Rather than raising Medicaid rates, New York may simply add a $1.5 billion health care funding increase – but split between hospitals and nursing homes. Operators in the state are concerned with this decision, since it’s unclear how those funds would be broken down. But, nursing homes said they’d need at least half.
As budget negotiations continue, nursing home operators are urging the state to ensure long-term care providers receive adequate support to remain viable and maintain access for prospective residents.
The state legislature came out with its independent budget proposals in February – the assembly wants $2.3 billion allocated to nursing homes and hospitals, while the senate proposed $940 million for nursing homes, hospice and assisted living programs, according to Stephen Hanse, president and CEO of the New York State Health Facilities Association (NYSHFA).
NY Gov. Kathy Hochul proposed $1.5 billion in January.
And while state officials haven’t delineated allocations, Hanse told Skilled Nursing News, NYSHFA is continuing to push for $750 million in Medicaid funding for nursing homes.
“New York needs to reverse its policy of disinvestment in nursing homes. They need to get to a point where they cover the cost of care of a Medicaid resident,” said Hanse. “That won’t happen in one budget cycle. That’s going to take some time to reverse, over 15 years of disinvestment in nursing homes.”
Nursing homes in the state have struggled for years as Medicaid reimbursement rates haven’t been updated in nearly two years. And because Medicaid covers 75% of nursing home residents, chronic underfunding has pushed facilities into financial distress.
“The $750 million won’t get us to where we need to be, but it will point us in the right direction. It will help turn the ship around,” said Hanse. “We’re cautiously optimistic that the state recognizes the need to invest in nursing homes. Gov. Kathy Hochul, to her credit, is really trying to reverse the prior administration’s policies of disinvestment.”
The state’s fiscal year runs from April 1 to March 31, but there is the possibility that the budget will be approved past the due date.
Associations have said the funding gap has directly affected patient care and staffing. Nursing home administrators say it’s difficult to offer competitive wages and maintain services when Medicaid often reimburses only about half the actual cost of care.
Hospitals, meanwhile, are facing serious financial challenges of their own. About half of the state’s hospitals are losing money, and federal policy changes are expected to reduce funding further while increasing uncompensated care, with more residents losing insurance coverage.
State officials have acknowledged the financial tension felt by nursing homes, and say they are working on revising the Medicaid reimbursement formulas in addition to working with policymakers to properly allocate the $1.5 billion. In other words, they are working to rebase the Medicaid rate, likely in 2027 and in tandem with the shift to the Patient Driven Payment Model (PDPM).
About 70% of the state’s nursing homes reported losses in recent years, and there have been 10 closures reported in the past two years, with 1,000 beds removed from the system. More closures and limited admissions could easily leave residents with reduced access to care while making hospital wait times longer; or, residents could be discharged to settings that don’t meet their needs.
Policymakers acknowledged this point too, that hospitals and nursing homes are interconnected. When nursing home capacity shrinks, hospitals become overcrowded and patients have nowhere else to go, they said.
“Making sure that there’s a path when somebody is ready to be discharged into a nursing home, means that the hospital isn’t going to experience the uncompensated care,” Assemblymember Carrie Woerner, a Saratoga County Democrat, told the Gothamist. “And uncompensated care, by the way, just ricochets back on all of us.”
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