Key Takeaways

1. New nursing facilities face significant barriers due to reliance on historical performance data, making it difficult to secure managed care contracts and referrals. This disincentivizes investment in modern infrastructure.
2. Provisional 5-star ratings for new facilities would address this issue by allowing fair competition during their first two years, contingent on compliance, resident outcomes, and staff performance.
3. Modernized facilities offer improved safety, better resident environments, and long-term cost efficiencies while driving systemic improvements across the sector.
4. Policymakers should ensure transparent criteria for transitioning from provisional ratings and foster collaboration between state and federal entities to support consistent implementation.

Issue

The development of new nursing facilities faces significant barriers due to the reliance on historical performance data in securing managed care contracts and referrals. New facilities, lacking this data, are disadvantaged despite offering state-of-the-art infrastructure that benefits residents and staff. This systemic challenge disincentivizes much-needed investment in modern care environments, perpetuating reliance on outdated facilities.

Proposed Reform

Establish a Provisional 5-Star Rating Program for newly built nursing facilities. Under this reform:

• Newly constructed facilities would receive a provisional 5-star rating for their first two years of operation.
• Ratings would remain contingent on the facility’s compliance, resident outcomes, and staff performance during the provisional period.
• After the provisional period, the facility’s rating would transition to reflect actual performance data, ensuring ongoing accountability.

This approach balances the need to incentivize investment with a commitment to quality and transparency.

Rationale

1. Investment in Modernization:

Many existing facilities struggle to meet modern care demands due to aging infrastructure. Encouraging new construction ensures that residents and staff benefit from updated layouts, advanced technologies, and design innovations that prioritize safety, comfort, and efficiency.

2. Breaking Barriers to Entry:

Without historical ratings, new facilities often fail to qualify for managed care contracts, leaving them unable to compete fairly. Provisional 5-star ratings remove this barrier, enabling fair competition and fostering market innovation.

3. Alignment with Quality Goals:

Provisional ratings are tied to outcomes and compliance, ensuring that the incentive is not a free pass but rather a tool to promote sustainable, quality-focused operations.

Key Benefits

1. For Residents:

• Access to modernized facilities designed with contemporary care standards in mind.
• Enhanced safety features, better staffing accommodations, and an improved overall environment that boosts quality of care and quality of life.
• 2. For CMS and Policymakers:

• Drives systemic improvements in the senior care sector by encouraging the replacement of outdated facilities with innovative, efficient designs.
• Promotes a cost-effective transition to high-performing facilities, reducing long-term maintenance and care costs associated with older infrastructure.

3. For Providers:

• Levels the playing field for new entrants, ensuring they can compete for managed care contracts and referrals.
• Supports providers in recouping substantial capital investments, fostering long-term financial stability and growth.

Implementation Considerations

• Safeguards for Accountability: Facilities must maintain compliance with all CMS regulations, and any significant deficiencies or adverse outcomes could lead to immediate adjustments in the provisional rating.

• Transparent Transition Criteria: Clear metrics for transitioning from provisional to permanent ratings should include resident satisfaction, quality indicators, and staff turnover rates.

• State and Federal Collaboration: States should work with CMS to adapt managed care frameworks to support provisional ratings, ensuring consistency across the country.

Call to Action

Modernizing nursing home infrastructure is critical to meeting the evolving needs of our aging population. By implementing a Provisional 5-Star Rating Program, policymakers can incentivize investment, ensure fair competition, and promote high-quality care in state-of-the-art environments. This reform represents a practical, forward-thinking step toward improving care outcomes for residents and providers alike.