I-SNP Case Studies Show Promise in Era Where Fee-for-Service Medicare Looks Unsustainable

Despite the challenges, skilled nursing facilities have succeeded at setting up their own specialty Medicare Advantage plans — and the strategy represents a key potential weapon amid the rise of alternative payment models.

Institutional Special Needs Plans (I-SNPs) remain a small part of the overall Medicare Advantage landscape, according to a panel discussion at the American Health Care Association’s annual conference earlier this month in Orlando, Fla.

But their influence is growing as providers both control their reimbursement dollars and redesign their care plans in ways that fit into other new payment models.


“The Medicare program for only so much longer can continue to pay on a fee-for-service basis,” Anne Tumlinson, CEO of consulting firm Anne Tumlinson Innovations, said during the presentation. “It’s really not a sustainable way to pay for health care going forward.”

I-SNPs specifically cover long-term residents in nursing homes, who must elect to enroll in the plan as they would with any Medicare Advantage product.

So far, I-SNPs make up only a small percentage of the overall special needs plan landscape; D-SNPs, which cover seniors who are dually eligible for Medicare and Medicaid, easily lead the pack according to data from Anne Tumlinson Innovations.


That said, long-term care providers remain a major source of growth for the overall SNP program, and enrollment in provider-led I-SNPs has increased by almost six times since 2015 — ballooning to 18,320 in 2019.

Despite the numbers, Tumlinson expressed surprise at the widespread interest in I-SNP plans, noting that even as recently as earlier in this decade, her calls on operators to adapt to new models such as bundled payments were met with resistance. But given the deleterious effects of that model — along with accountable care organizations and Medicare Advantage in general — the allure of payment control under the I-SNP system has become difficult for many operators to ignore.

“There’s a large degree of frustration with the way that health care reform and value-based payment has been rolling out over the last 10 years, and the challenges with having a seat at the table,” she said.

Setting up an I-SNP isn’t as simple as hanging a shingle and watching the payments flow in. The entire process, from start to finish, can take more than a year, with tens of millions in capital requirements and enrollment thresholds to meet in each state.

“Really understand what an I-SNP is, and what an insurance company is,” René Lerer, CEO of Longevity Health Plan, told SNN on the most recent episode of the “Rethink” podcast. “The world always said: ‘Insurance is easy; I can do it myself.’ You need to look at all the health plans that were started by medical groups and hospitals that didn’t survive. Because it’s not that easy.”

Tumlinson echoed that sentiment in Orlando.

“You are now the owner and the operator of both a nursing facility organization and a health plan organization — and in some cases, a medical services operation,” Tumlinson said.

While conventional wisdom puts the ideal scale of an I-SNP at at least 1,000 enrollees, and ideally more, Tumlinson argued that the model can potentially work for operators of all sizes.

Source: Anne Tumlinson Innovations

The average provider-led plan has an average of 584 enrollees, Tumlinson’s analysis determined — with a single plan of nearly 4,500 participants skewing that number upwards.

“This is not necessarily just for large organizations, which is something that I hear a lot,” she said.

Financial and scale considerations aside, I-SNP success relies on fundamentally changing an organization’s outlook. When a skilled nursing provider decides to become an insurer, the company needs to start looking at the world from both perspectives — with full buy-in for the plan from employees up and down the totem pole.

“There are serious risks and serious compliance responsibilities that you take on when you start a plan,” Phil Fogg, president and CEO of skilled nursing provider Marquis Companies, said during the presentation. “Full engagement at not only the board level but the committee levels — specifically around audit and compliance — I think are absolutely critical.”

In Marquis’s case, launching an I-SNP meant enlisting the help of a third-party administrator (TPA), which handles many of the paperwork and logistical burdens that come with running an insurance plan. But even if operators elect the TPA route, they can’t just assume that their partners will take care of any and all problems that arise.

“I could have never started an I-SNP without a partner that had the expertise,” Fogg said. “But having said that, you cannot give up or delegate your responsibility for governance to that TPA. You need to be heavily engaged.”

That engagement should ideally take the form of a completely redesigned care plan, with a keen focus on care coordination and higher-level services than one might expect in a traditional long-term care setting.

For instance, Fogg and Marquis have incorporated physicians and nurse practitioners into their I-SNP program, a move that can have a two-pronged benefit. Because providers assume full responsibility for risks and costs under the I-SNP model, reducing expensive hospital readmissions takes on even greater importance; by installing more advanced practitioners in the buildings, the nursing home and I-SNP have a better chance of treating problems in place instead of resorting to acute-care transfers.

Beyond the finances, having routine visits from doctors and other specialists improves resident satisfaction, Fogg said.

“You don’t see the sag in customer experience. where they’re used to seeing the doc once or twice a day, and at the SNF, they may never see it,” Fogg said. “Now you get daily touch with those people.”

Anecdotal comments from a recent Anne Tumlinson Innovations analysis of three I-SNPs backed up Fogg’s experience.

“I have not had any issues with not being able to receive coverage or any benefits,” the daughter of a resident enrolled in provider PruittHealth’s I-SNP plan said. “Everything I’ve asked for has been covered.”

The daughter of another I-SNP beneficiary, this one enrolled in American Health Advantage of Oklahoma, framed her experience in terms of reclaiming a more personal relationship with her mother.

“It takes the stress off of me, because I can actually be a daughter instead of a caregiver,” the daughter said, accodring to Anne Tumlinson Innovations. “I can enjoy my mom instead of having to worry.”

I-SNPs’ integrated care plans can also help cement SNFs’ place in accountable care organizations (ACOs) and even drive traditional Part A referrals, Adam Sholar, president and CEO of the North Carolina Health Care Facilities Association, said during the discussion.

Those can serve as a “great marketing tool for your entire organization,” Sholar said.

Of course, doctors and nurse practitioners don’t come cheap; it’s up to I-SNP participants to bake the cost of employing these professionals into their overall Medicare Advantage plan budget. To that end, I-SNP managers can stock away a certain percentage of the per-member, per-month (PMPM) rate that the Centers for Medicare & Medicaid Services (CMS) pays Medicare Advantage plans, and set it aside to compensate advanced practitioners.

“That is money that’s effectively going back into your organization just out of that per-member, per-month premium payment from CMS,” Tumlinson said.

What’s more, being an MA plan gives providers leverage with vendors. Residents who require high-cost drugs, for instance, can potentially be a drag on an I-SNP’s finances, particularly if enrollment is low. But in Fogg’s experience, the I-SNP leader has more authority to work with pharmacy partners and come up with a potential solution that’s amenable to both sides.

“If you can make it happen, it’s just a thing of beauty,” Fogg said.

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