RICHMOND, Va. — Virginia's Medicaid agency will no longer give out quality-based bonus payments to the state's worst-performing nursing homes.
The change comes on the heels of CBS 6's reporting that showed the state rewarded facilities that have been identified as having the most serious violations of health and safety standards for extended periods of time.
Andrew Mitchell with the Department of Medical Assistance Services (DMAS) announced the changes in a presentation to the Virginia Nursing Home Oversight and Accountability Advisory Board earlier this month.
DMAS has run the Value Based Purchasing Program since 2021, which allows nursing facilities to earn extra Medicaid dollars in addition to the base Medicaid funding they already receive. The amount of extra money they get depends on how well they score in certain performance metrics and if they showed improvements from the previous year. The goal is to incentivize high quality of care.
The performance metrics currently include staffing levels and the avoidance of residents experiencing negative outcomes such as urinary tract infections and bed sores. But critics have said the methodology is flawed because it does not take the Virginia Department of Health's (VDH) inspection reports into consideration at all. VDH is responsible for licensing facilities and routinely inspecting them for compliance with care and safety standards as well as investigating complaints filed against facilities.
Additionally, some of the performance metrics chosen by DMAS, such as UTIs and bed sores, are self-reported by facilities. Nursing home advisory board member Jim Sherlock asked Mitchell at the recent meeting whether that caused a "reverse incentive" for facilities to under-report that data.
“I think [the Centers for Medicare and Medicaid Services] acknowledges that those are self-reported, and for some of them, I think even the falls with major injury, they are in the process of validating them or cross checking them with claims data as a way to try to address that very kind of concern. So it is an acknowledged problem," Mitchell answered.
Through an analysis of program awards back in September, CBS 6 found DMAS gave the six nursing homes associated with the federal Special Focus Facility program a combined $5.2 million in fiscal year 2025. Mitchell said these facilities are "essentially the six worst performing nursing facilities in the state." For comparison, DMAS gave six different facilities with the highest possible quality ratings $5.9 million in 2025.
According to the Special Focus Facility program criteria, these nursing homes “rarely address underlying systemic problems that give rise to repeated cycles of serious deficiencies, which pose risks to residents’ health and safety.”
VDH and CMS select the facilities based off their inspection records over the past three years. One facility is designated as the Special Focus Facility and five others are considered candidates and essentially put on a watch list.
Some experts, family members of residents, and lawmakers expressed concern that the state Medicaid agency was handing out bonus taxpayer dollars meant to reward quality to facilities that another state agency deemed as having a history of serious quality issues.
Virginia Medicaid gave the state's worst-rated nursing homes millions in bonuses meant to reward quality
Moving forward, Mitchell said Special Focus Facilities will not be rewarded anymore.
“Those six facilities will not be eligible for payments starting in July of next year," Mitchell said.
Officials with DMAS told CBS 6 the agency wants to be incentivizing the right things and said due to clear issues associated with Special Focus Facilities, it would not be appropriate to continue rewarding those facilities. While they said CBS 6's previous reporting brought more attention to the issue, officials had already begun internal discussions about the matter.
CBS 6 also reached out to the Virginia Health Care Association (VHCA), which represents the nursing home industry, about the changes. Spokesperson Amy Hewett did not directly comment on the exclusion of Special Focus Facilities from the program but said the association helped design the initial program and has "supported the program’s evolution as it has matured."
Hewett additionally noted that Virginia nursing facilities outperformed the national average on five out of six of the original performance measures.
Mitchell said DMAS will modify the performance measures for future years. For example, DMAS will swap out a staffing measure for a turnover measure and swap out the avoidance of UTI's measure for the avoidance of falls with major injuries measure.
In the longer term, he said DMAS is also looking to further align the program with VDH's data on inspections and complaints. That may not happen until fiscal year 2028.
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