Quality Reporting Program Changes to Bring Nursing Homes ‘Into the Realm of Health Equity’

Skilled nursing facilities are set to see changes to the Quality Reporting Program (QRP), with the Centers for Medicare & Medicaid Services (CMS) making moves to address social determinants of health (SDOH) – mainly, adding factors such as living situation, food, utilities, and transportation.

“These quality measures are leading us into the realm of health equity,” Joel Van Eaton, the Executive Vice President of PAC Regulatory Affairs and Education at Broad River Rehab, told Skilled Nursing News (SNN).

Yet as operators grapple with tight margins, industry experts also continue to warn that updates may be underpredicting the cost of care and the support necessary to implement changes.

Updates to Quality Reporting Program

In the recently released Prospective Payment System Proposed Rule for fiscal year 2025, CMS included the proposed updates related to the collection of SDOH information in the quality reporting program.

Specifically, CMS is proposing that SNFs will be required to report one item related to living situation, two items related to food, and one item related to utilities as standardized patient assessment data under the SDOH category.

The proposed rule also puts forward a change to transportation-related information currently collected in the Minimum Data Set (MDS). The changes would include a defined 12-month look-back period for whether the resident experienced a lack of reliable transportation, as well as simplified response options.

CMS, in the proposed rule, describes these three anticipated benefits to this new data collection:

• First, promoting screening for these SDOH could serve as evidence- based building blocks for supporting healthcare providers in actualizing their commitment to address disparities that disproportionately impact underserved communities. 
• Second, screening for SDOH improves health equity through identifying potential social needs so the SNF may address those with the resident, their caregivers, and community partners during the discharge planning process, if indicated.
• Third, these SDOH items could support our ongoing SNF QRP initiatives by providing data with which to stratify SNF’s performance on measures and or in future quality measures.

The proposed rule also lays out what the information the proposed new items would glean, and how that information could inform skilled nursing care. For example, the proposed living situation item would ask “What is your living situation today?” Potential answers would determine whether a resident or patient has a place to live and the stability of that living situation.

SNF providers could then use this information in discharge planning, the proposed rule states. For example, SNFs could work with community-based organizations to help address unmet housing needs, while also using the information about housing stability to more effectively coordinate with other health care providers.

As CMS adds more elements to its Quality Reporting Program (QRP) requirements, Van Eaton said operators should review their health equity confidential feedback reports now.

“These reports are related to two quality measures: Medicare spending per beneficiary and discharge to the community,” he said. “They provide insight into how your facility compares to certain underserved groups, such as dual eligibles, both within your institution and nationwide.”

These quality measures, in addition to the four newly proposed elements, can serve as a rubric for operators to better understand and serve their patient population, he said.

“It’s one of those areas where we really have to pay attention because it’s only going to expand and grow,” he said. “Within Value-Based Purchasing, there was a lot of discussion on advancing the program for health equity. And what they’re going to do about that is in relation to making it a more practical application of how we implement these principles in practice on a day-to-day basis.”

Regarding financial incentives, Van Eaton acknowledged that many operators may not currently prioritize these updates due to their complexity and novelty. However, he cautioned that non-compliance could result in significant penalties, such as a 2% reduction in payments related to the market basket update, urging operators to stay informed and compliant.

“It’s important for people to be aware of this timeline…” Van Eaton said. “One unique aspect of modern CMS is their willingness to listen to what we have to say.”

The proposed updates are currently in a comment period, and operators can weigh in until May 28th.

Market basket update

The updates to the QRP are among several changes that CMS put forward in the latest PPS proposed rule – and, of course, the Medicare payment rate update is the centerpiece.

CMS is proposing a 4.1% increase in SNF payment rates for FY 2025. This includes a 2.8% market basket update, a 1.7% market basket forecast error adjustment, and a negative 0.4% productivity adjustment.

These figures do not yet incorporate the potential reductions for certain SNFs under the SNF Value-Based Purchasing Program (VBP).

Yet CMS’ market basket update process may be under-predicting the amount of inflation that’s actually occurring in the economy, Brian Ellsworth, VP of public policy at Health Dimensions Group, told SNN. 

“It’s a good thing that they have this mechanism to correct the forecast, but it would be even better if they had a methodology that was more sensitive, especially when inflation is accelerating or medical input prices are accelerating, as they have been for the last couple of years.”

While inflation is slowing down, wage growth remains a significant driver of costs, comprising over 50% of the expenses at a typical SNF, Ellsworth said, noting that in many markets there is a projected growth of the age 75 population between 10 and 15% over the next five years.

“In contrast, the projected growth of the working-age population varies depending on the market—flat, plus 1%, or minus 1%,” he said. “So, the projected growth in those two age cohorts is very different, indicating there will be a supply and demand imbalance for the foreseeable future, which will translate into upward wage pressure. That’s what happens when demand exceeds supply.”