Medicaid nursing home pay for performance: where do we stand?

Purpose: Nursing home pay-for-performance (P4P) programs are intended to maximize the value obtained from public and private expenditures by measuring and rewarding better nursing home performance. We surveyed the 6 states with operational P4P systems in 2007. We describe key features of six Medicaid nursing home P4P systems and make recommendations for further development of nursing home P4P.

Design And Methods: We surveyed the six states with operational P4P systems in 2007.

Results: The range of performance measures employed by the states is quite broad: staffing level and satisfaction, findings from the regulatory system, clinical quality indicators, resident quality of life or satisfaction with care, family satisfaction, access to care for special populations, and efficiency. The main data sources for the measures are the Minimum Data Set (MDS), nursing home inspections, special surveys of nursing home residents, consumers or employees, and facility cost reports or other administrative systems. The most common financial incentive for better performance is a percentage bonus or an add-on to a facility's per diem rate. The bonus is generally proportional to a facility performance score, which consists of simple or weighted sums of scores on individual measures.

Implications: States undertaking nursing home P4P programs should involve key stakeholders at all stages of P4P system design and implementation. Performance measures should be comprehensive, valid and reliable, risk adjusted where appropriate, and communicated clearly to providers and consumers. The P4P system should encourage provider investment in better care yet recognize state fiscal restraints. Consumer report cards, quality improvement initiatives, and the regulatory process should complement and reinforce P4P. Finally, the P4P system should be transparent and continuously evaluated.