Assisted living communities have served an important role in the US’s health care continuum—often they have been the next stop for older people who have been discharged from a hospital or a skilled nursing facility. Assisted living communities assist their residents with medication management and activities of daily living. With such an important role serving seniors, why don’t insurers pay these providers to keep their constituents safe?
Apart from long-term care insurance, it is not common for health insurers to pay assisted living communities because many insurers and providers operate on a fee-for-service basis. That means providers charge the insurers for each procedure/line item. Under this payment structure, preventative care, like what is provided in assisted living communities is over looked by the insurers–much like your insurer now probably doesn’t pay for your vitamins or exercise classes.
The Center for Medicare and Medicaid Services(“CMS”) in tandem with private insurers, are experimenting with a fee-for-value payment model. Through this model, a cohort of providers are paid a flat fee to manage the health of the insurance company’s constituents. In this model, the group of providers can earn more money by reducing the health care costs of the insured population.
As this new fee-for-value system rolls out, assisted living communities will have an opportunity to take payments from insurance companies as a way to reduce the cost of managing the health care costs of their constituents, most notably through lowering readmission rates into hospitals.
If assisted living communities become part of the formal health care continuum, many will have to change the way they do business. Now, a lot of assisted living communities operate as hospitality companies with a sliver of supplemental care. That’s because these communities must woo consumers in to their communities and we believe they do that through enhancing their hospitality features over care capabilities. The way we understand consumers is they generally require a minimum level of care and then focus on choosing a community with the nicest hospitality features that they can afford.
Under a system by which an insurance company pays an assisted living community, a community must show it knows how to manage a population of people effectively. To do this, assisted living communities may have to improve their health care capabilities. A few notable aspects that Dr. Kevin O’Neil pointed out in his interview with Senior Housing News is senior living communities must work on systems to help prevent falls and manage the medications of its residents better1. That means communities may need to have software systems in place to track metrics about their residents, to train their staff to spot people who are a fall risk, and to hire more staff to manage the communities’ residents better.
Two things need to happen for assisted living communities to take payments from insurers: (1) assisted living communities need to focus more on providing health care; and (2) insurers and providers need to organize under a fee-for-value system. When those two aspects occur in a given market, then you will see assisted living communities take payments from insurers as a result of caring for the insurers’ constituents.