LTC Provider-Led I-SNPs Increase by 38% in Plan Year 2021

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ATIInsights
11/10/2020
AUTHOR – ATI Advisory

While traditional insurance companies sponsor most Medicare Advantage (MA) plans, a growing number of long-term care (LTC) providers—nursing and assisted living facilities—are forming health plans, using special needs plan (SNP) authority under the MA program to focus enrollment on their residents. These mostly institutional special needs plans (I-SNPs) give LTC providers a rare opportunity to participate directly in managing population health and operate under value-based contracts.

Despite the challenges of managing institutional and high-risk populations during the COVID-19 pandemic, provider organizations continue to see benefits in plan formation for better financial alignment and integration of primary care.

CONTINUED GROWTH IN LTC PROVIDER-LED SNPS IN 2021

New data on plan year 2021 show that the market continues to embrace these provider-led plans: LTC provider-led SNPs (all types) increased from 76 plans in 2020 to 98 plans in 2021.

Continued growth in LTC provider-led I-SNPs[1] is unmistakable: LTC provider-led I-SNPs grew from 9 percent of all I-SNPs offered in 2015 to 37 percent in 2021. This means that in the I-SNP market, growth of LTC provider-led I-SNPs is outpacing growth in insurer-led I-SNPs.

There are three new provider organizations offering SNPs in 2021: Perennial Consortium, CommuniCare, and Los Angeles Jewish Home for the Aging.

WHY WE’RE SEEING PROVIDERS FORM SNPS

There are both clinical and economic benefits to Medicare of contracting for full healthcare risk with these providers. The financial alignment of this arrangement integrates health and long-term services and supports (LTSS) with the care and quality management programs associated with an MA plan.

While Medicare has been shifting from fee-for-service (FFS) to value-based payment, an increasing portion of the Medicare population has been choosing MA over traditional FFS. Nursing facilities have largely been frustrated in their attempts to participate in the major FFS demonstrations and report significant resistance from MA organizations in negotiating value-based contracts that would reward investments in new clinical and care transitions capabilities.

Nursing facilities also recognize that their long-stay residents are frailer and more clinically complex than ever before. Caring for them requires tools and capabilities that are hard to finance through Medicaid rates that largely reflect a custodial model. The ownership of risk for total cost of healthcare gives nursing facilities the ability to deploy healthcare dollars into services that have long been poorly resourced; these services include care management, onsite primary care from NPs, and technology. Savings they generate in reduced hospitalizations and emergency room (ER) visits can then be driven back into the facility care through value-based contracts and gainsharing with the plan.

HOW COVID-19 WILL AFFECT PROVIDER-LED SNPS

While most MA plans are experiencing strong financial performance due to a drop in healthcare utilization, provider-led I-SNPs face a tougher road. Their headwinds include a combination of small plan enrollment and high vulnerability of the enrolled population as a result of congregate living and frailty. Deaths and hospitalizations due to COVID-19 will be much higher as a percent of their overall membership and medical spend than a traditional MA plan.

At the same time, these plans are funding integrated onsite nurse practitioners and care management that greatly enhance the ability of nursing homes to respond to the pandemic. The primary care providers enable nursing homes to skill in place, thereby helping to alleviate hospital capacity constraints during local COVID-19 surges. For senior living providers – such as the organizations that form the Perennial Consortium – onsite integrated healthcare services can make a big difference in getting residents the care they need.

ATI is pleased to see two of its clients among the three new provider organizations offering SNPs in 2021.

[1] ATI defines LTC provider-led plans as those where the LTC provider—a nursing facility, independent or assisted living facility, home health agency, or PACE organization—has some investment and ownership in the legal entity and holds the contract with Centers for Medicare & Medicaid Services (CMS). In some cases, a LTC provider has no investment or ownership in the plan but, nevertheless, takes significant levels of healthcare risk under value-based contracts with plans in the “insurer-led” category.

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