1. (1) In addition to Quality Informed aspects of the NF reimbursement methodology, a specified amount of the funding for NF services shall be set aside during each fiscal year for purposes of calculating a quality-based component of each NF provider’s per diem payment (i.e., a quality incentive component). At implementation of this Chapter, the amount of funding set aside for the quality-based component of the reimbursement methodology for NFs shall be no less than forty million dollars ($40 million) or four percent (4.00%) of the total projected fiscal year expenditures for NF services, whichever is greater. In each subsequent year, the amount of funding set aside for the quality-based component of the reimbursement methodology for NFs shall increase at two (2) times the rate of inflation of the index factor. Index factor inflation shall be calculated from the midpoint of the prior state fiscal year to the midpoint of the new state fiscal year. This annual quality-based component index factor adjustment shall continue until such time that the quality-based component of the reimbursement methodology for NFs constitutes ten percent (10%) of the total projected fiscal year expenditures for NF services. Once the quality-based component of the reimbursement methodology constitutes ten percent (10%) of the total projected fiscal year expenditures for NF services, it shall then increase or decrease at a rate necessary to ensure that the quality-based component of the reimbursement methodology remains at ten percent (10%). All noted minimum quality-based component thresholds and index factor inflationary adjustments are made prior to consideration of the BAF.
2. (2) The quality-based component of each NF provider’s per diem payment shall be calculated based on the facility’s volume of Medicaid resident days and the percentage of total quality points earned for the measurement period.
3. (3) Quality outcome measures, performance benchmarks for each measure, and point values shall be reviewed and revised, as appropriate, in consultation with THCA and, as necessary, other NF stakeholders. Any modifications to such criteria shall be established through rulemaking and shall remain in effect for a minimum of three (3) years.
4. (4) Information about deadlines and training details shall be released annually to stakeholders and Medicaid licensed nursing facilities in advance of the submission and scoring process via the QuILTSS Memo, which shall include the QuILTSS Manual as an attachment. The QuILTSS Manual details the performance benchmark methodology, threshold measures, scoring methodologies, and special provisions established by this rule in consultation with THCA and NF stakeholders. The QuILTSS Memo and QuILTSS Manual shall be issued annually and posted on TennCare’s website at tn.gov/tenncare.

5. (5) Quality outcome measures shall be determined in consultation with THCA based on input from individuals receiving services, their family members and representatives, and other NF stakeholders, as appropriate, and shall reflect those aspects of NF service delivery that most impact the day-to-day experience of care for NF residents, as follows:

   1. (a) Satisfaction shall be valued at thirty-five (35) of the one hundred (100) possible quality performance points.

      1. 1. Satisfaction shall include three (3) separate measures:
   2. (i) Resident satisfaction shall be valued at fifteen (15) of the one hundred

6. (100) possible quality performance points.

   1. (ii) Family satisfaction shall be valued at ten (10) of the one hundred (100) possible quality performance points.

   2. (iii) Staff satisfaction shall be valued at ten (10) of the one hundred (100) possible quality performance points.

      1. 2. In order to measure Satisfaction on the basis of outcomes and to establish performance benchmarks for each of the three (3) Satisfaction measures, NFs shall be required to use a standardized survey instrument and methodology that provides for anonymous submission to a neutral third party, which shall be responsible for submission of required data to TennCare.
      2. 3. The survey instrument(s) and methodology for conducting each survey shall be selected or designed with input from NF stakeholders, and subject to mutual agreement between TennCare and THCA. Providers shall be notified of the acceptable survey instrument(s) and methodology no later than two (2) months prior to their implementation.
      3. 4. The methodology used for calculating a facility’s Satisfaction score shall be based in part on whether the facility achieves the performance benchmark for each of the three (3) Satisfaction measures described in Part 1. of this subparagraph, and for facilities who do not achieve the performance benchmarks, a lesser score based on the percentage of improvement as determined by TennCare. Providers shall be notified of the performance benchmark methodology for each of the three (3) Satisfaction measures and the specific methodology for calculating a facility’s Satisfaction score at least thirty

7. (30) days prior to the data collection period.

   1. 5. TennCare shall provide (or arrange for the provision of) training regarding each survey instrument, the survey methodology, and the methodology that will be used to calculate a facility’s score for each of the three (3) Satisfaction measures.
   2. 6. Results of each NF’s surveys (excluding any information that could be used to identify respondents) shall be made available to the NF for purposes of quality improvement activities.
   3. (b) Culture Change and Quality of Life shall be valued at thirty (30) of the one hundred

8. (100) possible quality performance points.

   1. 1. Culture Change and Quality of Life shall encompass four (4) different aspects of the degree to which a NF’s environment, programs, policies, and practices are individualized and person-directed; reflect the core values of self-determination, choice, dignity, and respect; and support meaningful roles and relationships for residents and staff. Culture Change and Quality of Life shall include four (4) separate measures:

      1. (i) Respectful Treatment shall be valued at ten (10) out of the one hundred

9. (100) possible quality performance points.

   1. (ii) Resident Choice shall be valued at ten (10) out of the one hundred (100) possible quality performance points.
   2. (iii) Resident and Family Input shall be valued at five (5) out of the one hundred (100) possible quality performance points.
   3. (iv) Meaningful Activities shall be valued at five (5) out of the one hundred

10. (100) possible quality performance points.

    1. 2. In order to measure Culture Change and Quality of Life on the basis of outcomes and to establish performance benchmarks for each of the four (4) Culture Change and Quality of Life measures, NFs shall be required to use a standardized survey instrument and methodology that provides for anonymous submission to a neutral third party, which shall be responsible for submission of required data to TennCare. The survey questions for measuring Culture Change and Quality of Life may be incorporated into the Resident satisfaction survey described in Subparagraph (a) above.
    2. 3. The survey questions and/or instrument and methodology for conducting the survey shall be selected or designed with input from NF stakeholders, and subject to mutual agreement between TennCare and THCA. Providers shall be notified of the acceptable survey instrument(s) and methodology no later than two (2) months prior to their implementation.
    3. 4. For purposes of the NF reimbursement rates effective on July 1, 2027, the methodology used for calculating a facility’s Culture Change and Quality of Life score shall be based in part on whether the facility achieves the performance benchmark for each of the four (4) Culture Change and Quality of Life measures described in Part 1. of this subparagraph, and for facilities who do not achieve the performance benchmarks, a lesser score based on the percentage of improvement as determined by TennCare. Providers shall be notified of the performance benchmark methodology for each of the four (4) Culture Change and Quality of Life measures and the specific methodology for calculating a facility’s Satisfaction score at least thirty (30) days prior to the data collection period.
    4. 5. TennCare shall provide (or arrange for the provision of) training regarding the methodology that will be used to calculate a facility’s score encompassing each of the four (4) aspects of Culture Change and Quality of Life.

    5. 6. Results of each NF’s performance on each of the four (4) aspects of Culture Change and Quality of Life (excluding any information that could be used to identify respondents) shall be made available to the NF for purposes of quality improvement activities.

       1. (c) For purposes of the NF reimbursement rates effective July 1, 2027, Staffing and Staff Competency shall be valued at twenty (20) of the one hundred (100) possible quality performance points.

    6. 1. Staffing and Staff Competency shall include four (4) separate measures, with each measure valued at five (5) of the one hundred (100) possible quality performance points, as follows:

       1. (i) Registered Nurse (RN) and Licensed Practical/Vocational Nurse (LPN/LVN) case mix adjusted hours per resident day.
       2. (ii) Nurse Aide (NA) case mix adjusted hours per resident day.
       3. (iii) Consistent Staff Assignment.
       4. (iv) RN, LPN/LVN, and CNA Staff Retention.
    7. 2. RN, LPN/LVN, and NA case mix adjusted hours per resident day shall be defined and calculated consistent with the methodology described in the CMS Five Star Nursing Home Quality Rating System. RN case mix adjusted hours per resident day and LPN/LVN case mix adjusted hours per resident day shall be added together as a single measure as described in Part 1.

    8. 3. Consistent Staff Assignment shall be measured by the percent of Long-Stay Residents who have no more than twelve (12) caregivers within one (1) calendar month.

       1. (i) To be eligible for Consistent Staff Assignment points, a NF must track its performance using the tools and methodologies created and/or specified by TennCare.

       2. (ii) A caregiver shall be defined as any staff assigned to provide and delivering direct NA-type care to the resident during the measurement period.

          1. (I) Caregivers shall include both NF employees (full-time and part-time) and individuals under an organization (agency) or individual contract that provide care to the resident during the measurement period.
          2. (II) Staff assigned to assist one or more residents only with mealtime and/or bathing shall be counted as a caregiver for all residents for whom such assistance is provided, even if the staff functions as a float or as part of a care team dedicated to such functions on behalf of multiple residents.

    9. 4. Staff Retention shall be defined as the percentage of specified staff that have been continuously employed (or contracted) by the NF for at least one (1) calendar year.

       1. (i) Specified staff shall include only RNs, LPNs/LVNs, and NAs.

          1. (I) RNs shall include registered nurses, RN directors of nursing, and nurses with administrative duties.
          2. (II) LPNs/LVNs shall include licensed practical/licensed vocational nurses.
       2. (III) NAs shall include certified nurse aides, aides in training, and medication aides/technicians.
       3. (ii) Specified staff shall include both NF employees (full-time and part-time) and individuals under an organization (agency) or individual contract. Retention of contracted staff shall be reported and measured based on the length of service of each staff person, and not the length of the contract. For example, if a staffing agency is used, a person shall be considered “continuously” contracted only if that staff person has been assigned to and working at the facility throughout the course of the twelve (12) month measurement period, even if the contract with that organization (agency) has been in place for a longer period.
       4. (iii) Specified staff shall not include staff reimbursed by a resident or his/her family, hospice staff, or feeding assistants.
       5. (iv) Specified staff information at the beginning and end of the measurement period shall be provided to TennCare in the required form and format.
       6. (v) A NF’s performance on the Staff Retention measure shall be calculated by dividing the number of specified staff continuously employed (or contracted) by the facility for the twelve (12) month measurement period divided by the total number of specified facility staff employed at the outset of the twelve (12) month measurement period.
       7. (d) For purposes of the NF reimbursement rates effective July 1, 2027, Clinical Performance shall be valued at fifteen (15) of the one hundred (100) possible quality performance points. Clinical Performance shall be defined and calculated consistent with methodology outlined in the CMS MDS 3.0 Quality Measures Manual v17.0, or any subsequent version and shall include three (3) separate measures, with each measure valued at five (5) of the one hundred (100) possible quality performance points, as follows:
    10. 1. Percentage of Long-Stay Residents who have/had a catheter inserted and left in their bladder.
    11. 2. Percentage of Long-Stay Residents with pressure ulcers.
    12. 3. Percentage of Long-Stay Residents who lose too much weight.

    13. (e) In addition to the one hundred (100) possible quality performance points that a NF may score in the areas described in Subparagraphs (a) through (d) above, a NF may also earn ten (10) bonus points for qualifying awards and/or accreditations that evidence the facility’s commitment to quality improvement processes. Qualifying awards and accreditations will be reviewed and validated by TennCare and must be current in the review period. Qualifying awards and accreditations are restricted to the following:

        1. 1. Membership in Eden Alternative Growth or Certified member level, which must be active during the period in which bonus points are sought.
        2. 2. Achievement of the Malcolm Baldrige Quality Award. This includes AHCA Award (Bronze, Silver, or Gold). Any such award must have been achieved within the three (3) years prior to the end of the period in which bonus points are sought.
        3. 3. Accreditation by the Commission on Accreditation of Rehabilitation Facilities (CARF).
        4. 4. Accreditation by the Joint Commission.

11. (6) A NF shall be eligible to receive the quality-based component of the per diem payment for NF services only if it has fully satisfied the following:

    1. (a) The facility has fulfilled the reimbursement conditions specified in Rule .03 of this Chapter.
    2. (b) The facility must be current on its payment of the NF Assessment Fee. Anytime a facility is more than thirty (30) days delinquent on its NF Assessment Fee, the quality- based component of the per-diem payment for NF services shall be suspended, and the facility shall forfeit any quality-based component of its per diem reimbursement rate until such time that the NF is current on its Assessment Fee payments. This shall be operationalized as an MCO rate withhold, pursuant to T.C.A. § 71-5-1006.

    3. (c) The facility has submitted complete, accurate and timely quality measurement data as required by TennCare in order to determine the NF’s quality performance.

       1. 1. Except as otherwise specified by TennCare, quality measurement data shall be submitted by the NF on an annual basis. Where possible and appropriate, TennCare will utilize existing data sources to minimize administrative burden.
       2. 2. The data measurement period shall be January 1 through December 31 of each year, which shall be used to inform the quality-based component of the per diem payment for the fiscal year beginning July 1 immediately after.
       3. 3. A NF shall not be entitled to a quality-based component of the per diem payment for any NF services provided if the facility has not complied with quality performance reporting requirements, or if the facility knowingly submits, or causes or allows to be submitted any such data used for purposes of setting quality-based rate components that is determined (including upon post-payment audit or review) to be inaccurate or incomplete.
       4. 4. Any facility knowingly submitting false (including inaccurate or incomplete) quality performance data for purposes of calculating its Medicaid payment shall be subject to all applicable federal and state laws, including but not limited to the federal False Claims Act (31 U.S.C. §§ 3729, et seq.) and the Tennessee Medicaid False Claims Act (T.C.A. §§ 71-5-182, et seq.), pertaining to the submission of false claims.
       5. 5. For purposes of this subparagraph, the term “knowingly” shall mean that a NF, or any person acting on its behalf: (a) has or should have, upon exercise of due diligence, actual knowledge of the information; (b) acts in deliberate ignorance of the truth or falsity of the information; or (c) acts in reckless disregard of the truth or falsity of the information. No proof of specific intent is required.
12. (7) Based on quality incentive program scoring, a NF will be placed into one of three quality tiers. The quality tier cut points may only be updated during July 1 rate setting and must be effective for a minimum of three years. For the rate effective date of July 1, 2018, and until the effective date of any future quality tier cut point updates, the quality tier cut points will be as follows: Quality Tier Cut Point Range Quality Tier 1 75+ Quality Tier 2 50 – 74.99 Quality Tier 3 0 – 49.99
13. (8) A NF’s quality tier and quality incentive program score will be established for each July 1 rate setting. The quality tier and quality incentive program score will be based on the quality incentive program measurement period for the calendar year period immediately preceding the applicable July 1 rate setting.

14. (9) A NFs quality incentive program score is based on the point structure previously described in this rule. As quality data is collected throughout the quality incentive program measurement period, the following score weighting will be applied to the varying metric collection intervals:

    1. (a) Quality incentive program scoring metrics that are annual in nature will not be weighted.

    2. (b) Quality incentive program scoring metrics that are quarterly in nature will be weighted as follows:

       1. 1. 50% weight for the fourth quarter of the calendar year.
       2. 2. 25% weight for the third quarter of the calendar year.
       3. 3. 15% weight for the second quarter of the calendar year.
       4. 4. 10% weight for the first quarter of the calendar year.

    3. (c) For any metric collection period, regardless of collection interval, in which the final period is not the highest scoring period, the NF provider’s quality incentive program scoring metrics will use the metric weighting method below that results in the greatest overall quality incentive program score:

       1. 1. The quality incentive program scoring metric weighting methods previously described in this paragraph.
       2. 2. A quality incentive program scoring metric weighting method that equally weights all metric collection periods, regardless of collection interval.
15. (10) Confidentiality of Submitted Quality Information. Any submissions by any facility relating to documentation of and participation in the quality-based component of the Reimbursement Methodology for Nursing Facilities pursuant to Rule .11 shall be confidential and privileged and shall be protected from direct or indirect means of discovery, subpoena or admission into evidence in any judicial or administrative proceeding. However, nothing in this rule shall not be construed to make immune from discovery or use in any judicial or administrative proceeding information, record, or documents that are otherwise available from original sources kept in the facility, and would otherwise be available to a litigant through discovered requested from the facility. The confidentiality provisions of this paragraph shall also not apply to any judicial or administrative proceeding contesting the determination of TennCare regarding the facility’s quality component reimbursement.

Authority: T.C.A. §§ 4-5-202, 4-5-203, 71-5-105, 71-5-109, 71-5-134, 71-5-1004, and 71-5-1413. Administrative History: Original rules filed May 1, 2018; effective July 30, 2018. Amendments filed January 28, 2021; effective April 28, 2021. Amendments filed March 31, 2026; effective June 29, 2026.