Understanding Recent Medicaid Changes and Their Impact on Elder Care
On July 4, 2025, new federal legislation introduced a series of reforms to the Medicaid program. These recent Medicaid cutbacks and changes to payment structure underscore the importance of flexible, tech-driven care models. Zemplee gives elder care providers the tools to adapt effectively, by combining safety, efficiency, and compliance into a single platform.
As elder care providers work to maintain high standards of care under new financial constraints, healthcare technology companies like Zemplee can provide solutions to staffing shortages, offering a glimpse into the future of senior healthcare!
The Changes Explained
Among the most impactful provisions are changes to State Directed Payments (SDPs), which many states, in the past, have used to increase reimbursements to long-term care providers. The Medicaid cutbacks to SDPs are projected to cause reduced access to care for many low-income seniors as well as impacting the senior care industry’s staffing levels as well.
SDPs are a financing tool used by state Medicaid agencies to direct Managed Care Organizations (MCOs) to pay healthcare providers more than the base Medicaid rate. This is often done to help struggling providers stay afloat, improve quality, or address underpayment. This additional funding makes Medicaid participation more viable for providers like nursing homes, hospitals, and behavioral health clinics.
Before July of 2025, states had flexibility to benchmark SDPs against Medicare rates, provider costs, or average commercial rates. Many SDPs were not performance based, and instead operated on flat-rate payments.
With SDPs now capped at 100% of Medicaid rates, many nursing homes and assisted living facilities are going to experience much tighter budgets, and many will struggle to even survive these changes. With the combination of less overall funding available and more federal oversight for funds paid out, the recent policy changes are already prompting reevaluation of staffing models.
These effects are being felt most strongly in states with high Medicaid reliance. In past years, Kentucky has used SDPs to double Medicaid nursing home rates in rural areas, while New Mexico benchmarked state payments to commercial rates at around 200% of Medicaid rates. Georgia, Nevada, and Iowa relied on SDPs for up to 35% of total Medicaid payments to key providers. North Carolina, Nebraska, Louisiana, Mississippi, and Oklahoma are among other states who will face disruptions in their traditional use of State Directed Payments.
Technology in Response to Medicaid Cutbacks
In times of crisis, new products in the senior care space can help offset the impacts of the upcoming Medicaid changes. Zemplee is an all-in-one passive remote monitoring platform designed to improve nursing home/senior living staff efficiency, enhance patient safety, and support regulatory compliance in elder care settings. Zemplee enables nurses and caregivers to monitor large groups of residents remotely, right from their nurse station or from a mobile phone. By implementing sensors, AI-behavior pattern mapping, and data analytics, Zemplee provides exceptional customized care. Our products reduce the need for frequent in-person checks while increasing the efficacy of on-the-ground staff like caregivers and RNs.
With labor and benefits typically accounting for 60-70% of a care facility's operating budget, Zemplee’s healthcare technology can potentially deliver 10-20% savings in labor costs. This could provide meaningful relief in a challenging budget environment.
Given a hypothetical $1 million dollar per year budget for a care facility, labor and benefits could cost an estimated $650,000. With technology like Zemplee’s help, this number could potentially be reduced by somewhere between $65,000 (10%) and $130,000 (20%) per year.
Where Zemplee Can Make the Greatest Impact
Facilities in states that previously relied on higher-than-Medicare SDP benchmarks are facing new budget realities. These include:
Georgia, Iowa, Kentucky, Minnesota, Nevada, Oklahoma, Oregon, South Carolina, Tennessee, Washington, and New Mexico.
Rural regions and states with limited resources or high Medicaid usage may also experience increased operational challenges. These include:
Kentucky, Louisiana, Mississippi, West Virginia, Kansas, North Carolina, and Nebraska.
Zemplee’s remote monitoring solution can help stabilize staffing workflows, support audit readiness, and ensure continued resident safety across these varied settings.
A Practical Tool for a Transitional Moment
Zemplee is more than a cost-saving solution. It’s a platform for resilience. By incorporating passive monitoring into daily operations, care teams can deliver consistent, efficient, and responsive care while streamlining documentation and reducing administrative load. As providers adapt to evolving policies, tools like Zemplee present a sustainable way forward.
The changing dynamics between federal funding and quality elder care will continue to draw focus toward new opportunities and solutions. Zemplee was built to help care facilities navigate these complex and evolving scenarios while continuing to provide high quality, efficient, and compassionate health care for aging adults. For organizations navigating staffing shortages and budget adjustments, we’re here to help. Zemplee offers a proven reliable solution.
Learn more or schedule a demo at https://www.zemplee.com!
Sources:
U.S. Department of Health and Human Services, Office of Inspector General. CMS Skilled Nursing Facility Cost Reports. https://oig.hhs.gov/oei/reports/oei-02-19-00491.pdf
