Rate Increase

Helping Patients & Family Understand a Rate Increase

Residents of nursing homes throughout the United States have come to expect compassionate and accurate assistance with their needs. In general, long-term care facilities uphold their obligation to provide this care. As costs associated with medical and daily task care increase, however, nursing homes are sometimes forced to raise rates. Cost is a major factor in the independent living selection process, and nursing home rate increase discussions are often sources of misunderstanding. Nursing home managers must be ready to help residents and their families to understand the factors behind a nursing home rate increase. Here’s how to facilitate that discussion.

Average Costs in Long-Term Care Facilities

Senior living centers, including nursing homes and skilled care facilities, tend to be surprisingly expensive. According to Genworth Financial’s 2019 Cost of Care Survey, of the 15,000 U.S. based providers surveyed, costs averaged:

  • $4051 per month for a single bedroom accommodation
  • $7513 per month for a semi-private room
  • $8517 per month for a private room

Costs have only increased; based on industry figures, the average annual nursing home rate increase since 2014 is around 3%. Demand for long-term care is growing as well; according to the U.S. Department of Health and Human Service’s (HHS), Long Term Care portal, about 70% of all people currently 65 years of age will need some form of long-term medical care and support in the coming years. 

What Factors Influence a Nursing Home Rate Increase?

There are many factors driving up costs throughout the healthcare sector, and some specific to long-term care facilities like nursing homes. Factors include:

  • Rising demand as America’s population ages.
  • Increases in operational expenses, including liability insurance, utilities, and regulatory compliance.
  • Growing expenses of medical devices, medications, and supplies.
  • Growing demand for and need of specialized medical and lifestyle care.
  • Increases in staff and management salaries.
  • Changes in reimbursement and coverage rates from Medicare and Medicaid.

In many cases, long-term care centers face unavoidable increases in costs. A nursing home rate increase, then, is all but inevitable for the majority of residents in these facilities. 

Best Practices for Handling a Nursing Home Rate Increase

It should come as no surprise that the prospect of a nursing home rate increase is a touchy subject. This is especially true for seniors and family members on fixed budgets or with financial insecurities. Thankfully, facility owners and managers can take advantage of several industry best practices to make the discussion of a rate increase that much more palatable.

The primary focus for nursing home managers is transparency. Whether discussing rates with potential new residents or those already receiving care, providing detailed information on how the facility bills for every service is critical. Policies for assessing rate increases should also be made readily available to residents and their family members. Being up-front with rates and potential hikes can ease the burden on residents, helping them to understand the service billing environment.

Facilities can offer incentives to ease the sting of a rate increase as well. For example, a facility with low occupancy rates may offer a room upgrade or the addition of services to help offset the rate increase. Administrators should be willing and open to negotiation, including offering residents ways they can trim off extraneous services that may stretch budgets. 

Finally, nursing home administrators should share information on financial assistance programs outside of the facility’s own control, including Veterans Administration, Medicaid, or local/state long-term care agency options. Getting the help of social workers and regulatory officials to identify alternative funding sources and plans can provide the needed assistance seniors need to continue their residency when a facility is facing a rate increase. With these tips, a nursing home rate increase does not have to be a frightening experience. Forward-thinking facility managers can provide peace of mind to their residents, even as expenses continue to rise. 

About Caitlin Morgan

Caitlin Morgan specializes in insuring assisted living facilities and nursing homes and can assist you in providing insurance and risk management services for this niche market. Give us a call to learn more about our programs at 877.226.1027.