This performance measure is important because it can indicate:
- Nursing home providers’ financial health and ability to continue operating and serving Vermonters
- Potential quality issues stemming from not having adequate cash to pay its vendors resulting in cuts to critical services
- The adequacy of the Medicaid nursing home rates in terms of whether they cover the cost of services that the nursing homes provide
Vermont Medicaid resident days make up 64% of total nursing home days in the 34 Vermont nursing homes that accept Medicaid. Vermont Medicaid is the overall largest customer to these nursing home providers and the providers are dependent on Medicaid revenue derived from the per diem rates set by DRS. Medicaid rates are a large driver of nursing home financial health and whether the nursing home makes profits or losses. Losses indicate that the provider is not taking in enough revenue to cover its costs, and sustained losses year-after-year raise concerns that the nursing home is being depleted of its financial resources and that the quality of services is potentially at risk due to lack of funds to pay for them. Large, consistent losses across the nursing home industry are indicative of an unstable nursing home system.
It is concerning that 43% of Vermont nursing homes that accept Medicaid suffered losses exceeding $100k in 2019, indicating the fragility of the industry. While these losses can be caused by a variety of reasons, the current rate setting methodology imposes caps, limits and a minimum occupancy resulting in millions of dollars of losses across the industry. While Rate Setting cannot predict how large of losses nursing facilities can bear, Rate Setting will continue to monitor the financial health and keep its partners apprised. It is likely that homes in immediate danger of failure may apply for extraordinary financial relief in the coming year.
Narrative last updated: 11/10/2020