OIG: ACOs Use Three-Day Stay Waiver, Preferred Providers to Manage SNF Costs

Preferred provider networks of skilled nursing facilities, embedding staff onsite and conducting so-called “warm handoffs” were among the strategies that top accountable care organizations (ACOs) use to manage costs in the SNF and home health care setting.

Because Medicare spending is expected to surpass $1.5 trillion by 2028, more than double the spending of $708 billion in 2017, the Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) conducted a review of the 20 top-performing ACOs in the Medicare Shared Savings Program (MSSP) to learn their strategies for transitioning to value-based care.

ACOs are groups of health care providers that take responsibility for the total cost of care and quality of care for their Medicare providers, with the goal of providing coordinated care that avoids service duplication and prevents medical errors.


Assessment of their performance varies. Multiple studies have found that ACOs achieve savings by reducing SNF spending, while another debate centers on whether they cost Medicare money or increase the program’s savings.

The OIG report, published July 19, found that to manage the cost and control the quality in the SNF/home health care setting, ACOs used preferred provider networks, embedded staff in SNFs to monitor beneficiary health, used primary care physicians to examine care needs and utilized the SNF three-day rule waiver.

When it comes to preferred provider networks, several ACOs reviewed SNF claims data to assess spending and quality, in order to identify providers that provide high-value services more cheaply, the report said. Almost 50% of ACOs interviewed for the OIG report set specific requirements for SNFs and home health agencies that want to be preferred providers, such as sharing data, notifying the ACO of admission and discharge and requiring participation in meetings with ACOs providers. One requirement included a pledge from SNFs to accept all ACO’s beneficiaries who select those facilities.


Multiple ACOs also reported conducting so-called “warm handoffs,” where ACO staff members were involved in the in-person transfer of a beneficiary between different care settings, and one ACO had care managers monitor beneficiary care for 30 days after discharge.

Many of the ACOs in the report had reductions in SNF length of stay, a point of contention in the SNF world. One anonymous operator argued strongly that the lower length of stay (LOS) was leading to worse outcomes for patients, while a Health Services Research study from 2018 found SNFs got particular pressure from ACOs to discharge patients earlier.

Members of the OIG team that worked on the report – Meridith Seife, the deputy regional inspector general at the HHS OIG; Jodi Nudelman, regional inspector general for evaluation and inspections in the New York regional office; and team leader Judy Kellis – told SNN that this issue wasn’t one that came up in the report. While some of the ACOs in the report reduced SNF LOS, they were focused on overall costs and were all concerned about rehospitalizations.

“They were really looking at ways to reduce LOS only when it came to the quality, and when it made sense for patient care,” Seife said.

The three-day stay waiver was available to six of the 20 ACOs the OIG interviewed, but those who used it saw benefits in terms of flexibility. The rule allows eligible beneficiaries to go straight to an approved SNF from either the doctor’s office, their home, or the hospital – even if their hospital stay was less than three consecutive days as an inpatient.

The SNF three-day rule waiver was useful in reducing emergency department spending for one of the ACOs, according to the report, and the OIG recommended that the Centers for Medicare & Medicaid Services identify and collect the experience and outcomes of ACOs in using the waiver, since the number was so limited, Seife told Skilled Nursing News

“We did find several ACOs who were using that waiver found it to be incredibly useful, because it allowed a level of care that wouldn’t have otherwise been acceptable,” Seife said.

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