I-SNP Exec: Skilled Nursing Operators Must Approach Insurers to Succeed — But Few Do

Skilled nursing operators frequently bemoan the shorter lengths of stay and lower daily payment rates for Medicare Advantage residents, but the leader of one plan says it’s also up to providers to present novel ideas to insurance executives.

Before taking the CEO role at the nursing-home focused Longevity Health Plan earlier this year, René Lerer spent five years as president of Florida Blue, which offers Medicare Advantage coverage among other health insurance plans. During that time, Lerer said during a panel discussion at Zimmet Healthcare Services Group’s annual conference last week, he never heard of a SNF that tried to act proactively when dealing with managed Medicare.

“No SNF ever approached us with a creative way to say: We will decrease your cost. We’re willing to take X percent less, but we will actually decrease our expense by 20%,” Lerer said during a presentation at the event, held in Atlantic City, N.J. “No one did it. And the reason is? Most of the SNFs don’t know their data.”

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And if they don’t have creative ideas, it’s all that much easier for leaders in new payment models to cut SNFs out of the rewards.

“There are only so many dollars, and the distribution of dollars to themselves is a much higher priority than the distribution of dollars to the SNFs,” Lerer said.

This call for strong data isn’t necessarily new on the conference circuit and the industry writ large. The fate of an individual SNF group increasingly rests on securing a spot in hospitals’ and plans’ narrowing networks, meaning the old days of winning referrals through free breakfasts and snacks are long gone.

“It’s no longer about donuts — it’s about data,” Joseph Kiernan, chief strategy officer of the New Jersey-based Ocean Healthcare network, said in the spring of 2018. “If you want to come and have meetings, that’s great — in God we trust, but everyone else must bring data.”

But while the mantra has been around for some time, the industry has only recently started realizing its potential power in new payment models, according to Allure Group president and chief operating officer Melissa Powell. Too often, in Powell’s view, operators internalize what “we’ve been taught to believe about ourselves” — such as the perception that they’re simply at the bottom of the food chain and subject to the whims of their upstream partners.

That’s changed with increasing access to data programs that help SNFs show their worth, including detailed information about lower hospitalization rates and positive outcomes. But those tools have only come into widespread use in the last few years, Powell said, meaning that the SNF push into the value-based world may just be now gaining momentum.

“Some of the things that we’re able to now bring to an Advantage plan, and talk about what we can do for them, didn’t exist” as recently as three or four years ago, she said.

But whether providers are ready or not, the changes are already here. Brian Fuller, CEO at care management and coordination firm Integrated Care Solutions, said the drive toward value — whether it’s through Medicare Advantage, accountable care organizations (ACOs), or other models — is growing faster than ever before.

“The incentives, the momentum behind value-based care are at a tipping point and — as compared to yesterday — accelerating beyond what we’ve seen historically,” Fuller said.

Those ACOs have emerged as a particular headache for skilled nursing operators, with one anonymous provider leader classifying their rise as a “disaster” for the industry in an interview with Skilled Nursing News.

Panelist Anne Tumlinson, founder and CEO of consulting firm Anne Tumlinson Innovations, said she wouldn’t go as far as describing the format as a disaster. Instead, she speculated that ACOs may not have registered as a major issue if their growth happened without concurrent rises in Medicare Advantage penetration and the introduction of the SNF Value-Based Purchasing (VBP) model — other payment shifts that have only served to compound the impact of ACOs.

Still, she acknowledged that they have caused strain by encouraging a general decline in skilled nursing admissions.

Under the ACO model, providers all along the continuum share responsibility for the overall cost of Medicare beneficiaries’ care. Because hospitals and physicians generally lead these organizations, they have increasingly sought to reduce spending by cutting SNF admissions in favor of home health care — a trend that Tumlinson identified as the major issue for SNFs in the system.

“The whole market itself kind of declined to a point where even if you were a really high performer and a top referral destination in a narrow network, you were still getting a much smaller share,” she said. “You’re getting a big share, but of so much of a smaller pie, that it was challenging to manage through.”

To succeed under ACOs, Medicare Advantage, and other models, Lerer suggested that operators look to the proactive approach that medical groups have ridden to success in his home state of Florida — where physicians and other operators took “aggressive” steps to demonstrate their value to the plans.

“The goal for the SNF world is to participate in the same way — it’s to create value, which Medicare is dying for,” Lerer said.

Lerer also touted the value of Institutional Special Needs Plans (I-SNPs), special Medicare Advantage plans designed to cover nursing home residents. Longevity Health Plan operates an I-SNP, a model that has quickly emerged as one of the hottest topics on the conference circuit: If a SNF group can launch its own Medicare Advantage plan, the thinking goes, it can control its managed-care reimbursements from start to finish, without outside pressure to reduce lengths of stay or accept payments that don’t cover the cost of care.

“This is dramatically different than anything else, because it’s the first time you control,” Lerer said. “You’re in charge.”

That said, the average SNF operator can’t snap his or her fingers and launch a health plan. The process takes a significant amount of planning and scale: Startup capital requirements can total $1.5 million to $2.5 million per state, with some experts advising operators to not even consider entering the I-SNP space unless they have a clear line toward 1,000 eventual enrollees.

“It’s not an easy skill,” Lerer said. “That’s not something most SNF owners have ever done, or SNF operators have ever done. They don’t think that way.”

But for those with the cash and vision to pull it off, the rewards can be great. Instead of striving to prevent readmissions in order to please a partner and maybe get a shot at a small bonus payment — if they’re lucky — a SNF with its own plan now has both a direct clinical and financial incentive to improve care and cut hospital visits. Though the responsibilities are greater, the rewards belong solely to the operator.

“Someone’s getting value. Make sure it’s you,” Lerer said.

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