Payment and quality experts on Wednesday described extensive changes proposed for skilled nursing’s value-based purchasing program as “long overdue” and a way to “reset the playing field.”

Since the 2016 launch of the incentive program, in which top-performing providers are eligible for additional payments, hospital readmissions have been the only measure by which nursing homes could prove quality.

But in its proposed FY 2024 SNF Prospective Payment System released Tuesday, the Centers for Medicare & Medicaid Services announced it plans to replace the existing hospital measure, adopt four new measures and make several policy changes.

“The prior approach of basing the SNF VBP on readmissions alone was a mistake,” said David Grabowski, PhD, a Harvard Medical School health policy expert and a member of the Medicare Payment Advisory Commission. “A single readmissions measure is not going to encompass SNF quality. Thus, this is an important step towards broadening the SNF VBP measure set. This change is long overdue.”

In addition to updating the 30-day all-cause readmission measure, proposed new measures would account for operators’ performance on metrics related to nurse staffing turnover, discharge function, hospitalizations of long-stay residents and falls. Performance data would be phased in depending on the measure starting as early as FY2024, with incentives for some measures available as soon as FY2026.  

“CMS expects that these new measures will result in more incentive payments to providers as the current data is not specific enough to capture meaningful impact,” said Melissa Brown, OTR/L, chief operating officer at Gravity Healthcare Consulting. “In other words, almost everyone is performing the same and at an acceptable level, so it is time to reset the playing field, especially for hospital readmissions. This should open the door for more incentives to be paid out, but could also move some providers into penalties if they aren’t careful and make the right adjustments.”

New accountability for hospitalizations

In the full rule set to be published in the Federal Register, CMS outlines its years of attempts to refine the hospitalization measure. During the last two years of the pandemic, the measure has been on hold, with all providers docked a 2% SNF VBP deduction, and those reporting required data getting 1.2% back.

Many providers will likely embrace the new version of the measure, which would change for measuring purposes in FY 2025. It will gauge how often patients are sent to the hospital within their skilled nursing stay — not only in the time after they leave the SNF.

“There are two major changes to the measure. The first is to hold SNFs accountable for the time that residents are in the facility. This is different than other measures that have looked at readmissions in the 30-day period following discharge from the SNF,” Grabowski told McKnight’s. “Second, some hospitalizations are thought to be preventable. Others are not. This measure attempts to target only those hospitalizations that are categorized as preventable. The measure will not penalize SNFs for hospitalizations due to conditions that were not considered to be preventable.”

Kevin Griffith is an assistant professor in the Department of Health Policy at Vanderbilt University Medical Center who has studied hospital readmissions extensively. He said the change would be an improvement over the status quo, “although not without challenges.”

Taking Graboswki’s concern a step further, he notes that under the current measure, facilities would be penalized “if you were discharged and then hit by a bus the next day.”

“With this updated measure, that readmission would not count against the discharging SNF,” he said. “However, there’s ambiguity in what constitutes a ‘potentially preventable readmission.’ Existing research generally suggests approximately 1 in 4 hospital readmissions are potentially avoidable through improved quality of care and discharge procedures, although estimates from specific studies range from as low as 5% to as high as 80%.”

Noting that “within stay readmissions” from SNFs are less well studied, he predicts a lot of “noise” as the measure launches. He urged CMS to actively monitor and identify improvements in their classification system once it’s deployed.

Griffith also noted that the original measure has helped ensure nursing homes provide better discharge instructions and follow up, an impetus that could be lost without the VBP incentive.

The measure would affect payment in FY2028, but Brown suggests providers should begin to track and improve their performance using the updated formulation beginning now.

New measure to help staffing levels?

While delaying an announcement on its staffing rule, CMS touted its proposed new value-based staffing measure as a way to drive adequate staffing levels. 

Under the proposed rule, the Payroll-Based Journal staffing measure already reported to Care Compare would be reported for value-based purchasing purposes starting in fiscal 2024, with payment effects beginning in FY 2026.

This is where Grabowski sees the biggest challenge for providers to claim some piece of the pie.

“Our research has found incredibly high staff turnover in many US nursing homes,” he said. “Nursing homes will have to make a major investment in wages and working conditions to retain staff and lower turnover.”

He also was surprised by the inclusion of a discharge function measure, which will be added to the SNF quality reporting program. CMS said the measure assesses functional status by calculating the percentage of SNF residents who meet or exceed an expected discharge function score. The measure will be based on mobility and self-care items already collected on the MDS.

“In theory, this is a great quality measure,” Grabowski said. “In practice, however, this measure is reported by facilities and has been susceptible to upcoding. I hope CMS is planning to include auditing and oversight in the use of this measure.”

The final two proposed new measures would track the hospitalization rate per 100 long-stay residents and the percentage of long-stay residents experiencing one or more falls with major injury. Both measures would start in about 18 months, in fiscal 2025.

Added bonus for dual eligibles

Providers who care for a relatively high share of residents eligible for both Medicaid and Medicare stand to gain under an additional proposed change.

A Health Equity Adjustment would reward SNFs with up to two bonus points if they place in the top third of any VBP measure and serve at least 20% dual-eligibles.

“Dual eligible residents are more likely to have more clinical complexity, which would make it harder for those admissions to boost VPB measures,” Brown said. “Including this bonus helps to level the playing field somewhat so that those providers willing to take dual eligibles and manage them well, will see even higher VPB incentives.”

On a call with members Wednesday afternoon, LeadingAge director of nursing home quality and policy Jodi Eyigor noted that CMS planned to increase its overall payback for the VBP program so that it could fund the equity bonus without taking from other providers.

Now, Brown says, the question is whether two points will be sufficient to make up for the clinical complexity of most dual eligibles. 

Graboswki said the current program “has been found to punish SNFs that care for a high share of dual eligibles,” but he ventured that the addition of a bonus to the program could  incentivize high quality care for the duals. 

“One concern is that the program still only accounts for 2% of overall revenue,” he observed. “If this program helps to improve quality (both overall and for duals), I would hope this share would be increased.”