Medicare Advantage (MA) will turn 25 years old in 2022, and the insurance program is not only getting older but more popular among older adults — with senior living providers playing an increasingly prominent role in driving MA growth and innovation.
Recent headlines showcase the continuing integration between senior living and Medicare Advantage.
Last week, SCAN Health Plan unveiled a new MA offering and care model that is geared largely toward assisted living residents in California.
And Minnesota-based Medicare Advantage plan provider UCare recently invested in Lifespark, a company that provides holistic senior services and acquired Tealwood Senior Living earlier this year. The investment was part of a $20 million Series B round co-led by Virgo and effectively makes Lifespark a “payvider.” Lifespark Founder and CEO Joel Theisen describes the transaction as the “holy grail deal.”
These are just the latest examples of how Medicare Advantage is making deeper senior living inroads. Other examples include a $300 million investment in AllyAlign, a company that helps senior living and care providers launch MA special needs plans. Another organization, American Health Plans, also co-owns MA plans with a growing roster of senior living providers.
The current expansion of Medicare Advantage can be traced back at least to 2018. That year, the federal government allowed MA insurers to offer new types of benefits — such as for “daily maintenance” types of care — that are in the wheelhouse of senior living providers. Subsequent MA policy changes have continued to expand the universe of potential benefits.
The Covid-19 pandemic did slow MA enrollment for 2021, according to leaders with ATI Advisory, a research and advisory firm focused on health care and aging. However, they anticipate higher enrollment for 2022, and note that many senior living providers are more interested than ever in how MA can support robust health care offerings, in light of the pandemic.
Taking stock of MA in senior living
The growth of special needs plans (SNPs) provides one measure of how MA has risen in senior living over the past three years.
SNPs are Medicare Advantage plans that are designed specifically for particular beneficiary populations; for instance, institutional special needs plans (ISNPs) are generally for people who live in a nursing home, while institutional-equivalent special needs plans (IE-SNPs) are designed for people receiving nursing home-level care while residing in assisted living or certain other settings.
Since 2018, the number of ISNPs has grown nearly 100%, from 97 to 186 plans, according to ATI Advisory data.
Year-over-year growth has varied, but the strongest growth trends have been exhibited by combination I/IE-SNPs. This suggests the increasing interest from insurers in reaching assisted living populations.
ATI did clock a “stagnation” in I-SNP and IE-SNP enrollment for 2021, likely due to effects of the Covid-19 pandemic, according to Tyler Overstreet Cromer, a principal at the firm who leads the Medicare innovation business practice.
Not only did Covid-19 unfortunately lead to resident deaths in nursing homes and, to a lesser extent, in assisted living, but the pandemic created complications in typical practices during the enrollment period for 2021 MA plans.
“We do expect enrollment to increase,” Cromer told Senior Housing News, referring to plans for 2022.
And while enrollment may have been flat in 2021, the longer-term trends in Medicare Advantage paint a clear picture of growth. In 2005, 13% of Medicare enrollees chose an MA option versus traditional fee-for-service; today, about 42% of Medicare beneficiaries are in an MA plan, according to data recently cited by AARP.
The growth of special needs plans stems both from senior living companies launching plans that they own and manage — The Perennial Consortium being one example — as well as from insurance companies starting SNPs.
ATI Advisory Founder and CEO Anne Tumlinson has been outspoken about the potential advantages for senior living providers to start their own MA plans.
By doing so, they can create benefits packages that are most aligned to the needs of their residents; they can most closely manage and coordinate care for their residents/beneficiaries; and they can realize the most comprehensive financial upside. These advantages are amplified if the senior living company also owns a primary care practice and other care providers in the plan’s network.
However, starting an MA plan requires a deep commitment, including having the right care and coordination capabilities in place.
While she still evangelizes about the virtues of senior living providers starting their own MA plans, Tumlinson says the industry has “educated her” about why doing so is unappealing for many providers.
These providers have more options than ever to work with primary care groups such as Oak Street Health and Cano Health, which are focused on serving Medicare Advantage populations.
Boosted by massive infusions of capital, these primary care providers are expanding quickly and are more interested than ever in partnering with senior living providers, Tumlinson said. They see the potential to come into a senior living setting and efficiently provide their services to a large percentage of residents, because they have contracts with multiple insurance companies and also can directly bill Medicare fee-for-service, she noted. So, they can offer services to residents in MA plans with, say, Humana and Aetna, as well as to residents in traditional Medicare.
The senior living provider likely would benefit from increased length of stay, if these primary care groups can keep residents healthier for longer periods of time. And, there is the potential for senior living providers to get a slice of the financial upside for their role in helping to keep residents healthy and costs down.
But, the extent of those financial benefits could be paltry, compared to what providers could capture if they own the MA plan outright.
“One of the things that Tyler and I are most concerned about is that senior living is leaving too much money on the table without fully valuing what they’re offering to these groups,” Tumlinson said.
Still, working with the primary care groups could be a way for a greater number of senior living providers to enter the “shallow end” of Medicare Advantage and start to enhance resident wellbeing, Tumlinson acknowledged.
“There are primary care groups that want to deliver a strong primary care model to senior living residents, and there are ways to partner with those groups that involve little or no risk,” Cromer said.
SCAN’s Embrace model
Among the new special needs plans that will debut in 2022 is one branded as Embrace, from SCAN Health Plan.
SCAN Health Plan is part of SCAN Group, a mission-driven organization tackling a range of issues related to older adult health care. The SCAN health plans serve more than 220,000 members in California.
Embrace beneficiaries will have access to an interdisciplinary care team, including physicians, pharmacists, care coordinators and others. And SCAN is focused on bringing care and services to beneficiaries where they live, including in assisted living communities.
Indeed, SCAN is particularly focused on how the Embrace model will integrate with senior living operating models and alleviate staff burdens, Dr. Payam Parvinchiha, SCAN’s vice president and medical director for Integrated Care, told Senior Housing News.
Parvinchiha drew from his own experience as the Embrace model was being developed. As a physician with a private practice earlier in his career, he “fell in love” serving nursing homes and senior living communities — but he also felt constrained from providing the most effective care, due to the fragmented nature of typical health care delivery and payment systems.
He subsequently held a leadership role with CareMore, an Anthem affiliate that has been active in delivering MA-supported primary care in senior living settings, including through a partnership with Welltower (NYSE: WELL).
After Sachin Jain transitioned from CEO of CareMore to CEO of SCAN Group and Health Plans, Parvinchiha also joined the SCAN organization, seeing new opportunities to apply what he has learned over the last decade and transform how care is delivered to older adults.
Parvinchiha’s thinking further evolved over the course of the pandemic, as he saw senior living staff strained and prevented from doing hands-on work to keep residents “happy and healthy,” because they also were responsible for care coordination and other matters that could be handled by SCAN.
“It’s really designing care models that keep the staff of the assisted living community and their values in mind, and delivers an amazing experience for them,” he said, of Embrace.
To deliver that experience, Embrace will keep panel sizes “as low as possible,” with a target of one clinician per 80 patients.
The other crucial pillar will be to closely integrate care delivery by having the clinicians and health plan under the same entity. In other words, all the clinicians will be SCAN employees, and they will not have to submit authorization requests and jump through other bureaucratic hurdles to provide needed care and services.
Furthermore, SCAN intends to tailor the Embrace model to the particular needs of its senior living partners. So, that could mean flexing the services that the SCAN teams are focused on to most efficiently supplement what senior living providers are already doing, or highlighting different plan benefits to residents and staff across different providers, depending on where they have gaps that could be filled.
“We’re developing deep partnerships I can’t [yet] announce, with large-scale operators that recognize this model of care, and hope to partner with them in unique ways,” Parvinchiha said.
He believes that the Embrace model will be appealing to senior living providers of all stripes, across different segments of the market.
Medicare Advantage products historically have targeted lower-income demographic groups such as people dually eligible for Medicare and Medicaid, but that is changing, according to ATI Advisory.
“We expect more and more people even in upper income categories to take advantage of MA,” Tumlinson said.
Parvinchiha affirms that this will occur as offerings like Embrace come to market. He likened the model to concierge care, only bolstered with larger clinical teams and additional benefits.
“That senior in a luxury apartment benefits just as much from that high-intensity, high-touch, team-based coordinated care as do lower income older adults,” he said.
And as for the financial upside available to senior living providers, Parvinchiha said SCAN is open to “all sorts of levels of collaboration and engagement,” and reaching “that place where we’re sharing in the operational and other elements of care for the patients and both taking advantage of any financial upside is absolutely the goal.”
Embrace will launch in Orange County, California, and SCAN plans to bring the offering to additional markets in the future. The enrollment period began on Oct. 15, and Parvinchiha is eager to get the plan in action come 2022.
“We have to show that this is delivering on what we promised, and I think once we do that, it’s going to be easy in terms of scaling and growing because people are going to want it,” he said.
UCare, Lifespark and future disruption
As the SCAN rollout indicates, Medicare Advantage initiatives are often geographically constrained due to the way plans are regulated, meaning that innovation related to senior living is happening at different rates and in different ways across the country.
Minnesota has emerged as one hotbed of activity. About a year ago, insurer UCare — in partnership with some other organizations — introduced two new plans exclusively available to residents of 160 communities operated by 22 providers in the Twin Cities metro area.
And earlier this year, in a watershed transaction for the industry, Lifespark (then known as Lifesprk) acquired Tealwood Senior Living’s portfolio of 35 communities across Minnesota and Wisconsin. Lifespark specializes in providing value-based care with a focus on home- and community-based services, with care models made possible through fully at-risk contracts with Medicare Advantage plans.
Now, UCare has invested in Lifespark, the two organizations announced on Oct. 12. The insurance company did not disclose the dollar amount of the investment, but it is “significant” and “the first occasion for UCare to make a direct investment in a provider partner,” UCare President and CEO Mark Traynor told SHN.
Lifespark also has secured debt financing as part of this investment round, so there is “a significant amount of cash coming into the company,” Founder and CEO Joel Theisen told SHN.
The cash will be used in part to further the development of Lifespark’s technology infrastructure, notably the organization’s efforts to create an electronic “life record.” The vision is to blend an electronic health record with additional information about an individual’s “purpose, passion and identity,” in order to facilitate more personalized and efficient care, Theisen told SHN, shortly after the Tealwood acquisition.
The UCare investment was motivated in part by the need to continue to differentiate UCare in an increasingly competitive Medicare Advantage market, Traynor said. The move also is a natural extension of the existing partnership between UCare and Lifespark, with about 6,000 UCare members utilizing Lifespark’s services at the time of the investment.
In the near-term, the investment should help drive the vision for Lifespark Senior Living; working with industry pioneer Bill Thomas and leveraging its capabilities in HCBS, Lifespark is developing an operating model for the portfolio that — if successful — will facilitate more coordinated, comprehensive and affordable care for residents.
Longer-term, there’s the potential for Lifespark’s technology and operational practices to also be utilized by other senior living providers partnered with UCare — including the many providers participating in the MA plans rolled out a year ago.
“The goal is to raise all boats,” Theisen told SHN.
Whether licensing the technology platform or partnering with senior living providers in other ways — including through risk-sharing MA contracts — Lifespark and UCare are open to future possibilities and see their partnership as a “learning opportunity,” he added.
Bigger picture, the UCare investment transforms Lifespark into a true “payvider,” or a payer that also is a care provider, and one with a large regional senior living portfolio.
The possibilities for future innovation are wide open to create more seamless care without painful gaps related to care transitions, fragmented care teams and other issues that have long plagued older adults, in Theisen’s view.
“This is the deal … the holy grail deal,” he said.
The leaders at ATI Advisory also see the UCare/Lifespark play as a potential harbinger of how senior living could be disrupted in the years to come.
For example, Tumlinson can envision how an insurer, a real estate company and a clinical company could work together to create middle-market senior living at scale. These organizations could, say, buy tracts of real estate for development or embark on a programmatic acquisition campaign for existing assets to reposition, and work together to create more affordable senior living with the care component delivered via specially designed MA plans and operational models.
Though on a limited scale, something similar to this scenario is taking shape in Minnesota, in Tumlinson’s view.
“I think Lifespark is probably as close to all this as any organization, with UCare,” she said.
Companies featured in this article:
ATI Advisory, CareMore, Lifespark, SCAN Health Plan, UCare, Welltower
