SNFs Serving Vulnerable Populations More Likely to Get Value-Based Penalties

The Medicare Value-Based Purchasing (VBP) program, which distributed its first round of incentives and penalties on October 1 of last year, has a goal of rewarding high-quality skilled nursing care by tying Medicare payments to performance.

In that round, almost three-quarters of SNFs saw penalties. And a new study published this month in the journal Health Affairs found skilled nursing facilities that serve vulnerable populations were less likely to receive bonus payments — and more likely to be penalized under the program.

Specifically, SNFs serving African-American or black residents, Hispanic or Latino residents, and Medicaid-eligible residents were more likely to experience losses under the SNF VBP program, and less likely to see gains.


SNFs where more than 50% of residents were African-American or black had lower odds of being in the top 20% of performance rankings and almost a quarter higher odds of being penalized, compared with SNFs where the majority of residents were white.

Facilities with a majority of Latino or Hispanic residents also had lower odds of receiving a bonus, at less than half, while having more than twice the odds of being penalized, compared with majority-white SNFs.

Under the VBP program, operators automatically lose 2% of their Medicare reimbursements, which they can then win back by meeting certain hospital readmission benchmarks. The initial round of results showed that about 73% of operators incurred some kind of penalty, while only 27% either recouped the loss or earned a slight bonus payment.


The researchers — all hailing from the University of Massachusetts — used data on nursing home characteristics, overall nursing home quality and on SNF VBP performance.

In addition, SNFs that were majority-African American or black or majority-Hispanic or Latino had significantly higher proportions of Medicaid residents and slightly lower proportions of Medicare patients compared with SNFs as a whole.

“It has been well documented that high-Medicaid facilities tend to be lower quality and have fewer nursing staff members per resident,” the researchers wrote. “Similarly, studies show that facilities with higher proportions of African American or black residents or Hispanic or Latino residents exhibit poorer quality and poorer financial performance. Our examination of the five-star quality ratings across SNF types is a further illustration of the overall poor performance of these facilities.”

The researchers also noted that Medicaid tends to pay much less than private pay sources, and that Medicare payments have historically been used to offset the cost of care for Medicaid residents. That means that facilities with a high dependence on Medicaid could have less resources for staffing, training, and quality improvement, as they are considered financially vulnerable.

“It may be that Medicare volume can explain the patterns of performance we saw among SNFs serving vulnerable populations,” the researchers noted. “However, we conducted sensitivity analyses in which we estimated all models adjusting for Medicare volume, and we saw only a modest mitigation of effects — the overall findings were consistent.”

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