No Viable Path for Many SNFs to Improve, Avoid Penalties in Value-Based Purchasing

The value-based purchasing program (VBP) may not be offering sufficient incentives for nursing homes to improve, particularly for low-performing facilities in areas with underserved populations.

Only 0.7% of poor-performing skilled nursing facilities were able to improve enough to avoid a financial penalty under VBP, a JAMA study found – the program didn’t “offer a viable path” for such facilities to avoid penalties using readmission rate data, JAMA researchers said.

“The statute that created the program required it to be cost saving to the [Centers for Medicare and Medicaid Services, or CMS], meaning that more SNFs are penalized than given a bonus by design,” JAMA authors noted. “When combined with previous results that indicate penalized SNFs overall are more likely to serve vulnerable populations, this outcome is a serious concern for the future of the program.”

The study was published Feb. 28 and involved 14,959 SNFs across the country; there are 15,327 facilities in the country as of 2020, according to the Kaiser Family Foundation.

Originally designed to improve patient outcomes by awarding financial incentives or penalties based on 30-day hospital readmission rates, VBP set a performance and improvement baseline for SNFs to meet in order to avoid a penalty.

The program withholds 2% of all Medicare fee-for-service (FFS) revenue and redistributes a portion of funds as incentive payments. Depending on readmission rates, a SNF could lose its 2% in withheld revenue, or get an additional 2% bonus on top of receiving its withheld revenue – these two examples are the worst and best-case scenarios.

The Medicare Payment Advisory Commission voted to broaden VBP quality measures beyond hospital readmission rates during an April 2021 meeting, a notion also mentioned in the Biden administration’s nursing home reforms first announced last week.

Staff adequacy, retaining staff and the resident experience were all additional measures proposed under Biden’s efforts to strengthen VBP. Such programs in other care settings, like hospitals, measure more than one metric.

“These changes merit evaluation if adopted but are unlikely to address the major concern brought about by our findings: if the intent of the SNF VBP program is to drive improvement in performance through financial rewards, it is falling far short of its goals,” JAMA authors stated.

An “improvement pathway” was intended to provide low-performing SNFs with an incentive to improve instead of only rewarding high-performing facilities, according to the study.

“Even SNFs that have historically underperformed in terms of readmission rates could earn nearly the full bonus, starting a virtuous cycle of improvement and financial reward,” JAMA authors wrote. “Rewarding improvement could therefore also enhance health equity, given substantial evidence that historically underperforming SNFs disproportionately serve racial and ethnic minority populations in poorer areas.”

Instead, early evaluations found three-quarters of facilities received a penalty in 2019 – that number increased in 2020, according to an earlier article published in the Journal of the American Geriatrics Society and referenced in JAMA’s study.

Penalized SNFs were more likely to serve vulnerable populations, JAMA authors added.

In the program, SNFs are assigned both an achievement score and improvement score, and whichever is higher is considered the facility’s performance score. Crucially, JAMA said, earlier studies didn’t “disentangle” differences between achievers – those with a higher baseline score than improvement score – and improvers – those with higher improvement scores than baseline scores under VBP.

“Because the intent of the SNF VBP program is to improve SNF readmission rates and not simply reward high performers, describing SNFs that were assigned their improvement scores as their performance scores—particularly those with the largest improvements—may offer insights on how to better design programs that drive improvements in outcomes,” JAMA authors added.

About 12.3% of the study sample size were assigned their improvement score as their performance score in the first year of the program – 63.1% of this group received a financial penalty and 20.2% received a bonus, JAMA researchers found.

Improvers that were able to avoid the financial penalties were in the top half of SNFs at baseline already, according to the study, but JAMA said improver SNFs still represent an “important subset” of facilities.

“Only 6 facilities that started in the lowest quartile of achievement scores were able to improve enough to avoid being penalized, and only 52 facilities (0.7%) that started below the median achievement score avoided penalties,” JAMA authors wrote. “These findings contrast somewhat with evaluations of the SNF VBP program as a whole, which largely apply to achievers.”

Predictors of improvement were not observable in JAMA’s data set, researchers said, and identifiable complementary approaches to help low-performing SNFs improve are needed.