Pulse Check on New York State’s Medicaid Funding for Nursing Homes

By Chelsea Murray, William McDonald, on February 23rd, 2024

As New York State (NYS) approaches the conclusion of its fiscal year, marking the commencement of the 2024 legislative session and discussions surrounding the forthcoming 2024-2025 Budget, recent developments cast a shadow over the prospects for Nursing Facility Medicaid rate increases. A letter circulated on September 20, 2023, by the State Division of Budget urged executive branch agencies to not exceed the prior year amounts. The Zero-growth budget is setting a tone of fiscal restraint that will impact funding for nursing homes in the upcoming fiscal year.

The looming fiscal year’s 2024-25 Governor’s executive budget proposal, rather than maintaining a zero-growth approach, introduces additional cuts to an already financially strained industry. Notably, the proposal suggests a further reduction in reimbursement, including a 10% decrease in the Medicaid capital rate, compounding the existing 5% cut already in effect.

RATE HISTORY

A persisting challenge in the industry is the lagging Medicaid rate increases compared to escalating wage costs. Over the period from 2012 to 2022, wages in New York for the following positions surged by approximately 26% for RN, 32% for LPN and 27% for CNA. In contrast, the nursing home sector has received only one rate increase in the past 17 years, with rates currently tethered to 2007 cost levels.

IMPACT

The consequences of inadequate funding have manifested in the closure of 32 nursing homes and the sale of 55 non-profit homes since 2014. Presently, 15,000 nursing home beds remain offline compared to 2014 levels, exacerbating capacity challenges at hospitals statewide. A considerable number of facilities are teetering on the brink of financial insolvency, posing a significant risk to the provision of care for the most vulnerable population. Demographics are pointing to increased demand as the baby boomer generation reaches traditional retirement age and beyond.

WHAT IS NEEDED

With over 70% of nursing home residents relying on Medicaid to pay for their care, providers are urgently advocating for enhanced Medicaid Funding. Currently, Medicaid rates cover only about 75% of the actual cost of caring for each resident. Collaboratively, nursing home industry stakeholders, irrespective of sponsorship types, are united in their plea to the Governor to increase the Medicaid rate by a flat $44 per Medicaid day, seeking to address the pressing financial challenges facing the sector.

If you need further guidance or have any questions on this topic, we are here to help. Please do not hesitate to reach out to discuss your specific situation.

This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.

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Chelsea Murray March 21
Chelsea Murray
Executive Vice President

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