Although skilled nursing facility owners and operators complain about Medicare Advantage (MA) plans because they pay lower daily Medicare rates for shorter period of time than the traditional Medicare program,[1] they increasingly see a financial opportunity in operating their own MA plans, called Institutional Special Needs Plans (I-SNPs). Created by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003,[2] and later extended,[3] I-SNPs are a type of MA special needs plans (SNPs) intended for people who, for 90 days or more, need the level of care provided in a long-term care facility (a skilled nursing facility or nursing facility).[4]
Federal regulations and the Medicare Managed Care Manual provide little detail about I-SNPs. Greater protection for beneficiaries is needed, particularly in light of (1) the large and increasing number of enrollees in I-SNPs (96,972 in 271 separate I-SNPs, according to the Centers for Medicare & Medicaid Services),[5] (2) evidence identified by the Medicare Payment Advisory Commission (MedPAC) in 2013 that I-SNPs prescribe inappropriate medications at high rates and could be denying beneficiaries needed hospital care, and (3) the focus of the nursing home industry in operating and controlling I-SNPs.
MedPAC
In its most recent discussion of I-SNPs, in 2013, MedPAC supported permanent reauthorization of I-SNPs, but made two disturbing comments about the care provided by I-SNPs.[6]
First, MedPAC found that I-SNPs “have higher rates than regular MA plans for the use of potentially harmful drugs among the elderly and the use of drug combinations with potentially harmful interactions.”[7] MedPAC excused these higher rates of inappropriate drugs and drug combinations by noting “their higher rates of monitoring of persistently used drugs suggest that drugs with potential interactions or adverse effects are also being closely monitored.”[8] Close monitoring is not reassuring when residents continue to receive inappropriate drugs.
MedPAC’s only other comment is the note that I-SNPs have “fewer hospital readmissions than would be expected given the clinical severity of their enrollees.”[9] MedPAC then leaps to the conclusion that “I-SNPs’ performance in hospital readmissions rates is an important measure of whether they provide a more integrated delivery system.”[10] That conclusion is not necessarily true. I-SNPs may simply be denying hospitalization for residents who need to be hospitalized or they may not be paying for hospital care. MedPAC’s only support for its conclusion is the statement, without any supporting citation, that “I-SNPs attempt to reduce hospital and emergency department utilization through care management and by emphasizing the provision of primary care.”[11]
These observations by MedPAC about inappropriate medication use and fewer hospitalizations suggest that more beneficiary protection is needed, as discussed below.
Nursing homes’ interest in participating in I-SNPs for financial gain
I-SNPs are increasingly led and controlled by long-term care facilities. The American Health Care Association (AHCA) reports that “LTC provider-led I-SNPs grew to 36 percent of all I-SNPs in 2022, with almost one-third of the total number of I-SNP beneficiaries in LTC provider-led plans.”[12]
AHCA reported that provider-led I-SNPs increased from 52 of 57 I-SNPs in 2015 to 110 of 174 I-SNPs in 2021.[13]
These numbers reflect dramatic increases in provider-led I-SNPs. Between 2016 and 2018, the number of provider-led I-SNPs doubled from 12 to 24 and the number of enrollees in provider-led I-SNPs more than doubled from 5,014 to 12,488.[14]
AHCA describes forming a Population Health Management (PHM) Council in 2019 in order “to convene and support long LTC providers who are leading in PHM initiatives through advocacy, education, and quality improvement data.”[15] AHCA identifies four organizations – AllyAlign Health, American Health Plans, Longevity Health Plan, and PHHP – “whose sole or primary purpose is to partner with LTC providers to support LTC provider ownership interests in PHM models.”[16]
Nursing homes’ interest in operating I -SNPs is financial. On AHCA’s website, American Health Plans writes:
American Health Plans’ provider-owned I-SNPs allow nursing home owners and operators to take control of the LTC residents and realize 100 percent of the shared savings associated with execution of the model of care.[17]
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Facility level financial returns: 100 percent shared savings
For too long, the concept of risk-based reimbursement meant an upside to other providers and a downside for nursing home owners and operators. American Health Plans has changed that dynamic. Their members are your residents and 100 percent of the shared savings generated through great clinical results is paid to the nursing facilities. These are savings your facility has earned. American Health Plans ensures you keep them within the facility.
The piece concludes:
American Health Plans: control your future by controlling the Medicare premium
As nursing home owners themselves, American Health Partners appreciates the challenges of clinical resources and cash flow. However, their experience owning and operating Medicare Advantage Plans since the inception of the program in 2004 has allowed them to realize the clinical and financial power of controlling the Medicare premium for their nursing home residents. They want to partner with you to bring the clinical program and financial upside to your facilities as well.
MedPAC reported in March 2019 that I-SNPs in 2017 had average margins of 9.4% (14.1% in 2016) (compared to MA plans’ average margins of 2.7%).[18]
Center for Medicare Advocacy’s Concerns about I-SNPs
I-SNPs are Medicare Advantage plans, which means that they are responsible for all of the health care costs of their members that they cover. The I-SNP receives the full Medicare payment for plan enrollees and controls whether and how Medicare dollars are spent. The CEO of AllyAlign, a company that helps providers, including SNFs, implement provider-sponsored managed care plans, described the model in 2019: “The construct is to grab the [Medicare] premium dollar directly if you’re an LTC provider, and then manage in the best interests of the patient.”[19] When the I-SNP is owned by the nursing home, there is an inherent conflict of interest because the plan, acting as an insurer, can deny coverage of expensive care, such as care in its own skilled nursing facility.
In 2017, Kaiser Health News highlighted the conflict of interest in a report about an Erickson Living continuing care retirement community (CCRC) in Maryland, which had an I-SNP, called Erickson Advantage, solely for its community’s residents. Kaiser described a resident in the retirement community, who was sold an Erickson Advantage plan by an Erickson nurse. After the woman returned to the community from the hospital, the I-SNP limited, and then denied, Medicare coverage of her stay in the skilled nursing facility (SNF) part of the CCRC.[20] Although the Erickson Advantage plan reversed its noncoverage decision after being contacted by the reporter, Kaiser Health News described the experience of a second resident with an Erickson plan in Massachusetts, who similarly had her SNF coverage limited by the Erickson plan. After 11 days in the community’s SNF, the 98-year-old resident was charged a daily rate of $463 (later increased to $483) for her SNF stay. Kaiser reported that an administrative law judge upheld the Erickson plan’s determination that the woman’s SNF stay was not covered by Medicare, “based on the testimony from the nursing home staff – all Erickson employees.” At the time of the Kaiser article, the CCRC’s bill for the enrollee resident’s SNF stay was $30,000, and increasing daily.
March 16, 2023 – T. Edelman
[1] Kimberly Marselas, “As CMS tightens vise on MedicareAdvantage, providers argue for even more help,” McKnight’s Long-Term Care News (Feb. 15, 2023), https://www.mcknights.com/news/as-cms-tightens-vise-on-medicare-advantage-providers-argue-for-even-more-help/ (quoting comment letters from LeadingAge and American Health Care Association on proposed rules on MedicareAdvantage).
[2]Public Law 108-173, §231, 42 U.S.C. §1395w-21(a)(2)(A)(ii), 1395w-28(b)(6), 1395w-28(f)(2)
[3] CMS, “Special Needs Plans,” https://www.cms.gov/Medicare/Health-Plans/SpecialNeedsPlans; CMS, Medicare Managed Care Manual, Chapter 16-B: Special Needs Plans, https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/mc86c16b.pdf
[4] CMS, “Institutional Special Needs Plans (I-SNPs), https://www.cms.gov/Medicare/Health-Plans/SpecialNeedsPlans/I-SNP CMS, Medicare Managed Care Manual, Chapter 16-B: Special Needs Plans, §20.3, Institutional SNPs, https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/mc86c16b.pdf
[5] 87 Fed. Reg. 79452, 79566, 79567 (Dec. 27, 2022), CMS-4201-P, https://www.govinfo.gov/content/pkg/FR-2022-12-27/pdf/2022-26956.pdf
[6] MedPAC, Report to the Congress: Medicare Payment Policy, “Medicare Advantage special needs plans” (Chapter 14) (Mar. 2013), https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/chapter-14-medicare-advantage-special-needs-plans-march-2013-report-.pdf
[7] Id. 321
[8] Id.
[9] Id.
[10] Id.
[11] Id.
[12] AHCA, Long Term Care Provider-Led Special Needs Plans: A Solution for Accountable Care, https://www.ahcancal.org/Advocacy/IssueBriefs/Provider%20Led%20SNP%20Business%20Case%20One%20Pager_CB%202022_Final.pdf#search=I%2DSNP
[13] AHCA, Population Health Management, https://www.ahcancal.org/Reimbursement/Pages/Population-Health-Management.aspx
[14] Anne Tumlinson and Elizabeth Walsh, “Long-Term Care Providers Drive Growth in Special Medicare Advantage Plans,” Skilled Nursing News (Dec. 18, 2018), https://skillednursingnews.com/2018/12/long-term-care-providers-drive-growth-special-medicare-advantage-plans/
[15] AHCA, Population Health Management, https://www.ahcancal.org/Reimbursement/Pages/Population-Health-Management.aspx
[16] AHCA, Population Health Management, https://www.ahcancal.org/Reimbursement/Pages/Population-Health-Management.aspx
[17] AHCA, American Health Plans, https://www.ahcancal.org/Reimbursement/Documents/PHM/American%20Health%20Plans%20Overview.pdf#sea rch=I%2DSNP
[18] MedPAC, Report to the Congress: Medicare Payment Policy, 358, 357, respectively (Mar. 2019), https://www.m0dpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/mar19_medpac_ch13_sec.pdf
[19] Maggie Glynn, “AllyAlign CEO: I=SNPs Will Form ‘Permanent Pillar’ in Changing Skilled Nursing World,” Skilled Nursing News (Jan. 27, 2019), https://skillednursingnews.com/2019/01/allyalign-ceo-i-snps-will-form-permanent-pillar-in-changing-skilled-nursing-world/
[20] Jordan Rau, Kaiser Health News, “Nursing Homes Get Into the Insurance Business,” U.S. News & World Report (Jul. 12, 2017), https://www.usnews.com/news/healthcare-of-tomorrow/articles/2017-07-12/nursing-homes-get-into-the-insurance-business; also available at https://khn.org/news/nursing-homes-move-into-the-insurance-business/