AllyAlign Health on Tuesday announced the closure of a $10 million strategic funding round led by McKesson Ventures as the developer and administrator of Medicare Advantage eyes growth.
The Richmond, Va.-based firm partners with long-term care providers to launch and maintain Medicare Advantage special needs plans, helping them future provider-sponsored managed care plans. SNFs have driven the growth of institutional special needs plans (I-SNPs), and many see becoming insurance providers as their way out of the pressures from Medicare Advantage and other payers.
The new round brings AllyAlign’s total capital raised to more than $41 million. With the infusion of cash, AllyAlign plans to expand with a focus on three main trends, president Amy Kaszak told Skilled Nursing News.
In addition to McKesson, existing investors Heritage Healthcare Innovation Fund, Health Enterprise Partners, and the Link-Age Fund participated in the most recent $10 million round.
Using Medicare Advantage to plan for the future
The first step, according to Kaszak, is ensuring that all of the company’s current health plans are ready to meet future needs. AllyAlign is currently affiliated with, or directly partnering with and supporting, 14 Medicare Advantage (MA) plans, most of which are I-SNPs, and all of which are provider-owned.
AllyAlign wants to ensure that its providers are ready for the coming changes in more ways than just having a viable insurance plan. And it’s taking cues from other iterations of provider-owned plans, such as those in the hospital industry, and those started by large physician groups.
“When some of them became MA plans or started their own MA plans, the ones you still see around today are the ones who really used the MA plan as a way to truly change their business model,” Kaszak explained. “And what I mean by that is: They used MA as one of their points of progression … to take that kind of final step from being paid only on volume and really making that switch to value.”
AllyAlign’s skilled nursing partners are facing an overhaul of Medicare reimbursement, the Patient-Driven Payment Model (PDPM), which is taking effect October 1.
In addition, other payer changes are moving the entire system toward value, and AllyAlign wants to ensure that its partner plans have the information and the systems they need to adapt, including diagnostics and coding, Kaszak said.
In many cases, attending physicians in SNFs document certain patient information that doesn’t ultimately make it into the Minimum Data Set (MDS), a key driver of reimbursements under the new PDPM — something SNFs and I-SNP plans must improve going forward.
The changing face of senior living and MA’s growth
With the latest funding round, AllyAlign also plans to find opportunities in the changes sweeping the senior housing industry.
“As Medicare has made changes in some of the services that they are now including as supplemental benefits [such as] the expansion of telehealth, in many ways I think the growth into assisted living, memory care, and even independent living, that is where we see the final bastion, or last holdout of true fee-for-service,” Kaszak said. “And we see managed care starting to move there, and opportunities to really change the way care is delivered in senior living settings outside the SNF.”
That is closely linked with the last major trend: the overall growth of Medicare Advantage enrollment. AllyAlign wants to use the new funding to help ensure that it is well positioned to match the demand for managed care in multiple settings as managed Medicare penetration increases nationwide, Kaszak said.
Medicare Advantage plans covered 34% of all Medicare beneficiaries as of 2018, according to the most recent set of data from the Kaiser Family Foundation; that’s nearly double the 18% penetration rate as of 1999, and more than twice as high as the cycle-era low of 13% seen between 2002 and 2005.
“The timing is absolutely right for growth overall,” she told SNN. “We have plans who are in their fourth year of operation, getting to a maturity level of where they need to be. We want to be the partner who is helping develop that innovation and then supporting what they are already doing today.”