Why might 400 nursing homes close this year?

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More than 300 nursing homes have closed during the pandemic, according to a new report from the American Healthcare Association and the National Center for Assisted Living (AHCA/NCAL) – and over 400 more are set to close this year unless they receive more financial support.

Resource Library: Caring for America’s Elderly

Report details and key findings

For the report, AHCA/NCAL analyzed data from CMS‘ Survey & Certification’s Quality, Certification and Oversight Reports to determine the number of nursing home closures between 2015 and 2022.

Overall, the report found that more than 1,000 nursing homes have closed since 2015, including 776 before the pandemic and 327 during the pandemic so far. As a result of these closures, 44,459 residents have been displaced, including 12,775 residents affected since the start of the pandemic.

According to the report, the facilities that were closing were generally smaller, with fewer than 100 beds, and in urban areas where most residents relied on Medicaid. Of the facilities that closed during the pandemic, nearly half received a four or five-star rating from CMS, more than a quarter were in rural communities, and a growing proportion were nonprofit nursing homes. .

Additionally, the AHCA/NCAL has predicted that over 400 additional nursing homes could close in 2022 based on current financial conditions. Across the industry, properties have a median operating margin of -4.8% and occupancy rates of 77%.

Despite these financial challenges, CMS has proposed potential reductions in skilled nursing (SNF) facility payment rates for fiscal year 2023. Under a proposed rule, SNF payment rates would be reduced by 4.6% or $1.7 billion to achieve budget neutrality in the Patient-Based Payment Model. Overall, the payment policies in this proposed rule would result in an approximately $320 million decrease in Medicare Part A payments to NFCs in fiscal year 2023 compared to fiscal year 2022.

To highlight the potential impact of these proposed payment reductions, AHCA/NCAL highlighted the findings of a recent CliftonLarsenAllen (CLA) who modeled what could happen if Medicare were cut by 5% and Medicaid public health emergency funding ended in 2022.

According to the CLA, these payment cuts would put 33% to 38% of nursing homes at financial risk, affecting between 32% and 40% of all nursing home residents, or up to 417,000 people.

Remark

Marc Zimmet, CEO of Zimmet Health Services Groupsaid the Covid-19 pandemic has worsened nursing home conditions across the country, and even states traditionally considered “stable” are now experiencing significant closures.

For example, in New Jersey, the number of nursing home beds has been stable for years, but Zimmet said that now “legitimately 25% of SNFs” in the state will likely close within 24 to 36 months without additional help.

“The Medicare cut is important for broader reasons, but the reality is that rates will only go down about $6 PPD on average,” Zimmet said. “That said, this has ripple effects on Medicare Advantage payments — plans will attempt to use recalibration to reduce their rates or refuse increases — even though MA plans get an 8.5% increase. .”

Mark Parkinson, president and CEO of AHCA/NCAL, called for policy changes to prioritize long-term care and provide resources and support to reduce financial and workforce challenges work in nursing homes.

“Each closure is like a broken family, with the lives of residents, staff and their families affected in the process,” Parkinson said. “With hundreds of nursing home closures looming now and thousands more expected if government funding is cut, state and federal policymakers must step up to support our social safety net.”

“We need to do more than just keep care home doors open – we need to make significant investments to better support our frontline carers and transform facilities for a growing elderly population,” he added. (Brown, McKnight Long Term Care News, 04/22; Gleeson, Becker Hospital Review, 4/25; AHCA/NCAL report, 04/22; Press ACHA/NCAL Release04/22)

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