Is long-term care a "ticking time bomb" for Medicaid programs?
Is long-term care a "ticking time bomb" for Medicaid programs?
The growing cost of long-term care services in Medicaid, which currently accounts for 32% of total Medicaid spending, could double or even triple by 2030, according to a June 2010 report from the Washington, DC-based Deloitte Center for Health Solutions, Medicaid Long-term Care: The Ticking Time Bomb.
If current trends in long-term care spending continue, Medicaid could reach levels close to 40% as a percentage of state operating budgets in some states. The researchers say that the expansion of Medicaid in 2014 will exacerbate this spending trend.
"While the findings in the report were generally not unexpected, certainly the magnitude of the financial impact on state Medicaid and overall state budgets was surprising," says Bob Campbell, vice chairman of Deloitte and head of the firm's state government practice. Mr. Campbell helped lead the study on Medicaid long-term care.
The Deloitte team knew these costs were a major issue for states, but had not developed a forecast with this level of detail until now. "In addition, the wide variability among states in medical management approaches is very interesting," says Mr. Campbell.
He says that Medicaid cost management will continue to be a major focus for states, given that Medicaid comprises such a large percentage of state budgets, of which long-term care is the fastest-growing portion.
Many changes coming
The downstream impact of the Patient Protection and Affordable Care Act on long-term care in Medicaid "is huge," according to Leslie Hendrickson, PhD, principal of Hendrickson Development, an East Windsor, NJ-based consulting group that helps to develop and strengthen long-term care programs. Dr. Hendrickson has administered Medicaid long-term care programs and has conducted research and fiscal analyses on the cost of Medicaid, Medicare, and other government health programs.
"The best way to see what's going to happen in the next few years is to take a look at the provisions in the act," Dr. Hendrickson says.
"On the one hand, we have a huge expansion of Medicaid eligibility to include some 15 to 16 million persons," says Dr. Hendrickson. "This is being paid for by a great federal bribe in the form of enhanced federal match for the rest of the decade."
On the other hand, the basic benefit package, as described in Section 1302, does not include long-term care or home and community-based benefits. This means that no enhanced federal rates are available for long-term care.
"We are already in a situation where demand for services is increasing, while states are cutting long-term care budgets and provider rates," says Dr. Hendrickson. "At the same time, the feds are continuing an incremental expansion of long-term care benefits."
In addition to extending the Money Follows the Person program through 2016, the 1915(i) Home and Community-Based Services (HCBS) state plan option was revised to broaden the scope of covered services. Also, the Community Living Assistance Services and Supports Act, a national voluntary insurance program for purchasing community living assistance, was established.
"The Secretary of [the Department of Health and Human Services] is charged with developing three 'actuarially sound' plans that folks can pay premiums to," adds Dr. Hendrickson. "That's a substantial help to folks with disabilities who want to be living in the community."
There is also the possibility of making HCBS a state amendment, which would further break down the distinction between waivers and state plan optional services.
"All of this gets started small at first, but could have a lot of use over the next four or five years," says Dr. Hendrickson. Here are other trends in Medicaid long-term care services:
Emphasis on an improved workforce.
The legislation established a National Health Care Workforce Commission to give grants to states that provide new training opportunities for direct care workers employed in long-term care settings. "They are trying to get some seed money out to encourage states to put on those programs," says Dr. Hendrickson.
More transparency.
In recent years, states had difficulty obtaining financial and quality information on nursing home chains. This is expected to change, due to new disclosure requirements on the financial structures of nursing homes.
A person who owns a nursing home may also have an imaging or physical therapy company. The ownerships of all of the subsidiary companies may be masked, or it may be unclear who owns what percentage.
"What you get into is a series of interlocking businesses," explains Dr. Hendrickson. "You don't really know if the home is operating in the most cost-efficient manner, because you are dealing with related third-party companies."
States will now be able to access this information without resorting to subpoenas or going to court. "In the past, that's what they had to do to break up the entanglement," says Dr. Hendrickson. "The feds are cracking down on this and are coming out with disclosure laws."
An increased emphasis on quality.
The federal government is setting up a new quality assurance and performance improvement program. States are directed to audit selected nursing homes every six months.
"The nursing homes may end up on a list they don't want to be on the homes that, in their opinion, need the most improvement," says Dr. Hendrickson. "We are seeing a continuing push on quality. That is a tide that has not abated yet."
A growing emphasis on the direct care work force.
"I think that the relationship between staffing and quality is now acknowledged. That is coming through with a vengeance," says Dr. Hendrickson. "For example, most of the pay-for-performance programs across the country have a staffing measure in them."
The federal government is now requiring facilities to post staffing characteristics on the Centers for Medicare & Medicaid Services (CMS)' Nursing Home Compare website. "You see a much more determined push at the federal level to emphasize the importance of staffing in nursing homes and to make that information available to the public," says Dr. Hendrickson.
The Government Accounting Office is currently studying the Five-Star Quality Rating System for nursing homes used by CMS. "It is an odd sort of rating system, as only 10% get in the top star, not 20% in each star. So, the other 90% are spread over the bottom four stars," says Dr. Hendrickson. "There have been a lot of comments on that, and Congress wants to get an independent view."
Dr. Hendrickson says that nationally, he sees "a merging between the quality-of-care folks and the workforce folks."
Coalitions that are set up to support direct health care workers, such as the Service Employees International Union, "are coming together with some of the culture change folks to make nursing homes more livable," says Dr. Hendrickson. "And the nexus of that, where those two circles overlap, is in staffing."
Contact Dr. Hendrickson at (609) 213-0685 or [email protected].
The growing cost of long-term care services in Medicaid, which currently accounts for 32% of total Medicaid spending, could double or even triple by 2030, according to a June 2010 report from the Washington, DC-based Deloitte Center for Health Solutions, Medicaid Long-term Care: The Ticking Time Bomb.Subscribe Now for Access
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