Facing the mounting financial challenges of providing skilled care on their campuses, continuing care retirement communities should carefully weigh a variety of tactics and the particularities of local markets, a panel of experts advised Thursday.
Deciding how to approach providing long-term care or whether to begin withdrawing from the sector is “the biggest challenge for our CCRC clients,” according to panel moderator Fred Bentley, a managing director at healthcare consultant firm ATI Advisory.
The panel, which was hosted by ATI Advisory, highlighted the growing prevalence of Medicare Advantage as a key threat facing CCRCs.
In 2023, for the first time, more than half of Medicare beneficiaries were enrolled in MA. This “tipping point” has put pressure on CCRCs in terms of administrative overhead, authorizations and reimbursement, noted Phil Chuang, senior vice president of healthcare services at care provider HumanGood.
“The elephant in the room is Medicare Advantage,” Chuang said. “Operating under Medicare Advantage is challenging…. It’s one thing to get paid less, it’s another thing to have to also manage shorter stays… more work for the team, higher acuity in-house — it does make the business much more challenging.”
Providers typically receive 60% to 80% of what they would get from Medicare Fee-for-Service from MA, pointed out Nicole Fallon, vice president of integrated services and managed care at LeadingAge.
The panelists also noted the challenges CCRCs face from the staffing shortages and generally low Medicaid reimbursement rates faced by most nursing homes around the US. In response to all these pressures, some CCRCs have adapted by removing skilled nursing from their slate of offerings, with at least some success.
Regulatory help on the horizon?
The good news for providers is that the increased size of MA is forcing regulators and lawmakers to take it seriously, according to Fallon.
“In the short term, we’re starting to get some traction,” she told attendees. “The Office of Inspector General report from April 2022 helped point out that there are plans that are not approving services that should be approved. And both congressional leaders and regulatory leaders at [the Centers for Medicare & Medicaid Services] are starting to take notice.”
Fallon said that LeadingAge advocates are “moving the needle” on prior authorizations and coverage determinations in particular. Providers can hope to receive relief from regulators on those issues in 2024.
In the longer term, however, the issue of low MA payments will continue to be a problem until lawmakers catch up, according to Fallon.
Adapting to local markets
Ultimately, panelists agreed, there are no one-size-fits-all solutions for CCRCs operating skilled care units.
HumanGood facilities, for example, see MA enrollment rates that range from 20% to 70%, according to Chuang. Reimbursement rates also can vary significantly from state to state. Particularities like these could prompt some CCRCs to scale back on skilled nursing, while others may benefit more from staying the course or even expanding to take advantage of economies of scale.
“As the saying goes, ‘Healthcare is local,’” Chuang said. “You have to look at the markets you’re in. I don’t think there’s a global decision that you make based on, ‘We should be in’ or, ‘We should be out.’”
The panel put a spotlight on Lutheran Services Carolinas as a case study in how going against the grain can work if local circumstances align. Facing financial challenges in prior years, it expanded from three to nine locations offering skilled care — a decision which has helped them manage costs through scale for years, according to Ted Goins, the local providers’ president and CEO.
“North Carolina has fairly strong reimbursement, a migration of people in, it’s a business-friendly state,” Goins explained. “We said, ‘We either need to get bigger or get out.’ … We’ve been able to get enough scale and that’s what it’s all about.”
