Nursing homes urged to improve with incentives

— -- For years, states have struggled to raise the quality of care in nursing homes by using a regulatory stick — citations, fines and other sanctions — when serious problems are discovered.

Last month, Ohio adopted a distinctly different, carrot-like approach by using financial incentives that encourage better services for frail seniors.

It's the latest effort to address longstanding concerns such as too few nurses, too many patients who develop painful bed sores and high staff turnover.

Under Ohio's new approach, almost 10% of the Medicaid payments to nursing homes will depend on factors including residents' satisfaction, rates of medical complications and the number of nurses on staff. Medicaid, a federal-state health program for low-income people, is the largest funder of nursing home services in the nation. Seven other states have programs of this sort, but Ohio's will be the largest.

Meanwhile, Medicare, the federal health plan for seniors, plans to roll out a similar program for nursing homes nationally in the next several years, after government officials evaluate results of a three-year demonstration project in Arizona, New York and Wisconsin that ended July 1. Medicare pays for short nursing home stays for some patients who need skilled care after a hospitalization.

Whether the strategy will improve nursing home care is far from certain.

"A number of states have attempted, this but most programs have been short-lived and haven't really made much of a difference," said David Grabowski, a professor of health policy at Harvard Medical School and lead investigator for the Medicare demonstration project.

That may reflect design shortcomings rather than the failure of the underlying concept, several experts suggest.

"There is a lot of room to improve the way programs are structured and to maximize their impact," said Dr. Rachel Werner, an associate professor of medicine at the University of Pennsylvania and author of an unpublished study on states' nursing home "pay-for-performance" efforts.

States such as Colorado, Georgia, Kansas, Nevada, Oklahoma, Utah and Vermont award a small bonus (from 60 cents to $6.16 per patient per day) if facilities achieve various standards. But industry representatives say those incentives are insufficient, says Nicholas Castle, who has surveyed nursing home administrators and is a professor of health policy at the University of Pittsburgh.

Meeting the standards

Under the new Ohio program, a payment of up to $16.44 a day for each Medicaid patient depends on the facility meeting five of 20 quality standards.

Ohio's approach provides a "much more powerful incentive," said Michael Cheek, vice president of long-term care policy at the American Health Care Association, an industry trade group.

The goal of the initiative, as well as a broader health care overhaul launched last year by Republican Gov. John Kasich, is to create a "coordinated, comprehensive, patient-centered health care system in Ohio" that "reimburses for quality" and lowers the sharply rising trajectory of health care costs, explained Bonnie Kantor-Burman, director of the Ohio Department of Aging.