The new direction of the Centers for Medicare and Medicaid Services (CMS) renews focus on harmonizing payments across care settings – a shift that could impact nursing home profits – even as the federal agency’s commitment to advancing value-based care (VBC) remains strong.

In a meeting held by the Center for Medicare and Medicaid Innovation (CMMI) Tuesday, current administration leaders discussed support for VBC programs as well as other initiatives to further President Donald Trump’s agenda.

And on the face of it, VBC will be applied even more deeply, according to Fred Bentley, managing director for the post-acute and long-term care and senior living practice at ATI Advisory. Certain mandatory initiatives of VBC, such as the TEAM model, introduced in the last days of the Biden administration, will also continue, he said.

CMMI’s shift in direction with regards to unifying payments across settings, however, could present a change.

In a bid to promote care choice through changes in Medicare Advantage and broader payment reforms, the new CMS under Dr. Mehmet Oz wants to enhance Medicare Advantage models to offer high-value coverage and better plan selection. Some of the changes could include site-neutral payments and care setting flexibility.

“People should also have more choice on where they receive care and who comprises their care team,” noted a white paper authored by CMMI Director and CMS Deputy Chief Abe Sutton and shared ahead of Tuesday’s meeting. “Innovation Center models can require site-neutral payments across settings to reduce costs and reinvest hospital capacity in outpatient and community-based care through changes to certificate of need requirements. Models can support expanded scopes of practice, virtual care, and at-home care so people can receive care more flexibly.”

During the meeting, Sutton did not specify which settings could be impacted by the site-neutral payment change.

Generally, site-neutral payments aim to eliminate unnecessary payment differences between care settings. For instance, Medicare used to pay significantly more for identical services provided in hospital outpatient departments compared to physician offices, Bentley told Skilled Nursing News. This led hospitals to acquire outpatient clinics just to receive higher payments.

CMS has since worked to reduce these payment disparities, Bentley said, and if payment is harmonized across settings, it could also impact revenue at nursing homes down the road.

Overall, in post-acute care, site neutrality could lead to a unified payment model across settings like long-term acute care hospitals (LTACHs), inpatient rehab facilities (IRFs), skilled nursing facilities (SNFs), and home health. The idea is that patients with similar needs – such as those recovering from a knee replacement – should generate similar payments regardless of care setting. This would simplify the system, reduce cost variation, and potentially impact nursing home reimbursement by aligning it more closely with other post-acute care options.

However, since currently home health services get reimbursed less, a site-neutral or unified payment system could result in reduced payments and less profits for SNFs.

“On net, [site-neutrality payment] could benefit home health and then at the expense of SNFs and inpatient rehab facilities,” Bentley said, explaining, “You’re harmonizing payments, or aligning payments between home health and SNFs, [and currently] home health providers get paid less.”

All beneficiaries in value-based care by 2030?

On the issue of changes to VBC programs, CMS leaders didn’t explicitly endorse the Biden administration’s goal of having all beneficiaries in a VBC arrangement by 2030, nor did they share specifics on how they intend to ramp up VBC during the meeting.

“Are they taking their foot off the gas? I just don’t think that’s the case,” said Bentley.

The new CMMI team may be avoiding being held to a specific legacy benchmark like the 2030 target, possibly to assert their own priorities and direction, he said.

“[They] are full steam ahead on value based care,” Bentley said. “[It] may be that they are going to be pushing ahead with a variety of different value-based care models, payment delivery system experiments that potentially would get us to that 100% goal by [2030].”

Despite the apparent shift in emphasis, Bentley believes CMMI testing with new models and care delivery changes has led to some useful innovations that will start to get implemented.

Over the last 15 years, with the goal to improve quality and outcomes and reduce costs for taxpayers, CMMI has been testing alternative payment models and making investments in the necessary infrastructure to support broad system reform, Sutton said. These alternative payment models were aimed at positioning states, payers, health systems and providers “as the catalysts for change.”

Moreover, CMMI wants rural and small providers to have ACO participation, Bentley said, a goal that demonstrates the Center’s commitment overall to value-base care.

Changes to SNF Certificate of Need (CON) requirements

CMS also wants to encourage expanded provider roles and reduce Certificate of Need (CON) restrictions, but it’s not clear how widespread the federal agency’s influence is on this issue, and whether it’s across care settings or just hospitals.

Certainly, CON requirements for nursing homes are enacted on the state level during acquisitions, and in some states they can dampen dealmaking.

Providers with operations in the Pacific Northwest have shared with SNN the hurdles they’ve faced in acquiring struggling SNFs – even when attempting to turn them around – resulting in closures rather than transitions to improved ownership.

“[CON changes] would enable a lot more mergers and acquisition and a lot more flexibility in terms of number of beds,” said Bentley.

All said, it remains unclear if CMS’ federal authority would override the SNF CONs, which are state specific, with restrictions related to CONs ranging from none to severe depending on the state, with Texas cited by Bentley as an example of having no CON requirements.