Skilled Nursing Operators Can Find Success Under the ‘Quite Similar’ PDPM and I-SNP Models

The Patient-Driven Payment Model (PDPM) overhauled the way skilled nursing facilities are paid for their services to Medicare fee-for-service patients when it took effect last year – removing therapy as a driver of reimbursement and putting an emphasis on patient conditions.

That gives it more than a passing resemblance to a lightning rod in the SNF world: the Institutional Special Needs Plan (I-SNP), according to Stephen Taylor, health care principal at the accounting and advisory firm CLA.

“If you think about it from a theory standpoint, PDPM and I-SNPs are really quite similar when you think about from a 10,000-foot view, right?” he said on a webinar hosted by MatrixCare on Thursday. “Because no longer under PDPM are we being reimbursed so heavily weighted on our therapy resources and needs. Under PDPM, it’s much more of a holistic approach: What are the care needs of this individual entering our facility?”


The I-SNP model represents one of multiple paths open to skilled nursing providers looking to break into the world of value-based care — and to gain some control as Medicare Advantage (MA) enrollment continues to rise. The I-SNP is a type of MA plan wherein providers essentially become an insurer, covering the residents of their long-term care institutions who choose to enroll.

It’s specifically geared toward nursing home residents, and SNF provider interest in making the jump into the insurance space has been growing steadily. In fact in mid-2019, the number of I-SNPs was found to have jumped by 29% from the prior year; an analysis at the end of 2018 found that long-term care providers were driving growth in such plans.

There are many reasons why providers see upside in becoming an I-SNP. The government and the health care landscape is pushing them to take on risk, and many have encountered challenges ranging from rate wrangling to post-acute utilization decline when dealing with MA insurers. SNFs see moving into the insurance space as a way to gain more control over their reimbursement, and position themselves for long-term success.


The move into MA also allows SNFs to align with one of the central concepts of PDPM — the goal of shifting payment to value, Mary Hsieh, managing principal at consulting firm Health Management Associates, told Skilled Nursing News some months after PDPM was announced.

“That’s the big piece, that instead of paying by therapy minutes, which is largely the payment basis for today, they really to take a look at the case mix … and really align payment more into the case, reflective of the intensity and the case needs of the patient,” she said. “I think that fundamental change is what Medicare Advantage is all about.”

But one of the most common cautions for providers considering the I-SNP model is that it’s difficult and it’s not for everyone. And while Taylor highlighted several of the economic factors SNFs need to consider, he made sure to note the intangibles.

“What is revenue today is cost to your plan once these are enrolled members in your plan,” he explained on the Thursday webinar. “So what’s your value proposition? What form of participation are you contemplating with an I-SNP? Are you willing to put in the work, put in the economic capital to establish one yourself? Do you have the ability to be an administrator? Do you need to find an administrative partner? What does your potential pool of enrolled lives look like? I think all of that goes into assessing what’s your value proposition.”

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