Massachusetts Is Now Cutting Medicaid Payments 8% at Its Worst-Staffed Nursing Homes — But Only a Handful Will Feel It

Boston, Massachusetts — Massachusetts is now cutting Medicaid payments by up to 8% at its most understaffed nursing homes, under new MassHealth rules that took effect October 1. The previous maximum penalty was 3%.

The state’s minimum staffing standard is 3.58 nursing hours per resident day. Facilities that fall below 3.00 hours can now lose 8% of their Medicaid payments. Homes between 3.00 and 3.58 still face the older, smaller cuts of 0.5% to 3%.

How we got here

The change follows an investigation by the Bedford Light, a local news outlet, that found about half of Massachusetts nursing homes violate at least one of the state’s minimum staffing standards. It’s also the latest black eye for an industry already under scrutiny — a Boston Globe Spotlight investigation recently tied out-of-state chains’ buying spree to falling star ratings across Massachusetts.

Resident advocates had argued for months that penalties of 0.5% to 3% were too small to change behavior. An 8% hit to Medicaid revenue is harder to ignore.

Only a handful will feel the maximum hit

There’s a catch. Based on available payroll data, only about five nursing homes would have faced the 8% penalty earlier this year. The math explains why: a home with 100 residents operating at 3.00 hours per resident day or less employs roughly 37 or fewer full-time nursing staff. Meeting the state standard would take about 45.

Advocates welcomed the tougher penalty but said the state should go further. Some are pushing for a 10% cut for the most severely understaffed facilities.

A carrot alongside the stick

MassHealth also built an incentive into the policy. Nursing homes that reach 4.00 nursing hours per resident day can win an exemption from a separate requirement to spend at least 75% of revenue on direct care. Resident advocates worry that exemption could let some operators shift money away from resident care.

The staffing rules are separate from pending Department of Public Health regulations that would strengthen broader oversight of nursing homes.

The state’s next test is enforcement — whether an 8% cut changes staffing decisions that a 3% cut never did.