Skilled Nursing Facility Performance and Readmission Rates Under Value-Based Purchasing

The new Medicare Skilled Nursing Facility Value-Based Purchasing program (SNF VBP) seeks to improve patient outcomes by awarding financial incentives or penalties based on 30-day hospital readmission rates. Skilled nursing facilities (SNFs) can avoid a penalty through low baseline readmission rates or improvement over time.

To assess the baseline performance and improvement over time of SNFs in the SNF VBP program.

This cross-sectional study examined readmission rates, financial penalties and incentives, and facility and patient characteristics associated with these outcomes at 14 959 US SNFs that received Medicare payments between January 1, 2015, and December 31, 2019.

Outcomes were readmission rates and financial penalties by facility. The SNFs were classified as improvers in the analysis if they had better improvement scores than baseline scores under the program and achievers if they had higher baseline scores than improvement scores.

Of 14 959 SNFs studied, 1849 (12.3%) were assigned their improvement score as their performance score in the first year of the program. Of these, 1167 (63.1%) received a financial penalty, whereas 374 (20.2%) received a bonus. Only 52 facilities that performed poorly at baseline (0.3% of all SNFs and 0.7% of below-median performers) were able to improve enough to avoid a financial penalty, despite large improvements in readmission rates. Improver SNFs treated larger racial minority populations (mean [SD], 74.57% [23.42%] White in the improver group vs 79.15% [22.18%] in the achiever group) and were located in counties with larger minority populations (mean [SD], 15.48% [14.05%] Black in the improver group vs 11.57% [12.72%] Black in the achiever group). The most important predictors of improvement were related to SNF finances, such as operating margin (mean [SD], -0.74 [13.87]) and occupancy rates (mean [SD], 79.93 [14.81]).

This cross-sectional study suggests that the SNF VBP program did not offer a viable path for nearly all low-performing SNFs to avoid financial penalties through improved readmission rates.