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Written by: John Wolf on Monday, October 18, 2010 Posted in:

Last year, the state of Colorado implemented a pay-for-performance (P4P) Medicaid reimbursement program for nursing facilities with financial incentives tied to both quality-of-care and quality-of-life measures. After a year of the program, results show that the program has succeeded in stimulating a culture change in nursing homes.

Implemented by the Colorado Department of Health Care Policy and Financing (HCPF), the program was developed with input from both public and private stakeholders. The implementation oversight board includes the state’s Ombudsman, HCPF, nursing home providers, the state nursing facilities contract auditor, and the Colorado Foundation for Medical Care.

Half of the nursing homes in the state participated in the voluntary P4P program.  To qualify, the facility submitted a Nursing Facility Pay for Performance Application 2010 to HCPF with self-reported scores, quantitative survey results, and other supportive documentation with 100 points assigned to numerous metrics.  Forty-nine points out of 100 were tied to quality-of-life metrics such as enhanced bathing experience, choice in dining time and menu, consistent assignment, and other measures designed to create a home-like environment. Fifty-one points were related to quality-of-care metrics. A nursing home that scored 75 points would receive $2 per Medicaid resident per day, or about $39,000 for a year, based on average Medicaid occupancy.

A provider fee on nursing homes provided the source of state funding for the incentive payments, which were matched by federal Medicaid dollars. Total spending on the incentive payments for state FY2009 was approximately $2.5 million.

The response to the P4P program from nursing homes was generally positive; some said that they were finally getting rewarded for what they were doing in the first place. For others, the incentives encouraged them to find innovative ways to give residents more choices and comfort, and to reduce waste.  The financial rewards then allow the facilities to do even more for the residents.

Click here to get more information on this program including specifics on the metrics used to evaluate quality-of-life and quality-of-care within the facilities.