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Pay for Performance: Can It Help Improve Nursing Home Quality?



Nursing home quality threatens the well-being of residents. Pay for performance pays organizations for meeting performance targets and is required in Medicare hospitals under the 2010 Patient Protection and Affordable Care Act, where it is called “value-based purchasing.” It is not yet required of nursing homes. This article asks whether pay for performance could mitigate nursing home quality problems. A total of 159 health care studies were reviewed. “Effect sizes” (the percentage improvement or decline in care) were gleaned from 22 selected studies measuring 150 health outcomes ranging from more frequent foot exams to a measure of heart function. The median improvement was a modest 2.9 percent. Nursing home studies were a minority of those reviewed. Yet one large randomized trial proved successful. Pay for performance may be well suited to nursing homes given their routine care, chronic population, and low wage rates. However, design and implementation lessons must be applied to avoid failure.