In an era of record-low skilled nursing occupancy and rapidly shifting payment models, some operators have found a single solution to both problems: an in-house insurance plan.
Skilled nursing providers can create their own institutional special needs plans (I-SNPs), a type of Medicare Advantage program specifically designed to cover beneficiaries who are confined to an institution or who require in-home nursing care.
The benefits of jumping into the insurance marketplace can be tantalizing. For instance, the designers of an I-SNP can choose to waive the three-day hospital stay requirement for skilled nursing coverage, allowing a provider greater flexibility and potentially better care. A 2016 report from the Congressional Research Service noted that 92% of Medicare Advantage plans don’t enforce the three-day stay rule.
“What we’re seeing is improved outcomes,” Marquis Companies chief financial officer Steve Fogg said during a panel discussion at the National Investment Center for Seniors Housing & Care (NIC) Spring Investment Forum in Dallas last week. “We’re seeing lower hospital episodes, better quality outcomes, better experiences for the resident.”
The Milwaukie, Ore.-based Marquis Companies, which operates 18 skilled nursing facilities and five assisted living communities, launched its AgeRight Advantage I-SNP plan in January 2017. So far, the program has netted Marquis $10 million in revenues, and helped to position the provider in the overall managed care landscape — an area of the skilled nursing world that’s rapidly growing.
Some experts have predicted that the proportion of Medicare-eligible seniors enrolled in Medicare Advantage plans will rise from 33% to 50% faster than government projections, while in Marquis’s home market of Portland, Ore., that number is already 65%.
“We now have control of the insurance bucket,” Fogg said. “We now can live in the value-based health care world. Generally speaking, outside of this, we tend to be [in] silos.”
In addition, having experience in the managed care space could prove beneficial in states that are moving their Medicaid plans — the number-one payor of skilled nursing services — to a managed model.
“We can potentially be a player instead of being at the mercy of managed care companies,” Fogg said.
James Thompson, the panel’s moderator and senior director of senior housing lending at Synovus Bank, noted that creating an I-SNP can help skilled nursing and other senior living providers direct the overall pattern of care, while also integrating financing and moving the business away from the “heads-in-beds” model.
But creating an insurance plan isn’t an easy fix. Mary Ousley, chief strategy officer for PruittHealth, told the group that finding solid partners is essential to success.
The Norcross, Ga.-based provider offers its PruittHealth Premier I-SNP, covering both skilled nursing care as well as no-cost extras such as vision, transportation, hearing, and foot care.
In order to manage the plan, PruittHealth uses the services of a third-party back-office firm, and Ousley also emphasized the extensive planning that goes into creating an I-SNP — including developing a detailed care plan that must be submitted to the National Committee for Quality Assurance, an independent accreditation firm.
But aside from the paperwork, Ousley said she sees the introduction of in-house health plans as a way to boost respect for the skilled nursing industry.
“Right now, I see so many opportunities for us that I never would have thought about,” she said.
And there are also benefits for a provider’s bottom line.
“It has tangible improvement in your long-term liver occupancy,” Fogg said. “For those of us who care about occupancy — I think we do — this is one of the best ways to preserve or improve your long-term living occupancy.”
Written by Alex Spanko