
PATHWAYS FOR VBC SUCCESS
Navigating Value-Based Care Payment Programs
for SNFs
Exploring the essential programs for skilled nursing facility success in VBC
Getting to Know the World of VBC in Skilled Nursing Facilities
Shifting from fee-for-service, volume-based healthcare to a model focused on value and outcomes is exceptionally complex. But this value-based care (VBC) transition is already occurring throughout healthcare, including the skilled nursing care setting, fueled by initiatives that are fundamentally changing how care is delivered and reimbursed.
Changes in care delivery processes and organizational culture are required for providers to successfully navigate this major shift — and investments in technology for data exchange, reporting, and analytics are a must. The good news is that resources and support are available to guide skilled nursing facility (SNF) owners, operators, and their teams through this transition.
Here are three crucial areas we’ll review in this e-book:
- Understanding the current VBC landscape and its potential to transform healthcare
- Exploring specific programs that impact skilled nursing providers and the individuals they serve
- Implementing advanced data and analytics solutions to achieve optimal benefits from these programs
We’ll round out the overview of these issues by highlighting the real-world, proven best practices that SNFs can follow to benefit from VBC programs.
Effective VBC program outcomes help SNFs to:
- Increase reimbursement
- Improve quality and operational performance
- Negotiate more favorable payer contracts
- Gain the confidence and knowledge needed to take on more risk
- Use achievement highlights for effective marketing
Understanding the Principles and Goals of Value-Based Care
The prevailing definition of VBC is a healthcare delivery model in which healthcare providers are reimbursed based on the quality and efficiency of care they provide rather than the volume of services delivered. The primary goals of most VBC initiatives are to improve patient outcomes, enhance patient experience, and reduce healthcare costs.
The Centers for Medicare and Medicaid Services (CMS) has stated its commitment to a healthcare system focused on quality, not quantity, and more equitable outcomes for all patients across healthcare settings. As such, the 2021 CMS Innovation Center Strategy Refresh launched a bold vision for the next ten years of value-based care: a health system that achieves equitable outcomes through high-quality, affordable, person-centered care. To achieve this vision, CMS’ goal is for all Medicare beneficiaries and most Medicaid beneficiaries to be in accountable care models by 2030. And it introduced a new framework to accelerate transformation.
Through its oversight and authority, CMS intends to bring more consistency between Medicare and Medicaid value-based payment (VBP) programs with the overarching goal of expanding successful models that reduce program costs and improve quality and outcomes for Medicare and Medicaid beneficiaries. This includes streamlining and harmonizing existing models, as well as developing new ones.
While a change of this scope is understandably concerning, it’s important to remember the overall goals of VBC, which are:
- Achieving improvements in patient outcomes
- Enhancing quality and safety
- Cost efficiency
- Supporting better care coordination
- Facilitating a more patient-centered approach to care
- Championing prevention and population health improvement
- Encouraging data-driven decision-making
To date, the success of some VBC initiatives in achieving these types of goals has been promising. In driving the delivery system toward meaningful transformation with a focus on equity, CMS intends to pay for healthcare based on value to the patient as a result of delivering person-centered care. To advance health equity, providers must recognize that each patient has unique needs and preferences, and non-medical factors that influence their health outcomes. Leaning into individuals’ social determinants of health (SDOH) and addressing population-level outcomes to reduce health disparities will be important.
To achieve these outcomes, embracing data-driven decision-making and using data analytics is crucial. This shift in approach is necessary for all stakeholders — including providers, payers, and patients — to measure performance, identify areas for improvement, and support evidence-based decision-making.
Exploring Key VBC Programs for SNFs
CMS’ first program to address quality specifically in SNFs was the Nursing Home Quality Initiative (NHQI), which launched in 2002. With several quality measures targeting patient clinical outcomes, CMS’ goal was to promote transparency by publicly reporting quality of care outcomes through its Nursing Home Compare website.
In 2008, CMS expanded the NHQI by introducing the Five-Star Quality Rating System for nursing homes, assigning ratings to SNFs based on three domains of outcomes: health inspection, staffing, and quality measures. Since then, the quality measure reporting and Five-Star rating systems have been revised many times.
The Skilled Nursing Facility Value-Based Purchasing (SNF VBP) Program
The SNF VBP Program, established by the Protecting Access to Medicare Act (PAMA) of 2014, was CMS’ first SNF VBC initiative to tie incentive payments — and penalties — to quality outcomes. The program is funded through a 2% “withhold” of Medicare fee-for-service (FFS) Part A payments across all SNFs. CMS redistributes between 50% and 70% of this withhold to SNFs with the best quality performance as incentive payments. High-performing SNFs can earn back more than the 2% withheld, while the lowest-performing SNFs do not receive their withhold back.
For CMS Fiscal Year 2025 (beginning October 1, 2024), the focus of SNF VBP is on reducing hospital readmissions. SNFs are assessed on both improvement and achievement using a single all-cause readmission quality measure. Beginning in FY 2026, the program is expanding to assess performance on multiple quality measures, rather than a single measure.
For more information, see FY 25 Skilled Nursing Facility Prospective Payment System Proposed Rule (CMS 1802-P).
State Medicaid Value-Based Purchasing (VBP) Programs
State Medicaid VBP Programs are developed and implemented by individual state Medicaid agencies to align with their state’s quality strategy. Through these programs, Medicaid reimbursement shifts from fee-for-service (FFS) to value-based care models that use performance-based metrics. Each state tailors its Medicaid VBP programs to its unique Medicaid population needs and policy goals.
Most state VBP programs are a pay-for-performance, or P4P, model that uses financial incentives to motivate providers to achieve specific performance goals and outcomes. Providers are rewarded financially based on specific quality metrics and outcomes (some of which we’ll explore later). Providers receive supplemental payments — incentives — when they reach predetermined performance targets. These targets are set based on baselines (data collected during a baseline period to establish improvement thresholds) and benchmarks (absolute, fixed, or relative reference points to compare participating providers’ performance).
P4P programs typically incorporate several concepts, including the following:
- Quality metrics and targets—Quality measures that providers must meet or exceed to receive financial incentives.
- Measurement and evaluations—Performance is measured periodically and evaluated against benchmarks.
- Financial incentives—Meeting or exceeding targets results in eligibility for increased incentive payments or bonuses.
- Penalties or withholdings—Conversely, providers may face financial penalties if they fail to meet metric targets.
- Patient-centered care—Program requirements incentivize taking proactive steps to improve patient outcomes and quality and often evaluate patient experience and satisfaction.
- Care coordination—A comprehensive approach to managing patient care across different settings and providers, with key components including interdisciplinary care teams, individualized care plans, and effective care transition plans for patient transfers and discharge to other care settings.
- Continuous improvement—A focus on continuously looking for ways to improve care, aiming to motivate providers to make changes and implement best practices on an ongoing basis.
Accountable Care Organizations (ACOs)
Per CMS, ACOs are groups of healthcare clinicians, including doctors, nurse practitioners, hospitals, and other provider groups, who come together voluntarily to provide coordinated, high-quality care to their patients. The goal is to ensure that patients receive the right care at the right time, avoid unnecessary duplication of services, and prevent medical errors. ACOs share in the savings they achieve for the Medicare program if they meet quality and cost benchmarks. This model emphasizes coordinated care and shared financial incentives among all participating providers, including SNFs that may be part of an ACO network. ACOs typically contract with SNFs, leveraging the SNFs’ existing infrastructure and expertise while expecting them to coordinate and manage patient care effectively.
Under this model, the ACO is responsible for managing the health of a defined population and sharing in any cost savings it achieves. This typically extends to their contracted providers. For example, if the contracted SNF successfully reduces healthcare costs while meeting the ACO’s quality targets, it receives a portion of the savings.
Bundled Payment Programs
In CMS programs such as the Bundled Payments for Care Improvement (BPCI), participating SNFs are paid a single, comprehensive payment for all services provided during an episode of care. The payment model encourages SNFs to coordinate care efficiently to avoid unnecessary costs and complications.
With the model, successful management of care episodes can result in shared savings for the SNF if the total cost of care is below the predetermined threshold while maintaining or improving quality.
Medicare Advantage Special Needs Plans (SNPs)
SNF owners/operators may decide to become a payer by starting a Medicare Special Needs Plan:
- Dual Eligible Special Needs Plan (D-SNP) – for eligible individuals who are enrolled in both Medicare and Medicaid
- Chronic Condition Special Needs Plan (C-SNP) – for eligible individuals with specific chronic or disabling conditions, such as diabetes, HIV/AIDS, or dementia
- Institutional Special Needs Plan (I-SNP) – for eligible individuals who, for 90 days or longer, have had or are expected to need the level of services provided in a long-term care (LTC) skilled nursing facility (SNF), a LTC nursing facility (NF), a SNF/NF, an intermediate care facility for individuals with intellectual disabilities (ICF/IDD), or an inpatient psychiatric facility
In a SNP model, the plan assumes all financial risk for the cost and quality of care for a defined population and set of services. In return, they receive a fixed payment (e.g., capitation) per member per month (PMPM) and are responsible for managing all aspects of care. This is typically referred to as “full-risk capitation.” Plans (and participating providers) who can successfully manage costs while maintaining high-quality care can achieve significant financial rewards.
Strong data gathering and analysis are crucial for full-risk contracts. Risk assessment based on demographics, health conditions, and past healthcare usage is crucial for estimating expected healthcare costs. Full-risk contracts include performance metrics covering outcomes, patient experience, and preventive measures.
CMS Medicare SNF Quality Reporting Program (QRP)
The QRP program requires SNFs to submit data on various quality measures, including outcomes, processes of care, and utilization of healthcare services. Data collected is used to evaluate the performance of SNFs (as well as other post-acute care providers) and is made public. The program incentivizes SNFs to improve care quality by linking Medicare payments to performance on specific measures, such as hospital readmission rates and functional improvement. One of its goals is to foster transparency to enable consumers to make informed decisions about SNFs and to improve overall quality. We’ll discuss the importance of data gathering and reporting in Chapter 2.
Quality Measurement in SNF VBC Programs
We’ve talked a lot about measuring outcomes in VBC programs. Let’s explore some typical areas of quality measurement and performance outcomes in value-based care programs.
1. Functional Status
Mobility and Activities of Daily Living (ADLs): Patients’ ability to move around and perform daily activities. Loss of independence can result in complications and adverse events.
2. Clinical Outcome Measures, for example:
- Pressure Ulcers: Lower rates indicate better pressure ulcer prevention practices.
- Falls with Major Injury: The incidence of falls that result in significant injuries, such as fractures. Fewer falls indicate better systems are in place to prevent falls and fall-related injuries.
- Weight Loss: Losing too much weight in the absence of a prescribed weight loss plan causes risk for complications and can be an indicator of quality-of-care issues.
- Depressive Symptoms: Identification and proper treatment of depression can help prevent other health problems.
3. Clinical Process Measures
- Vaccinations: Assessing patients and appropriately administering vaccinations is essential to lower and prevent the risk of infections.
- Antipsychotic Medication Use: These have side effects and are associated with an increased risk of death when used in elderly patients with dementia. Providers must ensure these medications are used in the right ways.
- Catheter Use: Urinary catheters have risks and should only be used when medically necessary.
4. Patient and Family Experience and Satisfaction
Results from patient and family satisfaction surveys that measure patient and family experience and satisfaction with care provided.
5. Infection Control
Healthcare-Associated Infections: Rates of infections such as urinary tract infections, respiratory infections, and others acquired during the stay. Lower infection rates indicate better infection control practices.
6. Infection Control Programs and Infection Control Practitioner (ICP)
Following best practices can reduce the incidence of infections, control outbreaks, reduce morbidity and mortality, and help manage antibiotic resistance.
7. Utilization Outcomes
- Hospital Readmission: Potentially preventable rehospitalizations can indicate issues with assessment and care in the SNF.
- Successful Discharge to Home and Community: The percentage of residents discharged to their home or community-based setting without unplanned hospitalization post-SNF discharge indicates successful rehabilitation and care coordination.
- Emergency Department (ED) Use: High ED utilization can indicate issues with quality of care and coordination of healthcare services.
8. Staffing Metrics
- Staffing Levels and Ratios: The amount of caregiving staff directly impacts quality of care and resident safety. Evidence shows a correlation among nursing staffing levels, patient outcomes (morbidity and mortality), and patient/family satisfaction. Insufficient staffing levels can lead to preventable injuries and hospitalizations, while facilities with higher staffing ratios tend to have better quality and regulatory outcomes and are less likely to be cited for abuse.
- Turnover Rates: Turnover is an important indicator of the overall quality and stability of care provided. High turnover can lead to negative outcomes and impact patient satisfaction, while low turnover can contribute to a more positive environment for both patients and caregivers.
- Competency-Based Staffing: Because SNF patients are complex and often require specialized care, while staffing levels are important, it is the mix of staff with the appropriate skills, qualifications, and competencies that ultimately determines the quality of care provided.
9. Care Coordination and Transitions of Care
The effectiveness of care transitions from hospital to SNF and from SNF to home or another care setting, including timeliness and accuracy of communication and care planning, can impact future healthcare outcomes.
By monitoring and improving these outcomes, SNFs can enhance the quality of care they provide, improve patient satisfaction, and reduce healthcare costs, aligning with value-based care goals.
Wrapping up the VBC Essentials
In summary, there are many distinct models and programs for skilled nursing VBC programs that share common objectives, and they can complement each other. Some are mandatory, while others give SNFs the opportunity to voluntarily participate in alternative payment arrangements designed to improve care quality and efficiency. A robust framework for SNFs is emerging that can support enhanced patient outcomes, streamlined operations, and better financial sustainability for the healthcare system.
To succeed in value-based care, SNFs must collaborate with other healthcare providers, effectively assess their patients, develop comprehensive care plans, and continuously improve the healthcare services they deliver. This can be challenging, as SNFs provide specialized care for complex, high-need populations of patients. But delivering high-quality, patient-centered care while efficiently managing costs and resources is the key to succeeding in a world where value-based healthcare delivery and payment is the norm.
Preview of Chapter 2
The goal of Chapter 1 is to clearly outline how reimbursement models and delivery systems are shifting to a value-based focus. In Chapter 2, we will dive into one of the more crucial elements for success in VBC: data. Data is vital to developing benchmarks, measuring performance, and providing actionable insights to improve outcomes. We’ll dig deeper into quality reporting requirements and how you can streamline and optimize the value you get from the process.
Plus, we’ll take a look at the technology needed for effective programs and how to optimize reimbursement by focusing on three key areas:
- Improving clinical outcomes and reducing hospitalizations
- Using data to negotiate value-based care targets and reimbursement rates with payers
- Enhancing organizational operations
To bring it all home, we’ll share best practices from successful programs. Stay tuned for more on this key topic for SNFs.
Navigating Value-Based Care Payment Programs for SNFs
Learn more! Watch this video: