What does New York’s Recent Cut to Nursing Home Capital Improvements Mean?

As a nonprofit organization dedicated to the care and well-being of nursing home residents, we feel it is crucial to share the impact of New York State’s recent budget decisions on our facilities, our staff, and, most importantly, our residents and their families.

While the budget includes some positive measures, it also imposes significant cuts that could further hinder access to quality nursing home care statewide, and the quality of the living environment we strive to provide at The Brothers of Mercy.

Understanding the State Budget Actions

The final state budget for this fiscal year includes some additional funding that represents about a 4% increase to nursing home Medicaid rates. After years of underfunding, and cost increases exceeding 20 percent in the past four years alone, this investment is a step in the right direction. However, at the same time, the state budget imposes a 10% cut to nursing home capital reimbursement rates. Capital reimbursement is funding that allows us to make mortgage payments and specifically helps pay for renovations and improvements to our buildings. As such, this cut has far-reaching consequences for our ability to maintain and improve our residence.

The Importance of Capital Reimbursement

Capital reimbursement funds essential projects that enhance the safety, comfort, and overall quality of life of nursing home residents. These projects include:

• Enhancing living spaces & private rooms: Upgrading common areas and converting shared rooms into private rooms to create homelike environments while at the same time maximizing infection control efforts.
• Improvements to HVAC systems: Ensuring proper air quality and temperature control, enhancing resident comfort and well-being.
• Sustainable energy initiatives: Upgrading energy systems to comply with best practices, reduce carbon emissions, and improve operational cost efficiencies.

These improvements are not luxuries; they are necessary for providing high-quality care and ensuring that our residents live in a safe and comfortable environment.

The Real Impact on Nursing Homes 

The net impact of the State’s budget actions this year are mixed. For many homes, the capital cut undermines the State’s investments in the Medicaid rate; in fact, a number of homes will see an overall net cut to their Medicaid funding.

The homes most likely to sustain a net cut from this year’s budget are the very homes that underwent recent capital improvements to their facilities. The bottom line is that the cut to capital funding will be a marked obstacle and disincentive for organizations to invest in capital improvements going forward.

The capital cut is particularly troubling given the context of chronic underfunding of long-term care. For over 15 years, nursing homes provided care to residents who rely on Medicaid without any  adjustment to their reimbursement to account for inflation. The result is a $1.6 billion Medicaid funding gap between what nursing homes spend and what they are paid by Medicaid each year. The gap already challenges our ability to cover rising operating costs and offer competitive wages to attract and retain dedicated staff. This cut will now make it even more challenging for non-profit nursing homes like us to continue to operate.

Given the inadequacy of current Medicaid funding, this cut to capital reimbursement is yet another blow to the infrastructure of aging services statewide.

Why This Matters to You

The State’s Medicaid funding actions directly impact the quality of care, staffing, and services we are able to provide. While we are committed to providing high-quality care and enhancing the quality of life of our residents today, cuts such as these undermine our efforts to create safe, comfortable, and homelike environments for our residents and community members.

Because of this cut, many nursing homes across the state will be left no choice but to delay essential projects that enhance resident care and/or expand access to care. Further, inadequate Medicaid funding amidst rapid cost growth continues to drive mission-driven providers toward closure. These budget actions not only affect nursing home residents’ daily lives, they will also impact the care options that will be available to consumers in the future.

As your local non-profit long-term care provider of choice, we urge residents, families, and all consumers to understand the implications of these budget decisions. Going forward, your voice will be critical in helping to educate state lawmakers about the negative implications of such cuts, and why the state must improve funding for long-term care options in New York State.