Newman's Notions | February 21, 2024 | FREE
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The ACO SNF waiver

Learn how an accountable care organization (ACO) can help get your patient into a skilled nursing facility (SNF).

Few hospitalists know much about accountable care organizations (ACOs). This is reasonable, considering that the organizations focus on primary care. However, if you, as a hospitalist, are managing patients who are attributed to an ACO, it is important to be aware of how this might affect your practice and your hospital.

Illustration by David Rosenman
Illustration by David Rosenman

ACOs are an alternative payment method developed by CMS. Patients who have fee-for-service Medicare can be assigned to an ACO based on their relationship to a primary care physician, if that physician is a member of an ACO. Patients can also elect to be an ACO member, but this is not very common. Visits to the ED or hospital do not lead to attribution to an ACO. It takes a true outpatient visit code.

ACOs are different from HMOs, in which there is generally an amount paid per member per month, regardless of resource utilization. In an ACO, CMS still makes regular fee-for-service payments to clinicians and facilities. But at the end of a 12-month cycle, ACO patients' total cost of care (TCOC) is calculated. There are risk modifiers based on the level of complexity of attributed patients and how well that is documented using hierarchical condition codes, or HCCs (not to be confused with CC, MCC, CC44, or CC Rider). Finally, there is a multiplier applied based on the ACO's outpatient quality scores. If a patient has an extremely expensive TCOC (i.e., those who underwent proton-beam therapy or bone marrow transplant during the year), then there is a cap on the TCOC attributed to that patient.

Once the TCOC is calculated, it is compared to those of previous years, with the most recent year having the biggest impact. Some ACOs are upside-risk only, meaning if their TCOC decreases, or increases less than CMS predicted, the ACO receives a percentage bonus from CMS. But if the ACO costs CMS more than predicted, they do not owe anything to CMS.

In a two-sided risk contract, if payments come in below the target, the ACO gets a higher percentage payment, and if the cost to CMS goes up, the ACO must return funds to CMS. It's a higher-risk system for the ACO/hospital, but it has a substantially higher revenue possibility to offset that risk.

Still awake? Here's where a hospitalist might get more interested….

In the two-sided risk model, there is an option to develop a three-day skilled nursing facility (SNF) waiver. As readers are likely aware, Medicare patients must have three inpatient days (really three nights as the day of discharge does not count) before they can be admitted to a SNF (among several other criteria and patient qualifiers).

What the waiver means is that a patient who needs SNF care but doesn't meet the inpatient criteria can go directly to a SNF if arrangements can be made. To make this waiver work, an ACO must apply for the waiver, find high-quality, willing SNF partners, and then be prepared to rapidly assess patients' suitability for SNF placement and have a solid administrative process for getting them there. Patients can be admitted to a SNF under the waiver from home, from the ED, from observation status, or even after an inpatient stay of less than three days.

I'll give you a second to think about that … OK, that's enough time.

In an era of tight censuses, having a way to avoid unnecessary use of inpatient beds is key. Sending a patient who is unable to stay safely at home but doesn't medically require hospitalization to a SNF instead is a win for everyone, especially the patient. At the same time, it's a benefit to the ACO, as the cost of unnecessary inpatient days does not contribute to the TCOC.

So, if any of your patients are attributed to an ACO, remember you may have this relatively new tool to get them an appropriate level of care and avoid using the precious resource of an inpatient bed, or worse, having them wait for admission in an ED or hallway.

Sounds great, right? Time will tell if the process can be streamlined, and what the true impact on hospital census and overall cost will be.