In a sign that state-level policymakers are increasingly recognizing the financial pressures facing skilled nursing facilities, three large states—Ohio, Florida, and Pennsylvania—have included significant Medicaid rate increases for nursing homes in their proposed 2026-2027 budget plans. Together, the three proposals represent over $1.2 billion in additional annual Medicaid funding for the SNF sector.
State-by-State Breakdown
Ohio has proposed a 7.5% increase in its Medicaid nursing facility per diem rate, the largest single-year increase in over a decade. The proposal, included in Governor’s executive budget released on January 8, would raise the average daily rate from $218 to approximately $234. The increase is funded through a combination of general revenue and an enhanced provider assessment. Ohio officials cited the state’s 14% facility closure rate since 2019 as the primary motivation.
Florida is proposing a 5.2% rate increase along with a new quality incentive program that would provide up to $8 per day in bonus payments for facilities meeting specified staffing and quality thresholds. The proposal aims to address Florida’s position as one of the lowest Medicaid-reimbursing states in the country, with current rates covering an estimated 82% of the actual cost of care.
Pennsylvania has put forward a restructured rate methodology that would increase base rates by 4.8% while introducing a new wage pass-through component that directs a portion of the increase specifically to frontline worker compensation. The wage pass-through model requires facilities to demonstrate that at least 70% of the additional funding flows to direct care worker wages and benefits.
Why It Matters
Medicaid is the dominant payer for nursing home care, funding approximately 60% of all nursing home resident days nationwide. However, Medicaid rates have historically failed to keep pace with the actual cost of providing care, creating a structural deficit that facilities have attempted to offset with Medicare and private-pay revenue. As that cross-subsidization becomes increasingly difficult, many facilities—particularly those with high Medicaid census—face existential financial challenges.
The National Health Care Association estimates that the national average Medicaid shortfall (the gap between Medicaid payment and the cost of care) reached $32.49 per resident day in 2025, totaling approximately $23.5 billion in unreimbursed costs across the sector.
Political Landscape
All three proposals face legislative hurdles. Ohio’s increase requires approval from a state legislature that has historically been skeptical of Medicaid expansion. Florida’s plan must navigate a budget process dominated by competing healthcare priorities, including hospital Medicaid reform and home health expansion. Pennsylvania’s restructured methodology requires regulatory changes that some provider groups have criticized as overly prescriptive.
Implications for Operators
If enacted, these increases would provide meaningful relief for facilities in all three states. Operators should engage with state advocacy organizations to support the proposals through the legislative process and prepare for any associated reporting or quality requirements. The Pennsylvania wage pass-through model, in particular, may become a template that other states adopt, creating new compliance obligations around demonstrating how rate increases flow to worker compensation.