As we look ahead in 2025, the senior living industry is poised for significant transformation, with value-based care (VBC) at the forefront of this evolution. The Centers for Medicare & Medicaid Services (CMS) has set an ambitious goal to have all Medicare beneficiaries in some form of value-based care arrangement by 2030, and the industry is making strides toward this objective.
The transition to value-based care has been gaining momentum, particularly within the Medicare population. In 2024, KFF reported that 54% of eligible Medicare beneficiaries were enrolled in a Medicare Advantage (MA) plan as opposed to the traditional fee-for-service plan. Enrollment in MA plans has been rising steadily each year and CMS projects increased enrollment numbers again in 2025. As an alternative, several operators have entered into risk-bearing arrangements where they either own their own plan or participate in a joint venture with an existing payer. We anticipate continued growth in these provider-led plans in 2025 as operators aim to have greater control over reimbursement and quality decisions for those they care for.
Growing Revenue Streams
The recently announced CMS GUIDE Model (Guiding an Improved Dementia Experience) presents a promising opportunity for senior living operators to participate in value-based care while generating additional revenue. GUIDE is not a shared savings or capitated model but is a condition-specific care model designed to be compatible with other models and programs like ACOs that aim to provide opportunities to improve care and reduce overall healthcare spend. Specifically, this model aims to help older adults with dementia stay healthy at home longer and introduces a new payment structure for participating providers.
Key aspects of the GUIDE model include:
- Reimbursement for care assessments
- Compensation for care planning
- Payments for educating caregivers
Many senior living operators are already performing these tasks, making the GUIDE model a natural fit for their existing operations. As the CMS Innovation Center continues to explore alternative payment models, it is anticipated that there may be additional opportunities for senior living organizations to be reimbursed for value provided.
Enhancing Data Sophistication
As an industry, we need to become more sophisticated in our data tracking, reporting, and implementation. This is an imperative for the industry and something that is absolutely critical in making progress towards not only value-based care arrangements, but in improving outcomes and communicating the evidence of value provided. The adoption of platforms that enable operators to accurately track key metrics on residents, to access information in real-time, and to support proactive interventions are paramount. We are optimistic that the sector will continue to improve in its data collection and reporting efforts in 2025 and will move toward greater standardization of key performance metrics.
As we enter the new year, the senior living industry is at a critical juncture in its journey toward value-based care. While progress has been made, there is still considerable work to do. The transition to value-based care represents not just a change in payment models, but a fundamental shift in how we approach senior care. By focusing on outcomes rather than services rendered, the industry has the potential to significantly improve the quality of life for seniors while also enhancing operational efficiency and financial sustainability. With innovative models like GUIDE and increasing awareness of value-based care benefits, we can expect more senior living operators to explore and adopt value-based care arrangements in the coming year.