SHN+ Report: The Medicare Advantage Opportunity for Senior Housing

July 2018

Key Takeaways

  • Medicare Advantage enrollment is rising rapidly, opening the market for new plans and new approaches.
  • Coordinated care is becoming more valuable to payers, which are increasingly rewarding care settings for quality rather than quantity.
  • Recent regulatory changes are beginning to allow for Medicare Advantage to cover personal care services and home-based care delivery, both of which could present opportunities for senior housing and care providers.
  • Major health systems are already actively pursuing deals to capture and control the entire care continuum, including senior housing in some recent examples.
  • There are many ways senior housing can take advantage of the changing health care landscape, and the innovative providers will gain most by getting involved now.

Most senior living providers today have wholeheartedly adopted a private payment model that offers control and steady financial rewards based on service-enriched housing. Despite the success of this approach, it might be time to look at new options.

Senior housing—namely independent living and assisted living—has intentionally elected this private-pay-only model, enjoying its benefits and mostly avoiding federal oversight and reimbursement risk. In essence, senior housing has never had to play by anyone else’s rules.

Today, a boom in the number of beneficiaries enrolling in private Medicare Advantage plans, in conjunction with a major push among policy makers and private companies toward more coordinated and value-based care provided in the home, is positioning senior living as a very attractive health care partner and opening up potential new revenue streams.

These dramatic shifts are forcing senior housing providers to rethink their position in the care continuum and make major decisions about what role they want to play in the future.

Oak Crest, an Erickson Living community.
(Photo courtsey of Erickson Living)

Welcome to the value-based care revolution

The shift to a value-based care environment is not going to be an easy change for most senior housing operators, but if recent moves among major health care players and payers are any indication, the effort will be worthwhile. Like these other players, senior living is beginning to see that opportunities offered in a growing value-based care landscape could enhance their bottom line and position them for more long-term success and stability.

The business case is getting harder to ignore especially for those companies that already offer skilled nursing and are used to dealing with the Centers for Medicare and Medicaid Services (CMS) and private managed Medicare Advantage plans. That’s because increasingly, payment models are shifting to a value-based approach—namely, payers are paying more for quality outcomes and they are abandoning the former fee-for-service model that paid based on quantity of services.

Care providers and payment experts agree: better outcomes are more easily achieved among a residential care population than across a disparate mix of hospital, home, skilled nursing facility or other care settings. Therefore, senior living is already the perfect place to achieve these highly desired outcomes. It is essentially the last remaining element not yet being compensated for its role in a value-based system.

“Senior housing is a great platform for providing very effective care coordination and value-based care for Medicare beneficiaries,” says Anne Tumlinson, CEO of Washington, D.C.-based health care consultancy Anne Tumlinson Innovations. “It is ideal. You can be incredibly effective in reducing hospitalizations, in reducing [Emergency Room] use, in reducing polypharmacy use, rehab—all of the things we know from years and years of research are the cornerstones of a care coordination model are pumped up on steroids in senior housing.”

A new frontier for care coordination

With enrollment in Medicare Advantage plans growing, the care coordination case for senior housing becomes even stronger. According to the Kaiser Family Foundation, the number of beneficiaries enrolled in private Medicare Advantage plans has more than tripled from 5.3 million in 2004 to 19 million in 2017, today comprising a third of all Medicare enrollees. Many of these beneficiaries already live in senior living communities.

This part of the coordinated care opportunity has already been identified by several major health systems and insurance companies that have made strategic acquisitions across the continuum—even to include senior housing in some cases. By acquiring managed care plans and combining them with acute care, post-acute care, pharmacy, home health and hospice care, they control the patient and costs—reducing hospitalizations and providing care in less expensive settings.

In early 2018, Insurance giant Humana said it would acquire a stake in the home health assets of Kindred Healthcare in an $800 million deal. As an insurer, the deal vastly boosts Humana’s home health operations, adding to its care coordination capabilities through its Humana at Home division. Specifically, it adds Kindred at Home’s 609 home health, hospice and non-medical home care sites of service, as well as almost 40,000 caregivers who serve about 130,000 patients a day, with annual revenue of approximately $2.5 billion.

Kindred at Home locations have a 65% overlap with Humana’s individual Medicare Advantage membership, the insurer noted in announcing the transaction.

In early 2018, Humana acquired a stake in home health assets of Kindred Healthcare in an $800 million deal.

“The combination of Humana At Home’s pursuit of improving care for seniors living with chronic conditions, in concert with Kindred At Home’s care delivery, will allow these important capabilities to create more effective care in a compassionate way for our members,” said William Fleming, Humana’s president of healthcare services, in a press release. “We look forward to transforming post-acute care through a value-based approach that will deliver improved clinical outcomes, ultimately lowering medical costs. We believe this work will lead to reduced hospitalizations, reduced emergency room visits, and allow physicians and clinicians to extend their care all the way to the patient’s home.”

The company is also in the process of acquiring privately-held hospice provider Curo Health Services for about $1.4 billion, further extending its reach across the care continuum. In part, its leadership cited being able to address some of the social determinants of health (conditions in which people are born, grow, live, work and age) in first announcing the Kindred deal.

Source: Kaiser Family Foundation

It only stands to reason that senior housing will become an acquisition target as it aligns with many of these same goals stated by Humana: a residential care setting that controls surroundings and care delivery.

“I think someone is going to buy a senior housing company,” says Lynne Katzmann, founder and president of assisted living provider Juniper Communities, of the interest from insurance providers relative to senior housing. “Whether they’re able to run it or not, I don’t know, but I believe someone will be able to do it, as soon as the Aetnas and Humanas recognize what we can do. We have not been traditionally part of the landscape, but as people become more aware of the benefits of senior housing, people will try to look for that part of an acquisition.”

While it hasn’t quite happened yet in those terms, players in the senior housing space are making early entry into this desired landscape.

Welltower announced in April 2018 it is acquiring health care REIT Quality Care Properties (QCP), in a $1.95 billion deal and joint venture with non-profit health system ProMedica. QCP is a major owner of post-acute care properties across the nation.

The deal creates a top-15 non-profit health care giant that comprises 13 acute-care hospitals, six ambulatory surgery centers, 300 other facilities, more than 300 former HCR ManorCare skilled nursing facilities and ManorCare’s Heartland home health business with 100 locations in 23 states. The portfolio also includes 10 assisted living properties essentially giving the system entry into senior housing and capturing a large swath of the care continuum that allows for closer coordination.

The deal “reinvents and revitalizes post-acute and long-term care delivery as part of an integrated health system,” Welltower said following the transaction.

“We want to take down the wall between traditional hospital and post-acute care services in an effort to enhance the health and well-being of our aging population,” said Randy Oostra, ProMedica president and CEO of ProMedica. “The lines are blurring between where health care begins and stops. This acquisition provides us the platform to think differently about health and aging.”

Senior housing operators will be well served to identify the opportunity now, and seize it early as these sophisticated health systems develop their strategies and actions around senior care. Innovators have already begun to adapt as new regulatory changes push this opportunity into the mainstream.

“We want to take down the wall between traditional hospital and post-acute care services in an effort to enhance the health and well-being of our aging population.”

Randy Oostra, president and CEO of ProMedica

The drivers of change: new regulation

Value-based care is here, but a few other policy changes could make the opportunity even greater for senior living providers. Details are still unknown regarding these changes, but the most proactive providers and health systems are already getting on board in anticipating that more in-home services will be covered by Medicare Advantage in the coming years. Mainly, these actions are based on two recent announcements:

Focusing on the home as the place of care for chronically ill individuals, whether that be a private home, or senior housing unit, aims to drive costs out of acute care and into lower-acuity settings.

“There’s really one major policy change in Medicare Advantage that has ramifications for senior housing and that’s the new flexibility in offering of supplemental benefits [in the home],” says Tumlinson.

While on its surface, it may appear that private duty (private pay) in-home care providers are best-positioned to benefit from this change, senior housing providers that offer these settings are arguably a better partner for Medicare Advantage plans as they can control the services and the environment where those services are delivered at scale in one location.

Providers not only have a great deal of control over residents’ environments through existing technology tools such as fall prevention and remote monitoring devices, but they also are tasked with providing food and nutrition, medication management and other services that tie directly to an individual’s health outcomes 24/7. Medication management alone accounted for 26% of hospital readmissions, according to a 2017 study published in the Journal of the American Pharmacists Association.

Already, insurance providers are taking note, such as SCAN, one of the largest not-for-profit Medicare Advantage providers, with more than 190,000 members.

“Given this new guidance and the direction the healthcare industry is headed, we would expect to see expanded collaboration within the senior and aging services industry,” said Chris Wing, CEO of SCAN Health Plan, in an emailed statement. “As these possibilities unfold, we’ll look at all opportunities to maximize the value our members get from SCAN Health Plan.”

Such a collaboration will not be without challenges, however, for insurance companies that have not yet worked directly with senior housing providers and may not be entirely familiar with the operations and service structures.

“Ultimately this requires a mindset shift and culture change,” Katzmann says. “[Senior housing] is a wonderful market. It’s a captive market of potential enrollees for Medicare Advantage. If they can design programs, if they get a handle on supplemental benefits, and if they can get a hold of a provider and believe they are going to increase volume, it’s possible there will be contract arrangements.”

Source: The Henry J. Kaiser Family Foundation

Why senior housing needs to seize the Medicare Advantage opportunity

While the regulatory changes around Medicare Advantage benefits are still being defined, the emphasis on care coordination and shifting consumers to lower cost settings is positioning senior housing to be a great partner in the care continuum in several areas:

  • Extending average length-of-stay among residents who receive full-continuum care in assisted living rather than across numerous care settings
  • Allowing senior living providers to become managed care providers by giving more control of the resident’s care plan delivered on-site
  • Driving referrals to senior living partners that offer assisted living and being a part of new care models
  • Providing a more comprehensive care plan that includes a primary care contact and a full continuum of care services.

Besides the care coordination, senior living providers have a population that is attractive to Medicare Advantage insurers.

The average age of today’s resident is 87, according to the National Center for Assisted Living. Three-quarters of residents require support with activities of daily living, and 95% have chronic health conditions, according to research conducted by the University of North Carolina at Chapel Hill and University of Georgia that was published in 2016.

The vast majority of senior housing residents are eligible for Medicare and could likely utilize its benefits.

With Medicare spending comprising 20% of the total national health expenditures, according to CMS, the senior population is a major part of the U.S. health care spending problem. But it can also be a big part of the solution, experts say, via settings and programs that focus on care coordination.

Source: 2012 Centers for Disease Control and National Center for Health Statistics Study

The models: How senior housing can participate

Senior living operators have several different ways to work with Medicare Advantage, all with varying degrees of complexity, opportunity, upside and downside.

Providers are predominantly getting involved in two ways:

  1. Launching and owning a Medicare Advantage plan.
  2. Partnering with an existing insurance company to become a contracted in-network provider or partnering with another care provider that offers a Medicare Advantage plan to its residents.

By whatever means they decide to partner with or utilize Medicare advantage, some are seeing this as the future of senior housing.

“The idea of these advanced partnerships with care coordination at the forefront, whether on the skilled nursing side or assisted living providing MA plans, I think that idea is the way of the future,” says Liz Liberman, health care analyst with the Washington, D.C.-based National Investment Center for Seniors Housing and Care. “I think for the providers who are able to provide that level of service, the value they will bring to patients and their families is tremendous and there is a huge business opportunity there. But the entire concept for the time we spend talking about it, is still in its infancy.”

Sunrise Senior Living offers Sunrise Advantage, its own branded Medicare Advantage Plan, to qualified residents in specified communities.
(Photo courtesy of Sunrise Senior Living)

New care models: pros and cons

Major private pay providers like Erickson Living and Sunrise Senior Living already have their own branded Medicare Advantage plans: Erickson Advantage and Sunrise Advantage, respectively. The plans are available to residents who live in specified communities and meet other requirements such as qualifying for original Medicare.

Marquis Companies, a regional player in the Northwest, has launched similar plans focused on those who qualify for Institutional Special Needs Plans (I-SNP), which require that beneficiaries have special needs that can be addressed in a residential care setting such as skilled nursing or assisted living.

Even Brookdale, the nation’s largest senior living provider, has piloted a program in this space. In 2015, the provider launched a demonstration project in Oregon called Brookdale Health Options. The program is no longer in existence, the company confirmed, but upon its launch through a partnership with UnitedHealthcare, voluntary enrollment in the five Oregon communities where it was offered was initially strong. The following year, Brookdale’s Chief Medical Officer Kevin O’Neil told attendees of a NIC conference that enrollment reached 66% penetration at one community and was growing. One of the main goals of the program was to reduce hospitalizations, with Brookdale receiving compensation from UnitedHealthcare for meeting quality metrics. Brookdale declined to share the reasons that the program ended.

Challenges to offering a Medicare Advantage plan

Complexity: The insurance market is highly regulated. It requires infrastructure, staffing and support such as customer service and billing channels—most of which senior living operators would have to add to their operations.

Competition: For one, the Medicare Advantage market is already highly competitive, with Humana and UnitedHealth comprising about 41% of enrollees nationwide. UnitedHealth alone held nearly 24% of the entire market share in February 2017, according to analysis from Mark Farrah Associates, with roughly 4.6 million enrollees.

Insurance giants such as Humana and UnitedHealth have widespread infrastructure in place to offer and manage their plans. This includes plan administration, required capital reserves to cover claims, brand recognition and marketing presence, and decades of experience in the insurance marketplace.

Capital: Insurance is a capital-intensive business, and regulators require a ratio of reserves based on projections that can create sticker shock for those who are not accustomed to offering insurance.

“One of the big issues is that you have to have risk-based capital,” says Fred Bentley, vice president with Avalere Health, based in Washington, D.C., describing the method by which insurance regulators measure the amount of capital they deem appropriate for an insurer to support its operations relative to its size and risk profile. “You have to have a massive amount of capital to be able to pay out claims. It’s essentially the case that all insurers have a big pot of money just in case, so they can remain solvent in order to fulfill their duties as an insurer. A lot of [companies] may look at that and say ‘Thanks, but no thanks.’”

Sources: Medicare Business Online(TM), Mark Farrah Associates, presenting data from CMS enrollment reports

Time frame: Businesses used to operating on their own time frames will have to get used to an insurance schedule that is mandated by the federal government as well as state regulatory agencies. Medicare open enrollments for beneficiaries is October 15 to December 7; plans can only be changed on an annual basis; and can only start on a given timeframe that is approved by CMS and the local governing bodies.

Margins: Under Medicare advantage, all providers must adhere to a medical loss ratio. Essentially, this means that for all Medicare Advantage plans, 85% of every premium dollar must be spent on benefits, while the remaining 15% can be spent on administrative expenses. Given the expense of administering MA plans, providers report the margins are relatively low—in the range of 3% to 5%—and in stark contrast to the margins senior living providers typically enjoy.

Regulatory landscape: Working with CMS and insurance regulators can be cumbersome for private entities that are not used to this level of oversight and complexity. Many have steered from the skilled nursing industry for this reason due to the reimbursement landscape and constant state of change around health care regulations.

But despite the perceived hurdles, there are ample opportunities for providers that share a few key characteristics and the opportunity is growing in light of the recent and upcoming changes to Medicare Advantage that stand to expand coverage of services delivered in the beneficiary’s home.


Regional presence: Regional providers are poised to benefit the most as MA is a regional business with the most penetration in urban markets. Likewise, most senior living providers operate regionally.

New source of revenue: Rather than residents paying a separate entity for health insurance and that insurer paying a separate provider for resident care, by offering a health care plan, senior housing providers are positioned to capture the full premium dollar and control how it is spent (within the boundaries set by regulations). Operating margins are regulated and are typically limited to low single digits, but with a substantial number of enrollees, the business can scale.

Control over care coordination: Rather than being at the mercy of third party care coordinators who make recommendations for residents, by offering a Medicare Advantage plan and staffing care coordinators such as nurse practitioners or other healthcare professionals, senior housing providers are uniquely positioned to control and coordinate care in the residents’ units. This includes softer influences such as diet, exercise, and other habits that take place in the home.

Savings on hospitalizations and long-term care: There aren’t a lot of firm numbers reported on rehospitlizations and hospitalizations under coordinated care models in senior housing because senior housing is still a new setting for this coordinated care. Anecdotally, some providers have shared that residents enrolled in Medicare Advantage plans geared toward senior housing residents have experienced double-digit reductions in hospitalization rates. And at least one organization is proactively collecting this data as a means to prove senior housing as a viable coordinated care setting. (See sidebar on Juniper Communities’ success with care coordination.)

Additionally, there is benefit to providers that operate skilled nursing facilities, or partner with them, in that the care provided in a skilled nursing facility is often used as a lower-cost alternative to a hospitalization under MA plans for senior housing residents. For providers that offer both assisted living and skilled nursing services, the plan allows for more seamless transitions and can serve as a way to drive referrals from skilled nursing to assisted living, and vice versa.

Improvement in length of stay: By coordinating residents’ care to prevent health care events such as falls and infection, which often trigger a move to a higher-acuity setting, assisted living and independent living providers can improve the length of stay for their residents. Longer length of stay translates into fewer costs for providers associated with resident move-outs and attrition.

“If you free up those dollars [for the insurer] it becomes profit [for the insurer],” Katzmann says. “But the savings that are created need to be utilized by people who do a better job on prevention. That’s us.”

The synergies between insurers and senior living providers are clear from a care-coordination perspective, and particularly in light of Medicare Advantage opening to potentially more in-home services. By getting Medicare Advantage reimbursement for assisted living and having some of the services paid by the insurer, residents will have to bear fewer costs over time. Thus, providers can expect to see fewer move-outs due to residents running out of money.

But how senior housing providers and insurers are going about capitalizing on this opportunity varies.

Source: Juniper Communities

Ways Senior Living Can Offer MA Plans

There are several specialized plans currently offered under Medicare Advantage that are available to individuals in care settings or who meet certain specifications.

While there are some general Medicare Advantage plans currently geared toward senior housing settings, the majority fall into the “special-needs” category under CMS for those who are assessed as requiring at least 90 days in a care setting such as long-term care, skilled nursing or assisted living.

Special Needs Plans types (SNPs)

  • Chronic or Disabling Condition SNPs (349,235 beneficiaries)
  • Dual-Eligible SNPs (2,209,691 beneficiaries)
  • Institutional SNPs (66,576 beneficiaries)

* Beneficiary counts according to The SNP Alliance Special Needs Plan Comprehensive Report August 2017

Chronic SNPs

These are are health plans for individuals with one or more identified chronic conditions, such as diabetes or congestive heart failure.

Dual-Eligible SNPs and Medicare-Medicaid plans

These are are health SNPs for individuals eligible for Medicare and Medicaid

  • A Fully Integrated Dual Eligible (FIDE) SNP is a special type of DSNP for high-risk Medicare-enrolled beneficiaries.

Institutional/Institutional Equivalent SNPs

These are health plans for individuals residing in nursing homes or equivalent settings, such as assisted living facilities, for 90 days or longer.

*Definitions are based on language published by UnitedHealthcare

SNP conditions under CMS
For an I-SNP to enroll MA eligible individuals living in the community, but requiring an institutional level of care (LOC), the following two conditions must be met:

1. A determination of institutional LOC that is based on the use of a state assessment tool. The assessment tool used for persons living in the community must be the same as that used for individuals residing in an institution. In states and territories without a specific tool, I-SNPs must use the same LOC determination methodology used in the respective state or territory in which the I-SNP is authorized to enroll eligible individuals.

2. The I-SNP must arrange to have the LOC assessment administered by an independent, impartial party (i.e., an entity other than the respective I-SNP) with the requisite professional knowledge to identify accurately the institutional LOC needs. Importantly, the I-SNP cannot own or control the entity.

Provider success with early partnerships

There are several existing examples of partnerships that operators have formed to gain access to Medicare Advantage synergies. As a less risky way to get involved, this could mean the senior housing operator partners with an existing insurance company to offer a Medicare Advantage plan to residents or a provider partners with another care provider such as a post-acute operation that offers an MA plan.


Control: The senior living provider gives up some control in this scenario as the insurer typically sets the benefits, creates the care plan, and employs the staff who administer the managed care program.

Limited upside: Because the senior living provider bears very little risk in this scenario, the rewards are also limited. Currently, the senior living provider is not paid directly for the services that are being covered. This could change with the new rules around Medicare Advantage covering services that are not skilled.


Length of stay: With a coordinated care plan being administered on site within the community, senior living providers report seeing residents remain in care settings for longer periods of time.

Reduced hospitalizations: Providers that have Medicare Advantage plans geared toward their residents report a major reduction in hospitalizations—in the ballpark of half as many hospitalizations prior to introducing the plan.

Referrals: As a provider of care services that are covered by a Medicare Advantage catering to senior living residents, assisted living and independent living providers can rise as a referral source for post-acute care providers as well as acute-care providers.

How Today’s Providers are Using Medicare Advantage

Some forward thinking providers have already formed Medicare Advantage plans and were offering them prior to the recent regulatory announcements.

The number of providers offering some type of Medicare Advantage benefit is likely to increase significantly under the recently regulatory changes.

Windsor Run, an Erickson CCRC
(Photo courtesy of Windsor Run)

Erickson Advantage

An operator of CCRC communities in several states, Erickson recently rolled out its Erickson Advantage (EA) plan, which is currently available exclusively to Erickson residents in 18 of its 20 locations. There are 4,900 enrolled members of more than 20,000 Erickson residents in total, almost a quarter of its total population.

According to the plan’s website, there are four tiers available to enrollees, ranging from $49 per month to $160 per month, with an additional component available to cover prescription drugs.

Some of the program benefits include:

A nurse care coordinator— residents have access to a care coordinator on campus. This skilled professional provides a wide range of services, from preparing enrollees for upcoming medical procedures to answering questions on different health issues. This coordinator may address questions that otherwise would be directed to a doctor, saving time, travel and expense. This person also acts as a hospital liaison upon admission and discharge.

Member services representative—Located on-site at each community, this representative is accessible to enrollees without their having to make a phone call or wait on the line.

Focus on preventive care and wellness—According to the plan details, it emphasizes preventing health problems from developing, not just treating them after they arise. It does this with a range of preventive programs, tests, and vaccinations, including:

  • Bone density screenings
  • Health information seminars
  • Colorectal screening
  • Diabetes monitoring
  • Mammography pap smear/pelvic exams
  • Prostate screening
  • Flu shots
  • Hepatitis B vaccine
  • Pneumonia vaccine
  • Blood pressure monitoring
  • Skilled nursing care

Hearing Aid Benefit

Other benefits—EA may be able to cover skilled nursing needs without a prior three-day hospital stay; a departure from the three-day stay requirement under original Medicare plans.

Sunrise at Silas Burke House
(Photo courtesy of Sunrise Senior LIving)

Sunrise Advantage

Sunrise currently offers an MA plan called Sunrise Advantage, that is available in 59 of its 261 U.S. communities. Those communities are located within specific counties within the states of New York, Virginia, Pennsylvania and Illinois.

Among the plan options, one bills itself as focusing on “providing a unique level of customized clinical care and services for residents in nursing facilities.” Another focuses specifically on those with dementia.

The plans fall under three options: an ISNP, a CSNP and a MA Part D program. The plans range in price from $27.50 per month to $79 per month with some shared benefits.

Overall, the plans all hinge on several common offerings:

The Advanced Nurse Practitioner—The (ANP) and primary care physician (PCP)/NFist (a PCP specializing in the care of nursing home patients) care team providing onsite, facility-based PCP support.

A risk assessment tool—designed for a senior, nursing facility patient population

A comprehensive history and physical assessment that generates an Individualized Care Plan (ICP)

A care management platform that helps identify needed preventive health/HEDIS services, ensures the use of evidence-based clinical guidelines, and facilitates care team communications for care coordination

Frequent face-to-face Member and caregiver/family member interactions that identify enrollee preferences and allow time for important care decision discussions and counseling.

All plans include the following, while additional benefits such as incontinence needs are covered under specific plans only:

  • PCP Visits
  • Routine Foot Care Visits
  • Hearing Services
  • Vision Services
  • Preventative Dental
  • Diabetic Supplies
Image courtesy UnitedHealth Group
Optum headquarters in Eden Prairie, Minnesota
(Photo courtesy of Optum)


Insurers have long been offering SNPs to certain qualifying demographics, including those who meet the ISNP requirements under CMS and live in care settings such as assisted living communities and skilled nursing facilities.

One example is UnitedHealthcare, and its Optum division. Separate from the insurance company and health plans, Optum is a health solution that can work for health plans to coordinate care, including among ISNP beneficiaries.

Among some of the benefits Optum can provide that are reimbursed by UnitedHealthcare plans are

hearing aids, dental services and podiatry as well as the services of a nurse practitioner or physician’s assistant who care for patients on site in the community.

Particularly in assisted living settings that do not provide health care services, this type of partnership can be a boon to providers.

“We have physical people [physicians’ assistants and nurse practitioners] in their space,” explains Sheila Strand, VP Field Operations for OPTUMHealth. “We can help them with what’s happening with their members. [We] partner with them to bring services in to close the ‘back door.’ We follow [patients] from the hospital back to nursing homes or assisted living. Members are able to stay longer at a better baseline, so they can be independent longer.”

Optum has had particular success offering an IE-SNP, or an institutional equivalent special needs plan, via a program it launched three years ago. The IE-SNP plan type is less common than traditional SNPs, and it varies state to state in what it requires for a beneficiary to qualify as “institutional equivalent.”

“IE-SNP is a huge growth engine,” Sheila Strand says. “It’s bigger than ISNP. …The members stay longer. They don’t pass away. I have a higher attrition rate on the skilled nursing side and a longer relationship with AL members, generally speaking.”

The company has proven metrics showing a reduction among beneficiaries’ ER visits by 50% in first three months and reduction in hospitalizations in the range of 50%-60%.

Not only does it reduce acute-care visits, but also family members appreciate the time saved in care coordination, Strand says, particularly for special needs populations such as memory care residents.

“What we are going to call the post-acute space—home health, AL_looks to be a $200B market for Medicare and the retirement population,” said OPTUMHeath’s Sheila Strand during a recent industry conference. “We believe it’s growing leaps over bounds for how to care for this population.”

Marquis Tualatin, a Marquis facility specializing in post hospital and long-term care.
(Photo courtesy of

AgeRight Advantage (Marquis Companies)

Available across five counties in Oregon, where Marquis operates a majority of its 26 assisted living, skilled nursing and long-term care facilities, AgeRight Advantage is a I-SNP plan that opened for enrollment under Marquis Companies in 2016. The plan is owned by Marquis and is available to qualifying communities in Oregon, where the operator has significant market share.

“One of the many reasons Marquis wanted to get into the insurance business was to take ownership over care and services, as well as bring clinicians in house,” says Ian Strand, executive director for AgeRight Advantage. “For a long time, this was a known weakness. By having our own plan, we can have NPs and others who are fully employed by us.”

Like other senior-housing administered plans, AgeRight incorporates a nurse practitioner to coordinate care for beneficiaries, a benefit Marquis and partner provider.

The plan markets the following benefits, at $34.50 per month (enrollees must continue to support their Medicare Part B plan).

  • Coordinated care and more personal attention.
  • Part D prescription drug coverage.
  • Vision, hearing, routine foot care, and preventive services and screenings.
  • Regular visits from your nurse practitioner to your residing nursing facility to help avoid unnecessary and often unwanted trips to the hospital.
  • Nurse practitioners can complete tests and treatments in the nursing facility that are normally done in the hospital.
  • One point of contact for communication with you, your family, your doctors, and the nursing facility staff.

Coverage includes

  • Doctor’s Visits
  • Routine Foot Care
  • Hearing Services
  • Vision Services
  • Preventive Care
  • Skilled Nursing—without a three-day stay required
  • Hospice Care

Many Medicare Advantage plans cover similar benefits from podiatry services to dental care and primary care benefits. However, unique to the plans offered by the providers themselves are the on-site care coordinators that understand the specific needs of the resident population and can help to manage the care accordingly.

In the case of AgeRight, Marquis also offers the plan to Frontier residents in the counties where it is available.

By offering the plan to Marquis and Frontier residents, both companies realize a benefit. Marquis is able to enroll more residents and coordinate more care as a result. Since the plan needs scale in order to succeed, its coverage area is expanded by partnership with Frontier. And for Frontier, it enjoys the benefits to its residents such as reduction in hospitalizations and longer length of stay, without having to take on the risk of actually being an insurer.

Frontier says it has been highly impactful for enrolled residents, which in some communities comprise more than half of the resident population.

“[In the communities where the nurse practitioner is in] two to three days a week, as families are able to meet the NP and see the amount of time spent with residents, there is a more tangible value that snowballs the number of people who want to know about the program,” says Elizabeth Simon, regional vice president for Frontier, which markets AgeRight Advantage to its residents. “They share more about the program and can help grow enrollment.”

Source: The Kaiser Family Foundation, October 2017

The Medicare Advantage plan of the future

Today’s Medicare Advantage plans typically cover a host of primary care and emergency services. Based on the changing landscape, plans of the future could look quite different.

“What I see happening is that some plans will have a hearing aid benefit, and dental,” says Sheila Strand. “We know oral health can make a significant difference in how people get sicker sooner if they don’t have good teeth or dentures to eat properly.

Other benefits might include more discounted athletic club memberships, chiropractic benefits or acupuncture benefits.

Yet other innovations in transportation might be included, too.

“I think we will see over time that the MA model will shift to one that is focused on the social determinants of health,” Bentley says. “Lyft or Uber might be carved in to support transportation to and from [doctors] office visits. A nutrition benefit might be added in, whether meals on wheels or some other link to nutrition, which plays a big role.”

Perhaps plans would cover updates to units to make them more accessible for inhabitants to age in place, Katzmann says. But experts agree it is unlikely that MA will ever cover housing costs.

A market ripe for growth—Who will succeed?

By expanding Medicare Advantage coverage to non-skilled services, in the most broad interpretation, this could open the floodgates for assisted living and independent living providers to be reimbursed for many of the services they already provide. For those that are willing to extend the risk to partnering with or becoming an insurer, the rewards are even greater.

“It depends on how CMS ends up defining the MA benefits,” Liberman says. “It will probably be those providers already comfortable with the government as a payor source. There is a lot of hesitation in the private pay world to get government-based funding… It’s not necessarily their business model.”

“I think the MA change is icing on the cake and has huge potential down the road. But I would not wait for that to become clear. Jumping in and being a part of the discussion is always better than waiting.”

Lynne Katzmann, founder, president and CEO of Juniper Communities

Other providers that are well-positioned to benefit under the new model likely operate in areas where Medicare Advantage enrollment is strong, and where they company has an existing market presence and brand.

“What has to counterbalance [the] risks or challenges are a believe you have a very powerful brand in the senior living space among your core customers that will translate into them wanting to get coverage from you,” says Avalere’s Bentley.

And while the benefits to getting into the insurance market are justified, they are not without their limits.

For example, providers are mistaken if they believe Medicare will begin subsidizing housing expenses for beneficiaries, Tumlinson says.

“I think what traditional insurers are looking for right now are the providers in home care, meals, transportation and fall prevention—those kinds of things,” she says. “CMS is going to include a list, and it’s not going to include fees for housing….We have to think about how we [as senior housing providers] charge fees for things MA might start to cover, and be very very careful not to duplicate benefits. It’s a dangerous road to go down to start to looking at how the MA program is going to somehow subsidize senior housing.”

But for those who are on the forefront of this shift, the benefits could be “huge,” says Juniper’s Katzmann, who has created a consortium of senior living providers that are working to partner on their own Medicare Advantage plan.

“I think the MA change is icing on the cake and has huge potential down the road,” she says. “But I would not wait for that to become clear. Jumping in and being a part of the discussion is always better than waiting.”