PACE and the Medicare+Choice risk-adjusted payment model.

This paper investigates the impact of the Medicare principal inpatient diagnostic cost group (PIP-DCG) payment model on the Program of All-Inclusive Care for the Elderly (PACE). Currently, more than 6,000 Medicare beneficiaries who are nursing home certifiable receive care from PACE, a program poised for expansion under the Balanced Budget Act of 1997. Overall, our analysis suggests that the application of the PIP-DCG model to the PACE program would reduce Medicare payments to PACE, on average, by 38%. The PIP-DCG payment model bases its risk adjustment on inpatient diagnoses and does not capture adequately the risk of caring for a population with functional impairments.

Partnership insurance. An innovation to meet LTC financing needs.

In the mid-1980s, the Robert Wood Johnson Foundation (RWJF) began to explore ways to support state-based initiatives in long-term care financing. This exploration has resulted in an innovative public-private long-term care insurance program known as the Partnership for Long-Term Care.

Long-term care insurance underwriting: understanding eventual claims experience.

Little is known about the accuracy of medical underwriting for long-term care insurance. The lack of data on claims experience continues to be an obstacle in testing the ability of medical underwriting to identify above average financial risks. This study used actual claims data to simulate medical underwriting and to examine the risk, duration, and timing of nursing home use for people with conditions that are uninsurable. The results show that at least one older person in seven who is rejected for long-term care insurance due to underwriting may not represent greater financial risk to insurers than do those who are accepted.

Transitions in long-term care.

This article examines transitions between the community and nursing homes among the private pay and the Medicaid eligible older (65+) persons. Discrete-time hazard functions were estimated to determine factors associated with the probability of these transitions. The analysis shows that recent hospitalizations for stroke, dementia, or hip fractures, while strongly predictive of nursing home admissions among the Medicaid elderly, were not significant (except for dementia) predictors for the private pay population. The results are of particular relevance in designing long-term care insurance, and more broadly, long-term care policy.

Spending-down to Medicaid in the nursing home and in the community. A longitudinal study from Monroe County, New York.

Medicaid spend-down continues to be of considerable interest in public policy discussions regarding long-term care financing reforms. Yet, "measuring" of spend-down has been difficult because of data limitations. This study focuses on patterns of spend-down affecting those who become Medicaid eligible both in nursing homes and in the community. The study uses a longitudinal, person-specific, merged Medicare and Medicaid claims and eligibility file constructed for Monroe County, New York. The analyses show that 27% of those who enter nursing homes as private pay can be expected to spend-down to Medicaid while in a nursing home. The spend-downers remain in nursing homes for a prolonged time, with 63% staying for more than 3 years. On admission, spend-downers appear somewhat more likely than those who remained private pay or Medicaid throughout to have been less disabled in terms of activities of daily living (ADL). The community-based spend-down group is larger, younger, and more heavily represented by those who are poor or marginally poor, than the nursing home-based spend-down population. Their spend-down to Medicaid appears to have been triggered principally by the cost of acute medical care not covered by Medicare or another third-party payer. It is this population of the elderly that would have been the principal beneficiary of the short-lived 1989 Medicare Catastrophic Coverage Act. The results of this study indicate that neither the existing private long-term care insurance policies nor the currently circulating public coverage proposals alone are sufficient to protect older persons, at risk of spend-down to Medicaid, from impoverishment. Effective long-term care financing reform will need to create partnerships between public and private insurance, rather than look at them as competing options.

Paying for long term care without breaking the bank.

As the U.S. population ages and major health care reform looms on the horizon, the search for new sources of financing for long term care has intensified. A key question is whether these resources should come from greater private contributions or from an expansion in public programs. The Partnership for Long Term Care, a new, state-supported public-private program, taps both sectors to protect those in need of chronic, long term care from impoverishment. The Partnership encourages people to plan for their long term care needs and uses Medicaid as reinsurance for those who purchase a certified policy. The four states that are participating in the Partnership have introduced a new form of means testing and better long term care financing options than currently exist.

Asset spend-down in nursing homes. Methods and insights.

The issue of how many elderly are affected by catastrophic nursing home expenses is a major part of the debate over if and/or how to reform long-term-care financing. Currently, there is some discussion regarding the magnitude of this catastrophic event, referred to as "asset spend-down", among the elderly. National data suggest the magnitude is small, while state-specific studies indicate it is greater. In addition, the literature regarding asset spend-down has presented two different measures of its magnitude, further confusing the issue. These two measures, each based on different denominators, have often been presented without adequate explanation. In this study, the authors review both measures and analyze reasons for the differences observed across studies. Major reasons identified include the type of sample used, the mix of payor source at admission, the length of time covered by the data, data on payor source/Medicaid eligibility, and the ability to observe multiple nursing-home stays within the data. Using the measure based on the number of persons who are private pay at admission, these studies indicate that approximately one fourth will eventually deplete assets. The second measure, based on a count of Medicaid residents at a point in time, indicates approximately one third were private pay when admitted. Study results indicate that national studies have underestimated the extent of spend-down due to national-level data limitations, while state-specific studies inevitably refect the specific state data set available and circumstances particular to each state. More state studies and a better understanding of asset transfer are needed.

The use and cost of health services prior to death: a comparison of the Medicare-only and the Medicare-Medicaid elderly populations.

Lack of data has limited research into the high cost and ethical dilemmas associated with care of the dying elderly. This study is based on a five-year, person-specific file of Medicare and Medicaid use and cost data for residents of Monroe County, New York, over the age of 65. It examines and compares utilization and expenditure patterns of the Medicare-only and the Medicare-Medicaid (dually eligible) decedents in 1988. Examination of reimbursement for nonacute services, not covered by Medicare, reveals that services for the "older old" may be less costly immediately prior to death than for younger decedents. However, when expenses in the year prior to the year of death are also counted, services for the dually eligible, older old decedents appear to be neither more nor less costly than for younger decedents. Distribution of expenses does, however, vary considerably with age. The younger decedents, aged 65 to 74, use 55 percent of their medical resources on hospital care, paid for by Medicare; the older old use 26 percent for hospital services and pay 67 percent for supportive care, reimbursed by Medicaid. The study suggests that medical intervention associated with dying is utilized more often and at a higher cost by younger decedents.

Spend-down of assets before Medicaid eligibility among elderly nursing-home recipients in Michigan.

Many elderly persons enter nursing homes as private pay clients, spend their available life savings, and then apply for medical assistance under Medicaid after their assets are depleted. However, reliable data on the size and characteristics of this "spend-down" population have been lacking. This study used Medicaid claims and enrollment data to identify the proportion of elderly Medicaid nursing-home users who originally entered nursing homes as private pay clients versus those eligible for Medicaid before or concurrent with, their nursing-home admission. The study population consisted of all elderly nursing-home users receiving Medicaid in Michigan in 1984, a total of 36,898 unduplicated recipients. Findings indicated that "spend-downers" comprised 27.2% of all elderly users. Once on Medicaid, spend downers exhibited similar nursing-home utilization patterns as other groups, but incurred lower Medicaid claims because they contributed more to the cost of their nursing-home care. In aggregate, the State of Michigan Medicaid program spent $75.4 million on nursing-home services in 1984 for elderly persons who spent down to eligibility in a nursing home. These data are relevant to state policy initiatives to reduce Medicaid spending for nursing-home care by encouraging potential spend downers to purchase long-term care insurance.

Private long-term care insurance. Simulations of a potential market.

Long-term care is now the most common cause of catastrophic illness costs for the elderly. Although acute care health insurance represents a mature market, private long-term care insurance is in its infancy and poised for development. This study presents a comparative analysis of simulation data, generated from the Brookings-ICF Long-Term Care Financing Model, for five alternative private long-term care insurance models. The simulation results indicate 1) the potential market for private long-term care insurance is substantial, 2) moderately comprehensive long-term care policies are affordable by a significant minority of the elderly, 3) policies are considerably more affordable to those under age 65, and 4) long-term care insurance has somewhat less potential to pay for nursing home costs for high risk groups than for other elderly.

Developing public-private long term care insurance partnerships.

Recognition of long term care as an insurable risk has provided a framework for reexamining how we finance and deliver nursing home, home health, and community care to our elderly citizens. Insurance options are beginning to be marketed that provide consumers the opportunity to pay for their long term care needs in a more reasonable way than the situation in which individuals have to first self-insure and then rely on Medicaid when their resources are inadequate. The emergency of long term care insurance has stimulated public policy interest in supporting market development. Government payers will benefit if private insurance can reduce the role of Medicaid as a source of payment for middle-income elderly by delaying or avoiding the need to spend-down their resources. States, in particular, have taken the lead in seeking ways to help make the available products appealing and affordable so that the market can be broadened to include those at risk of needing Medicaid assistance.(ABSTRACT TRUNCATED AT 250 WORDS)

Reforming long-term care financing through insurance.

Until recently, insurance for long-term care was not viewed as feasible. This perception has changed dramatically in the past few years. Several models of long-term care insurance have begun to be tested. Although the application of insurance principles to long-term care is still new, the emergence of private market interest in developing long-term care insurance has been a catalyst to renewed public-policy support for reforming the way we pay for long-term care. States, in particular, have become interested in developing public-private partnerships to support the emergence of long-term care insurance that could help relieve the mounting pressure on Medicaid budgets.

Hospital DRGs and the need for long-term care services: an empirical analysis.

The Medicare DRG-based Prospective Payment System (PPS) encourages hospitals to reduce length of stay for elderly patients. Thus, discharges to long-term care services are expected to increase. Maryland hospital data for 1980 are used to identify those DRGs which most frequently represent patients discharged to nursing home and home health care services; explores the incentive to discharge earlier under PPS those patients needing long-term care versus short-term care; and describes characteristics of patients most likely to face increased pressure of earlier discharge to nursing homes and home health programs. Because only a limited set of patient characteristics are available from Maryland hospitals, data from a study of San Diego nursing homes are used to explore further the sociodemographic and health status measures associated with unusually long stays in a hospital prior to nursing home placement. This research suggests that the DRG reimbursement system gives hospitals a strong incentive for earlier discharge of patients needing long-term care services. However, hospitals that target only long-term care patients for early discharge will not substantially gain under PPS because these patients represent a small portion of the cases treated in the hospital and a small percentage of unreimbursed days.