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Breaking Down the Florida Medicaid Rate Increase

In recent months, Florida made headlines after the state legislature passed its 2024-2025 budget, which included an 8% increase in its Medicaid reimbursement rates. This $247.8 million increase in Medicaid funding is the largest ever seen in the state and represents more than just a financial boost. It is a pivotal win for skilled nursing owners, operators, and residents alike.

Most importantly, the Medicaid rate increase will provide owners the financial means to address the immediate needs of their facilities and make investments to provide best-in-class care.

At the same time, we caution owners in the state to allocate the funds strategically as the lifespan of this increase in reimbursements is ultimately uncertain, and some of the most significant challenges in the industry will remain a struggle for owners as funds won't solve everything.

And for many Florida skilled nursing owners, the increase in reimbursement rates means something totally different. Long-time owners who are thinking about exiting the industry in the near future might look at this as a rare opportunity to maximize the value of their community and secure their financial interests.

Top Operational Priorities Among Florida Owners 2024-2025

With the increased reimbursement rate taking effect in October 2024, here are some of the top operational priorities of SNF owners in the state:

  1. Quality of Care: With increased Medicaid rates, additional resources can be allocated to enhance the quality of care provided to residents. This may include training programs for staff, technological upgrades, or expanding services to meet residents’ evolving needs.

  2. Investment in Infrastructure: Skilled nursing owners may now have the means to address overdue infrastructure updates at their facilities that they were previously unable to prioritize due to financial constraints.

  3. Improved Staffing and Retention: Adequate staffing continues to be the biggest challenge facing long-term care providers across the country. With increased Medicaid funding, communities can offer the competitive wages and benefits to help attract and retain qualified staff.

Operational Areas That Will Remain a Struggle Regardless of State Medicaid Reimbursement Rates

  1. Staffing: Despite some improvements from increased rates, staffing will continue to pose several challenges including workforce shortages, finding qualified staff in a limited talent pool, and the declining work-age population. This will be made especially difficult with the proposed federal staffing mandate.

  2. Federal Regulatory Challenges: Federal regulations continue to be a hurdle for many healthcare providers and it often hinders operational efficiency. Especially considering the inevitable changes that will follow the 2024 presidential election.

  3. Rising Operational Costs: While the extra Medicaid funding helps with costs, it will still be off-set by rising operational expenses ranging from dietary to supplies and facility upkeep. As these costs continue to climb, providers will still face budget strains to some degree.

  4. Increase in Medicare Advantage Plans: Although Medicare Advantage plans must cover the same benefits of traditional Medicare, nursing home coverage continues to be the most frequently denied services by insurers of Medicare Advantage. In Florida, the share of beneficiaries enrolled in Medicare Advantage is at 58% today, making it the state with the fifth-highest Medicare Advantage penetration rate in the country just behind Michigan, Alabama, Connecticut, and Maine.

The Impact on SNF Market Values & How to Plan for the Future

While the recent Medicaid rate increase in Florida will greatly benefit skilled nursing communities over the next couple of years, this increase did not happen overnight. It was achieved through persistent lobbying and legislative efforts made by the Florida Health Care Association (FHCA). Considering the amount of effort, as well as the historically modest rate adjustments in the state, it is unlikely that Florida will see another rate increase of this magnitude in the foreseeable future.

For skilled nursing owners considering exiting the industry in the near future, or even in the next ten years, it is important to consider how this funding will increase the value of Florida skilled nursing communities. It is no secret that since the budget was announced growing regional operators and national investors are hungry for SNF acquisitions in Florida. Owners looking to retire should capitalize on the heightened market demand while the rate increase is still in effect. Evans Senior Investments provides free, no-obligation market valuations to help owners strategically plan their exit and maximize return on their investment. Owners also do not need to wait for October to get an accurate market valuation. The increased reimbursement rate will be factored into the valuation.

For providers focused on improving their operations, a complimentary ESI Benchmarking analysis is another great option. ESI will evaluate a community's current expenses against our proprietary database of similar skilled nursing facilities locally, regionally, and nationally. Doing so will help providers better understand their current expenses and strategize where to allocate the increase in funds come October.







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