The percentage occupancy is calculated by taking the (a) number of days of service provided to all-payors by the 33 Vermont nursing homes that accept Medicaid in that month divided by (b) the number of days in that month divided by (c) the total number of licensed beds at all 33 facilities.

This performance measure is important because occupancy levels are strong indicators of financial health.  Low occupancy levels can indicate financial distress, which often correlates to quality-of-care issues.

Low occupancy levels mean that there is less revenue being earned by nursing facilities, which can result in financial difficulties.  Financial difficulty is often linked to quality-of-care issues, as facilities may not be able to pay vendors for essential services including food, utilities and therapy provided to residents.  Inability to pay vendors may lead to application for extraordinary financial relief or closure.  Nursing facility rates are subject to a 90% minimum occupancy level; facilities with base year occupancies below 90% are penalized in their Medicaid rates. The Division monitors the financial health of nursing facilities and relates concerns to DAIL and DLP. 

Pre-COVID, the average nursing occupancy was 83-84%, indicating that several facilities were being penalized in their rates due to low occupancy.  In the time period during which COVID has been present, the average occupancy as decreased to 75%, indicating that (a) facilities are not making as much revenue from days of service provided and (b) the average occupancy to date in SFY21, which is a base year, which impacts rates in future years, is well below the 90% threshold and will result in large financial penalties to the facilities in the form of reductions in their Medicaid rates. After COVID, the average nursing occupancy has increased slightly back to 80%, indicating that several facilities are still being penalized in their rates due to low occupancy.

Narrative Updated:  03/25/2024

• Department of Disabilities, Aging & Independent Living (DAIL)
• Division of Licensing and Protection (DLP)
• Nursing home providers

Rate Setting commenced discussions in late calendar year 2022 with DAIL regarding potentially making changes to the minimum occupancy level by reducing it to either 80% or 85%.  A change in the minimum occupancy would require a rule change to the Division’s rules and additional expenditures.  Estimates developed in December 2022 estimated the cost of such change to be approximately $3.9 million (85%) to $7 million (80%) annually.