Mismatched Medicaid: Rates Inadequate for Costly Nursing Home Care, With Closures Feared in NY

Some nursing homes in New York may be forced to close their doors without an increase in Medicaid funding, a dire warning as the state legislature starts its budget hearings.

Elemental Management Group, which owns and operates eight nursing homes in Upstate New York, is losing about $2 million annually as costs rise and operators face unmoving Medicaid reimbursement rates, owner Joe Murabito told MSN.

As budget hearings are underway for the state legislature, Murabito is advocating for changes in the state Assembly, reminding state leaders that some regions are being left behind, like Oswego County and Upstate New York.

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Facilities in Oswego County are dealing with reimbursement rates of $200 a day or less, he said. Dividing $200 by 24 hours in a day, that’s $8.34 an hour that nursing homes are expected to deliver around the clock, oftentimes high acuity care.

Stagnant Medicaid also affects hospitals in the state, as providers struggle to place residents in nursing homes following a hospital stay. The fight for adequate Medicaid rates is nothing new for the state, which is home to one of the largest number of facilities even as shutdowns increase due to labor shortages.

At the beginning of 2024, reimbursement only covered 50% to 60% of actual costs, and Upstate New York’s nursing homes saw just a modest increase in 15 years. Meanwhile, costs have gone up 40% on just labor alone, Hurlbut Care Communities president Robert Hurlbut said at the time.

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Nursing homes saw a 1% increase in their Medicaid rate in July 2024. The state in 2023 approved a 7.5% increase in Medicaid but was only able to implement 6.5% – approval from the Centers for Medicare & Medicaid Services (CMS) was needed for the remainder.

Older nursing homes in the state are having an even more difficult time, with no reimbursement approved for capital improvements in 2025. State operators in December sued the state Department of Health to block the cost-cutting measure.

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