Nursing home operators face a complex, fragmented reimbursement landscape as we approach the end of 2026, with leaders having to juggle a growing list of reimbursement systems complicating matters and making the federal government’s latest payment increase feel inadequate.
Traditional Medicare is still on the table, along with state-specific Medicaid programs – some being better than others, Elizabeth McLaren, senior vice president of revenue cycle, reimbursement and home and community-based services (HCBS) at Covenant Living Communities and Services, told SNN. Then there’s Medicare Advantage plans with separate authorizations, different payment requirements, private pay, and a growing number of value-based agreements operators are navigating.
Labor and other costs, meanwhile, are pressuring margins, and the CMS SNF Final Rule’s rate increase is inadequate to handle all of these factors, McLaren said.
“It really isn’t about rate increases, it’s about margin,” said McLaren. “Reimbursement isn’t keeping pace with cost and complexity in care. That’s where we have challenges now and where we’re going to continue to be challenged with the landscape.”
While traditional Medicare is standardized comparatively, Medicaid and managed care plans differ by state and the same plan for a multi-state operator “behaves differently” depending on the region, McLaren said.
“A 2.4% increase is the bare minimum,” said McLaren. “Think about merit increases for your staff – no employer wants to give a 2.4% increase, they want to give three or above. But if the majority of your payers are giving you less, how do you manage that with benefit costs and other operating costs? It’s getting harder and harder.”
The current reimbursement landscape requires operators to know building data by payer and plan, looking past gross revenue. Leaders should look at net reimbursement, administrative burden, authorization times and length of stay, along with bad debt and payment timing among plans.
“We’ve done a lot with that at Covenant, and I think it’s made a big difference in our decision making and from a directional perspective, with our reimbursement strategy,” said McLaren.
McLaren is SNN’s guest for November’s RETHINK Executive Forum. Join us on Tuesday, Nov. 17, as we dig into reimbursement, revenue cycle and payer complexities, and discuss how public policy is reshaping senior care by registering here.
MA no longer a secondary issue
When thinking about how MA fits into the reimbursement landscape moving forward, McLaren said operators can’t think of the payer as a secondary issue anymore.
It has become a necessary part of the overall post-acute care program compared to five years ago.
“At Covenant, we weren’t seeing such a significant shift … we could be a little bit choosier. We could decide which plans we wanted to participate in, and we can still do that to a certain point. But there’s so much more market penetration in a lot of our areas that we really don’t have as many options as we did before,” said McLaren.
The whole sector is competing for traditional Medicare business, and there isn’t as much out there because beneficiaries are choosing MA. And, many aren’t going into skilled nursing after hospitalization; they’re opting for home and community-based services.
The choice to go into HCBS puts added pressure on MA, McLaren said. The best advice for operators juggling all of these payers and plans is to understand each plan from top to bottom.
“It’s not just about your rate … what’s the financial and operational performance of the plan? We try and push back, negotiate as much as we can related to rates, but I think a lot of providers are just looking at the rate and not looking at everything underlying there, and they’re losing money,” said McLaren.
Operators should keep an eye on regulatory movement to rein in MA, with legislators calling for more transparency around authorizations, decision timeframes and the overall MA claim process, she said.
“There’s a lot of really good conversation happening at the federal level … the test is whether resident experience and provider experience actually improve,” said McLaren. “This has been a hot topic of conversation from a bipartisan perspective, so I think this conversation is going to continue, especially with the shift [toward Democratic control] in Congress in this last election.”
Reimbursement starts at admission
Reimbursement doesn’t start when a claim is generated; it starts at admission, McLaren said. Operators need to ensure the entire process, including revenue cycle management, starts the minute the referral comes in.
“That’s where we get tripped up. We think of reimbursement as the back-end cash collection, claim generation and copay collection. But really, everything we do up until that point is going to drive that,” said McLaren.
The claim tells the reimbursement story, but it shouldn’t be where leaders start thinking about reimbursement. Eligibility needs to be accurate and authorizations need to be correct so that staff are painting a true picture of resident care in that assessment.
Documentation should support eligibility, authorizations and overall resident care, and MDS coding accuracy should support services rendered and tie back to the assessment.
“The triple check process is huge … that really is the one place to make sure that therapy, nursing, dietary, social services, medications and diagnoses are matching up; everything is coming together to support reimbursement, support that picture,” said McLaren, referring to a mandatory internal pre-billing audit done by nursing homes.
