What Does Nebraska's $87-Per-Day Memory Care Add-On Mean For My Facility's Value?

Nebraska directed $15 million of its first-year Rural Health Transformation Program allocation to an $87-per-day add-on payment for Medicaid Waiver residents carrying a documented Alzheimer's or dementia diagnosis. Because those residents are already living in the building and already receiving care, most of that revenue arrives without matching cost and falls to the bottom line. A buyer will pay for it only to the extent it can be documented and believed to recur.

What the add-on is and where the money comes from

The Rural Health Transformation Program is a federal program worth $10 billion a year for five years, allocated across all 50 states. Nebraska's first-year allocation is $218 million, directed across the full rural healthcare system rather than at seniors housing alone. Of that, roughly $16 million is tied to seniors housing: $15 million funds the per-day memory-care add-on, and $1 million in total funds is available for facility modernization grants.

The piece that matters to an assisted living operator is narrow and specific. It is an $87-per-day add-on payment for Medicaid Waiver residents with a documented Alzheimer's or dementia diagnosis, made retroactive to December 29, 2025. It is not a change to the base Waiver rate, and it is not a grant you apply for and spend. It is a per-resident, per-day payment layered on top of what the community already bills for residents who qualify.

The dollar figures above are the state's year-one budget. They do not commit the state to the same amount in later years, and the mechanics of how any state program is administered can change. Confirm current rates, eligibility rules and billing requirements with the state agency administering the Waiver before you build them into a budget or a sale package.

Which facilities and residents can qualify

The facility side

The add-on flows only through approved residents in facilities certified to accept Medicaid under the Aged and Disabled Waiver. Nebraska has 190 Medicaid-certified facilities statewide. If a community is private-pay only, this program does not reach it at all, which is one of the few situations where a Medicaid census turns into an advantage rather than a discount.

A common misconception is that a facility needs a memory-care endorsement or a dedicated secured unit to bill the add-on. As the program has been described, any Medicaid-certified assisted living community can be reimbursed for a resident with a qualifying diagnosis. Endorsement, licensure and documentation standards vary by state and change over time, so treat that as a question to verify in writing with the state rather than an assumption to underwrite.

The resident side

Qualification turns on a documented diagnosis in the resident's chart. The codes that qualify fall into two groups, Alzheimer's disease and other forms of dementia, and are listed here for reference only:

• G30.9, Alzheimer's disease, unspecified
• G30.0, Alzheimer's disease, early onset
• G30.1, Alzheimer's disease, late onset
• G30.8, other Alzheimer's disease
• F03.90, unspecified dementia without behavioral disturbance
• F03.91, unspecified dementia with behavioral disturbance
• F01, vascular dementia

Which code applies is determined by the resident's treating physician based on the resident's actual clinical condition. Reading a chart to see whether a diagnosis is already documented is an administrative exercise. Influencing which diagnosis gets made is not, and no reimbursement opportunity justifies it. Some operators have reported that 40 to 60 percent of their Medicaid residents may currently meet the criteria. That is what those operators observed in their own buildings, not a state average and not a forecast for yours.

Why the add-on lands mostly as margin

Most revenue increases in seniors housing arrive attached to cost. Higher acuity means more care hours. Higher occupancy means more staffing, more food, more turnover expense. This add-on is different in kind, because it covers existing residents already receiving care in the community. The care plan does not change on the day the payment starts. So the incremental revenue carries little or no incremental staffing or care cost, and it moves through to net operating income almost intact.

That is why the add-on can matter to value out of proportion to its size. Value in this asset class is driven by sustainable net operating income, and a dollar that arrives with no expense behind it moves NOI a dollar. The practical question for an owner is not the headline rate but how many of their residents have a qualifying diagnosis already documented, and whether the billing has actually been captured.

How a buyer underwrites add-on revenue in a sale

A buyer capitalizes income it believes will still be there after closing. Program-funded revenue gets tested harder than base rate revenue, and there is no single convention for how it is handled. Expect a sophisticated buyer or lender to work through several questions:

• How many residents are currently billed at the add-on rate, month by month, and how stable that count has been.
• Whether each of those residents has a physician-documented diagnosis in the chart that supports the billing.
• Whether any portion of trailing income is a retroactive catch-up payment rather than a recurring monthly amount.
• How long the funding stream is authorized to run, and what happens to the pro forma if it is not renewed at the same level.
• Whether the facility's Medicaid certification is current and transfers cleanly in the contemplated deal structure.

Retroactive catch-up dollars deserve particular care. A payment covering an earlier period shows up in trailing financials but does not repeat, and a buyer will normalize it out. Presenting it inside a run-rate NOI figure is the fastest way to lose credibility on the rest of your numbers. Separate the recurring monthly add-on revenue from the one-time catch-up in your own reporting before anyone else has to.

How much of the recurring add-on a buyer will capitalize, and at what capitalization rate, depends on the community's payer mix, occupancy, care level, market, physical condition and the buyer's own view of program durability. There is no standard haircut. What an owner can control is the quality of the documentation supporting the income, and that is usually what determines whether the revenue is credited in full, discounted, or set aside.

Whether the payment continues after the first year

Nebraska's share, and how it is divided internally, is re-estimated each year based on fund availability and the volume of funds actually utilized in the prior year. If a state does not deploy its full allocation, it risks a lower level of funds in subsequent years. Federal administrators have been clear that future allocations are not guaranteed, and that states which deploy funds efficiently, measure outcomes and show rural health improvement are expected to compete better for discretionary dollars. The metrics that matter to that case are things like preventing rural provider closures, keeping Medicaid beds available, stabilizing the workforce, reducing higher-cost nursing home utilization and cutting hospitalizations and transfers.

There is also a distribution question that could change who benefits. The funds were opened to Lincoln and Omaha on the reasoning that rural residents historically traveled to those cities for adequate memory care. Douglas and Lancaster counties hold 43 of the 190 certified facilities, about 23 percent, but 3,393 of the certified beds against 5,869 in the balance of the state, so roughly 37 percent of the beds. Metro facilities are materially larger, and their share of the reimbursement pool runs ahead of their facility count. An argument has been raised that the metro counties should not qualify in future years, which would leave fewer facilities drawing on the same finite pool. That is an argument under discussion, not a decision, and it cuts both ways depending on where a facility sits.

What an owner can do now, sale or no sale

The work that captures this revenue is the same work that supports a valuation later, which is a rare alignment. Start with a chart review to identify residents who already carry a qualifying documented diagnosis and are not being billed at the add-on rate. Then build a simple monthly record of qualifying census, so that a year from now you can show a trend rather than a snapshot.

Keep the reporting clean. Recurring add-on revenue, retroactive catch-up amounts and any modernization grant proceeds are three different things, and a buyer or appraiser will want them separated. Modernization grants in particular are capital, drawn from a small total pool, and spending them on deferred maintenance changes the physical condition a buyer inspects without changing recurring income.

Finally, treat the program's rules as something to confirm rather than something to remember. Reimbursement policy, certification requirements and documentation standards vary by state and change, and the people who should be answering those questions for your building are the state agency, your own clinical leadership and your counsel. What we can help with is the part after that: what the resulting income does, or does not do, to what a buyer would pay.

Where this fits in a valuation conversation

Two communities with identical buildings and identical occupancy can be worth meaningfully different amounts if one has a documented, billed, stable stream of add-on revenue and the other has the same residents with the same conditions and no documentation to support the billing. The clinical reality is the same. The provable income is not, and value follows the provable income.

That is the honest summary. The add-on does not change what a facility is. It changes what a facility can demonstrate it earns, and it introduces a durability question that a buyer will price one way or another. Owners who track it carefully are in a position to argue for full credit. Owners who cannot separate recurring from retroactive, or billing from diagnosis, usually get the conservative treatment by default.

A note on rural facilities specifically

147 of Nebraska's 190 certified facilities sit outside Douglas and Lancaster counties, and they are on average smaller. For a small rural building, a per-day add-on on a meaningful share of the Medaid census can be the difference between a thin operating margin and a workable one. That matters for value, and it matters for something owners of rural communities think about more than valuation, which is whether the building stays open at all. Preserving access in rural markets is the stated policy rationale behind the funding, and it is the case that has to keep being made for the money to continue.

This article is general information about a state reimbursement program and how income of this kind is typically viewed in a sale. It is not an appraisal, a broker opinion of value, or legal, tax, clinical, billing or transaction advice. Program rates, eligibility and documentation requirements vary and change, and any conclusion about a specific community's qualifying census or value requires current, property-specific review with the state agency and your own advisors.