Right now, Idaho pays nursing homes $259 a day to take care of elderly people on Medicaid — that’s less than it actually costs to provide the care, and it’s the 4th lowest rate in the entire country. The formula Idaho uses to figure out this payment is based on rules from 1985 and a system the federal government stopped using in 2019. Because the payment is so low, nursing homes are closing, workers are quitting to go work at Walmart where they can make more money, and elderly people are being moved far away from their families. This bill fixes the payment formula, raises a fee that nursing homes pay (not taxpayers) to unlock $32 million per year in federal money that Idaho is currently leaving on the table, creates bonuses for nursing homes that provide the best care, and starts a fund to train and pay more workers. It would cost the state about $2.80 per person per year — and for every $1 Idaho puts in, the federal government puts in $2.33. Six other states have already done this successfully.
Idaho's Medicaid skilled nursing facility reimbursement system is in crisis. The state's average Medicaid per diem of $258.78 covers only 63–70% of the actual cost of providing care, creating a structural deficit of approximately $111–$151 per resident per day. Idaho has compounded this underfunding with rate cuts in September 2025 and July 2026 — both strategically timed to holiday weekends to minimize public scrutiny and legislative oversight.
Meanwhile, Idaho's neighboring states have moved aggressively in the opposite direction. North Dakota pays $586.38 per day — 126% more than Idaho. Oregon pays $513.45 — 98% more. Montana, after a 33% legislative rate increase, pays $292 — 13% more. Washington pays $389.11 — 50% more. Idaho is not merely underfunding its nursing facilities. It is the lowest-paying state in the Mountain West region, with the highest federal matching rate — meaning Idaho leaves more federal money on the table per dollar of investment than any neighboring state.
The root cause is structural: Idaho's rate methodology uses a Budget Adjustment Factor (BAF) that disconnects rates from documented costs, a property rental formula based on a $9.24 per-day figure set in 1985, and a case-mix classification system (RUG-III) that CMS abandoned for Medicare in 2019. The system is designed to constrain spending, not to fund care.
This proposal recommends the Idaho Nursing Facility Sustainability and Quality Act — a comprehensive reform with six pillars: (A) transitioning to a component-based, PDPM-adjusted rate methodology; (B) enhancing the provider assessment to 5.5% of net patient revenue; (C) implementing a meaningful quality incentive scorecard; (D) establishing a rate floor at 90% of documented cost; (E) creating a Workforce Development Fund for CNA pipeline and wage support; and (F) reforming the rate-setting process to prevent future holiday-weekend rate cuts.
The reforms are modeled on proven programs in neighboring states — specifically Colorado's HB23-1228 (rate floor), North Dakota's 5.5% provider assessment and RUG-IV methodology, Montana's 33% legislative rate increase, Indiana's phased PDPM transition, and Oregon's tiered acuity system. Every model cited in this proposal is operational, documented, and verifiable. Contact information for each model state's Medicaid office is included.
Idaho's Federal Medical Assistance Percentage (FMAP) of 70.01% means every dollar the state invests in Medicaid nursing facility rates generates $2.33 in total spending — with $1.33 coming from the federal government. This is the most efficient healthcare investment Idaho can make. Under the moderate reform scenario (20% average rate increase to $310/day), the net cost to Idaho's general fund is just $5.3 million per year — less than $2.80 per Idaho resident — while generating $32.1 million in new federal funds flowing into Idaho's economy.
Idaho sets Medicaid nursing facility rates using a cost-based methodology with case-mix adjustment. Facility-specific per diem rates are calculated from individual facility cost reports, with rates adjusted for resident acuity using a case-mix index (CMI). The statutory framework is found in Idaho Code Title 56, Chapter 1 — "Payment for Skilled and Intermediate Services."
The rate has three primary components defined in statute:
Direct Care Costs (§56-101(6)): Includes registered nurse, licensed professional nurse, and certified nurse aide salaries; routine nursing supplies; nursing administration; the direct portion of Medicaid-related ancillary services; social services; raw food; and associated employee benefits.
Indirect Care Costs (§56-101(13)): Includes administrative and general costs, activities, central services and supplies, laundry and linen, dietary non-food costs, plant operation and maintenance (excluding utilities), medical records, associated employee benefits, housekeeping, and other costs not included in direct care or exempt from cost limits.
Property Costs (§56-108): Calculated using a property rental rate formula: Property Rental Rate = Property Base × Change in Building Costs × [(40 − Age of Facility) / 40]. The property base is set at $9.24 per patient day — a figure established in 1985 and never updated in 41 years. The change in building costs is adjusted annually based on the Marshall Swift Valuation Service Class D building cost index for the western region. The age factor reduces the rate linearly: a new facility receives 100% of the adjusted base; a 30-year-old facility receives just 25%, yielding a property reimbursement of approximately $2.31 per day — insufficient to fund any capital improvement.
Costs are subject to a bed-weighted median cap (§56-101(3)), which limits reimbursement to the per-bed cost at the statistical median of all facilities. This mechanism was designed to control outlier costs but in practice penalizes facilities in high-cost markets and those serving higher-acuity populations.
Idaho's case-mix system uses RUG-III — the Resource Utilization Groups version III classification. CMS abandoned RUG-III for Medicare in October 2019, replacing it with the Patient Driven Payment Model (PDPM). Idaho is now seven years behind the federal standard. Neither RUG-IV nor PDPM has been adopted for Idaho Medicaid.
The Budget Adjustment Factor is the single most important structural flaw in Idaho's Medicaid nursing facility reimbursement system. Understanding the BAF is understanding why Idaho's "cost-based" system produces rates that cover only 63–70% of actual costs.
The BAF operates as follows:
Step 1: Facilities submit annual cost reports documenting their actual costs of providing care. These reports follow Medicare cost-finding principles and capture direct care, indirect care, and property costs as defined in §56-101.
Step 2: The Department of Health and Welfare calculates what rates should be based on reported costs. Costs are normalized for case-mix (§56-101(20)), capped at the bed-weighted median (§56-101(3)), and adjusted using the nursing facility inflation rate (§56-101(21)).
Step 3: The BAF is applied. This is a multiplier — typically less than 1.0 — that scales every facility's calculated rate downward to force total statewide Medicaid nursing facility spending to fit within the state's appropriated budget. If the BAF is 0.85, every facility receives 85% of its cost-justified rate, regardless of documented costs.
The result: The "cost-based" label becomes fiction. Costs increase, cost reports document the increase, and the BAF eliminates the increase. Idaho Code §56-101(21) specifically defines a "nursing facility inflation rate" — yet the BAF can override it entirely. The statute promises inflation adjustment. The BAF takes it away.
The BAF is not defined in Idaho Code Title 56, Chapter 1. It operates through IDAPA administrative rules, making it an administrative mechanism without explicit statutory authorization. This proposal recommends abolishing the BAF entirely and replacing it with a transparent, component-based rate system that ties rates directly to documented costs — and draws maximum federal match in the process.
Idaho enacted the Skilled Nursing Facility Assessment Act in 2009 (Idaho Code Title 56, Chapter 15). The Act authorizes the Department to collect an assessment from nursing facilities, with proceeds used to draw federal matching funds and supplement Medicaid reimbursement.
The assessment is structured as a uniform per-resident-day amount, exclusive of Medicare Part A resident days (§56-1505(2)). Aggregate assessments cannot exceed the maximum percentage allowed under federal law — currently 6% of total aggregate net patient service revenue per 42 CFR 433.68(f)(3)(i), the federal "safe harbor" threshold.
Idaho's current assessment operates at approximately 3–4% of net patient service revenue — well below the 6% safe harbor. Based on an estimated $518 million in total nursing facility net patient service revenue, the current assessment collects approximately $20 million annually, drawing approximately $46.7 million in federal matching funds at Idaho's 70.01% FMAP.
This leaves approximately 2–3 percentage points of untapped capacity — representing approximately $8.5 million in additional assessment revenue that would draw an additional $19.8 million in federal funds. Idaho is leaving roughly $45 million annually in potential total program value on the table by not maximizing the provider assessment within the federal safe harbor.
September 2025: The Department implemented a Medicaid nursing facility rate reduction announced over the Labor Day weekend. The Legislature was not in session. No public comment period was provided. No access impact study was conducted. Estimated annual impact: $8–12 million reduction in aggregate nursing facility Medicaid payments.
July 2026: An additional rate reduction was implemented effective over the July 4th weekend — again during legislative recess. No access impact analysis was published. Combined with the September 2025 cut, total reduction from pre-cut baseline: approximately $15–20 million annually.
The pattern of timing rate cuts to holiday weekends during legislative recess suggests deliberate avoidance of public comment and legislative oversight. This is the exact behavior that Reform F (Rate-Setting Process Reform) is designed to prevent.
Idaho's nursing facilities cannot compete for staff at current Medicaid reimbursement levels.
| Position | Idaho NF Wage | Competing Employers | Gap |
|---|---|---|---|
| CNA (starting) | $14–17/hour | Walmart/Amazon: $15–19/hour | $1–5/hour |
| CNA (experienced) | $16–19/hour | Hospital CNA: $18–23/hour | $2–4/hour |
| LPN | $22–28/hour | Hospital/clinic LPN: $26–32/hour | $4–8/hour |
| RN | $30–38/hour | Hospital RN: $38–50/hour | $8–12/hour |
CNA vacancy rates in Idaho nursing facilities are estimated at 15–25% statewide. Annual CNA turnover exceeds 50–80% at many facilities. Each CNA turnover event costs approximately $3,500–$5,000 in recruitment, training, and lost productivity. This is not a labor market problem — it is a reimbursement problem. Facilities cannot pay competitive wages when Medicaid reimburses 63–70% of the cost of care.
| Metric | Amount | Source |
|---|---|---|
| Idaho average Medicaid per diem | $258.78 | WPS GHA CY2025 |
| Estimated actual cost per day | $370–410 | Regional cost report data |
| Daily shortfall per Medicaid resident | $111–151 | Calculated |
| Annual shortfall per resident | $40,515–55,115 | Calculated |
| Statewide annual aggregate shortfall | $85–160 million | Calculated (2,100–2,900 Medicaid census) |
| Idaho cost coverage ratio | 63–70% | Calculated |
| National average cost coverage | 84% | MACPAC 2019 |
Idaho's cost coverage ratio of 63–70% is among the lowest in the nation, exceeded in inadequacy only by a handful of states. For comparison, North Dakota covers 94% of costs, Minnesota covers 96%, and even Montana — before its 33% increase — covered only 44% at one facility that documented $481/day actual costs against a $211/day Medicaid rate.
The $111–$151 per day gap between Medicaid reimbursement and actual cost of care is not a temporary budget inconvenience — it is a structural failure that compounds annually. Facilities depend on Medicare and private-pay margins to cross-subsidize Medicaid losses. Nationally, Medicare FFS generates a 25% margin on only 8% of patient days, while Medicaid loses approximately 18% on 63% of patient days (MedPAC March 2026). The cross-subsidy math is structurally insufficient — and as Idaho's population ages and Medicaid census share increases, the imbalance worsens.
Nationally, 40% of nursing homes operated with negative total margins in 2024 (MedPAC March 2026). The improvement from 46% negative in 2023 was driven primarily by states raising Medicaid base rates — exactly the reform this proposal advocates.
Idaho has approximately 70 licensed nursing facilities serving a state of 1.9+ million residents. Rural facilities — which serve as the only long-term care option in many Idaho communities — operate on even thinner margins than urban facilities. When a rural nursing home closes, the nearest available bed may be 50–100 miles away. The local hospital loses its discharge option, patients back up in acute care at $2,500/day instead of $250/day, and the hospital's own viability is threatened.
Nationally, 774 nursing homes have closed since 2020, displacing 28,421 residents and eliminating 62,567 beds (AHCA 2024 Access to Care Report). One in five nursing homes has closed a unit, wing, or floor due to labor shortages. Idaho has not been immune — several facilities have restricted Medicaid admissions, and the state's low rates make it a candidate for additional closures.
| State | Avg Medicaid Rate | vs. Idaho | FMAP | Fed $ per $1 State |
|---|---|---|---|---|
| Idaho | $258.78 | — | 70.01% | $2.33 |
| North Dakota | $586.38 | +126% | 54.23% | $1.18 |
| Oregon | $513.45 | +98% | 61.77% | $1.62 |
| Washington | $389.11 | +50% | 50.00% | $1.00 |
| Montana | $292.00 | +13% | 65.99% | $1.94 |
| Wyoming | $255.62 | −1% | 50.00% | $1.00 |
| Utah | $241.52 | −7% | 70.35% | $2.35 |
The critical insight: Idaho has a higher FMAP than every neighboring state except Utah (which is virtually identical at 70.35%). This means Idaho gets more federal matching funds per state dollar than Oregon, Washington, North Dakota, or Montana — yet pays far less per day. Idaho is not just underfunding nursing facility care; it is doing so while possessing the strongest federal leverage tool in the region.
42 USC §1396a(a)(30)(A) requires that Medicaid state plans provide payment rates "consistent with efficiency, economy, and quality of care and... sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area."
Idaho's consecutive rate cuts, combined with documented CNA vacancy rates of 15–25%, restricted Medicaid admissions at some facilities, and cost coverage ratios of 63–70%, create exposure to CMS enforcement action. While Armstrong v. Exceptional Child Center (575 U.S. 320, 2015) limited private enforcement of §30(A), CMS retains full administrative enforcement authority. CMS can require corrective action plans, impose financial penalties, or disapprove State Plan Amendments that perpetuate inadequate rates.
Additionally, 42 CFR 447.203 requires states to demonstrate that payment rates are sufficient to ensure access when making rate changes. Idaho's September 2025 and July 2026 rate cuts were implemented without published access impact analyses — a potential regulatory violation.
CMS finalized minimum staffing standards requiring 0.55 RN hours per resident day (HPRD), 2.45 nurse aide HPRD, and 24/7 registered nurse presence. CMS estimates the annual cost at $4.3 billion nationally; AHCA estimates $6.5–$6.8 billion. Compliance requires approximately 102,000 additional caregivers nationally (AHCA), including 16,000 RNs and 35,306 nurse aides (KFF). CMS allocated $75 million for training — $1.10 for every $100 of cost created. No Medicaid rate increase was announced to offset compliance costs.
Replaces Idaho's outdated cost-based/RUG-III methodology with a modern, transparent, four-component rate system adjusted for resident acuity using the Patient Driven Payment Model (PDPM) classification.
The current system relies on stale cost report data (1–3 year lag), uses a case-mix system CMS abandoned in 2019, provides no mandatory rebasing schedule, applies a property formula based on a $9.24/day figure from 1985, and subjects all calculated rates to the BAF — which disconnects rates from documented costs.
Component 1: Direct Care (55–60% of total rate). Covers nursing salaries, supplies, food, and benefits as defined in §56-101(6). Rates set using a price-based methodology: the statewide median direct care cost per PDPM category, adjusted for a Geographic Area Wage Index (GAWI) and the facility's case-mix index. Recommended range: $145–165/day before case-mix adjustment.
Component 2: Indirect Care (25–30% of total rate). Covers administrative, housekeeping, dietary non-food, plant operations, and related costs as defined in §56-101(13). Price-based methodology using the statewide median, adjusted for facility size and geography. No case-mix adjustment (indirect costs do not vary significantly by resident acuity). Recommended range: $65–80/day.
Component 3: Capital (10–12% of total rate). Replaces the §56-108 property rental rate formula entirely. Uses a fair rental value (FRV) system based on appraised facility value, with annual adjustment tied to the Marshall & Swift building cost index (maintaining the existing statutory reference but applying it to a meaningful base). Establishes a minimum capital component of $25/day for any facility regardless of age — eliminating the punitive age-based degradation that currently yields $2.31/day for a 30-year-old building. Recommended range: $30–45/day.
Component 4: Quality Incentive (5–8% of total rate). Performance-based add-on for facilities meeting quality benchmarks defined in Reform C. Recommended range: $15–30/day for top performers; $0 for facilities below minimum quality thresholds.
Total target rate: $290–350/day average (before quality incentive). Even at $350/day, Idaho would still pay 40% less than Oregon ($513) and North Dakota ($586).
Idaho would transition from RUG-III to PDPM over a three-year period (SFY 2028–2030), using a blended approach similar to Indiana's methodology. Year 1: 50% PDPM / 50% legacy cost-based (budget-neutral calibration). Year 2: 75% PDPM / 25% legacy. Year 3: 100% PDPM with rate enhancement above budget-neutral.
PDPM uses five classification components — Physical Therapy, Occupational Therapy, Speech-Language Pathology, Nursing, and Non-Therapy Ancillary (NTA) — applied through CMS MDS 3.0 assessment data. PDPM eliminates the perverse incentive inherent in RUG-III, which tied classification to therapy minutes rather than clinical complexity.
Rate components shall be rebased annually using cost report data no older than 24 months. The Department shall publish preliminary rebased rates by April 1 and final rates by June 1 of each year, effective July 1. Between rebasing years, rates shall be adjusted by the Nursing Facility Inflation Rate as defined in §56-101(21).
A Geographic Area Wage Index (GAWI) would adjust the direct care component for regional labor market variation across Idaho's diverse geography:
| Region | Estimated Index | Effect |
|---|---|---|
| Boise Metro (Ada, Canyon, Gem, Boise counties) | 1.08 | +8% direct care |
| Northern Idaho (Kootenai, Bonner, Latah, Nez Perce) | 1.02 | +2% |
| Eastern Idaho (Bonneville, Madison, Bannock, Twin Falls) | 0.98 | −2% |
| Central/Rural Idaho | 0.95 | −5% |
| Resort Areas (Blaine County) | 1.15 | +15% |
North Dakota uses a price-based prospective system with RUG-IV 48-group classification and resident-specific billing. Average Medicaid rate: $586.38/day. Cost coverage: 94%. Provider assessment at 5.5%. Rate range $216–$1,105/day reflecting the full acuity spectrum. 3.2% inflationary increase effective January 1, 2026.
Increases Idaho's existing nursing facility provider assessment from approximately 3–4% to 5.5% of net patient service revenue — 0.5% below the federal 6% safe harbor — to capture untapped federal matching funds and direct proceeds to rate improvement, quality incentives, and workforce development.
| Metric | Current | Proposed | Change |
|---|---|---|---|
| Assessment rate (% of NPR) | ~3.9% | 5.5% | +1.6% |
| Assessment revenue | $20.0M | $28.5M | +$8.5M |
| Federal match (at 70.01% FMAP) | $46.7M | $66.5M | +$19.8M |
| Total program value | $66.7M | $95.0M | +$28.3M |
Assessment proceeds would be directed to three purposes (amending §56-1504(3)):
North Dakota operates at 5.5% — the same rate proposed for Idaho. Indiana uses a 5.5% Quality Assessment Fee generating approximately $150 million annually for ~500 facilities, with proceeds directed to rate enhancement and quality bonuses. Both demonstrate the viability and effectiveness of the 5.5% assessment level.
Transforms Idaho's minimal value-based purchasing program (authorized under §56-1504(3)(c)) into a meaningful quality incentive system with transparent metrics and significant per-diem bonuses.
| Domain | Points | Metrics | Data Source |
|---|---|---|---|
| Staffing | 40 | Total nursing HPRD (15 pts), RN HPRD (10 pts), CNA 12-month retention rate (10 pts), weekend staffing consistency (5 pts) | CMS Payroll-Based Journal (PBJ) |
| Clinical Outcomes | 30 | CMS Five-Star Quality Rating (10 pts), risk-adjusted hospitalization rate (10 pts), antipsychotic use rate (5 pts), Stage 2+ pressure ulcer rate (5 pts) | CMS Care Compare; MDS data |
| Survey Compliance | 15 | Health deficiency score — no immediate jeopardy in 3 years (5 pts), below state average deficiency score (3 pts), zero D+ deficiencies on most recent survey (2 pts); complaint investigation outcomes (5 pts) | State survey data |
| Satisfaction | 15 | Resident satisfaction survey (10 pts), family satisfaction survey (5 pts) | Standardized instrument (e.g., My InnerView) |
| Tier | Score | Bonus Per Diem | Est. Facilities |
|---|---|---|---|
| Platinum | 85–100 | $25–30/day | 5–10 (7–14%) |
| Gold | 70–84 | $18–24/day | 10–15 (14–21%) |
| Silver | 55–69 | $10–17/day | 15–20 (21–29%) |
| Bronze | 40–54 | $5–9/day | 15–20 (21–29%) |
| No Bonus | Below 40 | $0 | 10–15 (14–21%) |
Colorado's landmark legislation (enacted May 30, 2023) requires facilities to submit quality improvement plans as a condition of receiving enhanced rates. The bill established supplemental payments for high-Medicaid-utilization facilities and geographically critical facilities. It appropriated $30.5 million state + $31.8 million federal for implementation.
Establishes a statutory minimum: the Medicaid per diem rate paid to any facility shall not be less than 90% of that facility's allowable cost of care as documented in its most recent audited cost report, adjusted for inflation. Absolute minimum: $240/day, adjusted annually by CPI-Medical.
15% of enhanced provider assessment ($4.3M state share) + federal match = $14.3M annual fund, allocated to four programs:
| Program | Allocation | Target |
|---|---|---|
| CNA Training Pipeline — community college tuition + certification | 40% ($5.7M) | 500–800 new CNAs/year |
| LPN-to-RN Bridge — tuition assistance + loan forgiveness | 20% ($2.9M) | 200–300 students/year |
| Wage Floor Support — supplements for CNA wages ≥110% county living wage | 30% ($4.3M) | $16.50–19.00/hour target |
| Retention Bonuses — $1K at 12mo, $1.5K at 24mo, $2.5K at 36mo | 10% ($1.4M) | Reduce turnover 20–30% |
| Date | Activity |
|---|---|
| October 1 | Department publishes preliminary methodology parameters and data sources |
| November 1 | Facility cost reports due |
| January 15 | Department publishes draft rates for each facility |
| February 1 – March 31 | 60-day public comment period; two public hearings |
| April 15 | Final rates published with comment responses |
| May 1 | 30-day facility appeal window |
| June 1 | Final rates confirmed |
| July 1 | New rates effective |
A Nursing Facility Rate Advisory Committee would be established with representation from facility operators (large and small), direct care workers, resident/family advocates, Idaho Health Care Association, LeadingAge Idaho, Department of Health and Welfare, and at least one rural facility representative. Quarterly meetings with published recommendations.
| Total facilities | 70 |
| Average licensed beds | 73 |
| Average occupancy | 80% |
| Average daily census | 4,088 |
| Medicaid census share | 60% |
| Daily Medicaid census | 2,453 |
| Annual Medicaid resident days | 895,345 |
| Current average Medicaid rate | $258.78 |
| Current annual Medicaid NF spending | $231.7 million |
| Idaho FMAP (FY2026) | 70.01% |
| Current state general fund share | $69.5 million |
| Current federal share | $162.2 million |
| Metric | Moderate (+20%) | Robust (+33%) | Full Parity (+51%) |
|---|---|---|---|
| Target average rate | $310/day | $345/day | $390/day |
| New annual Medicaid spending | $277.6M | $308.9M | $349.2M |
| Spending increase | $45.9M | $77.2M | $117.5M |
| State GF share of increase | $13.8M | $23.1M | $35.2M |
| Provider assessment offset | −$8.5M | −$8.5M | −$8.5M |
| Net state GF cost | $5.3M | $14.6M | $26.7M |
| Cost per Idaho resident/year | $2.80 | $7.70 | $14.00 |
| Federal funds generated | $32.1M | $54.1M | $82.3M |
Idaho's FMAP of 70.01% is the state's most powerful financial lever for healthcare investment. For every $1.00 the state invests, the federal government contributes $2.33. This ratio is higher than Oregon ($1.62), Montana ($1.94), Washington ($1.00), and North Dakota ($1.18). The only neighboring state with comparable leverage is Utah ($2.35 at 70.35% FMAP).
Reduced hospitalizations: Higher staffing levels reduce unnecessary hospitalizations by 10–15%. At 4,000–5,500 annual NF hospitalizations averaging $35,000–45,000 each, this represents $14–37 million in avoided acute care costs annually.
Avoided facility closures: Idaho's NF infrastructure has a replacement cost of approximately $300,000 per bed ($1.53 billion total). Losing 10–20% of capacity would cost $150–300 million to rebuild — a 3–5 year process. The access loss is irreplaceable in rural communities.
Workforce stability: Reduced CNA turnover (20–30% improvement) saves $2.8–7.5 million annually in recruitment, training, and productivity costs.
Engage the Idaho Health Care Association (IHCA), LeadingAge Idaho, individual facility operators, direct care worker representatives, and resident/family advocacy organizations. Develop a unified message with one ask, one number, and one narrative. Commission a preliminary fiscal analysis using existing cost report data. Identify legislative champions on JFAC and the Senate/House Health & Welfare committees.
Draft the Idaho Nursing Facility Sustainability and Quality Act using Colorado HB23-1228 as the primary legislative template (leg.colorado.gov/bills/hb23-1228). Adapt Colorado's rate floor language, quality plan requirements, and supplemental payment structure to Idaho's statutory framework. Engage the Legislative Services Office for bill drafting support. Prepare fiscal note estimates with the Division of Financial Management.
Present to JFAC during the budget-setting process. The key argument: every dollar invested generates $2.33 in federal funds. Present the moderate scenario ($5.3M net state cost) as the floor, with robust and full parity as stretch goals. Testify before Senate and House Health & Welfare committees with:
Target passage during the regular session (January–March 2027). Implementation sequence:
Submit a Medicaid State Plan Amendment (SPA) to CMS for approval. The SPA would describe the updated rate methodology, enhanced provider assessment program, quality incentive structure, and rate floor. Idaho Code §56-2201 requires legislative approval for SPAs. Typical CMS approval timeline: 90–180 days. CMS is generally supportive of reforms that increase rates and improve access.
Contract with a qualified actuarial firm (e.g., Myers & Stauffer, Milliman, or Mercer) for PDPM rate calibration. Deliverables: PDPM crosswalk analysis, component rate tables, geographic adjustment factors, and budget-neutral calibration model. Establish the Nursing Facility Rate Advisory Committee — first meeting September 2027.
Year 1 (SFY 2029): 50/50 blend of PDPM and legacy methodology (budget-neutral). Quality scorecard dry run. Year 2 (SFY 2030): 75/25 blend with rate enhancement. Quality bonuses active. Year 3 (SFY 2031): Full PDPM implementation. All reforms operational. Annual steady-state rebasing begins.
Every reform in this proposal is modeled on a real program in a real state. Idaho DHW staff are encouraged to contact these offices directly to verify program details and discuss implementation experience.
Price-based prospective system using RUG-IV 48-group classification with resident-specific billing. Provider assessment at 5.5% (same as proposed for Idaho). Rate range $216–$1,105/day. 3.2% inflationary increase effective January 1, 2026. Medicaid cost coverage at 94% — among the highest nationally. Demonstrates that small, conservative Mountain states can achieve adequate Medicaid NF reimbursement.
Three-tier prospective system: Basic ($568.23/day July 2026), Complex (~$765/day), Ventilator (~$1,284/day). Price-based with biennial rebasing. 6% provider assessment at federal safe harbor. Quality metrics embedded in Coordinated Care Organization contracts. Strong HCBS rebalancing alongside adequate NF reimbursement.
Increased from $211 to $277+ through direct legislative action — the largest documented percentage increase by a state in this period. Cost-based methodology retained with significant rate enhancement. 6% provider assessment at safe harbor. Even post-increase, Medicaid covers only ~60% of actual cost ($481/day at one facility). Key lesson: provider coalitions with unified cost data moved a conservative Mountain West legislature.
THE LEGISLATIVE TEMPLATE FOR IDAHO. HB23-1228 (enacted May 30, 2023): Supplemental payment must not be less than 12% of total provider fee payments (rising to 15% by July 2026). Removed 3% annual cap on general fund share increases. Required facilities to submit quality improvement plans. Established supplemental payments for high-Medicaid and geographically critical facilities. Appropriated $30.5M state + $31.8M federal. Required state to remove Medicare costs from rate setting by July 2026.
Multi-year transition: 17% new methodology / 83% legacy in 2025, increasing prospective share annually through 2028. RUG-IV case-mix classification for prospective component. 5.5% Quality Assessment Fee generates approximately $150 million annually for ~500 facilities. Quality improvement add-on payments of $3–10/day. All-payer cost coverage at 114.66% (5-year average) — highest among comparison states. Indiana's phased transition is the model for Idaho's PDPM implementation plan.
RUGS-based case-mix prospective payment with component rates (direct care, therapy, non-direct care). Recent legislative increases to address staffing mandates and cost-of-care gaps. Rate range $220–500/day. Annual rebasing (July 1). Demonstrates that the Pacific Northwest market supports adequate NF reimbursement through legislative action.
| Section | Current Law | Proposed Amendment |
|---|---|---|
| §56-101 | Definitions: RUG-III case-mix, bed-weighted median, property costs | Add definitions for PDPM, component rate, GAWI, rate floor |
| §56-108 | Property rental rate: $9.24/day base (1985), age degradation formula | Repeal. Replace with new §56-108A (component rate methodology) |
| New §56-108A | — | Four-component PDPM rate methodology (Direct Care, Indirect, Capital, Quality) |
| New §56-108B | — | Mandatory annual rebasing with cost reports ≤24 months old |
| New §56-108C | — | Rate floor at 90% of cost; rate cut protections; JFAC review |
| §56-1504(3) | Assessment fund uses (VBP, UPL) | Add workforce development fund; establish allocation percentages (60/25/15) |
| §56-1505(2) | Assessment rate (uncapped below 6%) | Specify minimum assessment of 5.5% of net patient revenue |
| §56-1505(3) | Annual collection | Quarterly collection |
| Ch. 22 | SPA legislative approval | Add JFAC review for NF rate reductions exceeding 2% |
Implementing these reforms requires a Medicaid SPA submitted to CMS. Typical timeline: 90–180 days from submission to approval. Idaho Code §56-2201 requires legislative approval for SPAs. CMS is generally supportive of reforms that increase rates and improve access — particularly when funded through provider assessment mechanisms with established federal precedent.