Closeup of Pennsylvania state capitol building in Harrisburg

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Pennsylvania lawmakers plan to introduce legislation as early as this week to set maximum rates that temporary staffing agency personnel can charge, to end a practice of “gouging” the state Medicaid program and taxpayers.

The proposal would require contract healthcare service agencies providing temporary employment in assisted living communities, personal care homes and nursing homes to register with the Pennsylvania Department of Human Services as a condition of operation in the commonwealth. If it passes, the Keystone State could become the third one — behind Massachusetts and Minnesota — to cap agency pay rates amid a nationwide push from providers seeking regulation of what they call temporary staffing firms’ anti-competitive behavior.

As the pandemic has exacerbated and accelerated existing workforce challenges in long-term care, providers have relied more on contract agency staffing to fill positions. State Sen. Tim Bonner (R-Mercer / Butler), who is behind the proposal, said that staffing agencies have taken advantage of this action and raised their hourly rates 100% to 400% higher than the current median wage. Staffing agencies also are recruiting full-time employees from the long-term care facilities where they are sending temporary staff members, he alleged. 

Pennsylvania Health Care Association President and CEO Zach Shamberg said in a statement that providers have remained committed to providing care and services during the “greatest workforce shortage in our history” but that it has come at a cost. Staffing agencies, he added, are using “outlandish wage markups,” “gouging long-term care providers” and disrupting the continuity of care for residents.

“There is a place in the long-term care continuum for direct care staffing agencies, but their service should not come at the expense of jeopardizing care for the residents they are hired to serve,” Shamberg said, adding that “price gouging is simply not sustainable.” “As providers attempt to emerge from the COVID-19 pandemic and make resident-focused investments, tese exorbitant costs are pushing nursing homes, personal care homes and assisted living communities to the brink of financial collapse.”

State agencies do not oversee supplemental healthcare services agencies. Bonner said that the excessive hourly rates are “draining an already-underfunded Medicaid program.” Although assisted living and personal care providers are not eligible for Medicaid reimbursement in the state, Bonner said, increasing agency costs could force providers to raise monthly rates, which would exhaust the assets of private-pay residents more quickly and bring more older adults into the state’s Medicaid program. 

“Recognizing the increased role that these agencies play in the day-to-day operations of nearly 700 nursing homes and 1,200 assisted living residences and personal care homes, we must ensure they are operating in a manner that support the long-term care sector and high-quality resident care,” Bonner said. The proposed legislation would place registration requirements on the agencies and would establish a system for creating and reporting penalties, he added.

At the national level, the American Health Care Association / National Center for Assisted Living recently sent a letter asking the Federal Trade Commission to use its authority to protect assisted living and skilled nursing operators, as well as consumers, from direct care staffing agencies “charging super competitive prices to desperate LTC centers that simply need workers.”