Some States Skeptical of I-SNPs as Long-Term Solutions for Nursing Home Coverage

Special Medicare Advantage plans for long-term nursing home residents have emerged as a significant growth opportunity for operators in the space, but state governments around the country may not necessarily be on board.

In fact, states may see Institutional Special Needs Plans (I-SNPs) as directly in opposition to their goal of shifting residents away from skilled nursing facilities and into the community, according to SNP Alliance president and CEO Cheryl Phillips.

In order for both sides to move forward, Phillips said, states and I-SNP plans should take steps to work together, sharing information and helping each other identify the residents who truly need round-the-clock institutional care — as well as those who could potentially return to the community with the correct supports.


“The opportunity to improve the delivery of care for those at an institutional level, particularly in a nursing home, I think, is a very powerful argument for an I-SNP,” Phillips told SNN.

As the leader of the Washington, D.C.-based SNP Alliance, Phillips advocates for I-SNPs and their assorted counterparts, including dual-eligible special needs plans (D-SNPs) and chronic special needs plans (C-SNPs).

SNN caught up with Phillips late last month to discuss the trends she sees in the specialty Medicare Advantage world, and what factors operators should consider before jumping into the I-SNP business.


What are some of the sort of higher-level trends you’re seeing around I-SNPs, at least in your advocacy work?

They are special needs plans, a subset of Medicare Advantage plan, for those who are at an institutional level of care for at least 100 days. So it’s not for the short-term skilled rehab. These are individuals who meet the state definition of an institutional level of need. And most commonly, they are all in an institutional setting, but I’m going to use institutional in italics: They may be in a long-stay nursing home setting, or they may be in another congregate setting — assisted living, senior housing — or they may be in the community.

But focusing on the nursing home setting: The opportunity for I-SNPs is that now nursing homes — either individually or through an organizational parent or through multiple nursing homes working together — now become the Medicare plan for their residents in the nursing home community.

So, you can imagine both the opportunity and the challenge. Certainly the opportunity is now, instead of struggling with multiple managed care payers, you are it. You are the payer. The opportunity is that now you can drive delivery design through on-site practitioners — such as nurse practitioners, who can help reduce hospitalizations, work more closely with the nursing staff on site — as well as the attending staff, who may be there more intermittently. It’s an opportunity to drive quality and to reduce hospitalizations.

The downside is … on the Medicaid side, or the long-stay side, if a person is not doing well, there’s very little staffing, financial, or any other incentives to keep them — so you send them back to the hospital. They get a qualifying three-day stay, they come back under Medicare skilled, where margin is roughly 18%, 19% based on some previous MedPAC reported data, and you maximize as much as is needed, ostensibly based on the individual’s needs. But all of this is driven by a very different financial incentive than when you are now the Medicare plan.

The idea of sending people to the hospital to have them come back under skilled days, and to optimize their skilled time and rehab, is not now in the new I-SNP’s best interest. So where the challenge: How do you match quality, the needs of the individual, with the opportunity to drive practice change, but at the same time, recognizing that there’s a whole different business model for your long-stay nursing home business?

Having said that, although they still are the smallest by enrollment type of special needs plans, they are growing fairly quickly. There were roughly 90,000 enrolled individuals last year in I-SNPs. We’re seeing growth in I-SNPs — both in the provider-sponsored, where the nursing homes or senior living communities either individually or get together — or other plans that have now expanded into the institutional nursing home environment. Certainly the major player has been Optum United[Healthcare] affiliates. However, what we’re seeing is the growth now in, as I mentioned, provided-sponsored.

I find the interplay between Medicare and Medicaid around I-SNPs fascinating — especially since you’re applying Medicare Advantage to a traditionally Medicaid population.

Let’s correct that. You are replacing the Medicare reimbursement. An I-SNP is a Medicare plan. Your Medicaid is unchanged. You may still have managed LTSS [long-term services and supports] in your state. You may have fee-for-service Medicaid for nursing homes. That doesn’t change.

You are now the Medicare plan under a I-SNP. That’s an important distinction, because one of the concerns that many states have raised is: “Well, I don’t know that we’re all that excited about having an I-SNP in our state, because we, the state, are still paying the Medicaid bills for the nursing home side. And one might argue that there is now a greater incentive to keep people at an institutional level, rather than having them returned to the community.”

I’m a long-term nursing home physician. I’m not practicing now. But my reality was that if people were in the nursing home for over 100 days, not a lot of them were able to go back to the community. But I do think that it does raise the issue about: how do I-SNPs work with the state? Because under an I-SNP model, you don’t change the Medicaid payment; that’s still the state’s responsibility, or a managed Medicaid organization.

The opportunity for truly integrating Medicare and Medicaid is not there with an I-SNP. The opportunity to improve the delivery of care for those at an institutional level, particularly in a nursing home, I think is a very powerful argument for an I-SNP.

What are states’ general stances toward the I-SNP program?

Some states are just agnostic. Others are actually rather concerned, certainly states that have put a great deal of effort into the other term we hear commonly — rebalancing, trying to move people to the community long-term service and support settings.

Some of the states have expressed real concern about the role of I-SNPs. And I don’t see it personally as an either/or; I don’t think that with a strong and functional I-SNP, that you are impeding rebalancing for those individuals who are appropriate to go home and return to the community. But some states have raised that concern.

And in fact, one of the things that the SNP Alliance has been focusing on is how might I-SNPs work a little bit more closely with states — at least sharing some information, understanding who is maybe appropriate for returning to the community, and who’s appropriate to stay as a long-stay resident.

But that’s where the tension is. And so you can imagine, if you are a state and you now have this plan that wants to keep people in a nursing home, and you’re trying to get people out of a nursing home, that unless there is an understanding, there could be some tension.

To your point, I’ve heard operators say: Come into my nursing home, and take a look at my long-term care population, and tell me who can actually go home — with the implication that very few of them really can.

When you have a large MA plan, let me just throw out numbers: There’s 100,000 enrolled lives in a market area. They see the nursing home, senior living providers at best as vendors, and at worst as just not even on their radar screen.

When you have an I-SNP that truly knows the delivery teams within that senior community— whether it’s assisted living, independent, or nursing — when you know the providers, and when you know the residents and the families, you now have a much more person-centered focus of developing a plan of care.

Special needs plans are required to have what are called models of care, or MoCs, that focus on exactly: What are you doing for that population you’re serving? What kinds of services are you putting into place, what kind of providers are available? How do you develop your care plans? All of that is so much richer and more individual-focused than in just a large general MA [plan].

When you talk about care coordination and patient-centered care, I think about PDPM; it sounds like if you’re preparing for PDPM, you can transfer some of those lessons to starting an I-SNP. Have you been hearing more interest in these plans amid PDPM?

Well, I’m not sure about the connection. I still think that fee-for-service is a long ways away from having the engine, if you will, to truly coordinate care. Under fee-for-service, you might be having some value-based payment incentives, you might have some alignment, but you really don’t have control over the provider network or the services, because everybody is billing CMS individually.

I think that, certainly, CMS is looking to fee-for-service strategies and vehicles to help. But I’m not sure that they will ever truly replace the opportunity for coordination that managed care does. And general MA is never going to have the same focus and opportunities to deal with person-centered care that an I-SNP can in the nursing home setting.

Where do you see penetration of these plans reaching over the next couple of years?

The Southeast has been an area of really remarkable growth — Georgia, Alabama, Florida. We’re seeing growth in Maryland, Pennsylvania, and some now up in the Northeast.

Minnesota has been a state in particular that has expressed concern with the expansion of I-SNPs, because they’re already such an integrated, focused environment with a lot of interest in rebalancing, but we’re seeing provider-sponsored expansion into some of the Midwest states.

Obviously, where you’re not going to see growth is where there is no managed care — so the Dakotas, Wyoming, those areas that really don’t even have MA are not going to have I-SNPs.

And some other states that I haven’t seen a lot of growth yet in is where there is access to a lot of options and choices. So California, for instance, has some I-SNPs, but based on its relative population of MA, it’s sort of surprising that there aren’t more I-SNPs — but it also has a large Medicare-Medicaid demonstration in eight counties and also a large dual SNP population. So right now it looks like the South is where most of the growth has been.

Let’s say I run a facility where an I-SNP might work. What should I start to consider? How do I start the conversation, start the process to maybe either form one myself or join up with an existing one?

You really need to understand your market area. You need to probably talk to an expert, and there are a number of consultants out there that can help with some of the actuarial assessments.

Enrollment is not a given. It’s not a field of dreams — just because you build it people will come. Just because you have eight nursing homes and you decide you want to be your own health plan, and you open up an I-SNP, doesn’t mean that your residents are all going to want to join your health plan.

What is your market area? What is your potential enrollment? What are some of the challenges? Then you need to get into the whole morass of the CMS regulatory and application steps. And so it’s rather daunting. I think it takes probably two years, at least, for plans to start up from a good idea to: “Let’s actually have an application in place.” Then you’ve got another year before you’re actively enrolling people. So it is a rather lengthy process.

It’s not for the faint of heart, and my recommendation is talk to folks that have done it. Who have they used? Who have they worked with? And I would also talk to folks that are exiting the market and found that either enrollment or rates or the ability to change the culture within the nursing home — or if you’re a rural environment, access to adequate providers — just wasn’t there. So the suggestion is: Look to see what works, but also look to see what doesn’t work.

This interview has been condensed and edited.

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