Managed Care in Post-Acute Settings

Many patients require continued medical care, either at home or in a specialized facility, following a hospitalization for injury or illness. “Post-acute care” refers to a range of medical care services, including therapy, that support the patient’s continued recovery from illness or management of a chronic illness or disability.

Skilled-nursing facilities provide skilled nursing, medical management and therapy services on a 24-hour basis to patients who do not require as high-intensity services as provided in the hospital setting.

There are several other settings for post-acute managed care:

Home health care is a regulated program of care provided through certified home health agencies, delivered by health care professionals in the patient’s home for treatment of a medical condition, illness or disability.

Hospice provides comprehensive, interdisciplinary health care to terminally ill patients, as well as bereavement and support services to the patients’ loved ones.

Medical rehabilitation focuses on improving or restoring functional independence for patients with disabilities resulting from injury, illness, or a medical condition. Medical rehabilitation is provided at all levels and locations of health care, including in general acute-care hospitals, inpatient rehabilitation facilities, skilled-nursing facilities, long-term-care hospitals, outpatient programs and home health agencies.

Long-term-care hospitals provide hospital-level care for medically complex, long-stay patients. They meet the same requirements as general acute-care hospitals, but have significantly longer average lengths of stay — 25 days or greater.

All of these facilities face the obstacle of new reimbursement schedules, as presented by the Centers for Medicare and Medicaid. Managed care programs for Medicare patients, called Medicare Advantage programs, are presenting the dual challenge of lower payments and increased paperwork.

Professional observers of the health care system say Medicare Advantage plans are attractive to beneficiaries because they often offer lower co-payments or co-insurance.

As more beneficiaries enroll in Medicare Advantage plans and as more states look to rein in costs through expansion of Medicaid managed care, post-acute providers such as nursing homes face the same kind of managed-care growing pains hospitals experienced in the 1990s.

Providers and patient advocacy groups worry that managed care might have harmful effects on post-acute patients, particularly those with disabilities who need long-term services and support in their homes and communities.

Nevertheless, post-acute-care providers are finding they can no longer survive solely in the fee-for-service world. Instead of primarily billing traditional Medicare and Medicaid, these providers increasingly are negotiating with managed-care plans to increase their revenue stream and stay viable.

As Medicare Advantage grows, providers are having to contract with those plans to get those patients. This has created challenges for providers who know what they get paid under traditional Medicare, but, when dealing with managed-care plans, must negotiate rates and comply with each plan's requirements.

Providers say that traditional Medicare payment rates are better than Medicare Advantage rates. Depending on the market, managed-care rates are 10% to 40% less than traditional Medicare rates. Some providers may accept lower rates with the hope— not always realized — that insurers will drive volume to their facilities.

Meanwhile, states are moving more long-term services and supports — including personal services in the home, assisted living or residential arrangements — into Medicaid managed care.

No doubt about it, post-acute care providers face challenges in navigating the new managed-care world in Medicare and Medicaid. But providers, advocates and policy analysts agree they don't have much choice. It’s the new way of doing business, and advisors agree that “to ignore it is to your own detriment.”


Alix Partners

California Hospital Organization

Modern Health Care