BOISE, IDAHO — Low Medicaid reimbursement rates are quietly reshaping who gets into a nursing home — and who doesn’t.
Across the country, skilled nursing facilities are growing more selective about which patients they admit. With state Medicaid payments failing to keep up with rising costs, many operators are limiting the number of Medicaid residents they accept, prioritizing higher-paying Medicare and privately insured patients instead. The result: hospital beds that can’t discharge patients, nursing home beds that sit empty, and communities with fewer options for senior care.
10% of New York’s Beds Are Closed to Admissions
In New York — one of the hardest-hit states — the situation has reached a critical point. Sebrina Barrett, president and CEO of LeadingAge New York, said roughly 10% of nursing home beds in the state are closed to new admissions right now. Over just the past two years, 11 nursing homes have shut down entirely, eliminating more than 1,200 beds.
“We know there are more than 7,000 beds offline, and that more than 70,000 beds are operating in financial distress,” Barrett said. “Unless nursing homes receive Medicaid reimbursement rates that cover the actual cost of care, we expect more closures, which will lead to greater bottlenecks in hospitals.”
The numbers behind the funding gap are stark. Costs in New York have risen by more than 50%, while reimbursement rates have climbed just 12.8%.
Operators Are Scrutinizing Every Admission
In Idaho, Cascadia Healthcare — the state’s largest nursing home operator, with more than 58 facilities across six western states — has taken a more careful approach to every new admission. Steve LaForte, the company’s CFO and principal, said each prospective resident is now weighed against whether the facility can realistically recover the cost of care.
“It has not included a blanket cutback on any specific type of admission currently, although we do have to assess each admission with more scrutiny to ensure that the costs of care do not overly exceed what our reimbursement will be,” LaForte said.
Without a change in direction from state policymakers, he warned, that calculation is going to get harder. “We remain very concerned that admission criteria will have to change, access to care for Medicaid admissions will be more limited, and unfortunately hospital bottlenecks will occur.”
In Illinois, Heritage Operations Group COO Steven Hart described a similar dynamic — though he pointed the finger not just at Medicaid rates, but at the growing gap between traditional Medicare reimbursement and what managed care organizations pay.
“I regularly see bottlenecks in hospitals because too few nursing home beds are available,” Hart said. “Managed Care Organizations reimburse nursing homes at strikingly low rates compared to traditional Medicare Part A coverage, and there isn’t much that skilled nursing operators can do to rectify that.”
A Crisis Already in the Data
The access problem is no longer just anecdote. A study published in JAMA Internal Medicine in January found that skilled nursing facility operating capacity declined at least 5% nationwide between 2019 and 2024. One in four counties lost 15% or more of their capacity. Rural areas and counties with severe staffing shortages saw the steepest drops.
Clif Porter, president and CEO of the American Health Care Association, said the research backs up what the industry has been saying for years. “Now we have numbers behind the countless stories we heard, but it may be worse than we thought,” he said. “The rippling effect on families, hospitals, and rural communities is real.”
In New York, industry groups including the New York State Health Facilities Association are pushing for half of a proposed $1.5 billion state fund to go toward nursing homes — a debate that’s directly connected to the funding standoff between nursing homes and hospitals in the current state budget.
“New York needs to reverse its policy of disinvestment in nursing homes,” said NYSHFA president Stephen Hanse. “That won’t happen in one budget cycle. That’s going to take some time to reverse over 15 years of disinvestment.”
With federal Medicaid cuts looming and more closures likely, operators say the window for action is closing fast.
