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I Am Scared about the Fate of Nursing Homes

January 6, 2014 by Honey Leveen Leave a Comment

It’s the end of the year, and I’m pelted with solicitations to donate to various charities. I feel bad enough having to make the visceral decision to toss most of the requests into the trash, even though I support just about all of the soliciting charities. I feel especially bad about the fate of one charity in particular: Seven Acres.

I gave a larger than average end-of-year donation to Seven Acres, the Jewish nursing home here in Houston. It has a reputation of being top notch. When I call Seven Acres top notch, I mean that only in relative terms. It is as top notch as possible for a Medicaid-accepting, money-losing nursing facility. I have heard from friends with loved ones at Seven Acres that there are too few caregivers so loved ones often wait a long time for help to come. Seven Acres staff strongly encourages families to hire their own, privately paid, additional caregiver.

Here are just a few of the blogs I’ve done on the unsustainable state of long-term care (LTC) finance in the US: /?s=nursing+home. Because Medicaid pays less than it actually costs to provide care, most facilities run in the red. This causes them to cut corners on the quantity and therefore, the quality of care they can provide.

In its annual solicitation letter, Seven Acres states that in 2013, it “provided over $8 million in charitable care to over 85% of its resident population who rely solely on inadequate Medicaid funding.”

I feel bad knowing that my donation is a drop in the bucket and will not help with Seven Acres’ over all financial problems. Increased demand will cause Seven Acres to continue to run in the red, in what may be a downward spiral. My donation will have no effect on making the changes, and reform, that will be necessary to preserve Medicaid-paid long-term care for our most vulnerable citizens. It will also have no effect on making political changes that are necessary to gain control over our country’s out-of-control Medicaid expenses.

The moral: take charge of your own future dignity and choices with a reasonably priced LTC insurance policy.

New Studies Measure State Long-Term Care Vulnerability

December 23, 2013 by Honey Leveen Leave a Comment

Could it be that after decades of steadfast battle to be heard, Steve Moses, President of the Center for Long-Term Care Reform, is finally being listened to and sought after? Glory be!

I guess the timing is finally right. Governments on state and national levels realize how rapidly time is running out before the predominantly government-paid system of long-term care (LTC) we’ve complacently become accustomed to, implodes.

The Center for Long-Term Care Reform, which Steve runs, has been recently commissioned by GA, VA and NJ to study and produce indexes that measure long-term care vulnerability. If people will stop, look, and digest the results, they are terrifying.

The great thing about the recently published GA and VA studies and the indexes of long-term care vulnerability they produced, is that legislators and policymakers (and anyone else interested) now have analytical tools that will help assess and quantify the future sustainability of their state’s long-term care service delivery and financing system.

Here’s a link to the GA Study: http://www.georgiapolicy.org/ftp_files/IndexofLong-TermCareVulnerability.pdf. The index of long-term care vulnerability is found on pages 27-28.

More information about the studies and about the Center for Long-Term Care Reform may be found at: www.centerltc.com.

Why Are We Willing To Discuss Fixing Social Security & Medicare, But Not Medicaid?

December 10, 2012 by Honey Leave a Comment

In his November 15, 2012 New York Times editorial, Paul Krugman demonstrates again that neither party is addressing the changes that will be truly necessary to curb growing budget deficits.

The only solutions to Medicare and Medicaid’s skyrocketing budgets that I’ve seen recommended are lowering Medicare and Medicaid reimbursements, and increasing Medicare eligibility ages. These are merely band-aid solutions.

Neither party is willing to address the hard changes that will be necessary to remove Medicaid from its economically dire predicament. I address this in my blogs Medicaid in deep trouble, no matter who wins the election and Neither party has a solution for the oncoming deluge of Medicare/Medicaid services.

For one thing, Medicare and especially Medicaid are complicated programs that most legislators and the public do not understand well. Furthermore, many of the most intelligent people I meet appear to suffer from resistance to discussing depressing sounding future events, such as planning for their elder years. And, tragically, this lack of planning frequently has dire consequences. More specifically, we know conclusively that very few middle-class Americans have done responsible long-term care planning.

Mr. Krugman argues, and I agree, that raising eligibility requirements for collecting Social Security and qualifying for Medicaid is needlessly cruel and would be hardest on our most vulnerable citizens – those who work in physically demanding jobs for little pay. And these changes would have little impact on the bottom line because those who depend the most on Social Security will not live as long as more affluent Americans since longer life spans are related to education and income levels. Raising the Medicare eligibility age a couple of years will also save the federal government little because seniors in their mid-to-late 60’s generally have decent health and cost Medicare far less than the very old.

Readers will note that few pundits write about how to fix Medicaid, nor do legislators approach Medicaid reform. Medicaid is our most expensive and threatened entitlement program. It is Medicaid-paid long-term care that will cause the most catastrophic budget shortfalls as the Baby Boomers continue to age.

So What If the Government Pays for Most LTC?

January 14, 2012 by Honey 1 Comment

Thanks to my good friend and colleague Steve Moses, of the Center for Long-Term Care Reform for the following guest column. I am re-publishing his blog because it gives unusual insight and makes complicated information easy to understand.

“So What If the Government Pays for Most LTC?, 2010 Data Update”
by
Stephen A. Moses

Ever wonder why LTC insurance sales and market penetration are so discouraging? Or why reverse mortgages are rarely used to pay for long-term care? Or why LTC service providers are always struggling to survive financially and still provide quality care? Read on.

America spent $143.1 billion on nursing facilities and Continuing Care Retirement Communities in 2010. The percentage of these costs paid by Medicaid and Medicare has gone up over the past 40 years (from 26.8% in 1970 to 53.8% in 2010, up 27.0 % of the total) while out-of-pocket costs have declined (from 49.5% in 1970 to 28.3% in 2010, down 21.2% of the total). Source: http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf, Table 12.

SO WHAT? Consumers’ liability for nursing home and CCRC costs has declined by 43% in the past four decades, while the share paid by Medicaid and Medicare has more than doubled.

No wonder people are not as eager to buy LTC insurance as insurers would like them to be! No wonder they don’t use home equity for LTC when Medicaid exempts most home equity. No wonder nursing homes are struggling financially–their dependency on parsimonious government reimbursements is increasing while their more profitable private payers are disappearing.

Unfortunately, these problems are even worse than the preceding data suggest. Over half of the so-called “out-of-pocket” costs reported by CMS are really just contributions toward their cost of care by people already covered by Medicaid! These are not out-of-pocket costs in terms of ASSET spend down, but rather only INCOME, most of which comes from Social Security benefits, another government program. Thus, although Medicaid pays less than one-third the cost of nursing home care (31.5% of the dollars in 2010), it covers two-thirds of all nursing home residents. Because people in nursing homes on Medicaid tend to be long-stayers, Medicaid pays something toward nearly 80 percent of all patient days.

SO WHAT? Medicaid pays in full or subsidizes almost four-fifths of all nursing home patient days. If it pays even one dollar per month (with the rest contributed from the recipient’s income), the nursing home receives Medicaid’s dismally low reimbursement rate.

No wonder the public is not as worried about nursing home costs as LTC insurers think they should be. No wonder nursing homes are facing insolvency all around the United States when so much of their revenue comes from Medicaid, often at reimbursement rates less than the cost of providing the care.

Don’t be fooled by the 8.9% of nursing home costs that CMS reports as having been paid by “private health insurance” in 2010. That category does not include private long-term care insurance. (See category definitions here.) No one knows how much LTC insurance pays toward nursing home care, because most LTCI policies pay beneficiaries, not nursing homes. Thus, a large proportion of insurance payments for nursing home care gets reported as if it were “out-of-pocket” payments because private payers write the checks to the nursing home but are reimbursed by their LTC insurance policies. This fact further inflates the out-of-pocket figure artificially.

How does all this affect assisted living facilities? ALFs are 90% private pay and they cost an average of $41,724 per year (Source: 2011 MetLife survey at http://www.metlife.com/assets/cao/mmi/publications/studies/2011/mmi-market-survey-nursing-home-assisted-living-adult-day-services-costs.pdf). Many people who could afford assisted living by spending down their illiquid wealth, especially home equity, choose instead to take advantage of Medicaid nursing home benefits. Medicaid exempts one home and all contiguous property (up to $525,000 or $786,000 depending on the state), plus one business, and one automobile of unlimited value, plus many other non-countable assets, not to mention sophisticated asset sheltering and divestment techniques marketed by Medicaid planning attorneys. Income rarely interferes with Medicaid nursing home eligibility unless such income exceeds the cost of private nursing home care.

SO WHAT? For most people, Medicaid nursing home benefits are easy to obtain without spending down assets significantly and Medicaid’s income contribution requirement is usually much less expensive than paying the full cost of assisted living.

No wonder ALFs are struggling to attract enough private payers to be profitable. No wonder people are not as eager to buy LTC insurance as insurers would like them to be.

The situation with home health care financing is very similar to nursing home financing. According to CMS, America spent $70.2 billion on home health care in 2010. Medicare (44.9%) and Medicaid (37.3%) paid 82.2% of this total and private insurance paid 6.4%. Only 7.1% of home health care costs were paid out of pocket. The remainder came from several small public and private financing sources. Data source: http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf, Table 4.

SO WHAT? Only one out of every 14 dollars spent on home health care comes out of the pockets of patients and a large portion of that comes from the income (not assets) of people already on Medicaid.

No wonder the public does not feel the sense of urgency about this risk that long-term care insurers think they should.

Bottom line, people only buy insurance against real financial risk. As long as they can ignore the risk, avoid the premiums, and get government to pay for their long-term care when and if such care is needed, they will remain in “denial” about the need for LTC insurance. As long as Medicaid and Medicare are paying for a huge proportion of all nursing home and home health care costs while out-of-pocket expenditures remain only nominal, nursing homes and home health agencies will remain starved for financial oxygen.

The solution is simple. Target Medicaid financing of long-term care to the needy and use the savings to fund education and tax incentives to encourage the public to plan early to be able to pay privately for long-term care. For ideas and recommendations on how to implement this solution, see www.centerltc.com.

Note especially:

“Medi-Cal Long-Term Care: Safety Net or Hammock?” at https://www.pacificresearch.org/medi-cal-long-term-care-safety-net-or-hammock/;

“Doing LTC RIght” at http://www.centerltc.com/pubs/Doing_LTC_RIght.pdf;

“The LTC Graduate Seminar Transcript” at http://www.centerltc.com/members/LTCGradSemTranscription.pdf (requires password, contact smoses@centerltc.com);

“Aging America’s Achilles’ Heel: Medicaid Long-Term Care” at http://www.centerltc.com/AgingAmericasAchillesHeel.pdf; and

“The Realist’s Guide to Medicaid and Long-Term Care” at http://www.centerltc.org/realistsguide.pdf.

In the Deficit Reduction Act of 2005, Congress took some small steps toward addressing these problems. A cap was placed on Medicaid’s home equity exemption and several of the more egregious Medicaid planning abuses were ended. But much more remains to be done. With the Age Wave starting to crest and threatening to crash over the next two decades, we can only hope it isn’t too late already.

Stephen A. Moses is president of the Center for Long-Term Care Reform in Seattle, Washington. The Center’s mission is to ensure quality long-term care for all Americans. Steve Moses writes, speaks and consults throughout the United States on long-term care policy. He is the author of the study “Aging America’s Achilles’ Heel: Medicaid Long-Term Care,” published by the Cato Institute (www.cato.org). Learn more at www.centerltc.com or email smoses@centerltc.com.

Medicaid outlook bleak for providers in 2012

January 2, 2012 by Honey Leave a Comment

A new report by Eljay LLC (A Report on Shortfalls in Medicaid Funding for Nursing Home Care, © 2011 Eljay, LLC. All rights reserved), on behalf of the American Health Care Association, states that the unprecedented state of budget deficits will result in historically low Medicaid nursing home reimbursements. Because of this, the report projects nursing homes will average a $19.55 shortfall, per patient, per day in 2011, up from $16.54/day in 2009.

Many nursing facilities have counted on profitability from Medicare patients to offset the profit they lose on Medicaid patients. In 2012, Medicare payments to nursing homes will be scaled back, effectively eliminating this “profitability patch.”

Recent LTCQueen blogs have predicted that the quality of government financed long-term care would diminish; here’s evidence that it will, sooner than many are willing to admit. These tragic circumstances make long-term care insurance ownership more compelling than ever.

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I Am Scared about the Fate of Nursing Homes

New Studies Measure State Long-Term Care Vulnerability

Medicaid outlook bleak for providers in 2012

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