As skilled nursing facilities work to build back hospital referrals lost during COVID, one way some are opening themselves up to new patients is by increasing their participation in managed care despite the tighter margins that come with it.
With skilled nursing occupancy still below pre-pandemic levels, operators simply are no longer in a position where they can say no to these plans and their patients.
“Managed care is continuing to grow and COVID has not slowed it down in the slightest,” Shayna Wasser, chief operating officer at Guidance Care HMO, a managed care consulting firm based in Lakewood, N.J., said. “Premiums are skyrocketing, but that’s really not stopping anyone from signing off with a managed care plan, especially with Medicare.”
Wasser told Skilled Nursing News that managed care’s saturation in the market has nearly reached 50%.
She suggested that operators become a part of as many managed care plans as they can as the risk of not participating far outweighs the benefits of not joining.
“The landscape is always changing, they are always growing and shifting and you never know where the population is going to be a year or two years from now,” Wasser said. “If they are offering you a contract that’s a big deal, especially if it’s a larger player. Down the line it might not be available.”
She said operators should “not drag their feet” when offered a managed care contract.
“That opportunity may not be available in a few months,” Wasser explained. “I just had an example where we got a contract offer for a nursing home in Florida and the rates were not excellent but not terrible. The provider took about two months to decide that they wanted to move ahead with the contract offer and the health insurance came back and said the contract was on hold.”
Steve Miller, president of Bridgemark Healthcare, a skilled nursing owner and operator group in Illinois and Missouri, doesn’t necessarily see any adjustments to his approach to managed care specifically due to COVID, but he continues to join plans “out of necessity.”
“If you want to be in the game, you’ve got to be in the game,” he said.
Looking back, he said that Bridgemark’s admission growth over the past few years has been primarily with managed care which is “indicative” that the plans are growing among consumers.
“You get Joe Namath advertising on TV, you’re going to get some interest,” he added.
The Ensign Group, one of the largest operators in the skilled nursing space, reported managed care growth as well during its earnings call earlier this month.
“Our managed care census for our same-store and transitioning portfolio improved by 26% from the prior year quarter and we saw sequential growth for the fifth consecutive quarter in a row,” Ensign CEO and Director Barry Port said.
He indicated that managed care would be part of their long-term strategy moving forward and expected its growth to continue.
Ensign Group Chief Financial Officer and Executive Vice President Suzanne Snapper said the vast majority of the company’s managed care growth was with Medicare Advantage.
Tough Margins Remain, Though There May be Room for Negotiation
While it’s become impossible to ignore managed care plans that now make up nearly half of the patient population, tight margins still exist for nursing homes.
“I would definitely say it’s somewhat tough to make money, you’re not bringing in the $500 to $600 a day you are in Medicare,” Wasser said. “It’s definitely tighter margins.”
Miller said that opting out of managed care is “not a possibility” for Bridgemark Healthcare on the Medicaid side of things.
“We depend upon Medicaid census to have sufficient occupancy to sustain ourselves,” he said.
For Medicare, the rates don’t get much better for skilled nursing facilities.
“We might see on average on conventional Medicare Part A of $550 all in, we might see $350 to $400 on managed care,” he said. “It takes a lot of the margin out of it.”
However, according to Wasser, certain insurance companies have become more open to negotiating rates during COVID and that’s something that Guidance Care is currently pushing for with its clients.
“I can say that there are insurance companies willing to negotiate now, about $25 above what they negotiated previously, because markets are changing,” she said. “I was just negotiating a deal for a group of SNFs and I said that we wanted these higher rates and they came back and said they would give us higher rates, however, the five lowest performing SNFs [would have to leave] the network.”