As the CEO of ATI Advisory, Anne Tumlinson continues to set the course for aging policy on the national stage. She founded ATI Advisory to drive reform of health care, long-term care delivery and financing for the nation’s vulnerable aging population. Tumlinson also founded Daughterhood to connect family caregivers, providing them with a platform to share support and information.
Through the Value-Based Care series, Tumlinson explains how both the policy and the medical environment struggle to understand the role of nursing homes, and why skilled nursing facility operators must lean into what they are good at to even have a chance for a fair financial reward through value-based care.
In one sentence, define what value-based care means to you.
Value-based care is a system of care delivery where the primary financial reward is tied to improving patient outcomes, measured against the cost of care. It is the extent to which we’re looking at health outcomes relative to cost and asking ourselves, ‘Is that value?’
What does value-based care require in order to be successful?
First, from a policy and payment perspective, there has to be a strong financial reward tied to patient outcomes immediately. There has to be good measurement and reporting of outcomes. Second, from an operational perspective, there needs to be strong communication and process protocols, good staff training, and capable leadership that can execute against change management.
It’s about being able to assess needs and target the correct intervention at the right person at the right time, regardless of what that is. Increasingly, we’re deploying non-medical services to meet health care needs, but we’re still struggling to determine the best approach. That science is not there yet, and it’s really, really important.
What do you think are the biggest hurdles to achieving value-based care in today’s health care landscape?
First and foremost, the financial reward in the fee-for-service world has not been high enough to attract sufficient investment and commitment to change. There’s a reason for that, because ultimately, in order for a provider organization or to reap that financial reward, they have to be willing to take on actuarial risk.
We’ve been in a bit of a chicken-and-the-egg situation, where organizations are nervous about taking on risk and the financial rewards have not been particularly high. However, the financial reward is still not high enough for organizations willing to take on the risk. And this is in fee-for-service, to attract a kind of investment and commitment to change that’s needed. We needed to be overpaying for a little while in order to commit to that investment.
The problem is, organizations that are trying to implement value-based care with a lot higher cost inputs have to fight against the larger system and it’s a lot more expensive. You have to hire three social workers to deal with all of the discharge planners, for example, at a hospital that is still operating like it’s in a fee-for-service environment.
We aren’t quite financially aligned yet, and there’s also a lot of misalignment across fee-for-service and Medicare Advantage, so it’s hard for providers to operationalize. It’s really hard for a provider to operate in that world unless they also have a similar type of contract in fee-for-service, and the fee-for-service contracts have a lot of turmoil and unpredictability. I think these are big policy hurdles to achieving value-based care, and I think they trickle down into all of the operational barriers as well. We haven’t been able to reward investment in all of the operational capabilities that we need to be successful.
Do you see any downsides to value-based care?
If it’s done perfectly, no, [chuckles] but the thing about value-based care is that it can be implemented poorly. Value-based care relies on risk-based payments to really align all the financial incentives needed to reward providers for delivering better outcomes at a lower cost.
In order to do that, they need to have skin in the game. The problem is that if quality and outcomes aren’t being measured well, the incentives can skew towards stenting on care. It’s the same kind of tension we see between fee-for-service and managed care. Fee-for-service is great from a consumer perspective because they can get whatever they want, but it’s not coordinated and it doesn’t have any explicit tie to value.
We’ve seen this in home health, which is a risk-based payment system to an extent due to the episodic payments over long periods of time. I think we have to be careful not to hand over a lump of money to a provider saying, ‘Go manage this,’ without having a concrete quality measurement around patient outcomes and value. That will force providers to invest in things that will make a difference in patient outcomes.
How is technology supporting the shift from fee-for-service to value-based care?
Technology is at the heart of it. It’s an essential ingredient as value-based care probably wouldn’t have been possible even 15 years ago. Technology is essential to so many operational capabilities, such as facilitating communications across providers, which allows for more efficient care delivery, along with better and more timely information about patient conditions. Remote patient monitoring and the artificial intelligence that goes with it facilitates a preventative mindset.
We must be able to intervene early enough by detecting minute changes in condition biologically, and that’s where medical technology is critical. But even beyond the clinical setting, we have to develop the science and advanced intelligence around outcome prediction so we can intervene in a cost-effective way.
The final way technology is supporting the shift is through health information and data analytics. Again, being able to collect and share information, then analyze that information is key to improving outcomes. And while we’re still in a pretty clunky phase, technology is significantly improving that process. It’s key to being successful.
Why do you think it has been difficult for SNFs to get a seat at the table when it comes to value-based care?
Value-based care program design is centered on owning lives and its populations, but skilled nursing facilities are really only interacting with that life over a short period of time. It’d be impossible for a skilled nursing facility to become an ACO because there’s no attachment point.
Primary care physicians own lives. They see people over the course of their lives. You could argue that hospitals and health systems don’t own lives, but since they’re usually large systems, they also have access to physician groups. SNFs don’t own lives on the post-acute side and they don’t have relationships with the physicians either. Ultimately, value-based care has to be driven by physicians who are at the heart of value-based care.
Skilled nursing facilities have largely been isolated from the physician world, and there’s nothing sticky about a skilled nursing facility stay.
That’s why we’ve seen the emergence of value-based care arrangements associated with the long-stay resident population. Because post-acute care is so transient, they have one of two choices: participate as a value contributor within a larger ACO, or take over the post-acute episode in the policy sphere.
I think SNFs have struggled to get out from the bottom of that food chain because they’re seen as a commodity in their market. It’s incredibly challenging to establish the value delivered by the skilled nursing facility setting in the context of population health.
That value is difficult for medical providers to understand. This gets back to my original thesis, which is that the financial incentives are not all that tight, so a hospital can win under value-based care if they cut some stages. The SNF is an easy target as a cost center under these arrangements.
It’s not clear if there are any consequences to that for the ACO, so it calls on the question, ‘What is the value of SNFs? What’s the value of the Medicare assisting?’’ Now I have an answer to that question, which is it’s a daily ADL care, but that’s a really hard thing for hospitals and health systems to wrap their brains around. They don’t really understand that.
The other thing is, in the policy sphere, to take the one element SNFs have some control over, which is the post-acute care episode. The value-based bundled payment initiatives are in part, value-based care, and the federal government has experimented with those. But it largely concluded that they don’t contribute to the overall value of care being delivered, and the government wants to focus on ACOs.
There was a moment in time when skilled nursing facilities got to participate in value-based care because it was bundled as payment holders under the model that made them responsible for 90 days of costs and care after somebody was admitted to the skilled nursing facility, but CMS shut that down. Again, I think the policy environment and the medical environment struggle to understand the role of SNFs.
What role should SNFs play in the value-based care landscape, if any role at all?
If I could wave a magic wand, I still believe that post-acute care for the typical Medicare beneficiary and their family is a pretty bad experience all the way around. Whether they’re going to a skilled nursing facility, home health, another hospital, LTAC or an IRF, there’s too much of a disconnect between what happens at the hospital and when they ultimately get home.
If we wanted to improve patient outcomes across the continuum, from the first hospital admission all the way through the transition home, we would have a much more managed post-acute care process. It could be significantly more engaged, and that’s the role SNFs should be playing. However, the financial model is not quite there for that.
What do SNF operators have to do to get a fair financial reward through value-based care?
It’s hard to operate in two worlds, and there isn’t a reward for moving to the value-based world. The good news is that the skilled nursing facility, as a setting of care, is still the only place, practically speaking, where somebody being discharged from a hospital can get daily skilled and unskilled care.
I think SNF operators should lean into what they’re good at. This chunk of patients will still exist no matter how tight and powerful value-based care incentives become. Doubling down on core competencies to deliver high-quality skilled nursing and CNA support will allow providers to capture a larger share of the diminishing, overall number of patients seeking post-acute care, with fewer and fewer people going to the hospital.
To me, the financial reward, at this point, is having sufficient Medicare pay for service businesses to support all the other challenges they’re facing — Medicare Advantage, Medicaid rates, all of those things. I personally haven’t seen a skilled nursing facility operator secure a value-based care contract of any kind, so I believe the investment and focus should be on those core competencies that nobody else can offer.
Is the shift to value-based care taking place fast enough, and does the pace of policy change align with that transition?
No, it’s way too slow. I think about the early ’80s when we went from cost-based reimbursement systems in hospitals across the United States, to prospective payment under DRG in a very short time. We flipped a switch and overpaid for the DRGs to make it profitable for hospitals that made the switch quickly, and then we ratcheted it down to DRGs over time after they got used to it.
There’s plenty of money. There’s plenty of private capital and an abundance of reimbursements. Every single organization has demonstrated in a variety of ways that it is capable of changing quickly. The technology is there, everything’s there. But I think there’s been a lot of nervousness on the part of policymakers about putting providers in the position of taking on actuarial risk for something bigger than a hospital stay. We’ve been doing this for 10 years exactly, so I think we’ve learned enough, we know a lot, we’ve invested a lot, and it’s time to go.