The company says it is protecting nursing home residents by curbing unnecessary hospital transfers. Whistleblowers allege cost-cutting tactics have endangered the elderly
In arrangements like this, an insurer (often through Medicare Advantage) pays nursing homes a fixed monthly amount per resident, then layers on incentives tied to cost and utilization: (1) bonus payments if the facility meets targets such as lower hospital transfer rates or quality scores, (2) shared-savings payouts where the nursing home gets a portion of the medical cost savings if overall spending drops, (3) sometimes penalties or clawbacks if targets are missed, and (4) care-management support (e.g., insurer-employed clinicians embedded in the facility) that influences how care is delivered and measured — the controversy arises when these financial incentives may unintentionally discourage medically necessary hospital transfers.
Okay, so I think I follow – if the nursing home keeps patients there instead of transfering them to a hospital, the insurance company pays them more, so the nursing homes are incentivized to keep patients there, even at their detriment.
Yes. So, they are dying of a heart attack and the nursing home says, “old man, you have heartburn, go back to bed” and then they keep their bonus check.
And this is on top of all the horrible things that nursing homes do even without insurance companies giving kickbacks and bonus checks
If I live in a nursing home and I pay $1000 per month to the insurance company (via Medicare and out of pocket, etc), and they have to pay $1000 per month for my medical bills, they get no money.
So, if they make a deal with the nursing home to stop bringing me to the hospital, they won’t have to pay my medical bills and they keep the $1000.
Well for starters, in your breakdown, isn’t the insurer paying some baseline amount to the nursing home? So if they don’t bring you to the hospital, aren’t they still paying out some portion of that to the home by default?
But okay, let’s say it would cost the insurer $1000 per month when regular hospital transfers are involved, and $500 per month to keep them there (just for easy numbers). Then, throw in the $100 bonus to the homes that do it, that’s $600 of the initial $1000 premium that the insurer spends instead of the full amount.
The insurer gets to pocket $200 of that remaining $400. The other $200 they’re either using to pay out other claims, or sending it back as a rebate (which they obviously want to avoid).
So I’m definitely seeing how the nursing home profits, but what’s the incentive for the insurer?
In arrangements like this, an insurer (often through Medicare Advantage) pays nursing homes a fixed monthly amount per resident, then layers on incentives tied to cost and utilization: (1) bonus payments if the facility meets targets such as lower hospital transfer rates or quality scores, (2) shared-savings payouts where the nursing home gets a portion of the medical cost savings if overall spending drops, (3) sometimes penalties or clawbacks if targets are missed, and (4) care-management support (e.g., insurer-employed clinicians embedded in the facility) that influences how care is delivered and measured — the controversy arises when these financial incentives may unintentionally discourage medically necessary hospital transfers.
Okay, so I think I follow – if the nursing home keeps patients there instead of transfering them to a hospital, the insurance company pays them more, so the nursing homes are incentivized to keep patients there, even at their detriment.
Do I have that right?
Yes. So, they are dying of a heart attack and the nursing home says, “old man, you have heartburn, go back to bed” and then they keep their bonus check.
And this is on top of all the horrible things that nursing homes do even without insurance companies giving kickbacks and bonus checks
Okay, I’m with you so far. Go on.
You seem very agreeable tonight… it’s suspicious.
Well I’m trying to understand how that translates into more revenue for the insurer.
If I live in a nursing home and I pay $1000 per month to the insurance company (via Medicare and out of pocket, etc), and they have to pay $1000 per month for my medical bills, they get no money.
So, if they make a deal with the nursing home to stop bringing me to the hospital, they won’t have to pay my medical bills and they keep the $1000.
As a reward, they will pay the nursing home $100.
$900 profit.
Well for starters, in your breakdown, isn’t the insurer paying some baseline amount to the nursing home? So if they don’t bring you to the hospital, aren’t they still paying out some portion of that to the home by default?
But okay, let’s say it would cost the insurer $1000 per month when regular hospital transfers are involved, and $500 per month to keep them there (just for easy numbers). Then, throw in the $100 bonus to the homes that do it, that’s $600 of the initial $1000 premium that the insurer spends instead of the full amount.
The insurer gets to pocket $200 of that remaining $400. The other $200 they’re either using to pay out other claims, or sending it back as a rebate (which they obviously want to avoid).
So I’m definitely seeing how the nursing home profits, but what’s the incentive for the insurer?
I feel like there is enough for you to work it out. Which insurance company do you work for? ;)