Even in States with Medicaid Increases, Nursing Home Closures Pile Up

Despite a 17.5% Medicaid increase last year, at least 25 nursing homes closed in Pennsylvania since the pandemic began – and a significant financial shortfall remains, leaders said. Closures equate to a loss of 2,588 certified nursing home beds in the state since 2020.

The continued workforce shortage and underfunding of Medicaid made closures and sales to “profit-motivated entities” a harsh reality for residents and their families – and could have contributed to the dire state of affairs for the sector in Pennsylvania, according to Garry Pezzano, president and CEO of LeadingAge PA.

LeadingAge PA is advocating for a $70 million increase in Medicaid funding for nursing homes specifically and a minimum $8.9 million toward Pennsylvania’s Living Independence for the Elderly (LIFE) program and inflation. These increases would be in the upcoming 2024-2025 state budget if approved.


Pezzano penned an op-ed in PhillyBurbs outlining the need for more Medicaid funding in order to restore access to care for older Pennsylvanians. As it stands, nearly one in four nursing home beds are unable to be used since there aren’t enough clinicians to staff them, he said.

Zach Shamberg, president and CEO of the Pennsylvania Health Care Association (PHCA), said that given the state’s fiscal outlook, the future of long-term care funding doesn’t just lie in large rate increases – it lies in innovative programs as well.

“More needs to be done to fund the care of residents in long-term care communities, especially with the growing reliance on Medicaid –– which is the state’s responsibility to cover the cost of care for its citizens,” said Shamberg.


Nearly 400 for-profit providers in the state that accept Medicaid residents have an average Medicaid occupancy of 78%, and the average Medicaid occupancy is 57% among nonprofits, he told Skilled Nursing News. Meanwhile, profit margins among operators in the state are -12%, according to a 2023 study published by CliftonLarsonAllen.

On top of these challenges are mandated staffing ratios in the state, which are set to increase for the second year in a row, said Pezzano. These unfunded mandates make it harder to staff up, and then operators need to consider the federal staffing proposal due to be finalized some time in the coming weeks.

Pennsylvania last year implemented new staffing ratios of 2.87 hours per resident day (HPRD), up from 2.7 HPRD. And this July, the ratio will increase yet again to 3.2 HPRD. The federal proposal calls for Medicare- and Medicaid-certified nursing homes to provide a minimum of 0.55 hours of care from registered nurse per resident per day and 2.45 hours of care from a nurse aide per resident per day, with non-rural nursing homes having three years and rural nursing homes five years to meet these standards.

“Pennsylvania can begin to answer this critical healthcare challenge by raising Medicaid reimbursement rates and, in doing so, move closer toward the aging services system that our seniors deserve,” said Pezzano. “We can’t change the past. However, we can prevent its repeat … let’s work together to do the right thing.”

The 2023-2024 state budget was supposed to include an additional $55 million to ensure providers could meet the staffing mandate, but only half of that actually made it in the budget, Shamberg said.

PHCA is advocating for the remaining $25 million that was negotiated for the staffing mandate, plus $100 million for a new program to support providers with additional quality-driven funds, Shamberg said.

The association’s Enhancing Care With Incentivized Payments program would distribute quarterly funds to providers who are meeting or excelling at specific quality metrics, Shamberg said, creating more accountability when it comes to care outcomes and tax dollars.

“We believe this innovative approach to supplement funding based on quality outcomes is the future of reimbursement in Pennsylvania,” said Shamberg. “Now, we need state leaders to adopt the program and fund it.”

About 48% of operators in the state had to turn away prospective residents from hospitals in the last three months because of staffing concerns, along with subpar Medicaid reimbursement, according to a survey from LeadingAge PA.

“This has impacted the healthcare system upstream, with the top 15 hospitals in the state reporting a nearly 2-day increase in the average length of stay for those expecting to be discharged to a nursing home from 2020 to 2023,” said Pezzano.

In 2022, the difference between reimbursement and actual cost reached $1.2 billion, a massive gap for nursing home operators to fill, he said.

Operators in the state are required to allocate 70% of revenue to bedside care, including staffing and salaries. About 93% of survey respondents said they would prioritize increasing starting wages and wages for existing staff.

“More staff would mean more available beds for residents,” added Pezzano.

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