Seeking Savings, NY Tries to Remove Long-Term SNF Residents from Managed Medicaid

Several states across the U.S. have eyed managed long-term services and supports as a way to reduce their Medicaid spend, but the state of New York — which made the move in the early part of the decade — is now taking a step back.

Specifically, the Empire State is looking to move the long-term care patients living in skilled nursing facilities off of mandatory managed Medicaid and back onto fee-for-service Medicaid if they are in a SNF for longer than three months.

The state waiver amendment is awaiting approval from the Centers for Medicare & Medicaid Services (CMS), New York Department of Health (DOH) spokesperson Jill Montag said in a statement.

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In terms of the numbers, by limiting managed long-term care eligibility to less than three months in nursing homes, New York expects to achieve $157.96 million in gross savings for state fiscal year 2018-2019. For 2019-2020, the state expects to see $246.14 million in gross savings, according to the 2018-2019 Executive Budget Scorecard.

If CMS approves the waiver, the change should be implemented in the first quarter of 2020, Marc Zimmet, the president and CEO of Zimmet Healthcare Services Group, told Skilled Nursing News.

“With Medicaid managed care in the nursing facility, this is what New York finally realized: It doesn’t make sense,” he said. “In the community, it makes all the sense in the world for a Medicaid patient to be in managed care. A managed care company can benefit; they can take risk, because the goal is to keep patients out of the hospital, keep them out of the nursing home.”

But once a patient is admitted to a SNF and becomes a long-stay resident, that logic no longer applies. When patients are in a nursing home, it’s much harder to reduce utilization, Zimmet argued, and cutting provider rates is unrealistic, given how low existing rates are.

When it comes to quality, managed care does have some key tools, Jay Gormley, the chief strategy officer at MJHS Health System in Brooklyn, N.Y., told SNN. But the cost structure in the nursing home is not something managed care can truly affect.

And given that MJHS has two SNFs with roughly 900 to 1,000 total long-term care beds, and a health plan that manages approximately 25,000 lives — all of which are dual-eligible for Medicare and Medicaid — the system has a view of both sides of New York’s proposed shift.

“Once you are admitted to a nursing home and you’re in that nursing home, that cost … 80% of that stuff is not variable, and the stuff that is variable is around how sick you are,” Gormley said. “There’s not a lot of management around that. It’s around [activities of daily living], it’s around how much utilization, nursing time you need. And that’s not where there’s efficiencies.”

While managed care can have an effect on linking payments with hospitalization rates and quality measures, the cost of a nursing home long-term care patient “is what it is,” he said. That means there are few controls a managed care company can implement to keep costs down.

On MJHS’s nursing home side, the change would mean more streamlined billing.

“While our nursing homes especially, and most nursing homes that we’ve worked with, want to embrace value-based payments, and want to embrace being paid around quality, the mechanics of long-term care patients is that billing Medicaid is probably easier than billing 15 or 20 payers,” Gormley noted.

New York’s managed Medicaid situation has some unique features that added to the difficulties in garnering savings.

“[New York] found they were paying the insurance company to manage the care, the insurance company was losing money on it, they were paying the providers, and there were a lot of provider protections in the New York system,” Zimmet said.

That experience runs counter to the goal of many states that move their long-term supports and services (LTSS) to a managed model. A report from the National Governors Association Center found that some states see managed LTSS as the only way to create a system that is more focused on home and community-based services (HCBS), as well as a means of containing costs.

That report also noted that the number of states contracting with managed care organizations for LTSS benefits has tripled over a 15-year span.

But in conversations with peers in other states, Stephen Hanse, New York State Health Facilities Association (NYSHFA) president and CEO, has heard that other states are keeping an eye on what New York does with its Medicaid long-term care patients. That could mean other states will look at similar strategies, he told SNN.

And given that Medicaid forms the bulk of most nursing facility payments, the ramifications of such changes are significant —whether they’re positive or negative. Most facilities can bear managed Medicare reductions to some extent, Zimmet said. But should leaders choose to chase managed Medicaid savings by cutting rates, the outcomes for SNFs could be dire.

“We can’t absorb a 20% decrease in our Medicaid rate,” he told SNN. “From a philosophical perspective, it almost can’t work. It cannot work the way Medicare Advantage works. You cannot manage institutional long-term care spending on the Medicaid side, when you only have one benefit.”

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