Medicare Cuts to Nursing Homes

MedPAC’s latest proposal makes one thing painfully clear: the people deciding how much nursing homes should be paid are looking almost entirely at financial spreadsheets—not the reality of resident care.

The commission is floating a 4% cut to Medicare’s base payment rate for skilled nursing facilities, arguing that margins are high, occupancy is stable, and access won’t be harmed. On paper, maybe that looks true. But anyone who spends time inside these buildings—or litigates the cases that come out of them—knows exactly where operators will make up the difference: they’ll cut staff.

MedPAC’s own report shows SNFs enjoyed 24% Medicare margins in 2024, with margins projected to rise even higher. Investor interest is strong. Corporate chains are expanding. Yet residents are still sitting in understaffed facilities where call lights go unanswered and basic care gets missed. High margins don’t mean high-quality care—they just mean the money isn’t being spent on bedside staffing. Cutting reimbursement now only widens the gap between the profits being extracted at the top and the dangerous understaffing residents face on the floor.

It’s also impossible to ignore that MedPAC openly admits it lacks reliable quality data, especially around patient experience. So the commission is recommending payment cuts based on occupancy and revenue, without measuring the most important question: are residents safe? If SNFs are already struggling to meet minimum staffing requirements—and many aren’t—rate cuts give corporate owners even more cover to slash labor budgets while pointing the blame upward at Medicare.

MedPAC’s chair noted that the post-acute sector “is not siloed,” but the recommendation was still built around siloed financial metrics. The lived reality is that when reimbursement gets squeezed, frontline workers disappear, turnover spikes, and preventable injuries rise. A 4% cut may look harmless from Washington, but in the real world it means fewer CNAs, fewer RNs, and more residents left without the care they depend on.

Nursing home residents shouldn’t bear the consequences of a financial model built on profit extraction and chronic understaffing. If policymakers want to reform the system, they should start by linking reimbursement to actual staffing levels—not by cutting rates and hoping corporate owners magically decide to put residents first.