How I-SNPs Help Cut Hospital Visits in Dementia Care

Nursing homes often operate under financial pressures that discourage investment in their own clinical services, leading to frequent reliance on hospitals to manage residents with dementia. This pattern drives up healthcare spending for this vulnerable group. One proposed way to better align incentives is through Institutional Special Needs Plans (I-SNPs). These plans use capitated payment models while also ensuring access to onsite clinicians provided by the plan itself. Using data from 12 million resident-quarters between 2016 and 2022, researchers analyzed the timing of nursing homes adopting I-SNP contracts to estimate their impact on patient outcomes. Results showed that I-SNP enrollment significantly lowered quarterly hospitalization rates by 3–4 percentage points, representing about one-third fewer hospitalizations compared to the average. However, the study did not find consistent improvements in other outcomes or quality indicators, suggesting that while I-SNPs reduce hospital use, their broader effects on care quality remain uncertain.

Rahman, M., McGarry, B., White, E. M., Grabowski, D. C., & Kosar, C. M. (2025, September). Is managed care effective in long-term care settings? Evidence from Medicare Institutional Special Needs Plans (NBER Working Paper No. 34235). National Bureau of Economic Research. https://www.nber.org/papers/w34235?utm_campaign=ntwh&utm_medium=email&utm_source=ntwg18