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Post-Acute Providers and Narrow Networks: Join, Form or Wait

As alternative payment models expand and the options clarify, the post-acute segment of the health care spectrum faces a series of strategic questions, primarily;

  1. Join a network that exists or is forming be it part of an ACO, a SNP, a preferred provider organization in a Managed Medicaid state, or part of a bundled payment initiative
  2. Form one de novo – a SNP, a PACE, etc.
  3. Wait and see what evolves as certainly, much will change over the next two to four years.

One consideration that cannot be overlooked is that CMS plans on aggressively pursuing additional “value-based payments” at the expense of fee-for-service arrangements presently in-place.  The process, if consistent with what has occurred in terms of roll-out/roll-forward, suggests a pace that will include new initiatives (e.g., bundled payments) every 12 months. Simultaneous or parallel to this movement, states continue to push forward on various hybrid Medicaid options including managed Medicaid plans, hybrid plans for dual eligible individuals, and the encouragement of more SNP and PACE options with some states offering incentives for formation (PACE Innovation Act allows for different program options with different benefit structures across more population categories.  Also provides program opportunities for for-profit organizations).

The question oft asked these days is given the above, where to next for an SNF, a HHA, or even an ALF or Hospice? The answer starts with the market area and the dynamics within the market.  The trends I see are truly unique and different region to region, market to market, state to state. For example, in certain states and regions, ACOs exist, are up and running, and have experience under their “belt”.  In other states, ACOs are just forming or in some cases, re-forming post a distasteful experience and opportunities are fresh.  In still other states, ACOs don’t exist and perhaps trial balloons have floated but nothing has persisted to conclusion.

The market factors that drive (majority of) network formation and thus, the maturity of the formation, the opportunities and the palate for additional or new ventures are;

  • How much “managed” Medicare and Medicaid exists in the state, region, etc. and for how long.  In markets with a large penetration of Medicare Choice plans, narrow networks and the experience and acceptance between providers is greater.
  • Are ACOs up and running and/or forming.  The more they are or are developing, the greater the interest in and opportunity for, network enhancement and development
  • The market experience with early-phase, bundled payments via BPCI – the precursor to the current bundled payment initiatives.  Similarly, whether the region is participating in the CCJR initiative or will in the new cardiac bundled payments.

No matter the dynamics of the market however, certainty does exist that post-acute providers must move to adapt to a value- based payment paradigm.  How much risk a provider can and will accept depends on the provider, its existing care management acumen, its infrastructure maturity and its financial/capital position.  Similarly, the evolution period that predominates the post-acute world now requires balance.  This period is still fee-for-service heavy yet, transitioning (depending on regions, markets) to value-based payments.  Providers must manage and excel at both though strategies to succeed in  both are not mutually exclusive.  Additionally, while payments are evolving, the compliance requirements are not.  Oddly enough, the forthcoming revised Federal Conditions of Participation for SNFs will not in any way, provide accommodation for providers that work heavily in a transitional, post-acute world.  The regulations are long-term care driven and heavily so in some cases wholly anathema to the transitional care world that is evolving.

Assumptively, this episode of care, value-based payment world is not going away.  What this means is that survival in such a world for any post-acute provider is to avoid reactive strategy (defensive), instead applying resources and energy in the direction of the change.  What I advise, before I answer the questions posed in the title, is as follows;

  • Know your market and critically evaluate the landscape.  What is going on in terms of Medicare Advantage plans, ACOs, etc.?  If not done, have an in-depth conversation with hospital and physician referral partners regarding their approaches, strategies, etc. to  bundled payments.  Don’t  be surprised however, if a level of vapor-lock exists.   Be willing to forebear the task and direct some additional dialogue.
  • Assess your organization critically.  Where are your quality ratings and measures (stars, etc.)?  How does your organization manage its lengths of stay, key quality measures (falls, hospitalizations, wounds, patient satisfaction, etc.)?  Where is your HIS/MIS at?  Can you communicate with other providers, provide physicians access, etc.?
  • Can your organization make investments financially in infrastructure and staff realignment while still caring for a payer mix that is predominantly fee-for-service?  Can you survive lower margins perhaps even losses while you transition?  You may have extra staff temporarily, different staff, and more capital investment than typical.
  • Can you laterally partner or downstream?  For example, an SNF needs to find a HHA partner.  What synergies in the market exist?  Can (or will or already is) the SNF be in the HHA  business?  How about outpatient?  How about physicians?  Partner?  Employ? Joint venture (careful here)?

Concluding: To the questions(s) posed in the title.  Join?  Yes, particularly if the provider is single site or limited sites in a region.  Again, I am assuming the provider is prepared to join (I’ll summarize at the end).  Source complimentary networks and get in and watch for opportunities in the market and within the network to develop additional product/service lines.

Form?  Not unless the provider has mass, expertise and enough geographic span and parallel partner alignment to manage a population of at-risk individuals for capitated payments.  This is a step that requires significant infrastructure and capital.  A provider must have enough outlets and partners to manage population risk across a group exceeding normally, 10,000 lives (ideally larger).  The common network models applicable for post-acute providers looking to form their own network are SNPs and PACE programs.

Wait?  I can’t recommend waiting as doing so will leave any provider at peril of being left-out as networks continue to evolve.  This said, a play cautiously strategy is fine provided that the provider or group is diligent and active in gauging networks and negotiating.  A wholesale “wait and see what happens” is an ill-advised strategy.

Final Note: By prepared to join a network I mean minimally, having the following pieces with experience and data as applicable.

  • Ratings at 3 Stars or better – ideally 4 or higher particularly in markets where multiple 4 star or better providers exist.
  • A great QAPI program that monitors outcomes and tracks and trends quality data and quality measures plus patient satisfaction.  Minimally, the provider should have data and analysis on infections, falls, wounds, hospitalizations, response times, other care transitions, length of stay, etc.
  • A procedure and personnel to care manage referrals through a full episode of care.
  • A process of sharing quality data and communication on patient care and service issues across provider segments.
  • HIS/MIS at a level that allows certain functional connectivity between providers such as lab/diagnostics, hospital, physicians, pharmacy, etc. such that patient information can be communicated and acted upon.
  • Parallel service partners (either owned or contracted with) across, up and down stream – physicians, hospitals, pharmacy, HHA, hospice, outpatient, etc.
  • Care algorithms to support best practices for outcomes on key patient profiles (minimally, bundled payments) plus supportive protocols for key co-morbidities such as COPD, CHF, diabetes, peripheral vascular disease, depression, and other source acquired pressure injuries and infections.  The latter are necessary to minimize re-hospitalization risk.
  • Care staff trained and using INTERACT tools and versed in physician communication protocols, ideally from a source such as AMDA.

September 14, 2016 Posted by | Home Health, Skilled Nursing | , , , , , , , , , , , , , | 1 Comment