Nebraska Joins Wave of States Overhauling Medicaid Payments for Nursing Homes, With Quality Focus

As part of its plans for the upcoming fiscal year, the Nebraska Department of Health and Human Services (DHHS) is looking to redesign Medicaid payments for skilled nursing facilities.

The ABC television affiliate NTV News first reported the news earlier this week.

The new system aims to move away from a cost-based system to one that has a pay-for-performance component; it’s an ongoing initiative from fiscal year 2019, according to DHHS’s business plan for fiscal 2020.


Currently the Division of Medicaid & Long-Term Care (MLTC) pays for SNF services in a cost-based system, without accounting for the quality of care provided — and in some cases, payments to one skilled nursing provider can be double those for another facility at the same level of care, according to the DHHS plan.

“Under today’s methodology, if a provider improves operational efficiency and reduces costs or increases patient days and keeps costs low, the next year they are often penalized with a lower payment,” the report noted. “Today’s payment methodology does not factor quality into the payment, which is a key component to modern value-based care payment models and consumer health care trends.”

The MLTC aims to remove the current payment methodology from state regulations and finalize a new one by December of this year. The goal is to submit a state plan amendment to the Centers for Medicare & Medicaid Services related to the change in April 2020; the new payment methodology would be implemented in July 2020.


The changes are intended to reward “efficient, quality services” for Medicaid beneficiaries receiving care at SNFs, with input from providers and other stakeholders. One of the features of the new payment system will be equitable base payments and a pay-for-performance component that uses quality measures.

Oklahoma earlier this year overhauled its Medicaid reimbursement for SNFs to boost rates through a pay-for-performance component, and though Texas failed to pass Medicaid increases for SNFs in its most recent session, it does have the Quality Incentive Payment Program (QIPP) for providers. That program, the first iteration of which fell under a Section 1115 demonstration waiver for the Texas managed Medicaid program, can earn supplemental payments based on making improvements for several different quality measures.

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