How Genesis is Seeking Lion’s Share of Post-Acute Market

Anticipating increased competition for referrals, one of the nation’s largest post-acute care providers is going big on alternate payment models in an effort to corner more of the market.

Genesis HealthCare (NYSE: GEN) is seeking accountable care organization status for one of its physician groups and is ramping up involvement in a Medicare bundled payment initiative, leaders with the Pennsylvania-based provider explained on a conference call Friday. The company also is preparing to work with hospitals in the Comprehensive Care for Joint Replacement model, which was proposed by the Centers for Medicare & Medicaid Services (CMS) in July.

Genesis encompasses more than 500 skilled nursing centers and assisted/senior living communities in 34 states nationwide. Its collaborators include high-profile post-acute developer Mainstreet. The two companies opened their first joint rehabilitation center earlier this year in Colorado; Mainstreet developed the 99-bed property and Genesis is leasing and operating it as one of its “PowerBack” rehabilitation centers, featuring private suites, bistros, game room and other amenities.

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“Genesis clearly is at the forefront of changes in the industry,” CEO George V. Hager said on the call Friday.

An increasingly crucial part of being at the forefront will be the company’s commitment to so-called value-based initiatives, Hager explained. These are new payment methodologies from the Medicare agency that are seeking to both control cost growth and align providers across the continuum.

The Bundled Payments for Care Initiative (BCPI) is one of these initiatives. In April, Genesis began participating in BCPI Model 3. Under this model, a 90-day episode of care starts when a Medicare beneficiary begins a post-acute stint in a SNF, home health agency or other setting. Medicare makes fee-for-service payments during the episode, and these are later reconciled against a bundled payment amount, or target price, and the government either pays the participating providers the difference or collects a recoupment.

“PCI Model 3 represents the only Medicare alternative payment model that allows post-acute providers to lead care delivery redesign and share in cost savings achieved,” Genesis stated in a press release.

A total of 32 Genesis facilities in eight states are set to participate. An initial assessment indicated that 65% to 70% of Medicare admissions would fall into the bundled payment program, said Jason Feuerman, senior vice president for strategic development and managed care. A majority of costs included in Genesis’ episodes are controllable, he emphasized, particularly the 18% related to hospital readmission.

Source: Genesis HealthCare
Source: Genesis HealthCare

“The big play for us is to reduce unnecessary hospital readmissions,” he said. “We think there’s opportunity to shave off 10% to 20% of hospital readmissions. We’ve got the platform to do it … Genesis Physician Services, so our own SNFists that are in most of these facilities, focused on preventing readmissions, we’ve got a care transition team that’s focused on discharges from our facilities, to keep them out of the hospital.”

Accountable care organizations (ACOs) also fall under the value-based umbrella.

There are various types of ACOs, which involve different types of providers partnering on coordinated care, with the opportunity to share in savings if they come in under certain cost thresholds while meeting quality metrics. In some models, there is both upside and downside risk, but Genesis is seeking involvement in a model—the Medicare Shared Savings Program (MSSP)—that at least initially does not put the provider in jeopardy of losing Medicare dollars.

In fact, even after an initial three-year period, Genesis will have the option of extending the one-sided risk for an additional six years, said Feuerman.

Genesis has not yet received official confirmation from CMS that is has been accepted into the MSSP, but all indications suggest that its application will accepted by year’s end, according to the executives on the call.

That application calls for the company’s Genesis Physicians Services (GPS) providers in Pennsylvania, New Jersey, Maryland and West Virginia to begin overseeing approximately 16,000 beneficiaries in 2016. These would primarily be long-term care residents but also include some short-term rehabilitation patients.

GPS doctors and nurse practitioners make about half-a-million visits annually to both long-stay and short-stay patients, providing after-hours and weekend coverage to help prevent readmissions, according to Genesis. The company is confident in the ability of these practitioners to achieve better outcomes at lower costs.

Finally, more than 100 Genesis-operated facilities are in markets that CMS randomly chose to be part of the Comprehensive Care for Joint Replacement model. Hospitals in these areas are mandated to take part. Their payments will be tied to all costs associated with these procedures for a 90-day period that could include a variety of services, including acute, post-acute, physician services, durable medical equipment and home health.

Genesis is in a strong position to become a preferred provider for these hospitals, given its experience in other types of advanced payment models and its expertise in care for joint replacement patients—which at 13% of admissions is the largest share of its business, Feuerman said.

Becoming the post-acute provider of choice is really driving the strategy with these alternate payment models overall, Hager stressed. He anticipates that parties at risk for Medicare reimbursement penalties, be they hospitals, payors or other providers, will begin to narrow their networks of referral partners to those, like Genesis, that can deliver better outcomes at lower cost and cut readmission rates.

“The point of emphasis here is that we’re looking to become a more significant partner with our referring hospitals,” he said. “We believe we will begin to see, through what we’ve created in our platform, a disproportionate share of the market.”

Written by Tim Mullaney

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