Managed Care for SNFs: A Growing Segment in Health Care

The trend toward contracts with managed care agencies for the administration of health care benefits in SNFs is increasing in popularity. The high cost of caring for chronically ill patients and aging of the general population highlights LTC as the prime target for reform by the managed care industry. Managed care organizations (MCOs) will be breaking new ground in controlling and reducing costs associated with providing care to clients with prolonged needs. Payers can improve the delivery of health care and manage costs better by holding providers more accountable for the care of chronic patients. Therefore, it is important to predict the fluid nature of health care and prepare for the changes ahead. Payers and providers need to commit to a system of payment that rewards high-quality, coordinated, cost-efficient care.

The process of accepting Managed Care members into our facilities for SNF care starts with a managed care contract. When a contract is structured with rates/levels there is a contractual definition of each Level of Care, including clinical needs, therapy utilization, and what is included/excluded from the per diem rate. This information is used to negotiate the appropriate rate upon admission. Therapy requirements include how many days a week therapy is required, and the amount of therapy provided per treatment day. For example, the contract may specify that therapy is required 5/6 days a week, up to 1 hour/day or up to 2 hours/day, depending on the level authorized.

Preparing the facility to “manage” the Managed Care is just as important as the contract. It is imperative to evaluate the systems of each facility, including operational systems, clinical systems and billing systems.

Things to look at:

Operational Systems

Admissions process and communication systems

Assessment systems

MCOs want quick acceptance of the referral: Is there staff in the facility or out in the hospitals with clinical expertise to quickly assess clinical documentation and make the decision on whether to accept the patient?

Clinical Systems

Evaluate the communication system between departments.

Quality care and coordination: Are all departments obtaining the information they need?

Outcome Data: Are you utilizing data to show patient outcomes?

Physician involvement: is your Medical Director involved in patient care? Does your facility have a Physiatrist? Specialty Wound care physician/ nurse?

Case Management

Whether your facility has a designated Case Manager or not, it is important to utilize the Case Management process to manage patients effectively. Case Managers or a Case Management designee will:

Assess patient needs

Obtain Authorization for admission to facility

Negotiate level of care/rate, per facility contract

Understand contractual exclusions

Therapy utilization: Negotiate higher rates when additional therapy is appropriate.

Utilization Review: Provide clinical updates needed for continued stay

Monitor progress

Evaluate alternative options and services to meet an individual’s health needs

Promote quality cost-effective outcomes.

Assist in fostering a positive relationship between facility and health plan. This process results in appropriate admissions, better assessment of needs, and better initial treatment and discharge planning.

Billing Systems

Does the BOM understand the exclusions and how to bill them? Is the correct rate/revenue code being billed?

Does your BOM have a provider manual from each health plan providing detailed information for billing and appeals?


Educate the hospital about contracts. Ask questions about MCO needs (services needed/difficult placements)

Understand the goal is reduced LOS with quality outcomes

Share success stories with the hospital

Understand which physicians have these patients and communicate with them regarding innovative treatments and successful outcomes.

Establish a relationship of trust with Insurance CM’s so they will think of you when assisting in the placement of the patient.

MCO Expectations:

Decreased Length of Stay

Quality outcomes with supportive data

One knowledgeable contact who is easily reached

Good surveys; they review all CMS surveys during the initial credentialing process prior to a contract and during re-credentialing (every 3 years or greater).

Things to consider:

Provide staff with Managed Care training

Dedicate a unit for short-term rehab providing sub-acute services, including medical director involvement, physiatrist and wound care physicians

Develop a Case Management process utilizing a Case Manager or clinical designee

Increase communication between all departments

Sounds complicated. Why would we want to embrace Managed Care at all?

There are several reasons:

The number of Medicare beneficiaries is growing every year

Census growth

Revenue enhancement

Growth of overall number of referrals. Admissions of sometimes difficult to place managed care patients can lead to the referral of less complicated patients.

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