Since We're Going to Spend Money on Health Care, Spend it Wisely!

As noted in my last post, the CLASS Act -- a provision of the Obama health care law that included modest long-term care benefits (not exceeding $75 per day) for those willing to pay the premiums -- has been scrapped as financially unsustainable.  The fact that has gone largely unspoken, however, is that their is money available to cover a substantial portion of long-term care expenses.  As former New York Times reporter Jane Gross points out recently in this excellent column, it's not that we lack the funds to cover a substantial portion of long-term care costs; rather, Medicare spends too much on the wrong type of care. 

As but one example supporting her argument, Gross points out that Medicare will cover the costs for a hip replacement for a frail senior citizen who will likely require long-term care with our without the procedure.  If the senior ends up in a long-term care facility, however, Medicare will at most cover a portion of the cost for 100 days' of rehabilitation.  Once Medicare stops paying the tab, if the senior is already of limited means -- or becomes impoverished as a result of an asset spend down -- then taxpayers, through the Medicaid program, will be on the hook for the senior's long-term care costs for the rest of her life. 

Why, you may ask, does it matter whether Medicare or Medicaid covers the cost of care -- both of federal programs, right?  As Gross points out, however, Medicare is supported by payroll taxes and thus at least has a significant element of being a self-funded program.  Medicaid, in contrast, is essentially a pure "welfare" program that is completely taxpayer supported.

The solution, Gross argues, is to have a serious national conversation about the reallocation of our precious health care dollars away from pointless and wasteful procedures (hip replacements for Alzheimer's patients) and towards the costs of custodial long-term care that is increasingly bankrupting our seniors.  Of course such a conversation will inevitably lead to the "R" word -- that is a discussion of the rationing of health care services.  I am continually amazed that conservatives who  complain about runaway government spending will decry rationing of health care -- even raising the phony spectre of "death panels" -- and seem unwilling to have a serious conversation about the irrational nature of spending on health care in this country.

Proposed GOP Budget Plan Would Slash Nursing Home Medicaid Benefits

Most of the analysis of the Republican's proposed budget (crafted largely by Wisconsin Rep. Paul Ryan) has focused on its potential impact to the Medicare program.  As discussed in yesterday's New York Times, however, the impact of that budget on seniors might be felt more acutely in the reduction in Medicaid payments for nursing home costs. 

Approximately seventy percent of all nursing home residents are on Medicaid. A significant portion of those residents began receiving nursing home Medicaid coverage only after spending down most of their assets (or if they had good legal advice, after protecting a portion of their assets through effective planning).  Under the proposed GOP budged, Medicaid (like Medicare) would be doled out in block grants to the states, with the annual grants to increase only at the rate of inflation.  Since health care costs have consistently increased well in excess of the inflation rate, states would necessarily have to curtail their Medicaid expenditures, unless they were to raise state taxes to cover the shortfall.

Click here to read the New York Times article. 

Class Action Lawsuit Challenges Medicare's "Improvement Standard"

Last fall I posted this entry discussing Medicare's misapplication of a "improvement standard" in determining a whether a person using Medicare days in a nursing home should continue to receive Medicare coverage for the duration of the 100-day maximum Medicare period for each "spell of illness."

On January 18, a number of advocacy groups joined forces and filed a class action lawsuit against the U.S. Department of Health and Human Services alleging that HHS has improperly applied the improvement standard to deny Medicare participants care to which they were entitled.   The lawsuit, Jimmo v. Sebelius, was filed in the United States District Court for the District of Vermont.

A copy of the complaint can be read here.

Medicare and the "Improvement Myth"

It is a familiar story:  an elderly woman falls down in her home and suffers a broken hip or other serious injury.  After a too-brief hospital stay, she is sent to a nursing home for rehabilitation.  Since the woman was in the hospital for at least three days prior to entering the nursing home, Medicare assumes the initial responsibility for covering the costs of her care in the nursing home.  Assuming that she is qualified, Medicare will pay 100% of the cost of  the first 20 days of skilled care, and will pay a percentage of the cost for days 21 through 100; in New York, the patient – or their supplemental insurer, if any – will pay a co-payment of $137.50 for days 21 through 100.

In practice, there is no guarantee that a Medicare will pay for the full 100 days.  Medicare directs nursing homes and home healthcare providers to terminate Medicare coverage upon a determination that the patient has failed to “improve” as a result of their treatment and is no longer in need of “skilled” care, but requires only “custodial” care.  The “failure to improve” standard has become so ingrained in Medicare lore that these determinations are rarely questioned. 

Contrary to common belief, the “failure to improve standard” is not found in any Medicare statute or its implementing regulations.  Rather, this rule is derived from references in various Medicare practice manuals, and has become “gospel” within the health care field.

Two recent Federal court decisions have affirmed that it is not required that a patient show improvement in order to receive Medicare coverage for their rehabilitation treatment.  In Papciak v. Sebelius, the U.S. District Court in Pittsburgh ruled that Medicare was improperly denied for an 81-year-old woman being treated for a broken hip whom, the nursing home claimed, was unlikely to improve.  In determining that continued Medicare coverage was warranted, the court stated,

[t]he restoration potential of a patient is not the deciding factor in determining whether skilled nursing services are needed.  Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.

Likewise, in Anderson v. Sebelius, the U.S. District Court in Vermont held that a 60-year-old woman was improperly denied home care Medicare coverage after suffering a second stroke.  The court noted that, “[a] patient’s chronic or stable condition does not provide a basis for automatically denying coverage for skilled services.”

Both of these court decisions confirm that the “failure to improve” standard that is almost reflexively employed in Medicare denials has no basis in law.  Patients denied Medicare on that basis may challenge these determinations and retain the coverage to which they are entitled.  Even better, perhaps the Federal Government will advise nursing homes and other health care providers to follow the appropriate guidelines in determining their patients’ ongoing eligibility for skilled nursing coverage under Medicare.