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Catastrophic Plans Could Help with Long-Term Care, Study Says

By Marissa Evans, CQ Roll Call

May 26, 2016 -- Catastrophic plans could be an important factor in saving money on long-term care services (LTSS) in the Medicaid program, according to a new SCAN Foundation and Urban Institute report.

A recent study found providing long-term support and services through a catastrophic insurance program could potentially offset the costs for Medicaid by about 38 percent, a move researchers say could provide financial relief for states. Medicaid is the joint federal–state insurance program for the poor. The catastrophic plans analyzed in the study would be insurance policies that would require enrollees to initially pay for services during a waiting period before receiving long-term care benefits for as long they need.

"Our research is only the first step in the analysis required to design new LTSS financing programs, but it illustrates the potential power of our simulation tool in demonstrating how new options can interact with existing programs," according to researchers.

The study also looked at front-end plans, which cover patients not long after they need long-term care benefits but only for a limited time. The study found that plans could potentially save Medicaid programs 15 percent of the usual cost.

Bruce Chernof, president and CEO of The SCAN Foundation said in an interview that both types of insurance could help prevent financial hardships for family members providing care and relieve pressure on Medicaid programs.

"This is an additional level of protection and level of support that isn't available today and that's a good thing," Chernof said.

Chernof also said that the big question would be if states would be open to participating in such plans and would be willing to help finance them.

Researchers also found that front-end plans would help save more money on out-of-pocket spending on long-term care compared to catastrophic plans. Front-end plans could save 45 percent on out-of-pocket spending compared to only 33 percent for catastrophic plans. In addition these types of plans could also fund new types of services and save money for patients. The study found savings on new services could be as much as 37 percent for front end plan policy holders and 27 percent for catastrophic plan holders.

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