Value-Based Payment Models Should Account for Higher-Acuity LTC Residents, Leaders Argue

Using outcomes as a basis for health care payment, rather than the quantity of services rendered, has long been a goal of policymakers from the federal to the state level.

But incorporating skilled nursing facilities into those discussions has been fraught, and many providers feel left out of the initiatives launched the various payers — ranging from the federal government to Medicare Advantage programs. And when it comes to dealing with high-cost, high-need patients, the programs might end up excluding or punishing the operators who care for them, given the incentives for providers to avoid spiking their costs.

To avoid that, the designers of these value-based models have to do a better job accounting for the needs of such residents, according to a discussion among representatives from stakeholders including Genesis HealthCare (NYSE: GEN), UnitedHealth Group (NYSE: UNH), and the American Health Care Associations.


Even though an array of new value-based payment (VPB) programs and models are emerging, SNFs have run into several challenges implementing VBP programs, according to a recent paper from the Advancing Excellence in Long-Term Care Collaborative (AELTCC).

Those challenges include:

  • Lack of inclusivity, with many SNFs and long-term post-acute care providers excluded from sharing in risks and savings
  • Incentives for fewer needed services
  • Definitions of value that are payer-focused and inadequate quality measures
  • Provider burden
  • A lack of interoperability

SNFs and other long-term and post-acute providers are often excluded from VBP models, and some of those initiatives, such as bundled payments and shared risk, could lead to the provision of fewer services, according to the paper — which drew from a 2018 meeting of the AELTCC that discussed the issues related to payment models and quality.


The issues of exclusion and needed services seem to be linked in some ways.

“In order to cut costs, some payment model participants may seek to bypass SNF care or limit stays in ways that may be incompatible with care plan goals and timelines required in the regulations and encourage inappropriate early discharge to the community,” the paper noted.

Accountable care organizations (ACO), which encourage providers to band together in order to reduce costs and provide quality care, have come under particular scrutiny under this heading. One SNF provider detailed how it had to stop participating in an ACO partnership because of pressure to send patients home too early at the 2019 American Health Care Association Convention and Expo.

“It was a better move for our facility,” John Vrba, CEO of Burgess Square Healthcare and Rehabilitation Centre, said. “We want to work with the ones that truly care, and truly have partnerships.”

The AELTCC emphasized the need for mechanisms of ensuring quality that are meaningful to patients, since provides in some of the payment models could reduce costs by reducing the number of services provided. This seems to be borne out in the case of bundled payment programs and ACOs, as multiple studies have found they generate savings by cutting spending on SNFs.

The need to measure quality also becomes an issue given the way many VBP programs define value, according to the paper. While quality measures are usually set up to balance out the effects of cost-cutting, they can be “narrowly focused on utilization,” the AELTCC argued.

“For VBP programs to effectively promote value, included quality measures must capture a broad spectrum of patient-centered quality care and outcomes and be weighted enough to motivate providers,” the paper said.

Addressing the challenges

There are some ways to deal with the problems VBP models have presented for SNFs, and the AELTCC provided four recommendations for improving the programs.

First, more inclusive models — that let SNFs and other post-acute providers take the lead — should be developed. In addition, VBP program designers should explicitly address the role of long-term and post-acute providers in programs that are designed for other settings, according to the paper.

Then, to combat cost reductions at the expense of access and quality, designers have to use financial mechanisms that address “unintended consequences and unrestrained cost cutting.” That might mean building in risk adjustments to offset the costs of high-risk, high-need patients, putting a greater proportion of the provider’s reimbursement or reward at risk based on quality performance, and financially incentivizing providers to invest time and resources into services such as advance care planning and care coordination.

In addition, VBP program designers need to shift to patient-focused definitions of value — again, through quality processes and outcomes that go beyond utilization, the group argued. They also need to minimize the burden of providers by simplifying documentation and aligning measures used across payers and programs, among other steps.

“Where LTPAC providers are held accountable for patient outcomes via VBP arrangements, regulatory flexibility can support efforts to achieve better outcomes,” the paper argued.