Achieving financial stability and growth in the current reimbursement environment is no small task for nursing home providers.

Three particular challenges relate to value-based purchasing (VBP) program changes, effects of the One Big Beautiful Bill Act (OBBBA) and the continued rise of Medicare Advantage, leaders with Ignite Medical Resorts and ArchCare said during a recent Skilled Nursing News webinar. 

When asked how changes to the value-based purchasing program have affected ArchCare, Chief Medical Officer Dr. Taimur Mirza offered a succinct answer: “Negatively.”

“When it was focusing just on the 30-day readmissions, that’s something that we could have a little more tighter control over, but with the nurse turnover and the nursing hours per resident day [added], it’s become much more challenging,” he said.

As the Continuing Care Community of the Archdiocese of New York, ArchCare is one of the largest non-profit providers of nursing home care in the United States and offers multiple other service lines throughout the New York City area, including assisted living, hospice, home care and PACE.

With ArchCare hitting a ceiling at three nursing hours per resident day in many locations, the company has taken a hit on reimbursement under the VBP program. The organization has more control when it comes to infection-related hospitalizations, Mirza said, having implemented a new process to spot system gaps and bring down the rate. 

“The infection control nurse works with the attending physician, and they have to document what was preventable, what system gap might have led to it, and that’s helped bring down our infection-related hospitalization by double digits in the last few months,” Mirza explained.

Ignite Medical Resorts has seen similar challenges, explained Shawna Rainey, SVP of clinical reimbursement. Ignite has 28 locations across six states and employs over 3,500 people.

Rainey said that the VBP model changes – specifically related to the national average payment multiplier – have wiped out the 3.2% annual Medicare payment update at some sites. The company is focusing on “time-sensitive things that we can make changes [to] and impact in real time.”

A key focus is around the return to acute care rate, Rainey said. The company is also gathering data on MDS-related measures in the quality reporting program (QRP), such as the discharge function score. She noted that with the growth of Medicare Advantage, the number of Medicare fee-for-service beneficiaries being considered for this measure is decreasing, which shrinks the denominator in discharge function score calculations and therefore poses difficulties in terms of moving the needle meaningfully upward.

OBBBA’s impact

The financial impacts of the One Big Beautiful Bill Act (OBBBA) passed earlier this year are still to be seen. ArchCare is watching the signs and planning for anticipated changes related to Medicaid. 

“Just looking around, a few states are piloting Medicaid readjustments and tying it to quality metrics, staffing levels, wage standards,” he said. “We try to build predictive models for New York, and we’re looking at things like inflation factors, rate caps, quality bonuses, and we try to run stress budgets to determine how long we could sustain high acuity admissions if rate growth stalls. Our philosophy is to act as if value-based Medicaid is already here.”

This will allow the ArchCare team to be prepared when new federal-state incentive structures do finally roll out, he said.

Data matters for managed care

While nursing home providers are anticipating Medicaid changes, they must adjust to a world in which Medicare Advantage is an ever more dominant payer.

Ignite has a vice president of managed care who sits down with Medicare Advantage providers and negotiates new contracts, Rainey said. Many plans offer higher reimbursement for certain conditions and treatments, such as bariatrics and in-house dialysis, but the goal is to make sure the base payment rate for other services is aligned with the Patient Driven Payment Model (PDPM). Even so, it’s likely that the rates won’t equal the full PDPM rate.

Meaningful negotiations with a managed care company depends on having data, she said. 

“A lot of our [payers] are very interested in not just the facility total readmission rate, but those that are enrolled in their plan, and giving them some data and trends,” she said. “ … To be able to renegotiate, you have to come with data.”

For instance, even though a payer might not require a five-day MDS, a provider should still maximize everything on the MDS in order to show a payer HIPPS codes, show acuity through those levels, and leverage that to negotiate for PDPM alignment.

For ArchCare’s part, Mirza said the relatively smaller size of the organization – being concentrated in the NYC area – means there’s less negotiating room with payers. However, transparency is still needed.

“Exchanging daily data with participating payers about our admissions, length of stay, case mix, distribution, readmission risk,” he said. “The open book approach helps them understand us better and then makes it easier to negotiate.”

The company is working to implement shared savings contracts with provider-owned MA plans. These plans allow ArchCare and the MA provider to share in savings when ArchCare has a win in areas like reducing readmissions or faster functional improvement, Mirza said.

Ignite invites a representative from MA plans to attend weekly meetings in which all the stats are laid on the table. Rainey said that some plans have reviewed that documentation and come back with the case mix groups they will pay for without waiting for the MDS to be completed. 

“Building relationships [is critical], whether it’s your MDS teams or your administrators, with some of those skilled inpatient care coordinators, and challenging the auths that they give us, sometimes,” she said. “We have found a lot of success in providing education through the RAI manual or through our documentation to justifying why we’re getting something different on the MDS versus what they have authorized.”