Poised To Take The New Payment Leap

Long term care providers are entering into a time of serious decision making on how best to embrace the opportunities and challenges that alternative payment models offer.

By Patrick Connole

As the Centers for Medicare & Medicaid Services (CMS) aggressively pursues value-based payments over traditional fee-for-service (FFS) contracting, the stage seems to be set for some radical changes for stakeholders of all stripes, from commercial health plans to acute-care hospitals, to the skilled nursing provider.

Sea Of Change

It is not clear how post-acute care providers will navigate this new world of value-based care (VBC) and pay-for-value reimbursement, given the sheer amount of change taking place.

Added to this uncertainty for skilled nursing facilities (SNFs) and other long term care providers is the evolving relationship with hospital systems, with some SNFs complaining that acute-care organizations are excluding them from new reimbursement models, like bundled payment.

At the same time, other post-acute care providers are striking deals with hospital systems and payers to become part of preferred networks, realizing the narrow network trend can work to their favor as CMS provides incentives for quality improvements across the entire care continuum.

Most VBC arrangements now in place, and set to accelerate in the coming two to three years, come under the guise of accountable care organizations (ACOs), bundled payment systems, preferred or narrow networks, and Medicare program demonstration projects like the Comprehensive Care for Joint Replacement and the Bundled Payments for Care Improvement (BCPI) initiatives.

Where SNFs and other providers working in the long term care space fit into these models is an interesting question: a growth area for some and a conundrum for others (see sidebar).

What is clearer is that SNFs need to embrace value-based reimbursement or likely face lower census and more bottom-line pressures, long term care leaders say.

PruittHealth Ventures Into New Territory

For Neil Pruitt Jr., chairman and chief executive officer of PruittHealth based in Norcross, Ga., near Atlanta, even if providers are taken kicking and screaming into the new payment world, there is no other option but to relent and plan ahead.

Neil Pruitt Jr.“We don’t like what is happening, but it is happening whether we like or not, and we have to respond to it,” he says.
And so PruittHealth has. The company, which serves 24,000 patients on any given day in 97 centers across Florida, Georgia, North Carolina, and South Carolina, is taking part in the evolution of the health care payment system by branching out into new areas, like assuming the role of a health insurer to better coordinate care for patients and grow its business within a new risk model.

“What we are seeing obviously is there is more ACO penetration and more narrow networks, and a lot them are narrowing their networks based on the CMS Five-Star rankings,” Pruitt says.

“This has been a trend that we have seen increase more and more, and what it is doing is compressing the average length of stay of our patients.”

The way PruittHealth has handled this trend, in part, is to start its own Medicare Advantage (MA) insurance plan called PruittHealth Premier, a health maintenance organization Special Needs Plan (SNP), specially designed for residents/patients living in PruittHealth nursing centers.

Beefing Up Care Coordination

The MA SNP is actively marketed for select PruittHealth centers now, but will expand to all facilities in 2017, Pruitt says.

“Our patients within our centers have to be dually eligible. They sign up for the plan and get extra services, such as a nurse practitioner coordinator. We’re seeing that coordination of care has really helped our readmission rates.”

Pruitt says the company’s goal is to a have a nurse practitioner plan service at all of its facilities. “This puts the provider—in this case us—in charge of the care,” he says. “There are risks and rewards with that, but we have seen good outcomes so far, and we anticipate this as a net positive for us.”

Beyond his own company, Pruitt expects other SNF operators to offer similar health plans in the near future, with the focus on coordination of care via the nurse practitioner model. As for how this new model changes relationships with the hospital systems that Pruitt does business with, it has been a plus in his view.

“We are hand in hand together. By having this robust nurse practitioner program, we are going to be able to address more of the patient’s needs at the facility level. When hospitals look at quality metrics, like cost per Medicare beneficiary, we are going to prove that our metrics are much better than the competition,” Pruitt says.

The Premier health plan just adds to the other measures already in place to improve quality and put more highly skilled staff in action to handle complex patients. “Premier allows us to be successful in other programs,” he says.

Providers Seek Viable Role

But if PruittHealth is the exception right now in extending its brand to health insurance, then what is the norm for SNFs when it comes to being active, or even included, in the Medicare program’s value-based payment programs and pilots or those that commercial payers, hospital systems, and physician networks have established?

Susan Westgate, a consultant to Sinai Hospital of Baltimore, part of LifeBridge Health, is co-chair of the company’s Skilled Nursing Facility Collaborative. The collaborative is a LifeBridge initiative to enhance the quality and performance outcomes of the partners in the group’s network, which is a collection of SNF facilities that surround LifeBridge hospitals.

To support this goal, Westgate says, third-party vendor PointRight is a big asset in the collection and analysis of performance metrics vital to the program.

“They also assisted us with development of a performance dashboard and are lending their expertise with their post-acute predictive analytics capabilities that we will be using to identify and achieve key performance benchmarks,” she says.

LifeBridge is a good candidate to take on such endeavors, since the providers under its umbrella range from home care companies to acute and post-acute facilities, to inpatient and outpatient centers, and since population health has been an organizing principle for some time.

“In many respects, even before some of the major shifts that have happened in health care, we have been positioning ourselves to meet the needs of the total patient, of the total community,” Westgate says.

For her, there are multiple levels to what is happening in VBC.

“Certainly, you have what the government is issuing in terms of change, and so we are moving toward pay-for-performance and value-based purchasing to really anchor health care around quality. A lot of what the government has been doing mirrors what has been happening in many private industries,” she says. “In many respects, large hospital institutions are trying to adapt to what is a completely fluid health care landscape.”

Myriad Challenges

Westgate says it is impossible to talk about payment without looking at some of the challenges that providers are facing, especially with increased patient acuity and complexity.

“There is this general migration to outpatient care, so it is a very tough landscape to navigate,” she says. At the root of much of the VBC movement is reducing cost, reflected in government programs, with private payers taking on managed Medicaid in many states and the Medicare program looking to shrink payments.

“At the same time there is general pressure to reduce costs and reduce reimbursement for services, and that is directly in conflict with what is happening with patient care,” Westgate says. “So we have sicker patients that are moving through the hospital system, we have sicker patients that need post-acute care services, and those less acute patients that used to be in post-acute care are now being managed in the outpatient realm.”

Further, she sees this kind of cost reduction movement creating a complicated situation for hospitals and post-acute care facilities.

Reform Tests Care

The push for quality, Westgate adds, is an important step, but balancing reimbursement reform with providing really sick patients the care they need is “really a conundrum.” While it is one thing to push patients to the least costly form of service, it is hard to do when there is no infrastructure to actually support the people being served, she says.

“I think the other part is that we have the Affordable Care Act, which is great in terms of expansion of coverage, but now you have many patients who have been farmed out to managed care organizations that may not have relationships with the best and most optimum facilities.”

In the end, for LifeBridge, the payment evolution is a lot of moving parts to navigate while still executing and delivering care, “but also for patients who are really stuck in the middle to figure out is there really a choice to my health care or is it really just payer-driven?” Westgate says. “I think in many respects it is still payer-driven” for now.

It is going to take a long time to make that transition work well, she says. And on the long term/post-acute care provider front, there is going to have to be a lot of capital investment in infrastructure to really best support patient need, “which is a challenge because you will not be able to see a return on investment for some time.”

Collaboration Takes On A Fresh Look

John Perticone, Pittsburgh-based vice president of strategic partnerships for Golden Living, has seen his company pursue a gradual phasing in of value-based reimbursement activity through CMS’ BCPI initiative.

“Both models [versions and updates to the program] involve episodes of care in the post-acute climate,” he says. With this effort have come greater efforts to reduce readmissions and to come in under the target price, or bundled payment amount, whether a hospital or an orthopedic surgeon or even the SNF is doing a bundling.

“Model 3 in the BCPI program is where we are actually a risk taker and are in a program with 18 clinical episodes of care being involved. So that will affect gradually how we do payment,” Perticone says. In Model 3, the episode of care is triggered by a hospital stay but begins at the start of a post-acute care stay. Medicare continues to make FFS payments in this model, but the total expenditure for the episode is later reconciled against the target price set by CMS.

Another element to watch for in the SNF community is the more aggressive ACOs that are just now being implemented under CMS’ Next Generation ACO Model (see sidebar).

“Those now afford ACOs a greater level of opportunity to share the gains and also take both upside and downside risk,” Perticone says. “I think that has had an impact on post-acute care in terms of our care being 35 percent of the cost of care in an ACO. So there should be a lot more engagement in post-acute care networks the ACOs have developed.”

The focus will be on transition approaches, he says. Putting more emphasis on transition nurses in facilities due to shorter lengths of stay will entail a more structured discharge-planning infrastructure.

Programs Study Needed

Another long term care provider, Plum Healthcare Group in the greater San Diego area, which has 63 facilities throughout California, is also participating in the BCPI and some ACOs and has facilities in five of the geographic areas that make up the Comprehensive Care for Joint Replacement program (CJR). Nanci Wilson, vice president, research and development at Plum, says it is important for SNFs, and all providers, to get up to speed on these CMS programs.Nanci Wilson

“An Advisory Board survey of 111 hospitals participating in the new mandatory Lower Extremity Joint Replacement bundle found only 8 percent thought they had a sophisticated knowledge of CJR participating criteria. Now that is of great concern,” Wilson says. “So I would say as you look at the majority of providers across all levels of care, they have been somewhat passive in understanding CMS programs.”

The most important aspect of alternative payment models, even with the complexities of all the different programs in play, is for SNFs to realize that lengthy stays are nearing an end.

“It really comes down to the matter of having great outcomes, quality care with reduced lengths of stay, and reduced rehospitalizations,” Wilson says. “With the historic 30- to 40-day stays, SNFs will not survive as a preferred provider.”

This is part of a paradigm shift for many SNFs, she says. “They are in denial, truly believing that bundled payment will come and go. It will be a rude awakening for them if it hasn’t been already: It is inevitable, and it’s not going away.”

Wilson says the post-acute profession is currently working on various proposals, one of which is a post-acute episodic bundle, similar to the BPCI, which sets a target price on a discount of claims for a certain period of years.

“Our represented organizations, along with providers, are proactive in seeking a reasonable solution where they have full responsibility for the care that they deliver once the patient is admitted into their facility,” she says.

SNF Strategies: No Easy Solutions

The realities of the opportunities and hazards that come with the new CMS edicts, the fact that traditional FFS is still mostly in place, and the way the marketplace is shifting in response to changes leave Washington, D.C.-based long term care and aging expert Anne Tumlinson unsurprised.

“SNFs kind of live in two worlds. They live in the Medicare world where they are very involved in trying to navigate a very quickly changing environment” where it’s all about volume, she says. “So they are attempting to get into preferred post-acute care networks in local markets where the hospitals are now sorting through their ACO options and narrowing the number of SNFs they work with.”

Tumlinson, who is the founder of Daughterhood and Anne Tumlinson Innovations, says these rapid shifts have made more change likely for traditional FFS as well as the alternative payment models. She cites advocacy efforts by the American Health Care Association to try to launch new Medicare payment methodologies under FFS as an example of what may come next. So, for example, instead of SNFs getting a daily rate, they would get an episodic rate for post-acute care, if policymakers agree.

And as all this change is occurring, the way hospitals view post-acute care is definitely shifting as well, as CMS focuses its attention on the BCPI, CJR, and ACO programs.

“In looking at Medicare data back in 2009, a big hospital in a big urban setting would be discharging to 100 different SNFs in their market,” Tumlinson says. “Literally, it was something like one patient here, two there, two here, three there. That is the world the SNFs are accustomed to, and that is the business in which they operate.

“But all of a sudden now hospitals are slowly waking up to the idea that you cannot reduce your rehospitalization rates, and you can’t manage lives under an ACO, if you are dealing with 100 different nursing facilities. You have to have clinical partnerships. But you can do that with a small subset, and you want those in the subset to be high performers. That’s the whole idea of the narrowing network for post-acute care,” she says.

Are Hospitals Bypassing SNFs?

But, what if hospitals don’t want to play with SNFs or other long term care providers in an effort to keep more of the bundle in-house by releasing patients straight to home care?

That is what a number of SNF operators are seeing in the marketplace, which seems to counteract the federal government’s aim to make acute care and post-acute care more efficient, while providing higher-quality care for seniors with complex chronic conditions.

Zo Long, the Boston-based Northeast Division president for Life Care Centers of America who oversees operations of 25 facilities, says there are multiple avenues that reimbursement is taking, and it is unique in each state and even in each locality. But a theme that she sees emerging on a daily basis is the lack of activity in bundled payment arrangements with hospital systems.

“I see many hospital systems, for instance, take it upon themselves to act as if they have a bundled payment or are preparing to be a bundled payment [entity] in the future,” Long says. “What is most significant, most particularly for orthopedics, is that some hospital systems or physician orthopedic groups are bypassing any or all post-acute care for those patients who probably need it. That is probably the most stunning example.”

There must be people who need some sort of rehab but instead are being sent home straightaway, she says.

“There are several hospitals right now where a patient who has had a hospital stay with a hip or knee replacement is being told to go home. If they go home and if they need home care, they are told they can pay privately for the service,” Long says. “That is very clear to me, since there is some sort of bonus being paid to physician groups to not utilize any post-acute care providers.”

SNFs and other rehabilitative service centers have an excellent track record in transitioning people from the hospital setting to improved health and then home, versus skipping the middle step, she says.

“To have it go from where we were well and good at doing this, to having really none of that now is very troubling. But I think the outcomes of that will finally catch up with some of the hospital providers and physician groups that are utilizing that strategy,” Long says.

This sentiment is echoed by Pruitt, who says PruittHealth is seeing some health systems managing care for insurance plans, notably in North Carolina, acting to keep more of the bundle for the hospital.

“They definitely are skipping the [post-acute care] providers,” he says, “but this is where we believe we need to manage the care, because we believe when you go to a SNF you have better outcomes, versus we send you home and you may or may not do the rehab prescribed for and don’t do the therapy and don’t get the outcome.”

Patrick Connole is a Washington, D.C.-based freelance journalist covering the health care sector and other economic issues, having worked previously for international newswires and health care-related publications.

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