One ACO’s ‘Preferred’ Skilled Nursing Providers Actually Performed Worse Than Average

Accountable care organizations (ACOs) have reaped savings by heavily managing post-acute care length of stays and being selective about the skilled nursing facilities they work with.

But one Pennsylvania ACO dug into its own data and found that its preferred network of SNFs actually performed worse than other facilities on a series of key metrics, according to a study published March 1 in The American Journal of Accountable Care.

This was especially notable given the wide network of SNFs the ACO’s patients utilized in 2017: During that year, the ACO’s attributed population was admitted to 134 different SNFs. But before the implementation of ACOs and the Bundled Payments for Care Improvement (BPCI) program, hospitals in the area were referring patients to an average of 58 post-acute care facilities, the study noted.


This wasn’t the only area where the ACO, located in the Philadelphia metropolitan area and abbreviated as PAACO, stood out with regard to SNF care.

“The national average readmission rate is 17%,” the study noted, citing a Deloitte report that in turn cited a 2016 article in the Journal of the American Medical Directors Association. “Almost half of the SNFs utilized by the PAACO in 2017 exceeded this average, despite the fact that most ACOs are incentivized to bring down readmission rates.”

In theory, ACOs work by encouraging providers up and down the care continuum to save money and improve care; if hospitals, SNFs, home health agencies, and other players are forced to split set reimbursements for certain services, the thinking goes, there will be more incentive for them to find efficiencies and reduce collaboration roadblocks.


The ACO model has brought both pain and opportunity to skilled nursing facilities. Underperforming SNFs could find themselves on the sidelines of key referral pipelines in some markets where ACOs have seen penetration, but other operators that have embraced data analytics have also developed clear blueprints toward landing key partnerships.

That said, ACOs aren’t necessarily eager to share their savings with their downstream skilled nursing partnerships, and the path toward achieving net savings for the Medicare program can often take years. In the meantime, operators must deal with the continued pressure to keep down lengths of stay and reduce hospital readmissions — metrics that also play into problems with Medicare Advantage payers.

Dearth of data

The ACO developed an internal algorithm to assess its SNFs in the absence of a standard risk-adjusted metric for determining their quality, the article authors noted. SNFs were ranked based on a weighting system of key indicators of quality, with the ACO using data from the Centers for Medicare & Medicaid Services (CMS) diagnosis-related group (DRG) scores, the facility’s case mix index, and various facility-level indicators — such as comparisons between estimated and actual lengths-of-stay and costs.

When comparing the ACO’s preferred network with all other SNFs used by its attributed patients, the preferred network showed a higher actual cost per day than what was expected of it, despite it having a lower case-mix index than the other facilities. But with this data, the ACO can start to make improvements and help establish clearly defined targets, the study noted.

“The next step for the PAACO is to review these data in greater detail at the facility level and prospectively trend the scores of the SNFs over time,” the article said. “Trending these data quarterly will show seasonal change, and accumulative trending is expected to show improvements in agreed-upon areas of opportunity including, but not limited to, readmission rates and LOS.”

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