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RTI Report Finds That CMS Payment Reform Initiative Did Not Reduce Avoidable Hospitalizations

RESEARCH TRIANGLE PARK, N.C. — RTI International, a nonprofit research institute, has released a new report finding that a recent Centers for Medicare & Medicaid Services (CMS) initiative did not reduce avoidable hospitalizations among nursing facility residents.

The initiative, formally known as the CMS Initiative to Reduce Avoidable Hospitalizations among Long-Stay Nursing Facility Residents - Payment Reform (NFI 2), yielded no clear evidence that its payment incentives achieved desired reductions in hospital utilization or Medicare expenditures for residents in participating nursing facilities. The report also noted that adding the NFI 2 payment incentives did not provide incremental improvement to the prior reductions that RTI found in its evaluation of the earlier clinical phase (NFI 1).

The evaluation found that although facility leaders and participating providers generally supported the initiatives goals, the NFI 2 financial incentive design was not effective in reducing avoidable hospitalizations or saving Medicare costs. RTI’s analysis of the NFI 2 billing patterns also suggested that facility treatment for the six Initiative-qualifying conditions did not substitute for hospitalization. Most residents treated on-site would not have been hospitalized, regardless of NFI 2 participation.

The NFI 2 financial incentive design was not effective, in part, due to the diverse facility and provider environment in which it was implemented, the report states. For example, many facilities owned by corporate chains never received the financial incentives directly. Instead, their CMS payments often went to centralized corporate offices without allowing facilities to determine how the funds might be used. Absent direct receipt of the financial incentives, facilities were less motivated to implement NFI 2 fully.

The report noted important lessons learned. First, Medicare payment incentives alone did not change facility or provider care practices enough to result in a real change in hospitalization rates. Instead, the team confirmed the importance of clinical staff stability and consistent assignment of nursing staff. Without adequate and consistent staffing levels and capacity to manage resident acute care needs in the facility, further hospitalization reductions would be challenging to achieve. Second, prioritizing on-site care for all residents may work better than focusing on residents with specific conditions, as NFI 2 was designed. Facilities may have more success addressing hospitalization rates facility-wide, as they did in NFI 1.

RTI’s team of national experts in program evaluation, Medicare payment policy, and health care for older adults, conducted the evaluations of both NFI 1 and NFI 2.

NFI 1, conducted from 2013-2016, involved seven Enhanced Care and Coordination Provider (ECCP) organizations, partnering with about 150 nursing facilities across seven states. Interventions ranged from ECCP-provided nursing facility staff education to deployment of nursing facility-based nurse practitioners to assess and care for residents. NFI 2, conducted from 2016-2020, built upon the initial design with an added financial incentive for participating facilities and providers.

View the full NFI 2 report