Texas, Nebraska Led Nation in Nursing Home Closures in 2022

Texas and Nebraska led the nation for most nursing home closures in 2022, with industry advocates citing inadequate Medicaid rates that have not kept pace with a tough economic and operating environment.

And advocates also caution that the latest numbers are likely understated, with even more facility closures occurring.

The Centers for Medicare & Medicaid Services (CMS) recently shared that 135 nursing homes have closed their doors in the past year as the industry grapples with massive staffing shortages and rising operating costs complicated by high inflation and rising fuel prices.

Advertisement

According to a Becker’s analysis of CMS’ latest numbers for states, the highest number of nursing home closures were recorded in Texas at 13, followed by Nebraska at 9. Meanwhile, Wisconsin and Massachusetts were next at 7 closures for each state, with Oklahoma shuttering 6 facilities and Iowa and Arkansas closing five each.

“The primary culprit has been an extraordinary explosion of wage and other operating costs since 2021 which has created a historic shortfall in Medicaid reimbursement rates of nearly 20%,” Iowa Healthcare Association President and CEO Brent Willett told Skilled Nursing News. “Iowa skilled nursing facility providers are today incurring ongoing and devastating financial losses.”

According to Willett, for every $1 spent to care for an Iowa Medicaid resident, the system currently reimburses providers only 80 cents.

Advertisement

“This is an unsustainable trajectory,” he said.

These closures demand an increase in Medicaid rates for skilled nursing “to stabilize the system and keep the doors open for rural Iowa facilities,” Willett said, adding, “based on Iowa’s history of investing in long-term care, I am encouraged the Legislature will act to lift Medicaid rates and protect rural access to long-term care for Iowans.”

The situation in Iowa spells dire trouble for other rural states while also emphasizing the overall problem with inadequate Medicare reimbursement rates.

A recently released MACPAC report points to this underfunding, with data including the ratio of average Medicaid base payments to the costs for Medicaid-covered residents. For Texas, this stood at 0.81 in 2019, while for states such as Iowa and Oklahoma, the ratio was higher at 0.9 for each. The ratio for Nebraska was 0.58.

MACPAC’s report also showed that the average total costs per day per resident for all facilities was $293.36 per day, compared to the $243.61 for Medicaid-covered costs.

In Texas, “The cost of care has increased 23% since the pandemic, at an average of over $40 per patient per day,” Kevin Warren, President and CEO of Texas Health Care Association, told Skilled Nursing News. “As we continue discussions with the Texas lawmakers during this current legislative session about closures and access to care issues, and addressing the staffing shortages, our top priority is securing an increase in the Medicaid base rate,” Warren said, adding, that his organization is also pushing for “supplemental funding” to address the current Medicaid add-on rate that will expire with the end of the Public Health Emergency in May.  

And in Oklahoma, where the situation is also quite grim with regards to closures, advocates say Medicaid reimbursement rates are projected to fall short. 

The Oklahoma Health Care Authority’s cost estimates for 2024 are projected to be $57 a day more per patient per day than the Medicaid reimbursement rate, according to Steve Buck, president and CEO of Care Providers Oklahoma. 

Buck told Skilled Nursing News, “Oklahoma’s nursing homes are experiencing a crisis of underfunding and understaffing that has already forced several homes to close and has forced many others to keep occupancy levels very low.” With the PHE ending, supplemental payments between $35 to $38 used to cover the shortfall will dry up, he said. “Our legislature needs to find a permanent funding solution that enables our homes to be solvent and to pay employees a competitive salary.”

Given the staffing challenges and that the pandemic relief aid is either no longer available or being phased out in 2023, advocates are expecting more closures.

More than a third of nursing home residents, numbering in 450,000, may be at risk of displacement if facilities are unable to increase their workforce and must reduce their census in order to comply with a proposed 4.1 hours per day staffing minimum, according to accounting and consulting firm CliftonLarsonAllen LLP (CLA).

For these reasons, the largest trade association for the skilled nursing sector, the American Health Care Association and National Center for Assisted Living (AHCA/NCAL), is pushing for more funding for the sector.

“Nursing home closures are devastating to residents, their families, staff, and the entire health care system. Residents are uprooted from their long-standing communities, families must often travel farther to visit loved ones, and hospitals are clogged with patients who are ready to be discharged. Policymakers need to prioritize investing in long term care to address staffing challenges and protect access to care for vulnerable seniors,” AHCA/NCAL President and CEO Mark Parkinson said in an emailed statement to Skilled Nursing News.

The closures reported by CMS are lower than expected

Advocacy groups caution that CMS data lags by a few months and many more closures might be on hand nationwide judging by media reports of ongoing closure efforts.

In Montana, for example, CMS is reporting that only one facility has closed, but local stories are reporting that it’s more than 10.

In Iowa, where the actual shutdowns are much higher than the numbers reported by CMS, 17 facilities reportedly shut down in the past 12 months, with the most recent closures including 6 SNFs affiliated with Blue Care Homes LLC. 

Meanwhile, in Wisconsin, local nursing home advocates said that 12 nursing facilities closed in 2022, and if it wasn’t for increased funding by the state, the closures could have been worse. 

“This additional funding has prevented many further closures and bed reductions. It has been a lifesaver,” Rick Abrams, Chief Executive Officer of Wisconsin Health Care Association and Wisconsin Center for Assisted Living, told Skilled Nursing News. “Our state policymakers know that more help is needed to sustain the long term care sector and as we enter the 2023-25 state budget development cycle, we are very confident that more financial help will be on the way.”

The figures reported by CMS in its Quality, Certification and Oversight Reports, or QCOR, system tend to be deflated due to the process of designating a facility as permanently closed. Even as a facility is in the midst of a shutdown, the federal database does not list it as officially closed until state regulators and CMS have approved a closure plan for the facilities and until all the residents have been typically moved out. In other words, the closure plan has to be fully executed before it’s recorded in the QCOR database.

Companies featured in this article:

, , , , , , , ,