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The Impact of Nursing Home Pay-for-Performance on Quality and Medicare Spending: Results from the Nursing Home

Objective: To evaluate the impact of the Nursing Home Value-Based Purchasing demonstration on quality of care and Medicare spending.

Data Sources/Study Setting: Administrative and qualitative data from Arizona, New York, and Wisconsin nursing homes over the base-year (2008–2009) and 3-year (2009–2012) demonstration period.

Study Design: Nursing homes were randomized to the intervention in New York, while the comparison facilities were constructed via propensity score matching in Arizona and Wisconsin. We used a difference-in-difference analysis to compare outcomes across the base-year relative to outcomes in each of the three demonstration years. To provide context and assist with interpretation of results, we also interviewed staff members at participating facilities.

Principal Findings: Medicare savings were observed in Arizona in the first year only and Wisconsin for the first 2 years; no savings were observed in New York. The demonstration did not systematically impact any of the quality measures. Discussions with nursing home administrators suggested that facilities made few, if any, changes in response to the demonstration, leading us to conclude that the observed savings likely reflected regression to the mean rather than true savings.

Conclusion: The Federal nursing home pay-for-performance demonstration had little impact on quality or Medicare spending.

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