State Long-Term Care Partnership Programs

By Brian Seguin

Photo by Scott Meis Photography via Flickr

Long-term care refers to end of life care where a person can no longer take care of themselves. These people require either the assistance of a trained professional, such as a home health aide, to help them care for themselves in their home, or they need to be housed in a nursing home and cared for there. Since Medicare does not cover long-term care, people who require it need to either pay for it themselves, or if they have almost no savings and get a low enough monthly income that they qualify, they can apply for Medicaid which does cover it. If someone pays for it themselves and winds up spending all of their savings and still needs care, they can then apply for Medicaid to cover it if their monthly income is under the threshold set by their state in order to qualify for the program.

In the early 1980’s, states began to worry that as the baby boomer generation got closer to retirement age and might start requiring long-term care, it could cause increases in their Medicaid expenditures and thus budget deficits. One possible solution forwarded for this impending problem, and eventually implemented by four states in 1993, was the idea of state long-term care partnership programs. Under these programs states would incentivize their citizens to purchase private health insurance to cover at least part of the long-term care they may eventually require and thus spare Medicaid from covering some of the costs. Insurance companies who participated in the programs had to meet certain regulations of what type of care was provided and had to report certain data back to the states so they could effectively monitor the impact the programs were having.

Proponents hoped these plans would cause people to buy their own long-term care insurance coverage and hopefully never need to turn to Medicaid to pay for it. They also hoped this would stop the perceived threat of people transferring their assets (savings) to family members early in order to appear qualified for Medicaid. Of the four original states, California and Connecticut incentivized their citizens by allowing them to disregard assets they had above the threshold allowed to qualify for Medicaid in the amount that the partnership plan had paid towards their long-term care. In other words if a person purchased a partnership plan and it paid out $200,000 towards their long-term care, that person would still qualify for Medicaid even if they had up to $200,000 in assets over the amount usually allowed to qualify. This was called the “dollar for dollar approach.” New York required citizens to purchase more comprehensive plans that had higher lifetime benefits, and if they did they could disregard all of their assets in determining if they qualified for Medicaid, known as the “total assets approach.” Indiana allowed a “dollar for dollar” disregard if the person purchased a plan covering less than four years of care and a “total asset” disregard if they purchased a plan covering more than four years.

Opponents of this idea worried that these public partnerships would inappropriately promote private plans with limited values, and that they could lead to increases in Medicaid expenditures by allowing wealthier people who would purchase private long-term care plans anyway keep their assets and now have access to Medicaid that they wouldn’t have otherwise had. As a result of these fears part of the Omnibus Budget Reconciliation Act of 1993 (OBRA) required any state that started a partnership program after 1993 to recover any disregarded assets of a deceased Medicaid recipient from their estate. Although this Federal law did not apply to the four states already operating partnership programs and did not ban other states from starting their own programs, it effectively eliminated any other states from trying to start their own programs by removing the incentives for citizens to join. This is because although a person could keep some of their assets while still alive, and still qualify for Medicaid, the state would now have to take those assets from their estate. So there was no longer any incentive for a person to purchase a partnership plan which they may never need, and thus shift some of the potential costs of long-term care on private insurers rather than Medicaid.

The Federal government finally decided to give long-term care partnership programs another chance in 2005 with the passage of the Deficit Reduction Act (DRA). Parts of that bill removed the estate recovery requirement of OBRA and allowed states (other than the original four who have continued their programs and are again not subject to this bill) to start their own partnership programs provided they use the “dollar for dollar” approach. Insurance companies participating in these new programs will have to be certified by the state, using new federal guidelines, and will have specific data reporting requirements. The “dollar for dollar” approach is mandated to avoid the grant of Medicaid benefits to those who do not need or deserve them. This approach only allows beneficiaries to keep the amount of assets they would have presumably spent for long-term care themselves and then qualified for Medicaid anyway, had their partnership plans not paid that amount. The federal government has finalized its rule of what data needs to be submitted by partnership insurers after consulting with the National Association of Insurance Companies, insurance companies who issue long-term care plans, the four original states with programs, and consumers who purchase long-term care plans. The data collected is meant to cost insurers as little as possible while still allowing the federal government to accurately track the effectiveness of these programs. While no states or private insurers are required to participate in these partnership programs, as of August 2008, 13 states (in addition to the original four) are now offering partnership plans and 12 more are in the process of implementing them.

A New Option For States: Medicaid Self-Directed Plans

By: Nicole Hamberger
Seton Hall University School of Law
Class of 2011

Photo by Joe Mud via Flickr

Medicaid beneficiaries often need assistance in personal daily activities such as dressing, grooming, bathing, and meal preparation.ⁱ For some of these consumers, home-care agencies can manage the care.ⁱⁱ But for others, the use of such agencies poses significant challenges and even perils.

When there are worker shortages at home-care agencies, when physical distance impedes access to rural consumers, and when workers are unwilling to enter high-crime urban areas where the beneficiary resides, many Medicaid beneficiaries lose access to care.ⁱⁱⁱ Further, many agency workers refuse to work weekend or evening hours, making the provision of care at such times difficult if not impossible to secure.^iv The inability to get needed services due to lack of access is only one potential problem arising from traditional home-care agency use.

Other problems arising from the use of home-care agencies relate to worker limitations. Restrictions on the kinds of care provided may stem from liability concerns, such as the inability for home-care agency workers to administer medications or supply transportation.^v Agency workers do not provide assistance in securing or installing home modifications or assistive devices, such as wheelchair ramps or microwaves, which would allow Medicaid beneficiaries to be more independent at their homes.^vi Other limitations exist when language barriers or cultural misunderstandings prevent proper and effective communication.^vii Such limitations can seriously blight the efforts of even the most well-meaning providers of care.

By the 1990s, many states became aware of these and other problems that certain Medicaid beneficiaries face using home-care agencies.^viii Self-directed care was proposed as an alternative method of care to Medicaid beneficiaries.^ix Self-directed care is defined as “a service delivery mechanism that empowers individuals with the opportunity to select, direct, and manage their needed services and support identified in an individualized service plan and budget plan.”^x The Robert Wood Johnson Foundation awarded 19 states grants to create self-determination care methods in the mid 1990s, including New Jersey, Pennsylvania, and Florida, pursuant to section 1905(a)(4) of the Social Security Act.^xi Those states’ projects eventually became Medicaid-funded programs under section 1915(c) of the Social Security Act, known as the “home and community-based services waiver program.”^xii Then, in the late 1990s, Robert Wood Johnson decided to offer these grants again in hopes of developing “Cash and Counseling” (C&C), a “national demonstration and evaluation project in three states” which was a form of self-directed care.^xiii C&C projects became demonstration programs under Section 1115 of the Social Security Act, permitting the self-direction option.xiv Then, when the Deficit Reduction Act (DRA) of 2005 took effect, States could offer the self-directed option through section 1915(i) as well as section 1916(j) of the Act.^xv Given this plethora of authority, the Centers for Medicare and Medicaid (CMS) submitted a Final Rule on October 3, 2008 to “provide[ ] guidance to States that want to administer self-directed services through their State Plans as authorized by the Deficit Reduction Act of 2005.”^xvi

The Rule first explains that the Act extends to those states that wish to create a state self-directed service plan; it is purely optional.^xvii If a state so chooses to create such a plan, then that state’s plan will apply only to those individuals who would otherwise receive traditional state-based care.^xviii Then, “within an approved self-directed services plan and budget, individuals can purchase personal assistance and related services and hire, fire, supervise, and manage the individuals providing such services.”^xix Individuals are also permitted by the Act to “hire any individual capable of providing the assigned tasks, including legally liable relatives, as paid providers of the services” and may “purchase items that increase independence or substitute for human assistance to the extent that expenditures would otherwise be made for the human assistance.”^xx The regulations do not explicitly address illegal immigrants; however, one provision of the act may implicitly allow such individuals to qualify for self-directed workers; that which allows for any “legally liable relative” to qualify as caregiver. A “legally liable relative” is described below:^xxi

“legally liable relatives means persons who have a duty under the
provisions of State law to care for another person. Legally liable
relatives may include any of the following:

(1) The parent (biological or adoptive) of a minor child or the guardian of a minor child who must provide care to the child.
(2) Legally-assigned caretaker relatives.
(3) A spouse.” ^xxii

Therefore, an illegal immigrant could potentially qualify as a caregiver by virtue of his or her relationship to a legal citizen who qualifies for Medicaid.

The Act states that a state’s “self-directed PAS ‘budget’ is not to exceed the amount that the State would pay for the services and supports if those services and supports were provided under the traditional service delivery model.”^xxiii Yet while the individual state sets the budget (and informs the individual of his or her budget’s limit), it is the individual covered by the plan or his or her defined representative who may “exercise choice and control over the budget, planning, and purchase of self-directed PAS, including the amount, duration, scope, provider, and location of service provision.”^xxiv Room and board is not covered by the Act, nor is the option to live in a traditional live-in care environment, unless the owner of such an entity is a spouse or blood relative.^xxv In dealing with monetary allocation, the Act “indicates that states may employ a financial management entity to make payments to providers, track costs, and make reports.”^xxvi. Such entities are to be compensated not on a commission basis, but “in accordance with section 1903(a) of the [Social Security] Act.”^xxvii. Section 1903 of such act provides that entities are to be compensated on a percentage basis of the sums spent in accordance with the lengthy provisions of section 1903(a). ^xxvii.

The individualization and flexibility permissible by the Act are among its greatest potential benefits. The Act delegates to the individual the opportunity to control every aspect of his or her care, including the allocation and management of care resources. According to the studies conducted in the aforementioned Robert Wood Johnson grant programs, self-directed plans result in “fewer unnecessary institutional placements . . . higher levels of satisfaction . . . fewer unmet needs . . . higher continuity of care because of less worker turnover . . . and efficient use of community services and supports.”^xxviii Further, highly personal activities such as toileting and bathing should rightly be conducted by an individual whom the beneficiary trusts and feels comfortable around. Two authors have suggested that minority patients will particularly benefit from such services, as they are able to hire and train culturally similar or understanding individuals, since “[w]ithout sensitivity to the cultural norms of the beneficiary, valuable information about the true level of need can easily be overlooked or lost.”^xxvix There is also evidence that enrollees may receive more of the care that they are authorized to receive when using a self-directed plan.^xxx

However, there are many concerns that arise under the Act as well. First, the ability of individuals to know what kind of care is truly best for them is questionable. “Part D” of Medicare, gives all senior citizens federal funds to buy the prescription drug plan of their choice, regardless of their sophistication or knowledge on the matter. Similarly with state-directed plans, there is concern that the caregivers chosen by Medicaid beneficiaries will be “inadequately trained” since no qualifications are necessary to be considered a caregiver, unlike traditional plans.^xxxi There is also concern that “that there [will be] insufficient oversight of the care being provided beneficiaries, and that the potential for fraud, abuse, neglect, and exploitation” may increase as there is no longer direct state control over the care provided.^xxii Further, there are concerns that state-directed service plans cost more than traditional agency-delivered services; something that CMS concedes may be true.”^xxxiii Since the Act does not require states to limit the number of Medicaid beneficiaries who choose a state-directed plan, there could be enormous costs for taxpayers.^xxxiv Further, the items participants may buy under the act which “increase independence or substitute for human assistance” and include “additional goods, supports, or services” are not further defined, allowing for potentially questionable purchases under state funds; purchases not permissible if they were using the money in the traditional home-care system.^xxxv

While the Act is commendable for providing an alternative to the traditional home-care model, perhaps the flexibility in care options should be balanced by a more comprehensive set of regulations and requirements; only then will worthy individuals receive the most individualized, albeit cost-effective, care possible.
________________________________________________________________________________________________________________________
i Robert Wood Johnson Foundation, Developing and Implementing Self-Direction Programs and Policies: A Handbook (2009), www.cashandcousneling.org/resources/pdf/cc-full.pdf

Read more

Rebalancing Long-Term Care

Will efforts to modernize home health programs survive insurance reform’s end game?  Providing insurance coverage to as many low-income uninsureds as possible has been an organizing principle in 2009’s health reform discussions, and reconciliation of the House and Senate versions will require satisfying some members that sufficient subsidies will be available to permit the promise of extended coverage to reach the neediest.  The ripple effects of those discussions may reach other reform issues, as leadership attempts to meet budgetary targets.  It would be a shame if this process led to a retreat from the current bills’ innovative long-term care provisions.

As I’ve described previously, the reform effort has contemplated an interesting mix of Medicare and Medicaid improvements to expand access to community based care for people with disabilities and chronic illness.  And the CLASS Act’s inclusion in the mix gives some hope  to those with needs for assistance with Activities of Daily Living (ADLs), as well as their family caregivers.  Those involved in caregiving for a chronically ill family member can testify that they’re not looking to dodge responsibility; to the contrary, they’re hoping to gain assistance to continue providing assistance in the community, to avoid the need for isolating and expensive institutional care for their loved ones.

Health Affairs’ January 2010, Volume 29, Number 1 — “Advancing Long-Term Services & Supports” - (subscription required for some content) is a welcome source of information and analysis in this area.   H. Stephen Kaye and coauthors provide timely data filling out our understanding of who is served, and where.  It is clear that people in need of nursing and personal care assistance prefer to live at home rather than in a nursing home.  About 8.4 million people of all ages with ADL difficulties receive services in their communities, while about 1.6 million receive services in nursing homes.  The median monthly cost in the home care setting, in 2009 dollars, is $928, compared to $5,243 in nursing homes.  About 75% of those in the community live with relatives.  90% have mobility impairments, 55% have cognitive impairments, and 31% have sensory impairments.  Other articles shed some light on programmatic and financial barriers to improving access to home services.

• Terrence Ng and coauthors describe the gaps, overlaps, and regional variation in long term care coverage provided by Medicaid and Medicare. In particular, they report wide variation in states’ adoption of Medicaid waivers and other mechanisms for extending community-based home care. For example, Iowa’s participation rate in Medicaid home and community-based care is 16.8 per 1,000, while Virginia’s rate is only 3.21 per 1,000. The authors also highlight the effects of the failure to coordinate Medicare and Medicaid for long-term care, and the cost-increasing effect of hospital readmissions, traceable in part to Medicare’s poor coverage of long-term care. The current Senate bill, at Sections 2401- 2406, would encourage expansion of Medicaid rebalancing efforts.
• The Public Policy Institute’s Susan Reinhardt discusses programs supporting the community preference of people with nursing and home care needs. She describes diversion and transition programs. Transition (”downstream”) programs are dedicated to moving to appropriate community settings those who would like to leave nursing homes. Diversion (”downstream”) programs fund home and community based services, to forestall or prevent institutionalization in the first place. She points to the reform bills’ support for the Community Living and Money Follows the Person Demonstrations.
• Two pieces do an excellent job of introducing us to those who provide home care. Carol Levine and others describe the plight of family caregivers, traditionally thought of as “informal” caregivers, but clearly the foundation of home health care.  Howard Gleckman provides case studies of non-family member home care workers, highlighting the physical and financial difficulties under which they labor. As needs for chronic care in general and home care in particular increase in coming years, the long-neglected needs of these family and non-family caregivers will have to be addressed. Congress is famously solicitous of the financial concerns of physicians, our most highly compensated caregivers. It is time to focus on the needs of those millions of direct caregivers who every day provide compassionate personal services to our most vulnerable friends and family members.

The January issue of Health Affairs helps to highlight the growing importance of the financing of long-term care.  As we age, and as our needs shift from acute to chronic care, we must wean ourselves from a financing perspective that emphasizes dazzling high-tech interventions and instead embrace the human-scale care offered by home health aides, visiting nurses, and physical therapists.  The pending bills don’t make this shift, but they nudge the battleship a bit.  They leave long-term care financing fragmented among various public and private programs, but they do support some promising programs.

The CLASS Act (Senate bill Section 8002) is a voluntary, opt out social insurance program that would provide some support for home care services.  For the reasons described last year by Howard Gleckman, the CLASS Act is incomplete; among other things, its voluntary nature could create selection problems.  It is a start, however, and would put a useful if imperfect patch on a torn system.  I’ll cite to one final article from the Health Affairs issue to point to a better way.  John Creighton Campbell and coauthors‘ discussion of public long-term care insurance in Germany and Japan contains the germ of a solution to the woes our system suffers.  Both the German and Japanese systems have universal coverage, support family caregivers, and accord beneficiaries a large degree of control over services received.  And they do so at a cost roughly comparable to that experienced by American public payers (Germany a bit less, Japan a bit more).  Organizing long-term care financing through one social insurance program yields efficiency dividends, eliminates stigma concerns, and encourages care at the level and location preferred by recipients.  Maybe it’s too early to be pushing for the next step in long-term care reform, but why can’t we do what the Germans and Japanese have done?  At the very least, let’s not cut back on the progress made in the current bills as we strain for the finish line.

Home and Community Based Services in Health Reform

As we head to floor votes and reconciliation, it’s important to keep our eyes on some of the less visible programmatic issues in the reform proposals. Many of these issues are old friends, have been kicking around Congress for years, and have been hammered out by members, advocates, and staff over many months. It would be a shame for them to be left on the cutting room floor in the interest of a “cleaner” bill. Home and community based care is one of those issues.

The reform bills adopt two complementary strategies to improve access to long term care (LTC): correct Medicaid’s institutional bias, and shift some LTC financing away from Medicaid. There is some history on which to build for the first strategy. Home and community based service (HCBS) reforms have chipped away at Medicaid’s institutional bias over recent years. HCBS waivers have increasingly moved care to the community settings, and reforms derived from DRA ’05 allowed further state flexibility in this area. Governors are strongly in favor of moving LTC funding to the community –- usually the most appropriate and economical setting –- but are seeking financial protection from increased demand. A recent paper from Harriet Komisar and others for the Scan Foundation proposed a four-prong proposal for HCBS Medicaid reform:

• Require –- or provide strong financial incentives for –- states to expand home and community-based services.
• Provide federal financial assistance to states through an enhanced matching rate to help finance expansions.
• Make home and community-based services eligibility available on an equal footing with nursing home care.
• Invest in workforce development.

Read more