5 Questions Every SNF Operator Should Ask When Evaluating Their Therapy Program

The Patient-Driven Payment Model shook the therapy world upon its launch in October of 2019 — and five months later, the COVID-19 pandemic changed the equation for SNFs again.

Now, as we approach the two-year anniversary of PDPM, SNF operators are faced with a range of questions. Here are five that every operator should ask when evaluating their therapy program.

In a value-based landscape where quality of care rules over quantity, ensuring that you are being accurately reimbursed for the services you provide is paramount to financial health.


“This is true whether your therapy program is outsourced or in-house,” says Stephanie Parks, Chief Development Officer of Reliant Rehabilitation. “For outsourced programs, operators should review invoices line by line to ensure the charges do not exceed the reimbursed amount. If any payor type is not directly aligned with reimbursement, the operator should immediately address this with their therapy provider.”

As for in-house programs, operators should weigh actual cost per minute, including all overhead, with reimbursement. This should include therapy related benefits and additional SG&A expense, not just therapists’ wages, she says.

“There are a lot of valuable services that may not be directly related to reimbursement, but with declines in census, increased expenses and downward pressure on reimbursement, providers need to really evaluate their therapy program, which is one of the most expensive departments in the entire facility,” Parks says. “If you aren’t being reimbursed to a level that is aligned with expense, you can end up in a serious situation from a financial perspective.”


2. Do I have a partner that is willing to share risk?

Therapy success in value-based care depends on alignment: alignment between services delivered and reimbursement received, but also between the SNF and the therapy partner with regards to risk.

“There is a trend in the industry for risk-share models among payers,” Parks says. “We’ve seen increased interest with operators towards I-SNP models. You must find a therapy partner who understands how to guarantee quality outcomes, while sharing risk with this type of capitated reimbursement model.”

An I-SNP is a Medicare Advantage plan that restricts enrollment to eligible parties who for 90 days or more need, or are expected to need, the services of a SNF or another institution, according to the Centers for Medicare & Medicaid Services (CMS). These Medicare Advantage plans receive a set amount of reimbursement based on a predicted cost of care. As such, these plans and their SNF partners have skin in the game, with their shared need to manage costs.

Expense alignment is one thing, but it’s not truly possible without having a complete knowledge of all therapy-related expenses.

“For fully outsourced programs, consider what your value-added services include and what is a billable additional service,” Parks says. “Are you receiving the services you were promised? Are you ever surprised with an additional fee for non-billable services? We have seen non-billable monthly expenses of over $5,000 per month with no explanation as to the services that were provided.”

The reality is that whether therapy is in-house or outsourced, SNFs must manage a number of expenses, including HR and onboarding, license reimbursement, legal fees and the expenses that come with quickly flexing staff based on caseload.

4. Am I satisfied with outcomes and patient experience?

With increased competition for census, patient experience and quality outcomes are more important than ever.

“Therapy departments should be ingrained in a SNF’s marketing and census development activities,” Parks says. “The rehab gym should be a showplace for facility tours.”

Family members should be actively involved with therapists regarding treatment plans and progress, and operators should have a mechanism for marketers to receive patient success stories and outcomes reports to share with referral sources.

“It’s critical that we have great outcomes for the patients we’re serving, and that we’re able to articulate those outcomes to the referral sources and the families,” Parks says. “Patient experience is key, starting from the minute they enter the door.”

5. Should I consider alternative models?

Every organization should evaluate its therapy program on a regular interval, meaning 12 to 24 months. If the therapy department is not managed appropriately, its complexity will have a negative impact on the SNF’s clinical and financial stability.

Whether in-house or outsourced, providers must have a clear understanding of their therapy services, outcomes, and total therapy related expenses, not to mention understanding the organization’s tolerance to fully bear all regulatory risks.

The key, Parks says, is transparency. Contractual agreements should be clearly defined and invoices from 3rd party providers should be entirely transparent with no surprises. In-house models should be accountable for all overhead and performance.

“Historically, in-house programs are not managed as efficiently as an outsourced department,” she says. “We have recently found significant cost savings for operators who choose to outsource. Moving to an in-house model should never be for financial reasons.”

In fact, Parks notes that the only scenario where a management or consultative model should be considered is for a temporary transition to a full in-house program for a period of three-to-six months. Otherwise, the additional management fee is an added expense that brings diminishing returns.

As for joint-venture models, these have been an enticing conversation for providers for over 20 years. The angle is to create a new company that will share profit with the SNF operator and possibly create a financial exit opportunity. In reality, there must be a fair and equitable contribution from partners upon creation in order to meet legal requirements.

“This should be a red flag to operators if the deal does not meet this requirement,” Parks says. “Keep in mind these are complicated legal entities that must meet all federal guidelines. Due to this complex legal relationship, they can be difficult to unwind when service does not meet expectations.”

In the end, an organization needs to define what is most important to them, whether value, risk-sharing, quality or expense control. The SNF must then stay true to these priorities, removing all emotion, when evaluating this key department.

This article is sponsored by Reliant Rehabilitation. To learn more about how Reliant can help your therapy program, visit reliant-rehab.com or send an email to [email protected].

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