If the demise of CLASS has any greater meaning, perhaps it will serve as a wake-up call for Americans that we need an enduring solution to the long-term care problem. The CLASS legislation, part of the Affordable Care Act, would have created a voluntary, long-term care insurance program that could eventually provide a modest benefit to its enrollees—up to $75 per day to help pay for assistance in carrying out daily activities, a health aide, medical supplies, or to help defray the yearly costs of living in a nursing home.
The CLASS Act was a small step in addressing what is shaping up to be a looming problem. Fewer than 10% of older Americans have long-term care insurance and many still cling to the mistaken belief that Medicare will cover these expenses. Instead, as our population ages and we face the largest growth in the number of the old-old (those over 85) ever, people will have to plow through their savings, their children’s savings, depend on exhausted family caregivers and then finally, turn to Medicaid to foot the bill for long-term care. As a recent AARP/Commonwealth Fund “scorecard” report finds, “The cost of services, especially in nursing homes, is not ‘affordable’ in any state. The national average cost of nursing home care is 241 percent of the average annual household income of older adult.”
Long-term care has been an afterthought to most lawmakers. Yet the job of caring for the elderly parent, the chronically ill spouse, the profoundly disabled child, and the destitute, mentally-ill homeless man falls to millions of individuals, institutions and agencies around the country. This mix of care-givers and range of services is not guided by any consistent policy or funding state to state, or overseen by any federal agency. It¹s a patchwork approach to a major rent in our social fabric and an issue that is quickly reaching a crisis point.
Long-term care is the exhausted spouse of an elderly Alzheimer’s patient, putting in 18 hours of unpaid care each day even though she herself is feeling the effects of ageing. Long-term care is a middle-aged son or daughter, working full-time, struggling to make ends meet and support his own family while paying for a nursing aide or other caregiver to help his mother who suffers from pulmonary disease and diabetes. Long-term care is also the couple, now in their 60’s, supporting their developmentally disabled son who will never be able to live on his own but whose nearby day program recently lost its funding.
If none of this cobbled-together care is available or is no longer enough to meet the needs of the patient, long-term care falls to nursing homes and other institutional facilities. Wealthy people can afford to pay for pleasant assisted living communities and nursing homes that provide adequate and humane service. They can pay for private duty nurses to make sure their charges avoid bedsores, neglect and receive medications as ordered. If these well-heeled elders exhaust their financial resources, federal law mandates that Medicaid cover the $70,000 or more for a year of care.
The story is different for the majority of elderly and disabled who started off low-income and are already receiving Medicaid (and usually Medicare) benefits—the so-called “dual eligibles.” Community and home-based programs are spotty, and their choice of long-term care facilities is limited. Many spend their last years in grim, understaffed institutions that are on the verge of closing down. They shuttle back and forth to hospitals (where the higher-paying Medicare benefits kick in) and remain hidden from the view of most Americans.
Here’s a startling fact that needs to be restated in this new reality: Medicaid’s long-term care users make up only 6% of the program’s total population, but account for nearly half of total Medicaid spending. In dollar terms, the average annual spending for Medicaid beneficiaries who receive long-term care of any kind was $43,296 compared to just $3,694 for Medicaid beneficiaries who did not use these services. As it stands now, Medicaid is still skewed toward paying for the most costly long-term care; federal law requires that states pay the cost of institutional care, encouraging the use of nursing homes when many elderly or disabled would far prefer to stay at home.
Meanwhile, struggling with overwhelming budgets, state and federal legislators have Medicaid in their cross-hairs. A study of state Medicaid directors released last week by the Kaiser Commission on Medicaid and the Uninsured found that all 50 states were implementing at least one new policy to control Medicaid costs in FY 2012. They are limited in their choices: To qualify for the large federal subsidies available for Medicaid’s expansion under the Affordable Care Act, states are required to maintain or even broaden eligibility for Medicaid benefits. That means savings cannot be wrung by tried and true techniques (requiring more paperwork, in-person interviews, balky enrollment procedures, etc.) that lead to a reduction in the actual number of people enrolled in Medicaid.
Instead, states are targeting Medicaid payments across the board; using an ax instead of a scalpel to cut reimbursements to doctors, hospitals and in 12 states, cuts are being made to the very community-based long-term care services that could provide cheaper alternatives to nursing home care. In March, California approved a 10% Medicaid cut to doctors and hospitals, (although these reductions are pending because of an existing lawsuit now being considered by the Supreme Court). In July, about a dozen other states began their new budget years by cutting payments to Medicaid providers. In total, some 39 states either cut or froze provider rates in the fiscal year that ended in June 2011; some 46 states plan to restrict provider payments in FY 2012. Eighteen states reported eliminating, reducing or restricting benefits—mostly for dental, vision, physical and developmental therapies, medical supplies and personal care services
What does this mean for long-term care?
Long-term care describes a wide range of services to a diverse groups of people—children, the elderly, people living with HIV/AIDS, mentally-disabled adults, etc. At one end of the spectrum there are nursing homes and other long-term care residential centers that house the frail elderly and profoundly disabled. At the other end, are community and home-based services that include adult day care centers, nursing aides and assistance with daily activities of life like shopping, bathing, or home modifications.
Of course there are profoundly disabled Americans and frail elderly with no one to look after them who must receive their care in a residential facility. Medicaid pays an average of $63,000 a year per patient for this institutional care. But there are plenty of people who, with the help of nurse’s aides, therapists, basic care providers or day-care programs, would be able to stay in their homes—a choice that is far preferable to many seniors and disabled people and, incidentally, saves the Medicaid program money in the long run. The most recent figure is that per capita spending on enrollees who predominantly use home or community-based services is $30,000 a year.
Currently, federal law mandates that states pay the costs of housing the impoverished, frail elderly and disabled in a nursing facility; but for the vast majority of home and community-based services, state coverage is optional. Through waiver programs, virtually all states do pay for some home and community-based services (HCBS)—although the particular services and the groups eligible (HIV/AIDS patients, people with developmental disabilities, etc.) for them range from state to state. In an effort to defray some of the cost of nursing home care, over the last two years, about 25 states have expanded their HCB services. According to another Kaiser report released in February 2011, the national percentage of Medicaid spending on home and community-based services has more than doubled from 19 percent in 1995 to 42 percent in 2008 reaching $45.4 billion.
This is a promising trend, but of course, in this challenging budget environment states will not increase Medicaid spending in one area without reining it in somewhere else. The catch with home and community-based services is that because they are so popular (few people prefer to be warehoused in nursing homes), virtually all states have restrictions in place—capping enrollment, coverage limits, etc.—leaving hundreds of thousands of eligible seniors and disabled folks waiting up to 35 months to even receive them.
Ultimately, it is difficult get a truly complete picture of long-term care in this country. There is no centralized data collection, and getting a handle on long-term care is complicated by the “tremendous” variation in policy and services state to state; further exacerbating the overall inequalities endemic to the Medicaid program in particular. The AARP, along with the Commonwealth Fund, published the first “state scorecard” on long-term services in September, and found that even in states that performed well in measures of (1) affordability and access; (2) choice of setting and provider; (3) quality of life and quality of care; and (4) support for family caregivers, there was room for improvement. Those states at the bottom of the scorecard had abysmal ratings for these measures—particularly in terms of giving the elderly or disabled a say in how their long-term care needs will be met. These states also have the lowest median incomes and highest rates of both poverty and disability in the nation.
Amid the hand-wringing over the future of long-term care, there is a pointed lack of solutions coming from either political party. This is what we do know: Medicaid is currently paying for about 50% of the $264 billion cost of long-term care in this country; private long-term care insurance chips in 10% and family caregivers provide billions of dollars of uncompensated care to help make up the shortfall. Nursing homes in poor communities—most of them providing subpar care—are closing, leaving the poorest and sickest of the so-called “dual eligibles” with even fewer options for care. Long-term care has been called a “ticking time bomb” for our already faltering economy.
Defusing this “time bomb” will take concerted effort from a range of stakeholders. First of all, any state cuts to Medicaid home and community-based services should be rescinded. No matter how you do the math, providing care outside of nursing homes and other residential institutions saves money. Secondly, regulators have to increase their efforts to ferret out fraud and abuse in the long-term care industry—whether it is by enforcing standards for private long-term care insurance, cracking down on the rampant fraud that pervades the durable medical equipment industry, or better regulating home health care companies. Just this week New York Medicaid auditors announced that they had “saved millions on a hunch:” they discovered that managed care providers were billing the government program based on where patients got care, not based on where they live. Since Medicaid reimbursements vary widely county to county, fixing this discrepancy “has already saved $41.3 million in five months — half of it state dollars,” according to the Wall Street Journal. “The state has recovered another $16 million.” Imagine how much more could be saved if auditors pursued more of these “hunches.”
Finally, more and more states are considering shifting Medicaid long-term care users into managed care programs. Already, 70% of all Medicaid acute-care beneficiaries are receiving some sort of managed care, but the vast majority of long-term care is still paid for under fee-for-service. For long-term care, according to the AARP, managed care would involve an arrangement “in which the state Medicaid program makes a single contractor responsible for a range of long-term care services and pays the contractor a set monthly fee, called capitation, regardless of the amount of care delivered.” The potential benefits of Medicaid managed long-term care include care coordination for recipients, most of whom suffer from multiple health problems, better accountability, fewer hospital and emergency room admissions, and for states, limited financial risk. On the flip-side, advocates worry about limited choice of providers, problems accessing services, and cost-saving measures that sacrifice care.
Several states, including New York, (the nation’s leader in terms of Medicaid long-term care costs), Massachusetts, and Arizona have instituted such programs over the last few years with mixed results. States have had problems signing up enough providers willing to participate in capitated plans; and the few studies that have been done have been inconclusive in terms of savings. Participation in the majority of these programs is voluntary, and so far, most serve limited populations. For now, the jury is still out on the benefits of Medicaid managed long-term care—although its expansion seems inevitable.
In the end, Ted Kennedy’s vision for the CLASS Act—that it would create a vital, new program to help defray the costs of long-term care—has not come to fruition. But the more enduring legacy might be that the Act’s demise has finally forced an apathetic public to face the necessity of creating viable policy, effective programs and more accountability in the growing and diverse range of services that make up long-term care.