Skilled Nursing Leaders Rank the Paths to Risk, from Medicare Advantage to Bundled Payments

As the federal government continues to push health care providers to put skin in the game for outcomes, skilled nursing facilities have to demonstrate their ability to offer solutions to reap the rewards.

But how they do that varies from region to region and provider to provider, with each path presenting its own pros and cons.

On a panel dedicated to the topic of moving SNFs further into risk at the LTC 100 conference held in Naples, Fla. earlier this month, there were wildly varied opinions on the best way forward into financial viability — defined as a path “capable of producing solid, sustainable margins.”

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For some providers, the most fruitful way forward has been pursuing partnerships with bundled payment conveners and accountable care organizations (ACOs). For others, that path is riddled with a great deal of danger for little gain. Even the concept of taking on risk could be difficult to define in the post-acute world.

But one common theme was the need for SNFs to offer solutions to the problems plaguing patients in their market — no matter who they were ultimately working with.

“I don’t want to be part of that continuum, the downstream continuum,” David Gardner, managing director of the Charleston, W.Va.-based Stonerise Healthcare, said on the panel. “I want to be a partner in [finding a solution to] the problems that are plaguing the hospitals — which are increase in average length of stay and avoidable costs.”

Joint venture potential

The various Bundled Payments for Care Improvement (BPCI) models and ACOs have loomed large in the SNF world, primarily for the challenges and paradigm shifts they’ve caused. ACOs have little incentive to share savings, experts told Skilled Nursing News earlier in the year, and multiple studies have found that ACOs generate savings at least in part by driving spending away from SNFs.

Industry leaders have emphasized that there is some opportunity for SNFs in bundled payments. At the LTC 100 conference, however, the panelists were split fairly evenly on the benefits of such models. Michael Spigel — president and COO of Brooks Rehabilitation, an inpatient rehabilitation provider based in Jacksonville, Fla., with 211 SNF beds — and Eric Tanner – CEO of Plano, Texas-based OnPointe Health, which has eight SNFs — both rated them somewhat low in terms of financial viability.

Gardner, on the other hand, ranked both BCPI and ACOs as viable paths to financial stability, even though he stressed that he had no wish to be considered a downstream partner.

But Stonerise took an interesting approach to working with its referring hospitals.

“We quickly avoided the discussion or the labeling of preferred provider agreements,” Gardner said. “All that did was give me what the hospital couldn’t get rid of. In our model, we have actually created joint venture partnerships, with the acute care facilities — both on an op-co and in some cases a prop-co, because we’re building our facilities directly on campus or near campus. We’re driving to solve a specific problem that a hospital has.”

Taking on risk is necessary to achieve any kind of reward, particularly since the Centers for Medicare & Medicaid Services (CMS) is pushing toward patient accountability, which will inevitably change the revenue model, Gardner argued.

For him, that means the business model has to change as well.

But for Spigel, SNFs need to meet some specific conditions to reach financial viability from BPCI and ACOs, which make him bearish on them as options. For one thing, they have to be large enough as a provider that they’re caring for a significant population of an ACO’s patients, he argued.

“Two, at least in today’s world — and I don’t really see this changing mainly for I think two three for five years — as hospitals are standing up these shared savings programs, most of them are just trying to learn how to do it,” Spigel said. “They’re not yet having any interest in really sharing the risk downstream; they’re trying to figure out developing their own infrastructure, understanding their own data, identifying their own opportunities.” 

Partnering with managed care organizations

Managed care has caused some headaches for SNF providers, as the growth of Medicare Advantage sits at 34% of eligible enrollees, according to a 2018 analysis from the Kaiser Family Foundation. And as the amount of revenue coming in from Medicare Part A shrinks, Medicare Advantage isn’t making up for the difference, Plante Moran partner Betsy Rust told SNN in March.

“There really is no access to public information on Medicare Advantage data, so anecdotally … we know from our experience serving clients that profitability under Medicare Advantage plans is flat or decreasing, and often Medicare Advantage plans pay less than Medicare fee-for-service RUG rates,” she said.

Though multiple experts have emphasized the need for SNFs to work with managed care plans and use their outcomes in the process, in practice, that can be harder than it sounds.

But at the LTC 100 conference, the solid majority of the panelists rated risk-contracting with managed care organizations highly as a path to viability. For Tanner, the reasoning is simple: the payers are the SNF industry’s paying customers.

For that reason, OnPointe is focused on figuring out how to make life easier for the health plans. Tanner specifically cited working on solutions for so-called “dual-eligibles,” patients who qualify for both Medicare and Medicaid who tend to account for high amounts of government health care spending.

As he explained on a recent episode of SNN’s Rethink podcast, figuring out what the SNF’s paying customers — the insurers — want from OnPointe can lead to strong partnerships.

“The hospitals, for me, they don’t generate revenue. No hospital actually generates revenue to my bottom line,” Tanner said at the conference. “The MCOs are — and this is how I view the problem — they’re actually people that are taking money out of their pocket and putting it into our pocket. So they’re my customer.”

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