After facing a 2% Medicaid pay rate cut that kicked in just as COVID was ramping up in 2020, Colorado nursing home operators are finally eyeing a potentially big increase.

A Colorado House committee last week unanimously approved House Bill 1228, which would increase Medicaid rates to skilled nursing facilities. As proposed, the 2024 increase would jump 10% next year, 3% in 2025 and 1.5% in 2026. The state’s Department of Health Care Policy and Financing has estimated it also would double the share of funding that supports pay-for performance models.

The proposal lifts a cap that has until now limited annual increases to 3%. One co-sponsor called the statute “inflexible,” noting that it has sometimes required emergency cash infusions, which the state offered during the pandemic, rather than allocating more realistic funding from the start. 

Providers said 11 skilled nursing facilities have closed in Colorado during the course of the pandemic.

The proposed increases would throw a lifeline to operators desperately recruiting staff and aiming to pay more than minimum wage, which exceeds $17 an hour in Denver.

 “We need this rate increase to be able to alleviate some of the [overcrowding] in the hospital that you’ve seen over the last three years,” Heather TerHark-Monreal, vice president of ancillary services at Vivage Senior Living told State of Reform last week. “If this rate increase is not passed, there may also be more skilled nursing facilities that close.”

Vivage Senior Living, the state’s largest Medicaid skilled nursing provider, surrendered some leases amid COVID and high financial pressures in the state. Earlier this year, Vivage announced a merger with Beecan Health Colorado, with CEO Jay Moskowitz telling McKnight’s Long-Term Care News last month that he expected advocacy over rates to pay off soon in terms of funding needed to strengthen services for it patients with post-acute and behavioral health needs.

Rep. Jenny Willford (D-N) said the structure of the proposed increase would incentivize access to care for Coloradans with complex needs.