# Presentation: 651132

## 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**

**Notes:**
your revisions look great!!! (MK)

## 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

## 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

## 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

## 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)

## 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

## 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

## 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

## 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)

## 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

## 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

## 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

## 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

## 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”

## 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

## 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

## 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**

## 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**

## 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

## 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

## 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

## 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

## 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

## 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

## 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

## Quality in LTCHow 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

## 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

## Long Term Care

- Challenges and Options for States
- in a Time of Budget Crisis:
- Where Do We Go From Here?

## 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?

## 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

## 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

## 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

## 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

## 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

## 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

## 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

## 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.

## 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

## 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

## 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

## 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