HHS to Link Part of $5B in Nursing Home Aid Directly to Performance [UPDATED]

UPDATE, August 11: An earlier version of this story indicated that a portion of the $5 billion in relief funding for nursing homes will be based on prior performance. Speaking at a virtual event Tuesday, American Health Care Association president and CEO Mark Parkinson clarified that the value-based initiatives will be exclusively prospective, with only future performance considered. Click here for a more detailed breakdown of HHS’s funding math.

The Department of Health and Human Services (HHS) released more details about how a new round of funding for nursing homes will be allocated, with a significant chunk of the $5 billion distribution connected to skilled nursing facilities’ performance “to ensure the federal government is paying for better outcomes.”

“By linking these funds to performance in controlling COVID-19, we are providing powerful tools and incentives for nursing homes to better protect their residents from the virus,” HHS Secretary Alex Azar said in a statement released Friday.

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The HHS distribution will provide $2.5 billion in upfront funding to nursing homes to help them meet staffing, testing and personal protective equipment (PPE) needs; funding will also be available for operators creating COVID-19 isolation facilities.

But the balance of the funding distribution will be based on how nursing homes perform, with the goal of encouraging “a collaborative approach to quality improvement.”

“Evaluation of performance will consider the prevalence of the virus in the nursing home’s local geography, and will be based on the nursing home’s ability within this context to minimize COVID spread and COVID-related fatalities among its residents,” HHS indicated.

The $5 billion from the Provider Relief Fund (PRF) created by the CARES Act was announced July 22 by President Trump during a coronavirus briefing.

At the time, Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma said more details would be forthcoming, though she noted that nursing homes in COVID-19 hotspots who are experiencing a significant caseload would be targeted.

The initial $2.5 billion distribution to nursing homes is scheduled to take place in the middle of August, with the performance-based distributions to follow throughout the fall.

“We anticipate that linking payment to performance will be an effective means of holding nursing homes accountable, stimulating innovation, and encouraging them to reach beyond their own walls for infection control expertise and support,” Thomas Engels, administrator of the Health Resources and Services Administration (HRSA), said in the release.

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