There was a time not long ago when senior living was essentially a 100% private-pay business. But it’s a rare state these days that does not let Medicaid help with the tab.

To be sure, welcoming Medicaid into the picture was a somewhat controversial move. On the plus side, Medicaid has provided millions of dollars that might not otherwise have been available. For quite a few struggling operators, such payments have spelled the difference between survival and creditor protection.

But the Medicaid-payment safety valve has some troubling strings attached. Among the most obvious is this: you want Medicaid dollars, you have to play by Medicaid’s rules.

By the way, those rules are constantly changing. And not generally for the better. Don’t believe me? As your nursing home operator friend down the street how well its relationship with Medicaid has worked out.

Putting aside the many picayune details that regularly get massaged into Medicaid rules, let’s consider a big-picture development: states shifting to “value-based payment” options. They are generally doing this via one of five ways:

  1. Requiring managed care organizations to adopt a standardized value based payment model.
  2. Requiring MCOs to make a specific percentage of provider payments through approved VBP arrangements.
  3. Requiring MCOs to move toward implementation of more sophisticated VBP approaches over the life of the contract.
  4. Requiring MCOs to actively participate in a multi-payer VBP alignment initiative.
  5. Requiring MCOs to launch VBP pilot projects subject to state approval.

So what will this latest tectonic shift mean for senior living operators? Three likely results come immediately to mind.

One is that operators can expect more scrutiny before receiving future Medicaid payments.

A second is that operators will increasingly be required to provide data showing that the care listed on the invoice has been delivered.

A third is that those payments in all likelihood will be ratcheted down to the lowest possible penny.

Admittedly, the third prediction is pure speculation on my part. And I will be wrong if the managed care firms calling the shots generally try to put operators’ profits before their own. It is theoretically possible that could happen. Just like it’s theoretically possible a monkey could type a sonnet. But I wouldn’t bet large sums of money on either outcome.

Nor would I bet large sums of money on the Medicaid-senior living alliance surviving the test of time. A marriage based on convenience rather than trust seldom does.

John O’Connor is editorial director of McKnight’s Senior Living. Email him at