Essential Gatekeepers: Hospital discharge planning staff have a critical role in the success of skilled nursing facility diversion/transition to assisted living programs based on In Lieu of Services.

Published in Today’s Geriatric Medicine Magazine - November 2022

By Jason Bloome

Hospital physicians, social workers, and case managers are on the front lines as they encounter older adults who, often due to insufficient care at home, return to the hospital soon after discharge. According to CMS, 1 in 5 individuals on Medicare return to the hospital within one month of discharge. Many of these are low-income “dual-eligibles” (on Medicare and Medicaid) and, when the cycle repeats often enough, some end up as permanent residents in skilled nursing facilities (SNFs) on Medicaid long-term services and supports (LTSS).

Dual-eligibles on LTSS in SNFs frequently have only custodial care needs (eg, require help with dressing, bathing, incontinence, ambulation) and do not require long-term skilled nursing care (eg, they do not have ventilators, g-tubes, tracheostomies). The 2020 AARP/SCAN LTSS State Scorecards indicate thousands of older adults on LTSS in SNFs have low-level care needs that could be met by community-based care settings, including assisted living homes.

Paying for expensive Medicaid SNFs for dual-eligibles who could safely reside in more affordable 24-hour custodial care assisted living homes is problematic for Medicaid state and federal payors seeking to lower LTSS health care expenditures. Increasing LTSS spending for home- and community-based care settings while decreasing it for SNFs is a nationwide trend accelerating each year.

To address the problem of unnecessary, costly institutionalizations, many states use 1915(c) waivers that allow Medicaid to pay for assisted living homes, but these programs have limited capacity, long wait lists and, often, strict eligibility rules (some states, for example, do not allow participation by individuals with Medicaid share of costs) affecting the efficiency of SNF transition programs throughout the nation.

In Lieu of Services
CMS allows states to use a new tool called In Lieu of Services (ILOS) to develop pathways for SNF diversion/transition to assisted living homes. ILOS are cost-efficient and medically appropriate settings or services substitutes “in lieu of” traditional Medicaid funded services, such as SNFs. ILOS are incorporated into state Medicaid Managed Long Term Services and Supports (MLTSS) programs in which states lower health care expenditures by enrolling Medicaid recipients with managed care plans (MCPs) for the delivery of health care services. The MCPs recapture their ILOS expenses during annual capitated (or per member per month) rate calculations.

California Advancing and Innovating Medi-Cal
California, which refers to Medicaid as Medi-Cal, is one state worth following as it implements a new ILOS program called California Advancing and Innovating Medi-Cal (CalAIM) which, if successful, could provide a template for other state ILOS programs.

CalAIM, which began in January 2022, is a five-year program that will eventually enroll all Medi-Cal recipients in statewide MLTSS by 2027. The program is expected to streamline Medi-Cal delivery systems by utilizing Enhanced Care Management options and 14 ILOS—referred to in California as Community Supports (CS)—which state contracted MCPs can choose to offer their members.

The CS for SNF Diversion/Transition to Assisted Living
In 2022, six MCPs are offering their members the CS for SNF diversion/transition to assisted living with more expected to follow in 2023. The assisted living home is funded by a combination of the “room and board” portion (paid by the member’s Supplemental Security Income—in 2022 the California Supplemental Security Income assisted living rate is $1,365.77)—and the “assisted living” portion paid by the MCP (reimbursed as a “authorized” ILOS expense).

According to the California 2nd Quarter 2022 SNF MDS 3.0 survey, the majority of SNF residents have custodial care needs, for example, they require supervision, limited, extensive, or complete help with dressing (96%), bathing (96%), ambulation (70%), and not skilled nursing needs, such as g-tubes (9%), IV (1%), or ventilators (2%).

Two-thirds of California SNF residents rely on LTSS Medi-Cal for payment and many are dual-eligibles who require only custodial care. SNF residents with only custodial care needs are good candidates for SNF diversion to assisted living homes, which include small four- to six-bed settings with high (1:3) staff to resident ratios.

Program data from California’s 1915(c) assisted living waiver indicate the annual DHCS capitated SNF costs are $56,840 and $35,600 for assisted living homes. Every assisted living waiver participant saves Medi-Cal annually approximately $21,000 or $2.1 million dollars for every 100 SNF transition.

In 2018, 5112 In Home Support and Services recipients (in-home caregivers paid by Medi-Cal) exited the program to go to SNFs—many with only custodial care needs. Diverting 10% (500) of this population from SNFs to assisted living would result in annual Medi-Cal cost savings of $10.5 million (500 x 21,000).

Discovering Eligible SNF Diversion/Transition Candidates
To discover eligible candidates, MCPs should develop a robust marketing program (for example, including emails, brochures, and CS dedicated webpages) informing members and their families about the CS. In addition, MCPs should data mine to discover eligible candidates:

1) Use MDS 3.0 Section Q SNF annual surveys (conducted by the SNF) to target eligible patients eligible for SNF transition and offer the CS to the member (or authorized family representatives).

2) Use patient records to target members in SNFs eligible for SNF transition and offer the CS to the member (or authorized family representatives).

3) Use patient records for LTSS members at home who repeatedly recycle from home-hospital-SNF-home to determine the risk of premature long-term institutionalization and offer the CS to the member (or authorized family representative).

Utilizing SNF Diversion/Transition to Lower Hospital Readmission Penalties
Every year CMS penalizes hospitals that have too many Medicare patients readmitted within 30 days. According to data analyzed by Kaiser Health News, 82% of the 3,046 hospitals (2,497) CMS evaluated in 2021 were assessed a penalty—with CMS cutting payments to the penalized hospitals by as much as 3% for each Medicare patient stay during fiscal year 2022.

Repeated hospital, emergency department, and SNF readmissions is expensive to private and public payors and disruptive and disorienting for frail elders and people with disabilities. Patients who are repeatedly discharged are especially vulnerable to the risks that accompany hospital stays and transitions between SNFs and hospitals, including medication errors and acquired infections. A 2013–2017 Government Accountability Study found that 82% of all inspected SNFs had infection prevention and control deficiencies.

As ILOS programs for SNF diversion/transition to assisted living, fully mature hospitals will have new tools for lowering hospital readmissions for frail dual-eligibles with custodial care needs who lack adequate care supports at home. The success of these programs will rely, in part, on essential gatekeepers: hospital staff responsible for discharge planning, such as physicians, social workers, and case managers, working in conjunction with MCPs to flag and preplan SNF diversion for LTSS dual-eligibles at risk of premature institutionalization and SNF transition for dual-eligibles who, after short-term stays in SNFs, for example, for rehabilitation services, would benefit from long-term stays in 24-hour custodial care assisted living homes.

— Jason Bloome is owner of Connections Care Home Consultants, an information and referral agency for care homes for older adults in Southern California.