Health Biz: Long-term care in the long run

WASHINGTON, Jun 23, 2005 (United Press International via COMTEX) -- Medicaid at the state and federal levels is trying to balance spending on home care and nursing-home care in hopes of giving the disabled and seniors what they want while saving money for the $300 billion-a-year entitlement program.

States have begun many different types of home-based care programs over the years, but the norm has been for more Medicaid dollars to be directed to nursing-home care, which is very expensive -- $50,000 per year and more in some areas.

A nursing home is an easier management choice for a program that cares for 53 million people, however. The irony is that when given a choice, most beneficiaries want to remain at home -- and that care usually is less expensive.

For example, a so-called rebalancing demonstration project that will provide equal access to home care and nursing-home care in the Vermont Medicaid program is estimated to cost about half -- $28,000 per beneficiary -- of what nursing-home care would be, officials said. In Vermont, the average cost for a Medicaid beneficiary in a nursing home is $54,000 annually, slightly lower than the national average of $60,000.

Dr. Mark B. McClellan, administrator of the Centers for Medicare & Medicaid Services, said in a statement the Vermont plan "will provide important evidence on how to end the institutional bias in Medicaid, to allow people with a disability to live in the community when they prefer to do so, without increasing Medicaid costs."

The Vermont plan was made possible by a CMS Medicaid waiver.

"If you give people a choice, they'll often choose the least-costly setting," Charley Reed, former deputy secretary for the Department of Social and Health Services in Washington state, told a Medicaid forum sponsored by the National Council of State Legislatures.

Reed said people have a right to manage their risk -- to decide to have care that might not be as comprehensive as in a nursing home -- if they are willing to accept it. The problem, Reed said, is "most states have a messed up long-term care delivery system."

States often do not have a single point of entry to their Medicaid program that quickly determines eligibility. Many do not have a standardized and automated assessment process. States must ensure the quality of care, as well as hire good case managers and provide sanctions for healthcare providers who violate regulations, Reed said.

Michael Reinemer, vice president for communications at the American Association for Homecare in Alexandria, Va., told UPI's Health Biz that "short of surgery there is virtually nothing you can't do in the home."

That message, he noted, needs to be communicated to governors and federal lawmakers.

"We need a better balance between institutional care and home-based care because it's not only preferred by patients, but it (also) is clinically effective and cost effective," Reinemer said. "There have been a number of technological advances in terms of telemed and telehealth that also contribute to the cost effectiveness of this option."

A 2002 study published in Health Care Financing Review looked at Medicaid home and community-based programs in seven states. In Washington, which had imposed strict fiscal caps, spending was kept to 40 percent of the cost of nursing-home care. In 1999 in Alabama, spending per enrollee in home care was $6,612 compared to $22,771 in nursing homes.

The studies and projections point toward Medicaid saving dollars through home-based care, but there is one fear: the woodwork effect. The theory is that people who are under the government's radar because they rely on friends or family to provide care for them free of charge will, so to speak, come out of the woodwork and avail themselves of new or improved Medicaid-funded home-based care. The woodwork effect could, it is feared, push Medicaid costs upward.

Congressional Budget Office Director Douglas Holtz-Eakin told a New America Foundation forum Wednesday that "long-term care services are exactly the kind of thing that you have to keep an eye on in the United States."

In his April 27 written testimony before the Subcommittee on Health Committee on Energy and Commerce, Holtz-Eakin said the CBO estimates spending on long-term care for the elderly, including donated care, totaled over $200 billion in 2004 or approximately $24,000 per senior with impairments.

He said long-term care will eat up more federal dollars as the baby boomers age, so it is important to figure out who will be paying for care in the future.

"How will they (long-term care products) be produced and supplied in a world where families are smaller and patterns that suggest that women are going to be working more?" Holtz-Eakin asked. "What will be the source of informal care, or will it simply evaporate? Expecting it evaporates, it will now become a market-driven phenomenon -- long-term care services delivered by markets."

Medicaid reform has become a hot topic in Washington as summer unfolds and congressional budget instructions are to find $10 billion to $14 billion in savings from the program.

Next week the Senate Finance Committee and the Senate Special Committee on Aging are to hold hearings on Medicaid reform. The Henry J. Kaiser Family Foundation is to brief the media on results of a public-opinion survey on Medicaid, and the lobby group Medicaid Health Plans of America is to have a briefing on the cost-effectiveness of managed care in Medicaid.

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E-mail ebeck@upi.com

Copyright 2005 by United Press International.