Hospitals’ Response to Covid-19 Could Disrupt Assisted Living in Lasting Ways

Hospitals across the United States are taking urgent steps to free up beds for people with Covid-19. The result could be a cascade of patients through the health care continuum, which would ultimately drive move-ins to assisted living communities and could disrupt their business model in potentially lasting ways.

The scenario taking shape is that hospitals, to create Covid-19 capacity, will send certain patients to skilled nursing facilities (SNFs). To accommodate this influx of hospital patients, SNFs would move some people — probably long-term care residents with minimal medical needs — to other settings, including assisted living.

While this situation is not yet playing out in dramatic fashion, there are reports of it occurring. And the precipitating conditions are rapidly taking shape in certain places, most notably the state of New York. Last week, authorities there issued an order that nursing homes are required to take hospital patients deemed “medically stable,” regardless of their Covid-19 status.

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The American Health Care Association/National Center for Assisted Living (AHCA/NCAL) pushed back on this approach to managing surge capacity, noting the particular vulnerability of residents in nursing homes and assisted living to Covid-19.

Instead of such a “blanket, one-size-fits-all” directive, states should take a more targeted approach to handling surge needs, AHCA/NCAL urged. Meanwhile, some senior living providers around the country are already in talks with hospitals, health systems and insurers about taking on patients, and the potential for new payment streams — through Medicaid and Medicare Advantage in particular — to support these efforts.

The entire concept of moving patients around in this manner is controversial and would be “incredibly disruptive,” altering the business models of SNFs and assisted living communities while placing older adults under duress, Howard Gleckman, a senior fellow in the Urban-Brookings Tax Policy Center at the Urban Institute and a noted expert on senior housing and care, told Senior Housing News.

But, desperate times may call for desperate measures.

“If we are in the kind of crisis that we appear to be in, particularly in some communities like New York and San Francisco and Seattle and other places, it calls for very dramatic measures,” Gleckman told SHN.

Assisted living has capacity, care capabilities

As the Covid-19 outbreak worsens across the United States, the need for additional hospital capacity is undeniable — witness the situation in New York City, where a field hospital is going up in Central Park and the Navy just docked a hospital ship off Manhattan.

Post-acute care and senior living communities clearly have a role to play in freeing up hospital capacity, according to Anne Tumlinson, founder and CEO of health care and aging consultancy ATI Advisory.

Most obviously, hospitals should look to long-term acute care hospitals and inpatient rehabilitation facilities, as these settings most closely mimic acute care hospitals and have the capabilities to take more medically intensive patients, she told SHN. Skilled nursing facilities are next in line, and as the situation in New York illustrates, SNFs are already being utilized for managing surge capacity.

The role for assisted living is less clear at the moment to Tumlinson but she does think that they will be involved.

“The assisted living facilities, some of them are going to have a role to play,” she said. “Some of them have capacity … they have a wing or a unit that could be recruited or put in use.”

Indeed, the Covid-19 pandemic has struck at a time when many assisted living communities are at low occupancy. Due largely to oversupply in certain markets across the country, the national occupancy rate for assisted living hit an historical low point last year before beginning to tick up. As of Q4 2019, the national average occupancy for assisted living sat at 85.7%, according to data from the National Investment Center for Seniors Housing & Care (NIC).

Gleckman also sees the potential for assisted living communities to take people from SNFs, as he described in a Forbes column last week and a subsequent interview with SHN. He too notes that excess capacity exists in many assisted living communities, and in fact occupancy might drop further as a result of Covid-19.

Although assisted living is a needs-based product, it is also almost entirely a private-pay industry. So, with the stock market decimated in recent weeks and unemployment through the roof, it’s plausible that seniors may defer a move because they can no longer afford it themselves, or their adult children may now be unemployed and unable to help pay, Gleckman said.

Furthermore, assisted living providers should be able to provide appropriate levels of care to many people who currently reside in a SNF, he believes.

“When I visit [nursing homes], I often see residents whose only issue is that they have dementia and some functional limitations,” he told SHN. “They don’t really have complex medical conditions.”

Still, taking on new residents means that proper staffing levels and expertise also have to be in place, and this could prove to be a challenge — but not an insurmountable one. One possible solution would be to have some of the SNF staff transfer to work in the assisted living setting as patients make the move, Tumlinson suggested.

Operators that provide both skilled nursing and assisted living are naturally well-positioned to help manage patient flow through the continuum. One such provider is Lakewood, Colorado-based Vivage, which operates skilled nursing under that brand and senior living communities under the WellAge brand.

The cascade of patients from hospitals to SNFs to assisted living is “definitely a possibility,” Senior Vice President of Business Development Daphne Bernstein told SHN.

“I have been having conversations with multiple hospital executives — they reach out to me every single day, to have conversations about transitioning patients from the hospital to our skilled nursing facilities,” she said.

Currently, Vivage does have bed capacity in its SNFs to take on patients, and is in discussions to lease those beds to hospitals. Current Vivage policy is to deny admission to anyone with respiratory issues, unless they have a negative Covid-19 test. However, this policy, and the entire situation regarding how Vivage and WellAge work with hospitals to manage patient surges, is “very fluid,” according to Bernstein.

“Everything changes on a daily basis,” she said.

A Keystone Kops situation

While the case for assisted living to help create hospital surge capacity makes sense, major impediments will have to be overcome first. Perhaps most fundamentally, there is no clear and coordinated strategy for how to involve skilled nursing and senior living providers in the effort to manage the nation’s health care resources and preserve all-important hospital capacity.

“There’s a lot of Keystone Kops going on here,” Tumlinson said. “We’ve got very, very different responses to the … problem in different markets. And nobody has really thoughtfully articulated a framework for how to assess the need, how to assess capacity, how to make decisions.”

Tumlinson herself is working on such a framework, but for the moment, she advises assisted living providers consult with the skilled nursing facilities in their markets to assess what they are hearing from hospitals and to determine potential areas for coordination. Many SNFs are “very, very nervous” about the patient influx that may be arriving in the coming days and weeks and are open to having conversations with other providers that could offer support.

It’s advice that Bernstein echoes.

“I can tell you most of the time, when salespeople from assisted living coming into our skilled nursing facilities, they’re coming in to just drop off a pen or a box of donuts and say, hey, how are things going, good to see you, we’ll see you next month,” she said. “[They’re] not having those conversations that they should have to really cultivate those relationships and to find out how can they help meet the needs that we have in trying to discharge people to the senior living communities.”

The payment conundrum — and opportunity

In addition to the overall lack of coordination and guidance from federal and state agencies, payment is another major sticking point if assisted living is going to take on patients from SNFs.

Payment is of course a crucial concern for any business at any time, but it is particularly pressing given that senior living providers are already facing elevated Covid-19 expenses related to labor and supplies, and these costs are destined to rise if they start to provide care for Covid-19 patients. The estimated cost for a single Covid-19 patient in a SNF is $2 million, Bernstein said.

Nursing homes are reimbursed through Medicaid for the majority of nursing home long-stay residents, but almost all assisted living is paid for out of residents’ pockets. Some states do offer waivers that allow assisted living to receive Medicaid reimbursement, but the margins are lower and the process for receiving those waivers can be onerous.

“ALs have to meet incredibly complicated rules to be considered home- and community-based — mostly, that’s where they get paid, from HCBS money,” Gleckman said. “So the ALs have to meet the standards down to … what kind of lock you have on the door and a bunch of crazy things like that.”

However, the Covid-19 crisis has already led the government to make sweeping changes with the stroke of a pen, creating new flexibilities and easing all manner of regulations. So, it’s conceivable that the Centers for Medicare & Medicaid Services (CMS) would turn on the spigot of Medicaid dollars for assisted living communities that take people from nursing homes. The federal government already increased Medicaid funding via one of the recently passed stimulus packages, so there is additional money available, Gleckman noted.

Tumlinson is on the same page, and thinks that Medicaid is at least prepared to offer nursing home rates to assisted living providers that take patients from SNFs.

“The problem everyone is trying to solve right now is hospital capacity, so if you are an assisted living facility and you think you have a solution for that, it creates an opportunity for you,” she said. “If you can do that in a way that makes sense for your business … that’s what we would want, and there should be enough waivers and reimbursement flexibility right now for that to be possible.”

In addition to Medicaid, there is another potential payment mechanism at play: Medicare Advantage.

If a Medicare Advantage beneficiary moves from a hospital to a SNF or assisted living, typically there are pre-authorizations needed and changes in what services are covered. But like CMS, the private-sector insurance companies that offer MA plans have been throwing the usual rulebook out the window.

MA insurers including UnitedHealthcare, Aetna, Humana and SCAN did not reply to requests for comment to this story or declined comment. Anthem directed SHN to the Medicare Advantage industry association America’s Health Insurance Plans (AHIP).

“We fully agree on the need to maximize capacity and minimize health risks — both for patients and for care providers — as we mitigate the COVID-19 pandemic,” AHIP Senior Vice President of Communications Kristine Grow told SHN via email. She shared a statement from the group’s board of directors, which stated in part:

“Patients who can be treated safely in alternate sites of care for post‐acute care services should be quickly moved to those facilities. That means inpatient hospitals can transfer patients that are  COVID negative or are treated in regions with capacity challenges without advanced approval to any alternate post‐acute care facilities that are safe, medically appropriate and readily available (e.g., Home Health, Long Term Acute Care Hospitals, Skilled Nursing Facilities, and others) until this crisis is resolved. The discharging and receiving facilities simply need to notify the health insurance provider the following business day … We strongly encourage all health insurance providers to adopt and implement this approach during this current public health emergency.”

Update: Humana on Thursday announced that it would adopt this approach.

Bernstein “definitely” thinks that Medicare Advantage will be a payment source should SNF residents transfer to assisted living, but said that the specifics likely will be hammered out only when necessity dictates.

“I’m sure the Medicare Advantage plans are overwhelmed by all of this as well right now,” she said. “Right now, it’s not so much looking to the future and planning what it’s going to look like next month or next year. We are really functioning on a day-to-day basis right now, and even looking into next week seems really far in the future.”

In the last two years, newly allowed Medicare Advantage benefits opened the door for this public-private form of insurance to become a more significant payer for assisted living services. Several senior living providers have launched their own Medicare Advantage plans, while some “payviders” — health systems with their own MA plans — have acquired senior living operating companies. This is part of a larger shift that has integrated senior living more with other health care providers, as population health frameworks put a premium on being able to manage patient care — and health care dollars — across the continuum.

But this process of integration has been stop-and-go, with senior living companies struggling in many cases to gain traction with health systems, Medicare Advantage insurers and other large players. Now, the Covid-19 situation is demonstrating the crucial place that senior care facilities occupy in the health care system, and assisted living providers have a chance to forge lasting relationships that will prove valuable even after the crisis passes.

Already, Vivage is having more frequent and different conversations with hospitals than in the past.

“Just a couple of weeks ago, we were getting ready to have some new preferred provider network relationships started here in the Denver area,” Bernstein said. “There were a couple hospital systems that sent us applications, we started having initial conversations, and all of a sudden, they put that aside and [said], we’re forgetting our preferred provider network. Right now we have this huge influx of patients that need to go somewhere else.”

In the past, hospital systems were fixated very much on metrics such as readmission rates to determine good downstream partners. Now, they’re looking for providers that are willing to cooperate and brainstorm solutions, she said.

In other words, senior living providers are rightly focused on safeguarding their residents and staff members in the face of the pandemic, but they are well-advised to reach out to the broader health care community in their markets at this time. Despite pressing concerns on issues ranging from infection control to cash flow, providers could be rewarded if they can look beyond the bubble of their operations.

“We’re all scared about our businesses,” said Tumlinson, herself an entrepreneur. “We just have to take a bigger-picture approach to the solutions, and I believe the providers who do that will win in the long-term.”

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