Despite Pressures, ACOs’ Three-Day Stay Waivers Could Emerge as Skilled Nursing Secret Weapons

Among the new payment models sweeping the skilled nursing industry, accountable care organizations (ACOs) tend to vex nursing home operators the most.

These groups, which encourage cost savings by holding providers up and down the continuum accountable for overall health spending, are typically seen as length-of-stay depressants. The hospitals and physician organizations that generally lead ACOs, the thinking goes, have a serious incentive to reduce skilled nursing utilization in favor of less-costly home health and community service programs.

But the newly promoted leader of a Vermont-based ACO says she sees great promise for both the model and skilled nursing facilities in one key aspect of the ACO structure: the three-day stay waiver.


While Medicare beneficiaries typically must spend three nights in a hospital before receiving their subsequent 100 days of skilled nursing coverage, ACOs can waive that requirement entirely.

For Vicki Loner, CEO of OneCare Vermont, that means her ACO can encourage SNFs to accept patients from hospitals sooner than three days — or, in some cases, directly from the community. Both residents and providers have expressed satisfaction with the waiver system, Loner told SNN, and OneCare’s model could potentially be replicated in markets across the country.

Loner brings extensive experience in the Vermont health care space to her new position, which became official earlier this month. After stints with insurers such as Blue Cross Blue Shield and MVP Health Care, the registered nurse served as the deputy commissioner for the Green Mountain State’s Medicaid agency for nearly five years.


She joined the Colchester, Vt.-based OneCare more than six years ago, when the ACO joined the Medicare Shared Savings Program (MSSP) as a joint venture between local hospital heavyweights Dartmouth-Hitchcock and the University of Vermont (UVM) Medical Center.

Since that time, OneCare’s reach has expanded into an all-payer model, serving Medicare, Medicaid, and private insurance beneficiaries. The ACO works with the majority of SNFs and home health agencies in the state, and currently covers about 172,000 lives — a significant number in a state that only counts around 620,000 total residents.

SNN spoke with Loner over the phone from Colchester to learn more about the ACO’s post-acute strategy, and what lessons both operators and ACOs can take away from the early success in Vermont.

ACOs tend to be seen as a Medicare-only operation. It’s interesting to me that you have Medicaid and private payers in there — does that complicate the equation or make it simpler?

I do actually think that it makes it easier, because when we think of Vermont and what the physicians and nurse practitioners want when they look at their panel — they want to have the same clinical or care model for the preponderance of the patients that they treat every day. So if they’re looking at their panel of patients, they can see that for the most part, everybody on their roster would be — and I’m going to use air quotes — “attributed” in one way, sense, or form through either Medicare, Medicaid, self-funded, and commercial. It makes it easier in terms of administrative burden, having similar models. We’ve worked really hard to have aligned quality measures across all of the payers. I think we’re up to around 13 or so measures that we report on in terms of overall quality outcomes and patient satisfaction.

What’s interesting about Vermont is that Medicaid has actually been one of the pioneers in the all-payer model. They were the first agency to do these risk-based models with the ACO, instead of what’s called the fixed prospective payment — which is kind of a global budget for the ACO — and was able to roll that out in a relatively smooth manner.

What does your risk profile look like? The government has been pushing ACOs in that direction after early research indicated that no-risk tracks might not achieve savings.

Overall, we’re usually anywhere between 4% and 6% of overall risk, depending on the programs that we’re in. This year, we were roughly $900 million in our total cost of care target, for all the programs, and … our risk was somewhere around $38 million.

Just to clarify, that’s the amount that you could gain or lose?

Yes, correct.

Have you been seeing gains or losses over the last couple years?

The only program we have officially settled right now is the Medicaid program in 2017, and that was a gain of close to 3% of our total cost of care — almost $3 million across the four communities. It’s looking like for 2018, the Medicare program is favorable. Medicaid, looks like for 2018, that will be slightly over our target, but pretty close — within a 1% to 2% margin.

For the commercial, it’s tough, because it’s a qualified health plan. What we’re seeing is that overall, we were about break-even, but when you add in some of the other reform efforts in Vermont, we’re a little less than what we expected to be.

If you take all the programs together, we’re in a positive position for 2018.

ACOs are usually seen as the enemy for post-acute care; skilled nursing operators tend to think they’re being squeezed out of the equation to save money. What’s your approach to SNFs and post-acute care in general?

Whenever I’ve gone and talked to other ACOs about their general makeup, most of the ACOs tend to be truly clinically integrated systems, where they own their own hospital and providers and health care systems.

The one thing that’s unique about Vermont, when I talk about all these different participants in the ACO — they’re not under a single health care system, so they’re all separate entities in and of themselves. Vermont doesn’t have some of the same competition that you would see in other parts of the [country]. Our goal is: How do you maximize the resources and the access points that you have, and work together in a way that’s efficient and best for individual patients?

I feel like that’s why we’re able to work as a full continuum together. And one of the great benefits of having the skilled nursing facilities has been the uptake of this three-day SNF waiver. That provides a lot of patient satisfaction, in terms of not having to spend some time in the hospital before they’re admitted to a skilled nursing facility. It’s provided a lot of satisfaction among the provider community — this rule, to them, doesn’t make sense clinically — or in terms of savings overall to the plan. If you have to admit somebody to the hospital, that’s additional dollars that are going to hit that total cost of care target. It’s best to put them in the most appropriate care point.

We’ve seen a lot of energy and enthusiasm between the hospital community and the SNF community around this waiver. Most recently, we opened it up to be able to have communities — that have been in for a while — admit directly from the community into the skilled nursing facilities. That has really been a positive experience for everybody.

The waiver usually gets lost in the discussion around ACOs among SNF operators; they tend to focus more on the length-of-stay pressures and lower reimbursements. But that three-day rule seems to be one of those odd regulations that nobody actually likes but is still on the books.

So everybody can rally around: This is a great idea for everybody!

With acuity taking center stage in the new payment model for nursing homes, that direct-admit strategy could be huge.

Absolutely. And it’s been really positive — we’ve seen a huge uptake from 2018 even to 2019. CMS does some reporting on the 29 ACOs that are participating in this waiver. We were originally number 21, because we were trying to get our processes up and running, and now we’re number four out of all the ACOs. So it’s really been a nice asset for everybody.

Within the ACO and elsewhere, are you seeing a push to home health over skilled nursing facilities in Vermont?

I would say that in Vermont, through their Choices for Care [program], a lot of it has been to make sure that people are in the most appropriate place. Obviously, you want to try to be able to treat people at home when you can, but there’s still a tremendous need to have the skilled nursing facilities. I believe that because we are such a small community, we really work together to say: What is the best place for this individual patient so that they’ll be the safest? Is it a skilled nursing facility, or is it home? We haven’t seen a big push to do total diversion from the skilled nursing facility — to get people directly to home.

Vermont obviously is a very small state by population — about 620,000 people. (For comparison, SNN’s home city of Chicago alone has more than 2.7 million.) Are these strategies scalable, or does ACO success rest on having a contained population?

I think absolutely there are some parts of this that are very scalable to other areas as well. Vermont is rural, but there’s also rural pockets around the country that can learn from these aspects of reform that we’re doing here. I think we’re one of the few states right now — there might be one other — that’s really looking at taking this global budgeting approach. I feel like we can be a real leader in that aspect as well.

Even though — depending on where you are — there might not be as much integration because there’s multiple skilled nursing facilities, or multiple home health agencies, I think some of the process flows that we’re developing here, on how to work together as a system, can be very beneficial to other ACOs.

This interview has been condensed and edited.

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