This expanded framework reflects CMS’ priority: aligning reimbursement with not only patient/resident safety and outcomes but also organizational stability, staffing culture and transparency.
Challenges facilities are facing
While these regulatory changes have been publicized, many facilities remain unaware of their direct financial impact. For organizations, the transition to pay-for-performance healthcare means that operational missteps can quickly turn into financial losses. Our team has observed several recurring challenges:
- Lack of awareness: Many SNFs focus primarily on their public-facing Five-Star Quality Rating System scores, overlooking that the same measures are used to calculate reimbursement. The disconnect between reputation and revenue puts providers at risk of leaving dollars on the table.
- Siloed operations: Access to CMS’ iQIES system, where compliance and quality data are stored, typically rests with clinical staff. Nurses, who already balance demanding care and assessment coordination responsibilities, may not be focused on the financial ramifications of compliance reports, correction deadlines or the consequence of failing to correct data errors. Without collaboration between finance and clinical teams, key deadlines are missed.
- Compliance blind spots: Facilities often fail to run the SNF QRP compliance threshold and error detail reports in iQIES, leaving them unaware of future penalties until CMS letters arrive. Each cycle, SNFs are granted up to 4.5 months to correct errors, but many did not take advantage simply because they did not know the reports existed.
- Resource constraints: Smaller or independent facilities, particularly those outside large networks, may lack the internal compliance infrastructure that larger operators enjoy. This leads to inconsistent monitoring and reduced awareness to respond when CMS raises the bar.
Financial and strategic implications
The cumulative effect of pay-for-performance healthcare measures is significant:
- 2% VBP Withhold: Returned based on performance, often only partially.
- 2% QRP Penalty: Triggered by insufficient or inaccurate reporting.
- CMS plans to audit these QMs for accuracy beginning this fall, which has the potential to impact Medicare rates for FY 2027.
- State Medicaid Linkages: Some states use CMS quality measures as incentives or payment add-ons for Medicaid reimbursement, compounding financial exposure.
In total, a facility could easily lose 4% or more of its Medicare revenue, not including the reputational impact of lower star ratings or negative public reporting.
Given tightening operating margins in long-term care, even a small percentage reduction in reimbursement can have disproportionate effects on staffing, resident services and long-term sustainability.
How Baker Tilly can help
Our team has worked alongside nursing facilities nationwide, helping providers align compliance, operations and financial planning. Based on our experience, several strategies have proven essential:
- Quality measure reviews: Baker Tilly conducts quarterly reviews of CMS quality measures across VBP, QRP and Five-Star reporting. These reviews identify noncompliance, highlight opportunities to resubmit or correct data and provide actionable recommendations to safeguard reimbursement.
- Education and training: We bridge the gap between clinical and financial teams. By training staff on where to locate iQIES reports, how to interpret them and what deadlines matter, we empower organizations to integrate compliance monitoring into daily operations rather than reacting after penalties hit.
- Process and technology alignment: Our advisors help nursing facilities implement workflows and digital solutions that automate compliance checks, integrate staffing data and improve visibility into performance metrics. Leveraging data early allows providers to correct the course before penalties or lost revenue occur.
- State Medicaid program impact: Because many states now align Medicaid incentives with CMS quality metrics, our team evaluates performance across federal and state programs. This dual approach helps providers capture every available dollar while avoiding unnecessary losses.
- Strategic advisory for future measures: As CMS adds new measures, such as discharge function and falls, Baker Tilly guides providers in adapting care models, documenting outcomes and preparing for evolving definitions of value. This proactive strategy ensures facilities are not just compliant but competitive.
Looking ahead: From compliance to competitive advantage
Pay-for-performance is no longer a niche program, it is becoming the default model across healthcare. While CMS has introduced these measures gradually, the trend is clear: more quality domains, stricter reporting thresholds and greater public visibility.
For SNFs, the risk of noncompliance is substantial, but so is the opportunity. Facilities that integrate pay-for-performance into their operational strategy can:
- Protect and even increase Medicare reimbursement
- Improve care quality and resident outcomes
- Strengthen Five-Star ratings and public reputation
- Position themselves competitively for partnerships with hospitals, ACOs and payors
Baker Tilly’s role is to help organizations make this shift from reactive compliance to proactive improvement. By aligning financial management, clinical care and operational monitoring, facilities can thrive in a healthcare landscape where value, not volume, determines success.
CMS’ movement toward pay-for-performance underscores a central truth: the financial health of skilled nursing facilities is now inseparably tied to the quality of care delivered and documented. With expanded measures, stricter thresholds and dual pressures from public reporting and reimbursement, providers cannot afford to treat compliance as an afterthought.
At Baker Tilly, we are committed to guiding SNFs through this transformation. Whether through education, quality reviews, or strategic advisory, our goal is to help organizations safeguard revenue, elevate resident outcomes and turn regulatory compliance into a competitive advantage.
Discover how Baker Tilly can help your facility navigate CMS’ evolving pay-for-performance programs.
