Employee Benefit Cost Containment Strategies for Skilled Nursing and Assisted Living Facilities

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The American Healthcare Association (AHCA) recently hosted a webinar on one of the most pressing issues facing skilled nursing and assisted living facilities today: the rising costs of employee benefits. Led by Nick Cianci, president of Compass Total Benefit Solutions, the session explored cost containment strategies specifically designed for long-term care providers. In this blog, we’ll break down key strategies discussed, including Medicare Reference-Based Pricing (MRBP), Minimum Value Plans (MVP), and Minimum Essential Coverage (MEC) Plans. These approaches aim to reduce costs, remain compliant with the Affordable Care Act (ACA), and offer benefits that support employee recruitment and retention in a competitive job market.

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Introduction to Employee Benefit Cost Containment

Year after year, facilities are faced with rising healthcare costs. It’s a significant challenge for skilled nursing and assisted living facilities, where operating margins are often tight. Compass Total Benefit Solutions has partnered with the American Healthcare Association for over a decade, initially helping facilities comply with the Affordable Care Act (ACA). Over time, this partnership has evolved to focus on employee benefit programs that are both ACA-compliant and affordable, offering facilities new ways to manage costs without sacrificing the quality of benefits.

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Understanding Medicare Reference-Based Pricing (MRBP)

Medicare Reference-Based Pricing (MRBP) is a cost-containment strategy that benchmarks healthcare service costs to Medicare rates. This approach could yield substantial savings for facilities that are often limited by traditional health insurance plans from large providers like Blue Cross, UnitedHealthcare, Cigna, and Aetna (collectively referred to as "BUCAs").

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In the traditional model, health insurance companies use a network of providers who have agreed to discounted rates. However, these rates are still higher than what Medicare pays. With MRBP, employers can build a health plan based on Medicare rates rather than BUCA rates. For example, while a traditional insurer might pay $300 for a $500 service, an MRBP-based plan could negotiate the price down to $130 or $160, depending on local market conditions.

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This strategy is particularly beneficial for facilities in rural areas, where finding in-network providers can be a challenge. With MRBP, there is no network; any provider can be paid at the set Medicare-based rate. However, one key risk with MRBP is the potential for balance billing, where providers may charge the patient for the difference between their rates and the amount paid by the plan. To manage this, Compass works with third parties who negotiate on behalf of employees, helping to settle the majority of balance bills with providers.

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Minimum Value Plans (MVP): Affordable Options for Frontline Staff

Minimum Value Plans (MVP) are designed to cover at least 60% of total healthcare expenses, meeting the minimum value standard set by the ACA. Traditional minimum value plans often come with high deductibles, which can be financially burdensome for frontline staff. A high-deductible plan might have deductibles ranging from $5,000 to $8,000, which is unaffordable for many employees in long-term care facilities. To address this, Compass has developed MVP options that cover essential services from day one, with no deductible in some cases. This can make a big difference in employee recruitment and retention, especially for facilities seeking to attract hourly workers.

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Compass also offers a unique network option called Private Healthcare Systems (PHCS), the fifth-largest network in the country. This network can be combined with MRBP to provide contracted rates for high-frequency claims, such as doctor visits and lab tests, while using Medicare-based rates for hospitalization. This approach provides flexibility and further cost savings while reducing the risk of balance billing.

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Minimum Essential Coverage (MEC) Plans: A Low-Cost Compliance Option

Minimum Essential Coverage (MEC) Plans cover the ACA’s essential health benefits and can be offered at a lower cost than traditional plans. These plans meet the basic requirements of the ACA, helping employees avoid penalties in states with individual mandates, such as California, New Jersey, and Massachusetts.

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MEC plans don’t cover hospitalization, but they can be supplemented with voluntary benefits like accident, critical illness, and hospital indemnity insurance. For smaller facilities or those with fewer than 50 full-time employees, MEC plans can serve as a standalone option, providing a baseline of health coverage. This approach allows facilities to offer “free healthcare” as part of their job postings, improving recruitment and helping employees meet minimum health requirements.

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The Importance of Education and Onboarding Support

Implementing non-traditional benefit plans requires a proactive approach to employee education. Education is key to ensuring that employees feel confident in their coverage and understand the process.

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Compass provides support through a platform called Employee Navigator, a cloud-based enrollment system that centralizes all benefit information. Employees can see only the benefits available to them, based on criteria like full-time or part-time status. Additionally, Compass offers benefit counselor services at no extra cost, where counselors educate employees either in person or virtually.

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For open enrollment, Compass can work with business office managers to provide virtual one-on-one meetings with employees, allowing them to review benefits at home with their family. Compass also uses text messaging, ringless voicemails, and benefit booklets to keep employees informed and prepared.

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Final Thoughts: Is Reference-Based Pricing Right for Your Facility?

For facility operators exploring cost-saving opportunities, MRBP offers a compelling option. Compass can provide data analytics for your specific area, helping you understand whether MRBP could work for your facility. This data can show what Medicare rates are accepted in your area, giving you a sense of potential savings without committing to a quote or altering your current benefits.

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The right benefit solution can make all the difference in managing costs, attracting talent, and staying compliant with healthcare regulations. For skilled nursing and assisted living facilities, balancing these priorities is crucial.

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For more information or to explore whether reference-based pricing could benefit your facility, reach out to Compass Total Benefit Solutions. We're here to guide you every step of the way.

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