Managed Care Medicaid/Medicare Medicare Advantage Nursing Home Nursing Homes

Impact of Medicare Advantage on skilled nursing facility profitability

How does Medicare Advantage market share impact skilled nursing facility (SNF) profitability? That is the question asked by Marr and Shen (2024). Using data from Medicare SNF cost reports, data, and county MA penetration rates, the authors use an ordinary least squares regression with SNF and year fixed effects examining how MA penetration impacts SNF revenues, costs and profitability. Using this approach, they find that:

A 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.

You can read the whole paper here.