Nursing homes in the United States face challenges in providing high-quality care to long-stay residents. This is in part because the payment structure for providing nursing home care is complex, with Medicare paying for post-acute care services and Medicaid paying for long-term care. Value-based payment models, which reward providers for improving quality outcomes and reducing costs, offer a promising solution. However, implementing these models in nursing homes is complex.

A recent NEJM Perspective by Health Policy PhD Candidate Amanda C. Chen, M.S., Scott Sarran, M.D., M.B.A., and Professor of Health Care Policy David C. Grabowski, PhD explores the current state of nursing home payment systems, the potential benefits of value-based payment models, and the challenges that must be addressed to successfully implement these models in nursing homes.

Institutional Special Needs Plans (I-SNPs) are a type of value-based payment model designed for nursing homes. I-SNPs are a specialized type of Medicare Advantage (MA) plan that restrict enrollment to eligible beneficiaries who receive long-term care in an institutional setting or live in the community but require an institutional-level of care. What differentiates an I-SNP from other MA plans is the provision of on-site nurse practitioners who work with nursing home staff and primary care providers to improve care coordination and prevent avoidable hospitalizations. There can be variation between I-SNP models based on the level of financial risk shared between the nursing home and the insurer which operates the plan. 

I-SNPs offer several potential benefits:

• Financial Engagement for Nursing Homes: I-SNPs can help nursing homes reduce expenses, primarily by preventing hospitalizations, and offer opportunities for nursing homes to participate in shared savings.
• Improved Quality of Care: I-SNPs can enhance care coordination, increase the provision of primary care, and reduce hospitalizations.
• Enhanced Resident Experience: I-SNPs can offer personalized care plans and provide supplemental benefits tailored to resident needs.

However, I-SNP penetration remains low (approximately 10% of all long-stay nursing home residents are enrolled) due to regulatory challenges related to the marketing, sales, and enrollment in I-SNPs. Also, some nursing homes may be hesitant to adopt I-SNPs due to lack of buy-in and concerns about risk sharing. 

More research is needed to fully understand the impact of I-SNPs on care quality, costs, and resident outcomes. Despite challenges, I-SNPs offer a potentially promising approach to improving nursing home care for long-stay nursing home residents. If they are able to address the limitations of traditional payment models and provide incentives for quality improvement, I-SNPs can help ensure that nursing home residents receive the high-quality care they deserve.