Why Senior Living Must Adapt to New Payment Programs

While the health system has been shifting away from its fee-for-service reimbursement model, alternative payment programs have accelerated coordination across the care spectrum, and senior living providers are becoming more involved.

Bundled payment programs are among these new models that have been introduced over the past few years by the Centers for Medicare & Medicaid Services (CMS), tying reimbursements to patient care over a period of care. The models have brought together providers across the health care continuum—from hospitals and home health to SNFs and even senior housing.

Bundled payment models link payments for multiple services and offer some opportunities for senior living providers, such as building a network of partners. There are also implications for providers with SNFs, which are critical components of bundled models. The upside of these models means more patient volume to SNFs coming from hospital and other acute care partners.


There are currently a few bundled payment models active, but only one is mandatory—the comprehensive care for joint replacement (CJR) model went into effect on April 1, 2016 in nine pilot states. This timeframe for this model is from the joint replacement surgery though 90 days of followup care; if the bundle of services provided in this window exceeds a cost benchmark, the hospital must repay Medicare, but if costs are lower, the hospital receives an incentive payment—which it may share with other providers involved in the episode of care. More mandatory models are expected to come, and CJR will likely soon spread nationally, according to David Terry, founder & CEO of Archway Health, who spoke last week during a panel discussion on bundled payments at the Post Acute Link Care Continuum Conference in Chicago.

Archway provides bundled payment management services to health care companies.

While bundled payment models such as the CJR arguably offer the most opportunities for home health care businesses to partner with acute care providers, senior housing can also have a seat at the table.


Part of the difficulty of getting involved in bundled payment programs is that senior housing is often viewed by health systems as hospitality rather than care. Senior housing has similarly felt this challenge in gaining traction with accountable care organizations (ACOs). Compared to ACOs, bundled payments come with less risk as the payments only cover an episode of care, according to Terry, though the model still leaves health care providers as risk-bearing entities.

However, just as in ACOs, as major health systems become responsible for the care of a patient during an episode of care under bundled payments, transitions into senior housing settings become part of the equation. As more alternative payment programs continue to come down the line from federal payers, senior housing should refrain from taking a back seat.

A few of the players already involved in bundled payments provided a few tips for providers looking to engage:

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1. Know Your Market: Currently, not all states across the country have mandatory bundled payment programs and not all areas have providers engaged in these alternative models. Before a provider gets involved, it’s essential to understand which programs are already ongoing in the area. Knowing what is going on in the market currently can help a company understand its place and value in these models.

“Know your market,” said Linda Huffer, president of Sentara Enterprises, the largest health system in Virginia, which operates more than 100 sites, including three assisted living facilities. “Know who is involved in bundles, that bundles they are involved in and if they are developing a preferred network. …Then determine your value proposition. Make sure you have a seat at the table with those who are participating.”

2. Engage at the C-Suite: The decision to get involved with alternative payment programs is one that needs to come from the top down, and executives must be fully engaged at the leadership level, panelists urged. It is crucial to get executives heavily involved when it comes to bundled payments.

“If the c-suite isn’t engaged, it will fail,” Terry said. “This is a huge change in the way your business will operate.”

3. Start Developing Relationships: As bundled payments link different providers from across the care continuum together, building a network of preferred partners can not only smooth the care coordination and transitions, but create added value to health system and hospital partners.

“The key takeaway is to focus on building collaborative partnerships in your areas,” said Judy Amiano, president and CEO of Franciscan Ministries. Franciscan Ministries providers senior housing and affordable housing in Wisconsin, Colorado and Illinois. The non-profit has been involved in bundled payments since July last year.

“You can’t do it alone anymore,” she said. “My recommendation is to make sure you’re getting in contact with all the other good providers in your area.”

4. Understand the Data Challenge: Real-time data is one of the most crucial elements of bundled payments as patients transfer from one care setting to another. Health care and senior housing providers not only need to make the investment in a system that can track patient care and outcomes, but have a way to analyze, digest and understand the data to continue to make improvements.

Without the real-time information, providers run “the risk of being reactive instead of proactive,” Amiano said.

All these components can help senior housing companies be successful when engaging with bundled payment and other alternative programs. As the health system continues to shift, actively engaging in these models can offer many opportunities.

“It’s here to stay, and it’s coming in a big way,” Terry said.

Written by Amy Baxter

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