SNFs: Time to step up, not give up
The design of the BPCI-Advanced program appears, at first glance, to offer little opportunity for SNFs looking to redesign their business models and take episodic healthcare risk alongside hospitals and payers. It effectively sunsets the original BPCI option that kicked off the risk-based episode at post-acute admission (called “Model 3”), leaving all bundled post-acute services to start with either an inpatient or outpatient service.
It's disappointing for Model 3 participants to lose access to the post-acute care only demonstration option. They have appreciated the opportunity to take risk and contribute to value-based care without having to beg hospitals and big convener organizations for partnerships and shared savings crumbs.
But SNFs aren't entirely out of the game. Like the original BPCI, there is nothing in BPCI-Advanced design that prevents SNFs from taking episodic risk as a convener. A convener is an organization that takes risk for post-acute episode costs, even if it's not directly delivering patient care. It signs up other providers with the understanding that the convener will take most or all of the risk but will share some portion of savings with its provider partners. The current conveners with which post-acute organizations are most familiar are navihealth and Remedy Partners.
The convener role would give SNF organizations more control over post-acute patient movement and expand revenue opportunities beyond the Medicare daily rate. It would shift their role from seeking bed volume to managing post-acute care and episodic risk across multiple sites of care. And if the SNF-convener does it well, it would allow them to keep a larger portion of the savings.
Without question, there are major challenges to this approach, not the least of which will be the need to gain cooperation and participation from hospitals and physicians. To do this, SNFs will have to approach hospitals and doctors from a top of the food chain mentality. For too long, SNFs have been at the mercy of hospital bureaucracies that still don't have quite the right incentives or the time to invest in clinical integration with individual post-acute care providers in their market. As one Model 3 participant said to me, “we can't get hospitals to pay any attention to us at all.” Additionally, too few SNFs have strong relationships with the specialist physician groups who would be natural bundled payment partners.
For these reasons, it's natural for SNF operators to view the convener role very skeptically. How could a SNF persuade hospitals and/or physicians to participate as their partner in bundled payment? It would not be easy but there are several ways to position the pitch.
- The SNF, as a convener, is taking the risk and offering the hospital and physicians shared savings, and providing physicians relief from various MACRA requirements.
- The SNF, as a convener, will be even more incentivized to improve performance that affects the hospital's value-based care penalties and bonuses.
- The post-acute care providers participating in the bundle will reduce readmissions but also guarantee that any of their discharges that need readmission, will go back to the originating hospital and not to another hospital (called readmission leakage).
- Bundles have the potential to create more alignment between hospitals and physicians they care about.
- Under a bundle, CMS can waive the 3-day stay requirement, giving hospitals the chance to reduce costs for certain DRGs and for SNFs to get patients sooner.
Becoming a convener requires investment and commitment. Creating processes, implementing technology, and training people to coordinate and deliver higher quality care across multiple sites at a lower cost is very hard. And it also requires scale that many SNF operators don't have.
One approach to these challenges is to form convener organizations together with other SNF operators. There is precedent for SNFs working collaboratively to take risk. Nursing facility operators in Alabama are doing it through the Medicare Advantage plan they're offering long-stay residents. LeadingAge members in Ohio and Minnesota are doing it to bring scale and expertise to negotiations with managed care organizations.
In adopting a top-of-the-food chain mentality, SNFs need to remember that they are the post-acute care experts. SNF operators understand the population and they know where the opportunities for efficiencies are. One reason other conveners have been so successful in attracting hospitals to their programs is that hospitals have so many other priorities, and are not adept at post-acute care management. They are often relieved to delegate the function and especially if it means they get better overall performance out of it and a share of the savings.
Perhaps the biggest challenge of all will be a mindset shift from being a facility business that believes strongly in the value of SNF care, to a business that values overall post-acute care efficiency and quality, regardless of where a patient goes. So, to succeed as a convener, SNFs will have to divert some volume from their own buildings to home health. But that's happening anyway. At least in this situation, they have the option to be a disrupter rather than be disrupted, and then they can benefit from lowered overall episode costs.
Regardless of the challenges, I believe SNF operators need to take every opportunity they can to seek out and manage healthcare risk. It's the only way of guaranteeing a future. As hard as it sounds, this isn't a time to be cautious. It's a time to step up.
Anne Tumlinson is the CEO of Anne Tumlinson Innovations.