This article was created in collaboration with Prerna Raman, Co-Founder, Circle Health.
For years, skilled nursing providers have largely viewed quality and reimbursement as separate conversations. Quality was often considered a clinical responsibility, while reimbursement, occupancy and financial performance were treated as operational or financial concerns. Today, those lines are increasingly blurred.
Performance has never been more visible, while federal and state payment models are making quality more financially consequential. Quality is no longer only an indicator of resident care; it is becoming a business metric that can influence market position, referrals, reimbursement and long-term performance.
Understanding that financial impact, however, is only part of the equation. The next challenge is identifying the operational and clinical strategies that can drive better outcomes, strengthen continuity of care, and ultimately improve both resident and organizational performance.
Public Quality Scores Are Shaping Provider Reputation
CMS Care Compare allows patients and families to search for skilled nursing facilities and compare facilities within a market. The Nursing Home Five-Star Quality Rating System provides an overall rating, along with separate ratings for health inspections, staffing and quality measures. CMS also publicly reports additional SNF quality measures, including discharge to community, potentially preventable 30-day post-discharge readmissions, healthcare-associated infections requiring hospitalization, falls with major injury and transfer of health information. Not all measures reported on Care Compare are included in the Five-Star rating calculation.
This transparency matters because the audience extends beyond prospective residents. Hospital discharge planners, physicians, health plans, accountable care organizations and other referral partners can use public data when assessing post-acute options. Ratings do not tell the whole story of a facility, and every metric has methodological limitations. Nevertheless, they create a visible, standardized signal that can shape first impressions, trigger further diligence and influence how a provider is positioned relative to nearby competitors.
Facilities therefore need to treat public data as an external representation of the organization. Leaders should understand how source data is captured, when results are refreshed and what operational factors drive performance. Accurate reporting matters, but it cannot substitute for better care processes.
How Quality Impacts Occupancy & Revenue
The relationship is not mechanical. Referral decisions also depend on geography, bed availability, clinical capabilities, payer mix and prior experience. But quality can differentiate facilities that meet similar needs. Recurring deficiencies, high turnover, preventable hospitalizations or a weak local reputation can make census recovery harder even when demand exists. Strong performance can create the opposite cycle: trust supports referrals and census, which gives the organization greater capacity to invest in staff and improvement.
How Quality Measures Affect Revenue Opportunities
Providers have traditionally focused on reimbursement optimization through cost-report strategy, case-mix management, rate appeals and supplemental funding opportunities. Those disciplines remain essential. Increasingly, however, quality performance must be considered alongside them.
At the federal level, the Medicare SNF Value-Based Purchasing Program makes the connection explicit. CMS withholds 2% of Medicare fee-for-service Part A payments and redistributes 60% of the withhold as performance-based incentives. For fiscal year 2027, performance is assessed across eight measures rather than the program’s original single readmission measure.
State Medicaid programs provide additional examples, although their designs, eligibility rules and funding formulas vary:
- New York: The Nursing Home Quality Initiative is an annual performance evaluation, while the Nursing Home Quality Pool is an annual, budget-neutral $50 million pool. Its methodology combines quality, compliance and efficiency components, translating comparative performance into payment consequences.
- Texas: The Quality Incentive Payment Program encourages participating facilities to improve quality and innovation through a Medicaid managed-care directed payment structure. For state fiscal year 2026, quarterly performance data for quality measures comes directly from CMS public data.
- North Dakota: The Nursing Facility Incentive Program makes annual incentive payments based on performance in four CMS-related measures: long-stay urinary tract infections, antipsychotic use, pressure ulcers and hospitalizations. Facilities are placed in performance tiers; higher tiers receive greater weighting, while the lowest tier is not eligible for incentive funds.
These examples do not suggest that every state rewards quality in the same way. They demonstrate a broader direction: reimbursement strategy is moving beyond the accurate reporting of cost and acuity toward the measurable delivery of value. High-performing providers may qualify for incentive payments, quality-pool distributions or enhanced reimbursement. Lower performance may mean missed incentives, reductions or penalties. For CFOs and operators, quality data is therefore becoming part of revenue analysis, forecasting and investment prioritization.
Why Quality Is a Business Performance Metric
The economic effect of quality is broader than any incentive payment. It can influence census, reputation, referral relationships, survey outcomes and regulatory scrutiny. It can also affect staffing stability: clear processes and responsive leadership support reliable care, while persistent operational failures can compound burnout and turnover.
Poor quality can generate costs through corrective action plans, agency staffing, rehospitalizations, legal exposure, compliance activity and leadership distraction. A serious event may also cause lasting reputational damage. A disciplined quality program can reduce avoidable variation, detect risk earlier and direct resources toward the issues with the greatest clinical and financial impact.
This is why quality improvement should not be treated as a collection of isolated nursing projects. It requires governance: a defined set of measures, clear ownership, reliable data, regular review, root-cause analysis and accountable improvement plans. Clinical, operational and financial teams should be looking at the same performance picture and asking how the measures interact.
Improving Outcomes Through Better Care Transitions
Quality outcomes do not end when a patient leaves the facility. Discharge is both a success and a point of vulnerability. Many former SNF patients return to the community with multiple chronic conditions, complex medications, functional limitations and several physicians involved in their care. A discharge summary does not guarantee follow-up, medication reconciliation or escalation of a changing condition.
Gaps among the SNF, physician, and community care team can contribute to deterioration and avoidable utilization. Without feedback on post-discharge outcomes, SNFs may also miss opportunities to improve education, handoffs and discharge planning.
Better continuity starts before discharge. The facility, physicians, patient, and caregiver should have clarity on the care plan, medications, pending tests, warning signs and follow-up responsibilities. A closed-loop handoff confirms not merely that information was sent, but that it was received and acted upon.
Supporting Patients Beyond Discharge
Structured care-management programs can support eligible patients after they transition home or to another community setting. These programs should be led by the appropriate billing practitioner, aligned with Medicare requirements and designed to complement, not duplicate other services.
Transitional Care Management (TCM) supports coordinated and continuous care during the 30-day period after discharge from an inpatient setting, including a SNF, back to the community. It provides a pathway for timely contact, medication reconciliation and follow-up.
Chronic Care Management (CCM) can support eligible patients with two or more chronic conditions expected to last at least 12 months or until death and that place them at significant risk. A care plan, regular outreach and coordination across providers can keep care from becoming episodic.
Remote Patient Monitoring (RPM), when medically necessary and appropriate, can add visibility between encounters. Connected devices can transmit blood pressure, weight or glucose data. The value comes from reviewing the information, engaging the patient and acting on meaningful changes.
Together, these capabilities can create a more dependable bridge among SNFs, physicians, patients and caregivers. Follow-up can identify a missed prescription, worsening symptom, sudden weight change or care-plan confusion before it becomes a crisis. Collaboration can also give the SNF insight into post-discharge outcomes and strengthen referral relationships.
Quality Requires Organization-Wide Accountability
Quality should no longer be viewed solely as a nursing or clinical KPI. CEOs and owners need to understand its effect on reputation, census, risk and organizational resilience. CFOs need to connect quality performance with reimbursement, avoidable costs and capital allocation. Directors of Nursing and Chief Nursing Officers need to connect bedside outcomes with broader organizational objectives. Physicians and care teams need reliable workflows that support continuity across settings.
The practical response is a shared operating cadence. Leaders should review a focused quality dashboard alongside census, labor, revenue-cycle and financial results, assign accountable owners and track whether interventions produce sustained improvement. Public ratings and payment metrics are lagging indicators of the underlying work, not substitutes for it.
Quality, reimbursement, occupancy and financial performance are no longer separate conversations. As transparency grows and payment models evolve, skilled nursing providers that manage quality as a clinical, operational, strategic and financial metric will be better positioned to earn trust, strengthen continuity of care and build more resilient organizations.
How We Can Help
As quality becomes increasingly tied to reimbursement, referrals, and financial performance, healthcare organizations need strategies that align clinical outcomes with business goals. Our team can help you evaluate performance, identify opportunities for improvement, and navigate evolving reimbursement models. If you have any questions or would like to discuss your organization’s specific situation, please do not hesitate to reach out today.
And to continue the conversation, join us for our upcoming webinar, From Quality to What’s Next: Turning Quality Performance into Stronger Financial and Clinical Outcomes. Stay tuned for more details on our LinkedIn page and website.
Sources
Centers for Medicare & Medicaid Services, SNF Quality Reporting Program Public Reporting.
Centers for Medicare & Medicaid Services, Skilled Nursing Facility Value-Based Purchasing Program.
New York State Department of Health, Nursing Home Quality Initiative and Nursing Home Quality Pool.
North Dakota Health and Human Services, Nursing Facility Incentive Program.
Centers for Medicare & Medicaid Services, Chronic Care Management Services, MLN909188, June 2025.
Centers for Medicare & Medicaid Services, Remote Patient Monitoring.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
