Size of the financial incentives in Medicare’s Skilled Nursing Facility Value-Based Purchasing Program

Size of the financial incentives in Medicare’s Skilled Nursing Facility Value-Based Purchasing Program
JAMA Network Open; by Robert E. Burke, Franya Hutchins, Jonathan Heintz, Syama R. Patel, Scott Appel, Julie Norman, Atul Gupta, Liam Rose, Rachel M. Werner; 9/25
The Skilled Nursing Facility Value-Based Purchasing (SNF VBP) program seeks to reduce all-cause 30-day readmissions from SNF for traditional Medicare beneficiaries recently discharged from the hospital. Under SNF VBP, most SNFs receive a financial bonus or penalty up to 2% of their total traditional Medicare revenues each year, on the basis of their performance on 30-day readmission rates compared with other SNFs, or their own improvement in readmission rates over time. In this cohort study, we found that the size of the financial incentives at the SNF level are relatively small in terms of dollars and as a proportion of net operating income, and that most SNFs experienced substantial variability from year to year in their incentive payments. These 2 factors may have contributed to the relative lack of effectiveness of the SNF VBP program. First, if the level of the penalty is not sufficient to hire additional staff, purchase equipment (such as an x-ray machine or laboratory testing), or invest in new care processes, then SNFs will not be able to improve their ability to manage changes in patient condition.