What the Evolution of Skilled Nursing Facilities Means for You

What the Evolution of Skilled Nursing Facilities Means for You

The modern skilled nursing industry began in 1965 when Medicare and Medicaid programs were enacted. In the 50 years that have passed, the skilled nursing sector has undergone significant transformation. Today, it continues to evolve, bolstered by demand for more specialized and medically-complex services and an evolving policy environment that influences payment and delivery systems.

A Changing Landscape.

The current landscape for skilled nursing is being influenced by several factors. First, the sector now serves two distinct patient groups: transitional short-term rehabilitation patients and long-term chronically ill patients. As a result, the clinical capabilities of many skilled nursing operators are growing to provide a full range of post-acute care services, that include rehabilitation therapy as well as specialty care services such as ventilator care and dialysis. An expanded service offering in turn often affects physical space and property expansion requirements as well. In many instances, operators are also moving into other service areas such as home health and hospice care in order to deliver a more complete service offering and diversify their portfolios.

A Shift in Risk Takers.

Second, federal government policy changes are shifting financial risk from the government to private managed care and sometimes the provider, while simultaneously holding providers accountable for quality care. The changes that are currently underway in how Medicaid and Medicare structure provider reimbursements, including accountability measures found in the new “Five Star Quality Rating system,” as well as the implementation of the Affordable Care Act, are changing the payor landscape. Alternative payment plans and networks, such as accountable care organizations (ACOs), managed care organizations (MCOs) and bundled payments are quickly displacing fee-for-service payment plans in both Medicare and private health plans. This shift to a risk-based, value-based environment is happening rapidly. Indeed, by 2018 alternative payment plans will account for 50 percent of Medicare payments, up from 20 percent in 2015. Meanwhile, Centers for Medicare and Medicaid Services (CMS) recently rolled out changes to the Five Star Quality Rating System in an effort to increase accountability and raise the quality of care standards. The change in tabulation of facility ratings caused many providers to lose one or two stars, directly impacting reimbursements for certain post-acute care procedures. Skilled nursing and post-acute providers risk being left behind unless they move quickly to adjust to the new policy landscape.

Read entire article in National Real Estate Investor here.

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