Long-Term Care for the Disabled Elderly:
Current Policy, Emerging Trends and Implications for the 21st Century
By Robyn I. Stone, DrPH
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TRENDS IN LONG-TERM CARE DELIVERY

 

As we approach the 21st century, policymakers, practitioners and consumers recognize the dual, and sometimes conflicting, needs to address long-term care costs while maintaining and even improving quality of care. These two objectives have led to the emergence of several trends in the delivery of long-term care that have important implications for the new millennium, when the aging of the baby boomers will probably increase the demand for a broad array of long-term care services.

Integration of Acute and Long-Term Care Services

As we approach the 21st century, policymakers, practitioners and consumers recognize the dual, and sometimes conflicting, needs to address long-term care costs while maintaining and even improving quality of care. These two objectives have led to the emergence of several trends in the delivery of long-term care that have important implications for the new millennium, when the aging of the baby boomers will probably increase the demand for a broad array of long-term care services. Integration of Acute and Long-Term Care Services A number of initiatives at the federal, state, and provider levels are focusing on the management of acute and long-term care services through a range of integrated approaches. There is no consensus on the definition of integration; some insist that to have an integrated system the funding as well as the delivery must be integrated. Others argue that the goal of integration is to ensure that all services are coordinated and managed at a point in time and across time to address the broadest needs of the individual and the family (Stone & Katz, 1996). Most would agree that the following elements are critical to achieving the goal of integration of services:


Despite the rhetoric of integration, the dearth of experimentation and successful innovation in this area is not surprising. One of the primary barriers to integration of acute and long-term care is the fragmentation of funding sources, particularly Medicare and Medicaid. While a single source of financing is not essential to effective integration of services, it is difficult to reach that objective when providers do not have the financial incentive to develop a package of services across settings that best meets the needs of the disabled elderly person. Furthermore, Medicare and Medicaid have different eligibility requirements and coverage rules that may impede the development of a rational plan of care for a disabled person with acute and long-term care needs.

A second barrier is the concern about financial risk and the fear on the part of plans and providers to try to address the special challenges of integrating acute and long-term care for high-risk, high-cost people. There is no valid and reliable risk adjustment methodology or other techniques to ensure that payments are adequate to cover the costs of providing care to people with chronic illness and disability. The BBA attempted to stimulate the Medicare managed care market through the introduction of Medicare+Choice. There has, however, been little expansion in the availability and diversity of managed care options, evidence of HMOs cutting back on attractive benefits such as no premiums and prescription drug coverage, and numerous reports of plans leaving many Medicare markets. Given these trends, it is not likely that managed care plans will be offering long-term care benefits to their enrollees.

Perhaps the most overlooked barrier is the lack of knowledge, information and training needed by health and long-term care providers to offer, coordinate and manage this array of services. There is no recognized authority in our current health care system for managing care across time, place and profession, and little acknowledgment that individuals with chronic disabilities move back and forth between physicians, hospitals, nursing homes and their own homes. Acute and post-acute care providers generally do not communicate with long-term care providers, even though an elderly person may be getting services from both sectors. The absence of management information systems and patient data bases that span time and place creates a further impediment to the integration of acute and long-term care services.

Federal Demonstrations

Most of the research on integration of acute and long-term care has been conducted through several federal demonstration projects. The Social HMO (SHMO), ongoing since 1985, adds community care services and short-term nursing home care to a Medicare-HMOs acute care plan. The program focuses on providing a broad cross-section of the Medicare eligible population with acute care and limited community-based long-term care coverage. The Program of All Inclusive Care for the Elderly (PACE) represents a public approach to providing long-term care to frail elders who are Medicaid eligible and nursing home certifiable. The distinguishing features of PACE are: 1) integrated funding and providers financial risk through capitated Medicare and Medicaid reimbursements; 2) integrated service delivery with adult day care as the focal point; 3) case management through interdisciplinary care teams (from the physician to the van driver); and 4) an aggressive attempt to keep individuals out of nursing homes using community care alternatives (Branch et al., 1995; Cohen, 1997).

To date, the findings from these demonstrations have been equivocal at best (Newcomer et al., 1995a; Wiener & Skaggs, 1995), despite the long history of these projects. Researchers have, for example, pointed to the failure of the first generation of SHMOs to actually integrate care across acute and long-term care providers (Manton et al., 1993). Gruenberg et al. (1993) found that in comparing PACE enrollee costs with a national sample of fee-for-service Medicare beneficiaries, the PACE program provides Medicare with a 9 to 34% saving depending on the analytical assumptions and sites selected. Shen (1993) has shown that inpatient hospital utilization rates for frail elderly PACE enrollees are much lower than a comparable frail population. Others, however, have referred to PACE as a "boutique" model that has tended to serve an average of 200 clients per site and that may have been engaged in client "skimming" (Branch et al., 1995).

At the same time, these models are intuitively appealing and have helped shed light on better ways to coordinate care across a broad range of services and systems. The Balanced Budget Act of 1997 makes PACE a permanent Medicare provider, and many state officials, often without much empirical evidence, have expressed the desire to create PACE-like systems in their respective communities. HCFA is currently supporting a second generation of SHMOs designed to improve on the first generation models (Kane et al., 1997). Rather than controlling for adverse selection by proportional enrollment at various disability levels, the new models will establish reimbursement rates based on an individual's impairment and illness profile at the time of enrollment and annually thereafter. In addition, the new generation will establish state-of-the-art geriatric health programs that will apply to all enrollees, not just those with long-term care needs. This demonstration will focus on coordinating acute care with a set of flexible, user-friendly, efficient long-term care services.

The EverCare model of managed care for nursing home residents, originally a subsidiary of the United Health Care Corporation, also shows promise for an integrated approach to serving the most disabled and expensive long-term care population. Through Medicare and Medicaid waivers, HCFA is currently testing this model in nine sites. The program enrolls nursing home residents in a risk-based HMO, with the nursing home costs covered by traditional Medicaid or privately. Teams of geriatricians and nurse practitioners provide more intensive primary care services to nursing home residents than is the norm, and also serve as linkages with long-term care providers in the institutional setting. Because EverCare is at risk for all medical services incurred by the nursing home resident, regardless of site of care, there is no incentive to cost shift. The intent is to maintain the enrollee's health and functioning, to treat the resident holistically, and to prevent medical crises that could lead to unnecessary hospitalizations (Shield, 1996). While no HCFA evaluations have been completed yet, the program appears to save money by shortening the hospital length of stay and paying the nursing home the additional costs associated with caring for residents who would otherwise be hospitalized (Malone et al., 1993). Nursing homes participate because they see the marketing advantage from the better health care and coordinated care that is provided to their residents (Kane et al., 1998).

State Initiatives

Motivated by escalating Medicaid budgets and growing numbers of aged, blind and disabled enrollees, many states have expressed interest in the integration of acute and long-term care. They are particularly concerned about their "dual eligible" population--those eligible for Medicare and Medicaid who account for about 17% of the state Medicaid enrollees and 30-35% of program expenditures (Booth et al., 1997). While 19 states had some type of integration initiative as of 1995, several are experimenting with some innovative financing and delivery strategies for meeting the acute and long-term care needs of their Medicaid elderly and younger disabled. Arizona's long-term care system is part of a mandatory Medicaid managed care program that has been in existence since the late 1980s. Medicaid acute, long-term care and behavioral health services are included in the service package, but Medicare funding is not explicitly integrated into the program. The program, however, implicitly achieves a degree of integration at the contractor level, because Medicare services are usually delivered through the organization that provides the capitated long-term care services; Medicare reimburses the contractor on a fee-for-service basis.

Minnesota was the first state to receive Medicare and Medicaid waivers to explicitly integrate acute and long-term care for the dually eligible elderly in seven counties in the Minneapolis-St. Paul area. The Minnesota Senior Health Options (MSHO) program offers an integrated package of acute and long-term care services through a choice of three managed care plans, with voluntary enrollment. Plans are at risk for the first 180 days of nursing home costs and then are reimbursed on a fee-for-service basis with the plan continuing to provide all services. MSHO has multiple rate cells to create incentives for plans to use home and community-based care services in lieu of institutional services.

Texas Star+Plus has enrolled 60,000 aged, blind and disabled beneficiaries, including 31,000 dual eligibles, into one of three managed care plans in the Houston area.. (Two have or will be established Medicare risk mechanisms). Medicaid enrollment is mandatory; beneficiaries may also choose to receive their Medicare coverage through one of the two Medicare risk plans participating in this pilot project. They will receive an unlimited prescription drug benefit as an incentive to enroll in the full acute/long-term care package.

The Robert Wood Johnson Foundation and HCFA are sponsoring evaluations of these programs and demonstrations in other states, but the results of these studies will not be available for some time. In the meantime, the rhetoric of integration will continue, as policymakers, providers, and researchers struggle with implementing the details.

Provider Initiatives

Despite the lack of financial incentives to integrate a full continuum of services for chronically disabled elders, a number of providers are attempting to create integrated service systems. The motivation is not purely altruistic, although these providers do, for the most part, represent organizations and health professionals that have traditionally cared for the elderly and understand the need to better coordinate and manage care. There are also strong market incentives to develop such systems. Hospitals trying to fill beds and skilled nursing facilities looking to expand their business beyond traditional long-term care, see integration as a way to develop a new niche. Hospitals are vertically integrating-buying up nursing homes, rehabilitation centers and home health agencies-in an effort to become an all-purpose provider in the community. Skilled nursing facilities and, to a lesser extent, home health agencies, are more likely to be integrating horizontally-building alliances with hospitals, physician groups, assisted living developers and other community-based providers.

The National Chronic Care Consortium (NCCC) is a strategic alliance of 31 nonprofit health systems in the United States and Canada who share a vision of integrated care for individuals with chronic health conditions and disabilities. NCCC's mission is to enable member organizations to serve as an operational laboratory for establishing chronic care networks. This is defined as "a set of primary, acute and long-term care providers in a given community committed to working together to collectively prevent, delay, and reduce the progression of disability associated with serious and disabling chronic conditions". To achieve this goals, the NCCC advocates the creation of integrated governance, information, financing and care management arrangements to help providers work together in minimizing the accumulation of costs while maximizing the long-term health and well-being of the population being served.

One of the major contributions of the NCCC is the development of the Self-Assessment for Systems Integration (SASI) tool, a set of guidebooks and training materials supported by a grant from the John A. Hartford Foundation. The main part of the tool identifies nine key objectives essential for chronic care integration and addresses these objectives through four goal-setting, planning, self-measurement and resource sections. To date, SASI has been used internally by selected NCCC members to assess their progress in achieving integration. No evaluations have been published, so it is difficult to assess the effectiveness of this tool. The NCCC intends to market this package to provider groups interested in developing integrated systems, but so far, SASI has not been used by non-NCCC members.

Assisted Living

Another trend that is receiving increased attention by policymakers as well as private developers and consumers is assisted living. One of the major problems with this trend, however, is the lack of a consistent definition across providers, regulators and policymakers. Some would argue that assisted living is just a "90s" term for a long-term care setting that has been around for centuries, another example of "old wine in new bottles." Homes for the aged, frequently associated with nonprofit fraternal and religious organizations, proliferated in the 19th and early 20th centuries to address the room and board needs of poor and/or indigent infirm elderly. Over the past three decades periodic attention has been focused on scandals surrounding the treatment of residents in board and care homes, a version of homes for the aged that also became a refuge for the chronically mentally ill in response to the deinstitutionalization frenzy of the 1960s.

In the 1980s the term residential care facility became fashionable as a catch-all term for places providing room, board and some level of protective oversight. Hawes et al. (1993) have estimated that about a half million people live in residential care facilities or board and care homes in the United States. Perhaps twice that number are living in unlicensed facilities (Newcomer et al., 1997).

It is somewhat ironic that homes for the aged, board and care homes and other types of residential care were replaced in the late 1960s and 1970s by nursing homes modeled after hospitals. The amount of nursing care delivered in these facilities has been far less than the name suggests. Today residential care is again in fashion and is viewed as a desirable alternative to the nursing home because of its ostensibly less institutional character and an emphasis on a social rather than a medical model. A number of states (such as Oregon, Washington, Florida, Colorado) have been aggressive in attempting to use residential care as a less costly substitute for institutions. One recent study (Spector et al., 1996) estimates that anywhere between 15 and 70% of the nursing home population could live in residential care. Kane (1997) has questioned the judgment of hospital discharge planners who refer disabled elders to nursing homes rather than alternative arrangements because of the 24-hour care available. She notes that in reality, remarkably little nursing care is provided in nursing homes. For example, a survey of nursing home residents in six states (Friedlob, 1993) found that 39% of the nursing home residents received no RN care in 24 hours, with the RN time per resident averaging 7.9 minutes and the nursing assistant time averaging 76.9 minutes daily. Despite these arguments, it is important to note that the empirical research has been equivocal on the issue of the "substitutability" and cost savings of residential care relative to nursing home placement (Kane et al., 1991; Newcomer et al., 1995b; Sherwood & Morris, 1983). In fact, residential care is more likely to be a substitute for living in one's own home than living in a nursing home.

What appears to differentiate assisted living from the general concept residential care and the somewhat pejorative label board and care is a matter of philosophy and emphasis on care as well as housing (Kane, 1997). Some have also suggested that assisted living is the rich person's residential care while board and care is for poor people who rely on federal Supplemental Security Income (SSI) and state supplements (SSP) to cover the costs. A recent survey of assisted living regulations in 50 states (Mollica & Snow, 1996) indicates that four states (Alabama, Rhode Island, South Dakota and Wyoming) use the terms interchangeably. For the other states, key characteristics differentiating assisted living from other residential care models are:


As noted in an earlier section on care settings, Hawes et al. (1999) recently completed the first national survey of assisted living using a national probability sample of facilities that met several criteria. These include having 11 or more beds, serving primarily an elderly population, and providing 24-hour staff oversight, housekeeping, at least two meals a day, and personal assistance with two or more ADLs. Preliminary findings from a telephone survey found that most facilities offer consumers a range of privacy options. Single rooms were the dominant mode of residential unit (52 percent); 48 percent of the units were apartments. The most common type of single room was a private room with a full bathroom; the most common type of apartment was a one-bedroom, single occupancy apartment.

While most facilities reported a general willingness to serve residents with moderate physical limitations, fewer than half were willing to admit or retain residents who needed assistance with transfers from a bed or chair. Furthermore, less than half of participating facilities would admit (47 percent) or retain (45 percent) residents with moderate to severe cognitive impairment; only 28 percent would admit or retain residents with behavioral symptoms such as wandering.

In assessing the extent to which these facilities' characteristics match the philosophy of assisted living, the researchers concluded that only 11 percent offered high privacy and high service. Another 18 percent provided high privacy, but low service. Twelve percent offered low privacy, but high service. The study authors noted that residents of these assisted living facilities had considerably more privacy and choice than did residents in most nursing homes and the board and care homes they had investigated in a previous study. Nevertheless, there was much variability across facilities, with a substantial segment of the industry providing environments that did not appear consistent with the assisted living philosophy. Furthermore, the large proportion of facilities with admission or retention policies excluding the cognitively impaired or severely physically disabled suggests that assisted living is not an environment where "aging in place" can occur for those who experience significant functional decline.

As assisted living emerges as a trend that warrants serious consideration by policymakers, providers and consumers, there are a number of impediments to its development that need attention. Currently, the assisted living market is primarily the well-off elderly, with little available to moderate or low-income consumers. This gap is due, in part, to the limited sources and inadequacy of public financing (primarily SSI and SSP) which could help to subsidize the room, board and care costs for financially strapped individuals and their families. The recent study by Hawes et al. (1999) confirms that assisted living is largely not affordable for moderate and lower-income older persons. The most common monthly rate for facilities offering wither high service or high privacy was approximately $1,800 in 1998.

Other impediments include concerns expressed by state policymakers and potential private providers about balancing consumer choice and privacy with health and safety and the fears concerning liability. One of the major issues reflecting this concern is the degree to which states are willing to moderate their nurse practice acts to allow delegation of certain tasks such as medication administration, wound care and changing catheters (Kane, 1997). A number of states (e.g., Oregon, Kansas, Texas, Minnesota and New York) have included nurse delegation provisions, but the latitude and interpretations vary tremendously. Not surprisingly, these initiatives have met with serious resistance by many of the nurses organizations, with the professional turf issues as significant as the care issues.

In addition to these barriers, there is also some question about the motivation of providers in the assisted living industry, who are more likely to be real estate developers and hotel managers than care providers. Furthermore, as nursing home providers look for new markets and reimbursement strategies that circumvent regulation, there has been some concern that many skilled nursing facilities will simply lay down carpet, install some doors with locks, and hang out the assisted living shingle. Finally, there is some question as to the amount of "assistance" that is actually provided in these facilities. According to the study by Hawes et al., 65 percent of the participating facilities were categorized as "low service"; that is, they did not have an RN on staff or they did not provide nursing care but did provide 24-hour staff oversight, housekeeping, two meals, and personal assistance. Another five percent were categorized as "minimal service" in which personal assistance with ADLs was not provided. When coupled with the finding that many facilities do not accommodate people with severe physical disabilities or cognitive impairment, the concern about the level of care offered seems justified.

Consumer Directed-Care

The 1990s may someday be referred to as the "coming of age" of the health and long-term care consumer. While the focus on consumer choice is a relatively recent phenomenon on the acute care side, it has a longer history in long-term care due primarily to the disability and independent living movements of the 1960s and 1970s. Catalyzed by younger physically disabled persons strongly opposed to institutionalization and desiring a range of home and community-based options with consumers in control, the trend toward more consumer involvement and direction among the elderly has begun to emerge.

The fundamental underpinnings of consumer direction include the ability of people with long-term care needs to assume a proactive role in their choice of service modalities as well as in the delivery of that care. Important characteristics include privacy, autonomy and the right to "manage one's own risk." Consumer direction in long-term care is seen as a way of leveling the playing field between institutional and home and community-based care. It is also viewed by a growing number of policymakers as a potential mechanism for cost savings through gaining efficiencies in both the allocation of resources and in care delivery.

Policy options span the continuum from consumer involvement in care planning and decision-making to the ultimate in consumer direction--providing cash benefits to beneficiaries and allowing them to purchase their own services. With the exception of the one program administered by the Department of Veteran's Affairs, most of the activity in the area of consumer direction has occurred at the state level through Medicaid home and community-based waiver and state-funded personal assistance services programs. California, for example, has a large independent provider program for elderly and younger disabled home care clients. Rather than receiving case managed services through an agency, participants have the option of hiring and firing their own workers. As employers, they have the ability to direct their own care and to be more personally responsible for the quality of the care provided. The state supports a registry of home care workers, but also allows clients to hire their own family caregivers. The U.S. Department of Health and Human Services has funded a three-year evaluation of this program to examine the impact of the independent provider model versus an agency model on costs and quality for care recipients and workers.

At least 35 of the 50 states have programs that provide some form of financial payment to relatives and other informal caregivers for homemaker, chore and personal services (Linsk et al., 1992). Programs may compensate for work done or compensate only for the out-of-pocket expenses incurred by caregivers (Keigher & Stone, 1992). Wage programs provide compensation directly to the caregiver, although most programs provide neither full-time employment nor fringe benefits to persons caring for one or two recipients. Allowance programs provide a flat grant geared to the family or caregiver need and the care recipient's condition. Caregivers may be eligible because of the categorical eligibility for income assistance, shared household status, or simply being related to the disabled persons.

The concept of direct cash payments for long-term care services, including payments to caregivers, has been much more controversial in the U.S. than other countries. Germany's 1994 Dependency Insurance Act, for example, provides universal coverage of long-term care for disabled people of all ages with the options of cash, vendor payments or a combination of in-kind and cash benefits (Schneider, 1997). Statistics for the first year of operation indicate that 80% of care recipients with the lowest level of impairment and nearly two-thirds of the severely disabled opted for cash benefits. Since the value of the program's cash payments is considerably lower than the money-value of vendor payments, the overwhelming use of the cash option helped Germany's care funds to keep their budgets within the prescribed limits.

The Medicaid program precludes direct cash payments to care recipients. However, through a joint planning and evaluation grant from the Department of Health and Human Services and the Robert Wood Johnson Foundation, three states (New Jersey, Arkansas and Florida) have received Medicaid waivers to experiment with "cashing out" the home and community-based care benefit. The states are currently in the process of designing their respective programs, including 1) establishing the cash payment rates; 2) developing the marketing strategy for enrolling a treatment and control group (those receiving case-managed agency services) of Medicaid eligibles; 3) developing a counseling program to help cash recipients to make choices about use of the dollars ; and 4) creating a quality monitoring system that balances consumer autonomy with safety and potential fraud and abuse concerns.

As the notion of an informed consumer becomes the centerpiece of new managed care initiatives based on the concept of choice, it will be interesting to see how this rhetoric is translated into reality in the long-term care arena. Historically, U.S. policymakers have been comfortable with a cash benefit model for certain subpopulations (e.g., the working disabled, veterans). In 1999, President Clinton proposed a $1,000 non-refundable tax credit for people needing long-term care (as measured by having at least two ADL limitations) or for family members caring for such a person. While modest, this proposal would provide consumer-directed benefits (i.e., a cash refund) to "deserving" taxpaying individuals. Policymakers have been less supportive of direct payments to "undeserving" individuals such as those in specific Supplemental Security Income eligibility categories, including mentally disabled children and substance abusers. Concerns about misuse of dollars as well as potential liability in the face of unforeseen mishaps have impeded the growth of this trend in the U.S.

Consumer-direction is not an option for all people with long-term care needs, but it may prove to be an effective and efficient way to allocate precious resources to an important subset of this population. Proponents of the consumer-directed approach see it as a relatively safe and inexpensive way to satisfy consumer needs and allow payment of relatives and friends for important services. Opponents view it as a vehicle for depressing wages, exploiting workers, and jeopardizing the health and well being of vulnerable consumers who may not be able to adequately supervise their care (Feldman, 1997). Although little empirical research has tested the validity of either perspective, findings from the "cash and counseling" demonstration and other studies in this area may shed some new light on the potential and pitfalls of this emerging trend.

A review of trends in long-term care service delivery suggests the following:




Outline | I. Introduction | II. Defining Long-Term Health Care | III. The Three Legged Stool of Long-Term Care Policy
| IV. Trends in Long-Term Health Care Delivery | V. Workforce Issues | VI. The Future of Long-Term Care Demand | VII. The Future Supply of Long-Term Health Care Services
| VIII. Sinking or Swimming Into the Future? | IX. Conclusion | X. References | XI. Author