Medicare premiums and out-of-pocket expenses. Medicare HMOs

1
Long-Term Care Reform in 2004Health Insurance
Options

• Presented by Jeanne Ripley
• Halleland Health Consulting
• September 10, 2004

2
Session Focus

• Options for providing insurance coverage for
  health and medical care with coverage for long
  term care

3
Agenda

• Presentation Overview
• Existing Options
• Contemplated Options
• Potential Options
• Discussion

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Long Term Care

• Definition
• A broad range of supportive services needed
  by persons of all ages with physical or mental
  impairments who have lost or never acquired the
  ability to function independently. They include
  nursing care, personal care, habilitation and
  rehabilitation, adult day services, care
  management, social services, transportation, and
  assistive technology.
• Across the States 2000 Profiles of Long-term
  Care Systems Public Policy Institute AARP

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Long Term Care

• - Yes, but do we care?
• - Isnt that a thing only old people worry about?
  
• Or is it different now, than 10 years ago?

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Long Term Care

• Two main sources for paid LTC services
• Out of pocket 1/4 of all spending (estimated
  18.7 million in 99)
• Medicaid 3/4 of all spending (estimated 62.2
  billion in 99)

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Twin Cities Business MonthlySeptember Edition

• LTC is the largest un-funded liability facing
  the baby-boom generation with the cost of care
  averaging 50,000 per year.

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Long Term Care Insurance

• 4 million Americans had purchased LTC insurance
  in 2000
• Mostly purchased by affluent elderly or
  near-elderly (or their families) as an estate
  protection mechanism

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Adding LTC to Med Supp

• 1999 Minnesota Legislature directed MDH to
  report on the fiscal impact of mandating coverage
  of LTC for Medicare Supplemental products.
  Finding
• adding LTC benefit to Medicare supplemental
  policies would drive the price up substantially,
  likely causing current purchasers to drop their
  coverage.
• Report to the Legislature, January 2000, MDH

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Health Savings Accounts

• Must be used in conjunction with a high
  deductible plan defined as
• Minimum deductible 1,000/2,000
• Annual out-of-pocket not higher than
  5,000/10,000
• Have first dollar coverage for preventive care
• Higher out-of-pocket for non-network services

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Health Savings Accounts

• Contribution Rules
• Max contributed annually is the lesser of
• Amount of deductible
• Or
• Max specified in law - 2,600/5,150 for 2004
• Those 55 can have Catch-Up contributions 500
  - 900/year

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Health Savings Accounts

• Distributions
• Is tax-free if taken for qualified medical
  expenses
• Can be used for
• COBRA continuation coverage
• Health plan coverage while receiving unemployment
  compensation
• Medicare premiums and out-of-pocket expenses
• Medicare HMOs, new prescription drug coverage and
  qualified long-term care insurance
• Cannot pay Medigap premiums

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Health Savings Accounts

• Created by MMA 03 signed into law on December 8,
  2003
• Special account owned by an individual to pay for
  current and future medical expenses
• Focused on those not eligible for Medicare

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Twin Cities Business MonthlySeptember Edition

• A New Age in Senior Housing Baby-Boomer Demand
  has Moved Developers Toward More-Livable Options
• Prescription for Premiums Can Health Savings
  Accounts Alleviate Rising Medical Costs?

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Current Bills in Congress

• Long -Term Care Act of 2004 (H4502)
• Amends the Internal Revenue Code to allow
  distributions from an individual retirement plan,
  a section 401(k) plan, or a section 403(b)
  contract used to pay long -term care insurance
  premiums to not be includible in gross income to
  the extent.
• In House Ways Means Committee (06/04)
• 16 sponsors (including C. Peterson and M. Kennedy)

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Current Bills in Congress

• Long -Term Care Support and Incentive Act of
  2004 (H4432)
• Amends the Internal Revenue Code to allow
  individuals a deduction for qualified long-term
  care insurance premiums, use of such insurance
  under cafeteria plans and flexible spending
  arrangements, and a credit for individuals with
  long -term care needs
• In House Ways Means Committee (05/04)
• 2 sponsors

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Current Bills in Congress

• Long -Term Care Insurance Partnership Program
  Act of 2004' (S2077)
• Amends Title XIX of the Social Security Act to
  permit additional States to enter into long-term
  care partnerships under the Medicaid Program in
  order to promote the use of long-term care
  insurance
• In Senate Finance Committee (02/04)
• 6 sponsors

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Current Bills in Congress

• Ronald Reagan Alzheimer's Breakthrough Act of
  2004 (H.R. 4595 S 2533)
• A bill to amend the Public Health Service Act to
  fund breakthroughs in Alzheimer's disease
  research while providing more help to caregivers
  and increasing public education about prevention.
• In Senate Finance and House Subcommittee on
  Health (07/04)
• 63 cosponsors in Senate (including Coleman
  Dayton) and 63 cosponsors in House (including
  Ramstead)

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Twin Cities Business MonthlySeptember Edition

• Long-term care insurance is one of the newest
  employee benefits being offered.
• Up to 29 billion a year is lost annually be
  companies due to elder care.

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Twin Cities Business MonthlySeptember Edition

• Expect to see long-term care insurance for
  employees, their spouses, their parents and even
  their in-laws become a standard employment
  benefit.
• Offering LTC insurance can help employers recruit
  and retain employees

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Twin Cities Business MonthlySeptember Edition

• Employer/Employee Benefits
• Employees can receive 25 tax credit on LTC
  insurance premium, up to a max of 100 (State)
• Employees can deduct the cost of premiums and
  medical expenses, if they exceed 7.5 of the
  adjusted gross income (Federal)
• Employers can deduct the total cost of LTC
  insurance they offer as part of their benefit
  package

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Care Delivery Continuum
Continuum of Care
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Bridging the Gaps between Medicare and Medicaid

• From Medicare side
• Social HMOs
• PACE
• From Medicaid side
• Minnesota Senior Health Options
• Other State Demonstrations
• 48 states with waivered demonstrations (mostly
  for community based care)

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LTC Services Medicaid

• Medicaid funds services in three programs
• Home Health Care
• Personal Care Services
• Home and Community-based Waiver Services
• States are required to
• Make home health available to those who are
  eligible for nursing facility care

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PMAP Program

• Minnesota was one of five state approved for 1115
  demonstration waivers in 1983
• Began operations in 1985
• 40,022 seniors now enrolled
• 44 of enrollees in NH or at risk of placement as
  of March 04

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PMAP Covered Services

• Medicare copayments and deductibles
• Drugs
• Some therapies
• Medical transportation
• Preventive physician services
• Limited number of nursing facility days
• Plans for including elderly waiver services into
  plan responsibililty

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Minnesota Senior Health Options Project

• Fully capitates Medicare, Medicaid and waivered
  services (6 months of NH care)
• Current enrollment of 5,217 in 10 counties
  (primarily metro)
• Contracts with 3 HMOs to provide insurance and
  delivery systems
• Enrollment of both community and institutional
  members (73 at risk of or in NH settings)
• Plans to expand statewide waiver application
  has been submitted

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MSHO's Covered Services

• PMAP Services
• Dental
• Prescription Drugs
• Vision Care
• Transportation
• Limited NH Coverage
• Elderly Waiver
• Adult Day Care
• Lifeline
• Homemaking
• etc.

• Medicare Advantage Services
• Medicare Part A
• Medicare Part B
• Preventive Diagnostic
• Skilled Nursing Facility

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Programs for All-Inclusive Care for the Elderly
(PACE)

• Focused only on nursing home certifiable
• Mostly dually eligible enrollees
• Contractors are responsible for all Medicare and
  Medicaid services - including lifetime need of
  nursing home care
• Typically enroll 200 - 400 at each site
• Now a State option under Medicaid

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PACE Programs

• Programs for All-inclusive Care for the Elderly
• Currently, 32 sites which provide services to
  over 12,000 seniors (7/04)
• Enroll chronically ill Medicare and/or Medicaid
  beneficiaries who are at risk of nursing home
  placement

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PACE Philosophy

• PACE programs are centered around the belief
  that it is better for the well-being of seniors
  with chronic care needs and their families to be
  served in the community whenever possible.

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PACE Programs

• All Medicare Covered Services
• Plus
• All Medicaid Coverage Services (including
  prescription drugs)
• Plus
• Lifetime coverage for Long Term Care Stays

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Social HMOs

• Currently 4 sites
• Elderplan, New York
• Kaiser Permanente, Oregon
• SCAN, California
• Sierra/HPN, Nevada
• Serve over 90,000 beneficiaries
• Enroll full range of well and ill Medicare and/or
  Medicaid beneficiaries

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Social HMOs

• MedicareChoice standard benefit set
• Plus
• Privately financed expanded home-and
  community-based and institutional care benefits
• Plus
• Prescription drugs (some limitations)

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SHMOs

• Findings
• Preventing or delaying long-term nursing home
  admissions
• Improving access to preventive and supportive
  services
• Integrating a geriatric approach to care
• Coordinating medical and expanded care services
  
• Key While 21 of members are eligible for
  nursing home care, only 1/6th to 1/5th of this
  group actually use the benefit

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Other State Efforts

• Colorado the Integrated Care and Financing
  Project (full capitation for Medicare, Medicaid
  and Waiver Services)
• Arizona AHCCCS and ALTCS (two capitated
  Medicaid programs that coordinate services for
  NHC populations)
• Texas Star (Integrates acute and LTC into
  managed care for NHC and voluntary NH)

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What have we learned?

• Community based and facility based long-term care
  need to be offered together
• Financing needs to be available up stream of
  Medicaid allowable finances
• The baby-boomers will drive insurance options
  because they will feel it sooner through
  their parents and then themselves
• Integrated continuum of care delivery and support
  is vitally important for chronically ill -
  insurance products should be designed to allow
  for this.

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Also

• Baby boomers and, clearly, our Gen-Xer children
  will not be satisfied with the choices currently
  available .

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The Industry Response The Imperative

• The future of LTC depends upon
• Providing opportunities to establish new services
• Changing the financing structure
• Reforming the regulatory oversight structure
• Ability to enhancement of worker recruitment and
  retention options

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Fix the payment, but also fix

• An institutional structure with few choices.
  It is a government-controlled approach that is
  expensive and does not meet consumers needs or
  desires.
• The Long Term Care Imperative Principles
  for Change, 2003 Update

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About the Speaker

• Jeanne Ripley advocates passionately for the
  senior population. Simply put, Jeanne pursues all
  avenues to provide care options for seniors.
  She'll build the new options herself if need be,
  as evidenced by her role as Executive Director of
  one of the original Social HMO pilot sites, the
  nationally-recognized Seniors Plus. Jeanne is the
  speaker of choice on Medicare and Medicaid dual
  eligibles. She navigates the tricky terrain of
  financing and policy with ease Jeanne was
  intimately involved in obtaining a twenty million
  dollar grant for an integrated health campus in
  rural Minnesota. She also works with a U.S.-wide
  coalition of seniors, payors and providers--the
  Medicare Justice Coalition--to assure fair
  payment from Medicare. For over 20 years,
  Jeanne's commitment has been to serve seniors and
  their families.
• Ms. Ripley can be reached at 612.204.4178 or by
  e-mail at jripley_at_halleland.com