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Groups Propose Long-Term Care Overhaul

By Mary Agnes Carey, CQ HealthBeat Associate Editor

January 18, 2008 -- Three long-term care organizations have proposed a restructuring of the current long-term and post-acute care systems that would, they said, encourage individuals to save for their long-term care needs and ease the financial pressure of long-term care expenditures on federal and state budgets.

"The long-term care system, if you want to call it that, is pretty messed up," said Bruce Yarwood, president and CEO of the American Health Care Association, adding that the current system is extremely fragmented.

The proposal, which would be phased in over the next decade, would create a catastrophic long-term care program for Medicare-eligible individuals age 65 and older who have obtained $100,000 in long-term care insurance in 2007 dollars. Participants could obtain that coverage through federally certified financial products, such as insurance policies and savings accounts. That amount could be adjusted on a sliding scale and low-income individuals would be exempt.

Individuals who qualified for catastrophic federal assistance would receive cash benefits to pay for community-based services, or they would receive skilled nursing facility or assisted living facility services. Enrollment in a Medicare Advantage plan that provides long-term care is another option, according to the plan, which was released Tuesday by the Alliance for Quality Nursing Home Care, the National Center for Assisted Living, and the American Health Care Association.

At Tuesday's news conference, Avalere Health President Dan Mendelson said 90 percent of people age 55 and older have no long-term care insurance coverage, though they may face annual costs exceeding $70,000 and few elderly have adequate assets to handle more than one year of nursing home care. In addition, long-term care accounts for than 35 percent of state Medicaid budgets. In 2004, the nation spent $185.3 billion on nursing home and home care, Mendelson said. Avalere Health assisted in developing the proposal.

States' share of Medicaid payments for long-term care would shift to the federal government under the proposal. States would be required to make payments to the federal government for the costs of long-term care services, with the amount of each state's payment approximately equal the amount of the state's expenditures if it were to continue to pay for long-term care through Medicaid on behalf of dual eligibles.

Other elements of the plan call for a post-acute care patient assessment tool developed by the Secretary of Health and Human Services that the groups said would do a better job that the current system of matching medical services to the patient's individual needs, with equal rates of federal reimbursement. Currently, Medicare reimbursements can vary by facility.

Alan G. Rosenbloom, president of the Alliance for Quality Nursing Home Care, said the presidential campaigns provide a unique opportunity for candidates to discuss the nation's long-term care system. "The timing couldn't be better to have a discussion like this," he said.

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