PAYING FOR NURSING HOME CARE

OVERVIEW

Government, private insurance and individuals pay for long term care services. As was seen in prior lectures Medicaid is the largest source of funding for institutional care and a major source of home and community-based care. Currently Medicaid expenditures exceed $150 billion annually, of which over $51 billion are for long term care. The majority of these long-term care funds are spent on nursing home services at an average rate of nearly $100 per day. Medicaid was originally designed as a federal grant program to the states to enable states to provide medical assistance to:

Families with dependent children (AFDC)

Elderly (Those receiving Old Age assistance)

The blind

Disabled and

Medically indigent

States also contribute funds to these programs and set criteria for eligibility. The typical recipient of support is an individual on welfare or receiving social security benefits. These groups are primarily children, mothers and the low-income elderly. In terms of eligibility for nursing home funding, many elderly may enter nursing homes as private pay patients and spend down their assets until they qualify for Medicaid support. Can you identify current asset limits to qualify for Medicaid nursing home care? Find out at: https://hhs.texas.gov/

Medicare, which was designed to provide medical coverage for elderly citizens, plays a smaller role in long term care due to strict limitations on coverage and eligibility. Medicare will pay for up to 100 days of Skilled Nursing Facility (SNF) care. The first 20 days are covered 100% by Medicare with the remaining 80 days requiring over a $100 per day co payment. Beyond 100 days Medicare pays nothing. Individuals seeking Medicare support must meet certain requirements. They must need skilled nursing or rehabilitation services as certified by a medical professional. They were in the hospital for 3 consecutive days prior to entering the nursing facility. And, they are admitted for the same or similar condition that required hospital admission. Medicare does not pay for personal care or assisted living facilities or for mental health conditions. Medicare payments to Nursing homes averaged over $200 per day for approved services.

In 2001 the national average cost of nursing home care exceeded $56,000 per year, which does not include cost of prescribed therapy or medicine. Assisted living facilities charged over $22,000 per year and home care ranged from $12,000 to $16,000 per year. Most of these costs are not covered by Medicare and so depending on the financial condition of the family the expenses are paid by personal funds, Medicaid or private insurance.

Recently, private insurance companies have offered long term care insurance to seniors. These policies vary considerably in coverage and cost. The primary focus is toward picking up the costs following the Medicare 20-day full coverage limit. Some policies provide for a payment per day of $50-$100 up to 3 years. The premium costs can range from $600-$8000 per year depending upon the age at which the policies are started, and benefits selected. In some cases, individuals with Parkinson's or Alzheimer's do not qualify for reimbursement. Middle income persons who would not quickly qualify for Medicaid or who cannot easily set aside savings for long term care are good candidates for these policies. With nursing home care currently ranging upwards of $50,000 per year families may face serious financial burdens. See National Association of Insurance Commissioners report, "A shoppers Guide to Long-Term Care Insurance". Review: www.naic.org

Outpatient drug coverage and costs has also been a difficult issue for elderly. Historically, Medicare has not provided coverage for outpatient drugs. For some elderly these costs can be significant. Recent debates in Congress indicate that the drug costs are an important political issue. Additional drug coverage will require an increase in Medicare part B premiums. See more on this issue at the Centers for Medicare and Medicaid Services web site. Start at www.medicare.gov

Coverage for Home Health services also comes from a variety of sources as discussed above for nursing homes. While Medicare traditionally paid for skilled nursing home health benefits if needed and paid 80%-100% of the cost, recent regulations brought about as a result of the budget reconciliation efforts have severely restricted the amount paid to home health agencies. This lower reimbursement has caused several agencies to close in the past three years, reducing the availability of services. As of Sept 2003 Medicare, part B limits the amount of reimbursement for outpatient physical and speech therapy to $1,590 per year combined and $1,590 for Occupational therapy. Also see

http://www.medicare.gov/Library/PDFNavigation/PDFInterim.asp?Language=English&Type=Pub&PubID=10969

Medicaid payment for home health services is somewhat broader than Medicare and of course does not have the co-payment requirement. In some cases, Medicaid provides personal care services when prescribed by a physician, supervised by a registered nurse and following a written plan of treatment.

Prospective Payment and Case Mix

As a result of escalating costs and a concern that the traditional method of reimbursement for nursing home care discriminated against certain types of patients a case mix approach has been used in many states including Texas. Texas has been using a case mix approach since 1989 (TILE) Texas Index for Level of Effort. The system requires assessment of each patient admitted to a nursing care facility and the assignment of the patient to one of 11 classes. The classes are first based on assessment of clinical status (Heavy Care, Rehabilitation, Clinically Unstable, Clinically Stable) Then patients are further assessed based on functional ability within each clinical group. These classifications are used to identify patients requiring more care and therefore more resources. Using these criteria Medicaid can then provide higher reimbursement for patients consuming more resources. This results in a more equitable payment system and encourages facilities to admit patient which they may have previously shunned because of a flat rate per diem payment.

Also see http://www.cms.hhs.gov/quality/mds20/

Effective October 1, 2019 the PDPM-Patient-Driven Payment Model goes into effect. Review details at https://www.cms.gov/medicare/medicare-fee-for-service-payment/snfpps/pdpm.html

Financing Issues

The future of long-term care providers and the maintenance of services are dependent upon several policy issues that continue to be debated in Congress. These include:

What services should Medicare cover?

How is eligibility defined?

Who should pay and how much should be shared by individuals?

Where will the money come from?