Introduction
The 2025 reconciliation law represents a critical turning point for America’s long-term care infrastructure. With nearly 15,000 federally certified nursing facilities serving more than 1.2 million vulnerable residents, any policy changes carry significant implications for both providers and patients. These facilities deliver essential medical and personal care services to older adults and people with disabilities who require round-the-clock support.
Medicaid’s role in financing nursing facility care cannot be overstated. In 2023, the program covered 44% of all long-term institutional care costs, making it the single largest payer in this sector. Out-of-pocket payments accounted for 37% of costs, while other public and private payers covered the remaining 18%. Although the reconciliation law does not directly curtail nursing facility services, its modifications to Medicaid could substantially reduce facility reimbursements and potentially limit coverage access for thousands of Americans who depend on these services.
Overview of Nursing Facilities and Residents
Number of Certified Facilities
As of July 2025, 14,742 nursing facilities hold CMS certification, representing a 6% decline from July 2015 levels. This steady decrease reflects the net change after accounting for newly certified facilities and those that closed or lost certification. To participate in Medicare and Medicaid programs, facilities must maintain strict compliance with federal regulations and undergo regular CMS certification processes.
The declining facility count raises concerns about access to care, particularly in rural and underserved communities where nursing facility closures can leave residents with limited options for long-term care services.
Resident Population Trends
Approximately 1.24 million residents currently live in certified nursing facilities nationwide. While this represents a gradual recovery from the pandemic-era low of 1.10 million residents in 2021, the overall trend between 2015 and 2025 shows a 9% population decrease. The COVID-19 pandemic created a devastating inflection point, with resident numbers plummeting from 1.32 million in 2020 to 1.10 million in 2021.
This sharp decline resulted from multiple factors, including high mortality rates among nursing facility residents and staff, family members moving loved ones to alternative care settings, and hesitancy among potential residents to enter facilities during the public health crisis. The pandemic’s lasting impact continues to shape nursing facility operations and occupancy patterns.
Nursing Facility Staffing Levels
Daily Care Hours by Staff Type
Residents receive an average of 3.85 hours of direct nursing care daily, distributed across different staff categories: 0.87 hours from licensed practical nurses (LPNs), 0.68 hours from registered nurses (RNs), and 2.3 hours from nurse aides. These staffing levels represent a critical component of care quality, as adequate staffing enables facilities to meet residents’ complex medical and personal care needs.
Staffing Trends and Challenges
Between July 2015 and July 2025, average nursing care hours declined 7%, dropping from 4.13 to 3.85 hours per resident daily. This decrease was driven primarily by a 19% reduction in RN hours and a 7% decline in nurse aide hours, partially offset by a 5% increase in LPN hours.
The 2024 staffing rule would have established minimum standards for RN and nurse aide hours, but a Texas judge overturned key provisions in April 2025. The reconciliation law subsequently delayed all rule provisions until October 2034, and the Trump Administration rescinded the rule entirely in December 2025. Previous KFF analysis indicated only 19% of facilities met the proposed standards when the rule was enacted.
Interestingly, staffing hours per resident briefly increased in 2021, reflecting a mathematical artifact where resident numbers declined faster than total staffing hours. However, absolute staffing levels fell 12% between 2020 and 2021, contributing to ongoing workforce challenges that persist below pre-pandemic levels as of March 2024.
Quality of Care and Facility Deficiencies
Deficiency Statistics
Nursing facilities average 9.5 deficiencies per survey cycle, with 27% receiving serious deficiencies indicating actual harm or jeopardy to residents. While nearly all facilities receive at least one deficiency citation, the distinction between minor and serious violations carries significant implications for resident safety and care quality.
Between 2015 and 2025, average deficiency counts increased 40%, rising from 6.8 to 9.5 per facility. This growth remained generally steady except for two stable periods: 2020-2022 and 2024-2025, though the latter years reported the highest deficiency counts during the decade. The share of facilities with serious deficiencies increased from 17% to 27% during this timeframe, with a slight decrease between 2024 and 2025.
Relationship Between Staffing and Quality
A 2023 Abt Associates report on nursing home staffing established a clear correlation between adequate staffing and regulatory compliance. Better-staffed facilities typically receive fewer deficiency citations, suggesting the increase in violations may be directly linked to declining staffing levels over the past decade. This relationship underscores the importance of maintaining adequate workforce levels to ensure resident safety and quality care delivery.
Payment Sources and Facility Ownership
Primary Payers for Nursing Facility Care
Medicaid serves as the primary payer for 63% of nursing facility residents, Medicare covers 14%, and other sources (including out-of-pocket payments) account for the remaining 23%. These proportions have remained relatively stable over time. While Medicare covers up to 100 days of skilled nursing facility care following qualifying hospital stays, it does not typically cover long-term care services.
KFF polling reveals a significant knowledge gap: four in ten adults incorrectly believe Medicare primarily covers nursing facility care for low-income individuals, when in fact Medicaid fulfills this role.
Facility Ownership Types
For-profit entities own 73% of nursing facilities, nonprofit organizations control 20%, and government entities operate the remaining 7%. Although ownership distribution has remained stable, for-profit facilities faced increased scrutiny during the previous administration. Private equity firms have increasingly purchased nursing facilities, sometimes implementing operational changes that prioritize profits over care quality. The GAO estimates approximately 5% of nursing facilities had private equity ownership in 2022.
Regulatory Changes and Transparency Requirements
The Biden Administration’s November 2023 final rule (distinct from the April 2024 staffing rule) mandates comprehensive ownership and management disclosure for Medicare and Medicaid-enrolled nursing facilities. Facilities must report anyone exercising financial control, property lessors or subleasors owning 5% or more of property value, and entities providing administrative, clinical, accounting, financial, or cash management services.
Facilities must also disclose private equity company or real estate investment trust (REIT) ownership. While facilities began self-reporting in early 2024 and data is now publicly available, current information may be incomplete—fewer than 100 facilities report private equity ownership and just over 300 report REIT ownership, though independent research suggests higher actual numbers.
Conclusion
The 2025 reconciliation law’s potential impact on nursing facilities extends far beyond immediate policy changes. With Medicaid serving as the primary payer for most residents, any program modifications could ripple through the entire long-term care ecosystem. Combined with ongoing staffing challenges, increasing deficiency rates, and evolving ownership structures, the nursing facility sector faces a complex array of challenges that will require careful monitoring and thoughtful policy solutions to ensure quality care for America’s most vulnerable populations.
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