Risk and Reward: Covid-19 Builds Case for Medicare Advantage in Senior Living

The Covid-19 pandemic has created new risks for providers of Medicare Advantage (MA) plans — but those plans are also proving their value and may still be a major future component of senior living.

That’s the message from some of the most prominent players that have been pushing for increased MA integration in senior living over the past several years.

Among these organizations is Glen Allen, Virginia-based AllyAlign, which helps support 22 different plans in about 550 facilities across the U.S. AllyAlign has two main plan models: one where it acts as an administrator and partner for providers who want to be the majority owner of their plan, and another where it acts as the owner of a plan. The company supports I-SNPs designed for residents of skilled nursing facilities in addition to standard MA plans and other types of special needs plans.

Helping create MA plans for private-pay senior living has been a recent growth area for AllyAlign. For instance, the company is playing a pivotal role in setting up The Perennial Consortium, an MA network owned by senior living operators due to launch on Jan. 1, 2021.

Having MA plans now has helped some providers deal with the global pandemic and keep some of their residents out of the hospital, according to AllyAlign President Amy Kaszak. AllyAlign has plans in some Covid-19 hotspots, such as New York, New Jersey and Maryland. And while the majority of its business is in skilled nursing, the benefits seen by SNF providers could translate into other types of senior living settings.

Anne Tumlinson, founder and CEO of ATI Advisory, has been another evangelist when it comes to the Medicare Advantage opportunity for senior living providers, and she too believes that Covid-19 is demonstrating the value of these plans. Like AllyAlign, she emphasizes that MA benefit packages demand and support more robust and integrated clinical platforms that prevent hospitalizations — always important in senior living, but even more critical during a pandemic.

And, she believes that plans will come out of the Covid-19 crisis with more flexibilities in terms of benefits, which could make them even more well-suited to senior living.

Risk and reward

Under a basic MA program, private-sector insurers receive money from the federal government to offer certain kinds of coverage to Medicare-eligible older adults. If a company designs its plans well while also efficiently managing care for its beneficiary population, it can deliver needed services and payments while still having money left to take home as profit.

However, margins on plans tend to be thin even in the best of times, and some senior living providers that have launched their own plans have stressed that they are not doing so with the primary goal of turning a profit as an insurer. Rather, they believe that offering MA comes with a host of potential benefits, including the ability to be more of a quarterback for residents’ health care, driving length-of-stay and increasing satisfaction.

But the plans come with a potential financial downside, too. If too many beneficiaries end up needing higher-cost health care services than anticipated, providers can be on the hook in having to pay the difference.

This is a particular risk during Covid-19, which is sending people age 65 and older to the hospital at a rate higher than any other age group, according to CDC data. Still, AllyAlign believes that MA plans are proving to be net-positive for senior housing and care providers, even amid the elevated risk of Covid-19.

One reason is that in order to launch an MA plan, a provider must first create a network of integrated care providers. A well-structured and managed care infrastructure brings more services to residents and helps control costs by limiting severe health events. AllyAlign prides itself on its ability to help its partners manage their residents’ health in the communities where they live, so that they don’t have to go to the hospital. It achieves this partly by utilizing Juniper Communities’ Connect4Life model of integrated care, which it licensed last year.

In senior housing and care communities, AllyAlign gives providers the option of deploying and overseeing a dedicated care team to work out of an on-campus clinical hub. These care teams are useful for making rounds and monitoring residents as well as stepping in to support their clinical care, should they need it. AllyAlign’s care teams can also perform scheduled visits and visits outside of residents’ rooms; a blend of preventive and monitoring visits for chronic conditions scheduled by resident acuity; and also urgent “sick day” visits on demand.

“During Covid-19 … that care team is an essential link between the wellness teams and care teams within the different levels of care in the community,” Kaszak said. “[For example,] they can help divert patients as needed to a skilled level of care instead of a hospital, or help monitor a mildly symptomatic Covid-positive resident while waiting for a test.”

And, results so far bear out AllyAlign’s belief that the model will reduce hospitalizations. That has been the case especially for skilled nursing providers, some of which have been more able to keep residents with Covid-19 out of the emergency room with AllyAlign’s help.

“They were able to successfully implement skill-in-place protocols to address potential Covid symptoms and avoid hospitalization,” Kaszak told Senior Housing News. “In some of our plans where either that model hadn’t matured, or for some of our partners where they don’t have that same care model … the nursing homes were more likely to send suspected Covid cases out to the hospital.”

One of AllyAlign’s partners told the company that, by using its model, the provider had trimmed its hospitalization rate by half and improved its mortality outcomes. That is encouraging for AllyAlign because it’s tangible proof that such arrangements are beneficial to providers, even in a challenging scenario such as a pandemic.

“The principle upon which we built the company was that long-term care providers needed to invest in a clinical model within their community,” Saunders said. “Covid-19 has validated that.”

Although providers of MA special needs plans are seeing higher risks in the short-term, they’re also going through motions now that will help them in the long run, according to Tumlinson.

“What a special needs plan does long-term is, it teaches you how to manage risk,” Tumlinson told SHN. “It gives you access to resources, access to expertise, and it forces you to put in place a risk-management strategy that you’re going to need for Covid, that you’re going to need for managing population health and public health.”

Tumlinson is not the only long-term care leader that sees the benefit of embracing MA plans and managed care now. Juniper Communities founder and CEO Lynne Katzmann is also a proponent of bringing MA to senior living settings. Juniper is one of the four companies collaborating in the Perennial Consortium, alongside AllyAlign and operators Christian Living Communities and Ohio Living.

For Katzmann, the risk of ignoring care coordination and MA is greater than the risks that come with embracing it.

“If you wait too much longer, the market will be taken by a whole variety of other people. There’s too much money at stake,” Katzmann said during a Senior Housing News summit in Washington, D.C. last October. “And we as senior housing providers have to make a move if we are going to take our seat at the table.”

Larry Gumina, CEO of Perennial Consortium member Ohio Living, said he still feels good about the organization’s looming MA launch despite Covid-19’s unexpected disruptions to the industry. And, he believes doing so will help the organization cope with whatever comes next.

“From a resident perspective, it’s simply the right thing to do,” Gumina told SHN. “And, yes, in a post pandemic world – which will hopefully be sooner rather than later – we’ll be better off than where we are today.”

It’s a point that AllyAlign Founder and CEO Will Saunders echoes.

As the Covid-19 pandemic drags on, more senior housing and care providers will be incentivized to offer clinical services in the future, not only by the need to care for residents within the community’s walls but to meet new consumer expectations. Not all senior living providers have the resources to meet the increased demand or be properly reimbursed for these services — but that’s where a special needs plan comes in.

“What happens a year from now if a family says, ‘Hey, my loved one is considering your community, [and] what happens if another Covid-19 wave comes and the community is locked down? What clinical capabilities do you have?” Saunders told SHN. “The value of a Medicare Advantage special needs plan is that it funds that clinical capability.”

‘Pent-up demand’

Medicare Advantage has gained momentum in recent years among senior living providers, particularly since CMS allowed more flexible benefits around chronic care and activities of daily living (ADLs).

While many MA plans were historically sponsored by for-profit companies, there is evidence that non-profit organizations are becoming more interested in them, too. The number of special needs plans administered by nonprofits has grown from 641 in 2018 to 872 in April, with current enrollment at about 3.4 million people, according to MedPAC and CMS data compiled by Chicago-based specialty investment bank Ziegler.

The risk surrounding the Covid-19 pandemic has put a damper on the number of companies seeking to develop MA plans with AllyAlign — but that could change when the pandemic abates, Saunders said.

“We certainly are seeing a slowdown in folks that are jumping in right now, but we’re also preparing for what we think will be a kind of pent-up demand,” he explained. “I think that a clinical model is going to become more and more important in each service area.”

New flexibilities in using MA plans to pay for telehealth services could also help tip the scales for providers that take advantage of them. Though those flexibilities are set to end when the Covid-19 public health emergency does, there’s no telling how long that might last. And, there’s a chance those flexibilities are carried over into the post-pandemic landscape.

“The way healthcare is delivered is going to change dramatically, and as a result, long-term Medicare Advantage bids, benefit packages, are also going to have to change in order for them to actually spend the money that CMS is giving them,” Tumlinson said. “In order for that to happen, they’re just going to have to have more flexibility. So, this is just the camel’s nose under the tent.”