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News Roundup: April 22, 2013

Home Health Medicare Co-Pay: A Study in Unintended Consequences

Published by Forbes
Robert A. Book and Doug Holtz-Eakin
April 19, 2013

The budget that President Obama submitted to Congress last week contains a call for, among other things, an increase of $1.4 billion in discretionary spending for the administrative expenses related to implementation of the Affordable Care Act (Obamacare). In a budget that claims to reduce the deficit, where is all this money coming from?

Some of it – $730 million – is supposed to come from instituting $100 co-payments for Medicare patients who use home health care. Home health care is primarily for patients who need frequent care that requires the attention of a physical, occupational, or speech therapist, or a nurse on a part-time basis, but does not require the patient to be hospitalized. The patients are homebound, and have difficulty accessing outpatient care in the usual settings. In fact, home health care is a significant factor in keeping patients out of the hospital.

The co-payment would apply to “episodes of care” requiring five or more visits over a period of 60 days or less, and is not immediately preceded by a hospital stay. In 2008, this would have applied to about 63 percent of episodes. One might think the goal to save tax dollars by replacing government spending with patient spending. But that’s not the case, as the average spending in a home health “episode” is $3,000, so the co-payment would represent only about 3 percent of total spending. Instead, the primary goal is, in the words of the Medicare Payment Advisory Commission (MedPAC), “ensuring appropriate use of home health care.”

In other words, the President’s budget doesn’t target the 3 percent that would become the patient’s copayment; it’s targeting the 97 percent that won’t be spent if patients can’t, or won’t, come up with the copayment. The administration predicts that “savings” from the non-use of home health services will add up to $730 million. This is consistent with MedPAC’s belief that a significant fraction of home health care is used by patients who could replace it with standard outpatient care, and that they are getting care at home only because it’s “free.”

The problem is, this fails to take into account that a significant fraction is also used by patients who would otherwise be using standard inpatient care – that is, they would be in the hospital instead of at home. If patients do indeed forgo care as the administration intends, many would see their condition deteriorate, and they would end up requiring hospital care to fix a problem that could have been prevented in the first place. In fact, data since 2002 shows that as home health has grown as a percentage of total per-beneficiary spending, hospital inpatient spending has fallen, and by a greater amount. It might be that spending more on home health saves money overall. (See chart.)

AARP: Seniors Need Better Internet Access to Support Aging in Place

Published by Senior Housing News
Alyssa Gerace
April 16, 2013

Seniors need to have better access to high-speed Internet in order to benefit from Web-based technologies that support aging in place such as telehealth and “smart home” systems, says AARP in a Public Policy Institute report.

Many older adults still do not have affordable, high-speed connectivity at home, and a review of 2010′s National Broadband Plan suggests a “slow and uncertain progress” to address barriers to older adults’ adoption and use of broadband, according to the report.

Just under four in ten people aged 65 and older had high-speed Internet access in their homes as of 2012, compared to 77% of the 30-49 age demographic.

Among minorities, access dips much lower, to 18% of African-Americans aged 60 and older, and 20% of Hispanics in the same age cohort.

Lacking access to broadband access is a problem, according to an FCC chairman who said that “broadband has gone from being a luxury to being a necessity for full participation in our economy and society.”

While the Internet was once predominantly used by consumers for email and reading Web pages, says AARP, it has become a more powerful and common platform with many more capacities.

Internet-based technologies can help support the needs and ambitions of older adults in five interrelated areas, the report says: personal fulfillment, health preservation, social connectedness, functional capability and activity, and caregiver support.

The ability to work from home thanks to higher-speed Internet service, for example, could be “particularly valuable” to older adults facing “growing demands to manage complex health, retirement, and care arrangements.”

Other uses include self-management of chronic diseases that can help prevent or postpone functional decline, such as home-based “smart medical services.” Game systems like Nintendo Wii or Sony PlayStation can help seniors stay physically active and encourage seniors to exercise, while video conferencing and telepresence technology can connect patients living at home with health professionals and services.

“Truly high-speed Internet access can make the world more accessible for older Americans, providing convenient pathways to the resources,a captivities, and services that empower them to live healthy, independent, and meaningful lives,” AARP says, going to on recommend several steps policymakers should take to expand access.

Home Care Remains Cost-Effective Option For Aging in Place Seniors

Published by Reverse Mortgage Daily
Alyssa Gerace
April 12, 2013

Long-term care in institutional settings has continued to get more expensive in the last five years, but in-home care costs have remained flat, according to the Genworth 2013 Cost of Care Survey.

For people who may require some assistance with activities of daily living but don’t need around-the-clock care or supervision, remaining at home with the help of a home care aide or home health agency could be more cost-effective than moving into an assisted living or skilled nursing facility.

The national median hourly rate for licensed homemaker services is up just 1.39% to $18 in 2013. Licensed home health aide services have a national median rate of $19 an hour, up 2.32% from 2012.

“Home care rates have remained flat in part because of increased competition among agencies and the availability of unskilled labor, and because the companies that provide these types of services do not incur the costs associated with maintaining stand-alone healthcare facilities,” says Genworth.

Both home care services have seen a 1% or less growth in costs in the last five years, according to the Cost of Care survey. The cost of assisted living care, in contrast, has grown 4.26% in the last five years, while a private skilled nursing room costs 4.45% more in 2013 than in 2008.

A private unit in an assisted living community cost a national median monthly rate of $3,450, up 4.55% from 2012.

Nursing home care got more expensive, too: the national median daily rate of a private room grew 3.60% to $230, while a semi-private room is now a median $207 a day, up 3.30% from last year.

In contrast, someone needing less extensive help could hire a home health aide for four hours daily, averaging out to less than $80 a day and under $30,000 a year.

Whether people remain at home or move into a senior care facility, more and more are expected to need long-term care, says Genworth.

At least seven in ten people aged 65 or older will need long-term care services at some point in their lifetime, research shows, while about one in nine people in that same age range have Alzheimer’s disease.

The duration of the disease makes the need for long-term care support “critical,” Genworth points out, adding that 46% of its total long-term care insurance claims in payment—and half of all claims dollars—are due to dementia.

The “astronomical” costs of Alzheimer’s care, both for paid care and care from unpaid caregivers, is expected to reach $1.2 trillion by 2050, according to the Alzheimer’s Association.