The Great Medicare Advantage Experiment

by Jeff Shaw

As senior living providers pursue partnerships in the healthcare industry, here are five critical points to keep foremost in mind.

By Jane Adler

With owners and operators of senior living properties serving an increasingly frail population of elders, Medicare Advantage programs are emerging to improve care, boost resident and family satisfaction, and increase length of stay.

The use of Medicare Advantage programs in senior living is still in its infancy. The programs are complex and there is still much to be learned. But several experiments and pilot projects are already underway that can act as a roadmap for property owners and operators. 

Where to start? Here are five key points to understand about Medicare Advantage programs and what they mean for the future of senior living. 

1. Medicare Advantage is here to stay: Private insurance companies offer Medicare Advantage plans and are reimbursed by the government. In contrast, traditional Medicare insurance is paid directly by the government. The big difference is that Medicare Advantage is a form of managed care, offering a bundle of services rather than the fee-for-service model of traditional Medicare. The thinking is that Medicare Advantage programs can help reduce medical costs while providing better and more proactive care for elders.

Medicare Advantage programs are growing rapidly. Look no further than the numerous ads on television for these plans that offer perks such as health club memberships and vision care. 

In 2019, slightly more than one-third (34 percent) of all Medicare beneficiaries — 22 million people — were enrolled in Medicare Advantage plans, according to the Centers for Medicare & Medicaid Services (CMS). The Congressional Budget Office (CBO) projects that the share of beneficiaries enrolled in Medicare Advantage plans will rise to about 47 percent by 2029. 

Many residents of senior living communities already belong to these plans. Now is the time for property owners and operators to understand the plans and how they can help improve resident health and bottom-line results, notes one industry observer.

“The industry can’t look at the significant healthcare needs of their residents and say that’s not their job,” says Anne Tumlinson, founder and CEO at ATI, an industry consulting firm in Washington, D.C. “In five years, no one will think that.”

At the same time, Medicare Advantage plans and providers are beginning to recognize the benefits of a senior living community to keep their member patients healthy and out of the hospital by providing proper nutrition, social engagement and care coordination, according to John Rijos, co-founder and operating partner of Chicago Pacific Founders (CPF), a private equity firm with offices in Chicago and San Francisco. 

Rijos also serves as CEO of CPF Living Communities, which owns and manages 42 senior living communities and manages 14 additional communities for other owners. CPF also has an ownership stake in two healthcare provider companies. 

When Medicare Advantage plans and healthcare providers are educated about the benefits of senior living, Rijos thinks these partnerships can be a source of new move-ins. “It’s an opportunity for both sides,” he says. 

2. Understand the playing field: Medicare Advantage plans are structured something like a health maintenance organization (HMO). Each plan has different benefits, rules and typically a network of approved healthcare providers. 

Two big trends are impacting the senior living industry. 

Over the past few years, CMS has allowed Medicare Advantage plans to pay for some housing-related services, such as personal care. The rules were further relaxed starting in 2020 to cover other benefits such as nutrition assistance. While the industry has viewed these changes as possible new revenue streams, many plans don’t yet offer these extra benefits. “It’s early days,” says Tumlinson. But, she adds, the expansion of supplemental benefits is a trend to watch. 

The second trend, currently having the biggest impact on senior living, is the growth of Medicare Advantage Special Needs Plans, often referred to as SNPs. These plans restrict enrollment to specific beneficiaries, such as those dually eligible for Medicare and
Medicaid (D-SNP), or those living in an institutional setting (I-SNP), such as assisted living. 

SNPs accounted for 13 percent of Medicare Advantage enrollment in 2019, according to CMS. A growing number of senior living providers are partnering with Medicare Advantage plans that offer the I-SNP option for residents. 

Here’s how it works: The I-SNP contracts with medical providers who visit residents on-site and help coordinate care. Families no longer need to transport their loved ones to the doctor. Close monitoring by the staff and practitioners made available through the plan helps reduce emergency room visits and hospitalizations. 

Some senior living providers are forming their own I-SNP plans. Juniper Communities, a Bloomfield, New Jersey-based owner and operator, is spearheading the Perennial Consortium, an
operator-owned Medicare Advantage network. 

The Consortium has four founding members including AllyAlign Health, a Richmond, Virginia-based Medicare Advantage plan developer and administrator. Enrollment is expected to begin soon, with coverage effective Jan. 1, 2021 for plans in Ohio and Colorado.

“Perennial and other seniors housing-based plans offer the opportunity to demonstrate the value of prevention as opposed to medical intervention,” says Lynne Katzmann, founder and CEO at Juniper. 

Juniper has already had a positive experience with healthcare management for residents. The company offers Connect4Life, a care coordination program that has lowered hospitalizations and readmission rates, according to Katzmann. 

“Seniors housing offers lifestyle management, and as such helps prevent the exacerbation of chronic illness.”

3. Take the first step: While the Medicare Advantage landscape can be confusing, it’s important to become familiar with local healthcare providers and provider networks. “Take baby steps,” advises Tumlinson. “There are a lot of ways to add value to an operation by working with Medicare Advantage programs in some way or form.” She recommends building partnerships in the local market with primary care physician groups, health systems and hospitals. “Figure out who in the market is a provider partner to bring services on campus,” she says. 

4. Watch the early adopters: Experimentation is underway. Senior living owners and operators are trying different approaches. For example, the big real estate investment trust Welltower (NYSE: WELL), based in Toledo, Ohio, formed a partnership last September with insurer Anthem and its affiliate CareMore Health, which offers a senior living solution called “Touch.” 

Residents of certain Welltower-owned buildings can sign up for a Medicare Advantage I-SNP plan offered by Anthem. CareMore provides access to teams of medical professionals such as nurses and medical practitioners on-site. The Touch program has been rolled out to a handful of Welltower-owned communities operated by
Houston-based Belmont Village Senior Living and SRG Senior Living, headquartered in Solana Beach, California. 

In 2020, Welltower plans to expand the CareMore program to five more states with five additional operators. CareMore is based in Cerritos, California, and has operations in nine states and the District of Columbia. 

Early results are promising, according to Isaac Hagerman, vice president of health and quality at SRG. The company introduced the program last August at six properties and plans to offer it to another six buildings this year. 

Residents have easy access to medical services. Mobile lab tests and X-ray units are brought on-site. “There’s no more waiting,” says Hagerman, emphasizing that the program cuts the red tape and provides immediate care for residents. 

The CareMore program has been in place for about 18 months at two Belmont Village buildings in California. The program is a collaborative model that requires a team approach between building staff and medical providers, according to Sheri Easton-Garrett, senior vice president of clinical services at Belmont Village. Her office is in Nashville, Tennessee. “We’ve learned a lot.”

CareMore’s program works best when at least 30 percent of a community’s residents sign up for the plan, according to Jim Lydiard, general manager of CareMore’s Touch program. The CareMore team visits the facility more often as additional residents sign up. Also, the building staff develops a rapport with the CareMore team to better coordinate care and flag problems. 

Other partnership models are emerging. Operators can arrange for a physician group or hospital system to care for residents even if they are in a variety of different Medicare Advantage plans. Consultants can guide operators through the process. 

5. Why take on risk? Some senior living providers are establishing their own Medicare Advantage I-SNP plans, like the Perennial Consortium, but it’s a big step. “Don’t go down this road unless you are committed to transforming your business,” advises Tumlinson. 

Owning a plan puts the senior living provider at risk for the cost of care for residents enrolled in the plan. But if resident care is managed well, senior living providers can also share in the savings created by reducing hospitalizations and emergency room visits. 

“It’s important to look at the risk continuum to determine which options meet your goals,” says Jill Sumner, vice president of population health management at the American Health Care Association (AHCA), the Washington, D.C.-based organization that represents skilled nursing and assisted living facilities. 

Sumner notes that AHCA aims to educate its members about their options. AHCA held a population health summit last December focused on the growth of Medicare Advantage plans. The event drew 230 attendees, about 80 more participants than expected. “Our housing providers understand that something needs to be different,” says Sumner. “It’s very encouraging.”

Marquis Cos., based in Milwaukie, Oregon, a suburb of Portland, operates 26 properties and a Medicare Advantage I-SNP plan through its subsidiary AgeRight Care Management. The plan includes 600 members. About half of the members live in Marquis properties. The other half live in nearby facilities not owned by Marquis. “We are fully at risk,” says Phil Fogg Jr., CEO at Marquis. The company does have reinsurance to mitigate big losses, a safeguard Fogg recommends. 

Fogg says the I-SNP is profitable, though the margins are slim, ranging from 1 to 4 percent. The key to success is to manage the biggest expenses such as hospital admissions. “I like being accountable for our members’ quality of life and satisfaction,” he says. “When you do not have accountability, things can get dysfunctional.”

Fogg’s advice: “Do not underestimate the challenges.” The initial steps should include dedicating leadership to create and administer a plan and setting up a healthcare provider network. He figures a plan needs at least 500 members to make it work. AllyAlign administers the back-office operations for the Marquis plan. 

Ten senior living and care providers in the Twin Cities rolled out a new Medicare Advantage I-SNP plan for residents beginning Jan. 1. The providers operate 78 long-term care and assisted living communities in the Twin Cities area. 

The initiative is a collaboration between the senior living providers, the nonprofit health plan Medica, and Genevive, a geriatric medical and care management organization. 

The expectation is that 600 seniors will enroll in the program the first year, with a projected enrollment of 3,500 in the second year, according to Dan Lindh. He is president of St. Paul, Minnesota-based Presbyterian Homes & Services, the largest senior living provider in the initiative and co-owner of Genevive. 

Lindh advises taking a step-by-step approach into the world of managed care rather than jumping right into the insurance business. “Understand the healthcare providers and what they can bring to the table,” he says.

A potential roadblock for any type of Medicare Advantage initiative is getting residents to sign up for the plans. Residents are often hesitant to change health plans because that means they may have to change doctors. 

Fogg says about 70 percent of his skilled nursing residents are enrolled in the plan and about 45 percent of those in assisted living. Nursing care residents and their families are more likely than assisted living residents to opt for the convenience of on-site care. 

Belmont Village hosts town halls to introduce residents to its program. The discussion focuses on the convenience of on-site care. Enrollment in the program grows as residents relate their positive experiences to others who live in the building.

Consultant Tumlinson says that the operator must be committed to promoting Medicare Advantage and integrating it into the everyday workings of the building. “You can’t just put up a sign in the lobby saying the plan is available,” she advises. “The plan has to be rolled out thoughtfully.”

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