Why SNF’s Must Evolve Their Multi-Payer Approach
So Many Payers, So Little Time.
The SNF industry and healthcare in general has historically adopted large changes slowly over time. The last several months and impact of the pandemic on SNF’s has changed all of that… Trends like telehealth and virtual care that just a year ago seemed far off in the future are now being accelerated into practice at a pace that would be difficult for any established industry to evolve. Reimbursement and revenue cycle are no exception – just not as often in the headlines. A decade ago, the revenue cycle was less complex. Medicare and Medicaid protocols were standard operating procedures for most providers and private pay was taken care of in advance. Today is a different world with growing complexity in the form of PDPM, Medicare Advantage, traditional Medicaid, Managed Medicaid and specialty plans like iSNPs (to name a few big buckets).
While the traditional payers, Medicare and Medicaid, continue to drive the bulk of revenue, both PDPM and the continual rise of Managed Care has drastically shifted our approach. Although many operators are seeing gains from PDPM, we are 18-months in and still seeing more than 50% of facilities leaving money on the table. Often in the form of avoidable mistakes like missing details or documentation to support depression, capturing NTAs/SLPs and comorbidities that are all typically buried in the loads of EHR or clinical data we have.
In what is already a challenging time, the rapid expansion of both Managed Medicare and Managed Medicaid plans has also complicated the revenue cycle process further. In 2021, there will be 40% more managed care plans than there were just two-years ago (2019). This means that each county will have more than 40 plans available for a beneficiary to participate in. Each plan has its own contract requirements and billing rules, and most are more prescriptive and rigorous than what the government requires. This increasing number and complexity of contracts can lead to a huge problem with contractual adjustments and bad debts. These are often triggered by issues ranging from minor documentation mistakes to providing services not authorized by payers — resulting in a denial of payment for a submitted claim.
And last but not least, State Medicaid which is a lot of rinse and repeat in many areas, but still for many operators represents the majority of the cases they see. States either follow a RUGs grouper (we’ll see if and/or when those change), a high/low flat rate model, a standard rate or have a Managed Medicaid program all presenting their own unique challenges especially for multi-state operators. We can discuss this on another post.
All in all, the days of a skilled nursing facility being able to succeed solely on processes from a simpler payment era are behind us.
How’d We Get Here?
Consumerism – As baby boomers have started evaluating their healthcare options, similar to most other industries, people want choices to pick from and control of their healthcare. That’s why you see 7,000 out of the 10,000 boomers that turn 65 every day choosing a Medicare Advantage plan. Many of these plans offer additional benefits such as dental coverage and allow consumers to “comparison-shop” different plans which is attractive to folks considering their options and fracturing the trend of simply enrolling in Med A at age 65.
Government Support – In addition to growing demand for choices and consumerism within healthcare, shifts in how the government has approached healthcare have equally altered the Payer landscape for SNF’s. While evolving to more value based payment models, the government has increasingly turned to the private sector to help drive efficiencies and improve outcomes in the form of legislation that widely expands the availability and benefits of MCO plans for both Medicare and state Medicaid. Largely this approach has been viewed as successful in the eyes of the government resulting in shorter lengths of stay (lower costs), reduced readmission rates and overall improved outcomes.
Payment Reform – The shift to PDPM has dominated the reimbursement landscape for the better part of the past few years but the shift to a value/condition based approach can be traced back to the IMPACT act in 2014. This piece of legislation paved the way for PDPM, the SNF VBP and has also been a catalyst for other reforms.
Old School Tactics – Historically when the volume of cases or complexity to reimbursement increases, SNF’s tend to look towards 1 or 2 “tried and true” options that are starting to show their age in the form of eating away at the bottom line. Whether it’s recruiting/hiring a team of experienced specialists, outsourcing to case management consultant groups, or trying to use Scrubbers that don’t provide proactive value to the bottom line, SNF operators can and should look to more proactive and cost-effective alternatives in technology and innovation that will only serve them further as the industry continues to recover from the pandemic.
Many SNF’s are operating in a vastly different reimbursement environment than a few years or even 12 months ago… The organizations that evolve and respond to these shifts in innovative and efficient ways will be positioned to thrive as the bounce back continues. We have already seen the investment in technology and innovation on the care side of the business payoff in helping operators respond to the pandemic. Smart operators will look to make those same investments in AI and technology to evolve with the times on the financial and reimbursement side as well.