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Report Shines Light on Long-Term Care Spending in Medicare

Several contributors to THCB have commented that long-term care tends to get short shrift in healthcare discussions. New research might help to make a case for why we can no longer afford to demote this critical issue as we contemplate overarching healthcare financing strategies.

In the report, researchers looked at beneficiaries ages 65 and older who receive help with three or more activities of daily living (ADLs) — longhand for people who need long-term care — and found that, even though these individuals represent only 7% of the Medicare population, they account for nearly 25% of spending in Medicare Part A and B.

This is interesting because Medicare doesn't actually pay for extended nursing home stays, which is where long-term care is usually delivered, but it does pay for limited post-acute care. The implication here is that Medicare services that transition patients from acute to long-term settings might actually be filling a gap for long-term needs. And, given the size of the gap, it is equating to staggering levels of spending.

To put this in real numbers, the report — which was authored by Avalere Health on behalf of the SCAN Foundation — notes that, in 2005 — which is the most recent data available — these beneficiaries consumed $18,902 per capita in Medicare spending compared with $4,289 for beneficiaries without disabilities. This equates to 4.5 times more per capita Medicare spending.

Hospice trends help to illustrate this issue.  Medicare covers palliative care and support services for beneficiaries who are terminally ill and have a life expectancy of six months or less. The new research shows that hospice lengths of stay from 2000 to 2005 took double-digit leaps for those suffering from Alzheimer's disease and senile dementia, suggesting that the Medicare hospice benefit may be addressing a shortfall in long-term care services.

As we enter into serious discussions on health reform, we must ensure that policymakers have a full understanding of the cost-drivers in our entitlement programs. They need to understand that long-term care cannot be categorized simply as a Medicaid or individual family problem and that more integrated solutions need to be considered.

Anne Tumlinson is a health policy consultant with nearly two decades of experience in long-term care financing policy. She is a senior advisor at Avalere Health and most recently directed the Post-Acute and Long-Term Care Practice at Avalere Health. In that role, she conducted and oversaw research and analysis on post-acute and long-term care policy for government, foundation, and commercial clients. 

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  1. My mother paid into CalPERS long term health care for years. When we contacted them about covering her expenses, we were told that there was a 90-day period that had to elapse before benefits could kick in. She died on Friday, never having received one dollar of coverage from the company. While I’m sure they were legally “right” and all was per her contract, I was stunned by their lack of empathy. The purpose of this message is a Buyer Beware: read all the clauses carefully and be sure that coverage is available when you need it.

  2. The feds ideally should be telling people to buy LTC insurance through insurance companies to shift the burden away from tax payers. It is highly annoying that the feds feel it is acceptable for billions of tax payer money support this.

  3. Greg’s comments point at the heart of the problem. There is sometimes little balance between actual resident centered care and profit centered care.
    The question really is, are those that are in the enforcement or overwatch business in long term care looking at the correct things. The enforcement types look at “how the facility did the paperwork” rather than was the treatment provided relevant to providing the best care for the patient.
    Will the urinary tract infection be cured by helping the resident to ambulate, transfer and perform bed mobility through skilled physical therapy five times a week? Probably not. If the urinary tract infection reoccurs (and it probably will) and the facility knows how to play the game, it is back to the hospital when the timing is right, a hospital stay and “here we go again.”
    That ladies and gentlemen is where the waste is. If a facility “plays this game” is it not fraud?
    We need to begin to think differently about how we think about the business of long term care.

  4. Healthcare reform is something we have taken a look at for some time now. It is my hope that we do not neglect studies in integrative care as well. Much of our attention is focused on lowering the cost of health costs. Why not create a rally around teaching others how they can support those in need like we did 40 years ago.

  5. Jim. LTC patients and their families have had a negative predisposition toward LTC facilities long before I had enlightened more of the public about them. These people became so cynical as a nation over the last eight years. We (as a nation) are too busy doing anything else to touch base on this issue. It is only when one is directly hit with health issues, does one take the effort to confront the issue head-on.
    Unless you directly have or had a loved-one in a nursing home, you don’t know what goes on in one. I don’t think I’d have the interest in pushing this much education about LTC facilities if I didn’t have my mother (barely) living in one.
    I have no doubt about the level of compassion and caring among employees of any LTC facility. However, the lack of staffing can be explained in simiplified terms, right down to the basic facts that, without it, residents don’t receive even basic humane care; i.e. fed, hydrated, changed, bathed, turned, given their meds on time and/or given correctly. Lack of staffing, in turn, creates a constant high turnover among even the most highly-trained, dedicated workers.
    Residents lose weight and some starve to death because no one helps them eat or leaves the tray at bedside, out of reach; same thing with drinking fluids; subjected to the humuliation of soiling themselves, often just because no one assists them to the bathroom, and such lack of hygiene also creates physical problems as well, from skin breakdown all the way to deadly, septic pressure sores.
    This lack of care also translates into even more taxpayer dollars down the drain because the health problems that result from the lack of staff means costly hospitalizations, surgeries, and/or other medical treatments and/or medications that wouldn’t have been necessary.
    Neglect is the silent killer in nursing homes. By some estimates, malnutrition, dehydration, bedsores and infection – caused by neglect – account for half of nursing home deaths and injuries.
    Fear and intimidation in the work force is not conducive to good and proper resident care. Intimidation or creating a hostile work environment is not of concern to the administrators of the facilities.
    The Carlyle Group has moved well beyond their usual interests, involving itself in the operation of Manor Care nursing homes (it has no experience in nursing homes), and has forwarded the crazy notion that resident care should rank at least somewhere in the priority range of how many Mercedes your average Carlyler can pack into their 18-car garage.
    These types of private for-profits have acquired nursing homes, cut expenses and staff, sometimes below minimum legal requirements, increased profits, and quickly resold facilities for “significant” gains. But by regulatory benchmarks, residents at those nursing homes are worse off then they were under their previous public for-profit owners.
    So don’t try to lecture me about the LTC field of healthcare, Jim. I AM working within the regulatory field to make the changes as opposed to someone like you who may think everything is hunky dory with the industry.

  6. Unlike Disneyland that provides a service everyone wants but nobody needs, the people in LTC provide a service no one wants and some people need. Due to scare mongering such as Mr. Pawelski’s comments, LTC patients and their families already have a negative predisposition toward LTC facilities.
    Having worked in both For Profit and Not For Profit companies, I have found that the level of compassion and caring is no different among employees of either structure. I have also found that the efficiency levels for operations and financing in Not For Profit are often below the efficiency levels of the For Profit companies resulting in a major waste of labor effort and funds. Mr. Pawelski may not like the “cold efficiency” of a company such as ManorCare (I do not work for ManorCare), but that cold efficiency makes sure that the revenue received from any payor source is used to it’s highest level of purpose.
    If Mr. Pawelski is so sure that the LTC field of healtcare is so terrible and scandalous, I challenge him to work from within the field to make the changes as opposed to being a doom and gloom herald for some professional Whiner association. My guess is Mr. Pawelski’s paycheck comes from some government grant. In which case, he is being paid with tax dollars to be a “Professional Whiner”.

  7. I’m reminded of the astute John Bogle, founder of the Vanguard Group and elder statesman of America’s financial sector. Bogle explained the broader implications of The Carlyle Group’s buyout of Manor Care Nursing Homes. More and more, Wall Street is taking control of corporations, making Main Street pay the price, and making health care less attainable. The financial sector takes billions of dollars a year out of society, subtacting value from the economy.
    I know about mandatory binding arbitration. A system rigged in favor of nursing home owners. The owners provide a steady flow of business to those arbitrators who predictably “low ball” residents victimized by abuse or neglect. A tremendous boon to the corporate bottom line, but it has nothing to do with justice. Sorry dudley, not having my loved-ones check their rights at the nursing home door by waiving their right to receive justice through America’s court system.

  8. Greg
    Any serious attempt at universal, cost effective healthcare is going to involve everyone giving up something.
    Reducing payments into the system while at the same time not reducing the risks of practicing in the system is going to lead to an inadequate # of lower quality people providing care. Parroting talking points of the plaintiff lobby cannot change reality.
    That is why, despite any legislation passed, there will be no real effective “reform” on the current administration’s watch, the plaintiff bar will make sure its interests are respected.

  9. Any tort reform legislation would do nothing to alleviate the real problems in our long-term nursing facilities, the repeated acts of serious negligence and the failure of public regulatory bodies to punish and stop those who are responsible. It will be our elderly parents and grandparents who would be denied justice for their pain and suffering in nursing homes. Insulating the nursing home industry by protecting their liability would be a travesty, an insult to nursing home victims of abuse, neglect and wrongful death.

  10. 15 yards Greg, for either not living in the real world or having undisclosed ties to the tort industry.
    The threat of civil liability is by far the least efficient form of regulation in any industry, spawning at a high cost, initiatives that merely address the liablity risk and do nothing to address efficiency or quality of care. If you really want to address the issue and not just protect plaintiff lawyer incomes, a combination of reasonable accountability and making sure the payor has an agent with skin in the game is a reasonable solution.
    How come every answer about healthcare reform on this blog has someone giving up something except consultants and lawyers?

  11. Tort reform and the practice of mandatory arbitration in nursing home contracts is one that preys on vulnerable seniors and their families when they are making tough decisions about long-term care. It is a system deliberately designed to take advantage of the weakest members of our society in order to pad the profits of greedy nursing home corporations.

  12. “The goal is for the resident to ambulate, transfer and perform bed mobility. The only intervention is for skilled physical therapy five times a week. This has nothing to do with urinary tract infections.”
    Most declines in function are the result of primary Dx not directly related to the roots of the functional declines but the consequences. It seems a shame to criticize the system when it attempts to address the decline of an individual’s independent safe function and it stinks of a myopic argument to regulate care just to save a buck. However, if that is the point, then consider the potential savings from returning and maintaining relative independent, safe, function instead of paying for the results of decline.

  13. I was wondering when someone would notice this.
    As a physician with a heart for long term care I can validate the cold ruthlessness Greg notes above. In fact, he understates it. Most nursing homes are frightenly efficient in legally working the system to maximize their return from Medicare.
    The physicians who serve these patients are felt by their fellows to be at the absolute bottom of the pecking order,untouchables doing a necessary but extremly distasteful and low-value job, probably because they are lazy or not very good. They are paid accordingly by Medicare as determined by RUC.
    Indeed, the complience requirements to get paid are as stringent as that for in-patients with a fraction of the reimbursement. Nursing home work is the most time intensive venue for a physician to work, even more so than a hospital, and there are no “shifts”. As a consequence of this reimbursement scheme, the government has intentially emasculated their one possible honest broker who could possibly look after Medicare’s interest.
    The few Physicians who practice in nursing homes in private practice have to have such a high volume that they cannot look out for recomendations for overtreatment nor are they paid to do so. Such interventions take time, which Medicare apparently thinks is valueless, since it won’t pay for it. Most physicians who do long term care either are employed by a non-affiliated organization, in which case they don’t care; or employed by the nursing home itself. In addition, working as a nursing home physician is by far the riskiest thing I do from a medico-legal standpoint. After neurosurgeon and OB; geriatrics when practiced in the long term setting will get you the third highest premium most medmal companies charge.
    If any policy makers are reading this, please consider:
    1. supporting Family Medicine training, it is where I learned the tricks of the trade and my committment to excellence to the little community NH I work in
    2. consider DRG type payment schemes for LTC to prevent “stripping” of rehab days. Remove the cap on LTC rehab days, if reimbursed properly this is one benefit that can save Medicare money.
    3. consider arbitration covenants as a condition of medicare enrollment, at least for patients in long term care facilities.
    4. Universal, single payer will not address the shortage of providers unless it is accompanied by tort reform and free tuition support for medical students. Nursing home medicine is a hard job, and it will take more than removing disincentives to augment the workforce needed as the baby boomer retire. Don’t expect ancillary providers to fill the need either, these patients are horrifically complex and most folks are not going to take end-of-life advice for a loved one from an ancillary care provider.
    4. consider risk sharing or total risk capitation rates for physicians who care for folks in LTC facitlities. Such a payment scheme would limit the documentation burden, encourage the best medical doctors to participate in long term care and put the physician at moral hazard for the care delivered. In the end, someone has to be at risk and, despite the disdain and contempt for physicians that consistantly drips from this blog (and in my opinion, limits it’s influence and reflects poorly on the editors), the physician is the most effective and most facile agent, If he is paid appropriately.

  14. True, Medicare doesn’t actually pay for extended nursing home stays but for-profit nursing homes are run by corporations that are coldly efficeint. If there is a way to play the system to make a higher profit from Medicare. they will.
    For example, the nursing home chain ManorCare Health Services has doubled the capacity of Medicare patients just out of hospitals, where it pays the most money, and add rehabilitation to the list of services. A ManorCare in my local area had done that at the end of 2006. Even renaming one of the nurses stations to T.C.U. (Tender Care Unit).
    However, in February 2007, there was a norovirus outbreak at the home. Over 125 residents (over 50 percent of the population) had fought off the infection. Guess where the norovirus epidemic started? T.C.U.
    Another way to increase revenue is when a Medicare/Medicaid resident goes to the hospital for (let’s say) a urinary tract infection for four days, and is readmitted to the nursing home, they are placed on Medicare-only status for up to 80 days, at a much higher rate of reimbursement.
    The only Plan of Care that is recognized is a decreased functional mobility secondary to a recent urinary tract infecton and hospital stay. The goal is for the resident to ambulate, transfer and perform bed mobility. The only intervention is for skilled physical therapy five times a week.
    This has nothing to do with urinary tract infections. There are no other interventions to prevent urinary tract infections even though the urinary tract indications may not be resolved. A recent Federal Complaint Survey at that same local ManorCare nursing home, looking at the Monthly Infection Control Summary, found the home’s infecton rate within the facility at almost double to five times the national average.
    Any ancillary services provided due to the hospitalization would also be more renumerative to the company if those services are owned by, or are shell companies belonging to the company (even when they do not pertain to the medical indication).
    And as we read recently on the Health Beat blog, the for-profits are taking over hospices the same way they have taken over nursing homes. More and more, it looks like the business plan of for-profit nursing homes with hospice services is to provide relatively minimal care to people who will take a long time to die, even if it is antithetical to the principles of hospice.
    The Kaiser Network noted that hospice care was designed to be delivered mainly by not-for-profit groups with affiliations to religious and community groups, but the June 2008 MedPAC report found that since 2000 mostly for-profit companies and hospices have been providing such care.
    ManorCare Health Services operates hospice under their for-profit nursing homes as Heartland Hospice Care. On top of receiving an additional $130 a day for hospice service, above the daily payment they receive providing nursing home care 24/7, they take donations to their Heartland Hospice Fund.
    Whether those ancillary services are independent of the company or not, they are an additional cost burden on residents and/or government programs.

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