Long-Term Care: Balancing Systems and Costs

1. Long-Term Care:Balancing Systems and Costs Christine G. Williams, M.Ed. Director Office of Communications and Knowledge Transfer Agency for Healthcare Research and Quality

2. What Is Long-Term Care (LTC)? • Broad range of personal, social, and medical supports and services • Affects persons of all ages with physical or mental impairments, who cannot function independently • Need for services projected 3+ months • Services and housing both essential to LTC policy and systems • Delivered across a range of settings

3. How Is the Need for LTC Defined? • The need for LTC is defined: • Needing help with Activities of Daily Living (ADLs): eating, bathing, dressing, toileting, transferring or • Instrumental Activities of Daily Living (IADLs): meal preparation, shopping, managing money, etc • Persons with cognitive impairments • Alzheimer’s and related dementias

4. Who Is Most Likely to Need LTC? • Demand affected by age, gender, race/ethnicity, and marital status • Need increases with age • Dramatic increase in physical and cognitive disability over age 85 • Demand higher among women • Demand higher among those living alone

5. Demographics of LTC Population • 57% needing LTC are over 65 ― 17% of elderly population • 40% are adults 18-64 ― 3.3 million = 2.1% population • 3% children = 400,000 (Nat’l Academy on Aging l997)

6. Boomers turn 65 in 7 Years! • Disability declining by 1% per year • BUT in 2000-2030, 65+ = 35  71 million • 12.4%  20% of total population • Populations Triple – 85+ • 65+ in nursing homes (NH) • 65+ with ADLs • Racial/ethnic diversity – disability higher • Women outlive men, yet more disabled • Fewer informal caregivers: smaller families, divorce, childlessness

7. The Oldest Old: Fastest Growing Age Group • People ages 85+ have the highest rates of disability – their numbers will increase by 31% by 2025 • Cognitive impairment – Alzheimer's and related dementias – increases dramatically with increasing age • Nearly half of all NH residents have some form of dementia

8. LTC: How Is It Financed? • LTC financing is a patchwork of public (Federal, State, local) and private dollars • Medicaid largest payer – 43% spending • Out-of-pocket spending – 24% • Medicare – 17% • LTC insurance – 4 -11% • RAND estimates value of informal caregiving up to $200 billion annually – 80% at home rely ONLY on unpaid care

9. Medicaid Spending Trends for LTC • All Medicaid spending grew 105% ― 1993-2003 • Spending for home and community-based services (HCBS) grew 564% • FY’03 Medicaid LTC spending • $44.8B – NH • $27.8B – HCBS • $11.3B – intensive care facilities/mentally retarded (ICF/MR)

10. National Trends in LTC Financing and Services • States trying to “rebalance” LTC systems • More State, Federal, local resources committed for choice of services and settings • Using multiple strategies to rebalance • Combining financing and org of delivery systems to shift funds from NH to HCBS • NH occupancy rates declining • But remaining residents are older and more dependent

11. Delivery System Is Flawed • Little person- or family-centered care • No real integration of services across time, settings, and providers • Inadequate attention paid to transitions • Poorly trained professionals and paraprofessional workforce • Inadequate information systems to evaluate quality and track outcomes

12. What the Research Tells Us • People would prefer to remain in the community – yet 70% of Medicaid LTC dollars spent on institutional care • There is unmet need for LTC in the community • At least 15% of nursing home residents could be cared for in the community • Some Federal LTC demos show expanded home care not offset by less NH spending • But a few State studies show cost-effectiveness • Quality remains a serious issue in all settings

13. Challenges Facing State Policymakers • Demographic realities • Rising expenditures for LTC • State budget crisis • Fragmented delivery and financing system • Quality problems in most settings • Demand for formal and informal caregivers growing – supply shrinking • Comprehensive LTC system unlikely

14. State Responsibility:Health and LTC Care for 65+ • Limited responsibility for ages 65-75 • Primary burden for States – over age 75 • Primary State issue disability, not health • States must obtain Federal waiver for community-based care – institutional care mandated as Medicaid benefit • Responsibility for “dual eligibles”

15. Elderly Medicaid Beneficiaries:“Dual Eligibles” • Medicaid beneficiaries much more likely than the total Medicare population to be: • Oldest and poorest • In fair or poor general health/MH • In greater need of ADL or IADL • Users of more resources • 40% racial/ethnic minority populations • 16% Medicaid enrollees – 42% costs • 18% Medicare enrollees – 42+% costs

16. Low-Income Protection Under Medicare • Qualified Medicare Beneficiary (QMB) • Up to 100% poverty • Medicaid pays for Medicare Part B Premium and copays • Specified Low-Income Medicare Beneficiary (SLMB) • 100-125% poverty • Medicaid pays for Part B Premium only • Relatively few in the eligible population have been enrolled

17. Medicaid and Persons with Disabilities • Elderly and disabled account for 1/3 of Medicaid beneficiaries but 2/3 of Medicaid spending • 7 million disabled qualify for Medicaid • Of these, only 2 million are elderly • Younger disabled increasing as a percent of Medicaid • Medicaid spends more per beneficiary on the elderly than on the disabled • Medicaid spends more in total on nonelderly disabled than any other group Source: Vladeck et al, Health Affairs, vol. 22 (1); 2003

18. Medicaid and Persons with Disabilities • More diverse population • Physically disabled children and/or adults • Mentally ill • Mentally retarded/developmentally disabled (MR/DD) • NH spending shrinking minority of total LTC $$ on younger disabled • Medicaid spending for disabled will continue to increase both absolutely and relative to other covered populations Source: Vladeck et al., Health Affairs,Vol 22 (1); 2003

19. Olmstead, Medicaid, and LTC • Olmstead vs. L.C. (1999) • U.S. Supreme Court ruled that States must provide services in the “most integrated setting” • Violation of the Americans with Disabilities Act to provide services only in institutions if a person’s needs can be met in a community-based setting • Encourages States to re-evaluate how they deliver publicly funded long-term care services • Barriers to full community integration continue • Financial constraints on Medicaid in States

20. Where Do Elders Receive LTC Services? • 81% with ADL/IADL needs are in the community • Unmet need in community – 37% of ADL-impaired elderly in community need help or additional assistance • Only 5% of elderly needing LTC are in NH • Supply of beds/occupancy rate for 75+ declined – LTC needs increasingly being met outside of nursing homes

21. Home- and Community- Based Services • States expanding HCBS options – but 70% Medicaid LTC $ still institutional • Overall, greatest increase in HCBS for younger disabled – MR and DD • Overall savings unclear – “woodwork” effect • Potential cost savings in HCBS – Alecxih, et al.,1996 study in Washington, Oregon, and Colorado

22. Nursing Homes: Whom Do They Serve? • NHs serve small percent of functionally impaired elderly (4-5%), but dominates LTC financing • NH pop. older, more disabled, frail, cognitively impaired (50%), need more skilled care • Likelihood of needing NH care increases dramatically with age – 50% of residents are 85+ • Lack of financial resources or family caregivers contributes to need for nursing home care • 50% elderly w/LTC needs without family in NHs • 7% elderly w/LTC needs with family in NHs

23. Assisted Living:Issues and Future Trends • Fastest growing senior housing • State, facility definition/regs vary • Quality unknown • Few available to moderate/low income • Medicaid support for assisted living facilities (ALFs) increasing • Limitation of ALFs for dementia • Primary cause for discharge – need for more care – ASPE/Hawes study • Currently, ALFs rarely replace NHs

24. Who Are the LTC Caregivers? • 80% of LTC provided by informal caregivers: family and friends – 73% women; average age 60 • Formal caregivers: Nursing assistants, home care aides, personal care workers – typical worker middle-aged, single mom, little education, poor • Large percent African American, Asian, or Hispanic workers, particularly in cities

25. Formal/Informal Caregivers: Challenges and Trends • Informal caregivers – backbone of LTC need emotional, practical, and $$ support • 33+ States have caregiver support programs – 30 are respite care; 50% of States pay caregivers • Most funding for informal care is State $$ • Formal LTC aide recruitment/retention major issue in most States • 30+ States – wage “pass-through” • Other training/career support needed

26. Quality in LTCHow Can It Be Improved? • NH reform in Omnibus Budget Reconciliation Act (OBRA) ’87 – quality improvements but problems remain • 1999 GAO Report – additional steps needed to strengthen enforcement of Federal quality standards in NHs • Difficult issues for State policymakers: • Nurse staffing levels in NH • Medicaid payment rates

27. Quality in LTC:How Can It Be Improved? • Quality in LTC difficult to define  medical and social services • Two LTC populations: clients and families • Serves clients with complex problems • Takes place over extended periods with periodic use of acute and subacute care • Shortcomings of existing quality oversight • CMS’s Nursing Home Compare • CMS’s Home Health Compare

28. Long Term Care Challenges and Options for States in a Time of Budget Crisis: Where Do We Go From Here?

29. FY’06 Budget Proposal:Implications for States • Proposed $60 billion savings in Medicaid over 10 years • New Freedom Initiative Proposals • More flexibility for HCBS • Money follows the person rebalancing demo • Limits on Medicaid funding for optional services?

30. Three Broad State Strategies to Control LTC Spending • Reform delivery system to provide care more efficiently • Expand HCBS • Integrate acute and LTC: managed care • Increase private and Federal resources • Reduce Medicaid eligibility, reimbursement, and services

31. Build Community Options • Home- and community-based options • Expansion of Medicaid 1915(c) waivers • Systems Changes for Community Living grants – CMS (HCFA*) • Olmstead – impact on HCBS • Respite programs • Adult day services *formerly Health Care Financing Administration

32. Support Informal Caregivers • Respite care • Education and training • Support groups • Tax credits • Range of services funded by Older Americans Act and Medicaid waiver programs • $$ to informal caregivers

33. Recruit and Retain Formal LTC Workforce • Establish “wage pass-throughs” • Increase worker fringe benefits • Develop career ladders • Increase and improve training requirements • Develop new worker pools including former welfare workers • Wellspring model of quality improvement

34. Support Consumer Direction • Issue driven by younger people • Permits person to arrange own care; spend as sees fit, allows hiring family • Robert Wood Johnson Foundation (RWJ)/CMS cash and counseling demos • To reduce unmet need • Same or lower public cost • Increased satisfaction • AK, NJ, FL • Independence Plus Waiver – FL, LA, SC, NH

35. More Private/Federal $Private LTC Insurance • Role of private LTC insurance unknown: 11% in 2002 • Upper income likely market • High cost of policies • Potential may depend on development of employer-based group market • National Claimant Study  ASPE/RWJ • Federal Employees Health Benefits Program (FEHBP) LTC insurance benefit – 2002 • Similar State offerings – MI, MN

36. Educate Boomers About LTC • “The Costs of LTC: Public Perceptions vs. Reality” – AARP survey • Underestimate costs • Falsely think their insurance covers LTC • 50% believe Medicare covers LTC • Denial about need for LTC • Boomers need to plan for future

37. Hallmarks of a Comprehensive LTC System • Philosophy of care • One State organization responsible for all functions • Access to multiple funding sources • Single appropriation for Medicaid LTC services • Streamlined functional and financial eligibility • Comprehensive entry points • Standardized assessment tool Source: Mollica and Reinhard, Recommendations of State policy leaders, RWJ funded, 2004.

38. Hallmarks of a Comprehensive LTC System (cont’d) • Full array of in-home, residential, and institutional services • Information and assistance • Consumer-directed services • Care coordinators assigned to NH to assist with relocation • Quality assurance and improvement system • Integration of health and LTC services

39. State Innovations in LTC • Consolidate State LTC programs and dollars in single State agency MA and NJ • Expand consumer direction AK, NJ, FL • Single appropriation for Medicaid LTC OR, MD, WA • Adopt assessment and care management practices to target resources to most in need

40. State Innovations in LTC • Maine and Oregon― Reduce NH utilization – increase home care and residential alternatives • Texas and Minnesota ― integrates LTC and acute care services and financing in managed care (Evercare) • Wisconsin―Family Care Program, comprehensive entry point

41. Future Trends • Financing likely to continue as patchwork of public and private sources • Medicaid will continue as primary public funding – wide State variation • States continue to expand HCBS • States expand consumer direction through Medicaid and State funding • Tax strategies for incremental reforms