4.3 How is eldercare financed now?
In October 2014, the New York Times chronicled the story of a frail elderly man who wanted to go home to his apartment in his final months but the incentives and limitations of the delivery system ended up preventing anyone from fulfilling this fervent wish. However, the “system” spent more than $1 million for nursing home, hospital, and emergency services that he, mostly, did not want. Stories like this are commonplace; indeed, so common that people count themselves lucky if the last years of life go well for a family member. Serious illness and disability is now the most common cause of personal bankruptcy, and most long-stay residents in nursing homes have already or will soon “spend down” to the severe impoverishment that is required for Medicaid to pick up the costs of LTSS.,
Americans turning 65 today will incur an average of $138,000 in LTSS costs, about half of which will be paid out of pocket. Nearly half will not have any LTSS spending at all, while 15.2% will have at least $250,000 in total spending.
Those needing LTSS have about 10% of those costs borne by Medicare, 1/3 by Medicaid, and half by private resources, with smaller amounts from the Veterans Administration, Older Americans Act grants, local revenues, and philanthropy. Most people who are paying for LTSS privately do not have insurance covering these expenses and do not have substantial savings, so they will spend all of their assets on LTSS and health care if they live long enough, and thereby will become eligible for Medicaid.
Until recently, Medicare and Medicaid within any one state would have been nearly standardized programs, with few variations concerning eligibility, coverage, and payment. In contrast, LTSS services had had different and changing eligibility criteria, capacities, coverage, and control. Now, Medicare and Medicaid have also become quite challenging to understand, even within one state. The array of financial arrangements and choices in Medicare alone includes traditional Medicare fee-for-service, capitated managed care, special needs plans including PACE, managed Medicare fee-for-service, integrated Medicare-Medicaid managed care, bundled payments, Accountable Care Organizations, a selection of Medigap plans for co-pays and deductibles, and so on. What was frustration with rigid certainties in the past has turned into fear and chaos for many frail elders and their families.
Medicare mainly pays for rescue care—that is, treatment of new and acutely worsening illnesses, rehabilitation, emergency transportation, and hospitalization. In a major updating in 2003, Medicare started paying for prescription medications, an adaptation to the increasing cost of medications and their importance in managing chronic conditions. In 2011 in the Affordable Care Act, Medicare started encouraging proven preventive services by eliminating the co-payment on services like immunizations and cancer screening. More recently, Medicare leadership has announced that they intend to move most beneficiaries and services out of the fee-for-service arena and instead pay for services in a variety of ways that link payment to the value of the services. The last few years have seen remarkable disruptions to usual practices, with many demonstration initiatives and reorganizations of service delivery patterns to reduce hospital use and to try to coordinate care outside the hospital. Nevertheless, Medicare has been only a small contributor to paying for the services associated with frailty, such as supportive care for persons with dementia or movement disorders, institutional long-term care, caregiver support, or even the information infrastructure to provide continuity across settings and time. The $18 billion dollar investment in information technology authorized by the Health Information Technology for Economic and Clinical Health (HITECH) Act, in 2009 supported hospitals and physicians but did not support information technology in, or interoperability with, home health, nursing homes, hospice, or community-based organizations.
About 60% of Medicaid LTSS funding supports elders and younger people with disabilities living in nursing homes, with about 40% supporting persons living in the community. Recent estimates do not separate LTSS spending for older adults and individuals under 65 with disabilities, and older data suggest that progress in shifting to support community living for older adults has been slower. However, the proportion of Medicaid LTSS paying for home and community-based services for the combined population has more than doubled since 1995. That increase will likely continue due to recent programs such as Money Follows the Person and the Balancing Incentive Program, which provide funds to states to assist in rebalancing their Medicaid LTSS spending towards community-based services and away from institutional settings. Most Medicaid reforms until recently focused upon the non-elderly, with Medicaid personnel feeling that their program was secondary to Medicare in most eldercare. However, with the advent of increasing numbers of frail elders unable to provide self-care with no family or families that are unable to fill in, Medicaid faces pressures that could lead states to raise eligibility requirements or otherwise restrict the possibility of providing for all beneficiaries. The integrated care demonstrations, for beneficiaries eligible for Medicaid and Medicare in a dozen states are beginning to address this population directly. In at least nine states (California, Illinois, Massachusetts, Michigan, New York, Ohio, Texas, Virginia, and Washington), the implementations have been on a regional or county basis, which could begin to build the data and practices that allow a geographic focus. These programs are also developing some novel metrics, such as “Percent of participants with care plans within 30 days of initial assessment” and “Number and percent of waiver individuals who have service plans that are adequate and appropriate to their needs and personal goals, as indicated in the assessment.” These efforts begin the process of developing metrics that matter in the care of the frail elderly population.
Frail elders and family members have some tough issues to deal with in accepting even obvious needs for personal supportive services, adapted housing, paratransit transportation, and family caregiving—and then in finding and funding the services. Some of the emotional challenges require resolving the natural resistance to accepting irreversibly declining capabilities in a frail older person. Also, however, programs come and go, waiting lists and delays are common, and support of family caregiving is often missing, so elders and families must scramble to patch together some workable arrangement. Scattered sources of assistance of varying utility have come into existence. By far the most common source of help is the inventorying of local supportive services and the associated counseling done by the Area Agencies on Aging (AAA), which serve every community throughout the U.S. The Eldercare Locator at 1-800-677-1116 or www.eldercare.gov provides a directory of AAAs for every part of the country. Nearly three quarters of AAAs also serve as Aging and Disability Resource Centers (ADRCs). ADRCs are a collaborative initiative by CMS and the Administration for Community Living (ACL) to establish highly accessible entry points into the LTSS system in communities across the country, and to provide reliable, unbiased information on public and private LTSS benefits to individuals and families at all income levels.
In addition, many managed care organizations, hospitals, ACOs, health plans, insurers, and Medicaid offices provide some sort of navigator service, variously called care managers, care coordinators and care navigators. Under current practice, a fragile elder with multiple chronic conditions may end up with multiple such navigators aiming to coordinate care and manage illnesses. The impact of these roles is unclear. Sometimes, the navigating person pulls together a real care plan, acts as helmsman for the care team, activates the elder and family to be more confident and assertive, and identifies and is able to initiate the appropriate services. But in other cases, navigators give conflicting commands, misunderstand the situation, focus only on pressing for the management of one part of the elder’s overall situation, or work mainly from a distance with no on-the-ground insight into the personal situation of an elder struggling to cope with a complicated situation and a lack of familiarity with local resources.
 (Bernstein 2014)
 (Himmelstein, et al. 2009)
 (Mehdizadeh, Nelson and Applebaum 2006)
 (Favreault and Dey 2015)
 (Favreault and Dey 2015)
 (Medicare Prescription Drug, Improvement, and Modernization Act, Public Law 108-173 2003)
 (Patient Protection and Affordable Care Act, Public Law 111-148 2010)
 (Burwell 2015)
 (HITECH Answers n.d.)
 (Eiken, et al. 2015)
 (Rowland 2013)
 (Centers for Medicare and Medicaid Services, Money Follows the Person n.d.)
 (Centers for Medicare and Medicaid Services, Balancing Incentives Program n.d.)
 (Eiken, et al. 2015)
 (Musumeci 2015)
 (Zainulbhai, et al. 2014)
 (National Association of Area Agencies on Aging and Scripps Gerontology Center 2014)