The Centers for Medicare and Medicaid Services announced it will test a new payment model for nursing facilities, with a goal of reducing avoidable hospitalizations, improving quality and cutting Medicare and Medicaid spending.

This phase of the Initiative to Reduce Avoidable Hospitalizations among Nursing Facility Residents seeks to reduce avoidable hospitalizations among beneficiaries eligible for Medicare or Medicaid by providing new payments to practitioners for engaging in multidisciplinary care planning activities. The participating skilled nursing facilities also will receive payment to provide additional treatment for common medical conditions that often lead to avoidable hospitalizations.

Through this model, CMS said it hopes to facilitate practitioner engagement when a nursing facility resident needs higher-intensity interventions due to an acute change in condition.

The model will be tested in six sites beginning in the fall. None of the locations are in New Jersey.

Medicare currently pays physicians less for a comprehensive assessment at a skilled nursing facility than for the same assessment at a hospital. This model would equalize the payments between the sites of care. Removing potential barriers to effective treatment within a facility can improve the residents’ care experience and mitigate the need for disruptive and costly hospitalizations. For example, participating skilled nursing facilities will be expected to enhance their staff training and purchase new equipment to improve their capacity to provide intravenous therapy and cardiac monitoring.

Since 2012, CMS has funded Enhanced Care and Coordination Providers (ECCPs) to test a model to improve care for long-stay nursing facility residents through clinical and educational interventions. The ECCPs currently collaborate with 143 long-term care facilities to provide on-site staff for training and preventive services and to improve the assessment and management of medical conditions.

Early results from the first phase of the Initiative are promising, according to an independent evaluation. All seven sites generally showed a decline in all-cause hospitalizations and potentially avoidable hospitalizations, with four sites showing statistically significant reductions in at least one of the hospitalization measures. In addition, all sites generally showed reductions in Medicare expenditures relative to a comparison group in 2014, with statistically significant declines in total Medicare expenditures at two sites. This first phase of the Initiative will continue through 2016.