Nursing Home Costs, Hospital Admissions and Hospice Use

APRIL 29, 1996 VOLUME 3, NUMBER 44

This week, Elder Law Issues reports a number of trends, statistics and individual items which we have been collecting for weeks. None warrants its own Issues article, and yet each is interesting enough to justify mention.

Nursing Home Costs

Figures have been released for the cost of nursing home (and other health care) in 1993. More recent statistics are not yet available.

Nursing home expenses totaled $69.6 billion in 1993. Money for nursing home care came from both private and government sources. Among the latter, Medicaid (including Arizona’s ALTCS program) paid 51.7%, Medicare 6.5% and all other government sources (including the Veteran’s Administration) 4.4%. The remaining (private) sources of nursing home funds consisted mostly of insurance payments (2.5% of the total) and out-of-pocket payments by private individuals, which accounted for 33% of the costs.

These figures reflect an increase in the share paid by private insurance, though it remains a small part of the nursing home financing picture. The government’s share of nursing home expenses (as well as all other medical expenses) continues to increase. Although nursing home figures for 1994 are not yet available, total medical expenses increased by about $50 billion, or just under 6%. Of that increase, government sources accounted for $33 billion, though remaining slightly smaller than the share paid by individuals and insurance companies.

While Medicare pays a small fraction of nursing home costs, the picture is quite different for home care services. Medicare accounted for 38.8% of such payments in 1993, while Medicaid paid only 15.5% and other government programs picked up .5% of home care costs. Private insurance paid another 12.2% of the cost of home care, and patients’ out-of-pocket expenses totaled 20.8%.

Hospital Admissions

According to the American Hospital Association, hospital use by elderly patients increased in the first quarter of last year. Quarterly statistics show that utilization is highest in the first quarter of each year, but that the increase in 1995 over 1994 utilization was about 4%. Nonetheless, the total number of hospital days actually dropped; the average length of stay for elderly patients fell from 8 days to 7.3 days during that time period.

Critics of the efforts to reduce hospital costs in recent years frequently refer to current discharge practices as getting patients out of the hospital “sicker and quicker.” Utilization statistics clearly support the “quicker” part of the formulation, in any event. One result of this trend: defying recent trends, medical costs increased less than the consumer price index.

Hospice Underutilized

According to the National Hospice Organization, hospice services continue to be implemented in a small minority of cases where they would be appropriate. The Organization estimates that in 1994 fewer than 15% of eligible Medicare patients actually enrolled in hospice.

Many Medicare recipients are unaware of the terms of the hospice benefit, which is considerably more generous than other Medicare programs. In most circumstances, hospice enrollees pay no co-payments or deductibles, and have all prescription drugs provided. By contrast, Medicare beneficiaries (except those enrolled in Medicare HMOs) usually pay for all their own medications, and 20% of the approved cost of most other outpatient medical treatment.

Because of the perceived underutilization of hospice programs, federal law now requires hospitals and nursing homes to specifically consider hospice benefits at the time of discharge. The new law became effective in November, 1995.

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