The long-term care sector must evolve to better protect our seniors

As someone who is 68 years old a member of the baby-boomer generation, the theme of this blog strikes home with me not only from a healthcare professional perspective, but also on a personal note. That personal note is not narrowly focused on me, but on my long-term care concerns relating to my fellow baby boomers and the generation that has preceded us.

--- Tom

Prologue:

Approximately 20 years ago, I started to write a journal article, which I never completed. Aptly, the title of the article was, "The Doomsday Prediction vs. The Quality of Life Dream: What will be Reality for the Baby Boomer?"

Obviously, the coming impact of the aging baby boomer generation on our society and the long-term care sector should be no surprise.

I don't consider myself a math wiz, but even I could have done the simple calculation back in 1964 (I would have been 14 years old), and identified the impact of the baby boomers on the U.S. population starting in 2020 as the baby boomer generation begins entering the oldest age category.

So we have had more than sufficient time to prepare for the onslaught of the elderly population from a societal perspective (like over 50 years), but are we ready for it, and what more should we be doing? And ultimately, how will we pay for it?

There will also be even more challenges from a societal and generational perspective, as our children and their children will be supporting a demographic that will be increasingly weighted towards the over 65 population and, even more challenging, the over 85 population.

The baby boomer children are facing financial challenges of their own as they attempt to focus on their own quality of life while balancing student loans, job competition from abroad and advancing technologies that will both create but also take away jobs. Adding to their challenges would potentially be increased taxes if we are unable to adequately address this long-term care issue.

As an aside, I recently discussed the above generational challenges to a group of undergraduate students at my university. When I asked them for any potential solutions to the dilemma, a young lady in the first row said we should institute "Hunger Games for the elderly." Needless to say, I have been working on my conditioning as of late.

Defining long-term care for purposes of our discussion today

"Long term care refers to a continuum of medical and social services designed to support the needs of people living with chronic health problems that affect their ability to perform everyday activities. Long-term care services include traditional medical services, social services, and housing. The goals of long term care are much more complicated and considerably more difficult to measure than the goals of acute medical care. While the primary goal of acute care is to return an individual to a previous functioning level, long term care aims to prevent deterioration and promote social adjustment to stages of decline." "Long Term Care: Definition, Demand,Cost,and Financing by Nelda McCall"

The long-term care settings being discussed in this blog include senior housing, assisted living, skilled nursing, nursing homes, home health and hospice. All of these settings and the related stakeholders are being impacted by disruptive forces on the payer and provider side as well as the demographic and health risk factors of the population they are serving.

The doomsday prediction vs. the quality of life dream:

Back in 2013 a Congressional Budget Office (CBO) report stated the following as it related to the doomsday prediction ("the ticking time bomb"):

"By 2050, one-fifth of the total U.S. population will be elderly (that is, 65 or older), up from 12 percent in 2000 and 8 percent in 1950. The number of people age 85 or older will grow the fastest over the next few decades, constituting 4 percent of the population by 2050, or 10 times its share in 1950. That growth in the elderly population will bring a corresponding surge in the number of elderly people with functional and cognitive limitations."

"Functional limitations are physical problems that limit a person’s ability to perform routine daily activities, such as eating, bathing, dressing, paying bills, and preparing meals. Cognitive limitations are losses in mental acuity that may also restrict a person’s ability to perform such activities. On average, about one-third of people age 65 or older report functional limitations of one kind or another; among people age 85 or older, about two-thirds report functional limitations."

"One study estimates that more than two-thirds of 65-year-olds will need assistance to deal with a loss in functioning at some point during their remaining years of life. If those rates of prevalence continue, the number of elderly people with functional or cognitive limitations, and thus the need for assistance, will increase sharply in coming decades."

"To put in in dollars and sense terms, in 2010 over $150 billion was spent on the elderly – almost 6 percent of total healthcare spending. By 2040, we can expect to spend three to five times that amount in real terms."

Intellectual banter vs. action 

Historically, the government and the public alike spoke of this impending, "doomsday" prediction they relate to the impact of the aging baby boomer population on our society, as they simultaneously placed the issues in the file marked "things to be addressed at a later date."

In order to give you further insight into this historical intellectual banter relating to the pending long term care crisis, read the following journal articles, one dated December of 1988 another one from the late 1990s and one more from 2008.

The quality of life dream

Unlike our parents, who lived during the depression era where survival was the most that many could hope for, we baby boomers have been raised on the classic American ideal. We grew up in a much more economically prosperous time and were the first generation to have a vision of a long and happy life. We baby boomers are now not only emotionally linked to the quality of life dream, but are also intellectually aware of the "doomsday" predictions.

All of this is not to say that a lot has not been done to address these coming challenges from both a long-term care sector perspective as well as societal perspective.

I will be focusing on our societial efforts to address these coming challenges in future blogs, including the ill-fated attempt to partially address the affordability of these long-term care services through the passage of the CLASS ACT which was part of the original Affordable Care Act of 2010,

So what is currently happening in the long-term care world both from a sector perspective, but also from a payer perspective (Medicare, Medicaid, LTC insurance, self-pay) to address the custodial and healthcare needs of our seniors and how is the long-term care sector reinventing itself to not only meet the multifaceted needs of the senior population, but also to survive and prosper during these disruptive times?

The home setting: The new frontier

From the payer perspective Medicare and Medicaid (and in turn commercial payers, if applicable) through regulations, programs and reimbursement methodologies are moving patients from nursing facilities to the home care environment to help address the cost of care issues, as well as quality of life demands of the elderly population.

Advances in technology and science are making it easier for seniors to age in place in the home setting as well as receive healthcare related services as needed.

A trend is also beginning to initiate skilled home care as a substitute for costly, facility based interventions, particularly for more frail or less mobile patients who tended to have high utilization of services.

More work is still needed to accomplish this transition of skilled care to the home setting including identifying eligibility requirements for this type of care. Reimbursement methodologies would also need to incent this type of care.

Senior housing and the care continuum

Seniors, especially the baby boomer generation, are also looking for autonomy from a residential perspective, and if appropriate, community living. The rise of senior housing complexes helps fill this transitional step since it provides the foundation for the necessary social interactions as well as security especially since many seniors children no longer live within the same geographic regions as their parents and can no longer provide a safety net.

Consumer preference to age in place is also making the care continuum (senior housing to hospice) attractive so as the match the appropriate setting with the needed care.

The younger and healthier senior citizens will increasingly be provided care in the home setting, senior housing or in assisted living. This population will require a completely different level and variety of services with a focus on matching their needs and demands from a quality of life perspective.

What are the challenges facing the long-term care sector as it exists today?

Especially vulnerable during these disruptive times will be institutional skilled nursing facilities which may be partially supplanted by skilled home care as noted above. Integrated hospital systems which are narrowing their referral networks for post-acute care also represent a threat, and possibly, an opportunity to independent long-term care providers if they are able to enter into collaborative partnerships.

Acute care providers are developing their own skilled nursing facilities or lower cost home health alternatives and in some cases are outsourcing these services to regional or national for-profit partners.

As reimbursements shift to risk-based (bundled payments, etc.), hospitals will look to cut poor-performing facilities out of the supply-chain no matter how long-standing the relationship.

The long-term care sector will not only face challenges in their facility-based skilled nursing line of business, but also with their residential nursing homes, especially in states that are over-bedded. The push by states to move Medicaid-eligible seniors to receive needed support services in the home setting vs. the costly institutional settings will continue.

This will all result in the remaining residential nursing homes population becoming more high-risk (physical and mental health) which will require more intensive services and overall care.

Another challenge or opportunity for the long-term care sector is the increased focus on cost and quality transparency. The major vehicle for such information is Medicare's "Nursing Home Compare."

On the "Nursing Home Compare" website, you will find detailed information about every Medicare and Medicaid certified nursing home in the country. It contains quality of resident care and staffing for each of these nursing homes.

The information is presented in a user-friendly format using a Five-Star Quality Rating System (1 to 5 stars).

The star rating system will present both challenges and opportunities for the long-term care sector. Hospitals will increasingly be referring patients to only 4 and 5 star entities, especially as they enter into more risk-value-based reimbursement arrangements (bundled payments, etc.) with Medicare, Medicaid and commercial carriers, and while attempting to minimize their own financial penalties as a result of readmissions within a 30-day threshold.

Commercial carriers are also looking at ways to incorporate the star rating system or some version of it, as it gains more credibility in the marketplace, into their own transparency tools that will be used by the under-65 population.

The long-term care sector will also be impacted by changes down the road relating to how they are getting paid by Medicare.

In June of 2017, MedPac (the think tank arm of Congress) published a report on the healthcare delivery system that included recommendations that focused on long-term care.

As related to long-term care, MedPac stated that the current fragmented payment system that reimburses providers based on the setting of care vs. the health condition and needs of the patient is a major contributor to Medicare costs.

Per the report, MedPac is supporting an expedited transition to a prospective payment system for long-term care services that is based on the patient's health conditions vs. the setting of care.

MedPac finally states that "If implemented, post-acute care providers' profitability would be dependent on their ability to adjust their cost structure to the PPS payments system."

Adding to all of the above challenges, the long-term care sector is also facing staffing shortages (Nurses, STNAs, Therapists) and turnover issues which adversely impact its ability to provide optimum services to the population they are serving today as well as the population they will be serving in the future.

Medicaid managed long-term care:

As we discussed in a prior blog, opportunity costs and constitutional balanced budget requirements are forcing states to find ways to make Medicaid more efficient especially as it addresses the custodial needs of the senior population.

An initiative that is becoming more prevalent with states across the country falls under the broad category of Medicaid managed long-term care. States are applying for and receiving Medicaid waivers to allow them to institute programs that would better control their costs by passing along the financial risk to third-party managed care organizations. The key goal of these arrangements is for the Medicare Managed Care entity to provide better and more coordinated care to the state's eligible seniors which hopefully would result in lowecosts and better overall quality. These new programs are focusing on the dual-eligibles-seniors who are both on Medicaid and Medicare.

The state would enter into risk arrangements with these managed care entities to provide the stipulated coordinated services to their assigned dual-eligible population.

One such example in my state of Ohio is called MyCare Ohio Plan - MCOP. The MyCare Ohio Plan (MCOP) allows individuals to have a single point of contact for both Medicare and Medicaid and includes health, behavioral, and long-term care services in the home, assisted living, adult foster care, and nursing home. These services might include doctor visits, meal delivery, medical transportation, personal care assistance, and much more.

Where do we go from here?

I recently read a journal article in JAMA that was published in 2017. The article focused on investing in programs that can reduce spending while improving the health and well-being of our seniors. A case in point: programs that help older adults and those who are disabled remain in their homes and out of long-term care facilities. As discussed previously, different versions of such programs are in place in states throughout our country.

An example of such a program is the All-inclusive Care for the Elderly (PACE) which is essentially a daycare program for the elderly, with providers receiving all-inclusive payments for care.

As noted in the journal article, there are now 233 PACE centers in 31 states serving about 40 000 nursing home-eligible people older than 55 years. With capitated payments from Medicare and Medicaid (if approved by states), PACE programs assume financial risk and provide comprehensive social, medical, and nursing services. Services include adult day care, transportation to and from the center, food programs, home care, primary care, social services, and other preventive services, all at a lower cost than institutionalization.

Another movement to watch is Medicare Advantage Special Needs Plans. Special Needs Plans are a type of Medicare Advantage plan that limits enrollment to Medicare beneficiaries who meet certain eligibility criteria. These plans cater their benefits to serve the unique needs of its members.

There are three types of Special Needs Plans (SNPs) available:

• Chronic-Condition Special Needs Plans (C-SNP): These plans serve beneficiaries with certain severe or disabling chronic conditions, such as cancer, chronic health failure, or HIV/AIDS. Chronic-Condition Special Needs Plans may target a single chronic condition or more than one condition.
• Institutional Special Needs Plans (I-SNP): These plans serve those living in an institution (such as a nursing home) or who need nursing care at home.
• Dual-Eligible Special Needs Plans (D-SNP): These plans serve people who have both Medicare and Medicaid benefits (also known as “dual eligibles”).

There is discussion in Congress about expanding the role of Medicare Advantage Special Needs Plans with hospitals and long-term care providers playing an increased role.

Concluding comments

This will not be the last time I use this analogy. If you owned a Widget Manufacturing Company that produced costly and inconsistent quality widgets, would you produce more widgets or would you fix the processes and system the produced these widgets? The answer is obvious you would fix the processes that produced the costly and inconsistent quality widgets.

Well, this is where we are with answering the question: will it be the doomsday prediction or the quality of life dream? We currently have a costly, inconsistent quality healthcare system for our seniors from a long-term care perspective. We are now adding hundreds of millions of boomers onto that system. If this continues without and real changes to the "system" the doomsday prediction will be a reality.

We still have time, but it is running out. We need to expedite changes to the long-term care model and it will result in a lot of disruption in the marketplace. We need to embrace new models that are being piloted in different states, but this will still not be enough. We need to accelerate the push towards innovation that will focus on not only the cost structure of long-term care, but also the overall quality.

Using what we learned from our health economics lesson "a healthcare system is shaped by what you pay for and how you for it" from a prior blog, we need to rely more on payment models that are risk/value-based such as capitation which will encourage innovation. While not a silver bullet, some form of capitation (adjusted for acuity), when designed correctly, would go a long way in transforming our long-term care system by creating the necessary incentives for long-term care providers to not only be more efficient, but also to keep seniors healthier and safer.

 There would also need to be a financial link between the capitated payments and some form of quality report cards. I am not saying that what we are measuring is correct under the current Medicare 5-Star Rating system, but we would need such a vehicle to address and incent the quality of life side of the equation.

A recent article in Harvard Business Review does a good job of explaining the power of capitation in unleasching innovation. You may find it a good read.

Finally, from both a quality of life and cost perspective, delivering palliative care further upstream in the disease progression before patients require inpatient care and before they reach a hospice election decision point may unlock the potential for realizing even greater improvements in patient outcomes and reductions in cost.

This journal article in ResearchGate validates the benefits of this approach from both a cost and quality of life perspective.

Will it be the doomsday prediction or the quality of life dream?

While we can focus a lot of discussion and research on "how will we pay for it" from a long-term care cost perspective, our primary focus needs to be "how can we make the long-term care system more efficient and focused on quality of life?"

I hope this blog discussion will light the innovative fires of people working in the medical device, technology and pharma-biotech sectors. Organizations and people that can partially provide the answer to the question of doomsday vs. quality of life dream will be well rewarded in the marketplace.

Finally, people and organizations in the long-term care sector are some of the most dedicated and mission- driven stakeholders in our society. They know first-hand about the challenges that are facing their sector, but their main concern is the population they are currently serving and will be serving in the future.

I welcome comments and additional perspectives on this blog from readers who work in the long-term care sector.

Note: I am currently a Board Member of a mission driven long-term care organization in Cleveland, Ohio.

Thomas Campanella is the director of the Health Care MBA and an associate professor of health economics at Baldwin Wallace University near Cleveland, Ohio.

If you are interested in receiving a monthly summary of all of the healthcare blogs, you can respond to me on LinkedIn or e-mail Tom Campanella (tcamp@bw.edu) with you contact information.

Source of pictures: pixabay.com & pexels.com