Rapid Medicare Advantage Expansion into Home Health, Senior Living Could Accelerate Pressures on Skilled Nursing

When the Centers for Medicare & Medicaid Services (CMS) moved to allow Medicare Advantage plans to cover more options for care at home, skilled nursing providers could be forgiven for not paying much attention.

It’s a move with more immediate impact to home care and home health companies, as well as senior living providers. Medicare Advantage (MA) plans are rapidly bolstering the supplemental benefits that CMS approved, with 116 plans offering more than one of those services for the 2020 contract year — after none of them offered more than one in the 2019 year. Interest in adult day health services, for example, saw a significant spike between the two years, according to a report from Milliman that was commissioned by the Better Medicare Alliance.

And as providers try to navigate their partnerships with managed care companies, the worry that insurer spending on these new services could take the oxygen away from SNF care “is a valid concern,” Dan Mendelson, the founder of consulting firm Avalere Health, said on Monday at the American Health Care Association’s (AHCA) inaugural Population Health Management Summit in Washington, D.C.


But that can’t hold SNFs back from talking with their Medicare Advantage plans, he added.

“Primary care is really very important for caring for patients in Medicare,” Mendelson noted in response to a question about whether or not the ancillary services will divert SNF spend. “With that said, post-acute care is also equally critical. A profitable health plan will be thinking about that full continuum of care. So that shouldn’t stop you in any way from engaging with plans.”

Another reason to work with plans is the fact that, as Nisha Hammel, senior director of population health management at AHCA, put it in a different session at the event: “Traditional fee-for-service is disappearing.” Though there are differing projections about how much MA enrollment will grow over the next two decades — the Washington, D.C.-based Avalere’s projections peg MA enrollment as a percentage of total enrollment at 64% by 2028, while the Congressional Budget Office (CBO) gives it at 47% — there is no doubt that it is growing.


Those ancillary services offered by the MA plans are only going to increase, partly in order to fuel that growth, according to Mendelson.

“I would say it’s a certainty that you’re going to see a lot more of these types of ancillary services that are being offered,” he said. “They are offered in part because they are a recruitment tool for the population that the plans want to bring in.”

From a financial standpoint, MA plans are motivated by the fact that they’re at risk for quality. The Affordable Care Act ties a certain percentage of plans’ overall income to quality incentives, a figure that now sits at about 7.5% of the Medicare Advantage program’s total funding stream.

“You can’t operate a Medicare Advantage plan without doing well on the stars,” he said.

With that perspective, the question for long-term care providers is how they can help the plans improve star ratings — and there are some that are largely within the control of SNFs, such as hospital readmissions, Mendelson said. But in another example, there’s a set of star ratings around immunization where SNFs can ensure that residents are properly immunized or being screened periodically.

“If you’re contracting with a plan and helping them to improve their operations, these are the kinds of things that they’re going to want to see from you,” he said.

From Mendelson’s point of view, Medicare beneficiaries who are also eligible for Medicaid — the dual-eligible population — will be “the next area of focus” for governments. These beneficiaries are more likely to be heavy users of long-term and post-acute care, and the growth of managed care isn’t confined to the Medicare eligibility of these patients. It’s becoming more and more prevalent in Medicaid programs — and so is the focus on quality.

In fact, 36 states are integrating quality initiatives into their Medicaid managed care programs, with 25 states including pay-for-performance incentives and 24 states featuring capitated withhold incentives, according to Mendelson’s presentation. The performance measure focus areas will also be familiar to those who know Medicare Advantage; 31 states are focused on chronic disease management, 24 are focused on mental health, and 17 are focused on value-based purchasing, he noted in his slides.

“We would expect to see more and more of the payment rates in Medicaid to be at risk for quality over time as well,” Mendelson said.

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