Creating or joining an independent practice association (IPA) empowers providers to negotiate managed care plan services and rates, a potential game-changer for nursing home owners amidst Medicare Advantage headaches — pains that include shorter lengths of stay, or the elimination of skilled nursing stays altogether in favor of home care.
Providers might opt into an IPA network if they’re willing put in the time and effort — and adhere to agreed-upon clinical and administrative parameters that the legal model requires.
But with so many evolving payment models and a fairly stringent approval process, it remains to be seen whether more operators in the sector will explore this very state-specific trend, or if the industry will remain cautious about entering into a complex system while already burdened by so many other regulatory changes.
The clamor for Institutional Special Needs Plans (I-SNPs), one of the newer payment models to sweep through the skilled nursing industry, came out of tight margins resulting from the push for shorter stays under Medicare Advantage.
Even though I-SNPs allow operators to become their own insurance entity, some operators are wary about creating one, as they come with a stack of impediments including high capital thresholds and varying state-level rules, to name a few obstacles.
Debra A. Silverman, partner and director at Garfunkel Wild, P.C. — a health care-focused legal firm headquartered in Great Neck, N.Y. — lauded the future of IPAs as a negotiation opportunity for some nursing homes in a webinar on Wednesday. Silverman spoke to SNN this week for a more in-depth discussion about how and why nursing homes might want to get in on this model as creators or participants.
Nursing home owners may originate an IPA or willingly participate as a member, depending on the rules of the state. Some states do not include the option at all.
“IPAs are creatures of statute. In a state like New Jersey, an IPA would take the structure of an organizekid delivery system. In Connecticut, you don’t need to have a special license or certification. So it’s a very-state specific concept,” Silverman said. “They may not even exist; there may be nothing called an IPA in Illinois, just as there’s no such thing as an IPA in New Jersey. All states don’t have the same laws.”
A broad base of providers are entitled to start their own IPAs — including nursing home operators, doctors, therapists, licensed home care agencies, and others, Silverman said. Once a nursing home joins an IPA, the clinicians are under that plan are obligated to abide by the terms of the contract or “the rules of the road,” she added.
As long as the IPA is clinically or financially integrated, a staff member or independent contractor is able to negotiate with Medicare and Medicaid managed plans. Participation may be a perk as long as policies and procedures are enacted regarding delivery of care, or what’s referred to as clinical integration; to have a knowledgeable group negotiate on your behalf may eventually help margins.
IPAs are governed by the federal antitrust laws, which create parameters for competition. Nursing home networks would violate these rules if they came together and demanded a specific payout per day.
A group of nursing homes cannot “go tell Anthem: ‘You have to pay us all $1,000 per day or you won’t have any nursing home coverage; that’s a blanket, per-state violation of the antitrust laws,” Silverman warned, adding that great care should be taken with the term collective negotiation by proving that your group is delivering a high quality, cost-effective product.
“Everybody shares the same policies and procedures, and you want to be cost effective. You need to lead your network and make sure everybody is following evidence-based guidelines. If you meet all those pieces, then you can face the plans as a single unit and negotiate on behalf of your network,” Silverman said.
Steps to success
Creating an IPA requires approval of the New York State Departments of Health (DOH) and the Department of Financial Services (DFS) and the Department of Education. The approval process often takes several months, and the IPA may be created as a limited liability company or a corporation, Silverman explained in the webinar.
The Department of Health must also approve a network services agreement between managed care organizations and the IPA.
Clinically integrated IPAs afford the best opportunities in the current managed care environment, Silverman said in an e-mail.
“An active and ongoing program to evaluate and modify the clinical practice patterns of the physician participants so as to create a high degree of interdependence and collaboration among physicians to control the costs and ensure quality” is advised, she said.
More specifically, clinical integration refers to the policies, programs, and procedures that the IPA develops and implements to enable unrelated providers to come together and negotiate rates collectively. Procedures include performance metrics, quality standards, penalties for non-compliance, and common IT platforms for the purpose of increasing care quality and lowering costs.
In order to be successful, a nursing home would need to demonstrate clear clinical and administrative leadership, a strong provider network, integrated electronic health records and web-based portals for patients and providers, adequate quality performance and objectives, and strategies for combating problematic trends, Silverman said.
Cons to creating an IPA
There’s more flexibility in joining an IPA versus starting one, which could require significant capital to develop a workable model for all participants in the group. Another hurdle in creating an IPA is potentially less “negotiating power” on your own, as well as planning for IT integration and managing a group.
Sharing data and creating new infrastructure is costly, Silverman said. But on the pro side, updating systems may help the bottom line.
“If a nursing home starts to invest in their own technology, they start to be able to become more interactive, right? They can better manage patients, and they can keep patients out of the hospital. Maybe the IPA has a care management component,” she said, adding that nursing homes should already be investing in these areas.
Larger nursing home companies may think about creating an IPA to advance their negotiating power on their own terms, especially if they prefer being in the driver’s seat for clinical and technological platforms.
“If you are a big player, you might want to drive the train. If you’re a smaller nursing home, you’re saying, ‘You know what, I don’t have the infrastructure to do this. I would just like to join up with someone and kind of follow their lead.’ It all depends on resources and the personality of the operators,” Silverman said.
Building an IPA takes work, effort, money, and time to get buy-in, she added.
To date, IPAs have been anecdotally beneficial for nursing homes when they’ve entered into certain risk agreements, “but that’s just conjecture on my part,” Silverman said.
But Silverman pointed to a buzz about IPAs in New York, noting the existence of recruiters who look for members, and trade associations as well as other affiliations who “tend to find each other.”