By Alex
Spanko | February 16, 2021
The average U.S. nursing home has operated in a kind of survival
mode for the last year, with long-term goals around new clinical and
reimbursement models shoved aside to tackle the immediate and persistent
scourge of COVID-19.
That said, some facilities were still able to execute on
previously developed strategies to enter the world of Institutional Special
Needs Plans (I-SNPs), unique Medicare Advantage plans that cover long-term
residents of nursing homes and other communal residential facilities.
As chief development officer at American Health Plans, Hank
Watson has had a front-row seat to observe the pandemic’s effects on I-SNP
rollouts; the Franklin, Tenn.-based company develops the plans through
joint-venture partnerships with operators in nine states, while parent firm
American Health Partners also owns and operates nursing homes across the
Southeast.
Watson joined SNN’s “Rethink” podcast to discuss the impact of
the pandemic on the I-SNP model, and why both he and nursing home leaders still
see concrete clinical and financial benefits to serving as both operator and
insurer — with Medicare Advantage forming a rare bridge between the often
diametrically opposed worlds of fee-for-service and value-based reimbursements.
Excerpts from the interview, conducted late last month, are
published below; for the full episode, check out the full episode on Apple Podcasts, Google Play, or SoundCloud, and be sure to subscribe so you
never miss an episode.
How has
COVID-19 changed the I-SNP calculation for providers?
As you know better than anyone, COVID was the most impactful
event to have occurred to the nursing home industry, and continues to be. There
are obvious challenges for provider-owned I-SNPs in that environment — facility
access and census, clinical execution. All this is occurring in a relatively
new partnership, a joint venture arrangement among providers and American
Health Plans.
But I’d say despite those challenges of 2020, and continuing in
2021, with COVID and all the difficult moments, I would say the I-SNP model
certainly held. It’s certainly been our experience for each of our five 2020
I-SNP plans.
They all have their own story, but overall, the model held. And
what I mean by that is not just the CMS I-SNP model, and beyond the financial
arrangements and considerations — the joint venture and the operating model
that our partners at American Health have put together and put in place.
As a collective group, we were able to manage our
hospitalization rates at around 3.5%. We were able to pay shared savings across
our book of business at about a 25% clip over top of capitation. I think what
really highlighted the challenges of 2020 was that structure, that day-to-day
execution that was required to realize those results.
Obviously, we were executing in the most difficult
circumstances. But an I-SNP is really a coordinated dance between the
facilities, the operating partner, American Health in this example, but also
the care management entity as well.
When you get into an operating environment like 2020, it
stress-tests those relationships, and how that partnership is set up: Are the
facilities fully committed to executing the model of care? Is the care
management entity integrated with the plan in a way that it can be responsive
to the changing environments that we’re facing? Is the plan operations partner
willing and able to be creative and flexible with the realities that a facility
may be facing on any given day? And then is the joint venture itself set up to
ensure that everyone is thinking long-term, providing proper governance through
difficult patches and pulling their own weight?
Two examples. We had one plan at launch just prior to COVID
hitting. We had our trying days, for sure, but the organization that we
partnered with was well prepared. They had contracted I-SNPs previously in
their homes, so they trusted the clinical model, and knew there was a lot of
value being left on the table by not being a provider-owned arrangement.
They partnered with us, and they worked openly with our care
management entity to expand the program into their homes, and navigate the many
challenges that fell on us just two months into launching the plan. And the
result was: They were able to get some shared savings results out of it, and
we’re now looking to continue to grow and expand the membership and double that
this year.
Conversely, another plan of ours that was probably most impacted
— our collective plan was a lot of rollout of facilities, for a number of
reasons, was to occur in Q2. So obviously COVID delayed those rollouts, as
everybody was digesting the new realities around them, and that pushed back our
plans for scale by a good six to nine months. But the partnership remained
open, communicative. Everyone took it a day at a time, and we’re now executing
on that backlog of growth, looking to bring in additional partners and execute
on geographic expansion.
The model is there. The model works. It’s founded in a much more
improved model of care. But the partnership does need to be patient,
collaborative, transparent. Those are the nuances that are really important. We
spend a lot of time talking about facility economics, and the blocking and
tackling, but it is a partnership — and that part of it matters as much.
Let’s
say I’m an operator who’s still curious about I-SNPs after all we just saw over
the last year — what are the potential advantages to jumping in now, even with
all the uncertainty surrounding the sector?
The benefit of the I-SNP is: You’re ultimately getting to the
top of the food chain and controlling the Medicare dollar. So while it could be
a long-term strategy in terms of positioning your nursing home organization
higher up the food chain, and in terms of engagement in the health system and
your local market, on day one, you’re getting premium payment from CMS monthly.
You’re getting capitation to your facilities monthly, so the immediate cash
flow effect is positive.
Additionally, you are getting access to that model of care
immediately. There may be long-term strategic implications, but you’re not
taking a step back financially to go forward in this model, which is appealing,
and there is a cash flow component to this that is positive with capitation.
What we’re seeing in terms of folks looking at participation,
and new plan activity — despite all the challenges of 2020 and census pressures
and the like, the provider-owned I-SNP membership did grow entering 2021. I
think a lot of that new plan activity was momentum through pre-COVID
discussions and efforts, given the cycle that CMS requires.
But one of our new partners in Texas — a new market we’re in — a
real sharp CEO, at the moment the height of uncertainty in May and June, she
pointed out that she viewed COVID as evidence of the need for the I-SNP model
of care. She was doing everything she could clinically to manage these
residents in their home, which, of course, is the nursing home.
That said, as we’re looking into the future here in 2022, I
think what you’ll see [driving] a lot of activity is depth in the market. Take
American Health Plans, for example. We’re now in nine states, so an emphasis
will be creating depth in those states through filling out opportunities with
existing partners. Maybe your operations are in 40 counties, but you initially
go live in 20, so you have the opportunity to fill out that opportunity by
expanding geographically, and then also engaging new interested participants in
those markets.
That’s a tremendous advantage for a group that maybe is
operating, in this example, in Texas — rather than having to make a decision a
year and half out to begin to develop and operationalize through all the steps
required to launch an I-SNP, there’s one now operating in their market. And the
opportunity to engage and plug in, effectively day one, it cuts down on that
lag time to engage with the I-SNP and realize that economic and clinical
opportunity.
I think the other component that we’ll be focusing on, certainly
in those markets, is expansion of our product offerings: You can also expand
into an institutional equivalent setting, ALFs and the community and the like.
Then for the groups that are emerging, with the vaccinations and
a little relief — maybe just the need to look forward after 10 months of battling
day to day. Those conversations are focused on 2023 new plan opportunities, and
so there’s some time to get up to speed and create that strategic plan for
those organizations around a new plan.
Logistically,
how has the I-SNP rollout changed? Historically it’s been very hands-on,
between implementing new care strategies and marketing the plans to residents
and their families.
When we talk about I-SNPs with partners and potential partners,
the nursing home owners, what they’re seeking from the I-SNP is a vastly
improved model of care, the capitated cash flow, and the opportunity for shared
savings. To access those three things, the provider-owned I-SNP has to deal
with really two factors at a high level. We call it capital and execution.
What you’re asking about is the execution piece. On the capital
side … yes, you’ll need your $1.5 million, $2.5 million in statutory capital;
you’ll need a couple more million to get stuff stood up and get to scale. But
the syndication allows for a lot of flexibility from the nursing home side.
We’ve got partners in for less than $500,000 that are still realizing those
three goals of the I-SNP — the model of care, capitated cash flow, and shared
savings.
On the execution, that really boils down to enrollment and
hospitalization, if you had to summarize it. If you execute on those two
points, the rest will follow. But there’s a lot that goes into those factors,
and to your point around launching the program and marketing it — that’s where
we believe a very integrated model between sales, clinical field operations,
and back-office health plan operations is really beneficial.
I think as providers are continuing to look at this model, [the
questions have evolved from]: What is an I-SNP? To then: What’s the map on
capitation, relative to fee-for-service? The next step is: What’s the operating
model here?
So 2020, to your point, put a lot of stresses on that. But we
were able to navigate the move to virtual enrollment, navigate the move to
virtual facility education leading up to launch — and really ongoing facility
education, because you always have a new administrator, or you’re constantly
enrolling new admissions and educating the facility on that process. A medical
director inevitably will have questions about the program that you’ll be
addressing and wanting to collaborate with.
All those things, of course, move to a virtual environment. But
I think a program that had a comprehensive operational approach allowed for us
to pivot and make that work, so that the end result — the last step of the
enrollment process, talking to the resident or the POA — didn’t change in terms
of 80% uptake when you get to that point.
Of course, the challenge was getting to that point through
facility education and virtual engagement of those residents and the POAs. But
we’re able to navigate that through a comprehensive and clinical effort between
operations, the care management team, and the sales team.
Let’s
drill down on the clinical piece of this, because I feel like most of the
attention centers on controlling the Medicare dollar. What are some of the
challenges and benefits of establishing the clinical component of the I-SNP
model?
The clinical team has to be on the same page. This whole
provider-owned model contemplates the nursing home being fully invested and
having skin in the game, the operating partner being fully invested in having
skin in the game. But what often gets left out is the care management piece.
If that is fragmented and cobbled together, for lack of a better
term, through whatever’s in place already — or “let’s go find somebody in that
local market that can can fill this void” — that model of care execution is
where the rubber meets the road. All the conversations around capital, and
shared savings, and enrollment — enrollment is driven by the model of care. If
that’s not happening, you’ll feel that in all those different places.
For us, the only way to ensure that that is all aligned
operationally, and with the facilities, is for that to be affiliated with the
joint venture between the nursing homes and the I-SNP partner, American Health
Plans in this example. We have an entity called TruHealth. They do a wonderful
job; their entire focus is to execute the model of care on behalf of this I-SNP
joint venture.
That’s what they do every day: They work with the field
operations team every day, they work with the facility folks every day to that
end — so they’re not walking room to room, trying to put on a fee-for-service
hat, taking that off, [putting on a] care management hat and trying to navigate
different models. The whole idea here is to strip away the challenges of a
fee-for-service environment, and the need for a nurse practitioner, RN model
that requires 15, 16, 17 visits a day to a model that is intensely focused on the
needs of the resident-member in the model of care.
If they need to sit with that member for two hours, that’s what
they’ll do, and that’s what leads to the proactive care — and ultimately, the
prevention of hospitalizations, ownership of calls on weekends, and doing it in
a way that’s collaborative with the facility, collaborative with the facility’s
medical director and the existing clinical team in place.
That’s the execution. That’s the magic of this model, and that’s
where you have to have everybody fully invested. That’s why we put so much
emphasis on that component of this, because nothing else works if you’re not
executing at the bedside.
I hear
from operators and analysts all the time about that tension between
fee-for-service and value-based care — everyone knows payers are moving toward
the latter, but with so many other near-term stresses, it can be hard to not
focus your energy on succeeding in the current FFS world. Do you think we’ll
look back and say COVID was the spark that finally pushed everyone into value
for good?
I think the short answer is absolutely.
As an industry, we talk about provider-owned I-SNPs and I-SNPs a
lot, and what gets lost in that is: What we are is a Medicare Advantage plan,
and that’s a good thing. Medicare Advantage is value-based care. It is solid
and growing. It is bipartisan. It’s going to be 50% of all seniors in America
soon.
A lot of the uncertainty, I believe, in value-based care comes
from programs that are partial solutions, or fragmented, or could go away or
evolve over time. This is solid; this is top-of-the-food-chain, first-dollar
premium from CMS. There’s nowhere else to go beyond this in terms of resources.
So when we’re talking about components of value-based care,
we’re always talking about reaching into this premium dollar. What the I-SNP
Medicare Advantage plan does is it puts the premium dollar in the nursing home
owners’ hands. That’s it; that’s the entirety of it.
Now it’s on the owners, and on American Health Plans as their
partners, to execute. I had the benefit of listening to some of your other
podcasts, and you bring up some good points about the mirage of value-based
care — and that goes away when you are controlling the premium dollar. It is on
you to execute.
We talked about the model of care and investing at the bedside —
that’s the choice we’re making in our health plans, to execute a model of care
that reinvests that premium dollar at the bedside. But you’re the Medicare
Advantage plan; you make those decisions. We think that’s the best use of that
capital and the best return for our members and residents clinically, and for
the facilities to get the shared savings.
But ultimately, you’re in control, and everything else is
building towards that. The direct contracting model is an effort to replicate
that in the fee-for-service environment, but ultimately, they’re building
toward a situation where: Here’s the premium. Provider, it’s on you, and you
can keep the shared savings if you are able to execute.
But at that point, the common conversation you have as nursing
home owners — and we’ve had it ourselves with our 29 facilities — is: “If we
had the resources, dot dot dot.”
This is it. These are all the resources. This is a full Medicare
premium to work with.
So I think this is where things are building toward. I think the
model that the industry has created, the nursing home owners have created, with
this provider-owned I-SNP is a good one to mitigate some of the capital
concerns, and to provide a model that can execute on this and keep the value in
the nursing facilities. Is it challenging? Absolutely. But you’re in the game
long-term if you’re a Medicare Advantage plan.
Regardless of what comes down the pipe next — which nobody knows
over the next two, five, six, 10 years — you’re in the game if you’re
controlling the premium dollar for your residents.
Folks in health care are always trying to find that pocket of
residents or patients who are high-need and largely unmanaged, and when that
occurs, vendors flow to that space to offer that solution of care management to
the Medicare Advantage plans or to CMS. Nursing home owners are sitting on a
million of those folks in their long-term care beds, and if nursing home owners
and their partners like American Health Plans don’t manage that situation to
their benefit and the residents’ benefit, someone else is going to eventually.
This interview has been condensed and edited for clarity.
Alex
Spanko covers the skilled
nursing industry for Aging Media Network, with a particular focus on the
intersection of finance and policy. Outside of work, he reads nonfiction,
experiments in the kitchen, enjoys pretty much any type of whiskey or scotch,
and yells at Mets games from his couch — often all at once.
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