In this Payment Perspectives interview, Skilled Nursing News is joined by American Health Plans Chief Development Officer Hank Watson to talk about what health care providers need to do differently when it comes to payment evolution. He explains how skilled nursing providers can show their value to payers, and he also debunks the common myths around the most misunderstood aspects of skilled nursing payments.
Skilled Nursing News: To start, what do health care providers need to do differently when it comes to payment evolution?
Hank Watson: The implication of the transition is that [providers] tend to miss the broader goal of value-based care, which is the element of control over their patients’ financial and clinical outcomes. It’s truly owning the premium dollar, no longer being a rate taker — that requires a long-term point of view and recognizing the need for a higher level of consideration than tomorrow’s rate.
What are your thoughts on how skilled nursing providers can show their value to payers?
If you’ve demonstrated the ability to take on risk as a payer yourself, as a provider-owned Medicare Advantage plan, you’re in a much stronger position to have those conversations.
You’re not just a downstream rate taker, but you are in fact a partner in the health care ecosystem in a way that none of us as nursing home operators have been able to position ourselves previously … Let’s just take ownership, demonstrate it for ourselves, and the rest of the health care ecosystem will recognize that value proposition.
The value is in that long-term care population, but a health system with an ACO is not as good at managing these long-term care folks. In fact, they often lose money on them. So, let us do it. At that point, they don’t care what our data says. We just take a risk and own it, truly betting on ourselves. That’s a whole different conversation with an MA plan and a health system. That to us is the ultimate goal.
Then, yes, downstream, you still want the short-stay contract, and you need a referral relationship, but that conversation shifts entirely when you can take 70%, 80% of your patient population and manage them with full risk, then craft that story to other organizations in the health care ecosystem.
How do you see skilled nursing technology supporting the shift to new payment models?
When we talk about control and ownership in the context of value-based care and being your own Medicare Advantage plan, I think technology comes into play in a couple of ways. Reporting is fundamental. Managing risk with good information and good data is key. Providers must be able to not only digest typical EMR [info], but also utilize the claims data and be thoughtful about the comprehensive data outputs for the patient population versus how the nursing home gets paid.
Providers today own the full Medicare premium dollar for these residents and patients. You now need to understand how the entire ecosystem around them works from a both payment and claims and data standpoint. But the only way any of this works is clinical execution.
Be it telemedicine or otherwise, it is important that skilled nursing providers lean into technology that can support clinical execution, and the data is just there for support. At the end of the day, we need to physically be there for these patients daily. That’s how we’ll be successful. Everything else is a support mechanism for that effort.
“If you could change one thing about the health care payment landscape, it would be…”
… giving providers the money they need to provide great care versus getting hung up on data reporting that does not translate to quality care.
“The future of health care payment is…”
… capitation with upside.
What do you think is the most misunderstood aspect of skilled nursing payments that you would like to debunk?
The myth is that I-SNPs and Part B therapy don’t mix. The reality is that Part B therapy, which I describe as the tail that wags the dog in the I-SNP, is a fundamental part of a provider’s I-SNP model of care — encompasses concierge medicine at the bedside, nurse practitioners, PAs, RN care managers, member advocates, aligned incentives, shared savings, upside, et cetera. In fact, in a value-based arrangement, typical friction points to provide Part B therapy, such as ADRs, prior authorization, and utilization management go away because you’ve received capitated payment — now you’re charged with taking care of the patient as best you can. That is one of the most common myths that don’t play out in reality.
The misnomer is that as you shift from a fee-for-service model to capitated payments, Part B therapy is underutilized. This comes back to the perverse incentives of fee-for-service and its effect on Case Mix. The reality is there’s significant funding in the I-SNP scenario with capitation to do everything you need clinically from a Part B therapy perspective, and you’re supplementing that with the NP care model.
There’s a lot of volatility in the Part B therapy approach from nursing home to nursing home and from state to state. That tends to be a focus of conversations when talking about transitioning to a provider-owned I-SNP in a capitated payment arrangement.
What would most I-SNP providers need to change in order to keep up with payment evolution, if anything?
With so many providers siloed in a world of consolidated Medicare Advantage plans and health systems, it’s important to collaborate with your peers in the industry. This can’t be an exercise of strategic planning at the corporate executive and owner level, it has to permeate the organization.
I’m very fond of, “Show me the incentives, I’ll show you the outcome.” If the incentives around this shift don’t penetrate every facet of your organization, it would be hard to have success.