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State Medicaid Programs in Quite a State

The public discourse recently has narrowed on the big capital “R” reforms potentially coming down from the federal government on states regarding their Medicaid funding. Meanwhile,  states themselves have a lot on their plates regarding Medicaid, despite the uncertainty of the future of the program and its financing. Some states, like North Carolina and Kansas, are still grappling with Medicaid expansion. Others are moving to managed Medicaid in a big way or making reforms to preempt the potential loss of federal funds for the program.  The following is a sample of states with reforms on the horizon.


Two changes in Florida could impact nursing homes under HB 7117. The state’s House passed a bill that requires Medicaid recipients to pay a $10 or $15 monthly premium, but the bill has not yet been approved by the state Senate. The second change could have a major impact on nursing homes in Florida and set a precedent for other states. Currently the state sets the rates that Medicaid managed care pays nursing homes, but this new bill would allow nursing homes and managed care organizations (MCOs) to negotiate that rate. Assuming managed Medicaid follows the same pattern as managed Medicare, this change could potentially drive down the daily reimbursement rate nursing homes receive for their Medicaid patients enrolled in managed Medicaid. Nursing homes Medicaid rates may experience downward pressure because the properties now must compete with their peers for patient volume by making their rates more attractive to the MCOs. They have the power to create narrow networks for their beneficiaries that exclude nursing homes that charge a higher rate than their competitors. Florida is also considering a measure that would eliminate certificate of need (CON) requirements for hospitals, meaning current limits on how many new hospital beds may be added in the state could be removed. Nursing homes in Florida are also constrained by CON requirements, so this measure could set a precedent viewed favorably by developers and others interested in building new construction in the state.


Maine’s Department of Health and Human Services sent U.S. Department of Health and Human Services (HHS) Secretary Tom Price a letter in January of this year outlining the changes to Medicaid the state will request through waivers. Among those changes are work requirements, time limits, and copays and coinsurance. Those reforms would probably not impact seniors very much. Some other reforms the state outlined could have more impact on seniors, however. First, the state aims to make its non-emergency transportation benefit more difficult to use, encouraging people to use public transportation and other means to get to medical appointments. Home-bound seniors often use this benefit; restricting access to transportation to medical appointments could mean that aging-in-place is more difficult for this population.

Two reforms that could impact seniors living in nursing homes are removal of the 90-day retroactive payment and implementation of an asset test. The retroactive payment is important for seniors living in nursing homes who are in the process of “spend down,” or using up all of their current assets to pay for coverage before they are eligible for Medicaid. Currently, seniors in “spend down” are eligible for retroactive payment to the nursing home if their eligibility is determined by the state after their eligibility technically began (the day they were eligible, not the day the state considered them eligible). Nursing home residents would need to time their application so they can enroll in Medicaid at the moment they reach eligibility to avoid gaps in payment to the nursing home. The asset test will serve to determine if other assets can count against a person’s Medicaid eligibility, such as property and cash. A strict asset test could mean seniors in spend down must exhaust even more of their assets before becoming eligible for Medicaid. Nursing homes often help residents in spend down navigate this system because at the end of the day, the nursing home is collecting the Medicaid payment from the state on behalf of that resident.


While many of the state’s Medicaid enrollees had been covered under managed Medicaid, on May 1, every person other than seniors and the disabled will be covered by a managed care organization (MCO). Missouri is another example of the appeal of managed care for states balancing very tight budgets. The St. Louis Post-Dispatch writes that not enough may have been done to inform Medicaid beneficiaries of the switch, which could cause patients to seek care and then find themselves responsible for payment because their MCO’s network doesn’t include a particular provider.


Providers in this state, including nursing homes, could be subject to a 25 percent rate cut. The Oklahoma Health Care Authority recently announced plans to formally propose the rate reduction soon, adding that the state may take additional steps to accelerate the approval process. Other programs may be cut entirely, such as hospice and Programs for All-Inclusive Care for the Elderly (PACE), which is designed to keep nursing-home eligible seniors in their home rather than in a nursing home. According to the state, the rate Medicaid providers receive would be equal to 65 percent of the rate they receive for Medicare patients. The result of such a dramatic rate decrease is that providers may find Medicaid patients are no longer a financially sound population, meaning fewer providers in Oklahoma may accept Medicaid patients. Nursing homes often report that they care for Medicaid patients at a loss even under current rates, so a 25 percent reduction in the Medicaid rate could exacerbate that loss ratio.


The state legislature is considering two bills that could boost wages and opportunities for skilled nursing employees. Bill S.336 provides a grant for training and education for skilled nursing employees, including English as a Second Language (ESL) training and other education efforts deemed necessary to maintain the needed workforce to sustain the state’s nursing home industry. The second bill, S.358, proposes to increase the Medicaid reimbursement rate to nursing homes for the explicit purpose of raising the wages paid to certified nursing assistants and other front-line staff. This bill is a continuation of the state’s efforts to increase staff wages, demonstrated by an appropriation made last year by the governor.

Nursing home operators and investors should be keeping close watch of the Medicaid changes occurring in their states as the majority of nursing home residents are paid for through this source. While health care reform at the federal level remains unclear, states are keen on finding ways to mitigate the potential loss of federal dollars that support the program. States are also using Medicaid as a lever to manage constrained budgets, which appears to be the motivating factor in both Florida and Maine. Many Medicaid changes must be approved by the Centers for Medicare & Medicaid Services (CMS) under waivers. The Trump Administration guides CMS in its consideration of these waivers. President Trump and HHS Secretary Tom Price have both expressed their general support for waivers that reduce Medicaid spending and increase states’ flexibility, therefore many of the above reforms are likely to be viewed favorably by the Administration.

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