In weathering the rise of managed care penetration – which has often meant lost profits – nursing homes are turning to centralized processes for handling claims, beefing up teams to handle additional documentation requests (ADRs), and closely tracking contract renewals.
Rates for managed care plans like Medicare Advantage are often lower than traditional fee-for-service Medicare rates, and given higher administrative burdens associated with managed care along with delays or denials of service, nursing homes have suffered financial loss from managed care’s growth. While centralization of managed care claims is some operators’ way to deal with the problem, others in the space have used Institutional Special Needs Plans (I-SNPs) to reduce managed care burdens.
Regardless of the preferred approach, nursing homes have had to overhaul their strategy to account for an increase in documentation requests from managed care organizations (MAOs), with staffing shortages on the insurance side further complicating the reimbursement process.
Covenant Living has seen an 8% increase overall with Medicare rates, but only a 1.7% increase in managed care rates for its properties. That translates to $685 for fee-for-service Medicare per patient per day, and $506 for managed care, which is a pretty significant difference, Elizabeth McLaren, senior vice president of revenue cycle, reimbursement and HCBS for Covenant, said during Skilled Nursing News’ RETHINK conference in Chicago.
There’s also a lot more time and hassle involved with managed care, said McLaren. Even though the level of service and acuity is often similar between the various types of payers, the clinical team is still having to touch claims on average seven times on the managed care side before the claim is approved to be paid, she said.
Meanwhile, American Health Plans’ response is to be inside facilities. American Health Plans owns and operates I-SNPs, and in partnership with nursing home operators, it offers nursing home residents access to customized health care through specialized Medicare Advantage plans. American Health Plans is in 31 skilled nursing facilities, implementing I-SNPs in the buildings since 2017. This has allowed American Health Plans to take control of who is being admitted to its facilities, Marybeth O’Connor, vice president of corporate development at American Health Plans, said at RETHINK.
“We realized we really don’t have a lot of control on large payer rates, large payer length of stay and our short-stay population. Where we have the control is on our Medicaid, our long-term population,” said O’Connor. “The large payers don’t really understand what we do. They focus on the highest cost of care, which is the hospitals.”
Large payers aren’t focused on where they’re sending people for short-term care, so it’s more worth it to focus on developing relationships that aren’t on the payer level, she said, referring to hospital partners.
Managed care strategies
Covenant’s managed care strategy in the last seven years has involved a significant overhaul, especially given that its facilities are spread across 12 states; there isn’t always the same level of assets, information and expertise across these markets.
Centralizing managed care, so that Covenant can provide the same process, evaluation and negotiation regardless of where the property is located, was a major step forward, along with maintaining a database of managed care contracts coming up for renewal, McLaren said.
“We’ve been very intentional about that to make sure we’re gathering recent data to be able to have those renegotiation conversations,” said McLaren. “A lot of providers aren’t staying on top of when it’s time to renegotiate, and no one’s going to necessarily reach out to you to say it’s time to renegotiate your contract.”
The last component of Covenant’s managed care strategy is understanding the costs and margin associated with each patient, regardless of payer. It helps the team be more intentional with making partnership decisions. It can help operators and leaders of various communities make decisions on admission strategies as well, McLaren said.
As for O’Connor, she suggests that operators look at their highest volume payer, understand how these patients are coming to a facility by tracking data, getting some benchmark data and setting goals with the managed care representative for, among other goals, reducing length of stay. Then, there might be a better rate when it comes time to renegotiate contracts.
“You’re probably working with anywhere between four to six different Medicare Advantage plans,” said McLaren. “It’s not a lot of volume per plan, so focus on the one where you have the most volume, where you might possibly be able to educate your representative, because they’re focused on high cost areas. They’re focused on hospitals.”
Continuing managed care burdens
Covenant has seen an increase in additional documentation requests since last fall, and has established a tracking system for managing medical review across its ADRs. There doesn’t appear to be a pattern for when and why an operator would get a claim review from an MAO, McLaren said.
“I think some of the challenges depend on whether we can submit them electronically. Obviously, the process is faster. Things aren’t misplaced, things aren’t lost. Deadlines are met. We have some payers, depending on the location, where you’re mailing [documentation] in, you only have a PO box to send it to, you can’t send it with any type of confirmation.”
American Health Plans has had to beef up its team that handles ADRs, O’Connor said. MAOs are getting squeezed as well, not just from reimbursement rates but from profit margins as well. And, many are publicly traded and have to deliver a certain margin.
Due in part to the ADRs, operators aren’t getting paid by managed care plans in a timely manner, McLaren noted. Five or six years ago, claims were paid in about 90 days. Now, it can be half a year before a managed care claim is paid to the nursing home.
There’s also staffing shortages on the insurance side, added McLaren.
“We’ve run into numerous situations where we have a group of $127,000 in claims for one property. We were working with the same person but that individual is no longer there,” said McLaren. “For our reimbursement team members, that’s probably their number one frustration. You can’t talk to the same person twice.”
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