Narrow SNF Networks and Increased Collaboration: The Remedy Approach

Why CMS is Focusing on Post-Acute Care

Healthcare is increasingly transitioning to value-based payment models in an effort to control spending and improve quality. In 2014, the amount spent on healthcare in the U.S. per individual reached $9,523—more than twice the average of all other developed countries—and is projected to reach $14,103 by 2021 if unchecked. Total healthcare spending represents almost 18% of GDP, and is expected to grow to 20% in the next five years. Furthermore, Medicare alone represented 20% of National Healthcare Expenditures in 2013, and is expected to increase significantly after 2015 due to growing utilization of medications and services by an aging population.

To counter this trend, the CMS is “setting clear goals—and establishing a clear timeline—for moving from volume to value in Medicare payments.” The Medicare program committed to convert half of all Medicare payments to risk-based models by 2018, and to link the remaining fee-for-service payments to quality and value. The Bundled Payments for Care Improvement Program (BPCI) is one of the largest alternative payment model demonstration projects and aims to link acute providers to post acute providers by aligning payment incentives during episodes of care.

The Institute of Medicine concluded in 2013 that as much as 73% of regional variation in Medicare’s cost per beneficiary is driven by post-acute care. Due to its tremendous variation and lack of correlation with quality, spending in the post-acute represents a substantial opportunity for cost savings and clinical improvement. From 2001 to 2013, PAC spending more than doubled—from $27 billion to $59 billion (Figure 1).

Acute care BPCI participants nationwide are tightening relationships with trusted, high performing post-acute providers and creating narrow networks to allow for increased collaboration and cost containment in the post-discharge period of the episode. 

Figure 1

Patients who are hospitalized for exacerbations of chronic conditions incur nearly as much expense in the 30-day post-hospital period – due to post-acute care and readmissions – as the expense of the hospital stay. From 1994 to 2009, for these types of patients, total Medicare spending grew annually by 1.5-2.0%; yet post-acute care spending for these same patients grew annually by 4.5-8.5%. There is no evidence that this increase in post- acute care spending for these types of patients – especially after the 30-day post-hospital period – improved quality of care or patient outcomes. In fact, a growing body of research suggests that mortality may actually increase from greater use of post acute facilities.

Furthermore, the significant geographic and facility-based variation in quality and spending contributes to inconsistent clinical outcomes and unsustainable financial repercussions. For example, a Remedy Partners analysis of Medicare claims data from 2013-2014 for a Major Lower Joint episode (DRG 469-470) showed the average cost of care for SNF care was more than $8,000 in New Jersey, and only $3,000 in Arizona (Figure 2).*

Figure 2

Comparing SNF Costs by State

The Institute of Medicine, as part of its report, concluded that bundled payments could reduce geographic variation in spending, while other value-based payment models such as pay-for-performance and accountable care organizations (ACOs) would not have a substantial impact. Moreover, this is consistent with reports from CMS, concluding that while bundled payments reduced readmissions, ACOs did not.

Importantly, higher spending is not correlated with improved quality. In fact, stratifying a sample size of 2296 skilled nursing facilities into quartiles based on Remedy Partners’ SNF Efficiency Model** revealed that the top quartile not only spent almost half per SNF episode compared to the bottom quartile, but readmission rates were also halved (Figure 3). 

Figure 3

Remedy’s SNF Efficiency analysis highlights that utilizing high-quality, efficient SNFs not only reduces costs during an episode of care, but also improves care outcomes. In the BPCI program specifically, post-acute care represents nearly three-quarters of the care redesign savings opportunity for both Model 2 and Model 3 participants. Hence, tight partnerships and care coordination efforts between acute care providers and top performing post-acute providers are critical to success.

Several academic articles have suggested that narrow SNF Networks are one of the three ways a provider can achieve success in reducing post-acute spending. Remedy’s partner hospitals and physician group practices nationwide are utilizing this approach to build high-value narrow SNF Networks, and to inform patient choice through increased transparency about performance and quality.

The Remedy Partners Approach: Narrow SNF Networks and Increased Collaboration 

Through a rigorous evaluation process that includes both quantitative and qualitative elements, Remedy guides providers in the selection of the best centers for inclusion in the narrow network, through data collection and analysis. Skilled Nursing Facility Scorecards are created for each hospital’s market that inform the selection process. The evaluation largely focuses on SNF past performance, current clinical process, relevant partnerships that may already exist via ownership structure, Model 3 BPCI participation and affiliated MD presence (Figure 4). These factors are weighted together to create a “Remedy Value Score” which informs the ranking on the Partner facing Scorecard. 

Figure 4

Remedy’s SNF Evaluation Process 

Informing Patient Choice: The Quality-of-Care Profile

The Medicare Program recently proposed that hospitals, as a condition of participating in the Program, must provide quality information to patients about their post-acute site of care. This increased transparency will assist patients, families and care teams to make better decisions during the discharge planning process. Remedy is helping providers to achieve early steps toward compliance with this rule by publishing SNF Quality-of-Care Profiles. These patient facing documents highlight quality information, specialty clinical programs, clinician availability and discharge planning processes.


Remedy Partners is helping providers prepare for the tidal wave of health care reform that is starting now and will quickly escalate over the coming months and years as CMS links the reimbursement model to quality outcomes and value instead of quantity of services provided.

Remedy’s SNF Performance network is a first step to ensuring that there is tight linkage between the acute and post-acute settings for patients entering episodes of care in over 500 partner hospital sites throughout the country. 


Catherine Olexa, LNHA, CALA, VP Performance Networks

Olivia Lynch, MPH, Post-Acute Quality Analyst

*Data from Remedy’s Database of Phase I and II Medicare Claims from Q4 2013 to Q3 2014.
**Data from Remedy’s Database of Phase I and II Medicare Claims from Q4 2013 to Q3 2014, SNF Efficiency Model.