Four states are finding out
What if long-term care organizations could increase compensation by simply providing better care to residents? Four states are doing just that — by tapping into The Centers for Medicare and Medicaid Services’ value-based payment arrangements.
In the battle to overcome workforce shortages, which are longstanding and widespread in long-term care, these arrangements may be critical.
Compensation in the industry is often tied to government-set reimbursement rates, at least for organizations that accept Medicaid or Medicare (most do). Facilities depend on these to fund all aspects of care, including paying direct-care professionals.
Many believe disparities in entry-level direct-care professional compensation contribute to healthcare workforce shortages. Yet, wage growth for these roles has lagged behind entry-level roles in other industries, making recruitment and retention difficult.
With some projections forecasting that 3.5 million additional healthcare professionals will be needed by 2030 to meet demand, this novel way to increase compensation could make the difference between people getting the care they need or not getting it.
Contents
What are Medicaid value-based payments?
State Medicaid VBP usage: An overview
Illinois: Aiming for increased workforce levels and CNA compensation
How Illinois facilities can earn incentives
Why it matters: Initial Illinois improvements show promise for long-term success
Maine: A phased quality bonus program emphasizing workforce levels — with penalties
How Maine facilities can earn VBP program incentives
Why it matters: Maine has the oldest population in the country
New Jersey: Increasing care quality, nurse retention and HPPD
New Jersey VBP program details
How New Jersey facilities can earn VBP program incentives
Ohio: Longstanding quality incentives updated with workforce benchmarks
How Ohio facilities can earn VBP program incentives
Why it matters: Ohio is calls itself ‘The best place to age in the nation’
Putting it all together: VBP program commonalities, achievements and future considerations
What are Medicaid value-based payments?
Put simply, Medicaid value-based payments (VBPs) are incentives tied to better care outcomes: better outcomes equal more compensation. In practice, it’s more complicated. Medicaid VBP metrics vary by state and stem from measures such as CMS’s Five-Star Quality Rating System and Staff Time Resource Intensity Verification (STRIVE) ratios.
State Medicaid VBP usage: An overview
State governments are increasingly using Medicaid VBP incentives to improve resident care quality in skilled nursing facilities, especially by addressing workforce shortages.
A recent policy brief highlighted that as of 2022, 24 states had Medicaid VBP programs. Of those, nine states have incentive-based initiatives focused on enhancing resident care: Connecticut, Illinois, Kentucky, Maine, Minnesota, Nebraska, New Jersey, Ohio and Pennsylvania. Four are explicitly using Medicaid VBP incentives to boost workforce levels.
The rest of this article will explore Medicaid VBPs in those four states: Illinois, Maine, New Jersey and Ohio. We’ll cover what’s going on in each state and why it matters.
Illinois: Aiming for increased workforce levels and CNA compensation
Illinois VBP program details
To improve workforce levels and attract and retain more healthcare professionals, the State of Illinois enacted legislation in 2022 that allocated around $350 million in annual incentives specifically aimed at increasing workforce levels and upping CNA compensation.
How Illinois facilities can earn VBP program incentives
Facilities can earn incentives in one of two ways. The first is reaching 70% to 125% of CMS’s STRIVE ratios (case-mix adjusted estimates for RN, LPN and CNA hours required per resident to deliver quality care).
The better a facility’s STRIVE ratio, the more reimbursement they earn per Medicaid resident, up to $38.68 per resident day. Ratios are determined quarterly, using data from CMS’s Provider Information file and State U.S. Averages file.
Facilities can also earn incentives through the CNA Pay Scale Incentive Program, which helps them attract and retain these vital members of resident care teams. Increased compensation is based on experience, with Medicaid covering a portion.
One caveat: There are minimums to meet, and the maximum subsidy is $6.50 per hour for CNAs with six or more years of experience. Facilities can choose to offer additional compensation, but Medicaid won’t subsidize it.
Source: Overview of Illinois’ CNA Payscale Subsidy Program
Medicaid will also subsidize $1.50 per hour in additional compensation for CNAs that have been promoted or have assumed additional responsibilities that require specialized skills. These subsidies are capped at 15% of the CNA workforce. The documentation stipulates that these subsidies cannot be earned if wages for new CNAs are reduced, an attempt to keep reductions from cancelling out additional compensation.
Why it matters: Initial Illinois improvements show promise for long-term success
By 2023, Illinois had increased staffing ratios by 11%. It had also increased nurse hours by 14%, three-quarters of which were CNA hours. STRIVE targets have also improved: At the start of 2022, 154 facilities fell below the 70% threshold, but by 2023, the number had decreased to 53. Facilities with high Medicaid populations and severe workforce shortages saw the most significant improvements.
Quality metrics were more mixed. As of 2023, long-stay quality metrics had shown improvement, but maintaining consistent quality remained difficult.
Maine: A phased quality bonus program emphasizing workforce levels — with penalties
Maine VBP program details
Maine’s three-year phased VBP program went into effect in January 2025 with an $8.1 million annual quality bonus pool. The intention is to boost hours per patient day (HPPD) and care quality while giving skilled nursing facilities time to adapt to new requirements. Additionally, direct- and routine-care cost settlements have been eliminated.
The program comes with penalties, too. Starting in the second year, facilities that do not meet requirements will have 1% of their Medicaid rate withheld. In year three, they could have up to 2% of the rate withheld. With the withholds, Maine plans to create a sustainable fund for year four and beyond.
How Maine facilities can qualify for incentives
With its VBP program, Maine is tying compensation to HPPD, positive resident experiences and clinical measures identified in Care Compare, such as UTI monitoring and appropriate antipsychotic usage.
Maine has a 4.44 HPPD requirement, and is incentivizing facilities to hire healthcare professionals to meet it by imposing a 10% per-facility limit on independent and temporary professional support. The state will use the CoreQ resident satisfaction survey, a person-reported outcomes report, in determining resident experience.
Source: Nursing Facility Services MaineCare Rate Reform
Why it matters: Maine has the oldest median population in the country
It’s unclear how this new program will affect Maine’s skilled nursing industry. But it is clear that Maine has the oldest population in the country: The median age is 44.8 years, and 23% of Mainers are over age 65. This makes the state somewhat of “a canary in the coal mine,” heralding the challenges that skilled nursing facilities are likely to face in the coming years.
New Jersey: Increasing care quality, nurse retention and HPPD
New Jersey VBP program details
The Quality Incentive Payment Program (QIPP), New Jersey’s Medicaid VBP program, began in July of 2019 with an annual pool of $50 million. The QIPP is jointly run by the state’s Division of Aging Services and Medical Assistance and Health Services. It’s updated periodically based on stakeholder input.
Initial incentives were doled out to facilities for meeting various quality measures (low use of restraints, low falls, higher vaccination rates, etc). In 2024, the state added workforce-related incentives and revised its quality metrics. It also released a report lining out reforms for the following three years (linked in the resource section). The new program nearly doubles the maximum per resident per day incentive from $12.60 to $23.25.
How New Jersey facilities can earn VBP program incentives
Facilities earn incentives for meeting quality care standards, hitting or exceeding New Jersey’s HPPD minimums, improving HPPD or retaining more direct care professionals. Quality metrics, revised in FY 2025, include appropriate antipsychotic usage, incidence of pressure ulcers, hospitalizations per 1,000 resident-days, and resident satisfaction via the CoreQ survey.
Facilities can be excluded from these incentives for being on CMS Special Focus Facility Lists A, C, D; having a One-Star CMS Quality Rating; or being cited by the Department of Health for two (or more) Level G licensing violations. Failure to submit or meet mandatory QIPP requirements can also disqualify them.
Source: nj.gov
Nurse retention incentives
With its nurse retention benchmark, New Jersey aims to reward facilities that retain nurses, and in turn, decrease turnover rates. To receive the $4.50 per-patient day incentive, facilities must meet or exceed the 30% retention benchmark, calculated using quarterly Payroll-Based Journal data.
Quality care incentives
Skilled nursing facilities can earn up to $3 per patient day for each quality measure, including CoreQ resident satisfaction surveys.
Source: Nursing Home Quality: Quality Incentive Payment Program (QIPP)
Notes: Metrics are derived from the CMS Nursing Home Quality Initiative. Benchmarks (National/State averages) are calculated by DHS using CMS data. The stricter benchmark between national and state averages is used for determining quality payment eligibility. There are specific rules and limitations; please see the linked resource for details.
Why it matters: COVID-19 exposed systemic issues in New Jersey long-term care that the state is still working to overcome
After the COVID-19 pandemic exposed systemic weaknesses in the long-term care industry, New Jersey invested millions of dollars into long-term services and supports (LTSS).
Efforts included increased reimbursements for skilled nursing facilities, with a focus on increasing compensation for direct care professionals. The State of New Jersey has adopted multiple policy reforms aimed at ensuring skilled nursing facility residents receive the appropriate care.
However, that has not been enough. New Jersey is now incentivizing higher workforce levels than mandated, encouraging improvement in facilities with chronic workforce shortages, and bolstering workforce retention efforts.
By aligning financial rewards with excellent workforce levels, it’s possible that the state will achieve its aim of attracting new direct care professionals and retaining those who may be “feeling overwhelmed and undervalued while engaged in physically and emotionally difficult work.”
Ohio: Longstanding quality incentives updated with workforce benchmarks
Ohio VBP program details
Ohio's Medicaid VBP program, “Nursing Facility’s per Medicaid Day Quality Incentive Payment Rate,” went into effect in 2020. It allocates $125 million annually to skilled nursing facility quality incentives, along with a per-facility payment (linked in the resources section). The per-diem rate is paid per the Medicaid claims cycle.
Administered by the Ohio Department of Medicaid, this program has historically rewarded facilities based on a set of clinical quality measures. In the 2024 to 2025 budget, lawmakers continued this initiative and expanded it to include a workforce-related metric.
How Ohio facilities can earn VBP program incentives
Facilities earn a higher Medicaid rate per patient-day if they meet specific quality measures, and as of State Fiscal Year 2025 (FY 2025), workforce measures. Ohio uses the CMS Five-Star Quality Rating System in determining benchmarks. Each facility’s performance contributes to its quality score and corresponding rate increase.
In FY 2025, Ohio added an “Adjusted Total Nurse Staffing Hours” metric to the Quality Incentive Payment VBP program. This new incentive measures adjusted HPPD and compares it to a target or statewide benchmark. There is also a Medicaid “private room” incentive that pays between $20 and $30 per day.
Why it matters: Ohio calls itself ‘The best place to age in the nation’
Ohio Governor Mike DeWine has a stated mission to make the state “The best place to age in the nation.” His Nursing Home Quality & Accountability Task Force is helping to realize his vision, alongside stakeholders that include Ohio’s Department of Health, Department of Aging, Department of Medicaid, skilled nursing operators and residents across the state.
It’s too early to see measurable impacts on workforce levels or resident outcomes from the FY 2025 change; however, early metrics from 2020 to 2022 demonstrate that skilled nursing facilities exceeded quality benchmarks.
Moving forward, the governor’s task force has also recommended that Ohio consider even higher workforce standards and additional incentives or requirements. The state will likely evaluate the success of current VBP metrics and adjust the program in subsequent budgets to keep driving improvements, aiming for its “North Star” for skilled nursing care: quality of care, quality of life, resident rights and system performance.
Further, Ohio’s “2023–2026 State Plan on Aging” intends that “All Ohioans live longer, healthier lives with dignity and autonomy, and disparities and inequities are eliminated.” Ohio is seeing results. In 2024, all four 2020 quality measures showed improvements.
Putting it all together: VBP program commonalities, achievements and future considerations
As ongoing workforce shortages and an aging population continue to pose challenges, Medicaid VBP programs could be levers for workforce development in long-term care.
While the details and achievements vary, programs that have been in place for a while, like those in Illinois and Ohio, are showing positive indicators for the future. In New Jersey, the government is striving to move the needle on workforce levels, seen across the board as contributing to better long-term care outcomes.
Increased compensation is important, to be sure. In our “2025 Senior Care Survey Report: Workforce 360,” low pay/earnings opportunities was the No. 2 reason for considering leaving the industry. The No 1 reason? Burnout.
Without a flexible workforce component, states could be missing out on a chance to support facilities in providing healthcare professionals with the flexibility that mitigates burnout, (which 97% of them want). They could also be missing out on qualified, available healthcare professionals who cannot or do not wish to work traditional schedules.
That kind of work is helping to attract experienced healthcare professionals back to the industry. A significant majority (78%) of healthcare professionals using ShiftKey credited the flexibility found through the variety of work opportunities on the marketplace as a key factor in enabling their return. And 49% of those using ShiftKey have 10 or more years of experience in the field.
There are many potential solutions to workforce shortages. Public and private partnership through Medicaid VBP programs will be critical to increasing compensation for long-term care facilities and creating better care quality for residents in the process.
References and resources
Aging and workforce data
2025 Senior Care Survey Report: Workforce 360 (ShiftKey + OnShift).
The U.S. Population Is Growing Older, and the Gender Gap in Life Expectancy Is Narrowing (Population Reference Bureau).
Who are the Direct Care Workers Providing Long-Term Services and Supports (LTSS)? (KFF).
Wages of Direct Care Workers Continue to be Lower in Most States Relative to Other Entry-Level Jobs (Health and Human Services, Office of Behavioral Health, Disability, and Aging Policy).
General Medicaid VBP program
Co-Sponsor the Bipartisan Healthcare Workforce Resilience Act (S. 3211/HR 6205) (AHCA/NCAL).
State Medicaid Value-Based Payment Incentivizes Staffing in Nursing Homes (National Academy for State Health Policy).
CoreQ-Satisfaction Among Patients, Residents and Their Families (CoreQ).
A Review of Nursing Home Value Based Payment Programs (Center for Health Policy Evaluation in Long-Term Care).
State Initiatives Painted as ‘Building Blocks’ That May Transform Nursing Home Staffing (McKnight’s Long-Term Care News).
Value-Based Payment & Financial Simulations (Medicaid.gov).
Value-Based Payment (macpac.gov).
Why the Medicaid Battle is Leading to More Quality Based Nursing Home Payments (Skilled Nursing News).
Illinois
Gov. Pritzker Signs Landmark Equity-Driven Nursing Home Rate Reform Legislation to Improve Care for Seniors (Illinois.gov).
Long Term Care | HFS (Illinois Department of Healthcare and Family Services).
Interim Review of the 2022 Nursing Home Payment Reforms (Illinois Department of Healthcare and Family Services).
Time Study (STRIVE) (CMS).
Provider Information | Provider Data Catalog (CMS).
State US Averages | Provider Data Catalog (CMS).
Overview Of Illinois’ New Nursing Facility CNA Pay Scale Subsidy (Illinois Department of Healthcare and Family Services).
Maine
Attention Residential Care (PNMI-C) Facilities: CoreQ Resident and Family Satisfaction Survey Pilot | Department of Health and Human Services (Maine.gov).
Nursing Facility ServicesMaineCare Rate Reform | Rate Update Meeting, October 23, 2024 (Maine Department of Health and Human Services).
Maine DHHS Proposes Framework for Nursing Facility Rate Reform | Department of Health and Human Services (Maine.gov).
Methodology - Calculating Quality Measures (CompareMaine).
Ageism Awareness Day 2024: Shifting Demographics & Contributions of Older Adults | Economist (Maine.gov).
New Jersey
Division of Aging Services | Nursing Home Quality (NJ.gov).
Final Report - New Jersey Task Force on Long-Term Care Quality and Safety Trenton, New Jersey (NJ.gov).
State of New Jersey FY26 NF QIPP General Letter Oct 2024 (NJ.gov).
Governor’s Fiscal Year 2025 Proposed Budget Rewards Quality Nursing Staffing Through Medicaid Bonus Payments to Nursing Facilities (New Jersey Department of Human Services).
Nursing Home Special Facilities (CMS).
CMS Resource Hub (ShiftKey).
Ohio
Ohio Governor’s Nursing Home Quality and Accountability Task Force (Ohio Department of Aging).
Recommendations Report (Ohio Governor’s Nursing Home Quality & Accountability Task Force).
Provider Rate Component Data Report (NF): Effective Date 07/01/2025 as of 07/22/2025 (Ohio.gov)
Nursing Facilities Cost Report, Rate Setting, Case Mix, Prior Authorization FAQs, Fact Sheets, Other Resources (Ohio Department of Medicaid).
Ohio State Plan on Aging (Ohio Department of Aging).
Section 5165.26 | Nursing Facility's Per Medicaid Day Quality Incentive Payment Rate (Ohio Laws and Administrative Rules Legislative Service Commission).
Here, There, Everywhere a Measure: Making Sense of Quality Measures 2019 (OHCA).
