Division of Rate Setting

% of nursing homes enrolled in Medicaid that have losses over $100K in a calendar year

37.1%2018

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Notes on Methodology

The goal is to reduce the number of Vermont nursing facilities that accept Medicaid and have annual losses which exceed $100,000 to zero. 

 

Partners
  • Nursing Home Providers
  • Department of Aging and Independent Living (DAIL)
  • Division of Licensing and Protection (DLP)
  • Vermont Legislature
  • Centers for Medicare and Medicaid Services
Story Behind the Curve

The Nursing Home Profits and Losses measure shows the percentage of the 35 Vermont Nursing Homes which accept Medicaid, which have significant annual losses in excess of $100,000.  The Division of Rate Setting (DRS) receives the nursing’s homes profit/loss data from its audited annual financial statements, which are received with each provider’s annual cost report submission, used to set the Medicaid rate.

This measure can be a useful indicator of:

  • 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; and
  • 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 61% of total nursing home days in the 35 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.  When DRS observes large, continued losses at a nursing facility, it notifies its partners at DAIL and DLP.  These Departments are responsible for monitoring the quality aspects of the facility and DRS works collaboratively with them to closely monitor the facility for any problematic changes to the services that it provides to its residents.  There is a clear link between nursing home financial health and quality, which allows DRS and its partners to minimize the impact a nursing home’s poor financial health has on the quality of care it provides its residents.

The measures are taken from providers annual cost report submissions, many of which were delayed for several months due to COVID.  We granted many extensions to providers who needed extra time to complete their cost reports.  Due to that delay, the measures are not yet available.

 

Last updated 10/15/20

Strategy

It is essential that each of Vermont’s 35 nursing facilities is financially stable in order to have the resources to provide its residents with a high degree of quality care.  Large, consistent losses across the nursing home industry are indicative of an unstable system.  DRS monitors these patterns and examines the causes of such losses.  If DRS determines that the causes of significant losses are a result of the Medicaid rate not compensating the providers for the cost of care, DRS may make appropriate recommendations to change its rate-setting rules that govern how the Medicaid rates are set. 

Challenges that DRS faces in attempting to mitigate nursing home losses include: 

  • Changing DRS’s rules is a lengthy process involving legal and budgetary constraints and approvals by various internal and external parties.  This process typically takes a year or more to complete, which makes it challenging to quickly respond to losses that are a result of the Medicaid reimbursement system as defined in the rules.
  • Nursing home losses that are caused by other reasons not attributable to the adequacy of the Medicaid rate, such as certain business decisions made by its owners, can be difficult to address.
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