This is the second in a three-part series on value-based long-term care. You can read the first part here.
COVID-19 laid bare long-standing concerns over the quality of care provided in nursing homes. One lever policymakers can use to improve this quality is value-based payment (VBP).
In VBP arrangements, health care purchasers (that is, Medicare, Medicaid, and private insurers) hold providers (such as nursing homes and home and community-based agencies that deliver long-term care) accountable for both quality and cost of care. These VBP arrangements can range from simple fee-for-service-based payments for infrastructure or reporting to complex population-based payment models. VBP for nursing homes often takes the form of pay-for-performance, and payers measure performance gains using pre-established measures of quality (for example, reducing avoidable inpatient admissions or readmissions).
VBP for nursing homes and other long-term care providers isn’t a new concept; federal and state agencies have used a variety of VBP models over the past 25 years. Medicare, for example, makes incentive payments to skilled nursing facilities based on measured hospital readmissions. As documented in a 2017 Mathematica report, at least six state Medicaid programs have modified payments to nursing homes based on performance on pre-established measures in several categories.
Improving the quality of long-term care also isn’t a partisan issue. The Biden-Harris administration has signaled the need to improve the availability and quality of home and community-based services (HCBS) often used as an alternative to nursing homes, and the Centers for Medicare & Medicaid Services (CMS) under the prior administration explicitly called for the use of VBP in nursing facilities.
So why now—amid myriad competing priorities in health care—does VBP in long-term care deserve our attention? The answer is that recovering from the devastation that COVID-19 wrought on people who continue to reside in nursing homes requires that we do better.
The first step to improvement is for policymakers to identify goals and measures that can be used to gauge progress. Studies of COVID-19 outbreaks in nursing homes—including a Mathematica-produced report for the state of Connecticut—identified factors that contribute to poor quality and, sadly, deadly outcomes. Here are three areas where VBP solutions can help:
- Improve staffing by increasing payments to nursing homes that provide more direct care and retain key staff. Higher staffing ratings, as measured through CMS, were strongly associated with fewer cases and deaths per licensed bed. Policymakers might adjust payments to nursing homes based on average nursing hours per resident day and staff turnover rate, or employee retention rate. They could also adjust payments based on outcomes that depend on attention from direct care staff, such as the prevalence of bed sores or falls, and improved mobility for rehabilitation patients.
- Pay bonuses to nursing homes that remain without any infection control deficiencies for a year or more. Nursing homes have been cited for lapses in infection control more than for any other type of health and safety requirement, yet sanctions have been rare. Federal law requires state agencies (usually state departments of health) to conduct on-site annual visits to nursing homes, and when deficiencies are found, can levy fines or other penalties. In addition, tracking health care facility-acquired infections through claims and standardized infection ratios could decrease the burden on state health departments and provide data in real time. By tracking outcomes and applying fines more diligently, CMS and states could reward nursing homes whose infection control efforts are effective.
- Adopt policies that help “rebalance” care so that more people receive services in their home or community rather than in an institution. Staff and visitor restrictions put in place to prevent the spread of COVID were a key cause in the decline of the functional, nutritional, and mental health status of nursing home patients, leading to many residents and their families no longer viewing nursing homes as the best option. States that use managed care can encourage rebalancing by paying plans more to successfully transition people out of nursing homes; they can measure lengths of stay in, and transitions from, institutions, with two measures of managed long-term services and supports Mathematica helped CMS develop.
Although many states are interested in using financial incentives to improve the quality of Medicaid-funded long-term care, some do not have the resources to make needed up-front investments. In the next blog, we examine recent funding opportunities—including the American Rescue Plan signed into law earlier this month—that can help states and HBCS providers invest in the infrastructure needed to improve quality and provide more long-term care options outside of nursing homes.
