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As the nursing care and assisted living sectors evolve, unique new opportunities exist for long term and post-acute care (LT/PAC) providers to capture a degree of value and control of their residents’ health and well-being by launching specialized Medicare Advantage (MA) plans, or Special Needs Plans (SNPs), for their long-stay residents.

The idea of a provider owning a MA plan—most often in the case of LT/PAC providers an Institutional-SNP, or I-SNP—is not fresh out of the oven as far as new ideas go, considering hospital systems have been active in the MA space for years. But, what is gaining traction is the nascent trend for skilled nursing and assisted living operators to offer SNPs.

Below are the stories of some of these pioneers that have become MA plan sponsors, alone or in collaboration with organizations prepared to not only adjust their business plan, but to transform their culture of care to embrace SNPs and all that entails.

Industry expectations foresee even more LT/PAC providers entering the MA SNP space in the coming years with their motivation likely not just some measure of financial incentive. The move is more about establishing quality improvement and care coordination efforts under the broader umbrella that is population health management, according to Tom Coble, president and chief executive officer (CEO) of Elmbrook Management Co. The organization owns and operates seven LTC and assisted living communities in southern Oklahoma.

A Sherpa-like guide for other nursing care providers looking into MA, Coble was one of the first to start a health plan from the LT/PAC universe. And, importantly to him, in doing so Elmbrook has tried to see the broader picture for what being a SNP means to overall resident care.

“I think if someone is just getting into this thinking they can make a lot of money, they probably just need to not do it,” Coble says. “But, if they are looking at an I-SNP as a way to improve their quality performance, their services in the building, and the quality of life for residents, then the model works.”

He says two other groups besides residents have been gratified by the MA plan experience in his buildings, and those are families and employees. “For the first time I think when you get an I-SNP in place, the staff feel empowered. They have the ability to really reach out and be proactive, and they don’t have to sit there and wait for a doctor to call back,” Coble says.

This is because of the role of the clinician in the I-SNP model, which is usually in the form of a nurse practitioner, who because of the way the MA program reimburses is able to be in the facility much more often than traditionally seen in nursing care and is on-call all the time. The enhanced care for plan members allows for better care coordination and works to reduce health issues before they become severe, he says.

Of course, like any venture outside of one’s comfort zone, there are challenges for a provider moving into the health insurance sector. Notably there is the task of meeting state insurance regulations; finding third-party insurance administrators to manage the back office, pay claims, and the like; and contracting with a reinsurer to handle any catastrophic claims.

There is also the need for capital—as start-up costs can be substantial—and other fundamental stress points to master, such as building out a provider network so plan members/residents have access to the primary and specialized clinicians promised.

Providers say these challenges can be overcome with the guidance of experienced peers who have already formed MA plans, by fellow provider collaborators, and by third-party insurance specialists like AllyAlign Health, American Health Partners, and Provider Partners Health Plan.

In addition, the assistance of industry advocates at the state and national level is now available, as in the case of the American Health Care Association/National Center for Assisted Living (AHCA/NCAL), which has made the topic a top priority with the 2019 launch of its Population Health Management Council. The stated goal of the council is to enhance quality of care and quality of life for beneficiaries in senior living settings by ensuring the sustainability of long term care provider-owned population health models through advocacy, education, and quality improvement data.

At its core, population health management is about bringing efficiencies to how patients are cared for, or in the case of SNPs, how long term care residents are managed in a person-centered, hands-on manner.

And, through the unique world of SNPs, specifically I-SNPs, Dual Eligible SNPs (D-SNPs), and Chronic Condition SNPs (C-SNPs), skilled nursing and assisted living operators are able to offer plan members an even higher level of coordinated care than was previously feasible. This is a result of the reimbursement system and administrative flexibilities available to MA as overseen by the Centers for Medicare & Medicaid Services (CMS).

To understand the terminology and way in which the SNP models can work for LT/PAC, Jill Sumner, vice president of population health management at AHCA/NCAL, tells Provider it is important to note that the regular MA plans must accept all beneficiaries who apply, versus SNPs that can limit enrollment to a subgroup of Medicare beneficiaries.

I-SNPs and I-SNP Equivalents may only enroll those who reside in a nursing facility, or are expected to reside in one for at least 90 days, or meet a nursing facility level of care but live in assisted living or the general community. C-SNPs are for those beneficiaries with a diagnosis of one or more CMS-approved conditions targeted by the plan, and D-SNPs are for those who qualify for both Medicare and Medicaid.

Under these arrangements, Sumner says, CMS delegates financial risk and responsibility for coverage of Part A, Part B, and Part D to a MA plan. Health plans can thus profit if plan members are as healthy as possible, by avoiding trips to the hospital through better care management and the use of a plan-paid physician’s assistant or nurse practitioner who is on-call and present in the facility much more often than in the course of traditional nursing care.

But, if care and administrative expenses are higher than the payout from the government, the downside risk comes into play and a health plan can lose money.

Sumner says the MA SNP program presents providers with a number of opportunities. And, it also brings the provider into the forefront of the movement throughout the health care system away from paying for quantity, or fee-for-service (FFS), and instead paying for value, or value-based care (VBC).

Becoming a health plan is the vehicle or platform for being able to modernize a FFS health care system that was born in 1965 to be a very different system today, she says.

“So, by owning the risk and taking that risk on behalf of CMS, you get flexibilities that allow for providers to practice in ways that make more sense for today’s population and give providers the ability to capture the value that they are creating through better care, efficiencies in care, and using data to drive decision making,” she says.

When LT/PAC providers start to explore the possibilities in MA, Sumner says they will need to identify not only what material changes lie ahead, but also the necessary changes in thinking that have to be accepted in how to care for their residents.

“For so many years our provider work has been focused on the individual, looking at people individually,” she says. “But, population health is really focused on looking at health from a broader perspective and using data to understand trends and disease burden and other aspects of health and applying interventions and measuring outcomes from those interventions.”

The organizations that have experience in doing this are health insurers, which allows them to manage large numbers of people, Sumner says.

“LT/PAC providers have not necessarily done that. We definitely track and trend certain things within our buildings, but looking at the population as a whole and understanding comprehensively what the needs are and being able to manage them across the continuum is not something that we have had an opportunity to do,” she says.

In the step-by-step process providers should follow in assessing whether to sponsor a plan, operators first must perform a very strong feasibility and readiness analysis. Sumner says some of the key aspects to look at are a facility’s health care capabilities, as higher quality performance usually contributes to more successful plan development.

“There also needs to be a strong leadership team with an ability to focus and inspire down to the frontline staff and have a commitment to integrating the aspects of population health management into the provider side of business,” Sumner says.

“This cannot be a side business [with] people on the provider staff looking at it and saying, ‘It’s the health plan, and that is somebody else’s job.’”

Once a provider is ready on their end, a decision needs to be made about taking on a partnership at some level, most likely led off by the hiring of a third party to handle the insurance back office and to help with health plan management. It also can be at an ownership level or as part of a consortium of providers banding together to raise capital and other financial commitments, Sumner says.

Examples of collaborations are seen across the country, including the Perennial Consortium spearheaded by Juniper Companies out of New Jersey starting business in 2021, which is a collaboration of providers working together to form health plans in multiple states.

But, providers say there are many insurance plan models and business arrangements to choose from when getting into the MA sector.

Consider that Alabama is home to a collaboration of 22 skilled nursing providers in the Simpra Advantage SNP; PruittHealth has its own PruittHealth Premier plan in Georgia, North Carolina, and South Carolina; and The Evangelical Lutheran Good Samaritan Society markets its Great Plains Medicare Advantage in Nebraska (with partner Sanford Health) and South Dakota.

What Sumner and the providers interviewed for this article have in common is that they all pointed to a nuts-and-bolts change that comes with being a health plan and operating a SNP, which is the aforementioned role of the nurse practitioner (or physician’s assistant), the hub of the wheel for the new care model.

“This has to be a good fit between the nurse practitioner and the community, and they have to figure out how to weave them into every aspect of what they are doing,” Sumner says. It is as basic as learning and unlearning who gets called when a resident has an issue after-hours, for example.

“Historically, the primary care physician has been the link, but now it is the nurse practitioner working in conjunction with the primary care physician. So, staff are getting that first call to the nurse practitioner to then assess the situation. This is one of the key processes that needs to be in place,” she says.

This access to a clinician in such a new way is where a facility can realize returns on investment by helping to bring down the number of avoidable emergency department visits and avoidable inpatient visits and also be able to take individuals back from the hospital earlier.

“Now that can result in significant savings that then accrue to you [provider] if you are the owner of the health plan or could accrue to somebody else if you are doing these things anyway but you are not the one paying for it,” Sumner says. It also gives a provider-owned SNP the ability to target benefits at their particular population and get residents things they need.

“For instance, think of dental coverage. Most health plans offer minimal benefits in this area, and if you need extractions and dentures you can build benefits around that in your MA plan, and in turn this has a huge effect on the overall health and well-being and nutrition for that resident.”

So, better management of a resident population, more flexibility, eliminating the three-day hospital stay since a facility can take the resident earlier with the advanced care of the MA plan, not sending residents to the hospital as often, all these things translate into savings and also translate into higher resident, family, and employee satisfaction.

“It takes a lot of work to send somebody out and then readmit them,” Sumner says.

What about cost? Since there are so many variations on how SNPs are designed, she is loath to give a standard amount but says ballpark a provider could spend $250,000 to get up and running with a smaller equity share to up to $3 million to $5 million to have the lion’s share of equity. “It depends on the model,” she says.

For Coble and his model, the lightning bolt of an idea to get involved in MA came years ago and out of a consistent effort since he got in the nursing care business in 1993 to get more services to long-stay residents. Even with the challenges of low Medicaid rates, for instance, Coble never stopped, as he says, “fiddling” with the notion of getting more care achieved in-house. 

“It was apparent we had the skills and ability to take care of them, but the payment system would not allow for it. Instead of being able to be proactive and preventative, we had to wait for our residents to be sick enough to be treated. That’s what started me down the road to MA SNPs,” he says.

Through owning a SNP, Coble says a provider is allowed to take care of people who reside in the local community as well as in the facility. “It is a way for you to have the skill set to take care of people in your facility. The three-day stay is waived so you are able to treat them in place without sending them to the hospital,” he says. “And, as you become better at that then it also allows you to start taking care of residents outside of your walls of the facility in the community where you might admit them directly to your facility from the home rather than going to the hospital as well.”

The reception to the health plan in Elmwood-owned facilities has been very good, he says. However, how fast the market penetration of a MA plan occurs can be hampered or aided by the overall state of MA in a given locale. Coble notes that his state of Oklahoma was behind the curve on MA adoption, and unlike in places like Oregon, there was a lot of learning required by consumers, company staff, and families.

Like Sumner, he says the vital role of the nurse practitioner cannot be overstated when it comes to fulfilling the promise of the SNP. 

“Most everyone that I know that has an I-SNP, they use nurse practitioners,” he says. The proactive way in which they work, setting benchmarks for plan members on their health status and their availability gives residents and families the reassurance that oftentimes a sick individual can be treated in place.

“And, families really like to interact with the nurse practitioner, and the ability of the nurse practitioner then to help them keep their loved one in the building rather than go to the hospital is very well received,” Coble says.

Another provider out in front in owning its own MA plan is Marquis Companies in Oregon.

Steve Fogg, chief financial officer for Marquis, tells Provider the main reason his family-held company decided to start AgeRight Advantage Health Plan was to improve the experience for residents. “And when I say improve the residents’ experience, I mean both kind of population subsets that we care for,” he says. 

Marquis characterizes its residents as either long-term livers who are going to be in a facility for the duration of their lives, or short-stay, those likely to be under care for between 15 to 30 days before discharging them home.

“Starting this insurance company in large part has helped us to start providing clinical services in our facilities. And by clinical services I mean physicians and nurse practitioners who are now employees of ours that prior to this we had never managed this way,” Fogg says. “We have a group of physicians and nurse practitioners who are in our facility on a daily basis providing services to both of these populations in our buildings.” 

One of the positive things about the I-SNP, he explains, is that the plan has in part provided the economics to be able to fund the in-facility, on-call clinicians. “The benefits we are getting from having nurse practitioners and physicians in our buildings on a daily basis are immense.”

Whenever there is a change of a resident’s condition, the clinicians are there and seeing that resident, tailoring their care plans and treatment based on their needs on an immediate basis, Fogg says. 

“They are communicating with family and other people within their care coordination process who are critical, and that time-sensitive communication has had tangible, positive effects on many of the outcomes we measure. Probably, the most important one being our [lower] hospital readmission rates,” he says.

Other areas that have shown positive results from owning the MA plan is to help the organization stand out in the marketplace, which can help improve occupancy levels, as well as to optimize value-based reimbursement systems, specifically on the Medicare side with the 2 percent value-based payment that providers can tap into from CMS.

“We have done pretty well as to how we came out on that value-based payment due to low readmission rates,” he says.

Membership rates in the MA plan for Marquis long-time livers is 68 percent, which represents the plan bearing fruit and marketing itself in some ways, Fogg notes.

“The largest benefit the resident sees is that they know the nurse practitioner or the physician is going to be available to them on an ongoing and consistent basis,” Fogg says.

“What is interesting is we found that a lot of residents who may not be members or our new admits to long-term living, they will see the care the nurse practitioner or the physician is providing and they get excited and want to be a part of that.”

There are of course strict regulations on how a provider can market its health plan to residents and their families. “Designated member advocates cannot meet with residents or families until that family or resident has signed a scope of appointment to allow someone to come in. CMS regulates it this way,” Fogg says.

For those providers thinking of getting into the payer side of the business, the foundation has to be set in the way the organization values quality care, he says.

“You have to have the ability to reach membership levels in your building in order to be able to carry out the key objectives of the plan. If you decide to start a plan and don’t have those traits in your organization [value culture and quality care], you are going to have a hard time building membership, and that will make it even more challenging,” Fogg says.

The reason Marquis formed its plan from the start “was because we knew that this plan could drive all of the positive outcomes and benefits to our facilities and residents,” he says. “While we have been viable [as an insurer], we have been about break even so far. The regulations don’t allow economics to be all that good in the insurance space.”

Another player in the provider-as-MA-plan movement is Garen Cox, president and CEO of Medicalodges, an organization founded in 1961 that currently operates 26 facilities in Kansas, Missouri, and Oklahoma.

The company has an ownership stake in an I-SNP called Kansas Security Select, which is marketed and operated along with three other LT/PAC providers, KS Health Advantage, Americare, Midwest Health, and Physicians Development Group. 

He says the four companies have a good collaborative relationship bent on enhancing the quality and good care of their residents.

Brought to the MA plan space in part by Tom Coble, the effort really gained steam in 2016 when the three partners came on board to share the costs and experience of such a new venture, Cox says.

The reaction to the plan among facility residents has been very positive, with nine buildings enrolled now and another eight coming on in the near future. “Right now, Medicalodges has the largest percentage of residents enrolled, at 167 from our nine facilities,” he says. “One thing that has been big on the mind of residents is therapy services. We listen to the needs of our people and have added the services of therapists.”

Of the many challenges, he cautions other LT/PAC providers to be prepared to meet all state requirements for starting an insurance company. “It is very intense at first in getting all the required regulations in order and the development of the insurance company, but follow the rules to the letter,” Cox says.

Overall, the business pressures on nursing care facilities and assisted living operators are as intense as ever, and as more providers look to MA as a possible way to bolster their overall quality performance and strengths as a value-based entity in the health care continuum, there are also pressures in the health plan world, too.

Coble, when asked about his gut feelings on the population health management initiatives in play now, says despite the presence of commercial health plans in MA and in the SNP markets, there is a great opportunity for LT/PAC providers and suggests operators at least explore the possibilities.

“For years we have been the low-cost, high-quality providers in the PAC arena, and everyone just kind of avoided us and let us stay on the sideline. But now as we start to see the continuum of care come together and consolidate, and the pressures on reimbursement, there is no one better positioned to respond to all of these challenges than skilled nursing,” he says.

“I think everyone needs to evaluate it for themselves. We need to move forward, even if those bears [the competition] may growl a little bit, it is a great opportunity for our industry.”