Long-term care meets managed care.

WHAT THE NEW "PARTNERS" EXPECT

In the brave new world of health care reform, what do managed care companies want from long-term and subacute care providers -- and vice versa? NURSING HOMES queried executives at two managed care organizations, Cigna Medical Group and PacifiCare, and at GranCare Inc., a long-term care company that contracts with a number of managed care organizations (MCOs), to get an up-to-date perspective on this important question. Here are their thoughts on what MCOs are and will be seeking of long-term care facilities, and facilities' own expectations.

1. Responsiveness to MCO's requirements and the ability to customize services to meet member needs. For MCOs, this responsiveness encompasses features such as easy access to systems, "seamless" referral from level to level, streamlined payment arrangements, timely reporting, and beds and staffing available to admit new referrals 24-hours a day. MCOs also note that, for patients, facility location and appearance still top the rating scale.

"Currently, we are looking at the geographic proximity of SNFs and other subacute and long-term care facilities to the medical groups and medical centers that are driving the system," says Michael Seeley, PacifiCare's Manager of Provider Contracts. "Providers who meet this criteria as well as our other requirements will likely receive a higher volume of referrals from us."

The maxim, "Know thy customer," was never truer than in today's managed care environment. To be an effective partner, long-term care providers must understand the different types of payors and MCOs, and their needs and incentives, so that programs and services can be designed to meet them.

"As acute care hospitals, IPAs and medical groups begin to share more financial risk for the total health care needs of their membership, they will expect their provider partners to share in the risk and to accept high-acuity patients more quickly from acute care settings," says Jeff Stuckhardt, National Manager for Managed Care at GranCare, Inc., the long-term care chain. "Even though employer groups who use PPO networks with providers contracted on a discounted fee-for-service arrangement do not have the same financial incentives as capitated groups, they are still interested in better cost management and the use of lower-cost, quality services when possible."

2. Quality clinical programs with above average outcomes. This objective goes beyond the competitive pricing scenarios of the present and past. "Outcomes" will be a combination of where and in what condition the patient ends up, and what the cost was to produce this result. Components of outcome measurements include: treatment and service utilization, lengths of stay by DRG, where patients go when they leave an acute care setting, where they go when they leave a subacute or a long-term care setting, and the use of quantitative outcome measurement tools such as FIM (Functional Independent Measures) and Rancho scores for rehabilitative services.

"We look for progressive facilities and chains, those companies that are constantly upgrading their personnel and services," says Greg Stilson, Contract Coordinator, Central Services, Cigna Medical Group. "This commitment can extend from capital expenditures to additional training for staff to accommodate the particular needs of a patient. The professional staff must understand the nuances of care in a step-down situation, and show how they can conserve resources in the process."

For subacute facilities, the ability to care for ventilator-dependent patients and to administer IV therapy are important components in assessing the completeness of a facility's services.

3. One-stop shopping. "MCOs favor vertically integrated companies that can provide a seamless continuity of care, from subacute inpatient through home IV," says Stuckhardt. "They will look for systems that provide a variety of services, such as long-term and weaning ventilator care and neonatal/pediatric inpatient services, which comprise a comprehensive approach to care within a local community or geographic region."

4. Experience in serving the non-Medicare as well as the Medicare market. As Stuckhardt suggests, HMOs that offer senior care plans will contract for long-term care facilities for specific needs of the 65-plus population, but other MCOs will be interested in care for people of all ages -- from neonates and pediatrics on up.

5. Competitive and outcome-oriented pricing. MCOs seek partners who will share the risk and rewards of patient care with them. They will favor capitated pricing or price per case, for example, over standard per diem rates or fee-for-service contracts. Stuckhardt sees capitated contracts on the very near horizon for GranCare, and expects this type of risk-sharing arrangement to make up an increasingly large part of GranCare's managed care business.

"Price is one of three major areas that we evaluate in selecting our contracting partners, the other two being quality of care and ease of administration," says PacifiCare's Seeley. "Rates will be limited by a trend to stay at or below the CPI for health service rate increases."

6. Marketing ability and commitment. Providers now realize that signing the contract is only the first step in the marketing process. MCOs will expect providers to actively market their services, including educating all elements of the managed care network in the options offered by the facility -- be it subacute care or skilled nursing -- from access to outcomes. This marketing effort must be accompanied by the expertise to actually deliver on what is promised. Experience counts. "We can't expect that a facility will be able to perform a service cost-effectively if they haven't ever done it before," says Cigna's Stilson.

7. Internal case management. In the past, a case manager employed by a payor or hospital often found that communication became decentralized when the patient was transferred to less acute settings, such as long-term care, because few of these facilities had their own case management staffs. MCOs, with their commitment to continuous managed care plans, will expect that subacute care settings and SNFs will have their own case managers in place. These professionals will assume the responsibility for assuring good communication between the facility-based caregivers, the home care team, and the referring facility and attending physician.

"Physicians and nurses get understandably nervous when a patient is taken out of their hands," notes Cheree Belanger, RN, CCM, Director of Case Management at GranCare. In this position, she is responsible for developing and managing a system-wide internal case management program. Belanger's perspective on case management and long-term care includes her previous position as Case Management Supervisor at PacifiCare.

"At PacifiCare, we sometimes felt that we lost control when a patient went to a SNF. Also, it was difficult to find facilities that had the broad range and the depth of service the patient needed; there were few facilities, for example, that provided high-tech skilled care. When we found such a facility, it was usually a specialized one, such as one for head trauma."

This scarcity of qualified referral sources is changing as long-term care and subacute facilities acquire the expertise and services that MCOs require.

8. An attitude of partnership. As noted, MCOs will expect long-term care facilities to share the financial risk of producing positive outcomes with limited resources. "We expect that they will be a team player, working with us, with home care agencies, acute care facilities, utilization review and case management," says Stilson. By the same token, if a patient's condition changes and requires a dramatically different treatment plan, the SNF will expect the MCO to return to the table to renegotiate in light of this new information, and to consider these clinical changes in assessing the appropriate cost of care. The facility will also expect referrals, and that their MCO partners will not merely "dump" patients for the minimum three-day stay so that they qualify for hospital re-admission.

9. An understanding and support of the managed care philosophy. No MCO wants to be involved in an adversarial relationship. Providers who view managed care as a negative influence or as "health care rationing" need to re-examine these attitudes. GranCare's Belanger observes, "Opposition to the concept of managed care and resistance to its further penetration into the health care system is counterproductive. We expect that managed care will become the dominant approach to health care in both the private and public sector, and are working now to build the successful working partnerships for that future."

Joy Scott is a principal with Haese/Scott Marketing and Public Relations, based in Los Angeles, CA. She specializes in issues involving the managed care industry.