Wave of Skilled Nursing Closures in Mass. Could Grow by 35 Without Medicaid Reform

Massachusetts, which has already endured a wave of skilled nursing closures amid tight Medicaid reimbursements, could see 35 more buildings shut their doors without timely intervention from lawmakers, according to a leading trade group in the state.

The Bay State has already lost 20 nursing facilities in the last year, according to the Massachusetts Senior Care Association, with 35 more at risk of closing as the underfunded state Medicaid program generates average annual per-building losses of nearly $1 million per year.

“Quality care and staffing are directly tied to government funding, and here in Massachusetts, it has been woefully inadequate,” MSCA president Tara Gregorio told Skilled Nursing News.

Advertisement

MassHealth, the state’s Medicaid program, currently uses costs from 2007 when calculating nursing home reimbursements, with only modest increases of 1% each year. But operators’ actual expenses had grown 20% between 2007 and 2017, with the state’s strong economy boosting wages and increasing competition for workers.

In addition, the rise of Medicare accountable care organizations (ACOs) has eaten into what had previously been a reliable safety valve for operators faced with Medicaid pressures. Since the 2010 passage of the Affordable Care Act, which created the ACO model, Massachusetts nursing providers have seen a $330 million reduction in Medicare reimbursements — based primarily on a decrease in SNF utilization as ACOs demand shorter lengths of stay, according to Gregorio.

For Massachusetts operators, the effect has been devastating: Along with the 20 closures in 2018 alone, the industry has seen unpaid bills pile up, with a separate MSCA report showing that year-end accounts payable ballooned from $288 million in 2014 to $414 million three years later.

The Worcester Telegram & Gazette, a newspaper that covers much of the central part of the state, earlier this year predicted that the nursing home industry in Massachusetts was on the verge of a “colossal collapse” unless something was done.

“It’s somewhat of a perfect storm,” Gregorio said.

The MSCA has tried to stem the tide by promoting a legislative package that would peg MassHealth reimbursements for nursing homes on 2017 costs and set aside funds for professional development scholarships for employees. The plan would also implement an annual market basket rate increase for Medicaid rates — which the federal government already provides for Medicare reimbursements.

“We ought to do the same thing each year in Massachusetts for nursing facilities, and that will allow us to make important wage increases for frontline staff,” Gregorio said.

The trade group helped to organize a Monday hearing in which nursing home residents, employees, and other stakeholders testified at the state house in Boston on the importance of quality nursing care from well-paid staff. The MSCA will also lobby for Medicaid increases for nursing homes to take center stage in the state’s budget debate process, with lawmakers facing a July 1 deadline to strike an overall deal.

The state isn’t alone in its Medicaid woes: Operators from South Dakota to Montana to Washington state to Texas have sounded the alarm in recent months about persistently low Medicaid rates. In Wisconsin, for instance, 30 SNFs have closed since the beginning of 2016, with many more in receivership — including eight properties formerly operated by Dycora Transitional Health and Living, which defaulted on its lease after failing to make its base rent.

As in Massachusetts, Wisconsin’s Medicaid calculations haven’t kept up with the times: In fact, because that state bases Medicaid rates for nursing home on the number of patient days, closures in that state have a vicious-cycle effect on those that remain open.

“Facilities are not able to maintain their operations, so they close their doors, and there are fewer Medicaid beds, and that means there ends up being less allocated in the payment formula for nursing homes,” Wisconsin Health Care Association president and CEO John Vander Meer told SNN on Friday.

Back in the Bay State, Gregorio pointed to “competing priorities” as lawmakers have expanded Medicaid coverage to a wider group of qualified beneficiaries. As a result, costs have increased amid higher overall utilization and skyrocketing drug prices, and the law hasn’t alway kept up for all providers in the system.

“I do think that the state, as they continue to expand those eligible for Medicaid services, they forget that they have a responsibility to then pay for their services,” she said.

Companies featured in this article: