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CBO predicts long-term care costs will hit $200B by 2023

Published by Medical Device Daily
Mark McCarty
September 23, 2013

The Congressional Budget Office released a report addressing the current and future demand for long-term services for Medicare beneficiaries, a document sure to stoke congressional interest in legislation to address the impending tidal wave of demand for such services. Congress repealed last year a bill dealing with community-based living assistance, but the report will add to the pressures on elected officials who are mired in a long-running debate about the fundamental structure of mandatory spending programs, including Medicare programs for durable medical equipment.

The CBO report notes that a fifth of the U.S. population will be at least 65 years of age by 2050, while those at least 85 years of age will make up 4% of the population by that date. CBO cites a 2005 study by Kemper, et al which indicated that as many as two in three of those who make it to the age of 65 “will need assistance to deal with a loss in functioning at some point during their remaining years of life.” The article by Kemp is titled “Long-Term Care Over an Uncertain Future: What Can Current Retirees Expect?” and appears in the December 2005 issue of Inquiry.

CBO predicts that Medicare spending for post-acute care will hit nearly $60 billion in fiscal 2013, a figure the agency expects will surpass $100 billion by FY 2023. State and federal spending for this population under Medicaid is expected to reach a similar number by 2023, a substantial portion of the $1.58 trillion the two programs will cost that year. However, CBO’s forecasts may be presumed to rely on the recent slowdown in Medicare and overall healthcare spending growth, a trend that many observers believe will revert to historical norms in the coming years (Medical Device Daily, May 17, 2013).

The Community Living Assistance and Services and Supports Act was designed to address such considerations, and was folded into the Affordable Care Act. The Obama administration acknowledged the program was unworkable the following year (MDD, April 22, 2011), but CBO had previously indicated the viability of the CLASS Act would be in question within five years of enactment (MDD, July 9, 2009). Congress included a repeal of the CLASS Act in the Taxpayer Relief Act of 2012.

Tyler Wilson, President/CEO of the American Association for Homecare (AAHomecare; Washington), said in a statement e-mailed to MDD, “the demographics of the country and the health challenges that the aging population faces are two factors that argue for more support for care at home.” He asserted that because four of five elderly “receive care in the community and that most of them live in private homes, it seems as though healthcare companies that provide medical equipment, products and supplies to that population should not be disadvantaged by the Medicare system.”

Wilson argued that Medicare programs for DME competitive bidding and related audits “have made it increasingly difficult for home medical equipment providers to supply quality service,” but he observed that more Americans are determined “to remain independent despite longer lifetimes with increasing frailty.” He added that the Centers for Medicare & Medicaid Services “seems not to recognize that reality as it undermines many of the companies that are trying to meet the needs of the elderly living at home.”

Device makers are well aware of the sizeable market for their offerings in home health, but one association leader noted that device makers may want to consider a more consultative approach. Teresa Lee, executive director for the Alliance for Home Health Quality and Innovation (AHHQI; Washington) told MDD in an e-mailed statement that the CBO report might prompt device makers “to look more closely at building partnerships with providers who care for elderly patients in need of long-term services and supports, particularly those providing care in the home.”

Lee remarked that the preference expressed by seniors for “aging independently at home rather than in institutional settings . . . coincides with new initiatives from the federal government and CMS that are looking to home-based care to provide an alternative to high-cost services traditionally provided in facilities.” She remarked that the Alliance’s membership, including home health providers, “are looking to remote monitoring, mobile health, and health information technologies as tools to improve coordination of care, patient engagement and care transitions.”

Hinting that legislators have not forgotten about the long-term care predicament, Lee said this is the subject “of continuing interest in the policy community given the repeal of the CLASS Act,” adding that the focus should perhaps be on “how the medical device industry can work with home care providers, patients and caregivers to address the needs of the aging and improve health care at home.” Lee pointed to a 2011 report by the National Research Council titled “Health Care Comes Home: The Human Factors,” which addressed a number of considerations, including user interfaces. “This is just one example of an opportunity to collaborate, and there may be other critical needs that could be addressed collectively” as well, she concluded.

OIG says nay to GPO equity proposal

Some device makers have less-than-glowing feelings about group purchasing organizations, and the Office of Inspector General at the Department of Health and Human Services recently gave a GPO a dose of bad news. OIG notes in a July 16 decision it would not go along with a proposal to give GPO members an equity interest in the GPO’s parent organization in exchange for several considerations, including a contract extension from five to seven years.

OIG said the GPO had stipulated that members would have to vow “not to decrease purchasing volume” and would have to relinquish their rights to a share of administrative fees “that would otherwise have been passed through to the members.”

The agency nixed the proposal because it could generate “prohibited remuneration under the anti-kickback statute,” but the memo also addresses inherent enforcement problems, noting that “any definitive conclusion regarding the existence of an anti- kickback violation requires “a determination of the parties’ intent,” the determination presumed to be “beyond the scope of the advisory opinion process.”