Guest Editorial

Our System Rewards Poor Quality


One reads with interest the enormous volume of literature that describes government efforts to improve nursing home quality. This is all a fraud. The reality is that state and federal reimbursement agencies pay nursing homes more to provide low-quality care. This incentive overwhelms all efforts to the contrary.

Fortunately for the residents of my facility, we are a nonprofit, government-owned organization, and the board that runs this facility puts quality care as its first goal. We rate 131 out of 132 points on the state “report card,” the highest rating in our county. We have the highest level of nursing staff (except for one specialty care unit), the fewest deficiencies, the highest nursing cost per patient day, and the best quality indicators. We also receive the lowest Medicaid reimbursement-almost a half million dollars less than the county average for managing an older population-and one of the lowest reimbursements in the county for Medicare.

The reason for this is clear: When a facility provides high-quality care, the patient’s health is better, he or she is discharged sooner, and reimbursement is reduced accordingly.

Take the case of a hypothetical patient (who we will identify here as “Grandma Ann”) and her identical twin sister (“Grandma Agatha”). Both were living in senior housing when they fell, were injured, and were taken to a hospital on the same day. After treatment they were sent to two skilled nursing facilities, which were reimbursed under Medicare. One facility featured excellent staffing and one-to-one rehab. The patient there, Grandma Ann, progressed to her baseline level in one month and was discharged. The facility received 30 days of Medicare payments, or about $9,000.

In the other facility the twin sister, Grandma Agatha, with exactly the same injuries, was given inadequate attention in a group setting and was on Medicare for 60 days. The facility received about $18,000 for doing a less-than-adequate job.

Both sisters were later readmitted on Medicaid, which had an acuity-based reimbursement system in place. Upon starting treatment, they needed help with medications, dressing, bathing, assist with a wheelchair, care for a catheter, treatment of a decubitus ulcer, and one skilled procedure. Both required 150 minutes of nursing time per day, reimbursed at $51.40 per day.

Six months later Grandma Ann still required help with medications and with her wheelchair but, because of excellent nursing care, she had become independent for bathing and for dressing, had had her catheter removed and remained continent, had her ulcer healed, and was receiving treatment to prevent further skin breakdown. The nursing minutes necessary as a result had been reduced to 72 per day, and the nursing reimbursement had been reduced to $28.48.

For her part, Grandma Agatha went to a facility with a barely adequate nursing staff. She still needed assistance with medications and her wheelchair plus with dressing and bathing. Her catheter had been removed, but inadequate attention thereafter left her incontinent. She still had a decubitus ulcer, which now required two treatments a day. Her total nursing minutes were now 188 and her nursing reimbursement was $72.28 per day. In short, simply for providing inadequate care, the second facility was collecting nearly $16,000 per year more than the first for an identical patient.

Acuity-based reimbursement, the payment method for Medicare and most Medicaid systems, rewards poor quality. The total dollars at stake overwhelm efforts to improve quality by surveys, fines, public postings, and the efforts of advocacy groups. As long as the reimbursement systems fail to measure average outcomes and reward those facilities that have the best, we should stop wondering why the long-term care industry does not provide higher quality care. It does not because public agencies reward lower quality. NH

Thomas Hanley is Director of Health and Elder Services of Hampshire Care in Leeds, Massachusetts. For further information, phone (413) 584-8458 or e-mail To comment on this editorial, please send e-mail to

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