Long-Term Care Reform in 2004 Health Insurance Options Presented by: Jeanne Ripley Halleland Health Consulting September 10, 2004

Long-Term Care Reform in 2004

Health Insurance Options

Presented by: Jeanne RipleyHalleland Health Consulting

September 10, 2004

Halleland Health Consulting 209.03.04

Session Focus

Options for providing insurance coverage for health and medical care with coverage for long term care


Agenda

Presentation Overview Existing Options Contemplated Options Potential Options Discussion


Long Term Care Definition:

“A broad range of supportive services needed by persons of all ages with physical or mental impairments who have lost or never acquired the ability to function independently. They include: nursing care, personal care, habilitation and rehabilitation, adult day services, care management, social services, transportation, and assistive technology.”

Across the States 2000: Profiles of Long-term Care Systems; Public Policy

Institute; AARP


Long Term Care

- Yes, but do we care?

- Isn’t that a thing only old people worry about?

– Or is it different now, than 10 years ago?


Long Term Care

Two main sources for paid LTC services:

Out of pocket – 1/4 of all spending (estimated $18.7 million in ’99)

Medicaid – 3/4 of all spending (estimated $62.2 billion in ’99)


Twin Cities Business MonthlySeptember Edition

“LTC is the largest un-funded liability facing the baby-boom generation with the cost of care averaging $50,000 per year.”


Long Term Care Insurance

4 million Americans had purchased LTC insurance in 2000

Mostly purchased by affluent elderly or near-elderly (or their families) as an estate protection mechanism


Adding LTC to Med Supp:

1999 Minnesota Legislature directed MDH to report on the fiscal impact of mandating coverage of LTC for Medicare Supplemental products. Finding:

“adding LTC benefit to Medicare supplemental policies would drive the price up substantially, likely causing current purchasers to drop their coverage.”

Report to the Legislature, January 2000, MDH


Health Savings Accounts

Must be used in conjunction with a ‘high deductible plan’ defined as: Minimum deductible: $1,000/$2,000 Annual out-of-pocket not higher than:

$5,000/$10,000 Have first dollar coverage for preventive

care Higher out-of-pocket for non-network

services



Contribution Rules: Max contributed annually is the lesser

of: Amount of deductible

Or Max specified in law - $2,600/$5,150 for

2004 Those 55+ can have ‘Catch-Up’

contributions: $500 - $900/year


Health Savings Accounts Distributions:

Is tax-free if taken for ‘qualified medical expenses’

Can be used for: COBRA continuation coverage Health plan coverage while receiving

unemployment compensation Medicare premiums and out-of-pocket

expenses Medicare HMOs, new prescription drug

coverage and qualified long-term care insurance*

* Cannot pay Medigap premiums



Created by MMA ’03 signed into law on December 8, 2003

Special account owned by an individual to pay for current and future medical expenses

Focused on those not eligible for Medicare



“A New Age in Senior Housing: Baby-Boomer Demand has Moved Developers Toward More-Livable Options”

“Prescription for Premiums: Can Health Savings Accounts Alleviate Rising Medical Costs?”


Current Bills in Congress Long -Term Care Act of 2004 (H4502):

Amends the Internal Revenue Code to allow distributions from an individual retirement plan, a section 401(k) plan, or a section 403(b) contract used to pay long -term care insurance premiums to not be includible in gross income to the extent.

In House Ways & Means Committee (06/04)

16 sponsors (including C. Peterson and M. Kennedy)


Current Bills in Congress ‘Long -Term Care Support and Incentive

Act of 2004’ (H4432) Amends the Internal Revenue Code to

allow individuals a deduction for qualified long-term care insurance premiums, use of such insurance under cafeteria plans and flexible spending arrangements, and a credit for individuals with long -term care needs

In House Ways & Means Committee (05/04)

2 sponsors


Current Bills in Congress ‘Long -Term Care Insurance Partnership

Program Act of 2004' (S2077) Amends Title XIX of the Social Security

Act to permit additional States to enter into long-term care partnerships under the Medicaid Program in order to promote the use of long-term care insurance

In Senate Finance Committee (02/04) 6 sponsors


Current Bills in Congress Ronald Reagan Alzheimer's Breakthrough

Act of 2004 (H.R. 4595 & S 2533) A bill to amend the Public Health Service

Act to fund breakthroughs in Alzheimer's disease research while providing more help to caregivers and increasing public education about prevention.

In Senate Finance and House Subcommittee on Health (07/04)

63 cosponsors in Senate (including Coleman & Dayton) and 63 cosponsors in House (including Ramstead)



“Long-term care insurance is one of the newest employee benefits being offered….

Up to $29 billion a year is lost annually be companies due to elder care.”



Expect to see long-term care insurance for employees, their spouses, their parents and even their in-laws become a standard employment benefit.

Offering LTC insurance can help employers recruit and retain employees



Employer/Employee Benefits: Employees can receive 25% tax credit on

LTC insurance premium, up to a max of $100 (State)

Employees can deduct the cost of premiums and medical expenses, if they exceed 7.5% of the adjusted gross income (Federal)

Employers can deduct the total cost of LTC insurance they offer as part of their benefit package


Care Delivery Continuum

Meals on Wheels

Adult Day Care

Assisted Living

Facilities

Home Care

Long Term Care

Subacute Care

Hospital

OutPatient Services

OutpatientDrugs

SpecialistsPhysicianSocial Services

Medicare Services

Medicaid Services

Community/ EW Services

Continuum of

Care

Halleland Health Consulting09.03.04

Bridging the Gaps between Medicare and Medicaid

From Medicare side: Social HMOs PACE

From Medicaid side: Minnesota Senior Health Options Other State Demonstrations 48 states with waivered demonstrations

(mostly for community based care)


LTC Services & Medicaid

Medicaid funds services in three programs Home Health Care Personal Care Services Home and Community-based Waiver

Services States are required to:

Make home health available to those who are eligible for nursing facility care


PMAP Program Minnesota was one of five state

approved for 1115 demonstration waivers in 1983

Began operations in 1985 40,022 seniors now enrolled 44% of enrollees in NH or at risk of of enrollees in NH or at risk of

placement as of March ‘04placement as of March ‘04


PMAP Covered ServicesPMAP Covered Services

Medicare copayments and deductibles Drugs Some therapies Medical transportation Preventive physician services Limited number of nursing facility days Plans for including elderly waiver

services into plan responsibililty


Minnesota Senior Health Options Project

Fully capitates Medicare, Medicaid and waivered services (6 months of NH care)

Current enrollment of 5,217 in 10 counties (primarily metro)

Contracts with 3 HMOs to provide insurance and delivery systems

Enrollment of both community and institutional members (73% at risk of or in NH settings)

Plans to expand statewide – waiver application has been submitted


Medicare Advantage Services: Medicare Part A Medicare Part B Preventive &

Diagnostic Skilled Nursing Facility

PMAP Services: Dental Prescription Drugs Vision Care Transportation Limited NH Coverage

Elderly Waiver: Adult Day Care Lifeline Homemaking etc.

MSHO's Covered Services


Programs for All-Inclusive Care

for the Elderly (PACE)

Focused only on nursing home certifiable Mostly dually eligible enrollees Contractors are responsible for all

Medicare and Medicaid services - including lifetime need of nursing home care

Typically enroll 200 - 400 at each site Now a State option under Medicaid


PACE Programs

Programs for All-inclusive Care for the Elderly

Currently, 32 sites which provide services to over 12,000 seniors (7/04)

Enroll chronically ill Medicare and/or Medicaid beneficiaries who are at risk of nursing home placement


PACE Philosophy

PACE programs are ‘centered around the belief that it is better for the well-being of seniors with chronic care needs and their families to be served in the community whenever possible.’


PACE Programs

All Medicare Covered Services Plus

All Medicaid Coverage Services (including prescription drugs)

Plus Lifetime coverage for Long Term Care

Stays


Social HMOs

Currently 4 sites: Elderplan, New York Kaiser Permanente, Oregon SCAN, California Sierra/HPN, Nevada

Serve over 90,000 beneficiaries Enroll full range of well and ill Medicare

and/or Medicaid beneficiaries


Social HMOs

Medicare+Choice ‘standard’ benefit set Plus

Privately financed expanded home-and community-based and institutional care benefits

Plus Prescription drugs (some limitations)


SHMOs Findings:

Preventing or delaying long-term nursing home admissions

Improving access to preventive and supportive services

Integrating a geriatric approach to care Coordinating medical and ‘expanded’ care services

Key: While 21% of members are eligible for nursing home care, only 1/6th to 1/5th of this group actually use the benefit


Other State Efforts

Colorado – the Integrated Care and Financing Project (full capitation for Medicare, Medicaid and Waiver Services)

Arizona – AHCCCS and ALTCS (two capitated Medicaid programs that coordinate services for NHC populations)

Texas – Star+ (Integrates acute and LTC into managed care for NHC and voluntary NH)


What have we learned? Community based and facility based long-term

care need to be offered together Financing needs to be available ‘up stream’ of

Medicaid allowable finances The baby-boomers will drive insurance options

because they will ‘feel it’ sooner – through their parents and then themselves

Integrated continuum of care delivery and support is vitally important for chronically ill - insurance products should be designed to allow for this.


Also

Baby boomers and, clearly, our ‘Gen-

Xer’ children will notwill not be satisfied with the choices currently available …….



The Industry Response – The Imperative

The future of LTC depends upon: Providing opportunities to establish new

services Changing the financing structure Reforming the regulatory oversight

structure Ability to enhancement of worker

recruitment and retention options


Fix the payment, but also fix:

‘[A]n institutional structure with few choices. It is a government-controlled approach that is expensive and does not meet consumers’ needs or desires.’

The Long Term Care

Imperative: Principles for Change, 2003 Update


About the Speaker

Jeanne Ripley advocates passionately for the senior population. Simply put, Jeanne pursues all avenues to provide care options for seniors. She'll build the new options herself if need be, as evidenced by her role as Executive Director of one of the original Social HMO pilot sites, the nationally-recognized Seniors Plus. Jeanne is the speaker of choice on Medicare and Medicaid dual eligibles. She navigates the tricky terrain of financing and policy with ease: Jeanne was intimately involved in obtaining a twenty million dollar grant for an integrated health campus in rural Minnesota. She also works with a U.S.-wide coalition of seniors, payors and providers--the Medicare Justice Coalition--to assure fair payment from Medicare. For over 20 years, Jeanne's commitment has been to serve seniors and their families.

Ms. Ripley can be reached at 612.204.4178 or by e-mail at [email protected]

Documents

Long-Term Care Reform in 2004 Health Insurance Options Presented by: Jeanne Ripley Halleland Health Consulting September 10, 2004