New Federal Program to Reduce Alarming Number of Nursing Home Re-Hospitalizations

New Federal Program to Reduce Alarming Number of Nursing Home Re-Hospitalizations

As shocking as it is, 1 in 5 Medicare patients sent from a hospital to a nursing home will be sent back to the hospital within 30 days. Many of such hospital readmissions are avoidable, and they place an unnecessary burden on an already strained system. For patients who wind up back in the hospital after being discharged from a nursing home, there is confusion, inconvenience, and sometimes much worse.

In an effort to address the problem, the federal government has introduced a new incentive payment program based on how many discharged patients end up back in the hospital.

Nursing homes that perform well according to the new readmission measures receive bonuses — poor performers will receive less money than they would receive without the program in place.

What Is the Purpose of the Program?

The Skilled Nursing Facility Value-Based Purchasing Program was authorized by Congress in the Protecting Access to Medicare Act of 2014. It is one of several such programs designed by the federal government to promote healthcare quality for Medicare patients by incentivizing companies to have higher standards.

For years, Medicare funding for nursing homes was focused on quantity, and quality started to slip. Facilities would be reimbursed for care according to the number of patients in residence, and the conditions those patients had. For each condition, Medicare would pay out a predetermined amount equal to average treatment costs.

This system incentivized a number of bad behaviors. Because nursing homes would receive a predetermined amount for care, it became common practice to send patients home as quickly as possible. This way, nursing homes picked up the payment and minimized the complex and costly care it had to provide.

The basic idea behind this program, and others like it, is to realign incentives to promote patient safety. By rewarding facilities based on readmission rates, the hope is that nursing homes will focus on the quality of care they deliver, rather than just the quantity of patients they serve.

How Does the Program Work?

The program is implemented and enforced by the Center for Medicare and Medicaid Services (CMS). For each nursing home, CMS determines how many hospital readmissions were preventable and assigns performance scores. Scores are based on individual performance, and performance relative to other nursing homes in the country. Findings and scores will be visible on the Nursing Home Compare website.

At the beginning of each fiscal year, CMS will rank facilities based on their readmission performance. Nursing homes that rank highly will receive 1.6 percent more for each Medicare patient they see ― lower ranking facilities will receive 2 percent less per patient. The higher ranking the nursing home, the higher the incentive payment will be. Facilities in the lowest 40 percent receive less money than they normally would.

Because the 2019 fiscal year began on October 1, 2018, some nursing homes are already starting to feel the effects of the new program.

What Are the Immediate and Long-Term Impacts of This Program?

In all, the new program will modify Medicare payments to 14,959 nursing homes: 10,976 nursing homes will be punished and 3,983 will be rewarded. Nursing homes that fell in the middle will not see a difference.

For nursing homes operating on a tight margin, these numbers could have a large impact. A facility that is struggling with hospital readmissions will be under further pressure. Some worry that struggling nursing homes will respond unproductively. By not admitting the most infirm patients, for example, or by refusing to send a patient to the hospital, nursing homes can drive their readmission numbers down.

Still, the incentive program is similar in kind to those CMS has used with hospitals in order to lower their readmission rates. Since 2012, CMS has assessed hospital readmission rates and penalized hospitals that fail to perform. Hospital readmissions have declined, but the results are far from conclusive.

Will the Program Help Curb Elder Abuse?

Ideally, any policy that promotes the quality of care in nursing homes will have a positive impact on the health and safety of their vulnerable patients. Of course, this is ideal, and one wonders about the limits of such financial instruments. Bonuses or penalties will fall upon nursing home administrations, and it is always uncertain how such incentives will trickle down into the individual actions of physicians and staff.

With appalling lapses in care appearing in the headlines daily, such a measure hardly seems like enough. Reducing hospital readmission rates is a commendable goal, but it is not protecting patients right now. And that is too late.

Sokolove Law Team

Contributing Authors

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Last modified: September 28, 2020