The skilled care delivery and payments system is going through a significant transitional period and it is increasingly difficult to be financially successful without meeting quality standards.

“Financial success is being tied to quality,” said Marc Zimmet, president and CEO of Zimmet Healthcare Services Group, a New Jersey-based consulting firm. “A much more complex system has emerged with so many players, payors and vested interests, but meeting increasingly stringent value targets often results in counterproductive strategies that may improve one revenue source but hurt another. It’s all connected, or said another way, it’s our “Theory of Reimbursementivity.”

Zimmet’s firm advises skilled nursing facilities and other stakeholders on all aspects of what he calls the reimbursement-compliance ecosystem. His firm works with more than 3,000 providers and related stakeholders nationwide.

Based on his broad experience, Zimmet noted the difficulty for a skilled facility to be financially successful today without meeting the quality standards demanded by payors and provider partners. “Rewarding quality is the right thing to do,” he added, cautioning that quality measures can vary. “The issue is that everyone measures quality and rewards quality differently.” The process includes understanding the nuances of bundled payments and the new patient driven payment model (PDPM). “Many operators struggle to manage all these moving parts, and the result is lost reimbursement,” said Zimmet. “Things [] fall through the cracks; we try to make sure that doesn’t happen.”

Another important factor is the growth of Medicare Advantage plans. About 65% of new Medicare recipients are opting for Advantage plans, which push down episodic treatment revenue from fee-for-service Medicare.

Some skilled operators may benefit by joining an institutional special needs plan, or I-SNP, according to Zimmet. The goal of the I-SNP is to treat residents in place. A skilled nursing facility may be able to share in the savings generated by not sending residents to the hospital.

But Zimmet warned, “An I-SNP may be a balancing act for the facility. It has to consider how all the pieces fit together, including the dynamics of contracted services, such as physical therapy, the impact of capitated payments, and the new Patient Driven Payment Model (PDPM). It’s all connected.” An operator that brings down costs in one area may be raising them in another. Also, facilities in states with higher Medicaid rates may be better positioned to benefit from an I-SNP.

Another challenge: In a complex environment, operators can run afoul of regulations, particularly regarding Medicare coverage rules which can be impacted by whether or not the resident is enrolled in the I-SNP or traditional fee-for-service. “Compliance is a big issue that often gets overlooked—facilities must have consistent policies,” he advised.

See an extended interview with Zimmet, including his thoughts on positioning a facility and his outlook for the sector, in the December issue of the NIC Insider newsletter.