State Use of Value-Based Payment in Nursing Facilities

Mary Madison, RN, RAC-CT, CDP
Clinical Consultant – Briggs Healthcare

HHS and ASPE posted this 7-page Issue Brief on August 18, 2022.

“This was a study to explore states’ use of VBP as part of their Medicaid nursing facility payment, including the goals of such programs, the measures used and other key elements. Twenty states and DC use VBP as part of their Medicaid nursing facility payment. States vary in terms of the types and number of measures used in the programs, how programs are funded, and how facilities are paid. But the goals of these programs–to improve quality and efficiency–are fairly consistent across states.

Some states use value-based payment (VBP) or pay-for-performance (P4P) programs as part of their nursing facility Medicaid payment systems. Yet, little is known about these programs. The purpose of this study was to determine which states use these programs, their goals, the measures used, and other elements of these programs. We found that 20 states and the District of Columbia (DC) use VBP for nursing facilities with the goals of improving quality and increasing efficiency. However, due to lack of evaluation, it is not known if these programs are achieving their goals. Additional research is needed to determine which state programs are most successful. The results of such research would help in the development of future VBP programs.

Payers across the health care spectrum have begun transitioning from paying for quantity toward paying for quality. These VBP programs vary in scope and focus, but generally share the goals of improving cost-savings and linking payments to value rather than volume. At the federal level, the U.S. Department of Health and Human Services (HHS) has increased efforts to promote VBP by setting targets for their use by all payers. In 2015, HHS set the goal of tying 30% of traditional Medicare payments to quality or value by 2016, and 50% by the end of 2018. Progress towards these goals varies widely by health care sector and payment source (i.e., commercial or public).

Although Medicare payments for hospital and skilled nursing facility care are tied to performance via mandatory national VBP programs, nothing on a national scale has been implemented to date for Medicaid-covered nursing facility care. Many states have implemented P4P methodologies, a type of VBP program that provides payment incentives to nursing facilities for achieving certain goals (e.g., meeting quality measure benchmarks). States using VBP and P4P programs vary widely in terms of how performance or quality are measured–some states use existing measures whereas others have developed their own. They also vary as to whether participation is mandatory or voluntary.

Little is known about how VBP programs for Medicaid-covered nursing facility care are designed, the specific goals states are trying to achieve with these, or whether they are successful in achieving their stated goals. This exploratory study sought to answer the research questions shown below.”