What’s new: DMAS has posted the Year 3 (2025) methodology document for the Medicaid Nursing Facility Value Based Purchasing (VBP) Program.

• This document is relevant to the performance year that began on October 1, 2023 and runs through September 30, 2024 with payments in the spring of 2025.
• It does not affect the Year 2 performance cycle that ended on September 30, 2023 with payments coming in the spring of 2024.

Be aware of a few important changes for Year 3:

• DMAS is “correcting” the staffing ratio metric thresholds. Remember, it was discovered that the thresholds initially set utilized the wrong data. Despite that, DMAS kept them in place for Year 1 (completed) and Year 2 (performance just completed, payments in spring 2024). The revised minimum threshold is a modest increase, but the higher levels of attainment have much more significant increases relative to the first two years of the program. VHCA-VCAL argued vigorously against these increases, but DMAS made the decision to move forward. Here are the new thresholds for Year 3 compared to the Year 1 & 2 thresholds:
• Related to the change in thresholds for the staffing ratio metric, the limitation of eligibility for “improvement” if a facility achieved “Best” in the previous year has been removed for Year 3; it remains in place for the RN hours metric.
• DMAS has included some language around flexibility in dealing with the recently implemented MDS changes and their effect on the Medicaid VBP Program in Year 3. With the October 1, 2023 MDS changes, both the pressure ulcer and staffing ratio measures will be affected.
  • Regarding the staffing ratio, CMS is transitioning from using the RUG-IV case mix to a PDPM-based case mix adjustment; while the effect of the methodology change is not fully understood at this point, we know that the Q4 2023 (current quarter and first quarter of the VBP Year 3) will not be calculated. Q1 2024 (the second quarter of VBP Year 3) through the end of the performance year will be calculated under the new methodology.
  • Regarding the pressure ulcer metric, it appears that due to CMS freezing the data during the transition to the new calculations, only one quarter (July 1, 2024 – September 30, 2024) will be available for the Year 3 performance cycle. VHCA-VCAL is working to verify this and discussing the efficacy of using only one quarter with DMAS.

As we continue discussions with DMAS around the MDS changes and any other VBP issues, we will update the membership.

• If you have any questions, please email Steve Ford.