Nursing Facility Long-Term Strategy: Policy Proposals for Massachusetts Medicaid (Masshealth)

Abstract

In the spring of 2018, Massachusetts’ Medicaid agency (MassHealth, or MH) leadership was approached by representatives from the nursing home industry due to financial troubles. The Massachusetts nursing facility (NF) industry’s concern was that due to consumer demands, bed utilization rates were dropping precipitously throughout the state. Because nursing facilities were reimbursed on a fee-for-service system, reduced bed days meant that revenues would fall from Medicaid. This paper analyzes potential reforms that are available to MH in improving quality and resizing of the NF industry over the next 3-5 years. More specifically, we explore value-based payment schemes and model preliminary costs for such programs to be ~$100M. We also explored the idea of converting NF units to assisted living units, which would require collaboration between housing agencies as well as MH. The preliminary cost estimates for such programs would be ~$150-200M.