By Lauren Flynn Kelly

Since the creation of institutionalized Special Needs Plans (I-SNPs) with the Medicare Modernization Act of 2003, nursing homes have viewed I-SNPs as a potential reimbursement vehicle for the work they already do in avoiding acute events, transfers to the emergency room and hospital admissions, industry experts tell AIS Health. But the trend of provider-sponsored I-SNPs has only begun to gain traction in the last few years and is likely to pick up even more now that SNPs have been permanently authorized, sources observe.

“There are many organizations that are considering or are entering this marketplace and one way or other finding the wherewithal to get the job done, but the challenges they face are greater than we anticipated,” observes Stephen Wood, a co-founder and partner with Clear View Solutions, LLC.

Within the small I-SNP market, five of the top 10 plans are sponsored by nursing home chains or other long-term care/skilled nursing providers. And providers that choose to sponsor I-SNPs can do so in several ways.

Of the companies that have consulted with Clear View on launching an I-SNP, about half have opted to work with so-called “aggregators,” or outside firms that may contribute private equity funding, share in the risk, handle licensing and other front-end pieces needed to launch a plan, or some combination of all three. Others opt to “go it alone,” says Wood.

Considering the upfront investment of starting an MA plan, the ongoing costs of operating one and the unknowns of reaching enrollment targets, potential I-SNP sponsors must look at this as a long-term investment, points out Wood. And the greatest financial challenges tend to fall on the administrative side, where plans are constrained by medical loss ratio requirements, adds actuary Kirk Twiss at Clear View. The biggest challenge, however, is getting enrollment, “and you need the economies of scale with bigger enrollment” to offset those costs, he points out.