‘There’s No More Money Out There’: Fighting Over a Finite Pool in Managed Care

It’s 4 p.m. on a Friday evening, and a patient at an acute care hospital needs a referral to a skilled nursing facility. Even if the hospital has a phone-book-sized list of all the different providers in the area who accept a specific managed care health plan, the reality is much narrower.

“Our care management people, they have a list of three providers,” Jeff Spight, former president of management services organizations and accountable care organizations at WellCare Health Plans, said. “And the real question is: Who are those three?”

Narrowing referral networks continue to turn up the heat on skilled nursing facilities in the modern health care landscape, but too often, post-acute providers aren’t taking the steps to set themselves apart and break into that top three, according to Spight and other panelists at a Tuesday discussion on managed care at the Post Acute 360 conference in National Harbor, Md.

“I think it’s been hard for managed care to fully embrace providers as partners at a lot of places — plans don’t have the ability to do so,” Spight said. “However, I would say part of the challenge [is that] we don’t have providers who really understand our challenges and problems.”

For instance, Spight saw instances where health plans would contract with a group of six or more skilled nursing facilities — but only some were the kinds of places he felt comfortable sending plan members.

“I’ve got the two that I really need, and the three that nobody ever goes to,” he said. “Do you really understand what you bring to me as a value partner?

The panelists — moderated by Dan Mendelson, president and founder of health care consulting firm Avalere Health — all described a post-acute universe with a finite amount of money available to providers. And the winners will be the ones who can convince payers to hand over as big of a cut as possible.

“These are really risky times, but the money is being pushed to providers, and you have to manage it,” Robert Schreiber, vice president and medical director for Summit Eldercare in Massachusetts, said. “There’s no more money out there.”

Providers fail, at least in the eyes of the health plans, when they don’t take steps to make the health insurance provider’s life easier. That frequently takes the form of data, which a variety of leaders have emphasized as the new gold standard when it comes to wooing potential referral partners.

But instead of viewing it as yet another burden, the panelists urged providers to think about the reasons why plans have become so intent on extracting hard data from their post-acute partners; the answer should hit close to home to most skilled nursing operators.

“We spend an absurd amount of money trying to figure out how to get our quality scores up because of stars,” Spight said, referring to the Centers for Medicare & Medicaid Services’ (CMS) five-star quality rating system for health plans. “And yet, you’re already there in front of them in the room, and you can collect all that information and send it to us.”

Still, even in a perfect world with solid relationships, post-acute providers and health plans have two very different aims — and right now, on the ground, those aims frequently run counter to each other.

“I don’t think, in general, managed care plans are particularly good partners when you’re looking to drive toward accountability as a provider,” Erik Johnson, national practice lead for value-based care at the Optum health plan, said — particularly pointing to the continued pressure to provide the lowest rates possible.

“I think there is still an ongoing effort at managing individual unit costs and episode costs, and not the entire cost of care,” Johnson said.

Written by Alex Spanko

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Alex Spanko
Alex covers the long-term health care industry for Aging Media Network, with a specific interest in the intersection of finance and policy. Outside of work, he reads nonfiction, experiments in the kitchen, yells at Mets games, and enjoys pretty much any type of whiskey or scotch — often all at the same time.

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