The convergence of these factors will ultimately determine the impact of accountable care organizations on seniors housing operators.
By Jane Adler
Amid rapid changes in the healthcare payments system, accountable care organizations (ACOs) are calling a lot of the shots. They’re making decisions on referrals and developing quality measures for skilled nursing providers, and they may eventually do the same for assisted living facilities.
Although ACOs are still a work in progress, seniors housing and care providers can’t afford to ignore these networks charged with coordinating healthcare services for their members, including where those services are delivered. Here are five important points to understand about ACOs.
1 Geography matters
ACOs are highly active in some parts of the country, while in other places they’re fizzling out. Though California has a large number of ACOs, San Diego-based Sharp HealthCare dropped out of a pilot ACO program in 2014, saying the financial model was not adjusted for the region where expenses are high.
But ACOs have already become the standard model of care in some areas. “ACOs tend to be popular in reform-driven markets,” says James Michel, senior director of Medicare reimbursement and research at the American Health Care Association (AHCA), which represents nearly 9,000 nursing homes. “Some healthcare markets are evolving faster than others.”
The most active ACO markets are on the East Coast and in major metropolitan areas, such as in Atlanta, Houston and Chicago. ACOs are also popular in places with large senior populations.
New Jersey provides a good example of a place where ACOs are established. About 18 months ago, the seniors housing owner and operator CareOne signed a preferred provider contract with one of the largest ACOs, a hospital system in northern New Jersey.
CareOne has 32 facilities in New Jersey and another 25 buildings outside of the state. The facilities include both skilled nursing and assisted living buildings. Based in Fort Lee, N.J., CareOne also offers home healthcare, rehabilitation services, hospice care and a pharmacy.
The company is only one of two preferred providers of skilled nursing care selected by the ACO. “We were fortunate that we had a good relationship with this hospital system that started five years ago,” says Tim Hodges, chief strategy officer at CareOne. “It enabled us to set the table for the foundation of what we’re doing today.”
CareOne works with ACOs in all of its markets, but the arrangements vary widely. “Depending on the maturity of the ACO, so goes our relationship,” says Hodges.
Many new ACOs are busy pulling together their networks and aligning services both financially and clinically. “Young ACOs aren’t ready to focus on post-acute care,” notes Michel at the AHCA. But, he warns, ACOs quickly develop post-acute care strategies seeking preferred providers that can meet quality and financial goals.
A March 2015 study by financial firm Lancaster Pollard showed that 78 percent of post-acute providers are not participating with ACOs. Thirty-five percent indicated they don’t participate because they haven’t been asked to do so.
In markets where they’re active, ACOs “warrant focus,” says CareOne’s Hodges, whose full-time job is to make sure ACOs get the information they need. “The other option is that we’re not at the table and somebody else is,” he says.
Consultant Susie Mix advises skilled nursing facility operators to “keep their ears to the ground” and understand where ACOs are in the provider selection process.
“Be involved in the community,” says Mix, president of Fountain Valley, Calif.-based Mix Solutions. She recommends meeting with hospital administrators to explain what the skilled nursing facility has to offer. “The hospital might not be talking about an ACO now, but you want to have that relationship developed just in case,” she says.
About two years ago, a group of physicians and hospitals in Washington State launched the Rainier Health Network ACO. The group expanded last year to Des Monies, Wash., adding a hospital partner there. The ACO began a search for skilled care partners in Des Moines and selected Judson Park, a continuing care retirement community (CCRC). It serves 330 seniors and is part of American Baptist Homes of the West (ABHOW).
Judson Park was selected, in part, because the community had previously started a dialogue with the ACO’s physician group. “We wanted to ensure that our short-stay rehabilitation program would meet or exceed their criteria,” says Nikole Jay, executive director at Judson Park. “We wanted to be positioned to deliver.”
Relationships with ACOs tend to evolve over time, notes Jay. The ABHOW Property in Oakland, Calif., Piedmont Gardens, has what’s called a “bed-hold” agreement with an ACO, she says.
The CCRC agrees to take patients quickly and is penalized if it doesn’t. If the ACO doesn’t fill a certain number of beds, it pays a base rate to the facility for those spots. “We don’t have that type of contract here at Judson Park,” says Jay. “But we envision we’ll have something like that eventually.”
3 Quality, quality, quality
A 2013 study by the Institute of Medicine shows that 73 percent of the variation in Medicare spending around the country is tied to post-acute care. So ACOs are picking their partners carefully since reimbursements are being linked to quality outcomes that help reduce costs. Eventually, the facilities with the best outcomes will be rewarded by sharing in the savings generated.
For example, the Atlantic ACO is one of the largest in the country and consists of five hospitals and 2,000 physicians. Based in Morristown, N.J., the ACO was started in 2012 and has 250,000 members, about 100,000 of which are Medicare beneficiaries.
“We are developing a post-acute care model in concert with skilled nursing providers,” says Dr. Poonam Alaigh, corporate consultant at Atlantic Health System, one of the hospital chains in the ACO.
An initial analysis by the ACO showed that the hospitals in the network worked with 350 skilled nursing facilities, but 70 providers represented about 80 percent of the dollars spent in post-acute care. But those facilities were rated lower than the state average on quality measures, such as the prevalence of bed sores and use of anti-psychotic medications.
“We were sending patients to skilled facilities not based on quality outcomes, but based on relationships,” says Dr. Alaigh.
Working with skilled nursing operators, 16 quality measures were developed in four broad categories: protocols for situations that often lead to hospital readmission, such as poor coordination of medication management; operational efficiency and staff development; clinical leadership; and other quality measures such as length of stay.
The metrics were rolled out in July 2014 to all 70 facilities and data was collected. Based on the scores, as of February 2015, only the high-performing facilities were being included in the network. “There has to be accountability,” emphasizes Dr. Alaigh.
She quickly points out, however, that the number of preferred providers isn’t limited. Any skilled center that meets the quality criteria can be included.
But many ACOs are narrowing their skilled nursing networks to only a few facilities. That doesn’t mean consumers won’t have a say in where they receive skilled care. They can pick the place they want. But preferred facilities will be recommended by the ACOs.
Dr. Alaigh emphasizes that the information on the high performing network will be shared with the beneficiaries and patients in compliance with Medicare.
4 Staffing investments
Skilled nursing facilities that work with ACOs must be willing to invest in staff and systems in order to track and produce quality outcomes, say industry experts.
Judson Park has hired a nurse navigator to identify patients who are at high risk for hospital readmission. The navigator works with the clinical team to design a care plan and follows up with the patient after leaving the facility to ensure a smooth transition back home.
Judson Park contracts with a physician’s group to provide three nurse practitioners and a full-time physician. A chaplain, who is also a registered nurse, was hired to focus on palliative care planning.
Training is important, too. For example, employees participate in webinars on congestive heart failure, adding to the community’s clinical strength. “You have to understand what the ACOs are looking for,” says Jay.
CareOne, in New Jersey, hired a nurse who is directly responsible for tracking patient data. The nurse communicates with the hospital about how the patients are doing, reviews discharge information, and notes any changes in health status. CareOne hired nurse navigators to act as liaisons with the clinical staff at the ACO.
Nurse practitioners have also been added at buildings to reduce hospital readmission rates and to allow for the admission of sicker patients so they can be moved sooner from the hospital. “We felt it was important to invest in staff and systems to achieve the quality the ACOs are looking for,” says Hodges. “We want to make sure we have a seat at the table.”
5 Assisted living up next
Although the focus to date has been on skilled nursing care, ACOs are interested in working with assisted living facilities.
“The opportunity is tremendous,” says Dr. Alaigh at the Atlantic ACO. She explains that many hospital patients come from assisted living and that the staff at those facilities can help keep their residents healthy.
CareOne is just starting to track the health status of its assisted living residents. ACOs like the idea that assisted living is available for someone who is not ready to go home yet, but who no longer needs skilled care, says Hodges. “The common theme is to keep older adults healthy and out of institutions.”
The Centers for Medicare & Medicaid Services (CMS) is also moving toward a site-neutral payment system, say experts. In other words, the ACO can use its funds to partner with all kinds of providers.
“Assisted living is an attractive target partner for ACOs,” says the AHCA’s Michel. “It costs less to care for a resident in assisted living than in skilled nursing.”
Michel expects to see more examples of ACOs partnering with assisted living facilities in the coming year.