Managed Medicaid Poised To Threaten Skilled Nursing Facility Payments, Census

February 24, 2019, Maggie Flynn, Skilled Nursing News - Skilled nursing facilities are familiar with the headaches of dealing with managed Medicare.  But the rise of managed Medicaid could cause just as many headaches for providers — if not pose outright threats to their financial wellbeing according to a panel of experts at the National Investment Center for Senior Housing and Care (NIC) spring conference in San Diego last week.

The panel spoke on the opportunities and challenges for senior living and care that come with the rise of managed Medicaid.  Skilled nursing has primarily focused on Medicare, while assisted living facilities have paid very little attention to Medicaid, moderator Michael Torgan of Wigtown Consulting Group said.

“On the skilled side, we’ve had complete carnage on Medicare admissions,” Brian Cloch, chairman at Attuned Care and CEO of Transitional Care Management, said at the panel.  “Every hospital system we experience is sending 50% percent less discharges to SNFs and to home now.  I think that same sort of math is going to come into Medicaid managed care, is that you’re going to start seeing far fewer people coming into long-term care skilled nursing facilities.”

Medicaid covers about 62% of all nursing home residents nationwide, forming the backbone of reimbursements for patients who require long-term care beyond the 100 days covered by Medicare after an acute event.

There are significant opportunities that come with the rise of managed Medicaid, such as the ability to become part of home- and community-based programming, as well as repurposing space for new service, and a new revenue opportunity for assisted living.

The threats, meanwhile, are almost entirely to the skilled nursing environment, and they are significant, Torgan said.

“Medicaid was a stable base, and you relied on that to be your stable base.  But as you get competition for dollars in the home- and community-based environment, that becomes a question whether that base is stable,” he said, citing his experience as a skilled nursing provider for almost three decades.

The specific downsides for skilled nursing include the diversion of funds from institutional care, greater pressure to avoid premature admissions to SNFs and other brick-and-mortar care sites, and the erosion of dual-eligible nursing home census — residents who qualify for both Medicare and Medicaid.

There’s a significant need to have integrated Medicare and Medicaid products, Anne Tumlinson, the founder and CEO of Anne Tumlinson Innovations, said.  She noted that Massachusetts and Minnesota have successfully pulled this off for dual-eligibles, requiring insurance products for these two needs to be connected.  It’s a pressing issue, as dual-eligibles are the fastest-growing segment of the senior population, Torgan noted.

But for facilities, the move to managed Medicaid has come with an erosion of SNF Medicaid census.  In the early 1990s, Illinois created the “supportive living” program, an affordable assisted living program.  Cloch was involved in bringing that program to life, and its specific goal was to slow the growth of people moving into skilled nursing.

The result is roughly 15,000 people living in affordable assisted living in Illinois today, with about 150 communities open in the state, according to Cloch.  But when Cloch’s company, Pathway to Living, began, 50% to 60% percent of its residents were coming directly out of long-term SNFs, he said.

“As you can imagine, the skilled nursing industry was really against this whole Medicaid, affordable assisted living program,” he said.  “But it happened.  And the relevance of that is that it enabled the state to get a discount for skilled nursing.  So by moving people out of skilled nursing, the rate that we were getting in assisted living was set at 60% to 70% of what the nursing homes were getting. so the state was getting a guaranteed decrease in costs, and the resident was getting a much better living environment.”

In fact, in Illinois, managed care companies received a “bounty” for residents moved out of skilled nursing, Cloch said.

“The threat is if you’re in a state where Medicaid managed care is coming and you have a very low-acuity custodial population, you rest assured it’s going to get reduced,” he said.  “They’re going to come in, they’re going to get that bounty.  They’re going to try to build the community-based services in order to move people out of your buildings back into the community.”