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Is the Value-Based Purchasing program on its way out? What SNFs need to know

The SNF Value-Based Purchasing (VBP) program is in for an overhaul. The Medicare Payment Advisory Commission (MedPAC) has been advocating to replace the current program with an alternative that is more equitable across skilled nursing providers and that builds in financial incentives to motivate quality improvement efforts more effectively.

On July 29, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that includes raising the number of quality measures in the program. Here’s what SNF organizations need to know about the upcoming modifications to the SNF VBP program.

Why is the SNF VBP program changing?

The SNF VBP program is supposed to reward SNFs with incentive payments that reflect the quality of care provided to Medicare beneficiaries. However, in a mandated assessment, MedPAC concluded that there were “fundamental design flaws” in the current SNF VBP program and recommended it be “replaced as soon as possible.”

According to the Commission, shortcomings of the program include:

  • Use of only a single outcome measure – hospital readmissions – to assess performance
  • A reward system that does not motivate all providers to improve quality
  • Failures to address social risk factor variations across patient populations
  • Not distributing all withheld funds

What changes are expected?

The FY 2022 SNF Prospective Payment System (PPS) Final Rule lays out the following the provisions that will impact the SNF VBP:

  • The Skilled Nursing Facility 30-Day All-Cause Readmission Measure (SNFRM) will be suppressed for FY 2022 due to COVID-19
  • All participating SNFs will be assigned a performance score of zero to address possible distortion of performance scores and incentive payment multipliers
  • The federal per diem rate for each SNF will be reduced by 2%, and 60% of the withhold will be awarded back, resulting in a 1.2% payback to those facilities that meet their targets
  • Up to nine additional measures may be applied to the SNF VBP program beginning in FY 2024

What’s next and how can SNFs prepare?

The expanded SNF VBP will undoubtedly incorporate multiple performance measures, focus on patient outcomes and resource use for scoring and account for social risk factors.

While any new changes are limited to functional status, patient safety, care coordination or patient experience, new measures will still need to go through the rulemaking process. Currently, CMS is considering measures that are already required for long-term care facilities (LTCFs) in addition to input provided by stakeholders.

The best way for SNFs to prepare is to ensure their quality programs include technology to track quality metrics and provide analytics to improve performance.

This can be achieved with ABILITY CAREWATCH®, a proven application that helps organizations simplify quality management, monitor their incentive multiplier, stay current with regulatory changes and optimize incentive payments under SNF VBP.


Inovalon and design®, Inovalon®, and ABILITY CAREWATCH® are trademarks of Inovalon, Inc.

About the author

Michelle Karl, Solution Architect