Value-Based Medicare Advantage Payment Plans ‘Only Going to Increase’

There’s a strong possibility that Medicare will move to mandate value-based payment models (VBP) for the nursing home industry in the years to come, according to industry executives.

Dr. René Lerer and Brian Cloch, CEOs for Longevity Health Plan and Transitional Care Management, respectively, spoke at a panel on the future of VBP models during Skilled Nursing News’ RETHINK event last week.

Lerer pointed to his time at Florida Blue as a precursor to his thoughts on broader usage of VBP models.


The payer required 50% of all Medicare Advantage payments be value-based, a sentiment that is “only going to increase,” Lerer said.

Another evolutionary trait of the model, Lerer added, is the role of long-term care more closely aligning with the role of a primary care doctor.

“It can be the equivalent of the primary care doctor. [Long-term care facilities] drive that patient’s care, in my mind, and I’m a physician, more than the doctor does,” said Lerer. “In many places, they have 100 patients and 30 doctors, and those doctors are not doing what they need to do, and the building controls that.”


Longevity is one of the nation’s leading independent providers of Medicare Advantage (MA) institutional special needs plans (I-SNP), a value-based plan that restricts enrollment to people eligible for MA who are also expected to need SNF services for 90 days or more.

For Cloch, that means doctors who prefer fee-for-service (FFS) will be left in the dust as more facilities transition to VBP models, a trend that would have happened sooner in certain markets if it wasn’t for COVID-19 and the suspension of the three-day-stay waiver tied to Medicare coverage.

Transitional Care provides management consulting services specific to the health care industry.

The initial rule change was made by the Centers for Medicare & Medicaid Services (CMS) at the beginning of the pandemic in order to allow hospitals to reserve beds for severely ill patients, discharging those who could recover at a SNF.

Prior to the pandemic, a patient needed to have a three-day inpatient hospital stay before Medicare would cover the SNF stay that followed. Industry leaders said the rule was established to make sure patients were in the best possible setting for care.

With the possibility of the waiver becoming a permanent fixture in the industry, it gives providers and operators less of an incentive to keep residents out of the hospital via VBP models, Cloch said.

Cloch used data points from two Victory Senior Living buildings as an example — the hospitalization rate for residents in value-based care during the height of COVID was 5-10%, while those outside of a value-based plan were being hospitalized at a rate of 65%.

Although not SNFs, Cloch’s building data illustrates how value-based care plays a role in keeping residents out of the hospital, despite where they are on the care continuum.

Cloch said 50% of the buildings’ residents were on value-based plans.

“The impact of value-based care was just huge — it would have been a death blow to us if we did not do that,” noted Cloch. “The provider and the payer have all the risk. They put a massive amount of resources into our building on their payroll; all of a sudden we had all these nurse practitioners, doctors, medical assistants in our buildings managing the population because the payer and the provider, you know, knew that if they didn’t, these people would end up in the hospital, and the cost of that would just drive it.”

Even without factoring in COVID-19, a facility could be more lucrative with VBP, Lerer said.

“If you have no admissions that month, no one’s gone to the hospital … no one’s been there three days, your Part A revenue for that month is zero, right? If you’re in an I-SNP or a capitated environment that’s paying you $400 a month for those 100 patients, you would get a check for $40,000. You’re getting a capitation for Part A,” explained Lerer.

Still, if the provider, operator and payer aren’t aligned to transition to more value-based care, the model can’t move forward, Cloch said.

Nursing homes have historically been a “fee-for-service environment,” Lerer said. An influx of agency staff and high turnover doesn’t help when these three components are trying to align with a novel payment model.

“People have to be motivated and trained and understand the problem, and today it’s a little bit tough,” explained Lerer.

“Scale and density” need to be present too in order for the “magic to happen,” Cloch added. Providers and owners need to transition more than just a handful of patients to value-based care in order to see results.

That’s where enrollment can still be difficult, according to Lerer, even when the model helps patients stay out of the hospital and helps operators and providers with revenue.

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