Skilled Nursing Stuck in Awkward Middle Between Old and New Payment Models

Narrowing networks of referral providers have been a top concern for skilled nursing facilities over the last two years, with industry leaders preaching the importance of improving certain metrics in order to impress hospitals and home health agencies.

Under models such as Bundled Payments for Care Improvement (BPCI) and other shared-savings plans, the thinking goes, SNFs must reduce lengths of stay and hospitalizations in a constant effort to prove their worth to the hands that feed them.

But at least one industry player says that formula is easier said than done, especially as long as so many SNFs remain fully planted in the traditional fee-for-service world.


“I think I’d be negligent to advise any of my clients to reduce their length of stay for their fee-for-service population,” Vincent Fedele, director of analytics at Zimmet Healthcare Services Group, said Wednesday at the company’s annual conference in Atlantic City, N.J.

The skilled nursing industry, according to Fedele, is currently stuck somewhere between two very different worlds — fee-for-service Medicare and value-based payments — with little room to maneuver in the center.

“You can’t have two feet in fee-for-service, and you can’t have two feet in population health management right now,” he said. “And we’re somewhere in the middle right now, in an awkward stage.”


Fedele’s remarks came during a lively discussion about population health management, the overarching idea that governs many of the newest payment models from the Centers for Medicare & Medicaid Services (CMS). BPCI, for instance, provides a single payment for each specific resident’s individual health episodes, with hospitals, SNFs, and other providers forced to figure out how to maximize their shares — without incurring costly rehospitalizations.

That’s a main concern for panelist Dana Strauss, care continuum manager at Valley Health System in New Jersey. Under certain bundled payment plans, the majority of the costs for a specific episode of care are actually incurred in Valley Health’s partner SNFs, and not the hospital itself.

“So for SNF providers who are spending above the target price for that bundle, we, the acute care hospital, have to pay back every one of those dollars above the target price,” she said.

But Strauss also revealed one of the major sticking points for SNFs under BPCI: While they may have to prove their worth in order to receive that particular patient, they may not see any additional benefits by partnering with a facility that’s grounded in population health management.

“Right now, the risk that we’re bearing ourselves doesn’t put us in a position to share the upside with the skilled nursing facilities,” Strauss said. 

Those tensions might increase under the upcoming BPCI Advanced model, which does not allow skilled nursing facilities to be episode initiators. Instead, SNFs will take more of a backseat role in how bundled payment plans are implemented in the real world, though many have emphasized the continued importance of the SNF in the new model.

For Scott Rifkin, CEO of the Timonium, Md.-based skilled nursing chain Mid-Atlantic Health Care, proving one’s worth in the new ecosystem all comes down to cutting hospitalizations, a metric that health systems will be tracking closely.

“If you can reduce hospitalizations by changing your care model, you will be rewarded,” Rifkin said.

But it isn’t enough to achieve those outcomes: Strauss said her health system doesn’t typically receive proactive overtures from SNFs about their particular success stories. To court the interest of hospitals, operators must actively meet with care coordinators to prove they have firm benchmarks for improved hospitalization, cost, and length-of-stay data — and are meeting them.

“That will be looked at very closely, not just by our hospital, but by all the hospitals in the area that will be participating,” Strauss said. 

Written by Alex Spanko

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