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Phase Two: Payment Reform

Guidance for Phase Two: Payment Reform under the Initiative to reduce avoidable hospitalizations in Nursing Home Residents.


Issued by: Centers for Medicare & Medicaid Services (CMS)

Issue Date: January 09, 2020




On August 27, 2015, the Centers for Medicare & Medicaid Services (CMS) announced a new funding opportunity to launch the second phase of this Initiative. In this phase Enhanced Care Coordination Providers (ECCPs) were invited apply to test whether a new payment model for long-term care (LTC) facilities and practitioners would improve quality of care by reducing avoidable hospitalizations, and whether the model could lower combined Medicare and Medicaid spending.

The intent of the new payment model was to reduce potentially-avoidable hospitalizations by funding higher-intensity treatment services in LTC facilities for residents who may otherwise be hospitalized upon an acute change in condition. Improving the capacity of LTC facilities to treat common medical conditions as effectively as possible on-site in the facilities, as appropriate, has the potential to improve the residents' care experience at lower cost than a hospital admission. During this phase of the Initiative, CMS focused on six medical conditions that, together, had previously been linked to about 80% of potentially avoidable admissions:

  • Pneumonia
  • Dehydration
  • Congestive Heart Failure
  • Urinary Tract Infection
  • Skin ulcers / Cellulitis
  • Chronic Obstructive Pulmonary Disease / Asthma

The model also included Medicare payments to practitioners (i.e., physicians, nurse practitioners and physician assistants) at a level similar to the payments they would receive for treating beneficiaries in a hospital.  

Successful ECCP applicants implemented the payment model with partner facilities continuing from Phase One as well as a number of newly recruited facilities. ECCPs and their partnering nursing facilities also continued the evidence-based clinical and educational interventions that they had implemented during the first phase of the Initiative. The payment model ran for four years, from October 2016 to September 2020. 

Press release (August 27, 2015)

Fact sheet (August 27, 2015)

On March 24, 2016, CMS announced cooperative agreements with six ECCPs:

Alabama Quality Assurance Foundation - Alabama

HealthInsight of Nevada - Nevada and Colorado

Indiana University - Indiana

The Curators of the University of Missouri - Missouri

The Greater New York Hospital Foundation, Inc. - New York

University of Pittsburgh Medical Center (UPMC) Community Provider Services - Pennsylvania

Press release (March 24, 2016)

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