Leadership at Cascadia Healthcare, which operates 25 facilities in Idaho, is raising the alarm over recent back-to-back Medicaid rate cuts in the state, warning that they threaten not only facility closures but could also impact the entire health care ecosystem.

Idaho lowered its Medicaid reimbursement rate by 4% on Sept. 1, after lowering rates 3% on July 1, effectively cutting reimbursement for long-term care by 7% in just 60 days, leading to concerns about the future sustainability of nursing homes in the state.

Officials at Cascadia, whose footprint is concentrated in several states in the Pacific Northwest, believe the Medicaid cuts would be detrimental to the economies of Idaho’s rural communities.

“We have 45 buildings total in five states,” said Cascadia Chief Financial Officer and Principal Steve LaForte. “We’re a bigger company, and we’re not going to go out of business retroactively on September 1. Does [the rate cut] impair our ability for long term sustainability if we keep moving in this direction? Absolutely.”

LaForte added that if the company’s entire portfolios were based in the state, smaller, more rural facilities would likely be targeted for closure by the end of the year. In some cases, Cascadia’s facilities represent a major employer for these rural areas. Meanwhile, Idaho represents about 50% of the company’s overall reimbursement.

Besides Idaho, Cascadia operates in Arizona, Montana, Oregon and Washington.

Federal funding not the issue in Idaho

The federal One Big Beautiful Bill Act (OBBBA) is not really part of the problem in Idaho, LaForte said. Nursing homes were exempt from the phasing down of provider taxes, which is currently 6% in Idaho. However, in 2018, the Idaho state legislature froze the Medicaid budget, with no carve out for nursing homes. The legislation that enacted this freeze caused Medicaid reimbursement rates to fall in order to keep the budget in the same place. This led to a 30% reduction in reimbursement from 2018 to July 1 of this year, or $277 per day down to $252 per day when the first additional cuts took effect in July.

These cuts and other fiscal management procedures in the state led to a budget surplus of $345 million at the end of fiscal year 2025 on June 30, LaForte said. Around $300 million was directed to tax cuts and $50 million went to K-12 education programs, including vouchers for private schools.

“Now the state is projecting that in fiscal year 2026, which started on July 1, there’s going to be an $80 million deficit,” LaForte said. “This is the hole that they are now trying to back fill.”

A Montana warning

During the COVID-19 pandemic, long-term care in Montana saw a lot of wage compression and lost reimbursement, LaForte said. Cascadia operates three facilities in Montana, which is all rural. By 2023, as Montana facilities had to incorporate standard expenses instead of rural expenses, 20% of facilities closed.

“You had an access crisis, and not only was it an access crisis, it was a rural access crisis,” LaForte said.

The facility closures also led to a major disruption of care, especially since there were no ventilator units in the state. Cascadia accepted these patients in a Boise, Idaho facility, but LaForte said the strain on patients, staff and physician partners was incredible.

“I had our people in the facilities in tears because they were accepting people that were being moved hundreds of miles from their families, hundreds of miles from their community, that maybe had no opportunity going forward to see their family because their family couldn’t afford to get from rural Montana,” he said.

Montana has since increased its Medicaid reimbursement rate, LaForte said.

“They had a special session of legislature, and they increased reimbursement by more than 30%. It went from an average daily rate of $211 to an average daily rate of about $277, but you had to do it on an emergency basis,” he said.

However, the damage to access was done. Once closed, reopening a facility is extremely cost prohibitive, LaForte said.

LaForte cautioned that if Idaho pushes forward with the rate cuts, and if other states do as well, the effects on rural residents will likely be similar to what happened in Montana.

“Medicaid reimbursement is public; we see what all the other facilities are getting,” he said. “We know what their censuses are. There will be facilities that close. I can look at the 78 facilities in Idaho, and I could pick two, three, four that will close over the next 12 to 18 months.”

Advocacy at the state level

Cascadia’s leadership has been taking advocacy around the rate change “day to day,” LaForte said. “We’re meeting with as many people as possible. We’re working with both our state association, and we’re highly vested in our state association, but we’re also working on our own.”

Cascadia has grown to be the seventh or eighth largest organization in the state of Idaho, according to LaForte, with many vendor partners. Cascadia has been reaching out to those partners to share their voice on the subject.

“It doesn’t just affect us,” LaForte said. “We’re getting a lot of support from our vendor partners, our pharmacy partners, our medical supply partners, our real estate partners, our financial partners. People are stepping up because they realize, if we go under, everybody goes under.”

LaForte said people are calling both Gov. Brad Littleton’s office and their local legislators about the cuts. LaForte said it’s been a “full court press within our sector and every area our sector touches.”

Cascadia and other entities in the state created snfadvocate.com, which allows the public to find their leaders and send their thoughts and support for the Medicaid program.