetables and deadlines for the performance of certain required activities, delaying revisit surveys, and generally exercising enforcement discretion for three weeks. During the three week time period, only the following surveys will be prioritized and conducted:

1. Complaint/facility-reported incident survey
2. Targeted Infection Control Survey
3. Self-assessments

https://www.cms.gov/files/document/qso-20-20-allpdf.pdf

CMS is Expanding Telehealth Benefits

CMS is expanding Medicare’s telehealth benefits under the Coronavirus Preparedness and Response Supplemental Appropriations Act. Beneficiaries will be able to receive telehealth services in any healthcare facility including a physician’s office, hospital, nursing home or rural health clinic, as well as from their homes. Considering the safety of residents and the need to continue physician care within nursing homes, telehealth will enable care to still take place in addition to mitigating COVID-19 infection.

https://www.cms.gov/newsroom/press-releases/president-trump-expands-telehealth-benefits-medicare-beneficiaries-during-covid-19-outbreak

Coronavirus Stimulus Bill Includes $200M for Nursing Home Infection-Control Efforts

Given the fact that CMS has made infection control a priority for nursing and current surveys of nursing homes, this bill will put additional support behind the current efforts of CMS to help ensure the safety of nursing home residents and staff. In addition, this is targeted to help the states’ efforts to prevent the spread of the virus.

https://www.appropriations.senate.gov/imo/media/doc/Coronavirus%20Supplemental%20Appropriations%20Summary_FINAL.pdf

The Department of Labor reported that 3,283,000 Americans filed for unemployment insurance benefits in the week ending March 21, 2020 as the COVID-19 pandemic shut down much of the economy.  The weekly report is among the first economic indicators to show the effects of the virus on the economy.   This was an increase of 3,001,000 from the previous week’s level of 282,000.  This shattered records and was the highest level of initial claims in the history of the series.  At its worse during the Great Recession, there were 665,000 first-time claims filed in the week ended March 28, 2009.  That was second only to the week ended October 2, 1982, when 695,000 first-time claims were filed.  This report compares poorly with the average 225,000 claims filed by people during each week during the past six months. 

The total number of people claiming benefits in all programs for the week ending March 7 was 2,006,363, a slight decrease from the previous week. There were 2,039,322 persons claiming benefits in all programs in the comparable week in 2019. 

The largest increases in initial claims for the week ending March 14 were in California, Washington, Nevada, Pennsylvania and Massachusetts.

The sharp increase in claims is attributable to impacts form the COVID-19 virus.  Many states reported increased layoffs in service-related industries broadly and in the accommodation and food services industries specifically, as well as in health care and social assistance, and the travel and transportation industries. States that depend heavily on tourism, were especially hard hit.

The increase in unemployment claims is a preview of the March unemployment rate to be announced by the BLS on April 3^rd.  Most analysts expect it to rise sharply from its February 2020 50-year low of 3.5%.  In response to the expected sharp slowdown in the economy, the Senate approved a $2 trillion economic stimulus rescue package that broadly expands unemployment benefits.  The deal will go to the House for a vote on Friday, March 27th.

Residents and Their Families Are Not Abandoning These Communities

Contrary to speculation that families are removing their elderly loved ones from senior housing and care properties, a new survey reports that 79 percent of operators saw no significant changes in move-outs last week and no significant changes in occupancy. Activated Insights, the senior care group of Great Place to Work, conducted this survey of private pay senior housing operators representing 1,078 buildings and 100,899 units.

Several U.S. operators noted that sales and marketing activities including all move-ins have been halted completely in this COVID-19 pandemic. Other operators continued to allow pre-scheduled move-ins to occur, though with extra steps and screening. 

Moreover, 21 percent of operators reported increased occupancy. Some operators attributed this increase to how families often realize they are not in a position to take care of an elderly or disabled loved one at home. Moreover, as one CEO commented, “they are much safer with us since we are cleaning and screening like mad.” Many of these move-ins are from pre-scheduled moves or families who have toured and were in sales consideration. Nearly all are heavily screened.

“The data reflect how quickly senior housing operators have adapted lessons learned in Washington state to protect our nation’s vulnerable elders and frontline staff by upholding the highest standards of care,” said Robert Kramer, Founder and Strategic Advisor at the National Investment Center for Seniors Housing and Care. “The results from this survey are especially timely since the investment community has been starved for data in this time of uncertainty.” 

The methodology for this study was based on phone surveys conducted on Wednesday, March 18 and Thursday, March 19 by Activated Insights. The 100,899 units represent close to 8 percent of the overall senior housing and care inventory. Moreover, the majority of the 19 operators are companies that have applied for Great Place to Work certification, an indication that they strive to be leaders in their field. Wharton and London Business Schools have published longitudinal, peer-reviewed studies concluding that Great Place to Work companies across a variety of industries perform better on key business indicators.

When asked why this survey was undertaken, Dr. Jacquelyn Kung, CEO of Activated Insights replied, “We were seeing new reports of families and their elderly loved ones fleeing senior housing and care properties but had not heard the same – so we thought it was strange. We conducted this survey to check the facts of what is actually occurring.”

While the COVID-19 pandemic is developing quickly and occupancy could change, this survey of senior housing operators by Activated Insights indicates that senior housing continues to serve an essential role in meeting the housing and care needs of frail older adults who are most at-risk in this pandemic.

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Medicare just announced that it will − temporarily − reimburse for telehealth-provided services, opening an opportunity for seniors housing providers to provide residents with access to vital health services without exposing them to pathogens circulating at hospitals and clinics as a result of the coronavirus outbreak.

A very timely panel discussion at the NIC Spring Conference on “Telehealth: Boon or Threat to Senior Care?” offered an overview of telehealth options, as well as concrete suggestions for seniors housing companies wanting to get started.

Panel moderator Kelsey Mellard, CEO of Sitka, laid the groundwork by clarifying that the general concept of “Telehealth” includes very different services.  Many people assume that telehealth describes remote monitoring of patient vitals, with smart devices transmitting health data to providers automatically and securely for analysis. The NIC panel, however, focused on another service category getting a lot of attention recently: virtual consultations by medical professionals, whether RNs, primary care doctors, or specialists; via phone, secure messaging, and/or video conferencing. Sitka and Doctor On Demand, whose president and chief commercial officer Robin Glass was also represented on the panel, both fall into this category.

Panelist Michael Kurliand, director of telehealth and process improvement at West Health, a non-profit focused on lowering health care costs for seniors, pointed out that telehealth is not new – it has been around since the 1960s – and that peer-reviewed and anecdotal evidence show up to a 40% reduction in hospital admissions with the deployment of telehealth practices in post-acute care settings.

Glass described the services of Doctor On Demand, where people consult via video and online chat with their care team. They can develop a relationship with a specific doctor, scheduling appointments in advance with him or her, or get help at any time from any doctor available. Doctor On Demand also supports multi-party calls so family members can join the conversation.

Sitka facilitates secure consultations with specialists, if the primary care physician needs a second opinion from an expert, and creates video messages from the specialist with specific instructions for patients, said Mellard.

Seniors housing staff members can assist residents with appointment scheduling online, or with using conference calling or messaging technology, keeping frail seniors from being exposed to dangerous viruses in doctors’ waiting rooms. Plus, as Kurliand points out, virtual visits can reduce the chance of a staff member getting infected.

During the question period, several operators asked about using telehealth for remote patient monitoring. Kurliand said this can be problematic because as soon as you get involved, you incur responsibility and liability.

For seniors housing operators wanting to explore telehealth, Kurliand said his team at West Health offers a free guide to getting started, available on the West Health website. Kurliand also suggests engaging with your regional Telehealth Resource Center. These government-funded centers offer connections and state-specific advice to organizations wanting to explore telehealth. You can find your local center at telehealthresourcecenter.org.

While the current CMS ruling applies only until the end of the healthcare emergency that the U.S. Department of Health declared on January 31, legislation pending in Congress could extend some or all of the provisions of the bill into the future. For more information, see the Medicare Telemedicine Health Care Provider Fact Sheet available on CMS.gov.

“There are a lot of good things in this ruling, and I commend Seema Verma and her team. It will give people a running start in implementing telehealth services, but it doesn’t really go far enough and will probably get revised,” Kurliand commented after the CMS ruling was announced.

Of the 99 NIC MAP^® primary and secondary metropolitan markets that the NIC MAP^® Data Service reports on across the nation, 11 are in California.¹ Within these metropolitan markets, NIC tracks 937 seniors housing properties with 107,500 units, or nearly 12% of the seniors housing properties within the 99 markets. By coincidence, this share is comparable to California’s 12% share of the total U.S. population (39.6 million people live in California versus 327 million in the U.S. as of 2018). Within the state, performance measurements vary considerably.

California Markets – Seniors Housing | 4Q2019

No Two Metropolitan Markets are the Same.  Of the 11 California metropolitan markets in the NIC MAP 99 markets, 6 ranked in the top 22 best performing markets for occupancy as of the fourth quarter of 2019. These include top ranking San Jose, with an occupancy rate of 95.7%, the highest in the nation, Ventura at 92.2% (seventh of 99 markets), Modesto at 91.2% and San Francisco, San Diego and Fresno, all with occupancy rates above 90%. Three of the 11 had occupancy rates below the national average of 87.9% in the fourth quarter: Bakersfield and Riverside both at 87.3% and Stockton at 87.1%. Los Angeles and Stockton were in the middle of the pack.

Similarly, there is wide variation among penetration rates within California’s largest metropolitan markets. NIC defines the penetration rate as total inventory divided by the number of households older than 75 years of age. On average, the penetration rate among these Californian metropolitan areas is lower than the 99 Primary and Secondary markets average: 9.8% versus 11.2%, respectively. Within these 11 metropolitan markets, Bakersfield, Riverside and Los Angeles had penetration rates below 8% in the fourth quarter of 2019, while Stockton and San Diego exceeded 12%.

Construction Ebbs and Flows.  Three of California’s 11 markets have relatively much construction underway—Riverside, Sacramento, and Ventura. Construction as a share of inventory stood at 14.1%, 18.3% and 10.2%, respectively, in the fourth quarter, above the 99 Primary and Secondary markets pace of 6.2%. On the other hand, six of these California markets have virtually no construction underway—parts of the Central Valley (Bakersfield, Fresno, Modesto and Stockton) and the Bay Area (San Francisco and San Jose). Los Angeles and San Diego have 6.4% and 5.9% shares of inventory under construction as of the fourth quarter 2019, respectively.

Difficult zoning regulations and entitlement rules, and the subsequent barriers to entry imposed on new development, often mean that California’s construction activity remains relatively low for many of its metropolitan markets. While this is bad news for those trying to get into the market, it is decidedly good news for incumbents in those markets as well as those developers and operators that currently have projects underway.  

Asking Rents.  Coastal California’s higher cost of living and of doing business, as well as higher home prices, means asking rents for seniors housing in these markets (Los Angeles, San Diego, San Francisco, San Jose, and Ventura) were 30% higher, on average, than the 99 Primary and Secondary markets average asking rent, with San Francisco a full 43% higher and San Jose 36% higher as of Q4 2019. However, except for Sacramento which was 11% higher, the more centrally located Central Valley metropolitan markets in California (Bakersfield, Fresno, Modesto, Riverside and Stockton) had asking rents that were 8% less than the national average.   

What’s Ahead?  Looking ahead, it’s likely that San Jose will retain its title as among the highest occupied markets for some time. Construction as a share of inventory remains low at 3.3% (200 units). While more projects may be in the pipeline at this time, they have not yet broken ground. Given that the time from groundbreaking to opening has lengthened and assuming California’s construction cycle is similar to that of the nation, it will likely be two years or later for new competition to significantly affect incumbent operators. In addition, San Jose is a high-barrier-to-entry market which will limit the threat of new competition. 

In contrast, construction as a share of inventory totaled 18.3% (1,916 units) in Sacramento in the fourth quarter, the highest share in the nation. The completion and opening of these units will put downward pressure on Sacramento’s occupancy rate which has already been pushed lower by the completion of more than 1,000 units since 2016. Since then, the occupancy rate has fallen more than three percentage points from an all-time high of 94.0% in the third quarter of 2016 to 90.3% in the fourth quarter of 2019. For perspective, it has taken the market since mid-2012 to absorb on a net basis the equivalent 1,930 units. 

In summary, California is a big state. If it were a stand-alone nation, it would rank fifth in the world, with a “GDP” of more than $2.7 trillion. It is a state of multiple dynamics in terms of development and growth opportunities, population and demographic subtleties and lastly, consumer preferences. This is perhaps nowhere as evident as in the performance of its myriad seniors housing properties.

¹ Note that NIC MAP also tracks seven additional smaller California markets that are not included here. The data time series for these additional markets is not as long.