Private Equity & British Care Homes

In earlier posts I have discussed the “care/profit tradeoff in nursing homes,” focusing on the role of private equity firms in reducing costs by limiting the liability of their enterprises. Cutting nursing staff and increasing the risk of elder neglect isn’t so costly for private equity barons when “complex corporate structures . . . obscure who controls their nursing homes.” One firm constructed a particularly notable series of corporate moats between itself and the nursing home which it first controlled, and then rented land to.

Daniel JH Greenwood has called a good deal of private equity activity a form of looting, and I have explored its shortcomings in a review of a book on the topic. Sadly, it appears that the private equity influence in Britain is undermining a key part of its health care system. Having stacked various care homes with debt in order to buy them, many private equity firms have abandoned (or are about to abandon) the homes:

[A new] report, delving into the running and funding of the care industry, reveals that the collapse of Southern Cross may not be a one-off, as a number of other social care companies are also on the brink. Private equity takeovers of public services that use similar high risk business models, could leave taxpayers picking up the bill for more company failures. The in-depth study of privatisation shows that the second largest care provider, Four Season, is also in severe financial difficulties and others may follow. If both Southern Cross and Four Seasons were to collapse, around 1,150 nursing and residential care homes would be at risk of closure, affecting nearly 50,000 vulnerable people and their families and hitting over 60,000 staff.

Another of the top four largest residential care home operators is Barchester Healthcare — a sister company to Castlebeck, the operators of the Bristol care home exposed by a Panorama documentary . . . for patient abuse. The home owners have admitted that serious wrongdoing took place at Bristol. The report shows that Barchester and other operators of care homes, have repeatedly changed ownership, often through private equity firms buying, consolidating and selling companies. The UK’s largest union is warning that the Government must tackle the crisis in the care industry.

However disruptive the private equity takeovers have been, they have fulfilled their main purpose: huge gains for a few entities that bought and sold at the right time:

Southern Cross was floated on the stock market by Blackstone, which obtained a 400% return in two years on its acquisition. Southern Cross is now at risk of collapse. Allianz Capital Partners made a return of 100% by acquiring Four Seasons in 2004 for £775 million, selling it four years later for £1.4bn - the business then collapsed in value.

3i private equity fund brought a 38% stake in Care Principles for £1.5m in 1997, the remaining amount in 2005 and sold to to Three Delta in 2007 for £270m — a return of 390%. Tunstall was acquired by Bridgepoint Capital in 2005 for £225m, merged with Bridgepoint Investment and sold on after three years for £514m.

Here are more details on Southern Cross. This story and other critical commentary suggest that the goal for owners has been rapid profit rather long term investment in more efficient processes. When the “music stopped” in the acquisition game, it was left with mounting debts.

Chris Sagers’ article “The Myth of Privatization” (59 Admin. L. Rev. 37) suggests that there is very little difference between “public” and “private” operationally, except that “one of them lacks even a nominal obligation toward the public interest.” I have seen little evidence to contradict that idea in the eldercare industry. Further research may reveal more support for Daniel JH Greenwood’s diagnosis of the rise of private equity:

The success of private equity firms challenges mainstream corporate governance theory: according to standard agency cost analysis, this should not have happened. Agency problems—the shorthand term for the tendency of fiduciaries in a capitalist system to work for themselves as well as, or instead of, their clients—cannot be solved by adding an additional layer of extremely highly paid agents supported by an ideology that justifies the most extreme forms of self-interestedness. Therefore, private equity is unlikely to be an innovative solution to the age-old agency problem.

Instead, it is better understood as a clever bit of legal arbitrage: by reclassifying agents as principals, it allows former fiduciaries to instead view themselves, and be viewed by others, as entitled to look out only for themselves. And look out for themselves they have: the private equity managers have extracted hitherto unseen sums from our corporations, appropriating for the private benefit of a handful of individuals surplus that otherwise might have gone to other corporate participants, including consumers, ordinary employees, taxpayers and investors in the public securities markets, or might have been devoted to increasing productivity or innovation for the benefit of future generations.

The basic private equity technique, like the basic hedge fund technique, appears to be to borrow money in order to increase potential returns or losses. If the loans were correctly priced, this would not create new value under standard valuation theories, nor would it be a service that could possibly warrant the high fees typically charged in the hedge fund and private equity worlds. The simplest explanation is that either lenders or fund investors are mispricing risk and have done so for several years at a stretch, contrary to the claims of the efficient market theorists.

This explanation suggests, moreover, that private equity is simply the modern equivalent of the pyramid schemes, margin loans and highly leveraged utility holding companies of the 1920s. Like those earlier edifices built on borrowed money, the contemporary schemes are likely to be highly unstable: if the underlying assets decline in value or fail to provide expected income by even small margins, the lenders are likely to take losses out of scale with their potential profits. Once lenders wake up to this possibility—most likely only after losses have begun—they are likely to cut back lending rapidly, which will, in turn, make the underlying assets both less valuable and less saleable still, thus beginning a new round of lender panic. Any minor downturn, in short, runs the risk of starting a self-reinforcing cycle of credit and business contraction. The rise of private equity in its present form, then, appears to be another step towards the pre-New Deal world of inequality and instability.

And don’t forget about the role of private equity in influencing our political process. Blackstone billionaire Pete Peterson helped fuel concerns about government spending, while doing very little to advocate for increased taxes on the wealthy. And now we see that the CLASS Act—an innovative program to promote full funding for future long-term-care in the US–is likely to be on the chopping block. The primary value of both care homes and care plans to P/E firms appears to be their susceptibility to rapid sales and purchases. The P/E firm’s employees can earn massive bonuses if the value of entities goes up, and can’t lose those bonuses even if things eventually fall apart. It is a heads they win, tails they win scenario. The losers include all the other stakeholders in firms which are treated primarily as ATMs for fleeting owners.

Community Health Law Project to Assist New Jersey’s Elderly and Disabled Save Money on Their Healthcare Costs

The Community Health Law Project (CHLP) has been awarded a grant to help seniors and individuals with disabilities save money on their healthcare costs. Founded in 1976, the Community Health Law Project (CHLP) is a non-profit advocacy and legal services organization with 10 offices located throughout New Jersey. CHLP President/ Executive Director, Harold Garwin said, “We are pleased to spearhead this initiative. It augments the Law Project’s mission to provide services to the elderly and disabled throughout the State of NJ, where so many people are eligible for benefits, but so few apply.”

The grant, made possible by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), will be used to conduct community outreach activities and help eligible individuals apply for programs that can help them save money on their Medicare premiums, deductibles, coinsurance and/or co-pay costs.

Seton Hall Law Professor and CHLP Chairperson of the Board, Paula Franzese said “Like so many government programs, the eligibility and paperwork can be a little confusing. Fortunately this grant will allow us to get seniors and the disabled the help they need and are entitled to. The benefits can literally add up to hundreds of dollars per month.”

The programs promoted by the grant include the Medicare Savings Programs known as QMB, SLMB and QI-1; the Medicare prescription drug program’s Low Income Subsidy(LIS) (also known as Extra Help), and the state’s Pharmaceutical Assistance to the Aged and Disabled Program (PAAD).

It is estimated that only 33% of individuals eligible for QMB and 13% of those eligible for SLMB or QI-1 have actually signed up for benefits. Likewise only 53% of those eligible for LIS who are not automatically enrolled through their participation in Medicaid or SSI are believed to receive the subsidy.

Seniors and people with disabilities, especially those who now receive Medicare are encouraged to call the CHLP Hotline at 1-888-838-3180 to see if they might be eligible. Advocates are available 5 days each week from 9-5 to answer questions and provide assistance in applying. Staff is also available to make presentations to community groups and organizations who are interested in learning more about these cost saving benefit programs.

Supporting Family Caregivers

Many of our hardest-working caregivers are not professionals, but parents, spouses, and children of people with serious chronic conditions, limited in their ability to engage in activities of daily living (ADLs) or instrumental activities of daily living (IADLs).  A new report from the National Alliance for Caregiving and the AARP opens up this informal, but absolutely essential, world of unpaid caregiving (h/t: Howard Gleckman ).

Some basic facts on the caregivers:

• They’re usually (66%) women;
• On average, they provide over 20 hours of care each week;
• They’re of all income levels, with an average income of about $60,000
• About one-third care for more than one person.

Some basic facts about those receiving the care:

• They’re mostly over 50 years of age, and 44% are over the age of 75;
• Most (51%) live in their own homes;
• Most (69%) require care due to long-term physical condition;
• 34% receive informal caregiving for 5 years or more.

In many cases, informal caregivers enable people with significant care needs to avoid nursing home or other institutional care.  Patients are better off, and so is the health budget: the avoided costs of expensive hospitalizations and nursing home care are enormous.   I have previously described the reform bills’ provisions that would support in-place care for people with chronic illness and disabilities.  Medicaid amendments would expand home care services, including such Cash & Counseling programs that give consumers substantial control over the mix of home services, and permit support for kinship caregiving.  And the Senate bill incorporates the Community Living Assistance Services and Supports Act (the “CLASS Act”), which provides for a new source of funding for personal assistance services for those not Medicaid-eligible.  A move supported by the insurance industry to strip it from the reform bill was narrowly defeated on December 4^th.

The insurance industry, of course, is vigorously trying to protect its own nascent long term care insurance business.  The long term care insurance industry has faced its share of horror stories about bureaucratic double-talk, denied claims, high prices, and limited benefits. The CLASS Act would provide an optional source of coverage, creating a voluntary program of member-supported public insurance for home care costs.  Like Medicaid’s Cash & Counseling system, it provides consumers with flexibility to choose the mix of supportive care when his or her health status triggers eligibility for coverage.

Why do we need such a program?  After all, there are many willing attorneys ready to help people spend down their assets — achieving “Medicaid impoverishment” — in order to qualify for Medicaid’s richer coverage.  Georgetown scholar Judy Feder was asked just that question for a recent Time Magazine article on the CLASS Act.  Her response was dead-on:

“Medicaid is invaluable,” says Judy Feder, a health policy expert at Georgetown University and a senior fellow at the Center for American Progress. “But it’s not insurance. It doesn’t protect you from catastrophe. It takes care of you after catastrophe.”

The long-term care financing mix in the Senate bill is far from perfect.  As a panel of experts surveyed by the Commonwealth Fund overwhelmingly agreed last year, the best solution would be to add a premium-financed long-term care component to Medicare, allowing the cost to be shared by government and consumers, without the trouble or expense of creating a new programmatic structure.  In the alternative, Congress could cobble together a better integrated “system” of long term/home care financing.  Such a system could virtually integrate a long-term care financing continuum, including Medicaid, Medicare, and voluntary insurance (such as that created by the CLASS Act) that could support consumers with chronic illness in the most appropriate setting for supportive care, reducing the discontinuities in coverage, perverse incentives for institutionalization, and counterproductive limits on services.  Either actual integration of all long term care services in Medicare, or the virtual integration (through smooth eligibility and service interfaces) in Medicare, Medicaid, and CLASS Act coverage could improve care and reduce costs.  But that won’t happen this year.

Instead, the best hope for expansion of access to personal assistance services will be the strengthening of Medicaid’s home care provisions and the creation of the CLASS Act program.  The overwhelming reform focus has been on very traditional “medical” insurance run through private, risk bearing insurance companies.  Only at the margins will the reform address the growing need for financing  appropriate health care for chronic illness.  Keeping the CLASS Act is a small step, but it at least acknowledges the obligation to support the personal assistance needs of those with serious chronic illnesses or disabilities, who are not (yet) impoverished, and who prefer to remain in their communities.  The CLASS Act will provide a new funding source for patient-directed personal assistance services.   Family caregivers will continue to devote themselves to their loved ones, but they need help.

Third Circuit Recognizes Federal Civil Rights Action for Death Caused by Substandard Nursing Home Care

[Ed. note: Today's post comes from Danielle Y. Alvarez. She is a Seton Hall Law student and a graduate of NYU, where she majored in Political Science. Ms. Alvarez is a research assistant to Dean Kathleen M. Boozang, and a former legal assistant to the Augulius Law firm.]

State and federal legislatures won’t fix the health care system by themselves, which is why a recent Third Circuit decision is a welcome tool to fight substandard long-term residential care.  A few enforcement officials have been aggressively creative in using false claims act theories to pursue providers of substandard health care (See here and here).  In short, the government claims that the submission of a bill to Medicare for services that were so bad they were the equivalent of no care at all is a false claim for which the government should be reimbursed and recover penalties.  And now the Third Circuit has recognized that the provision of such substandard care violates an individual’s civil rights.

In Grammer v. Kane, a nursing home resident’s child sued the nursing home, operated by Allegheny County in Pittsburgh, Pennsylvania, alleging the home’s failure to provide adequate care caused her mother to develop ulcers, become malnourished and develop sepsis, from which she died. Plaintiff invoked  42 U.S.C. §1983 to argue that the nursing home had violated decedent’s civil rights by breaching a duty to provide the standards of care delineated by the Federal Nursing Home Reform Amendments (FNRA), contained in the Omnibus Budget Reconciliation Act of 1987 (OBRA). The district court granted the nursing home’s  motion to dismiss, finding that FNRA merely sets forth requirements for nursing homes to comply with but does not grant the deceased rights that are enforceable under §1983. The United States Court of Appeals for the Third Circuit reversed and remanded, concluding that FNRA grants Medicaid recipients like the deceased rights whose violation can be remedied under §1983.

Congress passed FNRA in 1987 to address the substandard conditions in nursing homes that participated in the Medicare and Medicaid programs. FNRA sets forth various quality and residents’ rights standards to which the nursing homes must adhere in order to be paid by the federal government.  And yet, as everyone knows, the problems persist. And so it should be a welcome outcome that the Third Circuit held that FNRA unambiguously confers federal rights upon Medicaid recipients in nursing homes, which gives rise to an action under §1983 which imposes liability on every person who, under color of state law, deprives another of “rights, privileges, or immunities secured by the Constitution and laws.” 42 U.S.C. §1983 (2009).

To determine that FNRA affords protection under §1983, the court applied a three factor test set forth by the Supreme Court in Blessing: first, the court determined that Congress intended FNRA to protect personal rights of Medicaid beneficiaries and nursing home residents rather than the nursing homes themselves; second, the court found that the rights asserted are not so “vague or amorphous” that their enforcement would strain judicial resources; third, the court concluded that the statutory language is sufficiently mandatory in nature with its repeated use of “must” such as “a nursing facility must provide services and activities to attain or maintain the highest practicable physical, mental and psychosocial well-being of each resident.” See Blessing v. Freestone, 520 U.S. 329 (1997); 42 U.S.C. §1396r(b)(2)(A) (emphasis added). Furthermore, the court found Congressional intent to create a right of action through rights-creating language, legislative history, statutory structure and Congress’ failure to set forth a more comprehensive remedial scheme. Thus, the Third Circuit recognized individual rights conferred by FNRA that are presumably enforceable under §1983.

District Judge Stafford, sitting by designation, wrote a dissenting opinion finding that FNRA is Spending Clause legislation which does not confer upon funding beneficiaries individual rights to sue funding recipients. The dissent highlighted specific statutory language to conclude that FNRA focuses on what nursing homes must do in order to receive federal funds rather than focusing on the individuals who benefit from the federal funds. Absent unambiguous Congressional intent to the contrary, FNRA does not grant nursing home residents individual rights to sue nursing homes under §1983 for alleged violations of FNRA. As such, the dissent argued that the District Court properly granted Appellee’s motion to dismiss.

Kaiser Health News, New Jersey Gets a New Hospital?, & Kicking Medicaid Grandma to the Curb

In the wake of declining newspaper presence, the Kaiser Family Foundation, a nonprofit private operating foundation known for its health care concerns, has started Kaiser Health News. In the present issue, there are two articles of special note for New Jerseyans. The one regards the plans of Hackensack University Medical Center, a 775-bed teaching and research hospital that is one of New Jersey’s most prestigious, [which] requested state permission to open a new hospital in Pascack Valley’s empty [hospital] buildings. Although Hackensack is a nonprofit, it announced that Westwood would be getting a for-profit facility financed by a private equity firm from Texas.

Not everyone approves.

The other regards measures that New Jersey legislators are considering in response to a recent investigation of assisted living facilities. KFN reports

Associated Press/Philadelphia Inquirer reports that “lawmakers this week will consider measures to enhance protections for assisted living residents in New Jersey to ensure they aren’t discharged simply because they pay with Medicaid.” The legislation comes in response to an investigation that found a Wisconsin-based assisted living firm called Assisted Living Concepts, which has eight facilities in New Jersey and more than 200 nationwide, “wrongly showed New Jersey residents the door once they exhausted their savings and were about to go on Medicaid, despite promises to allow them to stay.”

Both stories are worth reading.

Health Care Costs for Retirees Equals Second Mortgage

Often, the costs of health care can seem abstract: we speak in the aggregate of billions and co-pays and deductibles and the labyrinth which is the “donut hole” formula for Medicare prescription drug payments. But sometimes we get to a number which instantly makes sense and allows us to have some grasp of the actual cost and the impact that health care costs can have. Fidelity Investments has just released such a number. Kaiser.org reports that

Couples Retiring This Year Need $240,000 To Cover Medical Expenses, Study Finds

A 65-year-old retired couple this year would need $240,000 on average to cover medical expenses, according to a recent study by Fidelity Investments, the AP/Long Island Newsday reports. The study assumed that the couple is covered by Medicare and has no employer-provided insurance. It also assumed that the male partner would have a life expectancy of 17 years, while the female partner would have a life expectancy of 20 years. The estimate includes Medicare deductibles, copayments and certain services that might not be covered by Medicare.

That’s out of pocket. That’s a house.

Or at least a house mortgage (not for a particularly big house here in metro New Jersey, but a house nonetheless). And to think that one would have to face that expense– equivalent to the mortgage on a whole other house–after presumably realizing (though the presumption is not as solid as it once may have been)  the American dream of having fully paid off that 30 year mortgage on the “first” house– is daunting to say the least, and arguably unconscionable as part of a social compact.

Kaiser reports that

The $240,000 estimate is a 6.7% increase from last year’s projection. Since Fidelity first released its annual report in 2002, projected medical expenses have increased by 50% (AP/Long Island Newsday, 3/31).

Home Health Area Especially Vulnerable To Medicare Fraud And Abuse

American Health Lawyers Association reports that the increased amount of federal spending on home health benefits has led to the rise of fraud and abuse issues.  AHLA reports that federal “spending on home health grew approximately 44% from 2002 through 2006 ….”

AHLA states:

Gaps in the Centers for Medicare and Medicaid Services’ (CMS’) administration of the $12.9 billion Medicare home health benefit have left the program vulnerable to improper payments, including payments for claims resulting from fraudulent and abusive practices, the Government Accountability Office (GAO) found in a recent report.

The opportunities for fraud and abuse issues concerning home health care are manifold.  AHLA states that  the “common types of upcoding and billing for unnecessary care in home health were: billing for outlier cases when that level of care was not required, billing for beneficiaries who were not homebound, and billing for therapy visits that may have been medically unnecessary. ”

The Department of Justice defines upcoding as “the practice of improperly assigning a diagnosis code to a patient discharge that is not supported by the medical record for the purpose of obtaining a higher level of reimbursement for that hospital discharge than the hospital would otherwise receive.”

AHLA also reports that Home Health Agencies (HHAs) “are not routinely subject to revalidation and that CMS generally does not include physicians, who are in a position to detect certain types of improper billing, in the agency’s efforts to detect improper payments.”

AHLA reports that CMS is considering adopting two of the four actions recommended by GAO:

CMS stated that it would consider two of GAO’s four recommendations–to amend regulations to expand the types of improper billing practices that are grounds for revocation of billing privileges and to provide physicians who certify or recertify plans of care with a statement of services received by beneficiaries. The agency “neither agreed nor disagreed with our other two recommendations,” GAO explained.

AHLA reports that the four recommendations for CMS are:

• Assess the feasibility of verifying the criminal history of all key officials named on an HHA enrollment application.
• Provide physicians whose identification number was used to certify or recertify a plan of care with a statement of services the HHA provided to that beneficiary based on the physician’s certification.
• Direct CMS contractors to conduct post-payment medical reviews on claims submitted by HHAs with high rates of improper billing identified through prepayment review.
• Amend current regulations to expand the types of improper billing practices that are grounds for revocation of billing privileges.

Read more

Alzheimer’s, Dementia Triple Individual Health Care Costs

According to U.S. News & World Report, a recent Alzheimer’s Association report estimates that Alzheimer’s disease and dementia triple health care costs for afflicted seniors.

In its report, the Alzheimer’s Association found that:

The average annual health-care cost for someone older than 65 with Alzheimer’s or another form of dementia was $33,007 in 2004 — three times more than the $10,603 for people that age without the conditions.

Deaths from Alzheimer’s disease rose by 47 percent from 2000 to 2006 while the number of deaths from several other major diseases — including heart attack, stroke, breast cancer and prostate cancer — fell during that period.

States in the Rocky Mountains and Northwest will see the number of people with Alzheimer’s disease increase by at least 81 percent between 2000 and 2025.

By 2025, California and Florida will each be home to more than a half-million people with Alzheimer’s disease.

Experts agree that the U.S. needs to invest more into Alzheimer’s research to keep costs low in the future. Some even advocate that the U.S. Government double its annual budget for Alzheimer’s research to $1 billion.

The aging of the Baby Boom Generation is one of the major reasons for the growing concern over the costs of living with Alzheimer’s disease. Said Dr. P. Murali Doraiswamy, a psychiatry professor at Duke University Medical Center,

The bottom line is that we are an aging society, and if we don’t find a cure to delay or halt the disease, we are soon going to become an Alzheimer’s nation.

Surprise, Surprise: Older Americans are Sicker than their European Counterparts

In this international study, we found that US adults of all wealth levels reported worse health than did Europeans at comparable wealth levels.  Poor Americans were at particularly worse health compared with their English or other European counterparts, but even well-off Americans reported health comparable to substantially poorer Europeans.  Differences in behavioral risk factors accounted for only a fraction of these disparities.

As behavioral factors were insufficient to account for this disparity, Avendano et al. distinguish between national health care systems.

Features of the US health care system may contribute to the worse health of Americans compared with Europeans.  In particular, most European countries have a stronger primary care orientation than does the United States.  Previous evidence suggests that a strong primary care system is associated with better health outcomes, partly because it entails a stronger focus on primary prevention, a more equitable distribution of resources, and a higher efficacy of the health system.

Investing less at the primary care stage where prevention is key, necessarily means that there is a greater focus on disease maintenance or amelioration after its onset.  Which is to say that Americans, for the most part, are not afforded significant medical attention until they are sick.

In addition to having a stronger focus on primary care than the United States, European countries have greater protections for their poor.  European countries offer virtually universal health care coverage, so even the poor have relatively unfettered access to necessary care.  The United States on the other hand, has an uninsured population totaling 41 million (or over 45 million by some estimates).

The fact that health disparities in England still persists despite access to care,

suggests that mechanisms outside the health care system may also be involved.  Wealth enhances access to material resources such as housing, and is a source of immediate consumption in periods of economic strain. Wealth may also increase sense of control over life and other psychosocial resources that can enhance health.

This study gives further credence to the notion that America has at least something to learn from the European health care system.  Universal health care is one component, but focusing more keenly on primary care and easing the social burdens of the poor are another.  Racial health disparities is also an issue that has to be addressed in the United States, but this study restricted its study population to non-Hispanic Whites in order to determine what factors beyond those attributable to race are at issue in the United States’ lag behind its European peers.  Given the fact that racial health disparities are prevalent in the United States, it would not strain reason to conclude that the gap between Americans and Europeans would be exacerbated if racial minorities were included.  The correlation between economic status, residential segregation and well being may help explain why this is the case.

The United States health care system clearly demonstrates that dollars spent is no indication of the quality or efficacy of health care actually received.  Moving into a more cost-effective health care  paradigm that provides access to comprehensive care at a stage where it can impact long-term health is essential.  The Avendano study offers proof of this.

Pilot Program Seeks to Educate Patients, Prevent Illness, and Save Billions

A pilot program aimed at reducing Medicare costs by “stopping the revolving door of hospital admissions by some chronically ill elderly” is taking shape in Baton Rouge, Louisiana.  According to the Baton Rouge Advocate, the program, called the Care Transitions Project, could be a model for U.S. health care reform if it is successful in Baton Rouge and 13 other participating communities.

The program seeks to provide patients and caregivers with information before they leave the hospital in order to prevent problems that could lead to readmission.  Fundamental to the program is the use of a “transition coach” who helps the patient put together a list of questions for their primary care physician, discusses questions about medications, and puts together a plan for “self-care.”  This allows the patient to be mindful of preventive measures and symptoms to be on the lookout for.

The patient signs a consent form in which they agree to meet with the transition coach before leaving the hospital and again within 48 hours of leaving. There is an additional follow-up at a week, two weeks, and a month.

Gary Curtis, head of Louisiana Health Care Review, says that:

In Louisiana, two out of every 10 chronically ill elderly patients are back in the hospital within 30 days of their release.

However, the problem is not confined to Louisiana.  According to statistics from the Centers for Medicare and Medicaid Services,

Nationally, the readmissions and subsequent treatment contribute to a $12 billion annual increase in Medicare costs.

Other communities engaging in the pilot program include Denver, Colorado and Miami, Florida.  Click here for more information about the Care Transitions Program.

Baucus’ Baby Boom Buy-In

There are over 5.1 million uninsured Americans between the ages of 55 and 64.  Given the current economic climate and increasing unemployment rate, that number is sure to increase as employers lay off baby-boomers to cut the costs of providing them with benefits.

Senate Finance Committee Chair Max Baucus (D-Mont.) proposed a plan for health care reform last November that allows Americans ages 55 through 64 to buy into Medicare.  Baucus’ plan would allow members of that age group who are currently uninsured or who have lost their employment to pay a monthly premium and receive Medicare benefits.

Sunday’s Charleston Gazette examined Baucus’ plan to allow 55- to 64-year-olds to buy into Medicare.

The idea has been around for years, but it has gained new currency as the recession deepens and a Democrat-run Congress and White House begin to discuss health-care reform.

Advocates of an early Medicare buy-in say it would complement other entitlement reforms because it would keep older workers healthy and productive longer and help rein in government spending over the long haul,

said The Gazette.

Read more

As the Obama Budget Unfurls, Details About Health Care Reform Emerge

The New York Times has published an article, “Obama Offers Broad Plan to Revamp Health Care” which ably outlines the contours of the emergent health plan–and the way we’ll pay for it. Or at least the way President Obama proposes we’ll pay for it. According to the Times, “Mr. Obama asked Congress to set aside $634 billion in a ‘reserve fund for health care reform.’”

Suffice it to say, for the moment, that there are winners:

Cancer research, a multi-year plan designed to double it; Biosimilars (generic versions of biotech drugs), speeded approval through “a new regulatory pathway” at the Food and Drug Administration;” low-income women, increased access to family planning through Medicaid; and doctors, who will not be subjected to the Medicare cuts in payments scheduled to take effect in 2010 under current law (21% in 2010, 5% for a few years thereafter);

And there are losers:

Drug Companies, an increased discount to Medicaid (from 15.1% to 22.1% of avg. manufacturer’s price); Private Insurers, a cut in payments to Medicare Advantage providers; higher income Medicare recipients, increased prescription drug premiums; Hospitals, a decrease in Medicare payments for those hospitals with a high proportion of re-admits within 30 days of initial release (said to be indicative of  poor initial performance); home health agencies, a $37 billion cut over the next 10 years.

Of course, “loser” is a relative term; and sometimes a gored ox, if it lives, is better than no ox at all. And I would imagine that is easier to bear the loss of  some oxen than it is others: specifically, an increased discount in Medicaid prescription drug pricing, is not the ability of Medicare to bargain for the price of prescription drugs. A topic we wrote about in early January, and a reform which the Obama Health Care campaign plan promised:

“At present, Medicare is itself unable to negotiate drug pricing. In Obama’s campaign health plan, he stated that he would

‘Allow Medicare to negotiate for cheaper drug pricing. The 2003 Medicare Prescription Drug Improvement and Modernization Act bans the government from negotiating down the prices of prescription drugs, even though the Department of Veterans Affairs’ negotiation of prescription drug prices with drug companies has garnered significant savings for taxpayers. Barack Obama and Joe Biden will repeal the ban on direct negotiation with drug companies and use the resulting savings, which could be as high as $30 billion, to further invest in improving health care coverage and quality’ (footnotes omitted).”

My guess is that this is an ox the drug companies are trying to save.

LoJacking Grandma and “Reality Mining,” or “Daddy, What was Anonymity?”

Mark Heftler, a geriatric care manager who is slated to begin study at Seton Hall Law in the Fall, has written an interesting article on RFID (Radio Frequency Identification) and its potential usage as a means of  early diagnosis of dementia among the elderly. Researchers at the University of South Florida have developed and tested an RFID technology which assesses the walking patterns of those which it monitors.

By monitoring the movements of the elderly within geriatric facilities, “the researchers hope to be able to diagnose the onset Alzheimer’s in their patients. Sudden veers, long pauses, and a tendency to wander are all indicators of dementia.”

As MIT’s Technology Review notes, “Drugs that are currently available can only slow the progression of related diseases, so the earlier dementia is caught, the better a patient’s treatment will be.”

Technology Review also notes, “In particular, dementia increases the risk of injury caused by a fall… ‘That’s a huge problem for assisted-living facilities,’” said  William Kearns, an assistant professor who researches aging and mental health at USF.

Not Just Grandma

Although one can readily see the positive cost/benefit and quality of life implications of warding off the falls of the elderly, as Frank Pasquale recently noted on both this blog and Concurring Opinions, the proliferation of “personal” electronic data is not without its danger.

The Technology Review article provides a link to another article which points out that RFID technology is also being harnessed to gather social networking information through what is referred to as “reality mining,”

“…a field that Tanzee­m Choudhury pioneered as a PhD student at the MIT Media Lab. Working at Intel after graduation, she created a pager-size sensor pack–loaded with software plus microphones, accelerometers, and other data-gatherin­g devices–to collect and analyze data about human interactions and activity. For instance, by processing verbal utterances, she can identify the most influential people in a social network.

Now an assistant professor of computer science at Dartmouth, Choudhury is conducting experiments with the sensor-laden iPhone. Within a few years, she says, simple versions of her software could be available for cell phones.”

CMS Ruling May Pose Serious Problems for New York Seniors

Federal law protects married couples from having to choose between divorcing and becoming impoverished when one spouse needs expensive nursing home care. For 20 years, this law allowed the healthier spouse to retain income and assets while the sicker spouse is covered by Medicaid.

In New York State, the same benefit has been extended to people with illnesses like Alzheimer’s disease or cancer who receive care at home, which is both less expensive and less disruptive to relationships.

That benefit may no longer be available to the spouses of those patients receiving care at home, according to The New York Times. Last fall, the Centers for Medicare and Medicaid Services sent a letter to New York health officials outlining a legal ruling declaring that couples in which both partners live at home are not entitled to the same protection as those couples where one spouse is in a nursing home.

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Model Wanted

The NY Times reports that according to Dr. Atul Gawande, a surgeon at Brigham and Women’s Hospital in Boston and an associate professor at the Harvard School of Public Health, “there’s a drastic decline in the number of geriatricians - and just 300 new ones are being trained each year - yet the number of people over 65 will double in the next 20 years. Those who work in geriatric care are among the worst paid in the health care system.”

That last statement, as shown in a recent post regarding physician compensation, is backed up by numbers. According to the American Group Medical Association (AMGA) the median compensation for a geriatrician is $179,344. The median compensation for a podiatrist is $180,080. These AMGA numbers have been approved by the Center for Medicare and Medicaid Services (CMS) for use in CMS related calculations.

Dr. Gawande “and others see a pressing need for new approaches to keep aging patients as healthy as possible and living independently as long as possible.” The Times reports that “Dr. Chad Boult, a geriatrician at Johns Hopkins School of Public Health in Baltimore, says the goal should be care that is well coordinated, and patients and families who are involved in and educated about the care plan.”

To that end, Dr. Boult is participating in the testing of a “team approach” which is somewhat reminiscent of the subject of a recent post, Alaska’s Southcentral Foundation’s “medical home” approach. Southcentral’s “comprehensive” health care strategy has shown some promising results. The Times reports that

Dr. Boult is involved in testing a team approach, in which nurses trained in geriatrics are helping physicians in the Baltimore-Washington area provide coordinated care for 50 or 60 of their highest-risk older patients. The nurses go to patients’ homes, develop comprehensive care plans, help the patients in self-monitoring, help them overcome obstacles to self-care and connect patients and their families to community agencies.

According to geriatrics experts, social workers trained in the problems of the elderly can also participate by performing home assessments, for example, to prevent falls and costly, disabling fractures. They can help overcome barriers to good nutrition, and they can help make the community connections for assistance with the activities of daily living, like shopping.
Dr. Boult said that “The Baltimore team project has already demonstrated an improvement in the quality of care that ailing elderly patients receive, and by keeping patients out of the hospital, he expects it will save money for insurers like Medicare.

The NYTimes also reports, however, that the current fee for services compensation scheme has not yet been structured so as to provide monetary incentives for such prophylactic care. The Times states: “While current insurance systems pay many thousands of dollars for hospital-based care, they cover only a fraction of the far less expensive care delivered by doctors and nurses that can keep patients out of the hospital,” and that experts say “a new model of care is needed.”
Read full article here.

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