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Nine million community-dwelling Medicare beneficiaries—about one-fifth of all beneficiaries—have serious physical or cognitive limitations and require long-term services and supports (LTSS) that are not covered by Medicare. Nearly all have chronic conditions that require ongoing medical attention, including three-fourths who have three or more chronic conditions and are high-need, high-risk users of Medicare covered services.
Gaps in Medicare coverage and the lack of integration of medical care and LTSS have serious consequences. Beneficiaries are exposed to potentially high out-of-pocket expenses. Medicaid covers LTSS for very low-income Medicare beneficiaries, but only one-fourth of Medicare beneficiaries with serious physical or cognitive limitations are covered by Medicaid.
Exhibit 1
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Exhibit 2
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Source: Medicare Current Beneficiary Survey (MCBS) 2010.
Without personal home care, access to senior day care, or support for family care partners, older adults needing assistance are at risk of losing their ability to live independently and being institutionalized in a long-stay nursing facility, with costs eventually covered by Medicaid. The lack of integration and accountability for both medical care and LTSS also contributes to avoidable hospitalization and emergency room use, and hinders the substitution of less costly social services for high-cost medical care.
Covering Home Care Under Medicare
This blog presents a Medicare Help at Home policy proposal to add home and community-based services to Medicare to enhance financial protection for beneficiaries, provisions to ensure the quality and efficient use of services, and honor beneficiary preferences for independent living and care at home.
It has three elements:
- A Medicare home and community-based benefit for those with two or more functional limitations, Alzheimer’s, or severe cognitive impairment, according to an individualized care plan based on beneficiary goals. This would cover up to 20 hours a week of personal service worker care or equivalent dollar amount for a range of home and community-based LTSS.
- Creation of new Integrated Care Organizations (ICOs) accountable for the delivery and coordination of both medical care and LTSS that meet quality standards, honor beneficiary preferences, and support care partners.
- Innovative models of health care delivery including a team approach to care in the home building on promising models of service delivery that improve patient outcomes, reduce emergency department use, prevent avoidable hospitalization, and delay or reduce long-term institutional care.
The benefit is financed by income-related cost-sharing, and a 25-75 mix of Medicare beneficiary premiums and an incremental payroll tax on employers and employees.
Eligibility
Medicare beneficiaries with serious physical and/or cognitive limitations, such as limitations in two or more activities of daily living, a diagnosis of Alzheimer’s, or severe cognitive impairment would be eligible. The benefit would be targeted towards those living at home or in community settings such as independent living in senior-life communities and group homes that retain patient autonomy and privacy. It is anticipated that those at the end of life experiencing a terminal illness will also qualify as their ability to function independently declines.
Benefit
The benefit level is based on the degree of physical and cognitive limitation and an individualized care plan derived from beneficiary goals and preferences, or if incapacitated, their designated legal guardian’s preferences. The maximum benefit is based on the estimated cost of a maximum of 20 hours per week of personal service worker assistance. For modeling purposes, this is estimated at $15 per hour plus an additional 33 percent allowance for fringe benefits and overhead, or up to $400 per week, or $20,800 a year. Beneficiaries (or their legal guardians) could, however, elect to use a portion or all of their allowance on other approved home and community services including adult day care, home modifications, transportation, and respite care for unpaid care partners.
Beneficiary functional limitation would be assessed and individualized care plans developed by organizations designated by Medicare. Beneficiaries electing to receive paid personal care services could select their own paid personal service worker (“consumer-directed care”) including family members other than their legal guardian, modeled on the Medicaid Community First Choice program.
Beneficiary Financial Responsibility
Beneficiaries would be responsible for coinsurance of a portion of the cost of services based on income, ranging from 5 percent for beneficiaries with incomes below 150 percent of the federal poverty level (FPL), to 15 percent for incomes between 150-199 percent FPL, 25 percent between 200-399 percent FPL, and 50 percent for incomes 400 percent FPL or greater.
Estimated Cost And Financing
For modeling purposes, it is assumed that 75 percent of those eligible for the home care benefit who are not already on Medicaid would participate each year (5.0 million out of a total eligible of 6.7 million). Using the Medicare Current Beneficiary Survey, we estimated budget neutrality could be achieved with a Medicare beneficiary premium of under $35 a month covering one-fourth of the cost and a payroll tax estimated at around 0.3 percent of earnings on employers and employees (details available from authors) covering the remainder, sharing the costs across lifetimes and families.
Integrated Care Organizations
The second element of the Medicare Help at Home proposal is the creation of a new entity called an Integrated Care Organization (ICO). Beneficiaries would receive reduced cost-sharing on their Medicare Help at Home benefit if they enroll in an ICO. ICOs would meet the requirements for accountable care organizations (ACOs), but in addition ICOs would be accountable for the delivery and coordination of both medical care and LTSS, and receive incentives for reduced or delayed long-term institutional placement. ICOs would be responsible for supporting unpaid care partners including training, respite, and other support services (e.g. mental health services). ICOs would be required to meet quality standards including achieving patient goals and reporting on quality and other performance metrics.
Care Delivery Innovation
The third major element of the Medicare Help at Home policy proposal is to redesign care delivery to include innovative models emphasizing a team approach to care and to honor beneficiary preferences with regard to types of services and sites of care. ICOs would be encouraged to incorporate promising models of care in their delivery systems found to improve patient outcomes, and reduce use of emergency departments, hospitalizations, and long-term institutionalization.
For beneficiaries with limited mobility or cognitive functioning, an emphasis would be placed on delivering services in the home. Innovative models of home and community-based care that have been shown to improve patient and family satisfaction, quality of life, and health outcomes such as Independence at Home and Hospital at Home would also be candidates for adoption by ICOs. The Program of All-Inclusive Care for the Elderly (PACE), palliative care at home and in residential hospice settings, and congregate models of housing such as Green House would be in the ICO “toolbox” with options tailored to beneficiary preferences about where they live and receive care.
Impact On Beneficiaries
The proposal would benefit Medicare beneficiaries who face the challenge of serious physical or cognitive functioning. It could improve access to home and community long-term services and supports and reduce the financial burden of out-of-pocket costs. The proposal would also assist family care partners in providing support to maintain independent living longer, reduce health risks such as falls, pressure ulcers, and infections, and prevent avoidable hospitalization and emergency room use.
Covering home and community-based care under Medicare also has the potential to improve beneficiary health and well-being by honoring their preferences for site of care and living arrangement. Ensuring that such services meet quality standards and providing information on reliable, safe sources of personal care assistance would better inform choices.
It is not a comprehensive long-term care financing policy proposal, but an important first step that would support beneficiaries in their desire to enjoy quality of life in a familiar environment. The proposal would likely improve the supply of long-term services and supports, and more importantly, provide a mechanism for ensuring quality and availability of information that would help all families know where to obtain high-quality, reliable, safe care for family members with functional limitations.
Impact On Care Delivery
By offering a home and community care benefit combined with delivery system reforms, acute care and LTSS could be better coordinated. A team approach to care using a wide range of personnel whose services are not now covered by Medicare offers the opportunity to shift resources to the types of care preferred by beneficiaries and to reduce costly avoidable hospitalization and long-stay nursing home care.
In addition, by intervening before beneficiaries become impoverished by the costs of home and community services, it shows great promise of maintaining independent living longer and avoiding costly long-term institutionalization and exhaustion of resources that result in Medicaid eligibility. These offsetting savings would reduce the current cost of Medicare and Medicaid to the federal government and state governments.
Creating integrated care organizations (ICOs) accountable for both acute care and long-term services and supports for this high-need population has several potential advantages. Such organizations would be an extension of Accountable Care Organizations that share in savings in Medicare services to also share savings from reduced or delayed long-term nursing facility care and be accountable for overall quality of care.
It would provide the incentive and the flexibility to adopt innovative acute care delivery models such as Independence at Home and Hospital at Home that bring physician and inpatient hospital care into the home. Care at home for those with mobility limitations can reduce the difficulty of arranging transportation, navigating stairs, and coping with unfamiliar environments. Hospitalization of this vulnerable population entails the risk of delirium and deconditioning, falls, infections, and pressure ulcers. Without palliative care in the home, the only recourse in an emergency may be to call 911, seek care from emergency departments, and wind up in intensive hospital care units at the end of life.
ICOs could also adopt innovative long-term services and supports such as CAPABLE and Mind at Home that show promise of improving functioning, and delaying or eliminating long-stay nursing facility placement by substituting low-cost personal care and supervision for more costly medical care. ICOs could be charged with providing support to care partners, whether training in administering medications, avoiding falls and pressure ulcers, or providing respite.
Meeting The Needs Of An Aging Population
The boomer generation began reaching the age of Medicare eligibility in 2011. Five years later they are entering their 70s, watching family members and friends encounter declines in their health and functioning, and hoping for a better old age for themselves. Yet, the Medicare program which recently celebrated its 50th birthday was not designed to support their preferences for independent living and functioning.
Medicaid is the nation’s safety net for low-income families, the disabled, and elderly people. Given the expense of long-term care services and support, it is also the safety net for middle-class elderly Americans who require assistance with their daily care. It began with coverage for institutional care, and has only recently moved to expand home and community-based services. Yet, it reaches only a fourth of Medicare beneficiaries with complex care needs.
Moving forward, adoption of a home and community based benefit in Medicare would constitute an important first step to helping beneficiaries afford the services and support they need to continue living independently. Adoption of innovative models of care emphasizing care at home or in independent living settings would reduce the difficulty and risk of obtaining services in traditional health care settings such as physician offices and hospitals. It would also reduce beneficiary reliance on Medicaid’s safety-net coverage of institutional care. It is a policy proposal worthy of serious consideration as the nation grapples with Medicare redesign to meet the needs of an aging population.