All Or Nothing for SNFs: ‘Managed Care Is Not Something You Can Dabble In’

The rising tide of managed care enrollment for both Medicare and Medicaid patients continues to swell, and as the nation grapples with the costs of the pandemic, SNFs should be aware of the moves states might make to implement some type of managed care model as they try to secure budgetary stability.

The steady increase in Medicare Advantage (MA) enrollment has many SNFs justly concerned about their bottom lines, as MA plans are lower-paying relative to traditional fee-for-service Medicare. But a Blue Sky Therapy webinar held August 19 highlighted a key factor that underpins this rise: the expansion of Medicaid in multiple states.

“If you were to crossmatch the Medicaid expansion states in 2017 to the above percentage of Medicare beneficiaries enrolled in managed care, you would find a high correlation,” John Harned, director at the consulting firm BKD, said, citing a map of Medicare private plan enrollment in 2017 that drew from data from the Center for Medicare & Medicaid Services (CMS).


This is because when some states move into Medicaid expansion, it creates a platform for insurance companies who have to set up the infrastructure to administer the Medicaid plans. That capital and structure are necessary to launch MA programs in those states, he noted.

This is because when states move into Medicaid expansion, they often create a platform for certain insurance companies to administer the Medicaid plans. The same capital and structure are also necessary to launch MA programs in those states, Harned said.

That means insurance companies in states expanding Medicaid are creating the platform by which they can also extend Medicare managed care, according to Harned.


Total MA enrollment in 2017 was 19 million individuals, which makes it all the more paramount that SNFs know their way around the sector, he noted.

“Medicare managed care is not something you dabble in, and I can repeat that,” Harned emphasized. “Managed care is not something you dabble in; rather it’s something you have to master, or the managed care organizations will take advantage of you, and you will wind up with little – or worse, zero – margin on the business.”

Integrating therapy

When it comes to mastering MA and managed care, therapy plays a critical role, particularly when it comes to communication, Lisa Chambers, chief quality and operations officer at Blue Sky Therapy, said on the webinar. Canfield, Ohio-based Blue Sky offers therapy services at a range of care settings, including SNFs, assisted living facilities, home health care settings and outpatient therapy clinics.

The therapy team’s role in managed care contracts lies in understanding the various managed care products, and a SNF should have an established authorization and verification process with the therapy department to ensure that services are appropriately provided and paid for, Chambers said.

That includes knowing reimbursement, criteria for reimbursement, knowing the various plan types, any mandates around the delivery of care and whether authorization is needed – and all of that entails ” a good, solid communication process” that is integrated into weekly meetings and the therapists’ workflow, Chambers said.

Managers, staff and appropriate nursing personnel need to understand these criteria, along with therapy, she noted.

“Cost is a big part of the managed care contract,” Chambers said. “Having a true partnership means making sure that everyone is winning.”

This means that SNFs – and therapists – need to know how the managed care plan is handling reimbursement, whether it’s using the new Patient-Driven Payment Model (PDPM), a visit rate, or even the old Medicare payment model of the Resource Utilization Group (RUG). They also need to make sure services are not being provided above the rate of reimbursement from the managed care company, Chambers said.

“Knowing how you’re paid and knowing your contract and being able to share that information with the therapy team is very important,” she said.

It’s for that reason Blue Sky sets contracts that take the reimbursement by payer source into account, she said, to avoid making already narrow margins on managed care worse. Chambers also recommended that there be a commitment from the therapy staff to provide “value-added solutions and additional resources,” to bring value to both the patients and to the SNF.

What SNFs need to consider

There are some specific steps SNFs can take when it comes to getting a better handle on their relationship with managed care organizations (MCOs), Julie Bilyeu, a managing director at BKD, said.

A step that seems obvious – but is easily overlooked – is taking inventory of contracts that are in place, she noted.

“I know this seems simple, but a lot of times we find, especially if there’s been a change in administration at a community, that sometimes people don’t know what payers they’re actually contracted with, or what’s actually in those contracts,” Bilyeu said on the webinar.

She also recommended checking any contracts that might need to be updated — particularly those of several years’ standing — and looking up any payers that a SNF might want to contract with. One place to start for the latter is to look at admissions that are turned down because a patient is out-of-network, she said.

Harned recommended that SNFs examine MA enrollment in their area using the CMS list for their area and try to target payers with the highest local enrollment.

“It’s kind of a chicken-and-egg process when you get started, but you almost have to have systems in place before you go start talking with the MCOs,” he said. “So I suggest starting easy with developing clinical pathways for things like hips and knees… but then you need to begin to work your way into more complex areas, for example: congestive heart failure.”

He also emphasized the importance of CMS star ratings, especially in metropolitan areas where a five-star rating is practically a necessity; three stars is something of a floor to start negotiations with the MCOs, he added. SNFs also have to be aware of their numbers for outcomes, particularly readmissions, as well as the public form of the data.

Other numbers to track on a monthly basis include:

  • Discharge rate to home
  • Average length-of-stay
  • Number of admissions by insurance company
  • Discharges to home, hospice and others

Harned also recommended that SNFs get a handle on their competitors’ data, since it can help in meetings with payers when performance is tied to results.

SNFs have to be diligent about documentation of care, both Harned and Bilyeu emphasized. The top reason for denial of services from MCOs is that the SNF personnel are not paying attention to authorization requirements, Bilyeu noted, and since a post-payment medical review is more likely with managed care, SNFs must “document, document, document,” she said.

He also recommended working with hospital liaisons and even other SNF competitors to form some infrastructure and forums for addressing various payer issues.

“Let’s be honest, the MCOs are the real 800-pound gorilla in the room,” Harned said. “So consider working with other hospital liaisons, working with other organizations, especially home offices, and build … a support group, if you will, to work on global issues that you’re having with payers.”

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