Nursing Homes P4P

State Adoption of Nursing Home Pay-for-Performance

On the importance of Nursing homes:

More than 1.5 million people reside in U.S. nursing homes at a cost of more than $120 billion per year (Kaiser Family Foundation, 2007). Medicaid is the majority payer of nursing home services, giving indigent people access to nursing home care by directly reimbursing facilities for the care of Medicaid-eligible residents…State Medicaid programs are responsible for approximately half of all nursing home spending, and Medicaid residents constitute 65% of all bed-days.

As nursing home expenditures have taken up a larger and larger share of expenditures, a number of State Medicaid Agencies have instituted pay-for-performance requirements (P4P).  A paper by Werner, Konetzka and Liang (2007) evaluate some of these P4P efforts.  A total of 15 states had planned or existing nursing home P4P programs when this article was published.

Here is a map of all the states who have initiated P4P programs for Nursing Homes.

Financial rewards in nursing home P4P are based on a variety of different quality measures , including traditional measures such as staffing, regulatory deficiencies, resident satisfaction, and clinical quality and less traditional measures such as occupancy, efficiency, Medicaid use, and culture change. Most use at least 4 different categories of measures, and none uses less than 3.

The following table summarizes the types of quality measures used in state nursing home P4P programs.  This table lists specific clinical measures used for P4P.

High performing nursing homes generally receive a financial reward for their status.  Most states use a per-diem add on as a reward for high performance.  One state, Vermont, gave flat-rate bonuses to up to 5 facilities that met predetermined quality thresholds.  This table summarizes the level of payment in selected state nursing home P4P programs.


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