Some state legislatures are looking closely at the sustainability of long-term care, looking at the rapidly aging population and increasing the need for such services over the next few years.
In Pennsylvania, the state discussed the 2025-26 budget and testified about the refund during legislative hearing this spring. Pennsylvania's budget adjustment factor (BAF) represents a major setback to sustainability, as it widens the gap between cost of care and operator payments.
According to Brent Willett, president and CEO of the Iowa Health Care Association, Iowa Gov. Kim Reynolds is expected to seek full retransport of Medicaid that is very closely matched with actual costs of care. He said the state supports determining pathways for reinvestment through research.
Iowa is also a certificate of need (CON) state, which has been in the moratorium for over a year and is a process that requires an overhaul, Willett said.
Stuart Lindeman, president and CEO of the Florida-based Mission Health Community, said it may be difficult for the state legislature to look past next year's budget.
“If you look at the demographics within many states, there's a growing population of over 75. I think there are a lot of states with a declining population,” Lindemann said. “I don't think there's a futuristic view in many states… I see it happen when a minority party in that state has all these great ideas, but it can't be implemented because there was no vote.”
Zach Shamberg, president and CEO of the Pennsylvania Healthcare Association (PHCA), recognizes that the state must keep sustainability action in mind. He mentioned Medicaid's looming $880 billion cut as part of these financial realities as part of the proposed Congressional Settlement Budget.
Moratoria on Medicaid provider tax and federal staffing mandate is a temporary victory for the industry, but nothing has been set yet.
“Changes, reductions will definitely bring back a lot of the good things happening at the state level,” Willett added. “Pressures on the federal budget that are not disappearing anytime soon will undoubtedly require states and federal governments to find innovative ways to trouble the poor population in the context of long-term care Medicaid registration.”
Obsolete budget adjustments for today's costs
Schaumberg said the BAF is an outdated fundraising mechanism. It was introduced in the early 2000s and was originally intended to last a year. At the time, housing costs rose 30% over five years. For example, if the state budgeted only 90% of the unpaid nursing homes, the state reduced the mathematics by 10% to make it work, Schaumberg said. All of this is set for today's inflation costs, higher vision among this rapidly aging population, more expensive staff, and even more expensive agency staff, he said.
Pennsylvania currently has the fifth-highest elderly population in the country, with around 2,000 people waiting for nursing home beds per day, PHCA said. The state's nursing home resident population is expected to double by 2035. Meanwhile, 30 nursing homes have been closed in the state since 2021 as nursing homes grow with higher vision.
“Dozens of people filed for bankruptcy, and there have been a lot of restructuring and ownership changes, because caring for seniors in Pennsylvania is like trying to walk down an escalator,” Schaumburg said. “It's like trying to resist an uptrembling tide because the system is set up as it's currently being built, so the provider is set up to fail.”
According to the PHCA, the state's Medicaid reimbursement rate tracks neighboring states at $256 per resident per day, compared to $275 in New Jersey, $299 in New York and $375 in Maryland.
The Pennsylvania Legislature has taken action, including the introduction of a bill that infuses $140 million for long-term care. The bill also requires accountable funds and renewals to BAF – on a refund floor of 0.9, the BAF will not fall below that percentage.
More recently, PHCA and SEIU Healthcare PA announced the Labor Industry Partnership on Nursing Home Job Sustainability and worked together to advocate for this Act.
Sustainability through quality of care and reimbursement
Willett said the Iowa State Capitol and the Senate are developing plans to identify specific sources of funding within the existing Medicaid system and adjust the quality of care.
“We are all passionate about finding ways to ensure that states are tailoring quality incentives to payments, and we are also passionate about ensuring the public that providers are involved in a system where certain amounts of funding are at risk based on quality performance,” Willett said.
Regarding all sorts of overhauls to state law, Willett said the proposed law includes a new “Bed Need Formula,” focusing on making sufficient nursing home beds available in the statewide market.
“Our Bedneys formula hasn't been updated in over 40 years,” Willett said. “To focus on the dynamics of the new market and ensure that we have beds that require them and that we don't have beds that don't need them is a pretty big step in the state here.”
