Potter, Thompson Introduce Legislation To Reward Quality At Nursing Homes
STATE HOUSE — Rep. Brandon Potter and Sen. Brian J. Thompson have introduced legislation to change reimbursement practices for Medicaid payments to nursing facilities to encourage investment in quality care.
Sen. Brian J. Thompson
“For patients in our nursing homes, quality care is their number one concern, and our reimbursement system should support facilities who work hard to provide it,” said Representative Potter (D-Dist. 16, Cranston). “Our current reimbursement system punishes facilities that spend more to provide quality care and rewards the worst operators who cut every corner in the pursuit of profit.”
The legislation would direct the Executive Office of Health and Human Services (EOHHS) to change its Medicaid reimbursement method to nursing facilities from the current price-based methodology back to a cost-based one.
Representative Potter has introduced the bill (2025-H 5144) in the House. Senator Thompson will soon introduce companion legislation in the Senate.
“Medicaid payments, including to our nursing homes, are a large part of our state budget, and it only makes sense that they should go toward providing quality care for Rhode Islanders. Unfortunately, our current reimbursement model is blind to quality and the costs associated with providing it, leading to worse care for residents,” said Senator Thompson (D-Dist. 20, Woonsocket, Cumberland). “Cost-based reimbursement is also more transparent, giving lawmakers and taxpayers a detailed account of where Medicaid dollars go, increasing transparency and fairness.”
Currently the EOHHS reimburses facilities for Medicaid care based on a fixed price formula, amounting to the 40th percentile of historical costs plus small adjustments for resident acuity. Facilities receive set amounts to care for their Medicaid residents and either pocket the difference if they spend less or go into the red if they spend more.
Rep. Brandon Potter
The primary problem, according to Representative Potter and Senator Thompson, is that this approach fails to meet the actual costs of quality care, encouraging facilities to cut corners and discouraging investments in quality, since they are paid the same regardless of the quality of care they provide.
In addition, the acuity bonuses provided to facilities to offset the costs of caring for patients with greater needs focus on the physical needs of patients and undervalue behavior health and substance use issues. As these needs rise among residents, facilities caring for these patients are seeing their reimbursement rates lag behind the cost of providing care.
Changing to a cost-based reimbursement model would make sure that facilities that prioritize quality care, including behavioral health support, would not be penalized because they have to spend more to do so.
“We’ve seen how the current approach can reward nursing home operators who put profits before people, at the expense of caregivers and our most vulnerable residents,” said Jesse Martin, executive vice president of SEIU 1199NE, which represents many staff members at Rhode Island nursing homes. “Our members are dedicated to providing the highest quality care, and this legislation makes sure taxpayer dollars go where they belong—supporting frontline caregivers and improving outcomes for those who need it most.”
The bill would also direct the EOHHS to develop an incentive mechanism to reward facilities that meet performance, quality or staffing benchmarks, which would monetarily encourage quality care and outcomes for residents.
The bill would also require 80% of Medicaid rate increases go directly to frontline caregivers, closing a loophole by which facilities profit off rate increases that are supposed to offset facility costs and the higher cost of living of its employees.