Colorado Cut Nursing Home Medicaid Rates 2%. Why Did Some Aurora Facilities Get Raises?

Two Aurora nursing homes show up on the same Health First Colorado rate schedule. Hampden Hills Post Acute, on East Hampden, went from $295.70 a day in fiscal year 2025-26 to $278.03 for July 1, 2026 through June 30, 2027. University Heights Care Center, on Dillon Way, went from $270.06 to $286.53. That is a 6% cut for one and a 6% increase for the other, in the same fiscal year as a legislated 2.0% across-the-board Medicaid provider rate reduction.

Both moves fit the rules. Colorado's 2% applies to the statewide pool. Each building's rate comes from its own costs. For anyone pricing an Aurora skilled nursing facility, the rate a buyer collects on day one depends on the seller's cost report, occupancy and payer history. The headline percentage tells you very little about it.

Eight Aurora buildings, one cut, eight outcomes

The General Assembly enacted the 2.0% reduction through HB26-1410, effective for dates of service beginning July 1, 2026. The June 2026 HCPF provider bulletin lists the exempt services, and nursing facilities are not among them. The Joint Budget Committee chose 2% on March 31, 2026, in place of the 0.75% reduction HCPF had originally proposed. On HCPF's Provider Rates and Fee Schedule page, the statewide average skilled nursing rate is $283.00 for FY2026-27, down from $288.78 in FY2025-26. That is 2.0% to the cent.

Here is how the Aurora facilities on both schedules moved:

Six of the eight rates went up. Both large declines came at facilities whose FY2025-26 rates were above that year's $288.78 statewide average. To see the dollar scale, take a hypothetical facility with 100 Medicaid residents a day. Hampden Hills' $17.67 daily change works out to about $645,000 a year at that census. University Heights' $16.47 change is about $601,000 in the other direction. Actual exposure depends on each facility's Medicaid census, which the rate schedule does not show.

The cut sets the average, and each facility's cost report sets its rate

The mechanism is in Colorado's Medicaid reimbursement rule, 10 CCR 2505-10 §8.443.1.B:

The MMIS per diem reimbursement rate shall equal the July 1 Core Component per diem rate multiplied by a percent factor. The percent factor shall be a percentage such that the statewide average MMIS per diem reimbursement rate net of patient payment equals the previous year statewide average MMIS per diem reimbursement rate net of patient payment increased by the statutory limit...

Every Class I facility gets the same multiplier. What differs is the Core Component it multiplies, which is the sum of three per diems: health care, administrative and general, and a fair rental allowance for capital. Under C.R.S. 25.5-6-202, health care costs are reimbursed from each facility's annual cost report, up to 125% of the statewide median. Administrative and general is paid as a price tied to the median: 105% of median for facilities with 61 or more licensed beds and 110% for smaller ones.

For the years before FY2026-27, the statute set minimum increases to the aggregate statewide average: at least 10% in FY2023-24, 3% in FY2024-25 and 1.5% in FY2025-26. Beginning in FY2026-27, it says only that the department "shall establish the aggregate statewide average of the per diem rate." That leaves the target in the budget process. The JBC set it 2% lower, and the percent factor spread that target across every facility's rebased costs.

So the system works as a budget-neutral allocation. A facility whose reported costs rose faster than the statewide pool moves up the distribution, even in a year when the pool shrinks. A facility whose costs rose more slowly, or whose cost report captured a weaker year, gives up share. The schedule shows the result for each building but not the breakdown between rebasing, case mix and capital. Diligence fills that gap.

The capital component already penalizes low occupancy

Occupancy sits inside the Core Component, in the fair rental allowance. Under §8.443.9, the annual fair rental payment is divided by whichever is greater: audited patient days, or 90% of licensed bed capacity. A building below 90% occupancy has its capital reimbursement spread over days it never filled. The allowance itself applies a rental rate equal to the average 10-year-and-longer Treasury rate plus two points, with a floor of 8.25% and a ceiling of 10.75%.

CMS Provider Information data, processed October 1, 2026 and released October 28, 2026, gives each Aurora facility's average residents per day and certified beds. Those figures are not the same as audited patient days or licensed beds, but they roughly show which Medicaid-certified buildings sit near the 90% line:

• Highland Park Rehabilitation & Care Center: 105.8 average residents on 110 beds, about 96%
• Lowry Hills Care and Rehabilitation: 99.6 on 108, about 92%
• Hampden Hills Post Acute: 190.6 on 218, about 87%
• University Heights Care Center: 90.1 on 105, about 86%
• Garden Terrace Alzheimer's Center of Excellence: 97.7 on 120, about 81%
• Life Care Center of Aurora: 123.3 on 166, about 74%

Four of these six operated below the 90% divisor in the most recent CMS release. For a buyer with a census-growth plan, that is an upside the rate formula partly allows for, since filled beds stop diluting the capital per diem once occupancy clears 90%. The upside shows up in a later cost report, so the buyer's first rate year still carries the seller's occupancy.

The utilization add-on is priced on last year's payer mix

On top of the per diem, a Class I facility can receive supplemental payments funded by the nursing facility provider fee. The rule lists them in statutory priority order. The one most tied to a building's history is the High Medicaid Utilization payment under §8.443.23. It pays $10 per Medicaid day to facilities with 85% or greater Medicaid utilization. It pays $5 per Medicaid day to facilities at 75% to 84.99%, or to a facility that is the only Medicaid nursing home in its county.

Utilization is measured over the previous calendar year: Medicaid patient days from the state's claims system divided by total days reported by the facility. Days with no payer source and days paid by the Veterans Health Administration are excluded. The payment is calculated annually, paid monthly to non-state facilities, and made only if federal matching room is available under the Upper Payment Limit. In a hypothetical building averaging 60 Medicaid residents a day, the tiers are worth about $219,000 or $109,500 a year. The tier is set by a calendar year that closed before the buyer took over.

What HCPF put on the table for November 17

These two backward-looking levers are what HCPF has now proposed changing. Its LTSS Sustainability series set a November 17, 2026 feedback session for nursing facilities and intermediate care facilities. The proposals cover "how facility occupancy is considered in reimbursement" and "Nursing Facility High Medicaid Utilizer Add-On payments," and HCPF describes them as intended "to help manage Medicaid spending while avoiding broader provider rate reductions." HCPF frames them as proposals, with decisions to follow the feedback. The Medicaid Sustainability page is where session materials and written-feedback opportunities are posted.

The state has already cut one nursing facility payment ahead of schedule. HCPF ended the minimum wage supplemental payment, which statute had set to expire in 2027, and those payments did not go out in Spring 2026. The same fiscal pressure that set the 2% pool target is now looking at the occupancy treatment and the utilization add-on. A low-occupancy, high-Medicaid Aurora building is exposed on both at once.

Building the first-year rate from the seller's records

An Aurora buyer can rebuild a defensible first-year Medicaid revenue line from documents the seller already has. A practical order:

1. Start from the FY2026-27 schedule rate, not last year's rate cut by 2%. In Aurora, that shortcut would have overstated Hampden Hills' rate and understated University Heights' by about $16 to $18 a day.
2. Request the cost reports filed by December 31 of each recent year. The health care median is redetermined from reports filed by December 31 of the preceding year, so the seller's most recent filing feeds the next rebasing.
3. Compare audited patient days with 90% of licensed beds. The gap shows how much the capital per diem is being diluted today, and how much census growth would recover.
4. Recalculate calendar-year Medicaid utilization under the rule's exclusions. A facility near the 75% or 85% line can change tiers with a modest shift in payer mix.
5. Separate recurring from non-recurring supplemental revenue. A trailing period that includes the minimum wage supplemental payment includes revenue that has ended.
6. Track the outcome of the November 17 proposals before you fix price. If HCPF changes the occupancy treatment or the add-on, the change lands on buildings with exactly the profile items 3 and 4 identify.

FAQ

Did every Colorado nursing home lose 2% on July 1, 2026? No. The statewide average fell 2.0%, from $288.78 to $283.00. Facility rates are each building's Core Component times a common percent factor, so individual Aurora rates ranged from a 6.0% decrease to a 6.1% increase.

Does the posted schedule rate include the High Medicaid Utilization payment? No. Supplemental payments are paid in addition to the per diem reimbursed through claims, and they are funded by the provider fee.

Which calendar year sets the utilization tier? The calendar year before the state fiscal year in which the payment is made.

This post is general information about Colorado's reimbursement rules and is not legal, tax or financial advice. Owners and buyers should confirm how these rules apply to a specific facility with their own counsel, accountants and reimbursement advisors.

When the Medicaid rate on an Aurora nursing home depends on the seller's cost report, occupancy history and payer mix, the asking price should be built from the same records. Senior Living Investment Brokerage prepares valuations from the facility's own rate history and runs a confidential sale process that keeps operations steady while buyers do their diligence. Get a Broker's Opinion of Value.