Provider networks can be powerful tools for improving negotiating leverage with managed care organizations while also benefiting care coordination. But their effectiveness depends on local market conditions and the structure of the network, as well as a chosen reimbursement structure that makes sense for the market population.
Meanwhile, nursing home operators in the middle of their contracts with managed care payers have found that contract administration can be just as important as reimbursement rates. That means monitoring denials, tracking compliance and aggressively pursuing appeals, while also thinking about the most influential advocacy efforts to keep MAOs honest.
Some providers built networks around existing hospital referral relationships, requiring participating nursing homes to meet quality and reporting standards. Denise Keefe, SVP of continuing health enterprise at Advocate Health, said referral patterns in particular are a good way to select nursing operators for their network.
“We go out and start to build our own network based on the relationships that already exist in our local markets,” said Keefe. “We’ll go to each of our hospitals and start to look at their network that they’re currently using by default, and then we’ll start to look and see who is interested in being a part of our network.”
The independent provider association model, on the other hand, has struggled due to antitrust regulations and provider autonomy concerns, along with problems maintaining collecting bargaining power. And yet, some providers are trying this way.
Overall, there’s no perfect network solution, with success dependent on local dynamics and whether network participation would strengthen or weaken a nursing home operator’s position.
Ignite Medical Resorts is approaching contract negotiations differently.
“We wanted to do it ourselves, even to the point that we’ve just hired a person from NaviHealth,” said Tim Fields, CEO of Illinois-based Ignite. “We’re trying to speak the other language and look at it from a different side, but I think there’s pros and cons.”
And considering value-based and risk-sharing options, traditional MA plans struggle to operationalize true value-based incentives despite expressing interest in them, according to Edward Farbenblum, chief strategy officer for New York operator VestraCare. Accountable care organizations (ACOs) may come through as a more promising opportunity for risk-sharing incentives and create better alignment between providers and payers. Delegated-risk physician groups and of course special needs plans like the institutional plan (I-SNP) popular in the sector are considered better risk-sharing options than MA plans.
To gain advantage with MA plans, providers should leverage data on reduced hospital admissions, shortened length of stays and efficient management of high-acuity patients.
Tips and pointers for MA contract negotiations
As for contract negotiation and administration between MAOs and nursing home operators, contract management is hugely impactful and should be considered just as much as negotiating rates while finalizing a contract, Farbenblum said.
Payers often profit off administrative mistakes made by providers, meaning errors in authorization management, billing, documentation and appeals when setting rates. In turn, operators should rigorously track contract compliance, monitor denied claims and pursue appeals – all are forms of contract management.
Farbenblum also dove into reimbursement methodologies baked into contracts – PDPM-based contracts better align with current Medicare reimbursement models and reduce therapy-minute requirements, while also limiting administrative disputes.
But traditional level-based or per diem arrangements can be easier to manage operationally.
“If you go to PDPM, you might take a discounted PDPM rate … they don’t force minute requirements on therapy,” said Farbenblum. “One of the things managed care has done poorly is they don’t understand our space. They still are banking most of their models on the old kind of rehab-driven reimbursement rate.”
The best reimbursement structure within a managed care contract is the one that recognizes an operator’s capabilities, including care management expertise, documentation, therapy operations and revenue-cycle administration.
Operators can make decisions on contract reimbursement models by understanding labor costs and therapy utilizations in their buildings as well, Fields noted.
MA oversight the right way
Accountability through care coordination goes a long way in terms of payer trust in a managed care contract too, taking responsibility for patient outcomes across the care continuum, including home health, primary care and post-discharge support.
Payers recognize that hospital readmissions are oftentimes influenced by factors outside the nursing home’s control, but will still attribute these outcomes to the operator.
Payer expectations changed the siloed care continuum – active management of referral networks will only help, and establishing expectations for home health agencies can add rapid follow-up care.
“Clinically and financially, the best way is to have everybody working closer together,” said Fields. “What we need is some sort of a layer integrating all the silos of care and ensuring that all the regular care chronic condition management happens.”
It’s a sign of what these contracts will look like in the future, Fields said, with expected movement toward greater integration of health care services and stronger collaboration between hospitals, physicians, post-acute providers and payers.
This level of coordination is a lot easier with technology investment and data sharing, Fields added. Still, it’s going to take a heavy lift to go from the fragmented care continuum we see now, he said.
And while operators should extend their influence across care settings, they should also be paying attention to legislative efforts to regulate MA plans too. The sector is optimistic about congressional hearings and public attention on MA practices, but leaders note that federal policymakers still generally support the MA model.
“CMS really does believe in Medicare Advantage, they believe that it is a cost saver. So, I am a little nervous about the possibility of them actually policing and requiring higher reimbursement,” said Farbenblum. “I think we might have better luck on the capricious cut letters and the regulatory red tape to get approvals and levels than we would on rates.”
In other words, advocacy efforts may be wasted on direct reimbursement mandates, experts said. Instead, legislative reforms tied to authorization requirements, utilization management and administrative burdens may be more impactful, and easier to get approved at both the state and federal levels.
Oklahoma, which falls in Ignite’s operating footprint, recently introduced an executive order with stipulations for MAOs in the state, but Fields said it will be hard to get them to adhere to the changes since they are federally managed and can hide behind federal statute.
”Most of [the state initiatives] are destined to fail because of federal preemption,” said Farbenblum. “There’s a robust case law about what states can and can’t regulate vis-a-vis Medicare Advantage plans … a lot of the things that states are trying to do are destined to fail in court, and the payers know it, which is why they’re ignoring it.”
But, policymakers have also been seeking to create more balance between traditional Medicare and MA; it’s an encouraging shift compared to the federal call for 100% MA penetration, they said.
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