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Aesuuino avo tvacuaron DISABILITY, AND AGING POLICY August 18, 2022

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STATE USE OF VALUE-BASED PAYMENT IN NURSING FACILITIES

 

KEY POINTS

e Twenty states and the District of Columbia (DC) use value-based payment (VBP) as part of their
nursing facility Medicaid payment system.

e Most state nursing facility VBP programs include mandatory participation on the part of providers;
only California, Colorado, Texas, and DC have voluntary programs. Kansas and Minnesota have
both voluntary and mandatory programs.

e Only the voluntary VBP programs in Kansas and Minnesota have been formally evaluated. Lack of
program evaluations hinder states' ability to learn from programs already implemented in other
states.

e Stakeholders noted that VBP programs are more successful if they include risk-adjusted, clinically
meaningful measures.

e Clinical measures are most often used in state VBP programs, followed by staffing measures, and
resident and family satisfaction measures.

e Nursing facilities may need technical assistance to participate in VBP programs and achieve
meaningful changes in quality or costs.

 

INTRODUCTION

Some states use value-based payment (VBP) or pay-for-performance (P4P) programs as part of their nursing
facility Medicaid payment systems. Yet, little is known about these programs. The purpose of this study was to
determine which states use these programs, their goals, the measures used, and other elements of these
programs. We found that 20 states and the District of Columbia (DC) use VBP for nursing facilities with the
goals of improving quality and increasing efficiency. However, due to lack of evaluation, it is not known if these
programs are achieving their goals. Additional research is needed to determine which state programs are most
successful. The results of such research would help in the development of future VBP programs.

Payers across the health care spectrum have begun transitioning from paying for quantity toward paying for
quality. These VBP programs vary in scope and focus, but generally share the goals of improving cost-savings
and linking payments to value rather than volume. At the federal level, the U.S. Department of Health and
Human Services (HHS) has increased efforts to promote VBP by setting targets for their use by all payers. In
2015, HHS set the goal of tying 30% of traditional Medicare payments to quality or value by 2016, and 50% by
the end of 2018. Progress towards these goals varies widely by health care sector and payment source (i.e.,
commercial or public).*

Although Medicare payments for hospital and skilled nursing facility care are tied to performance via
mandatory national VBP programs, nothing on a national scale has been implemented to date for Medicaid-
covered nursing facility care. Many states have implemented P4P methodologies, a type of VBP program that
provides payment incentives to nursing facilities for achieving certain goals (e.g., meeting quality measure
benchmarks). States using VBP and P4P programs vary widely in terms of how performance or quality are

 

August 2022 ISSUE BRIEF 1
measured--some states use existing measures whereas others have developed their own. They also vary as to
whether participation is mandatory or voluntary.

Little is known about how VBP programs for Medicaid-covered nursing facility care are designed, the specific
goals states are trying to achieve with these, or whether they are successful in achieving their stated goals.
This exploratory study sought to answer the research questions shown below.

 

Research Questions

1. Which states use value-based purchasing programs as part of their nursing
facility Medicaid payment?

2. What are the goals of VBP programs and have states achieved their goals?

3. What are the key elements of VBP programs?

METHODS

An environmental scan was conducted to identify states that have VBP programs for nursing facilities, the key
design elements of those VBP programs, and the goals that states are aiming to achieve through these
programs. The scan included a review of state websites and peer reviewed and gray literature. All 50 states
and DC were included, but United States territories were not. The information gathered was organized by state

in a spreadsheet.

Interviews with seven stakeholders were also conducted: five with Medicaid representatives in states with VBP
programs (Colorado, Kansas, Maryland, Minnesota, New York), one with a national industry association
representative, and one with an academic researcher with expertise in VBP. Key themes were identified across
interviews.

LIMITATIONS

The environmental scan was limited to information that is publicly available about state nursing facility VBP
programs and did not include a formal analysis of state legislation or discussion with state representatives. This
may have limited the information we were able to find about these programs. For example, some states only
make available the types of measures used in their program and do not list the actual measures used. Our
stakeholder interviews are not generalizable and included only five of the 20 states (and DC) with VBP
programs. State representatives that agreed to participate in these interviews may have been different from
those who did not participate. For example, state representatives may have been more willing to participate if
they viewed their VBP program as successful, which may have limited the information we were able to collect
about less successful programs. In addition, some state representatives we spoke to were not in their positions
when the VBP program was developed and were unable to provide details about why or how the program was
developed.

RESULTS
Which states use VBP programs as part of their nursing facility Medicaid payment?

As shown in Exhibit 1, as of November 2021, 20 states and DC use VBP programs as part of their nursing facility
Medicaid payment. Two states (Minnesota and Kansas) have two VBP programs each.

 

August 2022 ISSUE BRIEF 2
 

Exhibit 1. States with Value-Based Purchasing Programs for Nursing Facilities in 2021

   

i States with 1 VBP program
i States with 2 VBP programs
[_] States with no VBP program

 

 

 

What are states' goals for VBP programs, and have states achieved these goals?
Goals and Evaluation

Stakeholders reported that states are using VBP in nursing facility payment policy to improve quality and
reward high performance, increase efficiency and value, and sometimes to promote best practices and
educate providers. It is unclear whether VBP programs have achieved these goals because most programs have
not been formally evaluated.

 

Lack of program evaluations hindered states' ability to learn from
programs already implemented in other states. Experts noted that
these programs are difficult to evaluate and rarely are because states
do not have the resources to conduct evaluations. However, the
; voluntary programs in Minnesota and Kansas have been evaluated by
- State representative academic researchers. The evaluations measured the effect of the
programs on quality but did not examine changes in costs. An
evaluation of Minnesota's voluntary program, funded by the HHS Agency for Healthcare Research and Quality,
found that participating facilities significantly improved their quality scores, while non-participating facilities
did not show significant improvement.? Participation in Kansas's voluntary program, which is focused on the
adoption of person-centered care (i.e., culture change practices), was associated with better clinical outcomes
for seven of 13 minimum data set (MDS) 3.0 long-stay resident health measures.?

"With the quality [measure]
components, [evaluation] is a
little bit harder because those
are, they're multi-factorial."

 

 

 

Stakeholder Suggestions for Achieving Goals

Most stakeholders said that VBP programs are more successful if they include risk-adjusted clinically
meaningful measures that can be updated as needed. Some suggested that measures should be oriented
toward outcomes rather than processes. Some also suggested that programs should use a limited number of
measures; too many measures could be burdensome and might make it difficult for facilities to determine

 

August 2022 ISSUE BRIEF 3
where to best invest their efforts. An industry stakeholder suggested that, based on research his organization
was conducting, roughly five measures was optimal.

 

Stakeholders thought that VBP programs were less successful when "Providers want to know if |
they included benchmarks that were difficult to achieve or that were spend my money and invest
not meaningful, or when they did not consider the variability here, they want a clear path

introduced by certain factors--like differences in resident population

that the outcome is going to
across facilities that cannot be fully controlled for in statistical models.

benefit them."
- State representative

 

 

Some stakeholders noted that programs could be administratively
burdensome and too complex for nursing facilities to understand and
implement. Some suggested that nursing facilities may need technical
"Some nursing homes are assistance to participate or achieve meaningful change.

 

 

going to need more technical
assistance or maybe even
financial investment to be
able to invest in the

Stakeholders noted that industry representatives were often involved
in developing or updating VBP programs and suggested that this was
important for buy-in to the program. Some noted that nursing facilities
: ' do not like these programs when they include measures of things that
infrastructure that's needed may be out of their control, when there is downside risk, and when

to improve quality of care." funds (such as provider taxes or withholds) paid into the program
- Academic researcher cannot be earned back.

 

 

 

What are the key elements of VBP programs?
Eligibility

Most nursing facility Medicaid VBP programs are mandatory; only three states (California, Colorado, and
Texas) and DC have voluntary programs. The two states with two VBP programs (Minnesota and Kansas) each
have one mandatory and one voluntary program. A stakeholder from Minnesota noted that the reason their
state has two programs is to provide some balance between only rewarding high performers and providing
funds to low performers so that they have a chance to improve. An industry stakeholder noted that Minnesota
can do this because they have dedicated a lot of infrastructure to their voluntary program that other states
may be unable to provide.

There was disagreement among stakeholders about whether voluntary or mandatory programs are more
successful. Some thought that voluntary programs encouraged better performance, whereas others thought
that voluntary participation made it difficult to attract providers to participate or only attracted those facilities
that were already high performers.

Some states limit eligibility for their programs to certain types of facilities. For example, in Ohio, facilities with
less than 80% occupancy are excluded. Several states exclude facilities based on previous issues with quality,
such as special focus facilities or facilities with a certain number or type of survey deficiencies. One stakeholder
disagreed with the use of these types of "gatekeeper" measures, saying that they put too much weight on one
type of quality measurement for eligibility.

Measures
In many cases, state regulations specify only the types of measures used, rather than the exact measures. That

may allow states to more easily change the measures used in their program as quality goals are achieved or
data for measures become unavailable. The types of measures used include annual survey derived measures

 

August 2022 ISSUE BRIEF 4
(e.g., number of deficiencies), measures of facility culture change practices (e.g., resident choice of bath time),
resident and family satisfaction measures, staffing measures (e.g., staff retention rates), and clinical measures.

 

Clinical measures are the most commonly used measures in state
nursing facility VBP programs, followed by staffing measures, and
resident and family satisfaction measures. Clinical measures include
those developed by the HHS Centers for Medicare & Medicaid Services
from MDS data. Some states have also developed their own clinical

"| don't like gatekeeper
metrics... Basically, what that
means is you've said that that
measure is more important

measures, such as rates of hospitalization. Only six measures are used than any of the other
by six or more states. These are shown in Exhibit 2. All other measures measures."
are used by three states or fewer indicating wide variety in the - Industry representative

 

 

 

measures used across states.

Exhibit 2. Most Used Measures in State VBP Programs for
Medicaid-Covered Nursing Facility Care

Most Used Measures in State VBP Programs for

or . a Number of States Using M
Medicaid-Covered Nursing Facility Care Measure ileal abies ida

 

 

 

Urinary Tract Infection Incidence 14
Pressure Ulcer Incidence 14
Antipsychotic use 11

 

Resident Satisfaction
Staff Retention
Physical Restraint Use

 

 

 

Financing and Payment

States pay for their VBP programs in various ways, such as Medicaid general funds, nursing facility provider
taxes (i.e., bed taxes), and monies from administrative penalties. Facilities receive payments either as
supplemental payments paid yearly, quarterly, or monthly, or as add-ons to the Medicaid per diem rate. In all
states except New York, nursing facilities do not face any downside risk in that they do not lose money if they
do not meet program goals. The VBP program in New York is funded through a Medicaid payment withhold,
and the poorest performing facilities do not receive their withheld payments.

CONCLUSION

This was a study to explore states' use of VBP as part of their Medicaid nursing facility payment, including the

goals of such programs, the measures used and other key elements. Twenty states and DC use VBP as part of

their Medicaid nursing facility payment. States vary in terms of the types and number of measures used in the
programs, how programs are funded, and how facilities are paid. But the goals of these programs--to improve
quality and efficiency--are fairly consistent across states.

One purpose of this study was to determine whether state VBP programs for nursing facilities are achieving
their goals. However, this was not possible due to lack of rigorous evaluation. Most state stakeholders
reported not knowing if their programs were working as intended, and only two programs have been formally
evaluated. The primary reason for this lack of evaluation is that states do not have the resources needed to
conduct evaluations.

 

August 2022 ISSUE BRIEF 5
This lack of evaluation seems to result in states developing programs without critical insights that could be
learned from previously established programs in other states. There is very little information available to state
staff regarding what has worked in other states and what has not. Therefore, an important next step in this
area is a formal evaluation that would determine whether these VBP programs are improving quality and
increasing efficiency. Future research could evaluate these programs and determine which state programs are
most successful at improving quality.

Any future research would have to take into consideration that each state's program is targeting different
aspects of quality and measuring these in varying ways, and that different states have been utilizing VBP for
different lengths of time. Therefore, a two-pronged approach should be taken to: (1) compare quality in states
with VBP programs to states without these programs; and (2) evaluate the impact of VBP programs within
states. This type of evaluation would determine both the success of VBP programs overall and identify those
states that have been most successful. Additional in-depth evaluation of the design, measures used, and other
elements of these successful VBP programs would provide valuable information to other states designing new
VBP programs or those redesigning existing programs.

REFERENCES

1. Medicaid and CHIP Payment and Access Commission. 2020. "State Strategies to Promote Value-Based
Payment Through Medicaid Managed Care Final Report." https://www.macpac.gov/wp-
content/uploads/2020/03/Final-Report-on-State-Strategies-to-Promote-Value-Based-Payment-through-
Medicaid-Mananged-Care-Final-Report.pdf.

2. Arling, G., Cooke, V., Lewis, T., Perkins, A., Grabowski, D.C., & Abrahamson, K. (2013). Minnesota's
provider-initiated approach yields care quality gains at participating nursing homes. Health Affairs, 32(9),
1631-1638.

3. Hermer, L., Cornelison, L., Kaup, M.L., Poey, J.L., Drake, P.N., Stone, R.I., & Doll, G.A. (2018). Person-
centered care as facilitated by Kansas' PEAK 2.0 Medicaid pay-for-performance program and nursing home
resident clinical outcomes. Innovation in Aging, 2(3), igy033.

 

August 2022 ISSUE BRIEF 6
 

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of the Assistant Secretary for Planning and Evaluation

200 Independence Avenue SW, Mailstop 447D
Washington, D.C. 20201

For more ASPE briefs and other publications, visit:
aspe.hhs.gov/reports

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ABOUT THE AUTHORS

Denise A. Tyler, Ph.D., Kristie A. Porter, M.P.H., and Natalie
Mulmule work at RTI International.

Acknowledgement

lara Oliveira, Marie Squillace, and Judy Dey work in ASPE/BHDAP
and contributed to the design of the work and supervised the
project. All authors and contributors reviewed and discussed the
findings and provided input and edits to this brief.

SUGGESTED CITATION

Tyler, D.A., Porter, K.A., & Mulmule, N. State Use of Value-Based
Payment in Nursing Facilities (Issue Brief). Washington, DC: Office
of the Assistant Secretary for Planning and Evaluation, U.S.
Department of Health and Human Services. August 18, 2022.

COPYRIGHT INFORMATION

All material appearing in this report is in the public domain and
may be reproduced or copied without permission; citation as to
source, however, is appreciated.

 

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August 2022

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