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The American Journal of Managed Care September 2019
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Managed Care for Long-Stay Nursing Home Residents: An Evaluation of Institutional Special Needs Plans

Brian E. McGarry, PT, PhD; and David C. Grabowski, PhD
This study examines UnitedHealthcare’s Institutional Special Needs Plans and their association with hospital and skilled nursing facility use.

Sample Differences

The sample of I-SNP beneficiaries is statistically different from the sample of FFS Medicare beneficiaries in terms of state of residence, gender, and age (Table 1). Specifically, the I-SNP sample has slightly more women, fewer individuals younger than 75 years, and more individuals 80 years or older. Moreover, the I-SNP sample is drawn more heavily from particular states (CO, CT, GA, NC, NY, RI, and WA), due to the distribution of facilities that have contracted with UnitedHealth I-SNPs, relative to the FFS Medicare sample. After applying the propensity score weighting, the sample characteristics are quite similar across the I-SNP and FFS Medicare comparison groups (Table 2).

Unadjusted Differences

When we compared utilization without any adjustment for demographics, the use of inpatient and ED services was significantly lower among the I-SNP group relative to the FFS Medicare group. Meanwhile, the use of SNF services was higher in the I-SNP group (Table 3). Specifically, there were 288 inpatient stays per 1000 I-SNP members relative to 524 inpatient stays per 1000 FFS Medicare beneficiaries. The I-SNP group experienced 218 ED visits per 1000 long-term residents relative to 452 per 1000 FFS Medicare beneficiaries. Additionally, 30-day readmissions were lower for I-SNP members (167 vs 334 per 1000 inpatient stays). Finally, I-SNP members had nearly twice the rate of SNF use (481 vs 253 stays per 1000 residents).

Adjusted Differences

When we weighted the analyses by demographics, the unadjusted results generally held. The differences in inpatient and ED utilization across the I-SNP and FFS Medicare groups were slightly reduced, whereas the differences in SNF use slightly increased. Specifically, the I-SNP members had lower rates of inpatient stays (310 vs 500 per 1000 beneficiaries), ED visits (217 vs 441 per 1000 beneficiaries), and 30-day readmissions (175 vs 318 per 1000 inpatient stays), but higher SNF utilization (514 vs 242 per 1000 beneficiaries). In percentage terms, I-SNP beneficiaries had 38% fewer hospitalizations, 51% lower ED use, and 45% fewer readmissions, and the rate of SNF use was 112% higher.

Potential Spending Differences

In an effort to illustrate how these utilization differences might translate to potential spending differences for Medicare, we compared actual Medicare expenditures for inpatient, ED, and SNF services with projected expenditures using the utilization rates observed for I-SNP beneficiaries (Figure). We took the median cost of each of these services and multiplied these values by our utilization estimates for both sets of beneficiaries from the analyses adjusted for sample demographics.

For 1000 traditional Medicare beneficiaries, we estimated spending on inpatient services at $7.6 million, ED visits at $0.4 million, and SNF stays at $1.2 million for a total of $9.2 million. For 1000 I-SNP members, we estimated inpatient spending at $4.7 million, ED visits at $0.2 million, and SNF stays at $2.6 million for a total of $7.5 million. In total, if FFS Medicare beneficiaries exhibited the same inpatient, ED, and SNF utilization patterns as I-SNP beneficiaries, the Medicare program would spend $1.65 million less per 1000 beneficiaries. Given that nearly 1 million long-term nursing home residents nationwide are in FFS Medicare, the program would spend roughly $1.6 billion less annually on these services if we applied the rates from the I-SNP enrollees. Importantly, this number should not be viewed as net savings in that it is likely reflective of some differential selection into the I-SNP and FFS Medicare groups and does not account for the additional costs of operating the I-SNP model.


We observed a different pattern of healthcare utilization under the I-SNP model relative to that under traditional FFS Medicare. In particular, I-SNP members had lower inpatient and ED use but more SNF stays. This result illustrates the relationship between investment in clinical care in the nursing home and decreased institutional use outside the facility. Importantly, any potential savings from decreased inpatient and ED use would need to be offset by the increased spending on advanced practice clinicians and other services under the I-SNP model. Nevertheless, if traditional Medicare beneficiaries exhibited a similar utilization pattern to the I-SNP beneficiaries, it could result in a decrease of more than $1 billion in spending on ED and inpatient services annually.

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