American Health Plans Puts Senior Living at ‘Top of the Food Chain’ with Medicare Advantage

About five years ago, American Health Partners offered a range of services across the continuum, from home health to nursing homes. But leaders with the organization realized that true integration was lacking.

“We had the pieces of a continuum, but we didn’t manage the dollar and the clinical model of care — that was dictated to us,” Hank Watson told Senior Housing News.

Watson is the chief development officer with American Health Plans, a division of American Health Partners that was formed to “manage the dollar” by launching and co-owning Medicare Advantage plans with other long-term care and senior living providers.


Today, American Health Plans has co-ownership and partnership agreements with providers in Georgia, Kansas, Mississippi, Missouri, Oklahoma, Utah, Texas and Tennessee. And more partners are coming on board; in April 2021, life plan community John Knox Village became the fifth partner in the provider-owned American Health Advantage of Missouri plans.

The growth of American Health Plans is part of a larger trend in senior living, as more providers — not only skilled nursing facilities, but assisted living and other private-pay companies — see value in Medicare Advantage.

Provider groups such as The Perennial Consortium, are also coming together to start special needs MA plans that have benefits packages to serve the particular needs of senior living residents. And one organization helping to drive and support these efforts, AllyAlign, recently received $300 million in funding.


The case for Medicare Advantage in senior living is clear, in Watson’s perspective.

“Once you’re at the top of the food chain as the Medicare Advantage plan, opportunities present themselves, and things like rehab, pharmacy, care management all become part of the story you can tell to your member/residents, that we have integrated clinical care,” he said.

The TruHealth model

Being able to manage a beneficiary population and provide the right services in the right location at the right time is key to managing costs, maximizing outcomes and achieving Medicare Advantage success.

American Health Partners was able to achieve this type of management thanks largely to its network of 29 nursing homes across Tennessee and Alabama, along with the other pieces of the continuum that the company owned.

But as American Health Plans now launches and co-owns MA plans in markets with providers beyond American Health Partners, the organization turns to TruHealth — a division of American Health Partners — to provide the essential care management.

Clinicians and case managers with TruHealth — such as nurse practitioners and physician assistants — coordinate care and services for beneficiaries of American Health Plans.

“They’ll have a panel of anywhere between 70-80 members/residents to care for, and that’s their job, to take care of them within the context of that model of care, keep them in their house or in their home, which is the assisted living facility or nursing home environment,” Watson said.

NPs and other clinicians have been attracted to working with TruHealth because of the smaller panel sizes and because they are evaluated not on visit count — which is typical in other environments — but on clinical outcomes.

And those clinical outcomes have been proving the value of MA plans that are tailor-made for the needs of nursing home and assisted living residents, Watson said.

The hospitalization rate for American Health Plans members in 2020 was less than 3.5%, compared to industry averages north of 7%, he said.

The value of Medicare Advantage

Owning a Medicare Advantage plan comes with costs and risks for senior living providers. The total capitalization for a new plan is roughly $4 million to $5 million, Watson said.

But, American Health Plans puts up more than half of that capital. If providers in a given state come together to form a joint venture, that enables even relatively small organizations to get a piece of the pie. Joint ventures among several providers also helps create the scale needed for a plan to operate profitably; Watson puts the threshold at 400 to 500 beneficiaries.

“We have anywhere from large multi-state operators to single-site locations that participate alongside us, and we have a lot of flexibility in terms of how they can come in as capital partners,” he said.

As for a return on that investment, that comes primarily in two forms.

One is shared savings payments that flow back to facilities or provider/owners each year, if they can manage their costs and drive quality outcomes.

For instance, Watson estimated the cost of a hospitalization at $13,000; by reducing hospitalization events through more proactive, coordinated care, the plan can achieve savings and distribute those to providers through shared savings arrangements. In 2020, American Health Plans paid about a 25% shared savings bonus on top of its usual contracted payments to providers across its book of business, Watson said.

There is also value creation over time from owning the Medicare Advantage plan, and this is no small consideration, given current trends.

Almost half of the U.S. population of older adults will be enrolled in Medicare Advantage within five years, Watson predicted. He pointed to companies such as Oak Street Health and Alignment Healthcare, which are focused on serving the Medicare Advantage population and have recently executed large initial public offerings or SPAC mergers.

“Providers have an option to engage with [Medicare Advantage], own it, manage it and control it, or have it managed for them,” he said.

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