Changemakers: Jason Feuerman, President, LTC ACO and SVP, Genesis HealthCare

If there’s one consistent source of change in post-acute and long-term care, it’s around government reimbursements and insurance payments.

And for Jason Feuerman, finding ways for operators to embrace that change proactively is at the heart of his job.

Feuerman helms LTC ACO, Genesis’s accountable care organization — an alternative payment model under which a variety of providers are encouraged to work together along the care continuum to improve care and reduce costs for each beneficiary under their control.

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As a senior vice president at Genesis HealthCare (NYSE: GEN), he’s also in charge of steering the nursing home giant away from fee-for-service Medicare and toward a more value-based philosophy.

For many skilled nursing providers, ACOs have a bad reputation; after all, there’s firm evidence that the model has worked in practice by reducing spending on institutional post-acute care in favor of home health and other alternatives.

But Genesis birthed LTC ACO to put skilled nursing providers in the ACO driver’s seat, and Feuerman believes the model should receive as much positive attention as the Institutional Special Needs Plan (I-SNP), the in-house Medicare Advantage plans that have been the talk of the conference circuit in recent years.

For his work to mold an existing alternative payment model to fit the typical skilled nursing facility’s needs — and expand its reach both inside and outside of Genesis — Feuerman is part of SNN’s inaugural Changemakers class.

Tell me about your background.

My background comes from the managed care world. I was brought into the industry by Genesis to help move the company from a fee-for-service mentality to a value-based mentality.

We entered a bundled payment program back in ’15, and then we later entered the Medicare Shared Savings Program. I come into this industry with — not only being a new guy — but with a different lens I’m looking through.

What specifically was your managed care background prior to joining Genesis?

I ran a large regional Medicare Advantage company.

The ACO model is something of a bad word for a lot of skilled nursing operators, who see it only as a way to reduce SNF utilization. How did you pitch that to Genesis, and how do you think the industry can come around to it?

Well, the reality is, at the time that I proposed this, the term a ACO wasn’t a dirty three-letter word. The organization was looking for an alternative to play in a value-based environment in a much more capital efficient manner than the way that you can under Medicare Advantage, specifically the I-SNP business. So the conversation wasn’t necessarily all that hard.

George Hager, our CEO, along with the board, certainly understood exactly what we were looking to do — and that was, in essence, using the Medicare Shared Savings Program as a platform to create an I-SNP on a fee-for-service platform versus a capitated platform.

So that was kind of the easy part. The more challenging part is moving an organization the size of Genesis along to ensure that you’re getting the cooperation, the support of each and every operator within the organization. That changes pretty frequently, and changes rapidly, and everybody’s got different sets of priorities. But we were successful with the leadership of the organization to begin to start changing the mindset of the folks that were responsible, on a day-to-day frontline basis to change your model into a care-in-place model — one that was already been demanded of us by the industry into one of them which you can share and the savings that that get generated from those efforts.

As we work to take it outside of Genesis, you’ve got a few things that are playing both in your favor and against you. I think it just depends on how you look at it. Number one, to your point: There are 516 Medicare Shared Savings Programs out there that operate as ACOs; we’re one of 516. So the other 515 are really looking to decrease costs for community-based patients by decreasing utilization of not only hospitalization, but skilled nursing utilization in the post acute space.

So you’ve got interference, if you will, or you’ve got influences that are being put upon you — not just by the ACO, but that ACO is probably owned by your distribution chain or your hospital partners from which you’re left no choice but to respond in kind with.

We’re not out there to limit the use of skilled nursing days; that will come from the fact that you’ve been able to care in place and decrease unnecessary hospitalizations, which will drive down naturally the Part A benefit and the skilled nursing utilization that’s reflected in the Medicare system.

On the flip side, you have people that are looking at the I-SNP model. What’s acted as an accelerant for us is: You have people that have looked at the alternate model and really liked it. They realize they don’t have the capital to really get involved with something like that, and they don’t have the risk tolerance to take on the downside risk, and are looking for another way to play in a value-based arena without having to put up capital and assume risk.

Tell me about those conversations that you have with operators on the fence between I-SNPs and an ACO partnership like yours — is it a difficult mental shift for them to make?

I think it’s the same shift as to whether we’re talking about an I-SNP or an ACO. The difference is people get confused with the ACO because they put it in a bucket with the other 515.

The conversations really aren’t all that difficult. What’s difficult is for people to purely understand the nuances within the Medicare Shared Savings Program versus a managed care product — and the fact that the attribution or enrollment of members is coming from the relationship with the physicians that are serving the facilities. Versus an I-SNP, where you have to get patients to affirmatively enroll into the program.

So the benefit is that it’s creating this alignment between physicians and SNFs that hasn’t that hasn’t occurred to date. It’s evolving, but in an I-SNP, it’s nurse practitioner-centric, where the PCP many times, while important, is left out of the value equation. And here, it’s PCP-centric, where the adjunct of the nurse practitioner is adding value to the entire equation — from which the NPs benefit, the physicians benefit, and a skilled nursing facility benefits.

This is a complicating factor — we’ve worked to create a fully aligned model that while on paper, and as I speak, sounds really good, effectuating change in a very set-in-its-ways industry [is difficult]. But it has to change, anyway, because the market’s demanding change. And this is a way to create financial alignment between all parties.

It’s interesting to hear it from that perspective, because when you go to conferences and talk to operators, “I-SNP” has a good connotation, and “ACO” generally has a bad connotation. But it’s not as simple as that, and I’ve seen people who are all in on the I-SNP model make similar points.

If you’re going to align our ACO with a community-based ACO, then you’ve got to equate the I-SNP to a community-based Medicare Advantage plan; they’re just different derivations of the same thing. It’s a matter of who’s benefiting and how that benefit accrues to the operator.

I always like getting the perspective of relative newcomers to the space. When you came to the skilled nursing world, did anything in particular strike you? Any aspect of the model or the landscape that you’d do differently if you could create it from scratch?

I think two things jumped out at me: Number one, that coming into the industry, is the perspective that admissions of long-term care residents was bad, and that readmissions are bad, when in fact, from operator’s perspective — perception notwithstanding, financially, it’s a benefit. So you’ve got that really perverse incentive there.

Number two, and this was very eye-opening, especially coming out of the Medicare Advantage world, is that in Medicare Advantage, you had a desire for those that qualify for the program to encourage the use of hospice. I think what you see, what we’ve observed in certain settings, is that hospice isn’t always appropriately used — and that there’s over utilization, which drives up the cost to the tune of $160 per day or $5,000 per month. The length of stay that someone could be on there is well greater than the intended length of stay in the program. So I think the industry needs to get tighter with its cost controls.

They’ve looked to hospice almost as staffing, and that’s driven up the unnecessary need. And I want to be careful: At times there’s enough, but there’s cases where hospice is not properly utilized, where there’s gross over utilization, and that’s been a real eye-opener.

What we try to preach, and the folks that we’ve got in our program, many of them believe in a whole model of caring in place if there’s no reason to send someone out to the hospital — particularly in the environment that we’re living in today, where going to the hospital and exposing someone to yet another set of hands and potential viruses creates exasperation in the current environment. Provide care for them in place.

I always thought that hospital admissions and readmissions were bad. The reality is at the end of day, it’s financed the industry for a long period of time. That said, a lot’s changed over the years. So that’s where I come at it, saying: The market’s already forcing you to do this. It’s already costing you money to do this; if you don’t do it, you’re going to be out of the network. If you do do it, then you’re making a bet, using your own money to make a bet.

So why not do the right thing? Because most of the folks in this industry want to do the right thing. Why not do the right thing, provide care in place, and then create a new revenue stream for yourself by doing that? I don’t think that’s terribly different — whether we’re talking about the ACO model, or the I-SNP model, they’re simply two different financing platforms. And I think we have the same exact care enhancement, care delivery objectives.

The industry’s stance toward Medicare Advantage has always been interesting to me — much like ACOs, operators tend to see it strictly as the enemy, whereas it’s such a source of excitement and opportunity in other settings like home health and senior living. I understand that, but it’s also necessary to point out that that’s what an I-SNP is.

It’s just a program under Medicare Advantage. I agree with you; if you’re going to lean toward an I-SNP to say you want to get up the food chain, you’re going to have to employ a lot of the same tactics and strategies as a typical Medicare Advantage company. If you’re going to be in an ACO like ours, you’re going to want to do the same thing — and that is provide as much care in place to take unnecessary costs and improve the system and improve quality.

They’re really identical, and that’s where it’s a bit challenging to get people to really understand it. There’s a perception in the industry that you want to become an I-SNP because you want to move up the food chain — and there’s no food chain to move up.

It’s a very difficult model to make money under. Whereas our model, it’s much more capital efficient — there’s nothing upfront, there’s no downside risk that gets passed along. It’s a way for you to create value for your physicians that could, in turn, create value for the facility by not only improving quality and decreasing costs, but creating a different level of alignment that you have between you and your physicians that you rely on, presumably, for admissions. So if you believe that latter point, why not enter our program, and why not participate in something that’s, again, not only more capital efficient, but creates that alignment with a much-needed resource like your physician base — and not commoditize them?

Genesis has made a major point of attracting other companies into the ACO — do you think this is a signal that the industry is moving toward more collaborative models, and maybe away from competition in a lot of markets?

I’m not sure I look at it from that perspective. I look at it from the perspective that

Genesis has this unique asset. The reality is, it’s very difficult to put yourself in our shoes in order to gain the minimum requirements to enter the Medicare Shared Savings Program, and you’re looking for ways to participate like an I-SNP.

I’m not an industry guy. I don’t know how they view it. I certainly run across operators that don’t want to do business with a competing company. This is not a competitive resource.

This is really a resource that’s been developed to facilitate a new revenue stream for the industry, and the fact that Genesis owns it is not something that I dwell on. It’s not something that we look at as a way to collaborate with Genesis at all. It’s the fact that we’ve got this asset that we’re trying to afford the entire industry to be part of.

I mean, Genesis has a rehab company, and they’ve got plenty of outside businesses, and plenty of outside businesses have hospice and home care companies — some of which Genesis uses. So I think there’s already some level of cross-collaboration there. I think you see it in the pharmacy industry, as well — not via Omnicare, but some of the smaller providers have opened up their own institutional pharmacies and tried to leverage it across different platforms. So I think some of that already happens. I’m not sure I stick this into that line of sight, simply because it’s unique; someone couldn’t just get into the business. Somebody else couldn’t just get into the business and do it themselves, either for themselves with themselves, or for themselves and with others..

Where do you see both Medicare Advantage and the skilled nursing industry going over the next 10 to 15 years, as well as the relationship between the two?

I think they’ve got to get into the game. They got to stop fighting on the rate side, because once you start fighting on the rate side, all you’ve done is commoditize yourself. I think you need to figure out, really, how you provide the most value to the system, which then accrues to the Medicare Advantage company, which then allows you to participate in their value-based programs, which then allows you to make up for some of the decreased revenue.

But if you think you’re going to constantly fight the growth of Medicare Advantage, and fight the Medicare Advantage plans, and you’re not going to focus on improving quality and containing cost, and what it is you can do for them? You’re going to find yourself in a losing battle — and one that doesn’t have to be a losing battle.

My belief is that, in this industry, there are really two value propositions: one that’s been exploited already via the REITs, and that is real estate. The second is the value of health care delivery. And until or unless the industry recognizes the value that they can provide the health care delivery [system], it’ll just be a rate issue to the extent that they can really focus on health care delivery and outcomes. That’s where the value lies.

I honestly wish I heard more people talking about that at all these conferences, but that’s the truth. That’s what payers are looking for. And whether it’s an I-SNP or whether it’s the ACO, you know, our quality metrics are the same as Medicare Advantage.

I’ve got a whole team of people that can talk about all this, all the value that I can bring to a Medicare Advantage plan and Medicare Advantage operator, and it works, and it starts changing the mindset of leadership within these facilities. That helps change the relationship between the operator and the payers.

I think we’ve done a heck of a job at Genesis over the last five or six years really enhancing our relationship with payers across the country. We operate in a really collaborative manner, and we don’t go in there talking about rates; we go in there talking about programs that not only meet our objectives, but their objectives. And until you embrace that, your words have fallen on deaf ears, in my opinion.

This interview has been condensed and edited for clarity.

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