KFF Analysis: $2.2B in Nursing Home Medicaid Payments at Risk
A KFF News analysis published Wednesday estimates that new federal limits on Medicaid state-directed payments could affect $3.7 billion in annual nursing home funding nationally, including $2.2 billion in federal dollars. The 2025 federal budget reconciliation law known as OBBBA caps these state-directed payments, which at least 15 states use to supplement nursing home reimbursement above base Medicaid rates. Pennsylvania faces the largest exposure, accounting for nearly 47% of federal funding at risk, with Texas, New Mexico, Rhode Island, Illinois and Indiana also affected. Industry groups including the Pennsylvania Health Care Association, Saber Healthcare Group, and AHCA/NCAL say it is too early to quantify impacts pending the final federal rule, but warn that reduced payments could strain nursing home finances, shrink Medicaid-certified bed capacity, and limit resident access to care starting as the caps phase in beginning in 2028.