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Occupancy And Medicaid

Published on January 2nd, 2020

Alex Spanko covers the skilled nursing industry for Aging Media Network, with a particular focus on the intersection of finance and policy. He recently wrote a great article discussing the decline in occupancy at the nation’s nursing homes.  Occupancy “stayed flat between the most recent two quarters, but the proportion of residents covered under Medicaid hit a record high — while the share of bread-and-butter Medicare residents fell to a record low.”

Medicaid accounted for 67.6% of resident days at nursing facilities in the third quarter of 2019, according to the most recent data analysis from the National Investment Center for Seniors Housing & Care (NIC).  However, fee-for-service Medicare, the gold standard for nursing homes with daily rates higher than all other payer sources, dipped to a record low of 10.9% of patient days.

The difference, from a financial standpoint, is stark: Traditional FFS Medicare provided reimbursements of $523 per day in the third quarter, NIC’s analysis found, compared to just $214 per day for Medicaid. That $214 daily average revenue per Medicaid patient day actually represents a high water mark since 2012 as well.

The gain in overall day share translated to revenue mix, with Medicaid accounting for a record-high 51.5% of nursing home income in the third quarter; Medicare revenue mix slid to 20.7%.

Consisting primarily of Medicare Advantage, managed Medicare accounted for about 6.3% of all patient days; these plans reimbursed at a rate of $431 per patient day, a slight drop, for a total revenue share of 9.8%.

“Medicaid is continuing to apply pressure to state budgets, because reimbursement rates are not keeping up with rising labor and other operating costs,” NIC chief economist Beth Mace said in a statement announcing the results. “This is not just a rural state issue. Continued growth in Medicaid may also be contributing to financial and budgetary pressures for bigger states like New York and Massachusetts.”

The nation’s nursing homes were 83.6% full in the third quarter, NIC found, a decrease of just a tenth of a point from the second quarter — and a 48-basis-point increase from June 2018.

“The fact that skilled mix decreased 50 basis points and occupancy was relatively flat in the third quarter suggests that Medicaid demand is helping to stabilize occupancy,” NIC concluded.

NIC senior principal Bill Kauffman echoed that sentiment in the statement.

“After a period of declining and then flat occupancy rates, the data this quarter suggest increased demand for skilled nursing from Medicaid patients is driving continued occupancy stability,” Kauffman said. “It’s too early to know if this trend will continue into the fourth quarter.”

 

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