Historic reductions to Medicaid funding are set to take effect this fall, raising concerns about how states will absorb billions in lost federal support. A new study suggests nursing homes may feel the strain most acutely — and residents could see the consequences.
Researchers at the University of Massachusetts Boston found a direct link between higher Medicaid reimbursement rates and stronger nursing home performance. Facilities in states with more generous Medicaid payments were more likely to earn four- or five-star ratings on Care Compare, the federal government’s online rating system managed by the Centers for Medicare & Medicaid Services.
The findings, published in the February issue of the Journal of the American Medical Directors Association, indicate that low Medicaid payment rates can undermine care quality. According to the study, facilities often rely on other revenue sources to offset Medicaid shortfalls.
Funding Tied to Staffing and Quality
Higher reimbursement rates allowed nursing homes to invest more in staff wages, training, recruitment and retention. Facilities were also more likely to devote resources to quality assurance programs and improvements aimed at boosting health inspection scores.
Those investments, researchers wrote, translated into stronger overall ratings.
Medicaid remains the primary payer for long-term nursing home care nationwide, covering services that Medicare does not. However, federal budget reductions are expected to cut roughly $900 billion from the program over the next decade, fundamentally reshaping the long-term care landscape.
Pressure Mounts in Pennsylvania
In Pennsylvania, state leaders have warned they cannot fully offset federal reductions. The federal government funds the majority of the state’s Medicaid expansion population, leaving little room for backfilling cuts.
Operators say reimbursements already fall short. Joe Weeks, regional director of operations for HCF Management Inc., said Medicaid covers about 80% of the cost of caring for a resident in Pennsylvania. At Hempfield Manor near Greensburg, he estimates the facility loses about $60 per day for each Medicaid resident.
“Funding drives staffing, and staffing drives quality,” Weeks said, adding that additional support is critical as Pennsylvania’s aging population grows.
Without increased investment, industry leaders warn, quality ceilings may tighten just as demand for long-term care surges.
