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CMS Pushes States to Tie Nursing Home Medicaid Payments to Quality

Analysis  |  By Jay Asser  
   August 25, 2022

The federal agency's informational bulletin details methods for improving safety and quality of care for nursing facilities.

As part of the Biden administration's efforts to reform nursing homes, CMS is encouraging states to tie Medicaid payments to quality measures to advance health equity and improve patient outcomes.

The federal agency's Centers for Medicaid and CHIP Services issued an informational bulletin for states outlining actions to drive better health outcomes for nursing home residents while strengthening staff pay, training, and retention efforts.

In February, the Biden administration announced a set of reforms to improve nursing homes by addressing safety and quality of care. The reforms aim to ensure that every nursing home provides adequate staffing, poorly performing nursing homes are held accountable for improper and unsafe care, and that the public has better information about nursing home conditions so they can opt for the best option.

By tying nursing home Medicaid payments to quality measures, CMS is further incentivizing advancing health equity by shifting the focus from volume to quality through value-based payments. The agency also notes that as of 2019, 2 million Medicaid beneficiaries received institutional services.

"Today's action is an important step toward accomplishing the administration's goals of strengthening the quality of care, accountability, and transparency in our country's nursing homes for Medicaid enrollees. States can implement a number of initiatives described in this guidance immediately," CMS administrator Chiquita Brooks-LaSure said in a statement.

"Medicaid enrollees residing in nursing homes will only experience better care through collaboration between states, CMS, providers, and other partners, and we look forward to working closely with them on this important effort."

CMS highlights how states can implement actions using flexibilities provided by the Social Security Act to establish Medicaid base and supplemental payments to provide performance-driven nursing home rates. Through the Medicaid state plan, waiver, or demonstration process, states can immediately implement initiatives to give Medicaid beneficiaries in nursing homes better care.

The agency also encourages states to align with initiatives such as the Nursing Home Five-Star Quality Rating System by improving safety, accountability, quality, and overall resident experience. The System is based on six measures, including weekend staffing rates for nurses and turnover of nurses and administrators over the course of the year.

"We know that low wages for staff can contribute to frequent turnover and dangerous staffing shortages at nursing homes, so we encourage states to work with these facilities to find solutions for training and improving staffing."

Jay Asser is the CEO editor for HealthLeaders. 


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