Long-Term Care Providers ‘Clobbered’ by Managed Medicare

While the skilled nursing industry worried about the rise of accountable care organizations (ACOs), managed Medicare plans slowly established a firm foothold that isn’t going anywhere soon.

“The growth of ACOs and bundled payments has kind of leveled off,” Jill Kreuger, president and CEO of pharmacy and rehab solutions provider Symbria said at LeadingAge Illinois’s annual conference in Schaumburg, Ill. last week. “But what I have seen, for the first time in my life here, is rapidly accelerating managed care penetration.”

According to Krueger, one Symbria therapy client told her: “We’re just getting clobbered by managed care.”

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Managed Medicare uptake has reached about 33% nationwide, with the Congressional Budget Office predicting increases of about 4% per year. But Avalere Health, a Washington, D.C.-based health care consulting firm, projects a faster rate of 6% to 7% per year — making 50% penetration a near-term possibility.

“Fifty percent of your potential business in the post-acute care space is being managed by somebody who really cares about the bottom line — and won’t be afraid to try to squeeze people,” Niall Brennan, president of the Health Care Cost Institute, said at another industry event last month.

Managed Medicare has accelerated the narrowing of networks in skilled nursing, Krueger said, in which acute providers refer their patients to a smaller and smaller bunch of skilled nursing facilities.

“The top five nursing homes are getting more and more patients, and the others are getting fewer and fewer,” she said.

Krueger emphasized the importance of improving outcomes and bringing the data to prove it, as SNFs compete against each other for shrinking hospital referrals.

“Managed care, what do they care about? Readmissions, length of stay — because the managed care players get a flat amount,” she said. “The single most expensive thing you can do is send someone back to the hospital. Bar none, that’s where the money is.”

Risk and reward

A lot of providers and thinkers in the space talk about data, but determining the exact metrics to follow is just as essential as setting up a reliable collection system. John Glover, chief operating officer of continuing care retirement community (CCRC) operator Franciscan Ministries, took an active approach, setting out to find the most common metrics that post-acute care networks and accountable care organizations used to select their partners.

The top five consisted of star rating from the Centers for Medicare & Medicaid Services (CMS), length of stay, seven-day readmission rates, 30-day readmission rates, and home care capture rate. But Glover noted that even after identifying the important data points to monitor,  there’s still a catch.

“The criterion or benchmark for each of those can vary greatly from one post-acute network or ACO,” he said.

For instance, the Franciscan Health network in Indiana has a length-of-stay benchmark of 14 to 17 days. For Advocate Health Care in northern Illinois, that figure is just 11. 2 days, Glover said.

In addition, tracking all that data isn’t useful without signing up to take on some of the risks associated with missing those benchmarks. While Glover noted that under the new Bundled Payments for Care Improvement (BPCI) model, post-acute facilities can’t take the lead, SNFs can still offer to take on some of the potential downsides from hospitals and physician groups — and reap a potentially higher reward for producing better-than-expected results.

“We have to be willing to enter into risk-taking agreements,” he said. “It’s all about taking risk. If we’re not open to entering into risk, we are not going to be successful in the future health care environment.”

Written by Alex Spanko

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