Measuring nursing facility quality: A former federal regulator’s viewpoint

Oct. 26, 2022 / By Chet Stroyny

Measuring nursing facility quality has been an important topic since the advent of Medicare and Medicaid programs. While some steps have been taken, much more work is still needed to ensure quality of care for our vulnerable seniors – and it all starts with risk adjusting to understand their health status and care needs.

First, a little history. I was a former federal official in the Chicago Regional Office of the Health Care Financing Administration (HCFA) overseeing Medicare and Medicaid nursing facility quality of care for several years. The Centers for Medicare & Medicaid Services (CMS) funds state health departments to conduct surveys of Medicare skilled nursing facilities (SNFs). It also has oversight of Medicaid-funded nursing facilities since CMS funds approximately 50 percent of Medicaid program costs.

Prior to 1965, there was little government financing for nursing care facilities in the U.S. Counties had what were known as “old age homes” for individuals. The Hill-Burton Act, passed in 1946, provided grants for nursing facilities to be built like a hospital, with different wings and a central nursing station. However, there were no government payments for nursing care in these facilities. Many folks died in hospital or at home due to a lack of long-term care facilities (LTCFs) in their community.

The historic Medicare and Medicaid legislation, which was passed in 1965, basically created the U.S. nursing home industry and nursing facility model that exists today. This landmark legislation created, for the first time, consistent government financing for skilled and LTCFs.

The initial Medicare benefit covered extended care facilities (ECFs). Medicare actually paid up to 100 days of care for the first year or so of the program. This policy was quickly changed due to sharp increases in programs costs to require a SNF level of care. Skilled services like physical therapy (PT), operational therapy (OT), speech therapy (ST), etc., the program limited coverage when a patient plateaued and showed no further improvement.

This is the Medicare benefit which exists today. Medicaid nursing facility coverage varies from state to state. For those who qualify, Medicaid coverage is available once Medicare is exhausted. There are skilled level of care and long-term care Medicaid nursing facilities. Typically, most Medicaid patients end up in the long-term care status once their income is exhausted.

A seminal study was done in 1986 by the Institute of Medicine “Improving the Quality of Care in Nursing Homes,” under the auspices of the Institute of Medicine. The study addressed the many issues present over the first 15 years of the two programs, including substandard care facilities. It also addressed the issues related to federal and state regulation of the nursing facility industry. I reference this important work since it addressed quality of care among many other issues related to regulatory oversight. Questions about how to measure quality of care concerns in nursing facilities still exist today and continue to evolve.

Another interesting aspect is that the typical nursing facility is patterned after the hospital model. If you visit a nursing facility, you will usually see a central nursing station with wings where patients’ beds are contained. The major difference is the types of staffing are totally different from acute care hospitals.

As noted in the Institute of Medicine study, hospitals’ treatment goals are based on medical diagnoses. In nursing homes, the care goals are based on physical and psychosocial assessment. A nursing facility plan of care outlines the goals for the individual patient based on this assessment.

Critical to the assessment of patients entering a nursing facility is determining their functional status. Functional status is the ability of the individual to perform the activities of daily living (bathing, dressing, toileting, transfer, feeding and continence). As the Institute of Medicine study points out, “Functional status is a sociobiologic construct that can be used to indicate the existence of chronic conditions and to objectively measure their severity. It also can be used to determine service needs and outcomes resulting from service use homogeneous groups of patients.” Also, the Institute of Medicine study goes on to report that a resident’s initial functional status is the best predictor of health care outcomes.

Measuring nursing facility quality continues to be a focus and challenge. CMS issued an informational bulletin to states on Aug. 22, 2022, urging states to tie Medicaid nursing home payments to quality outcomes. Various tools have been developed to measure nursing facility patient functional status over the years. The most widely used tool is the Minimum Data Set (MDS). However, if we are to truly care for patients, we need to understand their health status and needs, and providers need to understand the expected level of care for those patients based on that health and functional status.

The best way to do this is with a categorial risk adjustment model. Other regression models can get close, but we aren’t playing horseshoes here. We need to understand an individual’s health burden and functional status to drive care decisions and more.

The advantage of a categorial risk adjustment tool is that it can be used to measure a population’s burden of illness. Using standard claims data and, when available, additional information such as pharmaceutical data and functional health status, collected longitudinally to assign each individual to a single, mutually exclusive risk group really gives a complete picture of the individual. A categorical model creates a language that links the clinical and financial aspects of care. Each individual is assigned to a single base grouping that reflects the full range of diagnoses for that individual. In addition, the individual is assigned to a severity of illness (SOI) subclass. Typically, there are four SOI subclasses for each base grouping: minor, moderate, major and extreme.

Many states have had initiatives underway to implement value-based payment programs for nursing facilities. I’m proud to still be working on this issue decades later by supporting continued efforts to make quality outcomes-based tools available to states, providers, managed care plans and others to support care management and value-based payment programs. It is still an important area to get right for Medicare and Medicaid beneficiaries today and going forward.

Chet Stroyny, consultant at 3M Health Information Systems.