The Reimbursement-Outcomes Loop

By Janine Savage, Division President, Net Health Value-Based Care Solutions

I operated skilled nursing facilities (SNFs) for sixteen years, and I can tell you that every administrator, Director of Nursing (DON), and Clinical Reimbursement Director I’ve ever worked with has internalized a version of this truth, even if they’ve never said it out loud: what a facility gets paid shapes the care it can deliver, and the care it delivers shapes what it gets paid. It’s circular, and it always has been. And that applies to every reimbursement model we’ve had in SNFs since the 1990s, not just the current Patient-Driven Payment Model (PDPM).

What’s changed under PDPM and the accelerating shift to value-based arrangements is that the circle now turns faster, the stakes on each rotation are higher, and the data feeding it has become the single point where the whole thing either holds together or breaks down.

I’ve called this “a dirty little secret in healthcare,” and I stand by that. It’s usually left unspoken, as most secrets are. But in my experience, calling it out turns it from a source of quiet frustration into a lever you can actually pull.

Four Links, One Loop

Here’s the way I think about it. I recommend you read these, not as a list of things that happen, but as a circuit, where the output of each stage becomes the input of the next.

Data determines reimbursement

Under PDPM, this is the hinge that everything else swings on. It is not the therapy minutes delivered, not the nursing hours logged, not the services rendered that set the rate. It’s the data captured about the resident: diagnosis coding, functional scores, the completeness and defensibility of the MDS. Data validation is absolutely crucial. It’s what secures the reimbursement you’re genuinely entitled to for the acuity you’re already managing. Miss a comorbidity, mistime an assessment, leave a resident condition uncaptured, and you haven’t just created compliance exposure; you’ve underfunded the care you’re about to provide.

Reimbursement drives care

This is the link people flinch at, so let me be direct about it. Any of us who’ve operated a building for any length of time know that reimbursement structures determine the care that gets provided. Payment is an active constraint that shapes staffing ratios, program investment, admission decisions, and which populations you can realistically say yes to, not just a passive settlement that happens after care. Pretending otherwise doesn’t make us more virtuous; it just makes the mechanism harder to manage.

Care drives reimbursement, and the outcomes that prove value

The loop curves back here. In value-based care arrangements, the care delivered and documented directly informs the reimbursement received. And it produces the outcomes, including readmission rates, length of stay, discharge function scores, and return-to-community rates, that you carry into every referral conversation and every payer negotiation.

Outcomes increasingly determine reimbursement

This is where the circuit closes and begins again. If you’re going at risk with payer contracts, or participating in quality incentive programs, your outcomes feed directly back into what you get paid. But even outside formal risk arrangements, outcomes govern whether the referrals come at all. Your outcomes matter for getting the referrals so that you can deliver the care in the first place. No referrals, no residents, no care to reimburse. The loop starves at the top if it fails at the bottom.

The point I most want clinical, reimbursement, and MDS teams to take away is this: it’s a single connected flow, but multiple individuals and teams have input into the process. The Nurse Manager, MDS coordinator, therapy, business office, and administration each touch a different arc of the same circle. When we operate as separate departments optimizing separate metrics, the loop still runs. It just runs against us, because no one owns the connections between the links.

What the Loop Looks Like on a P&L

During a recent webinar, I walked through two SNFs of similar size in the same market to show what happens when the loop runs in each direction.

Facility A ran a 22% readmission rate, a 29-day average length of stay, a bottom-quartile discharge function score, and a 2-star rating. The downstream financial consequences weren’t a separate problem from those numbers. They were those numbers, just one rotation later, meaning exclusion from preferred networks, heightened scrutiny from hospitals and Medicare Advantage (MA) plans, referrals diverted to competitors, and almost no leverage at the contract table. That facility fell back on standard fee-for-service, which further squeezed the margin available to fund better care and tightened the loop into a spiral.

Facility B ran 12% readmissions, an 18-day stay, top-quartile function scores, and a 5-star rating. This is the same loop in the opposite direction, resulting in inclusion in hospital, ACO, and payer preferred networks, favored status with MA plans, census consistently above 95%, and negotiated rates 10 to 15% above market. We work with one organization that used its outcomes to negotiate a PDPM-plus-6% rate with certain Medicare Advantage plans, and I want to be clear that a number like that exists only because the facility could prove, with data, what its care produced.

The uncomfortable takeaway for reimbursement is that Facility A’s financial problems didn’t start in the business office. They started upstream, in data that didn’t fully capture acuity and care that didn’t move the outcome measures, and by the time they showed up as referral loss and weak contracts, the loop had already lapped the building.

The Data Is the Control Point

If reimbursement drives care and outcomes drive reimbursement, then the leverage point, the place where a reimbursement director or MDS coordinator can actually stand and change the direction of the loop, is the data. Not more of it. Better-validated, better-connected, better-translated data.

I say this often: the goal is not more data. The goal is delivering the right insight to the right person at the right time so they can take the right action. For MDS teams, I think that reframes the work entirely. An assessment is the moment where clinical reality gets translated into both a reimbursement rate and a data point that will eventually be reported to a payer as proof of value. Get the translation right, and both the payment and the outcome story hold up. Get it wrong, and both degrade, quietly, and in the same direction.

This is also where I believe embedded, specialty-informed intelligence earns its keep. By surfacing which residents, which assessments, and which documentation gaps carry the most risk right now, while there’s still time to act on them rather than reconcile them after the window closes. It’s not about replacing your judgment. I’ll be emphatic here, because I feel strongly about it: the goal is never fewer humans. What we really want is better-supported humans who can then deliver better outcomes. Technology should reduce the noise so that experienced clinical and reimbursement staff can spend their effort where it actually changes outcomes.

Jennifer Glosser, a Clinical Reimbursement Specialist at Legacy Health Services, described the practice version of this during our session: her team uses data-driven analytics and interdisciplinary meetings to “best document the patient’s story,” which in turn drives both accurate reimbursement and stronger outcomes. That phrase has stayed with me. The patient’s story, the reimbursement, and the outcome aren’t three separate deliverables produced by three separate teams. They’re one story, and the loop is just that story told in sequence, over and over.

Managing the Loop on Purpose

A well-run reimbursement and clinical operation should be able to answer four questions at any moment, not at quarter-end, when the loop has already turned.

1. Are we getting the fundamentals right?
2. Which residents need attention right now?
3. How are we performing?
4. Where should we focus next?

Answering those in real time is the difference between managing the loop and being managed by it. For reimbursement directors and MDS coordinators, here’s my reframe: the accuracy of today’s assessment is about more than just today’s claim. It’s an input into next quarter’s referral relationships, your facility’s negotiating position, and the rate you can command. The facilities pulling ahead are the ones treating data, reimbursement, care, and outcomes as one connected system with a single direction of travel, and deciding, deliberately, to turn it the right way.

That’s what I mean when I say the future of skilled nursing won’t be defined by our constraints, but by our contribution. The loop runs either way. The only question is whether you’re steering it.