2015 Business Outlook: Payment

Editor's Note: Senior housing and services providers will enter 2015 with many unanswered questions regarding their future. A new Republican majority in the U.S. Senate, an expanded Republican majority in the U.S. House of Representatives and the presence of Republican governors in more states will bring new perspectives to the political landscape. Controversial presidential executive orders related to immigration reform await resolution, and threatened governmental action could overturn some or all of the Affordable Care Act (ACA) and the health insurance it provides to certain seniors and others. New payment models and regulations under consideration could alter the business climate for years to come. In a multi-part series beginning today, Long-Term Living takes a look at some of the top issues that those who serve older adults will face in the new year. See the entire series here, or see the digital edition of the December 2014 issue for the print version of these and related articles.


By their very nature, all businesses rely on revenues to operate and accomplish their missions. Some government initiatives under testing or development, therefore, give pause to many serving older adults.

Len Russ, American Health Care Association“The biggest challenge is the uncertainty that we’re facing now with respect to the change in payment modeling…with the advent of increased Medicare managed care, increased Medicaid managed care, which many states are implementing, the accountable care organization (ACO) projects [and] the bundling initiatives,” Len Russ, chair of the American Health Care Association (AHCA), tells Long-Term Living. “At the same time, we’re making unconditional commitments to ramp up, to whatever extent possible, our quality performance.”

Jim BoweManaged care is a growing force in the post-acute area as well, says Jim Bowe, principal of GlenAire HealthCare, Bloomfield Hills, Mich. “With risk-based managed care increasingly calling the shots, Medicare and Medicaid are preparing to step back and cede administrative responsibility as the capitation rates, provider networks, quality standards, utilization reviews and contract negotiations that are so prevalent throughout the rest of healthcare begin to envelop post-acute care,” he says.

Look for Medicare and Medicaid to try to extend their service coordination and cost-containment reach by bridging the dual-eligible divide to address perceived inefficiencies, fragmentation and overlaps, Bowe says. “This means that as spending for dual-eligibles ‘snowballs,’ due in large part to the increasing prevalence of chronic disease comorbidities and complex medical conditions, as well as the addition of 16 million more Medicaid recipients under the ACA, the traditional Medicare and Medicaid reimbursement dichotomy is about to be upended,” he adds.

Such efforts, however, won’t come without the voices of AHCA and other organizations and providers being heard. AHCA President Mark Parkinson told those attending the group’s annual meeting in October that new payment models for skilled nursing—managed care, ACOs and bundled payments for dual-covered individuals—“all have things in common: reduction in length of stay, reduction in rate, exclusion of providers and nothing good for our residents.” Providers cannot wait to see which models are implemented, he added, but rather “must play offense” by setting the agenda and offering solutions related to payment models as well as proposed regulations that would affect assisted living communities.

Toward that end, Russ says that AHCA soon will unveil a proposal designed to address Centers for Medicare & Medicaid Services concerns about therapy services and lengths of stay. “We’re looking to veer away from the fee-for-service, per-diem payment system and assume more risk but also to take more control of the dollars,” he says.

“A lot of the emerging payment models siphon off a good part of the payment, either to insurance companies, managed care entities [or] third-party conveners who will be managing, so to speak, the care with the ostensible goal of creating more efficiencies,” he adds. “But basically, what’s happening is, they’re making clinical decisions at a great distance from the patient’s care, taking that discretion away from providers and also putting the monies in their own pockets, where this money, in a tight-budget situation, would be better spent for direct care.”

Also in this series:

2015 Business Outlook: Service Reach

2015 Business Outlook: Quality

2015 Business Outlook: Staffing

2015 Business Outlook: Professionalism

2015 Business Outlook: Technology

2015 Business Outlook: Important dates

Related content:

Parkinson: Its time to go on the offensive

Topics: Articles , Executive Leadership , Finance , Medicare/Medicaid