CMS is launching the Nursing Home Value-Based Purchasing demonstration, which will test if incentive payments improve the quality of care and efficiency of nursing home operations. Under the demonstration, which is expected to run from July 2009 through June 2012, CMS will assess quality of care in selected nursing homes based on selected measures, and make additional payments to facilities with the highest scores or the greatest improvement in score. Savings generated by the project, such as reducing the number of avoidable hospitalizations, will fund state bonus payment pools. Nursing homes in Arizona, Mississippi, New York and Wisconsin are eligible to participate, and CMS will mail an application kit to each Medicare-certified nursing home in these states.