Every year, about 25% of people who live in nursing facilities are transferred to hospitals for care. Although some of these transfers are required to treat specific health conditions or complications, many of these hospitalizations may be avoided through quick diagnosis and treatment in nursing facilities. Unnecessary hospitalizations of nursing facility residents are disruptive, disorienting, and often unsafe. Hospital care is also expensive. Medicare and Medicaid, the federally funded insurance programs that cover most long-term care costs, spend an estimated $1.9 billion each year on avoidable hospitalizations. Keeping nursing facility residents on site for care represents an opportunity to improve resident health, while reducing care costs.
Clinical and Educational Approaches to Reduce Both Avoidable Hospitalizations and Medicare Expenditures (NFI 1)
The Initiative to Reduce Avoidable Hospitalizations among Nursing Facility Residents (NFI)—a 2012-2016 Centers for Medicare & Medicaid Services (CMS) effort—tested a range of clinical care and educational interventions aimed at:
- Reducing avoidable hospitalizations among long-stay nursing facility residents
- Improving nursing home residents’ quality of care
- Decreasing health care costs.
The Initiative involved seven Enhanced Care and Coordination Provider (ECCP) organizations, partnering with about 150 nursing facilities across seven states. Interventions ranged from ECCP-provided education and training for facility staff to deployment of advanced practice registered nurses to provide resident assessments and care in participating facilities.
Financial Incentive Approaches to Reduce Both Avoidable Hospitalizations and Medicare Expenditures
In 2016, CMS began implementing the second phase of the Initiative to Reduce Avoidable Hospitalizations among Nursing Facility Residents, adding a new Initiative-wide facility payment incentive and a second cohort of participating nursing facilities. This second phase of the Initiative concluded in October 2020. The model offered:
- Additional payments if the nursing facilities provided on-site care to residents with specific health conditions that commonly lead to hospitalizations.
- Facilities submitted Medicare claims for treating eligible residents on site, rather than transferring them to hospitals for care.
- Facilities could receive extra per diem payments for periods of in-house treatment.
- Additional payments to participating physicians and nurse practitioners for supporting facilities in this effort.
- Practitioners could bill Medicare Part B when evaluating residents for facility-based care.
- Practitioners could receive a hospital-level payment for this care.
The diagram below outlines the theory of action for NFI 2, highlighting how CMS intended the Initiative to be implemented and highlighting intended outcomes.