CCRCs Tapping Revenue Streams, Offering On-Site Therapy & Rehab

| February 7, 2013

Senior care communities are looking for ways to drive revenue through ancillary services, and many are turning to on-site rehabilitation and therapy as strategy to counteract shrinking Medicare reimbursement margins for skilled nursing care.

Continuing care retirement communities (CCRCs) in particular have the ability to harness potential revenue from Medicare Part B, which provides coverage and payment for outpatient therapy services, including physical therapy, occupational therapy, and speech-language pathology services, says Richard Boyson, Jr., chief financial officer at Therapy Partners, a division of Baltimore, Md.-headquartered HealthPro Rehab based in Middleburg, Ohio. 

Medicare pays the highest rates for residents receiving rehabilitation services, and in 2010 the skilled nursing facilities with the highest Medicare margins were the ones with greater shares of days in intensive rehabilitation case-mix groups, said a 2012 report from the Medicare Payment Advisory Commission (MedPAC). 

“Providers are realizing there’s a revenue stream [in providing therapy services], and it’s also a good wellness component,” says Boyson. A third potential benefit: “If the community has an aging in place philosophy, doing more therapy can keep residents healthier for a longer period of time,” thus improving or maintaining census.  

Boyson’s company, which has a large footprint in Ohio, contracts with CCRCs to provide on-site therapy, generally though a full-service model that includes helping communities develop a marketing plan to advertise the availability of services to independent and assisted living residents. 

Five years ago, Boyson says his company would ask providers what they were doing with their independent and assisted living residents from a therapy perspective, and would hear ‘We’re not doing anything.’

Now, he says, it’s unusual to go into a CCRC and not see at least some efforts being made to go after those residents. “In the last five years, it has changed dramatically,” Boyson says. “We have some long-time customers who didn’t used to do anything in independent or assisted living. When they realized the market and went after it, they were able to build of a caseload of 20, 30, 35 patients—just in independent and assisted living.”

The marketing pitch to a CCRC’s residents is fairly simple: It’s generally much more convenient to get on-site therapy and rehab rather than having to go on campus, and it provides for great care continuity. 

When a CCRC’s independent living residents fall and break their hip, they go to the hospital, get “patched up,” and eventually get sent to the community’s skilled nursing facility, where they’re seen by a therapist.

Typically, then, they’re discharged back to their independent living unit, where they would most likely qualify for at-home therapy under Medicare Part B. More therapy is usually needed even after eligibility for Medicare’s home health benefit runs out. 

“Instead of going out for therapy, everything can be on campus, so when a resident comes back to a CCRC’s skilled nursing unit after a hospital stay, they can work with the same therapist through home health benefits and also for outpatient Part B services,” Boyson says. 

Feedback from residents indicates a preference for being able to work with the same therapist throughout the recovery process, especially because the therapist is familiar with that particular case, he says, enabling care to be more efficient. 

In a CCRC’s independent living component, Boyson’s company has seen anywhere from 5-12% of residents being eligible for the outpatient program. That percentage generally goes up in assisted living, he says, to between 8-16%. 

Based on a medium-sized campus of about 400 residents, there could be 30-40 units of eligible Part B beneficiaries, he says. “If you’re seeing them three to five times a week, revenues could be very significant.” 

The ability to provide—and get paid for— Part B services depends on state regulations. Communities in states such as Ohio can bill Medicare under their skilled nursing facility’s outpatient services number, while third-party therapy providers in Illinois CCRCs, for example, have to use their own billing number. In those cases, the therapy provider essentially sets up shop on campus and pays the CCRC market rent for the space being utilized. 

It’s a revenue stream that’s waiting to be tapped, Boyson says, and it can be at no cost to the CCRC as therapy providers typically aren’t paid unless they’re bringing in revenue to the community. That revenue is split, and while the percentages for sharing revenue vary case by base, Boyson says usually 70-75% is paid to the therapy provider, with the rest retained by the CCRC’s skilled nursing facility. 

“The community doesn’t have to put capital at risk [to develop an in-house therapy business] to hire people and keep them busy,” he says. “The onus is on the therapy company to drive that revenue.” 

Written by Alyssa Gerace


Category: CCRCs, Senior Care, Senior Housing, Skilled Nursing

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