Value-Based Payment in Nursing Facilities: Options and Lessons for States and Managed Care Plans

Technical Assistance Tool
Publisher: Integrated Care Resource Center
Nov 06, 2017
Jenna Libersky, Julie Stone, Leah Smith, James Verdier, and Debra Lipson

States and managed care plans new to VBP should consider:

  • Aligning nursing facility quality and performance measures with those reported by CMS’ Nursing Home Compare Five-Star Rating System.
  • Standardizing data collection methods and/or instruments across facilities.
  • Creating financial rewards that are sizeable enough to encourage change within facilities.
  • Using an underlying reimbursement structure that works in harmony with the payment incentives provided under VBP. Strategically selecting stakeholders to engage in VBP program design and providing technical assistance to participating facilities can also help ensure the program’s success.  
To improve the value of care provided in nursing facilities, payers are experimenting with value-based payment (VBP) approaches that link financial rewards to measures of quality. Drawing on findings from interviews with state officials and plan representatives, this brief describes the VBP approaches that select states and managed care plans currently use, presents perceived effects of VBP, and shares lessons on the design and administration of VBP programs. States interested in VBP may look to the examples in the brief to design their own VBP programs or encourage plans to do so. States and plans that blend Medicare and Medicaid funding may find VBP especially attractive for improving nursing facility care for dually eligible beneficiaries who may move between skilled/rehabilitation and custodial stays. Though this brief found few examples of VBP approaches that fully integrate incentives across payers, states or plans that wish to develop such initiatives can draw from the lessons in this brief by measuring facilities on services and outcomes that require coordinated medical and custodial care, or by using alternative payment strategies that allow providers to share in additional risk and rewards.