Minnesota making progress on incredibly hard’ task of performance-based contracting for nursing homes
Developing criteria for payment promises to be controversial
Frustrated with buying a pig in a poke, Minnesota is getting serious about performance-based contracting for Medicaid nursing home care.
This month, Minnesota officials are reviewing proposals to help the state develop criteria for the new system of contracting. The target date for implementation is July 1, 2001, moved back a year this spring by legislators and a nursing home industry wary of such a fundamental change in the way nursing home care is paid.
"We got a delay in the implementation in order to spend more time, really, thoughtfully developing a system, given the fact this is an incredibly hard thing to do," says Laurel Illston, manager of special projects for the Minnesota Health & Housing Alliance in St. Paul.
Minnesota already operates a pilot project for contracting involving 246 nursing facilities, more than half of the state’s total. The project, approved by legislators in 1995, is intended to develop an alternative to the state’s cost-based reimbursement system.
The state’s Department of Human Services issues a request for proposals from facilities interested in participating in the demonstration, and chooses among them using a predetermined selection process.
Contracts are renegotiated annually, and state law allows facilities to participate for up to four, one-year terms. The first contract were signed in May 1996, and thus far, all nursing facilities in the demonstration project have chosen to renew their contracts.
Proposals were due to the Department of Human Services Sept. 7 to help officials with four specific areas as they expand the pilot to the rest of the industry:
• Criteria by which the performance-based incentive payments are made. Proposed criteria were discussed in a report to the legislature in January, says Bob Held, division director of the state’s Continuing Care for the Elderly. He adds that state officials are "open to hearing what new ideas might emerge."
• Establishment of a plan to move toward universal adoption of Medicare’s resident assessment system so that the financial impact for each facility would be budget neutral. Since 1985, Minnesota Medicaid has reimbursed nursing facilities according to one of 11 payment categories in its own case-mix system.
• Identification of net cost implications for nursing facilities and the Department of Human Services preparing for and implementing performance-based contracting, or any proposed alternative system.
• Identification of facility financial and statistical reporting requirements involved in performance-based contracting.
Public-private work groups will tackle five other issues:
• Interim default payment mechanisms for facilities that don’t have a contract. All but eight of the state’s 438 nursing home facilities depend upon Medicaid revenue, leaving legislators and industry officials to fret about what would happen to nursing homes unable to snag a contract.
If you don’t have a Medicaid contract, you’re out of business," says Ms. Illston. "You can’t not take Medicaid."
The concern is valid, particularly in rural areas that may depend upon nursing facilities as an economic base, says Mr. Held, but he maintains that the quality of the care is a separate issue. "If we’re going to do business by contract, and you can’t get a contract because of your quality or you refuse to apply for a contract, why should we do business with you?"
• Criteria and a system for requesting rate adjustments for low base rates, geographic disparities, or other reasons.
• Development of a dispute resolution mechanism for nursing facilities that are denied a contract, incentive payments, or rate adjustment.
• Development of a property payment system to address capital needs that will be funded with additional appropriations.
• Identification of exemptions from current regulations and statute applicable under performance-based contracting.
Contact Mr. Held at (651) 215-5761 and Ms. Illston at (651) 645-4545.
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