Skilled Nursing Facilities Face ‘Colossal Collapse’ in Mass. Amid Low Medicaid Rates

Low Medicaid reimbursements in Massachusetts have put skilled nursing facilities in the state on the brink of “colossal collapse,” according to a deep dive from the Telegram & Gazette published on Saturday.

In the past year, 20 SNFs in the Bay State closed, and more than half of the state’s 401 skilled nursing providers are operating at a loss, according to the Massachusetts Senior Care Association (MSCA). Nursing home advocates laid the blame on the state’s Medicaid program — known as MassHealth — which does not cover the cost of daily care.

MassHealth reimbursement rates are based on 2007 costs, the Telegram & Gazette noted, and a typical nursing facility participating in Medicaid will see $900,000 in *uncompensated care annually, the MSCA told the publication.

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“Historically, short-term and private-paying individuals offset the shortfall in Medicaid payments,” the paper reported. “However, the balance between Medicaid and other payment sources has shifted in recent years.”

Specifically, in 2011, an average of 66% of nursing home patients in Massachusetts used Medicaid, while 15% paid with Medicare and 14% paid privately, the MSCA said. But by 2017, 69% of residents were on Medicaid, compared to 13% on Medicare and 13% on private pay.

That shift, combined with an almost 25% cumulative decrease in short-term skilled nursing facility stays in that six-year time span, resulted in a $300 million drop in revenue since 2011, the MSCA told the Telegram & Gazette. In addition, nursing facilities are financially penalized if their occupancy falls below 94%; the industry median is 90% occupancy, the MSCA added.

SNFs across the country face razor-thin operating margins; a CliftonLarsonAllen report from 2018 found that the industry-wide median operating margin was zero. For Bay State SNFs, meager profits are a particular source of pain: Margins peaked between 2014 and 2017 at 1% for the average nursing home, specifically in the year 2015, the MSCA said. In 2017, the average facility had a 1.6% loss.

Facilities with 50% or more Medicaid patients had even lower margins: Their profits topped out at 0.5% in 2015 and were at -2.1% in 2017. Meanwhile, facilities with 75% or more MassHealth residents could only approach making a profit; in 2015, these buildings averaged a loss of 0.7%. In 2017, they lost an average of 3.2%.

“We’ve predicted a ‘colossal collapse’ coming in Massachusetts, and it’s here now,” Matt Salmon, chairman of the board of the MSCA and also CEO of Salmon Health and Retirement, told the Telegram & Gazette.

*This article originally reported that a typical nursing facility would see “$900,000 in compensated care annually.” It should have reported “$900,000 in uncompensated care annually.” SNN regrets the error.

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