Inside the Latest $5B in HHS Aid for Nursing Homes: Value-Based Competition, Stricter Testing Mandates

The federal government’s latest targeted coronavirus aid for nursing homes will consist of four separate programs, with a significant portion of the $5 billion price tag doled out based on operators’ performance in monthly value-based competitions.

Of that pledged total, the Department of Health and Human Services (HHS) will distribute half — or $2.5 billion — directly to operators with no application process, American Health Care Association president and CEO Mark Parkinson said on a Tuesday virtual panel discussion hosted by accounting firm Roth & Co.

“You’re going to show up one morning and you’re going to see some funds that hit your account,” Parkinson said. “The money is for PPE, testing, and staffing. You get to decide what you want to spend the money on. It’s your decision.”


The exact amount sent to each facility will depend on two key factors: bed count, and whether or not the building has already received an antigen testing device as part of a separate HHS effort to facilitate point-of-care COVID-19 screening at all 15,400 nursing homes across the country.

For an average-sized facility of 104 beds, the automatic HHS disbursement will total $170,000 if an antigen machine has not yet arrived, and $90,000 for those with the free testing devices; under the triaged HHS distribution plan, facilities in community hotspots and those without reliable access to offsite testing have been prioritized for the first device shipments.

Either way, the payments will begin arriving over the next 10 to 14 days, according to Parkinson.


But even though the dispersal is automatic, Parkinson warned that “there’s no free lunch” for operators under the program, with the Centers for Medicare & Medicaid Services (CMS) mulling a concurrent rule that would implement stricter testing requirements for nursing homes.

“CMS is very likely to issue a rule that says that if you’re in a state that has a positivity rating of above 5%, you need to test staff once a week,” Parkinson said.

An additional $2 billion of the total $5 billion pot will be put towards a value-based payment program designed to reward operators that log average or better-than-average numbers of new COVID-19 cases in their facilities, according to the AHCA CEO.

“They’re trying to incentivize us to do everything that we can to keep COVID out of the buildings,” he said. “I know we already are, but they believe that this program will further amp up our efforts.”

HHS will evaluate those averages using the COVID-19 data that operators must submit to the National Healthcare Safety Network (NHSN) database, Parkinson said. Within each month from September to December, a total of $500 million apiece will be up for grabs; operators that have a challenging September but then recover to log above-average COVID rates the next month would be able to access the funds in October, for instance.

The value-based competition will be entirely prospective, meaning that past COVID-19 performance will not count for or against operators. Facilities will also not be penalized for admitting positive patients into dedicated COVID-19 units, as HHS will only be tracking cases contracted within the nursing home setting, Parkinson said.

“There’s a tremendous opportunity for you to work with your folks in your buildings, incentivize the people in your building to really keep those numbers low,” he said. “It’s not just obviously the right thing to do clinically — there is money available there.”

HHS will derive the exact amounts of those bonus payments from a complex formula still under development, but Parkinson estimated that the average building could see a $70,000 boost from solid performance under the program.

Finally, the remaining $500 million in relief cash will help offset the cost of establishing specialty COVID-19 units — the question of whether facilities that have already done so qualify for retroactive payments remains open, Parkinson said — and compensate operators that want to work with outside groups to improve coronavirus prevention efforts.

Parkinson’s breakdown came after HHS released a statement late last week indicating that the performance-based steps were necessary “to ensure the federal government is paying for better outcomes.”

“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 statement.

The $5 billion, announced at the end of last month, joins an earlier $4.9 billion in COVID-19 relief sent directly to nursing facilities, as well as more general stimulus tranches based on prior Medicare and Medicaid reimbursements.

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