Skilled Nursing Occupancy Inches Up from 2018, Managed Medicare Revenue Drops

Despite a quarter-over-quarter drop, national occupancy at skilled nursing facilities inched upward in the second quarter of 2019 as compared to last year, even as Medicare Advantage revenues took a slight tumble.

The nation’s nursing homes sat at 83.3% full during the second quarter of the year, up 0.5% from the same period last year, according to the most recent occupancy report from the National Investment Center for Seniors Housing & Care (NIC).

That figure represents a half-point slide from the previous quarter, but such a trend was expected, the Annapolis, Md.-based organization noted.


“Occupancy has been relatively stable during the last 12 months, varying by only one percentage point and staying above its low,” Bill Kauffman, senior principal at NIC, said in a statement. “The slight decrease from the first quarter likely does not foreshadow a broader trend, because seasonal flu-related admissions that typically spike in late fall through winter trail off later in the year.”

At the same time, the national percentage of revenue coming from managed Medicare plans slid 2.3% in urban markets, NIC reported, while holding steady in rural areas; Medicare Advantage plans account for 12.1% and 5.2% of total skilled nursing revenues in those geographies, respectively.

NIC chief economist Beth Mace said it wasn’t clear what drove the Medicare Advantage declines, speculating that the trend could be related to some old familiar culprits: lower reimbursement rates as compared to traditional Medicare, pressure to reduce lengths of stay, and plans bypassing skilled nursing care entirely to cut costs.


Medicare Advantage plans paid a national average daily rate of $432 per patient in the second quarter, NIC reported, compared to $525 per patient day for traditional fee-for-service Medicare.

“It’s too early to say if the noticeable decline in skilled nursing revenue from Medicare Advantage will continue,” Mace said in a statement. “On the one hand, Medicare Advantage is becoming an increasingly prominent player. However, like all payers, Medicare Advantage isn’t immune to constant cost containment pressure.”

On a national average basis, the sector experienced a slight gain in Medicaid reimbursements, with revenue per patient day up 2.7% — or just $6 — from the same time last year. Medicaid rates vary substantially by state, however, with insufficient reimbursements contributing to distress in states from Texas to Massachusetts to Wisconsin.

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