The Long and Winding Road to Reform of Long-Term Services and Supports

1. The Long and Winding Road toReform of Long-TermServices and Supports Joshua M. Wiener, Ph.D. RTI InternationalWashington, DC 701 13th Street, NW – Suite 750 · Washington, DC 2005Phone: 202-728-2094 · Fax: 202-728-2095 · jwiener@rti.org

2. Plan of Talk • How will acute care reform affect LTSS providers, workers and consumers? • What are the LTSS provisions in the health reform bills? • What are the main issues of comprehensive financing and delivery LTSS reform? • What are the likely political dynamics?

3. How Acute Care Provisions Affect Long-Term Services and Supports Providers and Consumers H.R. 3962 and Senate bills Providers are employers Direct care workers often uninsured 16% of CNAs in nursing homes 30% of home health aides People with disabilities have acute care needs as well as long-term care needs 12% are uninsured Medicare beneficiaries with 2+ ADL problems have 4.5 times the expenditures of beneficiaries without ADL problems

4. What’s in the Health Insurance Components of the Bills? • Pay or play for employers, with small business exemption • Individual mandate with exemptions and penalties • Low-income subsidies for insurance purchase • Expansion of Medicaid • Insurance exchanges • Insurance reforms • Reduction of the Medicare Part D donut hole

5. What About Long-Term Services and Supports? • Modest provisions • Grand policy • Community Living Assistance Services and Supports (CLASS) Act • Home and community-based services • Post-acute care • Nursing homes • Chronic conditions and dual eligibles

6. Grand Policy: Sense of Senate “It is the sense of the Senate that – during the 111th Session of Congress, Congress should address long-term services and supports in a comprehensive way that guarantees elderly and disabled individuals the care they need; and long-term services and supports should be made available in the community in addition to institutions.”

7. Community Living Assistance Services and Supports Act (CLASS Act) Voluntary social insurance program for LTSS care developed by Senator Ted Kennedy Limits of private long-term care insurance Voluntary public social insurance plan Cash rather than service benefit of average of $50 per day Self-financed by insured, estimated premium $122 per month Students and low-income pay $5 per month 10-year budget window “saves” $59 billion

8. CLASS Act (continued) Adverse selection Automatic enrollment unless opt out Must pay premiums for 5 years before use Initial enrollment limited to the working population Minimalist definition of “working” Excludes retired elderly who do not work Excludes current population with disabilities who do not work

9. Home and Community-Based Services Additional funds for Aging and Disability Resource Centers (ADRCs) Extend Money Follows the Person (MFP) demonstration and change criteria for eligibility to residing in an institution for 90 days rather than 6 months Community First Choice Option to provide broader range of HCBS without a waiver

10. HCBS (continued) Higher Medicaid match as incentive to states to offer HCBS Require States to provide spousal improvement protections under HCBS waivers Home health agencies required to submit quality data

11. Financing: Medicare Post-Acute Care Medicare payment cuts to skilled nursing facilities and home health agencies to help finance reform High profit margins on Medicare services 12.2% for home health in 2009 12.6% for skilled nursing facilities in 2009 Cross subsidy with Medicaid Medicare Payment Advisory Commission “on steroids”

12. Medicare Post-Acute Care (cont.) Post-acute care bundling demonstration Rehospitalizations Medicare currently pays widely variable amount to variety of providers for same population Single provider responsible for wide range of services, including post-acute care Seeks to create incentives for coordination across providers Hospital-dominated system? What happens to post-acute care?

13. Nursing homes Requires disclosure of ownership Additional staffing data Rules on facility closure Demonstration projects on culture change and information technology Training for certified nurse assistants required on dementia and abuse Requires background checks Standardized complaint form and funds for investigations

14. Chronic Disease/Dual Eligibles Establishes a federal Coordinated Health Care Office within CMS Medicaid state option to establish “health homes” for enrollees with chronic conditions with 90% Federal match for 2 years Medicare demonstration of Department of Veterans Affairs’ Home-Based Primary Care program Extend Special Needs Plans (SNPs), with new frailty adjustment payment methodology for some plans

15. Chronic Disease/Dual Eligibles (cont.) Hospice and end-of-life care Medicare hospice concurrent care demonstration Medicaid hospice concurrent care for children state option Prohibits use of funds for assisted suicide Mandates revision of payment methods for Medicare hospice

16. The Fire Next Time: Long-Term Supports and Services Large projected growth in the number of people with disabilities $231 billion spent on long-term services and supports in 2006 People with long-term care needs have high acute care costs 15

17. Projected Public Long-Term Care Expenditures (All Ages) in Selected Countries, as a Percentage of GDP, 2005 and 2050 16 Source: OECD, 2006.

18. Options for Reform: Financing Political divide over role of government programs vs. private sector initiatives Key issue is fiscal sustainability for the future Private insurance and reverse mortgages Social Insurance, Medicare and Medicaid expansion, and increases in Older Americans Act programs Major changes (including private insurance) require large increases in direct government spending or expensive tax incentives 17

19. Percentage of Medicaid LTSS for HCBS for Aged and Disabled, 1992–2005 18

20. Options for Reform: Service Delivery Consensus for more balanced long-term care system and more consumer control Participant-directed home care, money follows the person, and assisted living Existing legal authority vs. mandates More direct government service funds (e.g., Medicare, Medicaid, Older Americans Act) or infrastructure grants 19

21. Conclusions Long-term Services and Supports care not the centerpiece of health reform, but will play a role Health care for uninsured must be solved first Why is LTSS so hard to reform? Comprehensive LTSS reform will cost money, but low-cost options can make contribution 20

22. Joshua M. Wiener, Ph.D. Senior Fellow and Program Director for Aging, Disability and Long-Term Care RTI International 701 13th Street, NW Suite 750 Washington, DC 20005 202-728-2094 (voice) 202-728-2095 (fax) jwiener@rti.org