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Medicare, Medicaid test new way to pay nursing facilities aimed at reducing hospitalizations

CMS hopes it will improve care for nursing facility residents

nurse helps man in wheelchairMarch 25, 2016 -A payment model for nursing facilities and practitioners will be tested to see if it can further reduce avoidable hospitalizations, lower combined Medicare and Medicaid spending, and improve the quality of care received by nursing facility residents, according to The Centers for Medicare & Medicaid Services (CMS).

This next phase of the Initiative to Reduce Avoidable Hospitalizations among Nursing Facility Residents seeks to reduce avoidable hospitalizations among beneficiaries eligible for Medicare and/or Medicaid by providing new payments to practitioners for engagement in multidisciplinary care planning activities.

In addition, the participating skilled nursing facilities will receive payment to provide additional treatment for common medical conditions that often lead to avoidable hospitalizations.

Through this model, CMS would facilitate practitioner engagement when a nursing facility resident needs higher-intensity interventions due to an acute change in condition.   

Medicare currently pays physicians less for a comprehensive assessment at a skilled nursing facility than for the same assessment at a hospital. This model would equalize the payments between the sites of care.

Removing potential barriers to effective treatment within a facility can improve the residents’ care experience and mitigate the need for disruptive and costly hospitalizations.  For example, participating skilled nursing facilities will be expected to enhance their staff training and purchase new equipment to improve their capacity to provide intravenous therapy and cardiac monitoring.

“This Initiative has the potential to improve the care for the most frail, most vulnerable Medicare-Medicaid enrollees—long-stay residents of nursing facilities,” said Tim Engelhardt, Director of the Medicare-Medicaid Coordination Office. “Smarter spending can improve the quality of on-site care in nursing facilities and the assessment and management of conditions that too often now lead to unnecessary and costly hospitalizations.”

Since 2012, CMS has funded Enhanced Care and Coordination Providers (ECCPs) to test a model to improve care for long-stay nursing facility residents through clinical and educational interventions. The ECCPs currently collaborate with 143 long-term care facilities to provide on-site staff for training and preventive services and to improve the assessment and management of medical conditions.  

Early results from the first phase of the Initiative are promising, according to an independent evaluation. All seven sites generally showed a decline in all-cause hospitalizations and potentially avoidable hospitalizations, with four sites showing statistically significant reductions in at least one of the hospitalization measures.

In addition, all sites generally showed reductions in Medicare expenditures relative to a comparison group in 2014, with statistically significant declines in total Medicare expenditures at two sites. This first phase of the Initiative will continue through 2016.  

This new four-year payment phase of the Initiative, slated to begin fall 2016, will be implemented through cooperative agreements with six ECCPs. The six awardees are:

  Alabama Quality Assurance Foundation – Alabama

  HealthInsight of Nevada – Nevada and Colorado

  Indiana University – Indiana

  The Curators of the University of Missouri – Missouri

  The Greater New York Hospital Foundation, Inc. – New York

  UPMC Community Provider Services – Pennsylvania

The new model will be subject to a rigorous independent evaluation to determine the effects on cost and quality of care. ECCP awardees will implement the payment model with both their existing partner facilities, where they provide training and clinical interventions, and in a comparable number of additional facilities to be recruited over the next several months.

The Initiative is a collaboration of the CMS Medicare-Medicaid Coordination Office and the Center for Medicare and Medicaid Innovation, both created by the Affordable Care Act to test payment models to improve health care quality and reduce costs in the Medicare and Medicaid programs.

The Initiative complements broader administration efforts to improve long-term care facilities, including proposed updates to the conditions of participation for nursing homes, improvements to the five-star rating system for consumers, and implementation of the new Skilled Nursing Facility Quality Reporting Program that ties skilled nursing facility payment to the reporting of quality measures.

For more information on this Initiative, including both current activities and this new phase, visit –

>> Initiative to Reduce Avoidable Hospitalizations among Nursing Facility Residents

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