Telehealth for SNFs – Part 3: Beyond Video…The Financial Return on Investment from “Real Telehealth”

By Paul Knight, OT, MBA, Founder, Curatess

The first two parts of this series covered what “real telehealth” is for skilled nursing facilities (SNFs) and proven practical tips for successful implementation (here’s a podcast interview summary). We’ve discussed why basic video chat applications, such as FaceTime, are not designed to be long-term solutions for delivering real telehealth to SNFs. As a result, many SNFs are realizing this fact and re-examining their approaches to telehealth left in the wake of the COVID-19 pandemic’s early days. Indeed, no less than 20% of all medical visits across all specialties and venues of care will have been delivered via telehealth in 2020 (1), and the high-acuity and infection risk of the SNF environment quite possibly pushes the telehealth adoption rate even higher for SNFs. Seema Verma, the Administrator of CMS indicated “26 percent of beneficiaries who received nursing home visits did so by telehealth”. (2)

Understandably, free or basic video chat apps have been widely adopted due to the sudden urgency of the pandemic and the need to provide patient care and preserve revenue. However, how do video chat apps really compare to enterprise-grade, real telehealth solutions in terms of revenue impact, direct costs, indirect (including hidden) costs, clinical outcomes, and stakeholder satisfaction?

A way to bring some answers to this question is to construct and analyze the financial case for real telehealth as applied to SNFs. In particular, sophisticated SNF operators and managed services organizations (MSOs) serving SNFs have a strong desire to learn more about the financial return on investment (ROI) of “real telehealth” and in comparison to that of basic video chat solutions. Industry consensus is that telehealth is permanently a financial, operational, and competitive necessity for SNFs emerging from the height of the COVID-19 crisis. As a result, SNF operators are increasingly unwilling to rely on temporary approaches or unoptimized solutions to address on-going telehealth workflows and needs in their facilities. The stakes are too high. 

“General video chat applications do not provide physicians with the capabilities to examine their patients. Real telehealth allows me to have the clinical templates and examination tools necessary to provide a comprehensive telehealth visit.”  – Dr. Karim Yunez, Medical Director

We discuss here the top three sources of ROI delivered by real telehealth and how maximizing and sustaining them goes beyond just adding video chat to a patient visit:

  1. Protecting Revenue 
  2. Maximizing Value-Based Care Incentives and Avoiding Penalties
  3. Expanding and Optimizing Care to Increase Revenue and Reduce Costs

1. Protecting Revenue

Change-in-Condition ROI

COVID-19 has significantly reduced SNF resident census/occupancy, increased expenses for unexpected PPE & labor, and impacted the access and quality of in-person care. Now more than ever, SNF operators need to find ways to prevent avoidable revenue losses.

SNFs with a high percentage of Medicare beneficiaries are acutely aware of the need to reduce care setting transfers and manage patients in place to preserve revenue. Medicare beneficiaries who return to the hospital for a “change in condition” and do not return back to the SNF before that midnight (the “midnight rule”) are not eligible for reimbursement to the SNF. Typically, the SNF doesn’t have physicians nor other qualified healthcare providers onsite during evenings and weekends, so the facilities are dependent on remote clinicians for triage. COVID-19 visitation restrictions have further reduced the in-person availability for physicians or other qualified healthcare clinicians at a SNF.

In response, a well-designed telehealth program with optimized clinical workflows to manage these events can avoid unnecessary care setting transfers, thereby preventing the loss of daily Medicare reimbursement.

ROI Example: Say a SNF with 60 Medicare Part A beneficiaries returns 10 such patients to the hospital each month who do not return to the SNF before midnight. Assuming a typical Part A SNF reimbursement of $500 per patient per day, the revenue loss would be $5,000 per month or $60,000 annually. If the fully-loaded cost of a telehealth program is $1,000 per month, then the telehealth investment would be breakeven if telehealth prevents only 2 of the 10 hospital readmissions from occurring. If half of the monthly readmissions are avoided through applying real telehealth, then the ROI is ($5,000/2 – $1,000)/$1,000 = 150%.

Returning-Patients ROI

Another means of preserving or recovering revenue is to educate families and patients who left a SNF due to COVID-19 safety concerns about how real telehealth can ease patients’ transitions back to the facility and support quality care, perhaps even better than pre-COVID. Real telehealth attributes shine brightly here, such as the ability to receive care from a patient’s family doctor, rather than a telehealth-only clinician, and for physicians to have easy, integrated access to the patient’s electronic medical record.

It’s less reassuring to families to hear that a SNF’s clinicians and staff are using FaceTime or other basic video chat app to support telehealth visits for their loved ones. Real telehealth is a differentiator for SNFs that treat telehealth as a core, mission-critical part of their operations versus as an afterthought deserving only the bare minimum of technology, training and support.

ROI Example: If implementing real telehealth plays a pivotal role in attracting only 1 Medicare part A patient per month back to the facility, that results in about $15,000 per month of recovered revenue. Assuming an operating margin of 30% and a $1,000/month investment in real telehealth, the recurring monthly ROI is ($15,000 x 30% – $1,000)/$1,000 = 350%

2. Maximizing Value-Based Care Incentives and Avoiding Penalties

In addition to protecting revenue, real telehealth enables SNFs and referring hospitals to capture quality incentives and avoid penalties instituted by value-based care programs rapidly expanding to post-acute care.

SNF Value-Based Purchasing (SNF-VBP) Program

The Medicare SNF-VBP Program rewards incentive payments based on the quality of care SNFs provide to Medicare beneficiaries as measured by hospital readmissions. (3) CMS withholds 2% of Medicare Part A fee-for-service payments from SNFs, creating an incentive opportunity for SNFs to earn back up the entire 2% based upon hospital readmissions performance. For many SNFs, this is a major revenue growth opportunity as 72% of SNFs in FY2019 experienced a penalty on Medicare A reimbursement due to the withhold. 

As described in the previous section, real telehealth sustainably enables SNFs to better manage patients in place, avoid readmissions, and thereby maximize the financial value of the SNF-VBP Program. In fact, telehealth has more than 90% of the time resulting in a higher probability to earn an incentive payment.

ROI Example: Consistent with the assumptions of the previous ROI examples above, a SNF with a payer mix of 60% Medicare A and 10 facilities, each with an Average Daily Census (ADC) of 100 patients, could earn back an estimate up to $2.3M per year in SNF-VBP incentives.

Hospital Readmission Reduction Program (HRRP)

The HRRP penalizes hospitals demonstrating poor readmission rates within 30 days after hospital discharge for the following conditions:

  • Acute Myocardial Infarction (AMI)
  • Chronic Obstructive Pulmonary Disease (COPD)
  • Heart Failure (HF), Pneumonia
  • Coronary Artery Bypass Graft (CABG) Surgery
  • Elective Primary Total Hip Arthroplasty and/or Total Knee Arthroplasty (THA/TKA)

HRRP directly impacts hospital revenues and heavily influences how hospitals select SNF partners pivotal to reducing readmissions. Hospitals were assessed $563M in HRRP penalties by CMS for FY2019 alone. (4) Underperforming SNFs have experienced reduced hospital referrals and even lost all referrals from a given hospital in all cases. Whether fair or not, some hospitals judge HRRP performance such that a SNF receiving only two referred patients and returning one to the hospital as having a 50% readmission rate. It is important for SNFs to realize and understand the correlation between hospital referrals and readmissions.

3. Expanding and Optimizing Care to Increase Revenue and Reduce Costs

In response to the public health emergency 1135 waiver and President Trump’s Executive Order to expand telehealth, CMS is proposing to make permanent key telehealth reimbursement and regulatory flexibilities. Hence, beyond the immediate COVID-19 crisis, SNF operators must decide who should control and fund their telehealth programs, the facilities or the physician groups serving at those facilities?

If a SNF decides to oversee and finance a program for real telehealth, then the SNF gains more control over:

  • patient access to care,
  • factors determining compliance with government-imposed COVID-19 restrictions, and
  • the means to empower remote physicians to deliver care within the facility.

In particular, this scope of control also enables a SNF to capture more revenue and reduce costs through care extension workflows, three of which are described here.

Hospital or Physician Group Specialized Programs

Telehealth clinical workflows can provide a SNF immediate remote access to hospital emergency department (ED) physicians for managing sudden changes in condition of SNF patients. Whereas basic video chat solutions are difficult for clinicians to use in busy EDs, optimized real telehealth makes it easy for remote ED clinicians to collaborate with SNF staff at the patient bedside to handle such scenarios. Similarly, physician groups can remotely deliver care for chronic conditions, cardiac and respiratory diseases, and post-surgical follow-ups via a real telehealth infrastructure and approach. All of these care extension scenarios represent new revenue opportunities for SNFs and their care delivery partners, while also improving outcomes and value-based care performance.

Access to Payor Care Teams

Payor-sponsored value-based programs such as Institutional Special Needs Plans (I-SNPs) and Accountable Care Organizations (ACOs) often provide advanced care practitioners to supplement and coordinate patient care in SNFs. A SNF telehealth program enables these practitioners to expand and extend their services to SNF patients, increasing value-based program quality performance and incentive capture.

SNF Pre-Admission Assessment

Leveraging enterprise-grade telehealth capabilities, a SNF can remotely conduct the pre-admission assessment for complex hospital patients by connecting the SNF’s director of nursing to the hospital bedside prior to the SNF accepting the patient. This reduces the financial and liability risks of the SNF accepting a patient whose condition is not best matched to the resources and capabilities of the facility.

What’s Your ROI for Real Telehealth?

Census is down across the nation with increased costs and restrictions like never before. As CMS resumes facility inspections paused by COVID-19, SNF may face the threat of additional non-compliance penalties. SNF operators must realize the full value of telehealth by implementing real telehealth programs to improve financial stability and enhance how care is delivered. Real telehealth avoids hospital transfers, expands partnerships with hospitals, payor and physician groups, and extends virtual care to capture new revenue opportunities, all of which deliver immediate and sustainable ROI. To further analyze the financial case for your organization, you may access our free ROI calculator for real telehealth.

Please contact me if you’d like to share your experiences or need help. Subscribe here to follow this series and receive other educational updates from our team.