Industry Leaders Split on Whether Skilled Nursing’s Future Should Include Separate Short, Long-Term Care

There has been an increasing call to separate long-term and short-term care in the nursing home sector as acuity rises and facilities take on more specialities, all while facing a staffing shortage.

Academics, finance leaders and some operators agree such a separation would be a positive for residents — and maybe even help the staffing crisis — but the big question is where long-term Medicaid beneficiaries would go if they’re not occupying beds in a nursing home.

Some believe these residents would eventually be absorbed into assisted living and home and community-based services (HCBS). While these parts of the care continuum cover Medicaid beneficiaries in some capacity, it’s not the norm – at least not yet.

“There should be a split between the people who are going to be there permanently as opposed to the people who are going to be moved back to their general life,” Wendy Simpson, CEO of LTC Properties (NYSE: LTC), said during a panel at the Skilled Nursing News Rethink conference earlier this month. “There are facilities that really need to be care facilities rather than rehab, skilled nursing facilities.”

The real estate investment trust works with one such operator – Ignite Medical Resorts – who already works exclusively in the short-term world. Simpson has called the partnership a “unique and wonderful opportunity” for LTC, but she admits they’re few and far between.

For more operators to follow this trend, experts believe the executive or legislative branches of the federal government would need to reinterpret the Medicare program, at least in terms of statutory language and the intent of what the program offers SNFs.

“If there was a change in interpretation, there might be subsequent changes to reimbursement associated with that,” said Lisa Grabert, research professor at the Marquette University College of Nursing. Deliberative policy changes to the Medicare SNF benefit would have to precede any reimbursement makeover, she said.

Separation impossible without Medicaid overhaul

Robert McClintic, CEO of Virginia-based Kissito Healthcare, told Skilled Nursing News a separation of short-term and long-term care within the nursing home industry wouldn’t be sustainable without a robust overhaul of Medicaid reimbursement.

More specifically, if a long-term care facility had 80% Medicaid payments there would have to be a “significant increase” in reimbursement, he said.

“There’s no way that a facility can operate just a long-term, Medicaid only facility and be competitive with wages and benefits to attract the workforce; it’s not feasible,” McClintic said. “It wouldn’t be a bad mindset at all. I’m not opposed to [the idea], and I think under the right scenarios, you can make it work.”

Kissito, which operates eight facilities across rural North Carolina and Virginia, has increased wages for its workers more than 30% and happens to operate in states with some of the highest Medicaid rate bumps in the country.

North Carolina increased its Medicaid rate percentage to 15%, for one, and that is expected to continue through the end of the year. McClintic believes states are trying to figure out where they overspent during the worst of Covid, and that could mean a recalculation of Medicaid rates to somewhere between pandemic rates and pre-pandemic numbers.

Patient mix really all depends on market demand, he told SNN. Currently, the nursing home business model relies on both short-term and long-term care patients, he said.

Medicaid reimbursement is generally lower than Medicare but more consistent; Medicare payments are higher but can be unpredictable, dependent on hospital referrals from elective surgeries.

“It balances out the viability of skilled nursing facilities,” added McClintic.

Separation benefits are tied up in a strict reimbursement system

Grabert said the benefits of separation really all depend on flexibility around reimbursement models.

From a strictly Medicare perspective, Grabert said the nursing facility benefit was always intended to be short-term, targeted toward getting people better and out of the nursing home.

“The intent was never to necessarily be more of a long-term benefit, although it may have morphed over time,” Grabert said of Medicare in nursing homes, referring to Medicare Advantage and special needs plans that may take dual eligible beneficiaries.

What Simpson has suggested, Graber said, is more clearly in line with what the initial intent of Medicare was for the nursing home when it was signed into law, instead of the relatively narrow reimbursement system it has become.

The Centers for Medicare & Medicaid Services (CMS) could take a page from the home health Medicare benefit, Grabert said, but taking a wider net of patients has come with its own set of issues for that part of the care continuum.

Currently, home health patients covered by Medicare can come from a community center or hospital – services needed for these types of patients vary widely, with those coming from the community needing chronic condition management while hospital discharged patients require higher rehab focus and recovery.

“That structure could be considered for SNFs, and there is certainly precedent for it if you looked at the home health system, but I would also argue that the home health payment system … is not working well,” she said.

There is “much more wiggle room” on the Medicaid side, Grabert said, for operators to make intentional decisions about how to set up services to cover the most beneficiaries regardless of Medicare or Medicaid.

“Of course, that leaves out the whole private payer population, but I think it’s a very complex question,” said Grabert. “We have a system in place today that forces [operators] to say, ‘what benefit does this patient fall under’; that doesn’t mean that that’s how we should envision nursing home care.”

Federal policy sends a “very confusing message” to nursing home operators, she said, who are meant to operate under programs with very different sets of rules, different conditions of participation, and different ways to bill beneficiaries.

And yet, it’s permissible to do all of these things under the same roof.

“It’s not very clear in terms of what the preference is, for one program or another,” Grabert said of government agencies. “A lot of it is left up to interpretation by operators.”

Will a separation help consumers, staff?

Long-term residents don’t want to be in an institutional, hospital-like facility – which can be the layout of short-term buildings, according to Mary Martin, dean of nursing at Arizona College in Virginia.

Longer stays should be in a more homelike environment, Martin said. Residents may need assistance with activities of daily living but are more or less medically stable.

“When they occupy the same space, long-term care can have that clinical or hospital feel, which sometimes causes a stigma with those patients,” added Martin.

Buildings are becoming more specialized as well, she said; facilities accepting patients with a higher level of acuity is tied to a robust payer source: Medicare Part A, or Medicare Fee-for-Service (FFS).

Long-term stay providers have already started exploring hospice, Martin added. It remains to be seen if the added specialty will make a standalone long-term care facility viable in future.

From a staffing perspective, it’s very difficult to fill shifts that require a wide ranging level of expertise in a given day, she said, who prior to her academic life served as director of clinical services and director of nursing for long-term care facilities, memory care units and psychiatric facilities.

“When you have long-term care and short-term care together, it is only required that there is one [registered nurse, RN] in the building. If you need an RN on the short term care unit, they really can’t walk around to make sure everything is going okay on the long-term side,” she added.

McClintic, on the other hand, felt a separation wouldn’t help ease staffing burdens. From an operational standpoint, it’s much easier to float your staff among multiple units in one building.

“If you’re a post-acute only facility and your ebb and flow census is up and down, you can’t float that person elsewhere,” he said.