Since their advent into long term and post-acute care in 2012, accountable care organizations (ACOs) have started with a hospital system as the nucleus and partners taken from the skilled nursing and home health arenas.
But in the past few years, assisted living (AL) providers have made headway in seeking out opportunities to collaborate with ACOs, and in so doing have proven to be solid partners in coordinating care to patients and spending health care dollars wisely.
Lindsay Schwartz, PhD
“I think that ACOs are focusing more on long term/post-acute care because they realize that we are a key player,” says Lindsay Schwartz, PhD, senior director of workforce and quality improvement at the National Center for Assisted Living (NCAL). “I also think that, often, ACOs, like many hospitals and managed care, don’t understand the major types of long term care and what assisted living could bring to the table and really provide,” she says.
Indeed, AL providers that are participating with an ACO stress the need for education about the value that AL brings, including the lower cost of caring for residents and patients when compared with a skilled nursing setting. Training of nurses and consistent data collection are also key factors that help an AL community successfully participate.
With plenty to offer the short-stay patient, including a consistent, social connection and quality medical care, more AL communities can benefit by participating and sharing in savings with ACOs, where possible.

A Growing Phenomenon

The number of ACOs has increased rapidly over time, and future projections point to a continued increase. In March 2012, there were 157 ACOs, and in December 2015, there were 782. The number of lives covered by ACOs has also increased over time, with 7 million in March 2012 and 23 million in December 2015.

A December 2015 study from Leavitt Partners titled, “Projected Growth of Accountable Care Organizations,” forecast that the number of lives covered by ACOs could increase to 105 million by 2020, and under ideal conditions, the number could even rise to 176 million. These numbers are derived from a baseline scenario used in the study, which is one of four possible future scenarios to calculate how the ACO model is likely to grow. The baseline scenario is considered to be the most likely under current conditions.

The passage of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) has had a substantial impact on the projected growth of ACOs. The largest risk is the possibility that existing ACOs will have increasingly negative financial results.

In all four scenarios, the prevalence of ACOs increases, which lends confidence to the assumption that ACOs will continue to play an important role in health care delivery.

1. Baseline: The federal government continues to demonstrate strong support for the ACO model via MACRA and ongoing support for new ACO models, positive financial results will become increasingly common, and commercial payers will continue to move aggressively toward risk-based contracts.

2. This scenario is similar to the first, but assumes the MACRA was not passed.

3. An increasing number of ACOs will experience financial failure and either terminate or fail to renew their contracts, and commercial payers will also find these contracts unfavorable.

4. ACO growth accelerates greatly. Support from federal government and commercial payers is sustained, state governments are attracted to the cost-saving potential, and consumers will develop a preference for care from an ACO.

Location Plays A Role

When it comes to participating in an ACO, location matters. The Medicare Shares Savings Program (MSSP), a voluntary ACO program managed by the Centers for Medicare & Medicaid Services (CMS), currently includes more than 430 ACOs in 49 states and the District of Columbia, serving approximately 7.7 million Medicare beneficiaries.

The MSSP rewards ACOs that lower their growth in health care costs, while meeting performance standards on quality of care and putting patients first.

About 61 percent of MSSP ACOs are located in high-density-population areas of the country, meaning that 85 to 100 percent of the ACOs in those locations are in metro areas. More MSSP ACOs exist along the East Coast and in metropolitan areas of the country, such as Chicago, Atlanta, and Philadelphia.

While there could be many different possible types of arrangements between ALs and ACOs, much of that also depends on the local dynamics of the market. What is possible or likely in relation to AL/ACO arrangements in one area of the country may not be the case in another.

“Assisted living also has an opportunity to engage more meaningfully with Medicaid ACOs in states that have adopted the model and where the community can be reimbursed by Medicaid,” says James Michel, senior director of Medicare research and reimbursement at the American Health Care Association (AHCA).

“There’s also the Next Generation ACO model, which is another Medicare ACO model and demo under the Center for Medicare & Medicaid Innovation. This allows for more financial flexibility,” he says.

Currently, 18 ACOs in specific states participate in the Next Generation ACO model.

Changing Referral Patterns

Brookdale Senior Living, based in Brentwood, Tenn., operates 1,077 independent living, assisted living, dementia care, and continuing care retirement communities and 75 skilled centers in 47 states. Brookdale is currently partnering with approximately 50 ACOs in 11 states across the country. That participation rate has been consistently growing and is anticipated to continue.

Christian Lanham, vice president, business development and post-acute integration strategies, at Brookdale, says the company’s evolution toward multiple lines of service has given it a competitive advantage in the ACO space.

Christine Lanham“There seems to be a shift in hospital referral patterns since the Affordable Care Act [ACA],” says Lanham. “Inpatient discharges are going down, while observation stays are going up. The acuity scale is growing up the post-acute chain.  Higher-acuity patients are going to skilled settings while discharge patterns have shifted even more toward the home health environment for those patients that do not have major complications or comorbidities.”

Lanham says that individuals with major complications may be going to skilled settings, albeit for a short stay, and then going to a lower-cost setting.

In response to those changes in referral patterns, Brookdale began to focus on more than just skilled nursing, expanding its different care options all the way to private-duty nursing.

“We do know that the aim of CMS is to get Medicare beneficiaries into some type of a managed network, whether that be managed care, accountable care, or episodic payment models,” says Lanham. “So we have been preparing ourselves and positioning ourselves to manage that.”

The Value Of Assisted Living To ACOs

AL providers in the right locations with an interest in ACO participation look to have the odds in their favor.

“ACOs are looking for efficiency and fiscal responsibility in how they are managing patients to the next level of service. Transitioning the patient from a higher- to a lower-cost setting or service with a successful outcome is key,” says Lanham.

Lanham says there is real opportunity in the patient or resident staying with an AL provider for the short-term while in the transition from higher to lower acuity. Or, as is the case with some ACOs, she says, there is opportunity to have those in a rising risk population move permanently  to AL to both help manage that person’s overall Medicare spend and provide services to enhance their overall health and well-being.

“Assisted living has been a big advocate in that it reduces that overall Medicare spend,” says Lanham. “Those individuals who are very high-risk are very well taken care of in a lower-cost setting. And since they’ll be supervised and cared for in the AL environment, they’ll be less likely to bounce back to the hospital or be given duplicative services through multiple physician visits or diagnostic tests.”

The uniqueness of the AL setting, which emphasizes social interaction while delivering medical care, is another strength.

“Assisted living communities are looking more and more like geriatric care centers,” says Loretta Kaes, director of quality improvement and clinical services at the Health Care Association of New Jersey.

“In New Jersey, we’ve mastered the thin line between the medical model and the social model. That social benefit is what’s most therapeutic. We’ve had depressed individuals needing care come into our AL communities, and in a month or two, they are so happy that they are there, and they have someone they can talk to.”

Kaes says that modern-day families don’t always have the resources to help a loved one with daily activities around the clock, and that’s where AL can help.

“Those patients just needing some therapy sometimes can’t go home because they may not have a caregiver or a spouse that shops and cooks for them,” she says. “They can take advantage of a respite stay in an assisted living center. They’ll get the therapy and the nurse monitoring and assessment, and most likely they won’t go through depression because they are in the social setting.”

Kaes says that, along with the therapy that AL can offer, a patient would benefit by being with people in the same age group and life experience, by commiserating and enjoying life.

Lanham agrees. “The assisted living environment provides an alternative way to provide care and services to someone who may just need supervision for care, nutrition, meals, and wellness services,” she says. “More importantly, it’s a social opportunity.”

The New Jersey Experience

The Atlantic ACO, based in Morristown, N.J., is a hospital-owned entity supported by Atlantic Health System, a leading health care delivery system in New Jersey. It is the second-largest ACO in the country.

“It’s been a great model and convener in New Jersey,” says Kaes. Atlantic met individually with leading AL providers in the state, including Brookdale, Chelsea Senior Living, and Genesis HealthCare, to ask how they felt about ACO opportunities and what they would do to enhance care. From those meetings came the first intravenous therapy waiver, says Kaes. It was granted by the state to an AL that applied for short-term hydration.

“Think of what a bonus that would be to the people who are dehydrated,” says Kaes. “You can give them 1,000 CCs of hydration, and they are back on their feet. And they’re not having to go to the hospital; they’re not getting a urinary tract infection or delirium. They can get the treatment right in an AL center.

“You know what makes it perfect in our state, is that our regulations are so flexible,” she says. “If we can do it and have good outcomes and show that, anything is possible.”

Each state establishes and enforces its own licensing requirements for AL communities. States have different philosophies regarding the role of AL in the long term care spectrum, which results in varying degrees of flexibility for admission and discharge requirements and the scope of care that can be provided. This flexibility enables providers to innovate and test new models of housing, plus services that are responsive to local consumer demands and to partners like ACOs.

According to Kaes, some providers will have a slower start than others, depending on geography, but the important thing is for AL communities to get started.

“The bundled payments are still in their infancy,” she says. “Nothing has been established as protocol. Many places are piloting it to see if they can make it.

“There’s a strong case for assisted living. They’re going to have to invest in staff. That’s No. 1. They’re going to have to have nurses around the clock. A home health aide cannot do it. Many have already started that. More registered nurses are needed.”

Focus On Nurse Education And Training

One of the most successful attributes of a company or a stand-alone center in the ACO environment is to invest in the competency and skill set of nurses, Kaes says. There is value in supporting nurses by offering education, and it will pay back in dividends, she says, giving nurses the competency to later teach nurse assistants how to work with physicians at a level that they’ve never had to before, due to new demands from rising acuity.

This is also true of other settings in long term care, Kaes says. “Given that acuity is rising, the nurse has to function with the competency of an acute care nurse. Many of our nurses have been working for 20, 30, or 40 years, so they haven’t been exposed to the level of competency as is needed now.”

Providers should see a return on investment on their bottom line when the patients and residents consistently have good outcomes, Kaes says. “That will make the company a valuable commodity to ACOs, to bundled payments, and to the people themselves.”

It Takes Data

What most providers agree on for success in ACO participation is producing data. In skilled nursing, a level of data is already mandated for performance for reimbursement and surveys. The demand for data has been a newer area for AL but is now necessary to highlight successes and substantiate best practices in care.

“We always talk about ACOs and managed care organizations at the national level because they want data,” says Schwartz. “That’s how we build the case that it’s not just about the practice of collecting data, but other providers need to see how well you’re doing. ACOs typically have a list of data points and measures that they look at and want.”

These data points could include anything from hospital admissions, readmissions, staff stability, satisfaction, and turnover.

“If your staff turnover is really high or you have poor customer satisfaction, something’s up, and providers know that,” says Schwartz. “ACOs want to see those kind of measures, too. Turnover and satisfaction are two big measures that are directly related to quality.”

To start, providers recommend tracking not just the inpatient admissions, but anyone going to the emergency department or to the observation unit in the hospital. Then comes the follow-up.

According to Lanham, it takes circling back with the hospital or the ACO to talk about why they sent this individual back to the hospital, determine if it was preventable or not, and decide what will be done moving forward to not duplicate the process.

“In the end, a provider who can articulate what their processes are and how they monitor and manage the individual to the highest level of their ability will be successful, and they will help the patient thrive in that setting,” Lanham says.

Data were such a critical piece for Touchstone Mental Health that it made them part of its agreement with other providers in its request for proposal.

“In general, if an AL community is partnering with an insurance company or hospital system, [those systems] have access to a lot more data than the community does,” says Michelle Wincell O’Leary of Touchstone Mental Health.

“Part of our partnership agreement includes this—that we need to have access to that data as well.” 

Shared Risk, Shared Reward

In the ACO world where demands are to do more with less, AL providers that have multiple lines of service have an advantage with more coordinated care under their roof. But those with fewer lines of service can share in the rewards as well. Lanham says the key is proper alignment with other partners.

“Those companies have to be successful in putting together a virtual network,” she says. “They may not have all of the product lines—they’ll need to partner with those that do have them—but those are wonderful opportunities as well to provide a shared risk/shared reward partnership.”

So how are shared risk and shared losses calculated? Under current program regulations for Medicare ACOs, Medicare continues to pay individual ACO providers for covered items and services as it currently does under the Medicare fee-for-service payment system. CMS develops a cost benchmark for each ACO against which spending is measured to assess whether the ACO generated savings or losses for the Medicare program during a performance year.

ACOs that satisfy certain criteria, including meeting or exceeding a minimum savings rate, meeting minimum quality performance standards, and maintaining their eligibility to participate in the Shared Savings Program, are eligible to receive a portion of the savings they generate (the rest goes back to CMS). In addition, if an ACO has chosen to operate under a two-sided risk model, and it meets or exceeds a minimum loss rate, it must repay a portion of the losses it generates.

Looking Ahead

Given the likelihood that ACOs will continue to grow in the future, AL providers recommend looking at the current situation for opportunities.

“Definitely don’t wait,” Schwartz says. “If there’s an ACO in your area and you’re interested in working with them, you should approach them. But providers need to have that data. An ACO doesn’t want to hear you’re great; they want to see you’re great and see your work.”

Providers should continue to place emphasis on how they collaborate and how they form partnerships with each other and payer bodies under all these new payment structures, says O’Leary.

“Our partnering agencies already have an agreement with Blue Cross Blue Shield for an intensive care coordination project,” she says. “In the future, we’ll be looking into how we can come up with some innovative ideas to fund particular courses of treatment within assisted living.”

“There are two primary reasons why patients potentially go back to the hospital,” says Lanham. “No. 1 is that they don’t follow up with their physician, and No. 2 is that they don’t follow up by filling their prescriptions. That’s when they usually have a recurring episode or decline and eventually go back to the hospital. That in itself is a huge window of opportunity for an AL community to position itself as an advocate in the overall goal of ACOs.”