Non-Profit SNFs Bear Brunt of $631M Medicaid Funding Shortfall in PA

Skilled nursing facilities in the state of Pennsylvania lose an estimated $631 million per year caring for Medicaid residents, with non-profits taking a particularly large share of the stress.

The state’s 221 non-profit nursing facilities lose an average of $82.16 per patient day on Medicaid beneficiaries, according to an April analysis from LeadingAge PA and professional services firm RKL. That works out to a shortfall of $380.9 million every year for the Keystone State’s non-profits — compared to a funding gap of $22.79 per patient day or $169.1 million per year for Pennsylvania’s 292 for-profit nursing homes.

Factoring in 21 government-operated facilities, the average SNF across all ownership types loses $47.85 per day, RKL found, bringing the entire shortfall to the $631 million figure.

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“The results of this analysis boldly reinforce the crisis skilled nursing facilities continue to face,” LeadingAge PA CEO Adam Marles said in a statement. “Excellent care and services cannot be sustained without reimbursement rates to match the escalating costs. Pennsylvania’s seniors deserve better. We have to do better.”

RKL used Medicaid reimbursement rates and cost reports from 2017 and 2018 to develop its annualized estimates, analyzing all 534 nursing facilities in Pennsylvania. The firm found statewide occupancy of 87.9%, with Medicaid census of 68.4%.

Pennsylvania certainly isn’t alone in its Medicaid woes: States from coast to coast have seen pressures in recent years, as the cost of care far exceeds state-level Medicaid reimbursements for long-term nursing services. For instance, the state of Massachusetts has not updated its Medicaid rates for nursing homes since 2007, contributing to a wave of 20 nursing home closures over the past year; without reform efforts currently winding their way through the state legislature, provider groups estimate that 35 more could be forced to close.

Medicare issues have taken center stage in the long-term care world with a new payment model for nursing home set to take effect next year, but state Medicaid programs cover about two-thirds of all nursing home residents nationwide — and account for more than half of the average SNF’s annual revenues.

Nursing home advocates around the country have worked to find solutions to the crisis. In Texas, for instance, operators can receive certain Medicaid-rate boosters for hitting quality thresholds, while Indiana facilities can use a novel ownership workaround to help close the gap between lower Medicaid rates and higher Medicare reimbursements

The new Medicare payment system — the Patient-Driven Payment Model (PDPM) — could also have trickle-down effects on Medicaid, as many states base their Medicaid calculus on the federal government’s Medicare math.

As in Massachusetts, Medicaid reimbursements in Pennsylvania have remained relatively stagnant over the past decade, with half of the state’s providers seeing only a 1% gain in last year’s budget according to LeadingAge PA.

“Without reversing this shortfall trend and properly funding Medicaid in Pennsylvania, some doors may be forced to close on nursing facilities providing critical services to our senior population,” Marles said.

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