Providers Get Into Insurance Game…

Scott Rifkin is one of a handful of providers who has started his own insurance company.

Scott Rifkin is one of a handful of providers who has started his own insurance company.

Bill Myers

Good morning, ProviderNation. It is notorious that many providers are, um, un-thrilled with the growing clout of managed care, but a few long term and post-acute care companies have learned that if you can’t join ’em, be ’em.

“People are starting to wake up to it, because they’re getting squeezed by the system,” says Scott Rifkin, CEO and managing partner of Mid-Atlantic Health Care, who’s just obtained permission to launch his own Medicare Advantage insurance company. “Why not do what we do best? Get people healthy, keep them healthy, and then, keep a little bit of the risk money for themselves.”

Rifkin is one of a handful of providers who’ve gone into the insurance business themselves. He will launch his Medicare Advantage provider in Maryland at the beginning of next year, and a Pennsylvania version is planned for 2017. As he and his colleagues see it, it’s not just good business sense: it’s the best way to improve quality care.

‘None Of It Is Rocket Science’

“None of it is rocket science, but what became apparent to me was that we were only sending people to the hospital because the payment system directed them there,” says Tom Coble, president and CEO of Elmbrook Management Co. in Ardmore, Okla. (and chair of the board of some Washington outfit). “It was very clear to me that we could take care of most of our residents in the facilities if we were just allowed to and we were paid to do that.”

Coble launched his own insurance line back in 2005; he and Rifkin now partner up to reduce their insurance companies’ administrative costs. What Coble saw coming all the way back in 1995, though, was that Medicare’s way of doing business wasn’t, um, good.

“I saw that falls occurred, or families got really upset during periods when everyone knew that their loved one, our resident, is getting sick, but they weren’t sick enough to be treated in the system,” he tells me. “The current Medicare system, and the current fee-for-service system still doesn’t allow for proactive, preventive care. So you had that going on.”

Coble: Seeing residents denied quality care 'set me off on a mission.'

Coble: Seeing residents denied quality care ‘set me off on a mission.’

‘Set Me Off’

Sometimes it was obscene, Coble recalls.

“Back then, when we would admit someone, they came from home used to having oxygen, electro-beds, wheelchairs, all this great stuff—and it was paid for by home health. But guess what? When they hit the nursing center it wasn’t paid for anymore—even though they needed it, it wasn’t paid for,” he says. “It just set me off on a mission to change the way Medicare services are delivered to residents in long term care centers.”

Two decades later, Coble is now a provider, and a payer. And that means he gets to help residents get the care they actually need, not the care that some bureaucrat will pay for.

“It has allowed to us to put nurse practitioners in centers that would not otherwise be able to afford them or to have access to them,” he says. “They can deliver that proactive, preventive care. We’ve been working in our plans now for three years not on readmissions. We’ve been working on avoidable hospitalizations. That’s thru proactive, preventive interventions.”

Obamacare Incentives

Under Obamacare, insurance companies are required to pile 85 percent of their revenue back into care. But the definitions between care and revenue are so vague that many providers are convinced that most health insurers aren’t paying their full 85 cents on the dollar for long term and post-acute care.

For Rifkin, that’s leaving money—and care—on the table.

“You’re already spending the money to get your readmissions down. You’re just not getting paid for it,” Rifkin says.

Rifkin, trained as a physician, has seen that movie before.

“I was there when the same thing happened to primary care docs 20 years ago. We got killed: We lost control of our patient bases. And they never came back. The same thing is going to happen in skilled nursing,” he says.

Post-Acute Care Managers

Now that legislators and regulators are routinely using “value-based purchasing” as though it was their last name, it’s a great opportunity to get ahead of the curve, Rifkin says.

“I don’t think we all want to be nursing home providers anymore. I think we want to be post-acute care managers,” he says. “The baby boomers are just hitting the homes, and the government isn’t interested in paying any more.”

Rifkin’s company owns nearly one-quarter of the long term and post-acute beds in Philadelphia. When he took over some of those centers, the hospital readmissions rates were nearly 44 percent. Now, they run between 8 and 12 percent, he says.

‘A Better Way To Go’

“If we’re already taking the risk to do something like that for our hospital partners, why wouldn’t we take on some of the upside to the risk?” Rifkin says. “This way of doing things is just from every policy perspective a better way to go. And that opportunity exists for every nursing home provider.”

That doesn’t mean that a provider can just hang out an insurance shingle and go to work, Coble and Rifkin are quick to stress. CMS regulates its Medicare Advantage companies rigorously (especially in its marketing plans and materials). All-in, it’s probably between $4 million and $5 million to get the company up and running, Rifkin estimates.

“This is what I call the ultimate bundle,” Coble says. “We deliver care in a different way than other Medicare Advantage plans do. But providers have got to be okay with risk. The capital can be intensive to do this. And the learning curve is very, very steep. They really need to do their homework and put themselves in a position where they know exactly what they’re getting themselves into.”

Bill Myers is Provider’s senior editor. Email him at Follow him on Twitter, @ProviderMyers.

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Filed under Long term care, Post-acute care

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