America’s nursing homes are at a crossroads. Operators are challenged by a history of insufficient funding under the Medicaid program and eroding Medicare payments. Coupled with long-term care facilities being ground zero for the COVID pandemic and the public being reticent to place their elderly parent in such a facility, skilled nursing homes are facing an uphill battle. It is time to rethink the structure of the senior care industry in the U.S.
The partnership between government and nursing home operators is failing. The Biden administration has called for improved quality and better outcomes from the long-term care operators across the country, but with decreased funding from programs like Medicaid and Medicare and high levels of preventable readmissions of these senior patients to hospitals, costing payors and patients an additional $10+ billion annually, we are left with a system crying out for help.
The incentives in the long-term care system are wrong. Increased length of stay and increased volumes are rewarded, while quality and positive patient outcomes receive much less attention. While there are annual inspections by health departments, absent the right positive incentives, operators risk fines and forced closures. Instead of rewarding providers for high quality and positive outcomes, regulatory bodies are focused on punishment.
It’s time for a new way to fund long-term care facilities. There are several major changes needed, including:
1. Reshaping reimbursement to include significant positive and negative financial incentives. Fifty percent of payments by both Medicare and Medicaid should be based on measures of quality. Value-based incentives motivate providers and insurers to deliver high-quality care that keeps residents healthier and reduces unnecessary services. Lengths of stay, hospital admissions, vaccination numbers and changes in patients’ status are easily tracked. Operators aren’t naive. When their lifeblood is based on outcomes, they will perform to the test.
2. Requiring every facility to participate in an integrated care management and data mining program. Data mining of the patient medical records is efficient and yields “interventional moments.” Understaffed nursing facilities lack the personnel to read every chart and every piece of data therein. Modern data mining solves that issue.
Once the interventional moments are identified, modern programs feed that information to centrally located care managers, who then interact with nursing staff. The care managers inform the nurses and offer standard protocols to solve the issue, thus providing a higher level of quality patient care.
Forward-thinking Accountable Care Organizations (ACOs) have used these programs to reduce admissions from nursing homes to hospitals by 20-70%. The state of Maryland funded a two-county program that reduced admissions by 20-30% and reduced the total cost of care by 6%.
Maryland then became the first state to fund the creation of a statewide IT backbone and care management system to allow the expansion of this program. The program cost $4 million, but if the goals of lower length of stay and lower hospitalization are met, the savings will be at least $200 million yearly. In addition to the financial advantages, it is clearly better care.
3. Send patients to lower levels of care in partnership with the operators. Many patients in nursing homes could be cared for in lower-cost settings such as assisted living facilities or with home health care. States need to create programs that share savings with nursing home operators when they identify patients that can be moved down the continuum. Some operators may even build new assisted living facilities or repurpose units of current facilities, saving millions just as baby boomers enter the system.
4. Last but certainly not least, share the savings. If operators are incented right, there will be $10-15 billion in savings nationally or approximately $500,000 per facility. By sharing this revenue with the operators who perform well, they in turn can utilize the money for appropriate staffing levels to improve care.
The bottom line is that the system needs to change. Improved quality of care is the best way to reduce costs while effectively and efficiently delivering on the administration’s goals. Better care lowers hospitalizations which are a major driver of cost. If we start to incentivize quality of care and not just volumes, we can help guarantee that the 1.3 million people living in more than 15,000 nursing homes receive the care they deserve.
Scott Rifkin, MD, is the founder of Real Time Medical Systems and Provider Partners Health Plan and career-long healthcare entrepreneur focused on improving the health of vulnerable seniors in skilled nursing facilities.
The opinions expressed in McKnight’s Long-Term Care News guest submissions are the author’s and are not necessarily those of McKnight’s Long-Term Care News or its editors.