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Medicare Studying Plans To Pay Nursing Homes Based On Quality

Aug 14, 2012

The Affordable Care Act directs Medicare to create a national incentive pay program for nursing homes.   But that appears to be several years away, according to a recent report to Congress.

First, the government needs to analyze results from its three-year "Nursing Home Value-Based Purchasing Demonstration" project, which ended July 1.

Initial results from the project's first year are being analyzed and appear mixed, with facilities in three states showing varying levels of performance, according to researchers.

The demonstration project involved 182 nursing homes in Arizona, New York and Wisconsin and assembled data for nurse staffing (such as registered nurse hours per resident), potentially avoidable hospitalizations, clinical measures (such as residents with bed sores or physical restraints), and information about deficiencies from state survey inspections.  A full evaluation is expected by the fall of 2013 and further review by the Centers for Medicare & Medicaid Services on the issue could take another year or more.

Facilities could get financial rewards (extra payments for meeting standards or improving quality) only if nursing homes participating in the project in their state achieved savings, as a group, compared to a control group.  The savings accrued from lower hospitalization rates for patients and became the pool from which incentive payments were drawn.

In the pilot, incentives were awarded to facilities based on two criteria: whether a nursing home improved its performance and whether it appeared in the top 20 percent of homes, based on a composite score. Those in the top 10 percent got a higher payment.  Scores were based on data for all Medicare-eligible nursing home residents, even if another insurance provider was responsible for the bills.

David Grabowski, a professor of health policy at Harvard Medical School, is the lead investigator responsible for evaluating the demonstration project.  In an interview, he said that results for the first year were "mixed." While Wisconsin nursing homes achieving "fairly large savings" and thus could reward significant incentive payments, Arizona homes achieved "more modest savings" and New York homes failed to show any savings.

"The results are somewhat disconcerting," Grabowski said.  "There does appear to be some opportunity for cost savings, but we don't have a good sense yet as to whether this (demonstration project) will actually improve the quality of care."

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