New Medicare Advantage Changes Expand Senior Living Opportunities

Recently announced Medicare Advantage policy changes could open up new opportunities for senior living providers, further accelerating the transformation of the industry’s dominant private-pay revenue model.

“Senior living providers are crazy if they don’t start thinking about housing/health care integrated products,” Anne Tumlinson, founder and CEO of Anne Tumlinson Innovations, told Senior Housing News, in light of the newly announced changes.

Tumlinson is a noted expert on senior living and care, and has been working with the National Investment Center for Seniors Housing & Care (NIC), among other organizations, to educate the industry on the topic of Medicare Advantage.


Last Friday, the Centers for Medicare & Medicaid Services (CMS) announced that it would allow Medicare Advantage insurers to test a variety of innovations within the value-based insurance design (VBID) model, starting in 2020.

The VBID program has allowed Medicare Advantage insurers to create plans that incentivize certain beneficiaries to consume “high-value clinical services.”

That is, VBID plans have been designed to maximize access to services that could help older adults, particularly those with some chronic conditions — including dementia — maintain their health and wellbeing. The idea is that this will not only result in better health outcomes but drive down costs within the U.S. health care system overall.


Initially, CMS rolled out VBID in sevens states in 2017. However, under the Bipartisan Budget Act of 2018, eligible Medicare Advantage health plans in all 50 states will be able to apply to participate in VBID beginning with calendar year 2020.

Per the changes announced Friday, senior living companies that double as Medicare Advantage insurers also have a new opportunity to participate in VBID. All special needs plans (SNPs) — including chronic condition SNPs (C-SNPs) and institutional SNPs (I-SNPs) — will be eligible to participate in VBID for 2020.

Special needs plans were first introduced through legislation in 2003, to enable Medicare Advantage coverage for particular high-need patient populations, including some residents of senior living communities. McLean, Virginia-based Sunrise Senior Living and Catonsville, Maryland-based Erickson Living are two companies that offer special needs plans to their residents.

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However, it remains to be confirmed whether I-SNPs in VBID will function under all the same general rules that I-SNPs operate under today, Tumlinson noted.

Already, VBID plans have had leeway in how they structure enrollee cost-sharing and other elements of plan design. Beginning in 2020, they will have even greater flexibility, through innovations such as:

  • Reduced cost-sharing and new benefits offered in a more targeted fashion than in the past, with customization based on chronic condition or socioeconomic status — or both — and benefits that are not primarily health care related, such as transportation
  • Increased access to telehealth services
  • More “meaningful and focused” rewards and incentives programs for beneficiaries

In addition, starting in 2021, a Medicare Advantage hospice benefit will start to be offered through VBID. This is a landmark step that some observers have long anticipated; currently, hospice in not an allowable benefit in MA, which has created care fragmentation and drawn criticism from groups such as the Medicare Payment Advisory Commission (MedPAC).

A challenge to innovate

Though their businesses have historically been driven by private-pay revenue, senior living providers have been eyeing Medicare Advantage as a possible payment source.

Last April, CMS announced that MA plans would be allowed to offer supplemental benefits that cover some non-medical, personal care services in people’s homes starting this year. That created the possibility that MA could begin reimbursing for some of the services often provided in settings such as assisted living.

This potential opportunity has spurred interest and activity among senior living providers. For example, Bloomfield, New Jersey-based Juniper Communities has been leading an effort to create a consortium of providers to launch a Medicare Advantage offering of their own, tailored to senior living.

Juniper CEO Lynne Katzmann was encouraged by CMS’ latest announcement, as an indication that plans might have even more latitude to cover senior living-related services.

Photo of Juniper CEO Lynne Katzmann Juniper CEO Lynne Katzmann for Aging Media Network
Juniper CEO Lynne Katzmann

“The new flexibility and benefit design options open up exciting new opportunities,” she told SHN. “It will be up to us to innovate appropriate new examples which deliver strong results at lower costs. Given that we have historically managed lifestyle needs for care and service, we are perhaps in the best position to demonstrate the value of different benefits on quality-of-life.”

Tumlinson agreed, and believes that these VBID changes could have an even more profound effect than the supplemental benefits changes announced last April.

Her reasoning is that MA plans offer supplemental benefits only out of a “small, marginal amount” of dollars left after a traditional benefits package is created.

In other words, MA insurers — which run the gamut from behemoths like Humana (NYSE: HUM) to more boutique or regional insurers — receive dollars from the federal government to administer the Medicare benefit. Usually they are required to offer all the same benefits as traditional Medicare and then have flexibilities to tailor plans. Under VBID, they have much greater flexibility “within the full premium dollar,” Tumlinson said.

So, VBID plans — not traditional plans offering supplemental benefits — might ultimately make the greatest inroads in covering residents of senior living communities.

At this point, there is more speculation than certainty when it comes to the senior living opportunity in Medicare Advantage, but providers can be certain that MA will never cover room and board costs, Tumlinson said. Still, the newest Medicare Advantage changes showcase that the federal government views MA as a testing ground for innovation in benefit design.

“[These changes] point to growing opportunity and flexibility in the MA program that perhaps a particularly innovative senior living provider could harness to create something really different in terms of a combo health plan/senior living product – where the savings in health care spend could be flexibly deployed to non-medical benefits,” she said.

Even if a provider does not want to start its own insurance plan or be on the leading edge of innovation, forging closer ties with existing MA payers is becoming a strategic imperative.

To forge these closer ties, providers will almost certainly have to demonstrate — through data — their ability to provide superior care for a pool of MA beneficiaries. Having significant scale and offering a range of care types might also be helpful, as large plans in particular want to be selective, partnering with a few sizable providers rather than multiple smaller ones.

Irvine, California-based Silverado is one example of a provider trying to pivot toward this future.

The company is known primarily for memory care, with about 40 properties across eight states. However, it is also expanding its hospice business and it is collaborating with Medicare Advantage insurers such as CareMore in some markets.

“Seniors housing operators like Silverado are uniquely positioned to work well with Medicare Advantage payers in providing continuity of care for our residents through the end of life,” Jeff Frum, the company’s senior vice president of sales and marketing, told SHN. “In addition to being a market leader in memory care, Silverado has built a strong palliative care and hospice business with clinical outcomes that have shown the ability to improve quality of life and reduce overall healthcare costs for our residents, patients and their families. As this industry evolves, we only anticipate working closer with Medicare Advantage payers who are looking for quality providers to care for their chronically ill beneficiaries.”

Interested in learning more about the Medicare Advantage opportunity for senior housing providers? Click here to access Senior Housing News’ deep-dive report on the topic.

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