An accountable care organization (ACO) backed by one of the nation’s largest nursing home providers on Tuesday announced a deal to expand telehealth services to its members in a push to cut hospitalizations and boost clinical coverage — during and after the COVID-19 pandemic.
Under the new agreement, the skilled nursing tech provider Third Eye Health will offer its virtual physician and other telehealth services to the more than 200 facilities that participate in LTC ACO, a subsidiary of skilled nursing giant Genesis HealthCare (NYSE: GEN).
LTC ACO president Jason Feuerman framed the deal as a way to boost individual facility-level quality while also creating a backbone that can help operators and the ACO improve across the board — a collaborative that the companies are calling a “virtual care network.”
“We are continually looking for ways to improve quality and reduce cost, improve care for the beneficiaries, and take the burden off of the direct caregivers,” Feuerman told SNN.
LTC ACO bills itself as the first ACO sponsored by a post-acute provider, making it a relative anomaly in the space. In theory, ACOs work to reduce health care spending and improve outcomes by encouraging collaboration across the care continuum; in practice, the model has largely achieved those goals by cutting out institutional post-acute care in favor of less costly home health services.
But the organization has touted its success in the Medicare Shared Savings Program (MSSP) so far, pulling in an incentive payment of $18.8 million for Genesis in fiscal 2019 after successfully hitting the federal government’s fee-for-service savings benchmarks.
“With more than four years of participation under the MSSP, we have gained valuable experience driving better outcomes and improved quality, managing episodic cost, and developing in-house capabilities to predict program performance,” Feuerman said in October 2020.
The Third Eye Health partnership looks to build on that momentum. The Chicago-based telehealth firm allows nursing home staff to virtually consult with physicians around the clock, with the goal of reducing unnecessary hospitalizations.
That metric has taken on greater importance as nursing facilities have increased their clinical capabilities and payers of all stripes look to reduce spending. Acute referral providers focus on rehospitalizations when building out their preferred networks, and the Centers for Medicare & Medicaid Services (CMS) can cut up to 2% of a facility’s Medicare reimbursements for sub-par readmission rates as part of the SNF Value-Based Purchasing (VBP) program. The most recent VBP data release saw 65% of operators lose some Medicare dollars, with just 19% earning available performance bonuses.
But more importantly than payment math, reducing hospital readmissions during the pandemic eases the overall burden on the health care system, ensuring that acute-care beds are available for the most pressing cases; increasing the presence of physicians can also provide a relief valve for overworked frontline caregivers.
The pandemic rapidly accelerated Third Eye Health’s growth plan even before the LTC ACO partnership. Back in April 2020, the telehealth provider reported meeting a two-year goal of expanding from 400 to 1,000 partners in a matter of weeks, as the federal government slashed restrictions on virtual consultations and providers scrambled to provide physician access to locked-down nursing homes.
“We’ve had truly exponential growth,” Third Eye Health chief growth officer Ray George told SNN at the time.
The two companies have already collaborated through telehealth interventions and a partnership with Genesis Physician Services, the nursing home operator’s affiliated group practice.
Under the new arrangement, LTC ACO will cover the cost of Third Eye Health’s services at any participating facility with a “meaningful” concentration of the ACO’s beneficiaries — generally in the 40-resident range, Feuerman said, though the exact figure may vary.
That support will eliminate a top stumbling block for operators looking to invest in tech: the cost, real or perceived.
“It’s always so hard with the margins that SNFs are facing while they’re trying to provide super high-quality care,” Dan Herbstman, Third Eye Health co-founder and chief strategy and product officer, told SNN. “So with the LTC ACO as part of this, they’re going to be able to supplement the cost we need to run the program beyond Medicare.”
In return for that investment, LTC ACO sees the chance to continue its solid performance in the MSSP, and eventually pass along the bonus payments to its participating facilities.
“The ACO’s bearing the risk,” Feuerman said. “The benefit will accrue to the SNFs through their participation in the ACO — through the reduction of unnecessary hospitalizations, they share in the savings.”
But in Feuerman’s view, the benefits of building a wider telehealth network go beyond the immediate fee-for-service gains. Laying the groundwork now for bolstering performance on key value-based metrics can set up both operators and other players — such as physician groups — for success under future models.
Outgoing CMS administrator Seema Verma threw down the gauntlet in a recent op-ed calling for an even greater array of payment models that reimburse providers explicitly for outcomes.
“All our regulation and oversight is for naught if nursing homes lack the resources to hire competent staff and implement best practices,” Verma wrote. “But the answer isn’t more taxpayer funding. Rather, we must fix how we pay for care. Currently, only about 2% of nursing homes’ Medicare reimbursement is tied to quality outcomes.”
And as a new administration looks to reform a post-acute and long-term care landscape ravaged by the COVID-19 pandemic, operators may be wise to start preparing now for a world where the fee-for-service model potentially faces a faster-than-expected extinction.
“We are looking for the more progressive providers that understand that there may be fiscal bridges that need to be built, and we think that this is a way to do it,” Feuerman said.