Medicare Advantage growth and skilled nursing facility finances

Abstract

AbstractObjectiveTo examine the relationship between growth in Medicare Advantage (MA) enrollment and changes in finances at skilled nursing facilities (SNFs).Data SourcesMedicare SNF cost reports, LTCFocus.org data, and county MA penetration rates.Study DesignWe used ordinary least squares regression with SNF and year fixed effects. Our primary outcomes were SNF revenues, expenses, profits, and occupancy. Our primary independent variable was the yearly county Medicare Advantage penetration.Data Collection/ExtractionWe linked facility‐year data from 2012 to 2019 obtained from cost reports and LTCFocus.org to county‐year MA penetration.Principal FindingsA 10 percentage point increase in county MA enrollment was associated with a $213,883.89 (95% Confidence Interval [CI]: −296,869.08, −130,898.71) decrease in revenue, a $132,456.19 (95% CI: −203,852.28, −61,060.10) decrease in expenses, and a 0.59 percentage point (95% CI: −0.97, −0.21) decrease in profit margin. A 10 percentage point increase in county MA enrollment was associated with a decline (−318.93; 95% CI: −468.84, −169.02) in the number of resident‐days (a measure of occupancy) as well as a decline in the revenue per resident day ($4.50; 95% CI: −6.81, −2.20), potentially because of lower prices in MA. There was also a decline in expenses per patient day (−2.35; 95% CI: −4.76, 0.05), though this was only statistically significant at the 10% level. While increased MA enrollment was associated with a substantial decline in the number of Medicare resident days (487.53; 95% CI: −588.70, −386.37), this was partially offset by an increase in other payer (e.g., private pay) resident days (285.91; 95% CI: 128.18, 443.63). Increased MA enrollment was not associated with changes in the number of Medicaid resident days or a decrease in staffing per resident day.ConclusionSNFs in counties with more MA growth had substantially greater relative declines in revenue, expenses, and profit margins. The continued growth of MA may result in significant changes in the SNF industry.