ACO Participation May Keep SNFs ‘In the Game’

Although accountable care organizations (ACOs) have never been particularly popular among skilled nursing facilities, timing may be ripe to take on more risk to stay competitive in the market.

ACO participation may help operators maintain referrals when so many potential residents are being diverted to home health care, hospice and other tracks along the continuum of care.

The industry’s move toward value-based care makes it more imperative to strengthen physician relationships too; physicians are at the core of ACO membership, along with hospital systems and other health care providers to care for Medicare fee-for-service beneficiaries and in turn reduce medical errors and duplicate services.

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“It’s more of a macro, or market-driven view of things. By not doing it, you run the risk of going backwards, you don’t run the risk of staying still,” said Jason Feuerman, senior vice president for strategic development and managed care at Genesis HealthCare. “It keeps you in the game, but it doesn’t mean you’re going to run faster.”

Feuerman is also president of LTC ACO, a wholly owned subsidiary of Genesis serving approximately 900 nursing homes across the country. The ACO’s reach is growing too, increasing from 13,000 lives in their care to an expected 25,000 by 2022. Roughly 90% of LTC ACO’s growth is coming from physician groups, Feuerman added.

SNFs and ACOs

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ACOs have historically been a contentious payment model in the skilled nursing sector since its introduction as part of the Affordable Care Act of 2010.

Multiple studies found that ACOs generate savings by reducing the length of stay in a nursing home; other ACO programs eliminated SNFs as participants altogether.

“The way the typical ACO makes money, or can make money, is to reduce SNF utilization. When you think about a typical SNF and you think about the cost structure, a person goes to the hospital, many people that leave a hospital who are on Medicare end up going to a SNF,” said Feuerman. “The idea for an ACO is either to get them to skip the SNF, or when saying get them into a SNF, to get them out of there as quickly as possible.”

If a local hospital has its own ACO, Feuerman said, operators “don’t have a choice but to participate” in the model, while also pointing out that SNFs would do well to strengthen or at least look at their physician group relationships, and in turn referral sources, with a fresh perspective.

“There are huge benefits to physician groups, that’s where the attribution or membership really comes from, who are serving patients in long-term care facilities,” explained Feuerman. “The way we turn this around is saying to the SNFs, this is a way for you to attract physicians to your facility to participate.”

While a SNF operator has the capability to form its own ACO, it needs to already be building a significant amount of resources to be successful — for starters, the operator would also need to run a primary care group with at least 5,000 patients in Medicare, Feuerman said.

For perspective, Genesis’s physician group entity had been around for 12 to 14 years before it had matured enough to participate in the MSSP ACO program.

Evolution of the ACO

Deemed a next generation ACO, the Medicare Shared Savings Program (MSSP) ACO model expanded rapidly to peak in 2018 before leveling off in subsequent years. The Medicare Payment Advisory Commission (MedPac) believes this leveling off was due to the Centers for Medicare & Medicaid Services (CMS) restricting new ACOS from entering the MSSP model during the pandemic.

Interestingly, the number of beneficiaries per ACO continues to increase despite the number of available ACOs leveling off, a trend echoed in LTC ACO’s numbers.

MSSP ACOs make up 19% of Medicare beneficiaries according to January CMS enrollment data, with managed Medicare taking up most of the pie at 47% and traditional fee-for-service at 31%; other ACOs and ACO-like models account for 3% of Medicare beneficiaries.

MedPAC released its 2021 data book on health care spending and the Medicare program in mid-July.

CMS requires MSSP ACOs to take on more risk by eliminating no-risk tracks, or pathways, and measuring spending levels at a regional level as an indicator of performance.

As a result, fewer ACOs were added and existing programs shuttered.

“There has been a pretty steady, clear dramatic drop in ACO participation since then,” added David Pittman, senior policy advisor for the National Association of ACOs (NAACOS).

The Trump administration in 2018 dropped rates to 40% for ACOs while asking them to take on more risk sooner, reports say. According to data collected by NAACOS, newly formed ACOs were more than halved once these changes took effect, dropping from 124 ACOs formed in 2018 to 41 formed in 2019, and 35 in 2021.

ACO-Friendly Legislation

The federal government seems to be warming to alternative payment models like ACOs, with bipartisan legislation introduced at the end of July to strengthen Medicare’s value-based care models through extending a 5% incentive payment for six years to providers.

The Value in Health Care Act of 2021 bumps recouped costs up to 50-60%, compared to 40% in 2018, while also giving newly formed ACOs three years before they’ll have to take on more risk.

“[CMS] found that people weren’t moving quick enough into risk, and therefore results weren’t being generated,” added Feuerman of prior changes.

These conditions are a huge boon for prospective ACOs, according to NAACOS, which has conducted studies proving that the model is more successful when it has had several years to grow before taking on more risk.

“We have encouraged the new administration and Congress to reevaluate the balance between risk and reward … It takes a few years for a new ACO to start to generate savings,” Pittman said. “[CMS] needs to give new ACOs time to understand the data that’s coming in about their patients, form relationships with providers to effectively manage their care long term. After a few years, [an ACO] should be generating savings.”

The organization’s arrival at three years before risk was based on data gathered since the model’s inception and implementation, Pittman said.

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