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Pay-for-performance in five U.S. states: lessons for the nursing home sector

2012 Conference Presentation

Markets/regulation United States

7 September 2012

Pay-for-performance in five U.S. states: lessons for the nursing home sector

Edward Alan Miller, University of Massachusetts, United States
Julia Doherty, University of Massachusetts, United States


Objective: Pay-for-performance (P4P) directs higher reimbursement to providers that achieve desired outcomes. Little is known about the use of P4P in the nursing home sector, however. This article reports the results of in-depth case studies of nursing home P4P in five Medicaid programs: Iowa, Minnesota, Oklahoma, Utah, and Vermont. Detailed summaries are provided, followed by a review of lessons learned, drawing insights regarding program participation, financing, measurement, administration, and development. The purpose is to inform the development and implementation of nursing home P4P programs more generally.

Methods: Iowa, Minnesota, Oklahoma, Utah, and Vermont were chosen for comparison. These states were selected to ensure variability in the Medicaid nursing home P4P systems studied. Data for the case study comparisons derive from two primary sources: interviews and state-provided documents. Selection of respondents was based on which individuals were most knowledgeable about each state’s P4P program, in particular, those responsible for implementing nursing home payment policy in this area, including state administrators and consultants.

Results: Results highlight the importance of obtaining stakeholder input, both initially and on an on going basis. They also highlight providing opportunities for acceptance and learning by phasing in programs slowly, beginning with performance measurement, followed by public report cards, and, finally, by introduction to P4P incentives. Funding P4P using new appropriations, incorporating multiple quality measures and domains, and relying on existing data sources where possible were deemed important for success; so too was allowing programs to evolve over time to account for changes and innovations in quality measurement as well as stakeholder involvement throughout a program’s development and refinement.

Conclusion: Nursing home P4P programs can be designed in a variety of different ways, and there is no single design that has been demonstrated to achieve the best outcomes. When identifying the best design, a state must first bring key stakeholders together to determine the underlying philosophy and principles that will guide design and implementation of the program. A second step will be to canvass the possibilities in terms of quality measures and P4P domains, recognizing the key decision points in question. As with any new payment system, monitoring for potential unintended consequences as well as conducting annual assessments of the program successes and potential improvements as the system evolves are also important.