Effectiveness Of The Medicare Skilled Nursing Facility Value-Based Program Was Likely Hampered By Small Size & High Variability Of Incentives

Results from the first three years of the Medicare Skilled Nursing Facility Value-Based Purchasing (SNF VBP) program suggest that it was not successful at reducing all-cause 30-day readmissions from SNFs to hospitals. A recent study proposes that the lack of success could be due to the small size and high variability of financial incentives offered. The program began in federal fiscal year (FFY) 2019 (starting October 2018). The program’s first three years involved stays in 14,189 SNFs by Medicare fee-for-service (FFS) beneficiaries recently discharged from the hospital to a SNF. The SNFs had downside risk and upside incentives. They were at-risk for up to 2% of their Medicare FFS rate, or they could earn a rate increase of up to 3% based on performance benchmarks for risk-adjusted 30-day readmission rates.

The median reimbursement adjustment across all SNFs and years was 0.15% of average SNF operating income, which translated to $10,336 per SNF per year. The magnitude of the financial incentives varied from year to year for most SNFs. The researchers concluded that the small size of the actual reimbursement adjustment and the high variability of the incentive payments may have contributed to the relative lack of effectiveness of the SNF VBP program.

SNFs certified by the Centers for Medicare & Medicaid Services are required to participate in the VBP program. During the first three years that the SNF VBP outcomes were assessed, FFY 2019 to 2021, there were more than 5 million qualifying SNF stays, according to the report. 

These findings were reported in Size of the Financial Incentives in Medicare’s Skilled Nursing Facility Value-Based Purchasing Program by Robert E. Burke, M.D., MS; Franya Hutchins, Ph.D.; Jonathan Heintz, MS; and colleagues. They sought to determine how the size and distribution of SNF VBP financial incentives were related to the projected program outcomes during the first three years, from 2019 through 2021.

The full text of Size of the Financial Incentives in Medicare’s Skilled Nursing Facility Value-Based Purchasing Program was published on September 26, 2025, by JAMA Network Open. A free copy can be viewed online (accessed October 2, 2025).

Additional information about the SNF VBP program is online (accessed October 3, 2025).

OPEN MINDS last reported on this topic in Medicare To Launch Value-Based Purchasing For Skilled Nursing Facilities Starting October 1, 2018 on July 1, 2018.

For more information, contact: Robert E. Burke, M.D., MS, Associate Professor, Division of Hospital Medicine, Perelman School of Medicine, University of Pennsylvania, 423 Guardian Drive, 1232 Blockley Hall, Philadelphia, Pennsylvania 19104; Email: robert.burke2@pennmedicine.upenn.edu; Website: https://ldi.upenn.edu/fellows/fellows-directory/robert-burke-md-ms