Marketing Dynamics

In my last article I discussed the second of three necessary steps to ensure you get “invited” to join the ACO of your choice in order to protect your Medicare referrals. (Click Here to view)  The third necessary step to protecting your Medicare referrals in the ACO environment is understanding that not every SNF will be invited to participate in the ACO of their choice; some may be left out. What are your options if you find yourself “outside” your preferred system?

Keep in mind that consumer choice will play an important role in the era of accountable care. This means that communicating with consumers now – to establish awareness of who you are and the quality care you provide – can be essential to protecting your Medicare revenues.

In my last article I discussed the first of three necessary steps to ensure you get “invited” to join the ACO of your choice in order to protect your Medicare referrals. (Click Here to view)  The second necessary step to protecting your Medicare referrals in the ACO environment is recognizing that you will need to reduce re-hospitalizations – especially for those Medicare Part A referrals that are within the “30 day window” – starting right now.

Although many facilities have begun to focus on this area, simply reducing your rate of re-hospitalizations isn’t enough; you must also track that performance and communicate it to your referral sources. Begin protecting your Medicare revenues right now by asking yourself the following questions:

In my last article CMS Announces First ACOs Under Medicare Shared Savings Program Idiscussed the recent CMS announcement of the formation of the first 27 ACOs under the Medicare Shared Savings Program and some of the challenges that providers will begin to face regarding their referrals.  This article will discuss the first of three necessary steps to ensure you get “invited” to join the ACO of your choice in order to protect your Medicare referrals.

Accept the fact that reform will take place and that it will change referralrelationships. There is no question: the need to lower costs and improve outcomes through better coordination of care will result in some form of Accountable Care Organizations (ACOs) in your marketplace. What can SNF management do right now to get “invited” to join the ACO of your choice and maintain or improve its referral relationships? Start by answering these questions:

• Are you perceived by referral sources as providing quality sub-acute and rehab care?
• Does every referral source know about your clinical capabilities?
• Do community physicians know how successful your rehab program is in returning short-term patients to their homes after a hospital stay?

The formation of Accountable Care Organizations has begun with the recent CMS announcement on April 10, 2012.  The announcement included 27 ACOs spanning 18 states, with the goal of improving care for almost 375,000 beneficiaries.  This now brings the total number of Medicare beneficiaries participating in various shared-savings initiatives to 1.1 million.  All ACOs that do well in providing high quality care, while reducing the costs of care, may share in the savings to Medicare. 

Five of the 27 ACOs are participating in the Advance Payment ACO Model, where each ACO will receive advance payments to help cover the costs of establishing an ACO infrastructure.  Additionally, CMS is currently reviewing more than 150 applications from potential ACOs that are looking to join the Shared Savings Programs starting in July.

Healthcare reform, although yet to be finalized, has already begun to impact skilled nursing facilities and their hospital referral sources. In fact, CMS recently announced that beginning October 2012, hospitals will be penalized for excessive re-hospitalizations. In 2012, the penalty will be 1% of Medicare payments and will then increase by an additional 1% in each of the next two years, to 3% in 2014.[1]

In addition to the mandated reduction in re-hospitalizations, improving outcomes at all levels of care will be one of the major goals of the reform legislation. This means that with the formation of Accountable Care Organizations will come the added challenge for SNF’s to demonstrate successful outcomes. Those skilled facilities that are recognized for good outcomes will be rewarded with increased Medicare referrals; those that do not prove their successful outcomes – regardless of their reputation until now – will be at significant risk to lose market share of Medicare referrals.

Part 2: What can I do over the next 12 months to protect their Medicare revenues

In my opinion, three facts are clear: First, much remains to be finalized about health care reform; second, there is no doubt that health care reform will soon be a reality. And third, reducing costs and improving Medicare outcomes will remain a central objective of the legislation regardless of any changes.

PART 1: What can you do right now to prepare for change

Concerns about the impact of healthcare reform and interest in ACOs are growing among LTC leaders. Increasing numbers of owners and operators are sharing with me that the uncertainty about the future has caused them to delay or cancel important decisions and shift priorities. This as they await clarification of how healthcare reform will actually impact their market, their referral sources and their revenues. Is it smart for SNF’s to adopt a “wait and see” approach? Or are there things you should be doing now, even before the legislation is finalized?

It was recently announced that hospitals will have their clinical outcomes monitored in regard to re-hospitalizations; and perhaps, beginning as early as October 2012, with penalties in the form of reduced total Medicare payments beginning sometime in 2013.  While this is not good news for hospitals, it can be a real opportunity for those SNFs that want to gain a competitive advantage and increase their share of Medicare referrals.

It has been estimated[1] that of the 3,100 hospitals expected to be involved in the CMS Readmission Reduction Program, as many as 60% will incur Medicare payment penalties of $10,000 to $500,000 for “excessive” re-hospitalizations.  One of the ways hospitals will seek to reduce this liability is by referring more of their Medicare patients to SNFs with the clinical capabilities, and the operational programs necessary, to achieve successful outcomes and reduced re-hospitalizations.

Call me a contrarian, but I see lots of exciting opportunities for LTC operators in the year ahead. Yes, there is a great deal of uncertainty surrounding health care reform and the way it will impact acute and post-acute care delivery systems and reimbursement. Yes, the recession and the slow recovery have negatively impacted states’ revenues and threaten to reduce Medicare rates.

However, there is no question that seniors will continue to need to be hospitalized. Regardless of healthcare reform or the economic slowdown, they’ll continue to need post-acute rehabilitation and long term care. Those are facts. The only real unknown is which of the SNFs in your market will get the biggest share of that opportunity?

So how can you be sure to be among those facilities that increase your share of referrals, so you’ll have a consistently strong census and strong revenue growth? At the risk of sounding too simplistic: focus on, and aggressively promote, the one asset that drives referrals and admissions – your image.

It’s important to keep in mind that the majority of the recent cuts in Medicare reimbursement were primarily focused on the high rehab and therapy services.  This was done to bring down reimbursement for those services following the very large rate increases they had previously received.  However, even with these recent cuts, Medicare referrals still represent high reimbursement/revenue opportunities. And Medicare referrals are about to become even more important, should states begin cutting Medicaid rates as many are now talking about doing. To gain the best competitive advantages to attract these referrals, consider implementing any or all of our best practices for attracting high reimbursement referrals CLICK HERE.

In addition to adopting these best practices, another issue that will definitely impact discharge planners’ decisions about where to refer cases – especially those with more complex needs and high reimbursement – is how well a SNF is doing with reducing re-hospitalizations.  Perhaps no other issue is causing more concern at the hospital level than the pending changes in CMS regulations and policies relating to avoidable re-hospitalizations of Medicare patients.  If you aren’t currently engaged in efforts to reduce re-hospitalizations you should look into it as soon as possible.  Keep in mind that reducing re-hospitalizations isn’t only important to referral sources.  It also directly impacts your bottom line as it relates to improved resident/patient retention which positively impacts your census and revenue.  CLICK HERE for our whitepaper on “Using Education and Communication Materials to Reduce Re-Hospitalizations.”