New Medicare Advantage Capitation Rate Increase Could Accelerate Senior Living’s Value-based Care Movement

Medicare Advantage (MA) plans are getting a boost in 2026 thanks to a greater-than-anticipated capitation rate increase.The senior living industry may reap some of the benefits.

The Centers for Medicare & Medicaid Services (CMS) announced a 5.06% increase in the capitation rate for the coming year. That was more than double what investment banking group Macquarie expected. Capitation rates are the rate by which CMS agrees to reimburse certain services.

Tao Qiu, senior healthcare equity research analyst for Macquarie, said while most senior living operators are still private-pay, the increase could be a good opportunity for operators to explore MA opportunities.

Medicare Advantage went from a “minority player” to “overtaking traditional fee-for-service Medicare,” Qiu said.

“I think that trend is going to continue, maybe accelerate, especially when you consider the higher rate that was given to them,” he told SHN. “Hopefully it’s positive for their market share gain, and it’s going to accelerate the adoption.”

Senior living operators that are aligning with value-based care plans stand to immediately benefit from increased capitation rates, he added. Those plans typically measure impact in duration of stay for residents and improved resident engagement and satisfaction.

Offering primary care, home based care and telehealth options within a senior living community as part of a value-based care plan can also lead to improved care coordination and help relieve spending burdens on other health care settings, Qiu said.

“There’s a benefit to both the MA plans and senior housing to work together,” he said. “Because senior living is the residential setting, they have a home court advantage in terms of understanding patient needs.”

An additional benefit is the potential for MA plans to become a revenue source for senior living providers. Brookdale’s HealthPlus program, which has continued to grow and expand over the past year and is receiving a small portion of MA capitation payments, he said.

Managed care organizations, such as Humana, UnitedHealth and Signa, are expected to receive up to $25 billion in additional revenue in 2026 and are expected to present opportunities for “enhanced MA plan profitability” following several years of headwinds, according to Qiu.

Healthcare providers as a whole, ranging from hospitals to skilled nursing facilities, could also see benefits from the improved contract rates, as a final ruling “closes the MA appeals loopholes,” the press release states.

Adopting additional MA programming within senior living could be the next leg of growth for the industry, Qiu added.

“The gist of [value based care] is to improve quality and cut down costs,” Qiu said. “With a rate increase … they do get more resources to expand. It’s less about margin and more about expansion, coming up with new programs, making new partnerships and expanding the population that are under these value based arrangements.”

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