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October 2005

Pay for Performance Demonstration Project

On September 20, 2005, I attended The Centers for Medicare and Medicaid Services (CMS) Special Open Door Forum on the Nursing Home Pay for Performance Demonstration Project held in Baltimore, Maryland. Abt Associates presented their recommendations to CMS on a draft design of the
demonstration project.

The slide presentation of the Abt Associates demonstration is posted on the demonstration web site. The following information is some of the recommendations presented by Abt Associates at the open door meeting.

The demonstration project is expected to include a few hundred facilities from three or four states and is to begin in late 2006 or early 2007. At this time, the states to participate in the demonstration have not been chosen. The project is to last for three years. The expectation from CMS is that Medicare savings from the quality improvements would be reinvested into an incentive payment pool per state. The demonstration would then be able to evaluate the impact of performance-based incentives on quality of care.

The principles behind the pay for performance demonstration project were identified as follows:

  1. All Medicare eligible beneficiaries residing in nursing homes, which includes Medicaid, Medicare, and private pay residents, would be included in the project
  2. Hospital-based and free-standing facilities would be able to participate
  3. The incentive payments are based on level of performance and improvement over time

There is not a limit to the size of the facility wishing to participate in the demonstration project.

Abt Associates identified the objectives of the demonstration project as promoting quality, facilitating sharing of best practices and providing information to guide national policies.

The potential performance measures identified at the open door forum included MDS-based measures, staffing levels and stability measures, rate of avoidable hospitalizations measures and others. The other measures identified in the possibility for consideration are process, quality of life and resident satisfaction measures. It was also presented that new measures might be added in the second year of the demonstration project as new data and methods become available.

Abt Associates also provided insight on options of how to determine the facility performance score, link the payment rate to the incentive payment, determine the size of the incentive pool and measure the Medicare expenditures. This project per CMS is to be budget-neutral.

The incentive thresholds will be different from state-to-state, will change year-to-year and will be paid annually. There was also discussion that some states may need to adjust the thresholds so there is an incentive. With states having reductions and shortages in Medicaid reimbursement, the facility could actually spend more than they would receive with the incentive payment. Another concern identified with the proposed demonstration project is the staffing level and stability measures. With the nursing shortage, the facilities may not have options on availability of direct care workers. Should the facilities have a poor performance score when they have been actively recruiting and working with area colleges to obtain staffing levels identified in the demonstration project?

The draft design presented was the first draft and will be revised based on feedback from the open door meeting. You can e-mail your comments and questions to nursinghomep4p@cms.hhs.gov

Karen Merk, RN, BS, CRNAC
Clinical Consultant, Briggs Corporation

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