Long Term Nursing Care Facilities.

Nursing Home Costs

(1/20/18)- In a front page article in the January 19 edition of the Wall St. Journal entitled “Safety Net Frays for Millions of Retirees” by Leslie Scim, she discusses the sharp increase for long-term-care insurance premiums that is causing many of the policy holders extreme financial hardship.

This once hot type of policy is now being sold by only a dozen or so insurance companies and the policy restrictions continue to increase. Ms. Scim writes that fewer than100,000 such policies were written in this country last year, as opposed to 2002 when about 750,000 such policies were written.

The major factors that has caused this rise is the fact that the insurance industry failed to project correctly were the sharp increase in costs for long-term care and the longer life that people are these facilities.

(9/14/16)- In the September 13 “New Old Age” column of the New York Times, Paula Span wrote about the misconception that existed for many years that Medicare could cease paying for a long-term patient’s rehabilitation in a nursing home unless that individual was progressing in the treatment process.

If the individual had reached a “plateau” in his/her treatment, Medicare could cease paying for the rehabilitation treatments. The article entitled “Held to an Outdated Standard” points out that the payments for the treatment should continue in order to prevent the patient from regressing if the therapy were to stop.

This change occurred because the Centers for Medicare Advocacy and the Vermont Legal Aid Society brought a federal lawsuit in 2011 wherein Glenda Jimmo, an elderly resident of Vermont was named as the plaintiff. and the Centers for Medicare and Medicaid Services (CMS) was the named defendant.

A settlement was reached in 2013 under the terms of which the agency was required to “rewrite its manuals, and to begin an educational campaign to publicize the change”. When only minor changes were made to the CMS manuals, the plaintiff’s attorneys.went back to the court seeking enforcement of the terms of the settlement agreement.

The Vermont judge ruled in August that the CMS did not have to further revise its manuals, but the agency would be required to increase its educational efforts to better inform Medicare patients and their advocates of the correct standard to be used before cutting off coverage for a patient’s physical rehabilitation.

Patients generally have 72 hours to appeal a Medicare contractors denial of coverage for a “redetermination”, and then, if that fails, a “reconsideration”. If coverage is still denied, an appeal can be made to an administrative law judge.

(12/21/15)- The median annual expense for a semiprivate nursing home room is more than $80,000, according to a nationwide survey by Glenworth, an insurance company. That is a 4% increase over last year. A private room costs over $90,000 a year.

Premiums for long-term care have more than doubled from 2007 70 2014, according to the American Association for Long-Term Care Insurance .Lifetime care is no longer offered and you can be rejected for coverage based on health history

It is unclear as to exactly what percentage of long-term care policy holders let their insurance coverage lapse because of premium increases, but many health experts and insurance specialists have said that the number is “substantial”.

(5/10/13)- The Centers for Medicare and Medicaid Services (CMS) released proposed rules for 2014 Medicare rates for several healthcare segments earlier this month.

For long-term acute care the facility would see a 1.1% increase in payments consisting of a market basket increase of 2.5%, decreased by a productivity adjustment of 0.4%, 0.3% mandated by the Affordable Care Act, and 0.75% for the second year (out of three) phase- in of the one-time budget neutrality adjustment.

For a skilled-nursing facility, it would see a 1.4% increase in payments consisting of a 2.3% market basket increase, reduced by 0.5% forecast error correction, and a .4% multifactor productivity adjustment. The rule also proposes revising and rebasing the market basket index.

(12/30/11)- In a complex deal, the Jewish Home and Hospital, which was built in the 1960s on the upper West Side of Manhattan on 106th Street, between Amsterdam and Columbus Avenues will be erecting a new 24 story facility, to be constructed on 97th Street, between Amsterdam and Columbus Avenues.

The Jewish Home said that it would be ready to break ground on the $250 million project in February 2013. It hopes to be able to move into its new facility in the spring of 2017. Officials of the Home are hoping to obtain a mortgage from the U.S. Department of Housing and Urban Development, in addition to the donations that it expects to receive from private individuals.

The new facility will use the so-called "Green House" model that was pioneered by Dr. Bill Thomas. There are currently 29 such Green House projects operating in the United States, and another 25 in development. None of these other projects involves a high rise building of the size of this new one.

The Jewish Home is doing the deal with a partnership of Joseph Chetrit and Larry Glick's Stellar Management, which owns the property where the new facility will be built. The Home will receive $35 million from the developers, in exchange for its present property, which consists of a four-building complex, and a 126-year old building on West 105th Street.

The new owners of the property at 106th St. have not indicated what they intend to do with the land once they take it over.

The new facility for the Home will be configured in 12-bedroom clusters around a communal kitchen and living area. The new facility will accommodate 288 residents, which means that it will hold fewer residents than does the present complex of buildings.

The present facility has both long-term care residents and skilled-nursing facilities for shorter-term patients. No mention has been made of what the residents will have to pay at the new facility once it has been constructed.

The area where the new facility is to be constructed is much more congested than the area where the present complex is located, and is in a "higher rent district."

As New Yorkers and having known many residents and staff of the present facility, both my brother and myself are quite ambivalent about this transaction, and until we get further terms of exactly what will be happening we will follow this matter with more than a cursory interest.

(11/20/09)- According to a survey from MetLife Inc.'s Mature Market Institute, the average nursing home costs for a semiprivate room are $198 a day.

(10/10/08)- In a recent report that was issued by Daniel R. Levinson, the inspector general of the Department of Health and Human Services, it was estimated that over 90% of the 15,000 nursing homes covered by Medicare and Medicaid were cited for federal violations of health and safety standards in 2008.

The homes hold over 1.5 million people and they are typically inspected once a year and must meet federal standards as a condition of participating in Medicare and Medicaid. Medicare and Medicaid covers about two-thirds of the residents of nursing home at a cost of over $75 billion in 2008.

Inspectors received 37,150 complaints about conditions in nursing homes last year, and they substantiated 39% of them according to the report. About one-fifth of the complaints verified by the federal and state inspectors involved abuse or neglect of patients.

The average number of deficiencies also verified varied, from 2.5 deficiencies per nursing home in Rhode Island to 13.3 per home in Delaware.

The federal government is expected to put online a five-star rating system covering nursing homes in December of this year.

(7/9/05)- The Centers for Medicare and Medicaid Services (CMS) estimated that in 2003 Medicaid paid about 46% of the total of $111 billion that was spent on nursing home long term care. Medicaid covers about two-thirds of the nation's 1.6 million nursing home residents. The CMS further estimated that Medicare pays about 12 % of the nursing home bill in 2003 with individuals paying about 28% of the total cost. Private insurance accounts for another 8% of the cost, with the rest of the expense being borne by "other" sources. Please keep in mind that Social Security checks go to the nursing home if the beneficiary is a resident of a home.

States and the federal government are all looking for ways to pare down their nursing home costs and this is one of the main areas that the legislators are looking at. Most experts expect the "look back" feature to increase from 3 years to 5 years as the period of time for officials to see about gifts made by individuals who enter nursing homes. Several states have enacted legislation allowing Medicaid officials to put liens on the homes of recipients who have passed away in nursing homes where Medicaid covered their expenses.

(10/22/03)-A new study by Consumer Reports, a publication of the nonprofit Consumer Union, a consumer-information organization found that long-term care insurance is "too risky and too expensive" for most people. According to the study many consumers have trouble paying the high premium for the policy and may ultimately let the policy drop. Another fault that it found with the policies is that they often cover only a small percentage of the total cost.

The study looked at 47 long-term care insurance policies offered by seven insurance companies in California, a state that has the largest elderly population. Of the seven insurance companies, three were found to be in poor financial shape, so that the insurance company might not be around in 20 or 30 years.

Two recent surveys on nursing home costs suggest that the annual cost continues to rise at rates much greater than inflation. According to the GE Financial Survey, the annual average cost of a nursing home has reached $57,000. This survey was carried out in all fifty states this past May and involved 2218 skilled nursing homes and intermediate care homes.

The other survey by MetLife indicated that the average national cost of a semiprivate room in a nursing home is now $158.26. This was a 8% rise from last year, while the GE survey rise was 7% increase from the companies first survey in 2001.

As we understand it, the costs for therapy, rehabilitation, and medication were not factored into the poll.These rising costs are in contrast to the decline in staffing nationwide and reports of decline in quality of care.

There is also a variation of costs in the 50 states, with Alaska ranking first at $166,700 and Louisiana last at $35,000. New York City average annual cost is $105,500, with the rest of the state averaging $78,700. Neighboring New Jersey came in at an average of $80,100, while in Connecticut the average annual cost was $97,400 and in Boston it was $89,800.

The Centers for Medicare and Medicaid Services said it would increase the Medicare payment rate for long-term care hospitals by 2.5% starting July 1. It said it would publish a final rule detailing the updated payment rate in the Federal Register of June 6. The rule will establish the first payment update for long-term care hospitals since the implementation of the prospective payment system that went into effect for hospital cost reporting periods beginning on or after October 1,2002. CMS said Medicare expects to pay long-term care hospitals $2.17 billion during the 2004 long-term care hospital rate year.

As we have previously written, long term nursing care facilities feel under great pressure to meet their financial obligations and as a result are finding it harder to obtain staff because of the financial strain. In our fact-finding tour of Florida, we found one well managed long term care facility that had omitted its yearly staff token raise of 25 cents per hour. There were many of the staff members who had been employed there for over ten years. These dedicated workers were thinking of seeking work outside of the healthcare industry.

Now in our tour through Wyoming, we have found that 11 out of 38 long-term care facilities are in Chapter 11 bankruptcy. The Wyoming State Joint Labor, Health and Social Service Committee has begun a study of long-term care market and the financial ability of the state to pay for services that will be needed. Wyoming’s Medicaid program is one of the most conservative in the nation and ranks 45th among the 50 states.

According to the statistics we obtained, Wyoming nursing homes had 2772 residents, including 1704 on Medicaid (61.5% of the residents), 407 on Medicare (14.7% of the residents), while 661 residents paid for their care with private insurance or personal funds. The total population of Wyoming is nearing 500,000, meaning that less than 0.5% of the residents are in nursing homes.

Dan Lex, executive director of Quality Health Care Foundation of Wyoming, said 12 of the 17 long-term care facilities he represents reported a net dollar loss from their operations with the average loss being 10%. He feels that the Medicaid payments are not covering the costs of a majority of the facilities.

The movement is toward assisted-living residences, which house Alzheimer’s patients and elderly people who require help in daily activities. Such settings provide aid that is less intensive-and less costly- than that offered in conventional nursing homes. Recently, Alternative Living Services Inc. agreed to acquire 21 assisted-living residences from HCR Manor Care Inc. for about $200 million. This transaction is part of a broader alliance announced by the two companies to spend as much as $500 million constructing new assisted-living residences.

In order to meet the growing needs of the elderly for long term care facilities, the US Department of Health and Human Services had asked states to look at community-based alternatives for nursing home residents who do not need full care. This is one of the reasons for the rise inassisted-living facilities. This may be appropriate for large cities but what do we do with small communities where these facilities are not available?

The NY Times, September 14, 2000, carried an article entitled "City Called Too Aggressive On Health Care Repayment: Financial Threat to Middle Class Is Seen". It appears that the New York City is trying to recover some of the cost for nursing homes from a spouse, if the married couples assets exceed $84,120 or they have a monthly income of more than $2,103. NY State law requires the state and city government to pay for long term institutional care for people who need it, even if they or their spouses have assets that they refuse to turn over to the government. (See our article on spousal refusal)

Bruce C. Vladeck, former administer of the federal Health Care Financing Administration (HCFA), said that the city has the option to collect, but is not required to do so. Even the act of "trying to collect" could put a severe stress on the spouse not institutionalized.

The NY Times article states: "Human Resource officials said they provide nursing home care to more than 40,000 New Yorkers (0.57% of the total residents), at an annual cost of more than $2.6 billion. Of the approximately 1,200 people who apply for assistance each year, about 200 to 300 have income exceeding the limits. It is these cases that the city seeks repayment,"

Long term nursing care is expensive, ranging from $25,000 to $125,000+ per year depending on what part of the country the nursing home is located. For many it is a financial drain and an unwanted place to be. For others it is the most advantageous and only place to spend the twilight of their life. These places need to be comfortable and affordable without draining a spouse of life savings. No one knows when they might be in a position to need such service. Community services are important, but there must be a step-up program so that those who need nursing homes can be provided an immediate space without fear of loss of life's savings.

We have now visited facilities in Massachusetts, New York, Florida, Colorado and Wyoming, all of which are going through a stressful period. As our population ages, we are going to be confronted with a service need that society is not prepared to meet. It appears that the non-profit sites provide better long term nursing care, but even they seek alternative outlets to long term care for financial support i. e. sub-acute care. What is to happen to the frail elderly who need labor intensive medical services after our hospitals deal with the acute exacerbations of their medical condition? Are we prepared for this situation?

Please also see our article Long Term Care-Who to Turn to for Help


Harold Rubin, MS, ABD, CRC, Guest Lecturer
updated January 20, 2018

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