AAHSA seeks to link quality and payment.

High-quality providers would have another reason to smile if the American Association of Homes and Services for the Aging (AAHSA) can convince federal and state governments to link payment for nursing home services to the quality of care provided. In a written statement to the Senate Finance Committee, AAHSA says reorienting the payment system will create a balance of quality, reasonable cost containment, and administrative feasibility.

AAHSA suggests governmental payers look to state Medicaid programs that use "modified pricing" systems as examples of linking quality and payment, such as those in Iowa, Indiana, Ohio, and Pennsylvania; in these states' systems, profit potential on direct care is limited by tying prospective payments for direct care (e.g., nurse staffing) directly to spending on direct care, ensuring that government funds are used specifically for their intended purpose (e.g., hiring sufficient staff to deliver high-quality services). Incentives to decrease costs are focused on other areas, such as administration. "By contrast," AAHSA notes, "the Medicare system and some state Medicaid systems create strong incentives for homes to reduce spending on both direct and indirect care by providing profit opportunities on the total payment amount."

In addition to making sure there is enough money for direct care, AAHSA proposes the development of "process" measures for which payers could award incentives to encourage procedures that should lead to improved resident outcomes (e.g., implementing standardized pressure ulcer risk-assessment protocols to identify high-risk residents). This shift from the current focus on resident-level outcomes (e.g., prevalence of pressure ulcers) "eliminates the need for complex, controversial risk-adjustment formulas to attempt to account for the various intrinsic factors that play a significant part in influencing resident out comes," notes AAHSA. A method for rewarding facilities with excellent performance with these measures could be developed and tested in a federal demonstration program similar to the one announced in July for hospital payments under Medicare, says AAHSA. The association also wants this program to look at innovative technologies--such as point-of-care data-collection methods--to improve information management and enhance quality of care.

To read AAHSA's full statement to the Senate Finance Committee, visit www.aahsa.org/testimony/nhquality.pdf.