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Senior Housing > Blog > 2014 > August


As more beneficiaries enroll in Medicare Advantage and as more states look to rein in costs through expansion of Medicaid managed care, post acute providers such as skilled nursing homes are facing the kind of managed care growing pains hospitals experienced in the 1990’s.  The goal of managed care is to reduce costs, increase efficiency and provide health benefits which improve the quality of care.  The demands, regulations and overall confusion in the plans in many instances have caused the goals to be only a THWARTED GOOD INTENTION

There are three types of Managed care plans,   Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO), and Point of Service Plans (POS).  Each plan has different regulations which can affect the kind and quality of care given, exclusions not covered, services allowed, time of stay, and amount of reimbursement.  The Skilled Nursing Facility admits all types of beneficiaries with different plans and to meet the goal of quality of care and also low cost, the admitting office must be versed in the details of all plans.  The requirements for everything from revenue codes and modifier codes to HCPS codes can vary widely between companies and plans.  NO WONDER THERE IS CONFUSION!

Skilled Nursing facilities must become adept at contracting with health maintenance organizations.  It has been reported that it is advisable for a SNF to hire a managed care coordinator.  For example, one crucial facet of managed care contracts is exclusions.  Certain items such as pricey  medications,   can be excluded from the per-diem rate that will be paid to the Skilled Nursing facility by the managed care plan.  A nursing home that negotiates smart exclusions will therefore have a greater ability to care for high-acuity patients and therefore can bill for excluded meds or services and receive the proper reimbursement.

The growth in managed care is likely to change cash flow for a Skilled Nursing Facility.  HMO’s typically reimburse more slowly than traditional Medicare.  Certain providers in California have been forced to take out lines of credit just to meet payroll.

Skilled Nursing Facilities are at a precipice, where they must improve their quality of care and relationships with acute care providers to survive.   Many have failed to do so and account for many troubled SNFs seeking protection of Chapter 11 in the Bankruptcy court.   Quality measurements are transforming the way healthcare plans think.   Skilled Nursing facilities have an excellent opportunity  to show that they are the best at post-acute care.  Despite consolidation in the healthcare industry, small or independently-owned skilled nursing facilities still have chances for success with managed care plans,  if they are willing to  change their business model.  They can GROW-UP.  Isn’t that what GROWING PAINS ARE ALL ABOUT!


The affordable Care Act (ACA) was designed to improve care and streamline service delivery for dual eligibles effecting millions of low-income seniors enrolled in both Medicare and Medicaid program.  The ACA presents an array of new and enhanced options to improve care for dual eligibles through better care integration, improved quality measures, and increased access to home and community based long term services and supports.  Plans often called “dual or “dual eligible” are designed for people who qualify for both Medicare and Medicaid at the same time.  These plans include all Medicare Part A (hospital stay) and part B (doctor visit) benefits and Part D prescription drug coverage. For senior with limited incomes these plans may offer better health care coverage than Original Medicare and a separate Part D plan.

The two separate funding streams of Medicare and Medicaid, and the different payment rates and coverage rules within them, create CONFLICTING FINANCIAL INCENTIVES for the federal and state governments and for all health care providers, particularly SKILLED NURSING PROVIDERS.  One of the primary problems plaguing the nursing home industry is Medicaid reimbursements, both the dollar amount and the timing.  Medicaid is the primary source of revenue within the skilled nursing industry. Consequently, any reductions in Medicaid reimbursements or delays in payment will have a dramatic effect on a skilled nursing facility’s financial performance.   Dual eligibles who have been cared for under Medicare may be transferred to a Skilled Nursing Facility to receive care under Medicaid which reduces State and Federal cost.  Dual eligibles are poorer and have greater health needs than Medicare beneficiaries.  Dual Eligibles are also more likely to be disabled, and suffer from chronic health conditions, such as diabetes, chronic lung disease, and Alzheimer’s disease.  The cost to the skilled nursing provider caring for the dual eligible can be much higher than the Medicaid reimbursement.

It is reported that the Medicare and Medicaid dual-eligible beneficiaries use more medical care and experience worse health outcomes than Medicare-only beneficiaries.  Inefficiency in the skilled nursing facility (SNF) admission process is partially matched based on dual-eligibility status.  Dual eligibles are more likely to be discharged from the hospital to SNF’s with low nurse-to-patient ratios and more likely to become long-stay nursing home residents with Medicaid reimbursement which doesn’t cover their cost of care.  Therefore the dual eligible receives MINIMAL CARE and the skilled nursing facility’s BOTTOM LINE IS RED.

LIGHT AT THE END OF THE TUNNEL:  The new Medicare-Medicaid Coordination Office created by the Affordable Care Act is now working closely with another new group within CMS, the Center for Medicare and Medicaid Innovation to develop new approaches to improve care for dual eligibles.  The new office has also identified opportunities to reduce conflicting requirements between the two programs, including reducing or eliminating differences under Medicare and Medicaid in coverage of many services only covered by Medicaid.  Hopefully their efforts will produce better care for the dual eligible and a BLACK BOTTOM LINE for the struggling skilled nursing