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75–038 PDF 2001

S. HRG. 107–122

LONG-TERM CARE: STATES GRAPPLE WITH

INCREASING DEMANDS AND COSTS

HEARING

BEFORE THE

SPECIAL COMMITTEE ON AGING

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

WASHINGTON, DC

JULY 18, 2001

Serial No. 107–10

Printed for the use of the Special Committee on Aging

(

SPECIAL COMMITTEE ON AGING

JOHN B. BREAUX, Louisiana, Chairman

HARRY REID, Nevada

HERB KOHL, Wisconsin

JAMES M. JEFFORDS, Vermont

RUSSELL D. FEINGOLD, Wisconsin

RON WYDEN, Oregon

BLANCHE L. LINCOLN, Arkansas

EVAN BAYH, Indiana

THOMAS R. CARPER, Delaware

DEBBIE STABENOW, Michigan

JEAN CARNAHAN, Missouri

LARRY CRAIG, Idaho, Ranking Member

CONRAD BURNS, Montana

RICHARD SHELBY, Alabama

RICK SANTORUM, Pennsylvania

SUSAN COLLINS, Maine

MIKE ENZI, Wyoming

TIM HUTCHINSON, Arkansas

PETER G. FITZGERALD, Illinois

JOHN ENSIGN, Nevada

CHUCK HAGEL, Nebraska

MICHELLE EASTON, Staff Director

LUPE WISSEL, Ranking Member Staff Director

(II)

C O N T E N T S

Page

Opening Statement of Senator John Breaux ......................................................... 1

Statement of Senator Larry E. Craig ..................................................................... 3

Statement of Senator James Jeffords .................................................................... 4

PANEL I

Hon. Howard Dean, M.D., Governor, State of Vermont, Montpelier, VT; accompanied by Patrick Flood, Commissioner on Aging and Disabilities .......... 6

PANEL II

David W. Hood, Secretary, Louisiana Department of Health and Hospitals,

Baton Rouge, LA .................................................................................................. 26

Ray Scheppach, Executive Director, National Governors Association ................ 40

Richard Browdie, Secretary, Pennsylvania Department of Aging, on behalf

of the National Association of State Units of Aging ......................................... 57

APPENDIX

Statement of Karen A. Wayne, President/CEO Assisted Living Federation

of America (ALFA) ............................................................................................... 75

(III)

(1)

LONG-TERM CARE: STATES GRAPPLE WITH

INCREASING DEMANDS AND COSTS

WEDNESDAY, JULY 18, 2001

U.S. SENATE, SPECIAL COMMITTEE ON AGING, Washington, DC.

The committee met, pursuant to notice, at 10:07 a.m., in room

SD–628, Dirksen Senate Office Building, Hon. John Breaux (chairman of the committee) presiding.

Present: Senators Breaux, Craig, and Jeffords.

OPENING STATEMENT OF SENATOR JOHN BREAUX,

CHAIRMAN

The CHAIRMAN. The Committee on Aging will please come to

order, and good morning, everyone. Thank you all for attending our

hearing. We have a good opening witness who we look forward to

hearing from, the Governor of Vermont, our good friend, Howard

Dean. We have an interesting panel which I think is going to be

very important in letting us know some of the developments and

the questions of long-term care, particularly the Secretary of the

Department of Health and Hospitals from my own State of Louisiana, David Hood, among others, who will be introduced at an appropriate time.

Today is the second in a series of hearings that the Aging Committee has embarked on, on the subject of long-term care. It is

something that all of us are going to be hearing a great deal more

about, particularly as the 77 million baby boomers—those folks

born between 1946 and 1964—become eligible for senior programs

like Medicare and others and also have to start making plans today

about how they are going to spend their golden years when perhaps

they may need additional help and additional care in dealing with

some of their health problems brought on by the aging process.

But I can say that in our discussions as a committee and from

personal experiences, the 77 million baby boomers do not want to

be taken care of like the current Medicare beneficiaries and the

seniors of today are being taken care of. For too many seniors in

this country, long-term care means being housed in an institution.

And I would argue that that is not the most effective and it is not

the most efficient and in many cases it is not the necessary means

of taking care of seniors.

My own father, who is in the category of approaching 80 years

of age, has told me there is no way he is ever going to be put into

a nursing home, that he would rather be dead. That may be an exaggeration, but it is certainly true that people who need medical

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care in their golden years find that nursing homes serve a very valuable purpose. But there are many millions of others who find

themselves housed in nursing homes when that type of institutionalized care is not needed, nor is it very efficient, nor is it very

effective.

This country is now faced with a decision of the Supreme Court

of the United States called the Olmstead decision, which basically

makes a statement that the Americans with Disabilities Act actually prohibits States from discriminating against persons with disabilities, including those disabilities acquired through the aging

process, that they cannot discriminate against those people by providing services in long-term care institutions when non-institutional care is recommended by a treating professional or is requested by the recipient of the services and would be a reasonable

accommodation. So the States under this ruling can no longer just

be comfortable with housing people in institutionalized care when

it is not needed.

The final point I would make for purposes of the record is that

my own State of Louisiana, to my regret, is ranked 49th in the Nation in the number of Medicaid waivers that they have requested

and have been granted to use Federal, State Medicaid funds for

purposes other than housing people in nursing homes. We rank

49th only because Arizona doesn’t participate in the program; otherwise, I would fear that it would be even worse. We also rank

49th in the number of people who are served under Medicaid waivers. And so we need some attention, a great deal of attention being

considered about how we operate in my home State.

[The prepared statement of Senator John Breaux follows:]

PREPARED STATEMENT OF SENATOR JOHN BREAUX

Today’s hearing is the second in a series on long-term care option for seniors and

the disabled. The first hearing that we held last month with Tommy Thompson, Secretary of Health and Human Services, highlighted the Medicaid bias toward institutional care and efforts by the Department to shift funding away from institutional

care and toward home and community based services.

Trying to shift Medicaid funds from institutional care to home and community

based care may be as difficult as turning an ocean liner around, but we have to try.

The 77 million baby boomers do not want to live in nursing homes when they are

older and will strenuously resist leaving their homes to live in nursing homes. We

are racing against a clock to develop other alternatives for baby boomers so they

may ‘‘age in place.’’

Today we will hear from expert witnesses on the status of long-term care in the

states. Some states have been aggressive in implementing the Olmstead decision

and in creating a wide array of services for disabled citizens have created similar

options for low-income seniors. Other states, like Louisiana, have not taken advantage of waivers available through the Department of Health and Human Services.

Because most long-term care services are delivered through Medicaid and the state

and federal government share in this funding stream, it is critical that we listen

to what our witnesses have to say today so we can learn what is working well, what

is working not so well and listen to suggestions for improvement by the federal government.

I now turn to Senator Craig for his comments.

Before I call on Senator Jeffords to introduce the Governor of his

State, I would like to recognize our ranking Republican member,

Senator Larry Craig. Larry.

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STATEMENT OF SENATOR LARRY E. CRAIG

Senator CRAIG. Well, Mr. Chairman, thank you, and I apologize

for running just a few moments late. But, again, let me recognize

you for continuing what is now a three-part series on this committee’s effort to understand and to build a record on long-term care.

Our first hearing provided an overview of the challenges. Today, we

are going to be examining some of the remarkable innovations that

States have undertaken—and, Governor Dean, we are pleased you

are before our committee. We will also be examining the obstacles

the States continue to face.

Over the past decade, dozens of States have sought and received

waivers from the Federal Medicaid program to creatively tackle

long-term care challenges. In particular, the Federal Medicaid

waivers have given States flexibility to provide seniors the option

of receiving services in home and community-based settings rather

than in nursing homes.

Nevertheless, much remains to be done. First, the waiver program remains just that—a waiver program. States must prepare

and file detailed applications to the Federal Government each time

they seek to depart from Washington’s standard approach. Secretary Thompson is making great strides in speeding up that process but, still, the road to the State and the innovation remain cluttered with the kind of roadblocks that Federal approval sometimes

develops.

Second, despite the progress in many States to shift the focus of

long-term care toward home and community-based care, institutional nursing home care still consumes 3 times as many Medicaid

dollars as home and community-based services, and that is unfortunate and troubling. I sense that is a substantial imbalance.

As we all know, the baby boomers will begin to retire in a few

short years, Mr. Chairman. Both he and I find ourselves in that

category, along with a lot of other citizens in our country, placing

tremendous pressure on the current fractured, patchwork care

services program. We owe it to them as well as to our current seniors, our children, and our grandchildren to tackle the hard problem, and I am pleased, Mr. Chairman, you are doing just that.

Governor, I think those of us who serve here and who had the

opportunity of serving in State legislatures or serving at the State

level oftentimes find the States served as marvelous incubators of

thought and idea and program. The welfare reform that has benefited so many citizens across our country today was a product of

State efforts. It was not something that was greatly envisioned

here. It was that we took the good efforts of States and incorporated that into a national program. And so that is why we are

anxious to hear from you and other States on the innovative practices they have used dealing with long-term care.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Senator Craig.

Let me recognize Senator Jeffords from Vermont for any comments he may have, as well as to present his Governor.

4

STATEMENT OF SENATOR JAMES M. JEFFORDS

Senator JEFFORDS. Thank you very much. There are few topics

more important to our Nation’s elders than the issue of long-term

care, and I want to salute Chairman Breaux and Senator Craig for

the priority they are giving to it for this committee.

This committee and its leadership has been at the forefront in responding to the needs of senior citizens. During the last Congress,

Senators Grassley and Breaux were instrumental in drawing attention to the need for a national program for caregivers. The National

Family Caregiver Support Program, which we included in the reauthorization of the Older Americans Act last year, is already providing $125 million to help support families and other provides of inhome and community-based care to older individuals. This program

is helping not only our seniors but their families who are struggling to care for them in the home environment rather than the

nursing home.

I raise the National Family Caregiver Program today only to

point out that the focus of this committee is fertile ground where

we can successfully plant the seeds of hope for our senior citizens.

While the caregiver program will help many Americans, it is not

itself enough.

Much has been said about the looming crisis facing our country

as the baby boomers begin to age. During the first hearing on this

topic, Secretary Thompson highlighted and defined that crisis.

Today, people who are 65 years or older account for only about 13

percent of our total population. By the year 2030, they will account

for about 1 in 5 Americans.

Today, Government funding accounts for about 60 percent of the

funding for nursing home care. That is in part because our system

is designed to direct people into nursing home settings. We will

hear today why that may not be the only answer, and certainly it

may not be the best answer.

I am especially pleased that Governor Howard Dean is here to

advise the Aging Committee on Vermont’s innovations in the area

of providing long-term services because he has an important lesson

to share, and I urge all of us to closely listen to Vermont’s experience in establishing innovative approaches to the long-term care,

the Federal regulatory problems, the State has confronted, and his

advice for making the system work better.

I also want to welcome our other witnesses, Mr. David Hood of

Louisiana and Mr. Scheppach of the National Governors Association and Mr. Rich Browdie, who is representing the National Association of State Units of Aging.

Let me go on to the introduction of my good friend. I have the

special pleasure this morning of introducing my long-term friend

and Vermont’s long-term Governor, Howard Dean. Vermont has

been at the forefront in providing our Nation’s elders real choices,

allowing them to live their lives in their homes. I know that my

colleagues on the committee will want to listen closely to the lessons learned by Vermont and to the advice and recommendations

that Governor Dean will offer.

Howard Dean brings to this discussion not only his experience as

chief elected official of Vermont, but also as a physician who understands the needs of patients and the elderly.

5

Governor Dean received his bachelor’s degree from Yale University in 1971 and his medical degree from Albert Einstein College

of Medicine in New York City in 1978. He then completed his residency at the Medical Center Hospital of Vermont and opened an

internal medicine practiced with his wife, Dr. Judy Spangler, in

Shelburne, VT. He served in the Vermont House of Representatives

from 1982 to 1986 and was elected assistance minority leader in

1985. He was elected Lieutenant Governor in 1986 and re-elected

in 1988 and 1990.

On August 14, 1991, Dr. Dean’s political career took a sudden

and unexpected turn. He was treating a patient at his medical

practice when a call came informing him that Governor Snelling

had died of a sudden heart attack. Dr. Dean completed his patient’s

physical, called his wife and children, and drove to Montpelier to

take the oath of office. He was elected to a full term in 1992 and

has been re-elected by solid margins since that time.

Over his decade as Governor, he has shown himself to be a fiscal

conservative with a social conscience. He has retired the State’s

deficit, built comfortable budget reserves, cut the income tax, improved the State’s bonding rating, and reduced the State debt. Not

bad.

In addition, Governor Dean has established Vermont as a national leader in the areas of children’s disease prevention programs, health care reform, and welfare reform. He has also focused

on improving public schools and helping Vermont families meet the

cost of sending their children to college.

As we will hear today, he has been a leader in providing improved systems of care and programs for the elderly. In short, Governor Dean is an independent thinker, and all of us know that Vermonters cherish independent thinkers, and in that vein, I want to

welcome him to the Aging Committee.

The CHAIRMAN. Well, thank you for that wonderful introduction,

and Governor, we are delighted to have you. It is particularly appreciated by this committee to have you as Governor of the State

come down and share your thoughts with us. What you have done

is important. It is important for Vermont, but it is also important

as a symbol for the rest of the country, and we are delighted to

have you tell us about it. Governor, welcome.

6

STATEMENT OF HON. HOWARD DEAN, M.D., GOVERNOR, STATE

OF VERMONT, MONTPELIER, VERMONT; ACCOMPANIED BY

PATRICK FLOOD, COMMISSIONER ON AGING AND DISABILITIES

Governor DEAN. Thank you, Mr. Chairman. Thank you, Jim, for

your kind words. I have with me Patrick Flood today, who is the

Commissioner on Aging and Disabilities, who has done a wonderful

job for us and gets a lot of the credit for some of the things that

we have done, and he is certainly obviously a technical expert, and

I thought I might refer some of the questions that you may have

to him.

I have prefiled written testimony, which I am not going to read,

so I am just going to kind of give you a general outline of what is

going on.

As this committee is very much aware, our elderly population is

growing. The fastest-growing age group in Vermont right now is

those over 85 years of age. By 2025, 20 percent of the population

will be elderly, and our current system of long-term, like many of

our other systems for the elderly, will be supported by an increasingly fewer number of working-age people.

What we have done in Vermont is essentially used the waiver

process, which we have been very successful at, to change our profile. In 1996, nursing home costs were 88 percent of our long-term

care expenditures. Today, they are 74 percent. We had a nursing

home population 4 years ago of 2,800; today, it is 2,300. At the

same time, we have been able to use Medicaid dollars under a Federal waiver to take care of 1,000 people in their own homes. And

this is really the crux of the message that I have for the committee

today. Four years ago, we were able to take care of 400 people in

their own homes. Today, we have more than doubled our ability to

do that.

Older people want to be taken care of in their own homes. They

don’t want to go to a nursing home. I think the example you used

of your own father is a very typical one that we hear from all kinds

of people. And what we are trying to do in Vermont and what we

need some help with and some flexibility with is to identify people

early on who are potential candidates for a nursing home and get

them enough services early on so they don’t ever end up in a nursing home.

I think if I could distill my testimony today into perhaps one sentence, it is this: You should not need a waiver to be supported in

your own home. And that is a position that Vermont and, of course,

all the others States are in as well. We need a waiver to use innovative programs, and, of course, when the waiver has to be reauthorized, we have to jump through lots of hoops, and it makes it

more and more difficult.

We are and have been able to keep some of the frail, vulnerable

people in their own homes with as much as 30 hours of services

a week. In the past, those people would have been sent to nursing

homes.

We passed a few years ago something called Act 160, which is

a mandate to reduce the number of nursing home beds and increase the number of people being taken care of in their own

homes. Fortunately, we have been able to expand the Medicaid dolVerDate 11-MAY-2000 14:04 Oct 05, 2001 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 75038.TXT saging1 PsN: saging1
7

lars to do that; otherwise, it would be impossible. The State clearly

can’t pick up the tab for people who are no longer in nursing home

beds.

The problem with the current system is essentially there is an

entitlement to a nursing home bed, but there is no entitlement to

any of the things that can keep you out of a nursing home. So one

of the things we are interested in having the Federal Government

do is to re-examine the entitlement so that the preferred choice is

not immediately the nursing home bed. Families don’t want that.

The individuals don’t want that. Of course, sometimes it is necessary. There are people who have enough needs that they can only

be taken care of in an institutionalized setting.

Patrick and I were talking yesterday about my upcoming testimony, and he believes that we could reduce our present nursing

home population easily by another 10 percent, and possibly more,

so that the net reduction would have been almost one-third over a

4- to 6- or 8-year period, if we had enough flexibility from the Federal Government in terms of designing the program so that we

could take care of people, identify people before they get into nursing homes, and never have to spend the $48,000 a year to keep

folks in nursing homes.

Everybody is a winner with more flexibility. The senior citizen

gets to stay in their own home or a more independent setting with

support. The State saves money. The Federal Government saves

money because an individual is less expensive. We can take care

of more people, or for the same amount of money, if you are not

as interested in the savings and more interested in spreading the

care around, and the family likes it because they feel less guilty

and it is less of a burden on them to keep somebody in their own

home.

So, basically, that is what we are trying to do. What we are interested in is more flexibility without the need of a waiver, for prevention services, housing costs, flexible funds. We think that this

committee ought to take a look at paying spouses in some instances, something that we are fooling around with. It is very hard

to do those kinds of things, but certainly it is something that the

committee might think about; and then covering nursing homes

and home care during transition periods so we can get people into

a more independent setting.

Again, I want to restate—and this is probably the most important thing I am going to say today. We need to somehow remove

the bias toward institutionalized care. If we could do nothing else

but that, that would be enormous, because the presumption is financially that when you are in a hospital and you are a senior citizen with a lot of disabilities caused by illness, that you are going

to the nursing home; and anything that you do that is not about

going to the nursing home requires a huge, jury-rigged, sort of innovative financial scheming to keep you at home and an enormous

amount of work on the part of social workers and discharge nurses

and so forth to keep that happening. So anything that we can do

to remove the institutional bias and allow us to spend funds for

people in their own homes, even to the extent that you would require for the financial, fiscal consideration a reduction in nursing

home beds, that would be fine. Because we did that. We knew we

8

had to do that. We knew we couldn’t afford simply to expand the

program and keep the same amount of nursing home beds and

then take care of more people in their home. And we have made

that tradeoff under the waiver, and we are taking care of 600 more

seniors than we were 4 years ago.

I think this goes without saying, and every advocacy group for

seniors will tell you this, and I am sure they have: Everybody

ought to have a voice in deciding where they are going to receive

their care, and to empower the senior and their family, we need

more flexibility at the Federal level.

I think that is really the—there are all kinds of things in here

about money and other—a couple more things I want to say, because, you know, I am in the middle, Governors are in the middle.

We come here and lobby you for more flexibility and more money,

but we get lobbied by mayors for more flexibility for the local people and more money. So I am not going to beat you over the head

with that because I am sure you hear it from everybody. But I

would just like to make one or two more remarks, and then I will

close my formal testimony.

The first is that one of the best things that could happen has actually nothing to do with or is only peripherally related to jurisdiction of the committee. We really badly need a prescription benefit

with Medicare. You would not have designed the Medicare system

today the way it was designed, the way you did it in 1964, because

most decent health insurance has a prescription benefit. Medicare

does not. If we had a prescription benefit piece of Medicare, in the

Medicare program, it would enable us to keep people out of nursing

homes because part of their problem is if they don’t take their prescriptions, which they don’t because they are too expensive—they

take them half as much as they are supposed to or they don’t take

them at all so they can pay the rent—that cuts down on the kind

of morbidity that sends people into long-term care.

Second—and on this I think I speak—I have pretty much spoken

for most of the Governors as I have gone through this, and you are

going to hear, I think, later from Ray Scheppach, who will officially

do so. But the next piece is not speaking for all the Governors. Vermont, Rhode Island, and a few other States, I think Minnesota was

one, really did not get much benefit out of S-CHIP. And if there

is a way that when you look at your legislation that you could craft

it so those States who are really trying to do a really good job and

are ahead of the curve don’t get penalized, as we did in S-CHIP,

those States which were already giving children a large amount of

health care never got any benefit out of S-CHIP. In fact, we have

turned money back because we simply can’t use the money because

our benefit level—we are at such a high level, anyway. We insure

people, kids up to 300 percent of poverty. We never had any benefit

from S-CHIP money.

I would hate to see that happen in whatever long-term care bill

might occur. It would be possible, for example, to design a bill that

would help those States that don’t have much flexibility, but it

wouldn’t give us any more flexibility than we already have because

we have a fair amount of it under our waiver.

So I would just put in a plea: For those States in the long-term

care that are fairly far ahead of the curve—and I think we are one

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of them—please don’t pass a bill that addresses the bottom 10

States. Pass a bill that is going to help all the States. S-CHIP was

not that bill for kids’ health care, and we certainly don’t want to

have a repeat of that for the health care for seniors.

So, Mr. Chairman, let me thank you very much for your kind invitation to come down and talk. This is an area we have spent a

lot of time on. This is an area Governors are going to be incredibly

concerned about as we see our financial situation deteriorating, because this is a big piece of every single one of our Medicaid budgets.

In our State, we have, not including dual-eligibles, about 100,000

people, which is about 20 percent of our population, on Medicaid.

Now, I have done that on purpose because I wanted to expand benefits to as many people as possible. Half of all the expenses—we

have 100,000 people on Medicaid; 2,300 of those people use almost

half of all the money that we spend on Medicaid, and that is the

nursing home population. Every Governor has a profile like that,

between 40 and 60 percent. So anything that you can do to help

us expand the number of people we can cover for that 40 to 60 percent of our Medicaid budgets would be incredibly helpful. And we

are just delighted to have the opportunity to come and share our

views.

I would be happy to take questions or comments.

The CHAIRMAN. Well, thank you very much, Governor, for telling

us about the Vermont experience and what you all have been able

to do. I think that you really represent what the future hopefully

will look like in all of our States with regard to how we treat and

help seniors live a better life.

Tell us a little bit about how you were able to pass the Act 160,

which, as your statement says, mandated the shifting of the State

financial resources from institutional to the non-institutional services. What brought that about? How difficult was it to get done? I

would imagine that nursing homes were strongly opposed to it.

How did all of it take place, both politically as well as socially?

Governor DEAN. We put together, Mr. Chairman, a coalition of

those in the disabled community and seniors, as well as the community providers—home health and so on—and tried to make it

very clear that we thought we could get a lot more for our longterm money if we were more flexible, if they would be more flexible.

We particularly emphasized choice for consumers. Since most

people prefer not to go to an institution, we found a great deal of

resonance with that. What people want is opportunity to do things

differently, and it turns out that the different opportunity is a lot

cheaper for the State and, in this case, of course, the Federal Government, too, since you have a significant piece of money in the

Medicaid budget.

It was extraordinarily cost-effective. Of course, the issue of what

happens, you know, to excessive use of this benefit was raised, particularly by the nursing home lobby, but that turned out not to be

true. In fact, we are able to serve a good many more people in circumstances that they prefer. So it is true that the nursing homes

objected to this, but we were fortunately able to prevail. And as it

turned out, we were correct. We have been able to decrease the

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number of nursing home beds by a little under 20 percent and take

care of about 150 percent more people in the system for that

amount of money.

The CHAIRMAN. Have the nursing homes, for instance, been able

to tailor their services so that some of them have actually been able

to move into some of these different new services that are being

provided on a home basis or day-care type of facilities?

Governor DEAN. We suggested that. That has not taken place as

much as I might have thought. I do want to let Patrick have a

crack at this question. Most of them were not nimble enough to do

that, and, in fact, the hospitals took over some of the long-term

care, the visiting nurses and so forth. There was some flexibility,

not as much as perhaps there could have been, but I want to let

Patrick just have a crack at that one as well.

Mr. FLOOD. Mr. Chairman, we made it clear to the nursing home

industry in the beginning that we were ready and willing to help

them change their services or do things more flexible. Adult Day

is a perfect example. In fact, we had one nursing home in the State

of Vermont that opened an Adult Day site.

But I have to tell you that, in retrospect, I think two factors are

at work here. One is the nursing home industry has been doing

business a certain way for a very long time, and they are not quick

to change. And, in fact, they will tell you in their candid moments

that they really expect that some of this emphasis that you are

bringing here today will pass and that when the baby-boom generation comes——

The CHAIRMAN. You mean pass, go away?

Mr. FLOOD. It will go away; when the baby-boom generation

comes, they are going to be back looking for nursing home beds. I

don’t believe that, but—so there is a certain inertia at work there

where they are just unwilling to change.

But, second, as providers of service, they are pretty limited in

what they can do. I don’t know what nursing homes you have been

in lately, but most of them look pretty much the same. You have

buildings that are not easy to renovate, not easy to change into

other use. So it is a pretty expensive proposition sometimes, too.

The CHAIRMAN. Today in Vermont, Governor, you say that all of

the following services are available—and I take it that each one

that you listed are the result of having to get a waiver from Health

and Human Services, the old HCFA operation, to be able to provide

those services. And that is another point about why you have to do

that, because I think we have to make some changes up here so

that we don’t have a bias just for institutional care. They just say,

we have money we want to have available to take care of seniors,

and, let’s design the best system that you can, make sure it is run

right, but it doesn’t have to be institutionalized so you don’t need

to have a waiver.

But you have home health aide services, homemaker services,

personal care attendants, adult day-care services, case management services, assistive technology and home modification, and

traumatic brain injury services.

My question is: Where did the people come from to provide those

services? All of a sudden, you say, look—I guess it came about

gradually, but all of a sudden, you say, look, here are some new

11

things that we can do with some of our seniors. Was the infrastructure there or did it—I guess it developed as you made the money

available for it.

Governor DEAN. Let me answer that in a couple of ways.

The infrastructure was not there, although the advocacy groups

were, and as money became available, these services became available. This is not, you know, a perfect world. It is wonderful for me

to come to Washington and tell my story. We fight every day with

people who want more of this and less of that, and that is just part

of the political fabric of what happens when you make changes and

what happens when you fight over resources. So I am not going to

say that everybody is 100 percent satisfied customers. We have disagreements with people about what services they need, because if

they could get any service they wanted, obviously we wouldn’t be

able to sustain the program.

We have built up as a result of this the sophisticated services

needed to keep people in their own homes, and one of the very good

things, in my view, that has happened is that we now have sophisticated services 4 or 5 years into this that we didn’t have before,

and so we can take care of much sicker people in their own homes

and still it is much cheaper than it is in an institution.

The other point I would make about this and point out about the

nursing home industry, in Massachusetts—I think this is a proper

statistic, and Patrick should correct me if I am mistaken. I think

one-quarter of all the nursing homes are in bankruptcy. In Vermont, that is not true. We do have a few financially troubled nursing homes. But I believe what this has done, coupled with the negotiation on our part with the nursing home community for adequate reimbursement, it is made the industry stronger. They are

more careful. They take sicker patients. We pay nursing homes

based on a case-mix formula now. So the sicker patients they have,

the more they get paid.

I think you are going to have to do something like that if this

is going to work because we can’t expect to pay them at the usual

rate if their case mix now—if they only get the sickest of all the

patients and we are able to keep everybody at home.

So we think that the nursing home community can do OK out

of this, although in our State they were kicking and screaming all

the way. But it does require some new negotiating approaches on

the part of the State as well.

The CHAIRMAN. Can you tell me, Patrick, what your reimbursement rate is for nursing homes?

Mr. FLOOD. As of July, the average nursing home rate in the

State of Vermont would be approximately $130 a day, which puts

it in the upper echelon.

The CHAIRMAN. Well, congratulations, Governor, for what you

are doing.

Senator Jeffords, any questions of your Governor?

Senator JEFFORDS. Governor, thank you, an excellent statement,

and I am proud of you and proud of Vermont in this area, as in

many other areas.

I would like to further the inquiry that we are having here. What

is Vermont’s experience with the increased participation in new enrollees? Has there been a sharp increase in the expense of the proVerDate 11-MAY-2000 14:04 Oct 05, 2001 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 75038.TXT saging1 PsN: saging1
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gram, or have you been able to serve more elders with the funding

available?

Governor DEAN. I would say it would be the second, but I would

like Patrick to answer that one.

Mr. FLOOD. Absolutely, Senator. What we have been able to do

by diverting people from nursing homes—the average cost is

$48,000 a year in a Vermont nursing home on Medicaid. The average cost to keep someone at home on our waiver program is less

than $20,000.

Senator JEFFORDS. Give me those figures again. I missed them.

Mr. FLOOD. The average cost for Medicaid, annual cost for Medic- aid in a Vermont nursing home, is approximately $48,000 a year.

Senator JEFFORDS. $48,000.

Mr. FLOOD. To keep somebody at home on our waiver program

averages less than $20,000 a year. So basically we can serve 2.5

people for the cost of 1 in a nursing home. So what we have been

able to do is not only serve people who otherwise would have been

in a nursing home, we have actually been able to take care of normal caseload growth. In other words, instead of building new nursing homes to take care of the population as it grows, we are building our waiver program where we can still afford it, and we have

been able to use some of the other monies, as the Governor said,

to buildup other infrastructure that is not necessarily covered by

Medicaid, which is one of the problems here. There are very important services that don’t get covered by Medicaid, and we have had

to take some general funds and do that.

So we have been able to do all those three things with basically

the same amount of money.

Senator JEFFORDS. I am glad you mentioned the lessons learned

by Vermont through the S-CHIP program. Do you have any specific

ideas to make sure responsible States are also rewarded? Would

small-State minimum funding levels work?

Governor DEAN. I would say that certainly things like smallState minimum, but, you know, I am not an expert in how we get

our money from the Feds on long-term care, so I think I would like

Pat—I mean, the question was: What would we do so the S-CHIP

experience isn’t repeated on the long-term care?

Mr. FLOOD. Honestly, Senator, I think we are prepared to just

start from where we are. We would like to just be able to use the

same amount of money we have today in more flexible ways. We

don’t want to be penalized in any way, I think is the Governor’s

message here.

For example, when Medicare cutbacks occurred a few years back,

the State of Vermont was probably the most cost-effective home

health provider in the country, if not, the second. And when the

prospective payment system started being put into place, we were

severely penalized. Our already very low reimbursement was reduced even further, and we went through a very difficult time in

the State of Vermont with home health. And that is just an example of what we want to avoid with a national approach.

I honestly think that if the Federal Government would just give

us the opportunity to use available dollars more flexibly, that

would be enough. Just be caution that in attempts to do this sort

of thing that you don’t cost shift away from a State that is already

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doing a good job. That is the general theme. We have seen it happen, and we would prefer that it not happen again.

Senator JEFFORDS. Governor, you mentioned the importance of

having a viable prescription drug benefit for our senior citizens.

That is why we are working on the Finance Committee to make

this program a reality this year.

Last year, we passed legislation based on advice we got from the

Food and Drug Administration that would allow the reimportation

of lower-cost drugs from countries like Canada. As the Governor of

a border State, but also as a physician, can you tell me if Vermonters have benefited from their ability to get the lower-cost

medicines for their personal use? And has there been any record

of adverse events or abuses by this practice?

Governor DEAN. Well, Senator, I think the notion that somehow

drugs that are made in America, shipped to Canada for sale there,

and then come back into America are going to be less safe is ridiculous. The notion that the Secretary should have to sign off on some

safety protocol makes absolutely no sense whatsoever. It is simply

protectionist for the pharmaceutical industry.

In my view, reimportation, the more, the better. If we believe

NAFTA is a good thing for the automobile industry, then why isn’t

NAFTA a good thing for the pharmaceutical industry? We have

had zero safety problems with reimportation. Zero. We have an extraordinary program started by some doctors in Bennington which

allows them essentially to buy drugs for personal patient use over

the Internet. We not only had zero complications, since these drugs

are made in the States, kept in their packages, go to Canadian

pharmacies, and then come back to the States. But for the first

year, 145 people used that program. The savings for those 145 people was $81,000. Now, that is an extraordinary savings for senior

citizens principally on fixed income. And I would encourage you

and the Senate to maximize our ability to reimport not only for individuals but also, frankly, if we want to do something for the local

pharmacies, let the pharmacies and let the wholesalers reimport.

Again, if we are going to have an era of free trade and

globalization, there isn’t any reason that this particular industry

should be exempted from it.

Senator JEFFORDS. Thank you.

The CHAIRMAN. That is another issue. [Laughter.]

Let me just ask one final question, Governor. I take it that what

you are saying is that as a result of your efforts you have happier

seniors and their family members are happier. And you are doing

all of this for less cost.

I would imagine that some in the nursing home industry would

make the argument, yes, but they are not getting the quality

health care they need and they are at risk.

Can you comment on that?

Governor DEAN. Well, I think it is very clear—and I will comment as a physician not as a Governor on this one. I have taken

care of a lot of people over the age of 65—over the age of 85, and

it is very clear to me that the single most important way of keeping

seniors happy and living longer is, in fact, keeping them happy. So

I would actually disagree with anybody who said that the quality

of care was going to be worse in the home, because by keeping

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somebody with independence, that enhances their own sense of

independence and allows them, A, to do more for themselves than

they would in an institution, and, B, to feel much better about

themselves. And, therefore, that alone will keep them living longer.

I doubt very much—I haven’t seen studies on this, but I would

be shocked if there was a lower incidence of people falling down

and hurting themselves in a nursing home than there was in a

properly supervised home. These folks who do the home care have

plans, they have restrictions that they make very clear to the families what they have to be. So I don’t think there is any kind of a

safety issue, and my guess is that people do better in their own

homes psychologically and, therefore, physically than they would in

a nursing home.

Now, we are not talking about everybody. Remember, home

health care is not for everybody. There are people who are so severely disabled that they must have institutional care, and we are

not talking about doing away with all nursing homes. But there are

an enormous number—in our State, for all we have done in expanding home health with the waiver, we still think that we have

at least 10 percent of patients who are in institutions now who

don’t need to be there, and we can’t get them out now because once

you go in, you become dependent and you need even more services.

So you have got to stop them from going in in the first place. Then

they are not only happier, but they do better physically.

The CHAIRMAN. Patrick, any statistics on that?

Mr. FLOOD. Well, I can say, Mr. Chairman, that the Adult Protective Service Office is also within my department, so I see the

complaints that come in about abuse and neglect and exploitation

of elderly people. And I certainly have not seen any increase in the

actual cases of abuse and neglect of people residing at home.

I agree 100 percent with the Governor’s comments that if people

are content, if people are happy, they tend to do better medically.

And my experience—I have worked in nursing homes as well as in

other settings, and my experience is an institutional setting, just

by its nature, tends to cause problems that you wouldn’t have at

home. We have seen no indication, no statistics to indicate that

there is any problem.

In fact, I would say unequivocally that people are better off and

they are healthier and they are happier when they are being cared

for at home. They have to have a system in place that manages

that. We do have that in Vermont. Any particular client, any particular person at home, has probably two or three different kinds

of services they are getting, and that provides a check and a balance in the system, which, in fact, is not something you necessarily

see in an institution. That is the problem with institutions. They

are separated.

In this case, the whole community is involved in the case of

somebody so you get that check and a balance, and that, in fact,

prevents the kinds of abuses people are worried about.

The CHAIRMAN. Well, thank you, Governor and Patrick, for sharing the Vermont experience with us, and hopefully it can be an example for others to follow. I think you all have done a wonderful

job, and we appreciate your being with the committee.

Governor DEAN. Thank you, Mr. Chairman. Thanks, Senator.

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Mr. FLOOD. Thank you.

[The prepared statement of Governor Dean follows:]

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The CHAIRMAN. I would like to welcome our next panel of witnesses, including Mr. David Hood, who is the Secretary of the Louisiana Department of Health and Hospitals; Mr. Ray Scheppach,

who is the Executive Director of the National Governors Association; and Mr. Rich Browdie, who is Secretary of Aging in Pennsylvania, who will be speaking on behalf of the National Association

of State Units on Aging.

Gentlemen, we welcome you and look forward to hearing your

testimony.

David, we have you listed first, so if you would go ahead and

begin, we’d appreciate it very much. And thank you for being with

us.

STATEMENT OF DAVID W. HOOD, SECRETARY, LOUISIANA DEPARTMENT OF HEALTH AND HOSPITALS, BATON ROUGE, LA

Mr. HOOD. Thank you, Mr. Chairman.

I am David Hood. I am the Secretary of the Louisiana Department of Health and Hospitals, and it is certainly an honor to be

here to discuss this very important topic with you and the committee.

Governor Dean and Mr. Browdie, who is going to testify, I understand, I have read their written statements, and I was very impressed. I applaud them for the clarity with which they outlined

the challenges and problems that are facing States today, and also

the thoughtfulness of their proposed solutions.

It is apparent that all States are having difficulty in making the

transition to a long-term care system that provides services our

senior citizens need and want, both today and in the future. Louisiana, on the other hand, represents a group of States which are actually very similar to States like Vermont and like Pennsylvania

in the types of challenges and problems that they face. But there

is wide disparity between the rich and the poor States with respect

to their resources and their ability to address these problems.

I think the demographics tell the story, and I will cite just a few

of them.

In Louisiana, 23 percent of our total population is below the Federal poverty level; 24 percent of our elderly population is below the

Federal poverty level. And in that respect, we are not unlike most

Southern States.

If you look at Northeastern States, on the other hand, 11 to 14

percent of their total population and 8 to 11 percent of their elderly

are below the Federal poverty level. So there is a significant difference there.

Louisiana has 20 percent of its population uninsured, and in the

Northeast, it ranges from 11 to 15 percent, again, a significant difference.

The statistics, for several Southern States are even worse than

for Louisiana.

I wish I could find some solace in the fact that these affluent and

socially progressive States, while making progress, are still having

tremendous difficulty reshaping their long-term care systems to

meet the challenge of the baby-boomer generation. Instead the difficulties that those States are having make the challenges seem

even more imposing for the poor States of this Nation, such as LouVerDate 11-MAY-2000 14:04 Oct 05, 2001 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 75038.TXT saging1 PsN: saging1
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isiana. I think Vermont and Governor Dean have certainly set a

high standard for us and have provided us with a model that we

could all follow. Progress so far has been slow in our State.

Louisiana has acknowledged that our health care system is in

need of reform and revitalization if we are to meet the demands of

the 21st century. We have made significant progress providing coverage for uninsured children and also for persons with disabilities

in terms of providing community services. But progress has been

painfully slow in providing more choices and better care for our elderly.

Louisiana did pass a bill in this recent legislative session to form

an Olmstead Planning Group, so we do hope change will occur at

a faster pace now. We have also established a trust fund for the

elderly to provide some financing for these new community-based

services that we hope will be expanded. And we will be expanding

them this fiscal year. We hope to double, for example, the number

of elderly waiver slots that we currently have.

Governor Dean indicated that 26 percent of Vermont’s long-term

care budget for the elderly goes to home and community-based

services and 74 percent to nursing homes. In Louisiana, the situation is much different. We in Louisiana are far below Vermont’s

level. We hope to reach 10 to 15 percent for community services

within the next few years.

There is a natural tendency to take care of the most urgent problems first, and I think Louisiana is no different in that respect. We

tend to leave future problems for the future, and this is changing

in some respects with our emphasis on primary care, coverage of

children, and so forth. And we certainly need to quicken the pace

with respect to our elderly population.

Nursing homes occupy nearly all of Louisiana’s long-term care budget for the elderly. Nearly $600 million this year in direct payments to nursing homes will be made, plus $200 million for drugs,

for physician services, and for various therapies and other services

are paid separately. So we spend a total of about $800 million on

our 25,000 or so nursing home recipients.

I think we would all agree that nursing homes are a vital part

of our continuum of care, and they will be for the foreseeable future. Certainly this requires that we pay adequate rates to assure

good quality of care in those nursing homes. Governor Dean mentioned $130 a day in Vermont. We pay about $80 a day in Louisiana, and that was after a recent very significant rate increase for

our nursing homes. So there is a wide disparity there as well.

We also want to be certain that as much of the money as possible

that we pay to nursing homes actually reaches the patient and that

it goes to direct care for those patients.

One thing we need to do in Louisiana, like in Vermont, is to reduce overcapacity and to encourage our nursing home industry to

diversify into other methods of delivering care to our elderly population. Our occupancy rate 15 years ago was about 95 percent.

Today, it is about 80 percent. We are over-built. We have too many

nursing home beds.

I would certainly agree with Governor Dean and Mr. Browdie

that both Medicaid and Medicare need to be reformed and restructured with much thought given to what the impact of change in one

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program might have on the other. For example, the Balanced

Budget Act of 1997 implemented cuts in Medicare payments in

many areas, including SNF care for the elderly, that had a direct

impact on our Medicaid program in Louisiana.

I would summarize our recommendations for change with two

words: funding and flexibility. We certainly would benefit in Louisiana from additional assistance in the form of enhanced match rates

that would provide incentives to expand home and communitybased services. In Louisiana, this provided an incentive for our

LaCHIP program to expand, and in terms of enrollment, it is one

of the best in the entire country. We think an enhanced match rate

will work just as well for our senior citizens, and I totally understand what Governor Dean has said about not putting States that

are ahead of the curve at a disadvantage here. But in Louisiana,

the money would certainly be very helpful.

Waivers are administratively cumbersome and need to be simplified. Governor Dean suggests cost-effectiveness calculations

should include the impact on Medicare, and we would wholeheartedly agree with that.

The concept of having to get a waiver at all simply proves that

the medical model that forms the basis of Medicaid and Medicare

law is outdated. It is expensive, and in the case of long-term care,

it fails to meet the true needs of much of our elderly population.

However, waivers provide a mechanism for States to control

entry into home and community-based services, which have high

demand and long waiting lists in poor Southern States. If they

were converted to State plan services, a State such as Louisiana

would be overwhelmed. Everyone’s needs would have to be met immediately. This needs to be taken into account as we consider reforms.

And, last, I would completely agree with Governor Dean and

many others that a prescription drug benefit under Medicare in

particular would keep people healthy, keep them out of nursing

homes, out of hospitals, and we would certainly hope that will

occur at some point in the near future. Otherwise, there will be tremendous pressure on States such as Louisiana and other poor

States in the country.

Mr. Chairman, that concludes my oral remarks.

[The prepared statement of Mr. Hood follows:]

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The CHAIRMAN. Thank you very much, Secretary Hood.

Now we will hear from Mr. Ray Scheppach, who is Director of

the NGA.

STATEMENT OF RAY SCHEPPACH, EXECUTIVE DIRECTOR,

NATIONAL GOVERNORS ASSOCIATION, WASHINGTON, DC

Mr. SCHEPPACH. Thank you, Mr. Chairman. I appreciate being

here on behalf of the Nation’s Governors.

The current health care system serving the Nation’s elderly is a

patchwork system built for another age. It no longer services our

citizens, nor does it permit States to provide 21st century solutions.

Medicare’s coverage has many gaps: preventive care, prescription

drugs, and long-term care. In their absence, States have filled the

gaps with many small, innovative, but effective programs. Although we have done exciting and innovative things, the patchwork

of programs and services that we have put in place is no substitute

for a comprehensive vision of long-term care. And the programs are

essentially getting much more costly.

Currently, Medicaid is about 20 percent of State budgets. It has

now jumped up to be growing between 10 and 12 percent per year.

It is squeezing out education funding. And as we look forward, we

really don’t believe States have the fiscal capacity to continue this

funding, particularly when you look at the growth of the over–85

population between now and the year 2010 and, of course, the overall elderly population growth between 2010 and 2030.

States have been doing a number of innovative programs: home

and community-based waivers. These allow States to provide alternatives to nursing home care through Medicaid. More flexibility, as

has been previous mentioned, is needed in this area. Innovations,

such as PACE and other programs, capitated rates which combine

Medicare and Medicaid spending, are good experiments. There are

a lot of information programs. State pharmacy assistance programs

are now in 26 States, and States are spending over $400 million

now on drugs for the elderly. We have cash and counseling programs in several States and partnerships for long-term care to help

States work with the private sector and individuals to fund longterm care insurance. Many of these are being done with State-only

dollars.

If you ask what the Federal Government can do, one thing I

would like to say is that the Governors passed a very comprehensive policy at the last winter meeting that called for a fairly major

reform of Medicaid. If you look at Medicaid, you find now that only

about 40 percent of the funding is actually in entitlements for required populations. Essentially 60 percent of the funding in Medicaid is now for optional benefits and optional populations. Yet the

problem is that once you include one additional individual, they

have to get the complete menu of services. So allowing States a lot

more flexibility in how they can mix and match those particular

benefits of the program would go a long ways toward stretching the

Medicaid dollars.

We also need help in Olmstead compliance. We need to work

with other agencies such as HUD and Labor where we can develop

more comprehensive programs with those agencies. We also could

use an enhanced match for home and community-based care, and

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also, although Secretary Thompson has been very, very good at expediting waivers during the last several months, he is limited by

Federal law on the waivers, and perhaps an expanded waiver bill

that would provide States with more flexibility for just the home

and community-based case could be an effective strategy in the

short run.

Thank you, Mr. Chairman, and I would be happy to answer any

questions.

[The prepared statement of Mr. Scheppach follows:]

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The CHAIRMAN. Mr. Scheppach, thank you.

Mr. Browdie.

STATEMENT OF RICHARD BROWDIE, SECRETARY, PENNSYLVANIA DEPARTMENT OF AGING, ON BEHALF OF THE NATIONAL ASSOCIATION OF STATE UNITS OF AGING

Mr. BROWDIE. Good morning. I am Richard Browdie, the Secretary of the Pennsylvania Department of Aging and a member of

the Board of Directors of the National Association of State Units

on Aging. The association applauds the committee for focusing congressional attention on the issue of long-term care in America.

The development of comprehensive home and community-based

service systems for older persons and adults with disabilities has

long been a policy and program objective of the association. We are

hopeful that this series of hearings that you have undertaken will

help to move this critical issue in the lives of millions of older persons to the center of the national policy agenda.

As the public agencies charged by the Older Americans Act with

determining the needs and preferences of the Nation’s older citizens, State units on aging are acutely aware of the overriding fears

expressed by older persons and their families regarding the risks

associated with a need for long-term care in this country. Once expressed somewhat vaguely as a fear of losing independence, the

concerns of increasingly knowledgeable older consumers have become focused on the realities of long-term care in America: likely

separation from home and familiar persons, the inevitability of poverty, and the possibility of inadequate services or poor quality of

care.

The inadequacies of the long-term care system in America are

built into the structure of the long-term care system, whose foundation was laid in 1965 when Medicare and Medicaid were created

as social insurance for the elderly and poor people. Though obviously critically important to the lives of millions of older persons,

these programs were drafted without extensive knowledge or experience with long-term care needs of long-lived Americans. At that

time, long-term care services were viewed as a simple extension of

medical care. We now know that medical services and long-term

care services are interrelated, but neither is simply an extension of

the other. Each is associated with a distinct body of knowledge.

Long-term disability is a social problem, a functional problem,

and a family problem. Medical and institutional care ought to be

a support to the long-term care system, not be the driving force.

Regrettably, the Medicare system has not addressed this issue but

has instituted procedures which shift the problems and the costs

from the federally financed health care system into the State and

privately financed long-term support system.

State systems of long-term care were necessarily built on Medicaid in order to capture Federal financial participation. Medicaid

has become the Nation’s long-term care insurance program. But the

Medicaid long-term care system exacts a high price for its benefits:

it requires people to be or become poor to gain access; it requires

individuals to separate from family members and relocate to institutions; it is organized through the medical care provider systems;

and it is not uniform in its benefits. While States have made sigVerDate 11-MAY-2000 14:04 Oct 05, 2001 Jkt 000000 PO 00000 Frm 00061 Fmt 6633 Sfmt 6633 75038.TXT saging1 PsN: saging1
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nificant progress in recent years in overcoming these obstacles

through the use of the Medicaid home and community-based waiver authority, the predominant bias in Medicaid remains institutional not home or community, medical not social. And as the costs

of institutional long-term care continue to grow, States have been

inhibited in their ability to move quickly because of the rising

costs.

The Older Americans Act is the only piece of Federal legislation

that promotes comprehensive, coordinated community-based systems of care, but it falls woefully short in terms of financing and

cannot meet all the needs of older people and their caregivers.

Despite these handicaps, States have moved aggressively in the

last two decades to organize and rationalize long-term care systems, by coordinating, financing, and designing systems which

more closely meet the needs and preferences of their older citizens.

States have taken deliberate and aggressive action to constrain

the growth in nursing home utilization and divert savings to community services, as you have heard; provide substantial State and

local funds to develop more comprehensive and systematic approaches to serve persons who do not meet the financial eligibility

of Medicaid and are unable to pay privately for needed services—

and if I might divert, Pennsylvania is a strong example of that

kind of initiative—develop a variety of services in in-home, adult

day care, assisted living, and other services designed to meet the

needs of diverse populations of older people; reorganize local services systems to provide standardized assessments of needs for both

institutional and community-based long-term care services, and in

some States single points of entry systems; provide consumers with

choice of services and providers suited to their individual needs

and preferences; develop equitable cost-sharing policies to extend

services to an even broader population; and pursue standards of

quality which monitor the achievement of outcomes sought by the

consumer: comfort, security, and dignity.

These efforts have resulted in a vastly improved array of service

options, increased involvement of family and community in-service

systems, and permitted a more judicious management of resources—but only for a small segment of population requiring care.

Current structuring and financing of long-term care is not adequate to meet the current need, much less the future growth in the

long-term care population.

The solution is a national long-term care policy which provides

a predictable, uniform long-term care benefit which older people,

their families, State and local governments, private insurers, and

providers can plan on. Knowing what Federal policy is committed

to provide will enable these other actors in the system to anticipate

and plan for the additional resources and services which will be required.

NASUA believes that the system older persons deserve will be

most equitable and responsive to their individual needs if it is federally financed, State administered, locally managed, and consumer

directed.

We are very encouraged by a number of recent Federal policy

and program initiatives which are providing States with new resources and flexibility to reform the current long-term care system.

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First, the field of aging worked with Congress and the administration to authorize and fund the National Family Caregiver Support

Program. As you know, the majority of people with chronic disabling conditions rely on friends or family members for their primary source of assistance. This new program supports caregivers

in their stressful roles with an array of services and supports that

may delay or prevent the need for institutionalization. We look forward to working with you and the Administration to expand the

reach of this new program.

Second, we applaud Congress and the Administration in providing States with new opportunities, flexibility, and resources to respond to the Olmstead decision. We are hopeful that Congress will

continue to support these new Federal initiatives which provide

States with resources to build on the work of the past two decades.

Third, NASUA also applauds and supports the efforts of Secretary Tommy Thompson in streamlining and expediting the Medicaid waiver process for States and providing leadership on the new

Family Caregiver Support Program and the Systems Change

Grants. We were greatly encouraged by his testimony before this

committee last month that underscored the administration’s support for State innovations in long-term care.

Having said this, we do continue to believe that a more fundamental restructuring of the long-term policy is needed and warranted. NASUA looks forward to working with this committee to

clarify existing Federal policies and support additional legislation,

including Medicaid reform, to enable States to expand home and

community-based services and long-term care programs for persons

with disabilities, regardless of age, and to promote Federal policies

that foster consumer dignity and respect through consumer choice

and control.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Browdie follows:]

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The CHAIRMAN. Thank you very much, gentlemen, for your testimony and for being with us and sharing your thoughts.

Secretary Hood, in our State of Louisiana, looking at the waivers

we have for non-institutionalized care for seniors, it seems we have

only one which has 500 slots. So everything else that we have for

seniors is really institutional-based nursing homes. The rest of

them that you have, four waivers that you receive, but they are not

targeted to seniors. One is for a group of 18 to 55; another one is

for people with disabilities from 0 to 65 years of age; and another

one is for adults over the age of 21; and I guess for elderly and disabled. I guess that would include potentially some seniors, but it

is also for young adults as well. There is one then that is targeted

just for seniors.

I guess the question is why. You make the point in your statement—and I understand it and I agree with it—that we have a

lack of resources. But it would seem to me that if a State has a

lack of resources and is a relatively poor State, this would mean

that they would aggressively try to move into a different way of delivering services for seniors other than using institutionalized care. For example, you point out that we spend $109 per person in Louisiana for nursing home services and only $1.33 for home and

community-based services. And Governor Dean pointed out that it

was spending $48,000 a year for a person to be in a nursing home

and less than $20,000 a year to serve a person who is elderly in

a home and community-based setting.

So it would seem to me that the argument that we have lack of

resources is an argument in support of moving to something other

than nursing homes, institutionalized care, not a reason not to do

it.

Can you comment on that?

Mr. HOOD. Yes, sir, and, Senator, just one minor correction. Most

of the elderly waiver slots are for the elderly. There are a few disabled adults who are not elderly.

The CHAIRMAN. I want you to get to the main question. But I understand we have four—one, two, three, four waivers that have

been approved for Louisiana. One is the personal care attendant

waiver, which offers services to individuals between 18 and 25—excuse me, 18 and 55 who have lost sensory or motor functions. We

have one for mental retardation and developmental disability waivers for people with disabilities between the ages of birth and 65.

And we have an elderly and disabled waiver for adults over the age

of 21. And there is only one that is granted specifically for elderly.

Is that not correct?

Mr. HOOD. That is correct, and as I said, the elderly waiver is

predominantly people over the age of 65, with very few adults who

are under 65.

The CHAIRMAN. So getting back to my main point, if we are a

State that is relatively poor, why are we not moving to something

that is less expensive in treating elderly?

Mr. HOOD. Right, and, you know, I wish I could say that it was

strictly a financing problem. It is not. There is also what I would

say is a lack of resolve that we have had in the past. This is only

now beginning to change. Now we have, as I said, an elderly trust

fund that we can use to finance some additional services. We have

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an Olmstead Planning Group and a process that we will use to try

to plan for those services.

The CHAIRMAN. What is the elderly trust fund, and how much

money do we have in it?

Mr. HOOD. Well, there is a significant amount of money in that

particular fund, and one-third of the interest earnings from that

money will be used for community-based services for the elderly.

The other two-thirds will go to nursing home care and will be used

to increase or enhance the quality of care in our nursing homes.

So that is a significant step in the right direction. I think we

are——

The CHAIRMAN. It would seem like if two-thirds is going to institutionalized care and one-third is going to new and less expensive

services, that is a step in the wrong direction.

Mr. HOOD. Well, many people would say that. I would only point

out that our nursing homes are not particularly well reimbursed in

terms of rates compared to other States.

The CHAIRMAN. The statistics show me that we are the 7th most

profitable nursing homes in the country in Louisiana. Is that not

correct?

Mr. HOOD. Those statistics have been published, and the publisher of those statistics has informed me now that they were in

error, that they were not 7th in the Nation. I frankly don’t know

exactly what they are.

The CHAIRMAN. If we are not 7th, we must be something else. He

didn’t tell you what the other number was?

Mr. HOOD. No. They are no longer citing that particular statistic

in their most recent report.

The CHAIRMAN. Well, if the report said that we were the 7th

most profitable nursing home system in the Nation and now they

are saying we are not, they must be saying that we are something

else. They don’t say what else we are?

Mr. HOOD. My guess is that we are probably in the top 25 for

sure, and the reason is that not only do we have low rates, but we

also have low cost.

The CHAIRMAN. What has been the position of the nursing homes

in Louisiana with regard to these waivers?

Mr. HOOD. I think they are in a mode of basically maintaining

of the status quo, tolerating the movement toward waivers and

community-based services.

The CHAIRMAN. They support the waiver?

Mr. HOOD. As I said, they are reluctantly accepting the existence

of these types of services. I would not say that they have embraced

them at all.

The CHAIRMAN. What is the biggest problem as to why we are

49th or dead last in the number of home-based community services

for elderly?

Mr. HOOD. Because, as I said earlier, I don’t think there has

been the resolve. It is not just a funding issue, and it is not just

a flexibility issue. It is also——

The CHAIRMAN. How do we solve the resolve issue?

Mr. HOOD. I think through the activities of this committee, for

example. Certainly you yourself have brought many of these issues

to light, and I think that that will have a demonstrable effect in

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Louisiana. And there is certainly a sign that our legislature is

showing some indication that we need to change as well.

I think we are taking the long view now instead of looking just

one year down the road at a 1-year budget horizon. So through programs such as LaCHIP, for example, which obviously is for children, but it will have some long-term effect. Primary care initiatives have been discussed in Louisiana, and, you know, we have a

plan to do something about the lack of access to primary care.

I think the elderly problem is also on the radar screen, and I believe that we will make significant progress in the near future.

The CHAIRMAN. Well, you and I have worked together very well,

and I commend you for it. I think that your heart is in the right

place on these issues, and I know it has not been easy, and part

of the problem, I think, is political and getting some of these things

accomplished, because people have interests and they don’t want

them shaken up.

I don’t, for the life of me, understand why people who are in the

nursing business can’t wake up and move into the 21st century and

recognize that the baby-boom generation is not going to want to go

to their facilities. I am going to Baton Rouge this weekend to participate in the Senior Olympic Games, and there are going to be

9,000 seniors there. And I bet you if I took a poll as to whether

any of them would prefer being in a nursing home institutionalized

when they need health care or whether they would rather be in a

home or a community-based setting receiving adequate care if they,

in fact, are not seriously ill, I bet I don’t find one person that would

have difficulty in saying they prefer home and community-based

services.

This industry is going to have to wake up and realize that the

21st century is not going to be like the 19th century and the 20th

century. They have to adjust their delivery of services and health

care for elderly to something that fits the needs and the requirements of the upcoming baby-boom generation. And what they have

now is simply not going to be where it is going to be in the next

50 years.

I would argue to them, look, you can make money doing other

services, too. I mean, you are going to have to pay for these services, but they are different services. And people are going to have

to recognize that change is coming, and, in fact, in Vermont, we

have heard that it is here. And you heard Governor Dean say, look,

we have got happier people, happier seniors, happier family members, and we are doing all of it for less cost, which is—you know,

how can you beat that deal? I mean, particularly for a poor State

that doesn’t have a lot of resources, if we can take care of people

for substantially less in a better setting and bring about happier

results for people, this is what it is all about.

Mr. HOOD. And, Senator we are encouraging the nursing home

industry to think in those terms, that this is not necessarily a loselose situation to them.

The CHAIRMAN. It is not.

Mr. HOOD. Some of them have diversified. Some of them provide,

for example, adult day health care. Some also provide assisted living services. I think we need to move more rapidly in that direcVerDate 11-MAY-2000 14:04 Oct 05, 2001 Jkt 000000 PO 00000 Frm 00075 Fmt 6633 Sfmt 6633 75038.TXT saging1 PsN: saging1
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tion. Diversification I think is the future for the nursing home industry.

The CHAIRMAN. You know, we have got to get away from the

thought—I mean, it is all of us in society, out of sight, out of mind.

I think that unfortunately some people feel if they have a grandparent or a parent in a nursing home they don’t have to be as involved. And that is a tragic statement, because it is probably easier

for them, but it is really not the best for everybody involved. And

that is a cultural thing, and we have to recognize that.

Well, let me talk to the other gentlemen about what we need to

do as a committee, because we heard Governor Dean talk about,

you know, why do I have to do all these waivers? If this is the right

thing to do, why do I have to go plead with the Federal Government to please let me do it? Why don’t we just—I mean, would you

recommend that we have an act of Congress that says that States

can provide care for elderly citizens in the best setting that they

determine to be best for the people in their State? They would

probably have to submit a plan to us to make sure that the money

is being spent appropriately. We are not going to just toss the

money out and say go use it somewhere, but give them almost total

flexibility. Design a day-care center, design a home health care delivery system, and show us what it looks like and how it is going

to be run, and then you can go do it. Is that something we should

do, Ray?

Mr. SCHEPPACH. Well, it would be nice. I don’t know whether

Congress, in all honesty, both sides, would be willing to do that.

We do believe that Medicaid needs to be reformed. As I said, there

is so much money in optional services and optional benefits when

States have no flexibility. And all you have to do is look back at

welfare reform when States had a fair amount of flexibility. You

know, they moved 50 percent of the caseload into self-sufficiency.

So I think they now have a track record where they have done a

lot in a program that they had flexibility.

If you can’t get something like that one, what I do think would

be important would be expanded waiver authority so that you could

get a broader definition of what would be allowed——

The CHAIRMAN. All right. I am going to ask you all to do something for us. Submit to this committee, if you can, a proposal for

the committee from a legislative standpoint. You don’t have to

worry about doing it in legislative form. Just give me the Governors’ ideas about how they would like to see this part of the Medicaid program written in order to give them the flexibility that they

need. And I think that would be very helpful to us.

Let’s see. I have some other questions I know might be of interest.

Ray, again, the NGA, National Governors Association, in February—you referred to H.R. 32, a health care reform proposal that

the Governors adopted. Can you tell me a little bit more about

that? What was the most important element of that proposal, do

you know?

Mr. SCHEPPACH. Well, what we did is we basically protected the

entitlement nature of it. So anybody under the current legislation

that was entitled to get certain benefits, that was continued. But

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then there was a second component of it that allowed States to designate other vulnerable populations that the States would entitle.

We did ask for an enhanced match on that particular component,

but then the rest of the money, which is really basically in optional

benefits and optional services, States would have a lot more flexibility to utilize that funding.

So, for example, States would get flexibility to increase the copays. They would be able to work with the private sector to perhaps pay for coverage of children through parents’ programs. So it

is really focusing on that 50 to 60 percent of the money that is optional, but the problem is you can’t—you have no ability to mix and

match that money. That is the policy and we would like to work

with Congress on it.

The CHAIRMAN. I thank all of you. The goal of this committee is

to try and help establish a system that provides better long-term

care in this country for seniors that is not only better but is more

efficient economically. We spend about $50 billion a year under the

Medicaid program as a Federal share that goes to nursing homes.

All of those people do not need to be there. Some do and they get

great service, and I think that there is a percentage—and it is a

large percentage—who do not need to be in that type of an institutional setting in order to be taken care of because of their conditions. And I think that if we can provide better services to allow

people to be happier and more content and families to be happier

and more content and do it all at a less cost than we currently do

it, that is a win-win situation.

I know the problems and the pitfalls and the politics of it, but

that is not a reason for us not to do what I think is right. And,

David, I think that you understand that, and I think you are giving

it your best, and I think people are starting to recognize what we

have been preaching and what you have been preaching. And I

want to work with you to help our people understand that.

This can be a win for everybody, including the nursing homes,

if they wake up and recognize that the care they give today is not

going to be the care that they are going to be called upon to give

tomorrow. It is a changing world. I thank you, all three of you, for

your contribution and for being with us.

That will recess the hearing for the moment.

[Whereupon, at 11:27 a.m., the committee was adjourned.]

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