Direct Contracting Opens a New Door for SNFs in Value-Based Care

Institutional special needs plans (I-SNPs) are seen by some to be the only path forward for skilled nursing facilities (SNFs) to enter value-based care, however, Brian Fuller, CEO of care coordination company Integrated Care Solutions (ICS), thinks SNFs should get more involved with direct contracting entities (DCEs).

A lack of understanding may be preventing them from doing so.

In an effort to test an array of financial risk-sharing arrangements to reduce Medicare expenditures and enhance care quality, the the Centers for Medicare and Medicaid Services (CMS) launched the Global and Professional Direct Contracting Model, approving 53 DCEs this year.

CMS recently announced that the direct contracting program is under review, and the agency is not currently accepting applications for the demonstration’s second year. This means that the remaining option for operators to reap the benefits of these models would be to partner with an existing DCE for the time being.

Four types of DCEs exist in the GPDC model, one of which, high needs population DCEs, serves Medicare FFS beneficiaries with complex needs.

Fuller sees high needs population DCEs as a potential path forward for SNFs.

He spoke with SNN last week about what he’s seen from the program through its first few months in an interview that has been interviewed for length and clarity.

ICS provides care management services, including coordination of care between acute and post-acute settings, as well as consulting for hospitals, physician groups and organizations focused on value-based care.

Do you think there has been confusion on the part of SNF operators regarding the CMS direct contracting model and their role in it?

I don’t think many skilled nursing facility operators even know what the program is and what its components are.

I think for those that are in markets where there are direct contracting participants, they have received some outreach and we’re starting to hear some feedback.

But if they’ve not been proactively approached, the majority of the industry is novice and understanding the program and may not even know that it exists.

What role have SNFs been playing with DCEs?

DCEs take risk for the full year of all costs for the Medicare fee-for-service (FSS) beneficiaries, so it’s a significant amount of risk out of the gate. You have to have the ability to proactively manage it.

One of the things we’re seeing where SNFs are getting approached by DCEs is that they have the ability to contract differently with downstream providers, and they have to designate who those providers are going to be. Essentially, the DCE can determine what the contract terms will look like.

Often a common structure that we’re hearing is the DCE approaches the skilled nursing facilities in their market, offers a contracted rate and a discount off of fee-for-service. A portion of that discount can be earned back for their performance on certain key metrics.

It’s another program where the fee-for-service reimbursement levels are getting compressed and going down.

That is unique if you compare the direct contracting program to other value-based payment models like an ACO structure or bundles, where you do not have the ability to modify fee-for-service rates or contract differently.

Is it a better deal for SNFs?

It’s still a compression on Medicare fee-for-service margins so it’s by no means welcome because it likely means revenue reduction on the fee for service population.

Would you say that there’s been more interest on the part of SNFs to get involved?

I don’t know that they know enough, honestly, to get involved. Most of the reaction I have heard has been a reaction to those contract outreaches.

I have heard a couple of examples of SNFs thinking about the high needs path of direct contracting. So direct contracting has a couple of different program types or participation types.

One of them is called a high needs program, and the long-term care population of a skilled nursing facility chain would qualify and meet the criteria for a high needs population.

As an alternative to an I-SNP, for example, there is a possibility that a SNF could choose to enroll their long-term care residents into a high needs direct contracting program, but I don’t know that anyone has fully vetted that and fully evaluated it to say, here are the pros and cons of that overall.

Particularly a chain, a SNF with a dozen or more facilities, that they could take risk for and proactively manage themselves.

What are you keeping your eye on with the DCE program?

Who the new or deferred entries are in Jan. 1 2022 and then how quickly the existing participants scale themselves.

There’s been some organizations out there that have been vocal about their aggressive plans to scale their own programs. Clover Health has been one that is very actively scaling their direct contracting program.

If there are others like VillageMD, Iora Health and other providers in the program today, who are trying to scale at the same pace, you could see a big market share grab from the small number of participants that are in it today.

What do you think a successful program looks like?

I think for all of these programs their aim is care transformation. These participants are not just trying to lower cost with contract terms, but are doing things that are changing the patient journey and the patient experience.

Having very close care coordination led by a clinical team that follows the patient, having warm handoffs at key transitions of care so that the clinical team from the hospital knows exactly what’s happening when the clinical team in the skilled nursing facility takes over. With those kinds of transitions, a lot of information around the patient gets lost.

A model supports the transfer of information from clinical team to clinical team [ensures] that those gaps in care do not occur.

What other options are there for SNFs?

What they could do for those that really wanted to get creative is if there’s a SNF operator who has other operating assets, they could merge together in a package deal then that starts to be really compelling.

For example, most SNF operators also run home health. Many of them may run hospice. So now you’ve got something.

Take your SNF asset, plus your home health, plus your hospice, and say give us your direct contract beneficiaries and we’ll manage them for a certain amount of time, money and case rate and regardless if they need SNF or home health or hospice, we’ll deliver that on our one platform. That’s really creative and could absolutely be a possibility.