Health care providers selling Medicare Advantage (MA) products isn’t a new trend, but typically “providers” refers to hospitals, health systems, or physician groups. Few would expect nursing homes and assisted living operators to be able or willing to manage health care risk for some of the highest-cost Medicare beneficiaries, according to Skilled Nursing News.
And yet, as these charts illustrate, long-term care providers are largely responsible for driving rapid growth (23%) in the number of MA special needs plans enrolling institutionalized Medicare beneficiaries over the last two years. The number of provider-sponsored I-SNPs doubled from 2016 to 2018, and enrollment has more than doubled. Long-term care providers now lead 21 of the 24 provider-led I-SNPs.
Why is this happening? Our team spent the last year traveling around the country talking to long-term care providers who are operating plans and educating facility operators. Here’s what we learned.
Many nursing home operators view healthcare risk models as the only viable business path forward.
Nursing home operators tell us the traditional nursing home business model — where margin depends solely on volume and daily rates — is becoming unviable. Nursing facilities have long expressed concern about sufficiency of Medicaid rates to cover costs of care; but in the past, they have generally been able to operate at positive and sustainable overall net margins thanks to sufficient short-stay patient volume in higher-reimbursed fee-for-service (FFS) Medicare.
Now skilled nursing facilities face a combination of business challenges, specific to higher-reimbursed Medicare admissions. Referring inpatient hospital volume has been declining and enrollment in MA is growing. MA plans tend to pay lower daily rates and more tightly manage length of stay. Even seemingly high performers complain that they have insufficient market leverage to secure value-based contracts from accountable care organizations (ACOs) or health plans.
Many operators see taking on health care risk – through bundled payments, SNPs, or in a few instances ACOs – as the only option for gaining more control over their financial future and capturing the savings from reduced hospitalizations, shorter stays, and coordinated transitions.
Read the full story at Skilled Nursing News.