RICHMOND, Va. — Virginia's Medicaid agency is acknowledging in a new statement that it needs to make changes to its program that doles out bonus cash to nursing homes in an effort to improve the quality of care. This comes after CBS 6's reporting into how the state was distributing those taxpayer dollars and the concerns it caused.
The Department of Medical Assistant Services (DMAS), which oversees the Medicaid program, gave out a total of $5.2 million in extra value-based payments to Virginia's six poorest-performing facilities. These nursing homes are enrolled in or candidates for the nationwide special focus facility program, which directs increased oversight of facilities that “rarely address underlying systemic problems that give rise to repeated cycles of serious deficiencies, which pose risks to residents’ health and safety."
Henrico Health and Rehab has been designated the worst-rated facility in the state, due to its "pattern of serious quality issues" identified through inspections by the Virginia Department of Health (VDH).
Despite that, DMAS gave the nursing home more than $700,000 in bonus quality-based payments in fiscal year 2025.
“It doesn’t make sense," said Cynthia Jefferson, whose aunt is a Medicaid resident at Henrico Health and Rehab. “I don't think they should be getting a reward. Nobody should get a reward if they're not up to standards. You’re setting a bad example.”
While DMAS did not respond to CBS 6's questions sent on August 20 for our initial story about the Value-Based Purchasing program, the agency has now provided a response more than a month later.
"It is clear that the focus of the VBP program needs to be restructured to intentionally reward facilities making the most progress in their quality standards affecting our members and DMAS is currently considering options to strengthen the program," said DMAS spokesperson Kedra Keith.
Based on the Centers for Medicare and Medicaid's (CMS) 5-star rating system, which scores nursing homes based on their staffing levels, inspection performance, and quality measures, Keith said 5-star facilities in Virginia currently earn 22% more funding than 1-star facilities on average.
However, DMAS believes "this level of differentiation is not sufficient," according to Keith.
Data shows the $5.2 million that Virginia's special focus facilities received in quality-based payments were not significantly lower than the $5.9 million given to six other facilities with the highest possible overall quality ratings from CMS.
Here's how the program works: DMAS collects data on six specific quality metrics including staffing levels and the avoidance of residents experiencing bad outcomes like getting bed sores or urinary tract infections.
The higher a facility scores in those categories based upon the data it submits, or the more it improves from the previous year, the more money it gets. The payment amounts are determined by a tiered system offering varying financial incentives at each level.
These value-based bonus payments are distributed in addition to the regular funding facilities already receive from Medicaid. DMAS does not withhold any base payments from facilities in order to fund the program.
The Virginia Health Care Association (VHCA), which represents the industry, said the program has "successfully driven performance improvements on targeted quality metrics at the provider level."
But critics like Toby Edelman, a nursing home regulation expert with the Center for Medicare Advocacy, said the program relies too heavily on data that is self-reported by the facilities and is not accomplishing its goal of incentivizing and improving quality of care.
“They're not really making a difference. It's like money just being given to facilities and not reflecting really significantly better care or much of anything. It’s just - we’re going to give you some more money," Edelman said.
Pointing to the problems with the program's methodology, she said it does not incorporate VDH's inspection findings, which are the main metrics that VDH considers when determining special focus facilities.
“Why would these facilities be getting extra money for providing good care when the other part of the state is saying, ‘These are the worst facilities in the state’?” Edelman said.
Lawmakers also took notice of CBS 6's reporting and questioned VDH and DMAS leaders about it during a General Assembly committee meeting earlier this month.
“Why can't you guys work better together? And if you go in and you find a nursing home that's not up to standard, do you call DMAS and say, ‘Hey, maybe you shouldn't be giving this company a value-based purchasing bonus.’ Do you do that?” said Del. Mark Sickles (D-Arlington).
Keith told CBS 6 that DMAS is looking at ways to improve collaboration with VDH, especially as the agency takes significant steps to bolster its understaffed licensing and certification office.
VDH has been criticized for late and overdue inspections, also known as surveys, that may impact facilities' CMS quality scores, and the VHCA previously said factoring inspection results into the Medicaid program could create disparities among providers.
"The Governor’s Executive Order #52 significantly strengthens Virginia’s oversight capacity by expanding inspection and survey activity for nursing facilities. As those improvements take effect, DMAS may consider incorporating inspection or survey-related measures into the NF VBP program methodology in future years. In the interim, DMAS is researching other avenues for this type of oversight information to be considered in the disbursement of VBP funds," Keith said.
DMAS is also considering establishing a minimum quality standard that facilities must meet to even participate in the program and be eligible to receive the extra money. Some states already exclude nursing homes with serious quality issues, such as special focus facilities, from their programs.
The agency's chief deputy director Jeff Lunardi told lawmakers during a public meeting earlier this month that the program's methodology "needs to be different."
“We’ve learned that we need to expect more from the nursing facilities in return for the investment, and particularly for our lowest performers who are struggling to provide the quality of care that we expect for the members," Lunardi said.
According to Keith, any program changes should be fully implemented by fiscal year 2027.
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