CNY nursing home leaders: Medicaid cuts would devastate our facilities, patients

CNY nursing home leaders: Medicaid cuts would devastate our facilities, patients (Guest Opinion)

Published: Feb. 01, 2024, 8:30 a.m.

By Kimberly Townsend, Michael Schafer & Russell D’Amico

Kimberly Townsend, Ed.D., is president & CEO of Loretto. Michael Schafer is president & CEO of St. Camillus Nursing & Rehabilitation. Russell D’Amico is CEO of Menorah Park of CNY.


We are writing to convey serious concerns for the impact Gov. Kathy Hochul’s fiscal year 2025 budget proposal will have on nursing homes. After a glimmer of hope that we would start to normalize Medicaid reimbursement rates to cover the escalating costs of care with the small 6.5% increase in 2023, we are back to the drawing board. Not only does this budget ignore the need to increase rates to cover current costs, but it proposes additional cuts that will inevitably have devastating effects across our regional healthcare network.

The governor’s budget includes over $500 million in cuts to nursing homes. Not only would it reduce parts of our Medicaid reimbursement rates by 10%, but it also reduces the Vital Access Provider Assurance Program by $75 million — critical dollars intended to help distressed nursing homes.

The proposal also includes a new $400 million savings target, whereby the administration would solicit ideas from the stakeholder community on how to further reduce Medicaid rates in the long-term care sector beyond what is currently proposed. If enacted, these actions would severely disadvantage not-for-profit nursing homes across the state. For nursing homes like Loretto, for example, this will add more than $500,000 in additional losses to the losses we are already incurring, creating catastrophic consequences for our facilities, the 10,000 residents we serve, and the regional health network that depends on Loretto for rapid, seamless discharges as a strong safety net partner.

Nursing home rates are currently based on 2008 costs — that’s zero cost of living increase in over 15 years, yet today’s costs of care are 40% higher than those in 2008This means nursing homes lose $70 per person per day, on average, for any individual supported by the Medicaid program.

Nursing homes in New York state serve a critical role within their healthcare networks. Approximately 97,000 New Yorkers rely on these residences, as do their families when care at home is simply no longer possible. Over 70% of residents in nursing homes rely on Medicaid to pay for their care. The state is not honoring its end of that arrangement, ignoring its responsibility to properly fund the Medicaid rate, and in effect, is defaulting on this promise to care for our most vulnerable.

Over 90% of nursing homes in Upstate New York are unable to cover operating costs. Over 75% of nursing homes struggle to find sufficient staff to meet minimum staffing levels, because they cannot compete in a competitive wage environment. And given these workforce shortages, thousands of beds are offline and unavailable to those in need. Our hospitals are already in crisis, lacking the ability to discharge patients to lower acuity settings like nursing homes. Eleven nursing homes have closed in New York in the last two years, with another eight currently at risk of closure. This is reality.

In 2023, an increase of 6.5% was provided, the first increase in 15 years. However, with an 8% inflation rate in 2023, that adjustment did not even cover last year’s cost increases. After decades of underfunding, and one increase, an $810 million funding gap persists. This is reality.

We need our state legislators to reject the governor’s nursing home cuts and include a 16% Medicaid rate increase as a bridge to rebasing, or adjusting, Medicaid rates to better meet 2024 costs. Specifically, we are urging our community to ask our Legislators to:

  • Reject the proposal that would freeze the nursing home operating rate at January 2024 levels;
  • Reject the proposal to reduce the capital component of the nursing home rate by 10%;
  • Reject the $75 million cut to the financially distressed nursing home Vital Access Provider Assurance Program;
  • Reject the $400 million savings target for long-term care;
  • Accept the proposal to allow medication technicians to administer routine medications to nursing home residents under the supervision of a registered nurse;
  • Include a 16% Medicaid rate increase to nursing homes ($500 million state share); and
  • Include language in the Article VII bill that codifies the rebasing of nursing home rates.

We need a commitment to not vote on a budget unless these important issues are addressed.

This crisis is very real, and it is impacting all of us — by delays in emergency rooms, longer lengths of stay in our hospitals and less access to care overall. Without immediate, meaningful financial investments coupled with sound policy measures, nursing homes will continue to struggle and even go out of business. This means less access for those that need nursing home care, and fewer choices for families in our community to rely on to care for their loved ones. We are proud to play a vital role in the care of the most vulnerable individuals in Central New York and we are in desperate need of more resources to continue to fill this vital role.

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