30% Medicare Advantage Penetration Rate in Senior Living Presents ‘Tremendous Opportunity’

About 30% of assisted living residents are enrolled in a Medicare Advantage (MA) plan, which is just slightly lower than the roughly 34% of seniors living in private housing who are enrolled in MA.

Nearly the same percentage of independent living residents — almost 31% — are Medicare Advantage beneficiaries, according to a new data analysis released Wednesday at the National Investment Center for Seniors Housing & Care (NIC) spring conference in San Diego. The analysis was done by ATI Advisory, which utilized the 2017 Medicare Current Beneficiary Survey from the Centers for Medicare & Medicaid Services (CMS).

The findings surprised the ATI Advisory researchers, firm founder Anne Tumlinson said during a press briefing at the NIC conference.


She and her team had anticipated that MA uptake would be lower among the senior living population compared to the general Medicare population for several reasons, including that the senior living group has more intensive health care needs and so might want to stay in fee-for-service Medicare to avoid being limited to insurer networks. In addition, their ability to afford private-pay senior living might indicate that they are more affluent and therefore could opt for traditional Medicare and purchase supplemental plans to fill coverage gaps.

Surprising though they are, the findings lend further support for efforts already underway to more closely integrate senior living with Medicare Advantage, the program through which private-sector companies offer insurance plans as an alternative to traditional fee-for-service Medicare. MA plans often bundle together benefits that are excluded by traditional Medicare, and they have recently been granted flexibilities to cover more services frequently offered by senior living providers.

“To our mind, this offers a tremendous opportunity for us to find ways — and it’s not easy, but it’s possible — for us to find ways for Medicare Advantage plans and seniors housing providers to work together to better manage the care needs of this population,” Tumlinson said.


Delving deeper into the numbers

Despite the surprisingly high penetration rate of MA in senior living, these residents still only make up a tiny fraction of the overall 65-plus Medicare population. While about 43 million of these seniors live in private housing, only about 1 million reside in independent living and 0.4 million in assisted living, according to the ATI Advisory data analysis.

However, the senior living residents are a high-cost population because they utilize expensive forms of health care at higher rates.

Among the Medicare population living in private housing, about 230 per 1,000 people are admitted as a hospital inpatient each year, the data show. For assisted living residents, the annual rate of hospital inpatient admissions is 430 people per 1,000.

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Assisted living residents visit the emergency room at more than double the rate of seniors who live in private housing, and at nearly the same rate as nursing home residents. However, nursing home residents are more likely to be admitted as a hospital inpatient, with 680 inpatient admissions per 1,000 nursing home residents annually.

ATI Advisory analysis of 2017 Medicare Current Beneficiary Survey

The numbers suggest that many assisted living residents who visit the ER are kept under observation or sent right back to the AL community, highlighting that assisted living providers have an opportunity to prevent many of these hospital trips with the right systems and operational models, Tumlinson said.

Hospitalizations generally run between $10,000 and $15,000 per admission, she said, so preventing unnecessary trips to the hospital translates to significant cost savings to the payer entity — including Medicare Advantage.

To reduce these hospitalizations and maximize the embedded value of having high-cost, high-need populations under their roofs, senior living providers should consider the resources they need to manage complex care, Tumlinson advised. Core care teams might add nurse practitioners and case managers to enhance on-site primary care, supplementing the directors of nursing, nursing aides and licensed practical nurses already on staff.

Some providers, such as Bloomfield, New Jersey-based Juniper Communities, have already invested in robust care capabilities, have achieved meaningful cost reductions, and are now in the process of launching their own MA plans. But this is only one model for tapping into the MA opportunity, Tumlinson emphasized. There are a variety of other routes, including partnering with an existing MA insurer, which might then be able to deploy these clinical capabilities into the senior living setting through affiliated groups, such as Optum in the case of UnitedHealth or CareMore in the case of Anthem.

Eyes wide open

Chicago Pacific Founders is one company making inroads in both Medicare Advantage and senior living. The private investment firm’s senior living subsidiary, CPF Living Communities, owns more than 40 properties that are operated by affiliate Grace Management. Chicago Pacific Founders also has invested in primary care groups that manage Medicare Advantage beneficiary populations, and the firm owns an MA plan, co-founder and managing partner Larry Leisure said at the NIC conference.

“We see lots of opportunities to do better care coordination,” he said. “Not necessarily delivering care in our CPF Living Communities, but improving their coordination, which will produce benefits on both sides.”

Those benefits to the senior living operator should include longer length of stay and increased resident satisfaction, while the MA payer should see financial benefits in the form of lower health care costs incurred to the plan.

And more than in the past, Medicare Advantage payers are aware of the benefits that could flow from working more closely with senior living providers, Leisure said. He believes it is a trend that will only gain further momentum as younger beneficiaries in MA plans age into senior living communities.

“They’re going to be finding you as senior living operators,” he said. “They’re saying, how can we more effectively be integrated with you and take advantage of the footprint you have?”

That said, there are still significant unknowns as to what capabilities senior living providers need to have in order to become preferred providers within MA networks and have fruitful and mutually beneficial relationships. There are instructive examples out there, and Leisure suggested that industry groups such as NIC could take deeper dives into case studies of these existing models.

One example is in Florida. There, the massive retirement community called The Villages offers a Medicare Advantage network called The Villages Health, leveraging the flexibilities of MA to provide more coordinated, comprehensive, accessible care, Leisure said.

The Villages example points to the importance of scale in the Medicare Advantage equation, Brandywine Living Chief Corporate Officer Kenneth Segarnick pointed out.

“The reality is that there’s so much consolidation going on in health care in general — health systems, health insurers, health plans,” he said. “ … You don’t have to be national, but you have to have a brand platform and presence that I think is scalable and leverageable to meet the needs of a highly consolidating industry, otherwise I think you’re going to be operating on the periphery.”

To achieve that scale, some providers have teamed up to launch plans or to gain more sway with large health insurance companies to get a share of the savings they achieve for Medicare Advantage plans. Without that leverage, they may struggle to win gainshare payments from insurance companies that offer inclusion in a network as sufficient reward.

Brandywine — which has a stronghold in the mid-Atlantic and is about to open its 30th community — does have a leverageable platform, Segarnick believes. The provider already has made moves to drive down hospitalizations, such as by investing in having a registered nurse on site around the clock.

That said, Segarnick is not saying that Brandywine is necessarily interested in becoming a risk-bearing entity within a Medicare Advantage framework, nor does he believe that taking on financial risk and upside should be the end goal for senior living operators in general. The Medicare Advantage landscape differs greatly from state to state, with penetration high in some areas of the country and lower in others. So, he advocated for providers to educate themselves on their own markets and consider various options for how to integrate more closely with Medicare Advantage.

“I’m an advocate for having eyes wide open for what’s happening in the communities and [for] all the stakeholders that are interested,” he said.

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