Having an In-House Insurance Plan Could Signal PDPM Success

Some skilled nursing providers have turned to in-house insurance plans to take more control of the care process, and the move could pay off if the government’s new proposed reimbursement model is finalized.

The Patient Driven Payment Model (PDPM), which the Centers for Medicare & Medicaid Services (CMS) proposed in April, would overhaul skilled nursing reimbursements to focus on patient need rather than on volume of services, at least according to CMS’ announcement at the time. The industry has been cautiously optimistic about the model, which has yet to be finalized; the comment submission period closed Tuesday.

“Conceptually, the reason CMS is moving in this direction is because they want to shift payment from volume to value, right?” Mary Hsieh, managing principal at consulting firm Health Management Associates, told SNN. “That’s the big piece, that instead of paying by therapy minutes, which is largely the payment basis for today, they really to take a look at the case mix … and really align payment more into the case, reflective of the intensity and the case needs of the patient. I think that fundamental change is what Medicare Advantage is all about.”


Alignments between MA and PDPM

Some providers have found offering in-house insurance plans to be a good fit as they adapt to the world of Medicare Advantage, which is growing at a rapid clip. One of them is the Evangelical Lutheran Good Samaritan Society, which recently announced a vote approving a merger with the non-profit hospital system Sanford Health.

Good Samaritan’s Great Plains Medicare Advantage institutional special needs plan (I-SNP) covers 816 beneficiaries, according to June data from the Centers for Medicare & Medicaid Services (CMS). Overall, under PDPM, the provider expects to see a reimbursement increase about $7 million. 


Mark Scharnberg, vice president of mergers and acquisitions at Good Samaritan, is optimistic about PDPM, particularly when it comes to care management. And in some ways, it draws reimbursement closer to the managed care model.

“I think what this transition [to PDPM] will do in the best-case scenario — it will in both scenarios focus on outcomes,” he told SNN. “The opportunity is that the PDPM bridges the gap to how managed care is being reimbursed and how managed care organizations manage the care of their beneficiaries, different from how the traditional [fee-for-service] under PPS reimbursement maybe drives behaviors differently.”

While PDPM is still geared to the fee-for-service beneficiaries, the fact that CMS is pushing Medicare towards this payment structure focused on the patient condition is telling, Hsieh said.

“Fee-for-service has been traditionally based on volume,” she said. “Now they’re pushing it so it’s more based on value. On the Medicare Advantage side, on the I-SNP side, it’s already there … or it’s getting there.”

The focus on care management in PDPM is where experience with Medicare Advantage plans can give providers a significant leg up, Scharnberg said.

“It really takes the remaining FFS Medicare folks, and it puts them in the same kind of category of improving care that has been the primary goal of ACOs, BPCIs,” he explained, referring to accountable care organizations and the Bundled Payments for Care Improvement program, a pair of other alternative payment models. “Now it puts all FFS beneficiaries into that kind of theme.”

Nate Ovenden, a Medicare and managed care consultant at Good Samaritan, agreed.

“I feel like the I-SNP plan and PDPM really align very well with each other,” he said. “Because it really gives the facilities and the nursing staff the ability to drive the care, whereas a lot of times in different SNFs … therapy ends up driving the care.”

Written by Maggie Flynn

Companies featured in this article: