An analysis of payor mix across 16,600 U.S. skilled nursing facilities (SNFs) shows that almost 60% of patient days at nursing homes on average were covered by Medicaid, compared to only 10% at hospitals.
According to Definitive Healthcare’s data review of SNF payor mix by total patient days, on average, Medicaid accounts for 59.1%, with private/self-pay/other pay days being responsible for 33.8% and Medicare for 10.9%. Moreover, nearly 20% of Medicare beneficiaries were dual eligibles and also received Medicaid support for health and long-term care.
Nursing homes with a higher percentage of Medicaid patients face tighter margins and greater financial strain. In contrast, those with more Medicare or private-pay residents are generally more profitable, as these payors offer higher reimbursement rates. As a result, a facility’s payor mix serves as a key indicator of revenue strength and long-term viability amid concerns about the rising proportion of managed care.
In terms of the regional breakdown of the SNF payor mix, facilities in the Midwest had the lowest percentage of Medicaid days and the highest private/self-pay/other mix. Meanwhile, nursing homes in the western U.S. had the highest Medicare days.
Some of the differences are due to the population makeup of the states in the region. For example, with some states such as California and Alaska having Medicaid enrollment percentages above the national average, Definitive Healthcare’s review noted.
The data is based on Medicare Cost Reports (MCRs), which are financial reports submitted quarterly by Medicare-certified facilities to Medicare Administrative Contractors (MACs) at the end of each fiscal year.
Payor mix is a closely watched metric of financial health in the sector, and with Medicaid funding under pressure, its importance is only growing. Of note too is that each payor reimburses providers at different rates, with Medicaid typically paying the least, often below the actual cost of care.
With Medicaid being the primary payor for nursing home care, any proposed federal or state cuts heighten the risk for providers already operating on thin margins. The larger consequence of Medicaid reduction could be staffing shortages, lower quality of care, or even closures, especially for facilities in low-income or rural areas heavily dependent on Medicaid, nursing home sector advocates have long argued.
Ultimately, payor mix also impacts investment decisions, loan eligibility, and regulatory compliance. Lenders and investors closely assess it when evaluating risk in transactions, particularly in asset-based lending, where unpaid debt to facilities that have provided services is used as collateral. A shift toward a heavier Medicaid mix can lower a facility’s valuation and increase scrutiny from investors.
