Do you wonder what will happen if you are no longer able to live independently? Will you have to “go into a home?” Is a nursing home the only way to go, or are there other living situations that might allow more independence? What will happen to your spouse? And who will pay for all of this? Medicare? Medigap insurance? Your kids? Is long term care insurance the answer?
Elders whose care is not covered by Medicare (and beware, Medicare covers only a limited period of “skilled” nursing care) have to look to Medicaid for help. Arizona has its own Medicaid program, the Arizona Long Term Care System (ALTCS). Unlike Medicare, which is available to elders above age 65, ALTCS applicants must qualify both medically and financially. The financial eligibility criteria are stringent and complex.
Victoria Blair, one of the partners at Fleming & Curti, PLC, offers a two hour program to address just these sorts of questions on Wednesday, January 27th and Thursday, January 28th. We will serve a continental breakfast and we promise to answer your questions about planning for (and paying for) long term care.
Both programs will include a discussion of the basics of ALTCS. Wednesday’s session will focus on our clients who are considering long term care options for themselves or a loved one. Thursday’s session will be a little more technical, and aimed at case managers, social workers and other professionals who want to better assist their clients. You are welcome to attend either session. There will be no charge for either program, but space is limited and reservations must be secured in advance.
Who should come to ALTCS School? Anyone who is thinking seriously about nursing home care, assisted living or in-home care, or is just curious about the options. Anyone who is contemplating purchasing a long term care insurance policy. Case managers and social workers are welcome (especially at Thursday’s session) and will leave with a clearer understanding and with answers to their questions about the system.
Ms. Blair will explain the medical and financial eligibility criteria for ALTCS. She will review what resources the “healthy” spouse can keep — a house, a car, money to live on — and strategies for “spend down.” She will review the penalties for making gifts (or selling assets for less than their value) to family members. And she will go over long term care insurance policies: what they cost, what they cover, and whether purchasing such a policy makes sense for you and your family.
To attend: contact Yvette in our office at (520) 622-0400 or by e-mailing our office. Please be sure to provide us with contact information and indicate whether you prefer to attend the client/layperson session on January 27th or the social worker/case manager/allied professional session on January 28th.
The Medicare program has announced its 2010 premium and coinsurance rates. As predicted, an anticipated increase in medical costs will mean a steep rise in Medicare-related premiums, but federal law protects most recipients from having to pay the new rates. One effect of changes in Medicare rate-setting over the last few years will be seen more clearly in 2010. Not long ago, every Medicare beneficiary could expect to pay the same portion of his or her medical costs. Those days are over, and a confusing system of co-payments, deductibles and premiums has now gotten more confusing.
Medicare has set the annual premium increase for Part B insurance at 15%, which translates into a 2010 premium of $110.50 per month. Nearly three-quarters of Medicare beneficiaries, however, will not have to pay that higher amount. Congress limited current Medicare beneficiaries’ premium increases to no more than their Social Security cost-of-living adjustment. Since Social Security announced two months ago that there will not be a COLA increase in 2010, that means that most Medicare beneficiaries will continue to pay $96.40 per month for Part B.
People who have been receiving Medicare but have not had Part B premiums deducted from their Social Security checks, for whatever reason, are not protected from the increased premiums.
New Medicare beneficiaries are not protected, either. If you start receiving Medicare benefits in 2010 for the first time, you will pay the higher rate.
Wealthy Medicare beneficiaries are not protected from increases. If a single person makes more than $85,000 per year, or a married couple more than $170,000, they will see the increase in their Part B premiums.
Wealthy Medicare beneficiaries actually get a double dose of increased premiums. Not only are they not protected from the 2010 increase, but they may also have to pay higher premiums based on their income levels. For the wealthiest Medicare beneficiaries — those whose individual income is over $214,000, or couples whose income is over $428,000 — the new Part B premium will be $353.60 per month.
Income for these calculations is determined by reference to the beneficiary’s 2008 income tax return. For those whose income has dropped since that year, it is possible to request a revision based on a later year’s tax returns.
Medicare Part D (the prescription drug benefit plan begun last year) includes an annual “election period” from November 15 through the end of the calendar year. Seniors—many of whom struggled to understand the program a year ago and waded through reams of information to select the most promising choice—now must review their existing Part D plan, figure out what changes are in store, and make another selection of the best option available for their individual circumstances.
As was the case last year, there is plenty of information about the plan options facing each Medicare beneficiary. The best collection of information about plan choices comes from the Medicare program itself, which operates a well-designed, understandable and informative website at www.medicare.gov. Among the points made by the Medicare site: the real due date for your Part D selection is December 8, not December 31—you need to make sure your new plan is in effect in time to assure coverage for any January prescription needs.
The upcoming year will provide a number of changes affecting prescription drug coverage. A few of those include:
The number of available plans continues to proliferate. In the Tucson area, for example, there will be 53 Prescription Drug Plans, 19 Medicare Health Plans, and 10 Medicare Special Needs Plans available—an increase of 20 total options.
Premiums will generally increase. Last year’s premiums for the Tucson area ranged from $6.14 to $64.86 per month, while the 2007 premiums will vary from $10.40 to $78.10.
Other costs will also increase, and by more than the rate of general inflation. While Social Security payments, for example, will increase by 3.3% next year, the out-of-pocket costs (not including premiums) for 2007 will increase by 7%. That figure includes a $265 deductible (the 2006 figure was $250), a copayment of the 25% for the next $2,135 (last year the copayment was for just $2,000 of drug costs), and a “donut hole” of $3,051.25 (up from $2,850).
Congress’ switch from Republican to Democratic control may lead to other changes, as well. Democratic leaders have made clear that they expect to immediately address the existing ban on government negotiation of drug prices. One Democratic leader has already introduced a bill that would direct the government to offer and operate a Medicare drug plan of its own. Administration officials argue that both measures conflict with the underlying free-market rationale behind Medicare’s prescription drug program, but it is too early to predict the outcome of that debate.
Each year Social Security benefits are raised automatically to keep up with the increased cost of living. Benefit increases are pegged to standard measures of inflation, and take effect on January 1. Social Security figures, however, are not the only automatic increases affecting seniors and the disabled.
Beginning January 1, 2002, Social Security beneficiaries will see their monthly checks go up by 2.6%. Supplemental Security Income (SSI) recipients will also see a 2.6% increase, with the largest federal checks going up to $545 (some but not all states contribute an additional amount to SSI benefits).
That SSI increase will have an indirect effect on Arizona nursing home residents. The Arizona Long Term Care System (ALTCS), Arizona’s Medicaid program for long-term care subsidies, is available only to those with incomes less than three times the maximum SSI benefit.
As a result ALTCS recipients with more than $1635 in monthly income will need to take additional steps to qualify for assistance. In most cases that will mean establishing a “Miller” Trust, though it may be more complicated for some long-term care recipients. Some ALTCS patients who have already established Miller Trusts may no longer need them if income has failed to keep up with the automatic increases.
Participants in the federal Medicare program will also see some increases in program numbers. Perhaps most importantly (or at least most immediately apparent) will be an increase in the Part B premium paid by Medicare beneficiaries. That premium is usually deducted from Social Security benefits, which means that a portion of the cost of living increase will be withheld from checks automatically. The Part B premium is slated to increase from $50 to $54 per month.
Other Medicare numbers will also change, with most of the changes pegged at 2.5% over 2001 figures. Increased figures will include the deductible for hospital stays (rising to $812 per month), and the coinsurance amount for nursing home stays between the 21st and 100th day of the stay (rising to $101.50 per day).
Some state government figures have also increased. Arizona annually calculates the average cost of nursing home care for purposes of determining whether gifts made by ALTCS applicants should disqualify them from coverage. In most cases the value of a gift is divided by the state-calculated figure to determine a period of months of disqualification. Arizona’s calculation of the average cost of care increased, effective October 1, 2001, to $3,540.67. In other words, if an ALTCS applicant gave $35,406.00 to his children in 2001, he would be ineligible for ALTCS for 9 months (the ineligibility period is rounded down). The figure for counties other than Pima, Pinal and Maricopa is lower, at $3,290.17.
It can be a chore to keep track of the regular changes in benefits levels and rates. At Elder Law Issues we will try to keep you current; let us know if there are other benefits figures you have difficulty locating.
Medicare is a federal program providing medical care to millions of seniors and disabled individuals. Although beneficiaries may pay some portion of their own care costs those contributions are in most cases modest. By any reckoning, however, there are two important medical needs not covered by the Medicare program—long term nursing care costs and prescription drugs. While about half of the national cost of long term care ends up being paid by other government programs (primarily Medicaid, a federal/state program for the poor), prescription drugs are paid for by individual Medicare recipients in most cases.
With medication taking a more central role in medical care, and in the face of rapidly rising drug costs, advocates and governments seek to make drugs affordable to individuals without forcing them to qualify for Medicaid coverage. One innovative approach was adopted by the State of Maine last year, and the State was promptly sued by representatives of the drug industry.
Maine’s approach was to establish a state-sponsored group purchasing plan. The “Maine Rx Program” would create a state fund from rebates collected from participating drug companies, allowing Maine residents to effectively wield the same group purchasing power enjoyed by Medicaid programs, HMOs and other large, organized groups.
Any drug company which declined to participate in the Maine Rx Program would be publicly identified, and could presumably expect to see its sales shrink. More powerfully, uncooperative drug companies would have their products removed from the list of drugs which are automatically approved for use in Maine’s Medicaid program.
The Pharmaceutical Research and Manufacturers of America, an industry group, sued to enjoin Maine from implementing its new program. Federal Judge Brock Hornby granted the injunction, and the State appealed to the First Circuit Court of Appeals in Boston.
The drug industry argued that the federal Medicaid program preempts Maine or any other state from adopting its own drug plan that includes Medicaid penalties for noncompliance. Not so, ruled the appellate judges: “We perceive no conflict between the Maine Act and Medicaid’s structure and purpose.”
The drug industry also argued that the Maine Rx Program is an impermissible attempt by Maine to control companies located outside its own borders. Once again the Court of Appeals disagreed, saying that the program does not “regulate” the drug companies’ interstate commerce, and that the effect on the drug industry is not excessive in relation to the benefits sought to be obtained. Pharmaceutical Research and Manufacturers of America v. Concannon, May 16, 2001
The Court of Appeals permitted Maine’s experimental program for controlling drug prices to go forward. It remains to be seen whether the Maine Rx Program will actually be effective at controlling prices.
George and Barbara McCall, California residents, sued their HMO and their primary care physician. They claimed that the HMO (PacifiCare of California) refused to refer Mr. McCall to a specialist when he needed a lung transplant, and that he was ultimately forced to disenroll from PacifiCare and seek medical care through Medicare. PacifiCare, for its part, claimed that Mr. McCall’s sole remedy was to appeal through the Medicare process, and that he could not bring a separate lawsuit.
Mr. and Mrs. McCall signed up with PacifiCare as a Medicare HMO—they were covered by Medicare and chose the HMO in order to reduce co-payments and deductibles. Their lawsuit alleged that PacifiCare violated its duty to provide referrals consistent with good medical practice, allowed its medical decisions to be guided by fiscal and administrative decisions, and encouraged Mr. McCall to leave the program when he appealed the denial of medical care. The trial judge agreed with PacifiCare that those questions had to be addressed only to the Medicare agency, since that was the source of funding and control of the McCalls’ medical care.
The California Supreme Court disagreed. It pointed out that the review provided through Medicare is limited—Medicare HMOs are required to offer an administrative review process only to patients who are “dissatisfied because they do not receive health care services to which they believe they are entitled, at no greater cost than they believe they are required to pay.” That provision addresses only the availability and cost of services, and does not provide any review for medical malpractice, or breach of the HMO’s duty to provide care. Since those items are not covered in the Medicare appeals process, reasoned the Court, the common-law right to sue the health care provider must still be available to the patient. McCall v. PacifiCare of California, Inc., May 3, 2001.
The McCall case comes at a critical time for the Medicare program. Congress is currently discussing a “patient’s bill of rights” concept which incorporates the same ideas. Critics of the legal system claim that leaving HMOs open to litigation is just another way of driving up the cost of health care while lining the pockets of trial lawyers. Critics of the HMO and managed-care industry argue that refusing to allow Mr. McCall, and people like him, to sue their HMOs will lead to more abuses like those the McCalls believe they suffered.
Two of the Court’s seven justices dissented from the ruling. They argued that the law provides only one remedy for Medicare patients who are upset by the availability or quality of care—to appeal the denial through the Medicare process. In Mr. McCall’s case, that appeal would have been made to PacifiCare itself.
Three short years ago Congress was pushing for increased use of “managed care” plans as one way to stave off a looming financial crisis for the federal Medicare program. Today the promise of managed care continues to be unmet—largely because of Congress’ own actions.
The federal government picks up almost 40% of all health care costs in this country, with almost half of that amount (just under 19%) paid by the Medicare program. Medicare covers over 13% of all American citizens. The program offers hospitalization, out-patient care, hospice and home health care, together with a limited nursing home benefit, to most citizens over age 65, the totally disabled and a handful of other beneficiaries.
Medicare HMOs (Health Maintenance Organizations) first began to sign up significant numbers of participants in 1995, and by 1996 Tucson had more of its Medicare recipients enrolled in HMOs than nearly any other community in the country. The New York Times, in an article published in March, 1996, predicted that the Tucson experience would soon sweep the nation, and that Medicare HMOs would continue to grow as seniors learned they could save money and still get good care.
Then Congress derailed its own HMO plans. In passing the Balanced Budget Act of 1997, Congress made it much more difficult to operate a profitable Medicare HMO. The result: in the next year (1998), over 400,000 HMO members were dropped when their health plans curtailed coverage in particular areas, especially in rural communities.
HMOs did not end their flight away from Medicare programs in that year, either. In 1999 another 327,000 enrollees were dropped by their HMOs, and almost a million more will lose coverage in the year 2000.
None of those HMO participants will actually lose Medicare coverage, of course. As HMOs pull out of the Medicare market, individual plan members are free to switch to another HMO (assuming another HMO offers coverage in their area) or return to “traditional” Medicare. They may find the choice of doctors or the extent of coverage sharply curtailed, however.
The 1996 New York Times article cited strong HMO competition in Tucson, with four companies offering different programs. That competition has now shrunk to just two HMOs in the Tucson area: Intergroup of Arizona, Inc., and PacifiCare of Arizona, Inc. (PacifiCare actually offers three slightly different programs under its Secure Horizons name). One HMO (Intergroup) offers coverage in Nogales, and four are active in parts of Pinal County, but the rest of Southern Arizona has no Medicare HMO coverage available. That experience is mirrored across the country as HMOs pull out of Medicare, particularly in rural areas.
Last weekElder Law Issues reported on a government study of nursing home staffing and safety. This week we continue that report. The full DHHS/HCFA report is now online.]
As described last week, the Department of Health and Human Services report recommends minimum staffing levels for nursing aides, Registered Nurses and Licensed Practical Nurses in nursing homes. It also suggests optimum levels. Almost two-thirds of U.S. nursing homes fall below those optimum staffing levels, and about half are below even the minimum levels for RNs and LPNs.
Why are staffing levels so low? Part of the problem, according to the government report, is the government itself. In recent years the federal Medicare and Medicaid programs have moved aggressively to cut medical costs, with particular emphasis on long-term care costs. Particularly notable was the Balanced Budget Act of 1997, which reduced government spending largely through reductions in Medicare and Medicaid financing, and with particular emphasis on long-term care, hospital care and drug costs. One result: many nursing homes can not afford adequate staffing.
A related problem in recent years has been the growing number of individual nursing homes, regional and national nursing home chains facing financial difficulties. A number of national chains have filed bankruptcy proceedings in the past eighteen months. Vencor, Sun Healthcare, Integrated Health Services and Mariner Post-Acute Network, four of the largest chains in the country, all filed for bankruptcy protection during that time period. Combined, these troubled organizations operated well over a thousand nursing homes.
The DHHS study looked at staffing ratios in those financially troubled nursing homes as compared to other chains and individual homes. Not surprisingly, staffing in the bankrupt chains decreased in the last four years—but so did staffing levels in the non-bankrupt chain facilities. Staffing levels in non-chain nursing homes, meanwhile, increased slightly during the same time period.
What will Congress and the Administration do about the decline in nursing home staffing? Republican Senator Chuck Grassley of Iowa, Chairman of the Senate’s Special Committee on Aging, provided one preview. In a press release issued days after the report was received, the Senator intoned that “the suffering of nursing home residents is intolerable. Bedsores and malnutrition turn the stomach and hurt the conscience. They beg for a solution, the sooner, the better.”
Senator Grassley “plans to look into options to encourage states to increase Medicaid rates for nursing homes if they agree to hire more staff with the increased rates.” In addition, the Senator promises to consider giving the nursing home industry back some of the money cut from Medicare budgets by the Republicans’ “Balanced Budget Act of 1997″—provided that the nursing home industry uses the money to hire more staff.
Will this solve the nursing home staffing problem? Perhaps. Direct government regulation may work better. In those states with minimum staffing requirements, the report indicates that staffing approaches the levels deemed acceptable by its analysis. But if staffing levels are increased by government order, but no new money is added to the system, those nursing homes already experiencing financial difficulties can hardly be expected to thrive.
Gilbert Levy, like many Medicare beneficiaries, was attracted by the promise of HMO coverage for his Medicare benefits. The California man shopped carefully, and only signed up with PacifiCare Health Systems after he was sure that he would be able to choose his own primary care physician, and that he would be entitled to all treatment recommended by that doctor. Mr. Levy chose Empire Physicians Medical Group, and particularly Dr. Frankel, to be his primary physician. Then Mr. Levy got sick.
In October, 1996, Mr. Levy was diagnosed with lung cancer. Dr. Frankel referred him to PacifiCare’s oncology expert. That physician, Dr. George, advised Mr. Levy that the tumor was too close to his heart, and was therefore inoperable. According to Dr. George, the only choice for Mr. Levy was chemotherapy and radiation.
Dr. George was an oncologist, not a surgeon, and so Mr. Levy requested a second opinion. He chose Dr. Morton, a thoracic surgeon at John Wayne Cancer Institute. His primary care physician, Dr. Frankel, prepared the necessary paperwork for the consult. Empire Physicians denied the request, saying that Mr. Levy must see a local physician associated with the plan instead.
Mr. Levy paid Dr. Morton out of his own pocket for an evaluation, and got both good and bad news. Dr. Morton believed the cancer was operable, but insisted that the surgery be performed immediately, since the tumor could be expected to double in size within thirty days. Mr. Levy returned to his primary care physician, who obligingly prepared the paperwork to request approval for Dr. Morton to operate.
Mr. Levy’s HMO once again refused, insisting that the surgery must be performed by an in-group physician. Since the group’s oncologist had already told Mr. Levy there was no physician in the group who would perform the surgery, he instead chose to disenroll from the HMO and return to regular Medicare coverage. Dr. Morton operated successfully the day after the disenrollment was effective.
Mr. Levy not only sued PacifiCare and Empire Physicians for damages, but also asked the California state court to enjoin both groups from continuing the same behavior. In his lawsuit, he raised several of the most common criticisms of Medicare HMO policies and practices:
Because of the way Medicare pays HMOs, there is a built-in incentive for denial of coverage in circumstances like Mr. Levy’s. For example, PacifiCare is reimbursed for care it provides its Medicare customers based not on how much medical care they need, but strictly on how many of them there are. PacifiCare receives approximately $570 per month for each Medicare beneficiary it signs up, regardless of how many are sick, or how much medical care they require. When a Medicare beneficiary becomes ill, the HMO does not receive any additional income to help pay the cost of caring for that member.
The arrangement between PacifiCare (the HMO) and Empire (the doctor’s group) compounded this problem, according to Mr. Levy. Like PacifiCare, Empire received its income based only on how many PacifiCare members it enrolled, not on the basis of how much care they needed. When outside services (such as Mr. Levy’s second opinion and the proposed surgery itself) are called for, Empire must pay for those services from its share of the $570 per patient per month. Consequently, according to Mr. Levy’s lawsuit, Empire has the same built-in incentive to deny authority for the referral to a non-participating doctor, especially when there is some prospect that the doctor might recommend treatment that is not provided within the Empire group.
Because of those built-in conflicts, alleged Mr. Levy, PacifiCare and Empire withheld the outside referrals, denied authorization for testing, failed to provide adequate diagnosis, testing and treatment, and failed to pay for treatment Mr. Levy needed. All of that, argued Mr. Levy, was a breach of the duty of good faith and fair dealing owed by the medical providers to their patients. That denial, according to Mr. Levy, went further—it caused him substantial emotional distress, which PacifiCare and Empire knew (or should have known) would flow from their denials of coverage.
Because both PacifiCare and Empire knew that they would behave the way they did if a claim like Mr. Levy’s was made, he alleged that PacifiCare had made serious misrepresentations to him when it first signed him up for the HMO program. He had been told that he would receive all the treatment he needed, and that his primary care physician would be able to access that care for him. As it turned out, Mr. Levy alleged, that wasn’t true, and PacifiCare knew it wasn’t true when they recruited him.
Both PacifiCare and Empire vigorously denied that they had mistreated Mr. Levy in any way. Although medical providers often complain about the cost and difficulty of operating in the legal system, both also took full advantage of that system. PacifiCare first caused the case to be transferred to federal court, and then agreed to return it to the California state courts. Both providers then moved to dismiss, alleging that Mr. Levy’s only recourse was to pursue an administrative proceeding under federal Medicare law.
The California trial court agreed, and last week the Court of Appeals concurred. Although the judges were not unsympathetic to Mr. Levy’s plight, the message is clear: he (and other Medicare HMO beneficiaries) must make their claims within the Medicare system, not in the state courts. “The conduct about which plaintiff complains is a serious matter,” wrote the court. “However, redress for the disquieting issues raised by the complaint does not lie with this court. The Legislature has created a scheme by which the senior and disabled citizens of this country, who are of more modest means, receive their medical care. That scheme leaves state courts no avenue to rectify the concerns raised by the plaintiff.” Levy v. PacifiCare, December 22, 1999.
Two programs—Medicare and Medicaid—provide the majority of acute medical and long-term nursing care for America’s senior citizens. In fact, those two programs provide over one third of all medical care for Americans of all ages. With the total cost of those two programs approaching $400 billion per year, efforts have intensified to cut the cost of medical care for the poor and elderly.
Health care rhetoric frequently focuses on fraud in the Medicare and Medicaid programs. Estimates of the extent and cost of fraud are difficult to come by, but range as high as $33 billion per year (see, for example, the National Center for Policy Analysis website at www.ncpa.org/health/pdh5.html).
In response to concerns about fraud in federal health care programs, the Administration in 1995 announced the formation of a program to find and eliminate fraud. Named “Operation Restore Trust,” the initiative claimed almost $25 million in returned program dollars in its first year of operation. Originally focused on the five most populous states, the program was soon expanded into smaller states, including Arizona. Other states and agencies have also begun concerted anti-fraud efforts.
The State of New Mexico, for example, recovered almost $2 million over a six-year period from a program focusing on criminal investigations and prosecutions. A single nursing home prosecution in 1997 returned over $100,000.
Much of the fraud uncovered by federal and state investigators is subtle. Earlier this year, for example, federal prosecutors in Florida indicted Jack Campo and five other men for allegedly participating in an illegal “kickback” scheme. Doctors are accused of accepting fees for referring patients for unnecessary tests and procedures; the total loss from the actions of the defendants is alleged to be over $1 million.
Fraud in Medicare and Medicaid is not always subtle. Operation Restore Trust has unearthed instances such as a van service billing $62,000 to transport a single patient 240 times in a sixteen-month period. In another case, a single psychiatrist billed an average of 26 sessions per day, each lasting 45 to 50 minutes.
This year, Operation Restore Trust will turn its focus to fraud in nursing home care. Four years of publicity and prosecutions may have caught some of the most flagrant instances of abuse, and deterred others who now fear the possibility of public exposure and prosecution.
For more information on fraud in the Medicare and Medicaid programs, visit the Health Care Financing Administration’s internet website at www.hcfa.gov/medicaid/mbfraud.htm or the Administration on Aging’s site at pr.aoa.dhhs.gov/ort/ (the AoA is a division of the Department of Health and Human Services).
