Skilled Nursing News’ Hidden Gems of 2019

For the skilled nursing profession, 2019 will be synonymous with the Patient-Driven Payment Model (PDPM), and the top stories of the year reflect the importance of this shift.

But PDPM is one of many moving parts in the skilled nursing world, and operators, landlords, and regulators alike made splashes in ways that had nothing to do with Medicare fee-for-service reimbursement.

From the Centers for Medicare & Medicaid Services (CMS) pushing new regulations to SNF operators going behind the scenes of their strategies, Skilled Nursing News has covered a range of stories over the last 12 months. We wanted to highlight some of our own favorites as we bring down the curtain on another year of news.

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First up, reporter Maggie Flynn’s picks.

Confessions of a Skilled Nursing Operator: ‘ACOs Have Been a Disaster for SNFs’

The title of this anonymous Q&A in some ways says it all: Accountable care organizations (ACOs) — in which hospitals, physicians, and other providers come together to provide care for Medicare fee-for-service beneficiaries — have been a bane for skilled nursing providers with which they were meant to partner.

This story might have been drowned out by the frenzy of PDPM preparation, but it drove conversation in a way that I’ve never seen any story do. Multiple emails came in from providers sharing their own experiences with the organizations, and one speaker at a conference cited it as an example of the challenges the post-acute landscape faces.

Though CMS took steps to force ACOs into taking on risk sooner than the organizations themselves might want, there seems to be no question that the model itself is going to be around for some time.

The government is increasingly pushing its reimbursement system to paying for value, and though the Q&A focused primarily on ACOs, it touched a nerve because it illustrated so clearly what many SNFs usually experience in a health care system primarily geared toward acute care: They’re “the poor sister in the discussion.”

Skilled Nursing Operators, States Turn to Medicaid Supplements to Avert Disaster

Medicare fee-for-service, the most lucrative payer source, draws the most attention from SNN readers. But the difficult reality is most long-term patients — and most SNF residents, for that matter — are covered by the given state’s Medicaid system.

In many states, however, that daily reimbursement isn’t enough for nursing facilities to cover the costs of caring for a long-stay patient covered by Medicaid.

Enter Medicaid supplemental payments. These programs, which exist in states ranging from Indiana to Texas, allow skilled nursing facilities to receive higher reimbursement through various methods, including license and intergovernmental transfers. Getting a handle on these mechanisms to write about them even somewhat coherently was one of the harder challenges I’ve had this year.

But that story likely won’t be the last word on these programs. CMS has not been happy with what it’s seen in terms of the transfers in these payment mechanisms, and it recently proposed a stricter set of rules for the Medicaid payment supplements. How the rule will be finalized is yet to be seen, but these programs will loom large for providers in the states that make use of them in the year to come.

Seeking Savings, NY Tries to Remove Long-Term SNF Residents from Managed Medicaid

In some ways this story ties together both of the themes in the other two, despite being state-specific and tied to the Medicaid program. The state of New York made the decision to remove its long-term SNF residents from its managed Medicaid program, since, as multiple experts pointed out, it’s not really possible to reduce their utilization.

“Once you are admitted to a nursing home and you’re in that nursing home, that cost … 80% of that stuff is not variable, and the stuff that is variable is around how sick you are,” Jay Gormley, the chief strategy officer at MJHS Health System in Brooklyn, N.Y., told SNN at the time.

Though New York has quite a few factors that make it a unique market for skilled nursing facilities, the issue Gormley raised is one that’s going to apply elsewhere in the country. More and more states are looking at managed long-term supports and services as a tool for reducing costs and balancing their budgets. Amid the promises of home and community-based care, it’s worth remembering just how frail some of the patients in the SNF setting are — and how their needs might not fit into an easy mechanism for savings.

And now three more from editor Alex Spanko.

Avoiding Million-Dollar Medicaid Eligibility Mistakes in Nursing Facilities

At SNN, we try to focus on the bigger-picture issues that keep skilled nursing operators, investors, and vendors awake at night — with an admittedly more limited focus on the day-to-day operations of individual facilities.

This story provided a great education for me on how the nuts-and-bolts management of a key funding source can snowball into a larger problem.

Even if everything goes right, Medicaid frequently causes financial headaches for nursing home operators. But Chad Bogar, CEO and managing partner at law firm sb2 Inc., described all the ways operators can mishandle the basic step of ensuring that each resident has the proper Medicaid eligibility — with the mistakes potentially costing providers millions.

“We have to control the Medicaid eligibility process,” Bogar said during a presentation this past spring. “If we control it, we win. If we don’t control it, if we leave it for somebody else to do, we’re out.”

Bogar also didn’t mince his words when describing the importance, both clinically and financially, of helping residents qualify for Medicaid coverage.

“These people would die without you, if there were no one out there to do this,” Bogar said. “You can’t take care of these residents at home without lifts and nurses. It just won’t happen.”

Hospital Exec: ‘Almost Nothing’ Won’t Move to the Home Amid Shift to Lower-Cost Care Settings

The smart money in the skilled nursing industry says that the home health diversion trend has largely subsided: The relatively healthier seniors who 30 years ago would have been in nursing homes — because there were no other options — have mostly shifted into home care or senior living properties. The nursing home space, meanwhile, has adjusted to a new reality of higher-acuity patients by investing in clinical care and embracing the role of a sub-acute provider.

George Hager, CEO of Genesis HealthCare (NYSE: GEN), has repeatedly dared doubters to go into his company’s facilities and identify anyone would could receive that same level of care in the home setting.

Unlike many others, Scott Powder of Advocate Aurora Health might take him up on that offer.

“There’s almost nothing that won’t eventually move to the home,” Powder, chief strategy officer at the Chicagoland health system, said during a June presentation.

While Powder allowed that doctors probably won’t be performing surgeries in America’s living rooms within the next five years, he predicted a continued shift of post-acute patients to the home setting.

“More and more recovery will be done there,” Powder said. “If you’ve got a five- to seven-year outlook in terms of investment, that’s a good place to be putting your money right now.”

How Avenue Development Built Two High-End Skilled Nursing Facilities — From Research to a $38M Deal

For reasons I can’t quite explain, development stories routinely struggle to catch on with our readership.

Sure, I understand that post-acute and long-term care facilities might not be the most exciting architectural projects; in response to my complaints about a general lack of interest in our reporting on construction and design issues, one industry player once told me, “Who wants to read about skilled nursing development? They all look the same.”

But even so, it’s impossible to deny the appeal of a shiny new facility, and I enjoyed probing the development process behind a pair of Kansas City-area buildings that LTC Properties (NYSE: LTC) decided to plunk down $38 million to purchase earlier this year.

Michael Mattingly, principal of Avenue Development, walked me through the design steps from market research to completion, perhaps giving our readers a blueprint to follow when pursuing their own new skilled nursing developments in the year to come.

“We have always liked the complexity of skilled nursing,” Mattingly said. “For us, it’s really important for our development company to understand what it takes for our operating partners to become successful. I think that anyone can kind of put together a real estate investment package and build the building, but our mission really is to enter and penetrate the markets.”