In-House Insurance Plans May Boost Skilled Nursing Operators, But Not Without Risk

The amount of skilled nursing residents covered by in-house insurance plans remains small, but the growth has been steady in just the last few years — and providers are beginning to stand up and notice.

Still, starting an Institutional* Special Needs Plan (I-SNP) isn’t for every operator, and one consultant in the space says savvy operators should think twice before diving into the insurance marketplace.

“It’s presented, oftentimes, as something that is right for everybody, like a pharmacy or a therapy program,” Marc Zimmet, president of the Morganville, N.J.-based Zimmet Healthcare Services Group, told an audience at the Post Acute 360 conference in National Harbor, Md. last week. “And it’s not.”


Of the roughly 15,000 skilled nursing facilities in the marketplace, only about two-thirds likely meet the standards for participation in the I-SNP program.

“I’d say a good third of them, I would wipe off the board — not appropriate for I-SNP,” Zimmet said. “I wouldn’t touch it.”

Under the program, long-term care providers can create their own Medicare Advantage plans specifically geared toward long-term care residents. For certain providers, the I-SNP can be a boon: Marquis Companies, which primarily operates in the MA hotbed of Portland, Ore., has seen $10 million in revenues since it launched its AgeRight Advantage plan in January 2017 — along with better quality outcomes and improved resident experiences, according to chief financial officer Steve Fogg.


Running an I-SNP allows skilled nursing providers to avoid the traditional three-day stay hospital requirement for SNF coverage under Medicare, while giving providers greater control over their reimbursement fates.

“We can potentially be a player instead of being at the mercy of managed care companies,” Fogg said during a March industry event.

Scott Rifkin, a medical doctor who serves as co-founder and CEO of Mid-Atlantic Health Care, echoed that sentiment in National Harbor.

“I’m really tired, as an operator, of being at the bottom of the food chain,” said Rifkin, whose Timonium, Md.-based chain runs 21 skilled nursing facilities. “To form up with a group of owners begging and pleading for a better rate is not my style. And I hope it’s nobody else’s style. We have an opportunity with I-SNP to really be in control of our own dollar stream.”

Rifkin specifically pushed back against Zimmet’s assertion that I-SNPs aren’t for every provider, noting that pharmacy and therapy don’t necessarily work for all SNFs.

“Those plans weren’t for everybody, either,” Rifkin said. “I think this is something that any smart operator ought to be looking at. It rewards better care.”

The right scale

While every facility has the right to explore the option of setting up an I-SNP, part of Zimmet’s reluctance is based on the issue of scale. Unless providers can offer treatment of high-acuity patients while avoiding rehospitalizations, the prospect may end up being more trouble than it’s worth.

“You cannot have an effective I-SNP when you’ve got a 40-bed facility in a rural area with no ability to treat in place,” he said. “It just doesn’t work. We need scale.”

As for nationwide scale, the I-SNP marketplace remains small, but data from the Centers for Medicare & Medicaid Services has shown steady growth. Back in 2015, there were about 65 plans nationwide with a total of 50,000 covered enrollees; in just three years, that number rose to 113 and 75,451, respectively.

“Anytime you see that growth, there’s something there,” Zimmet said.

Rifkin agreed, positioning the creation of an I-SNP as a key blow to strike against the rise of managed care plans.

“We’re getting squeezed by managed care companies and others that really don’t care whether we can make our mortgage payments,” Rifkin said.

*This article originally referred to Institutional Special Needs Plans as “Individualized Special Needs Plans.” Skilled Nursing News regrets the error.

Written by Alex Spanko

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