"Medicare risk:" who's really at rick?

As we have heard ad infinitum by now, Medicare is the fastest growing segment of an out-of-balance federal budget. Senior citizens already represent approximately 14% of the population, and this demographic is expected to increase dramatically over the next 10 to 20 years. Whatever their costs, Medicare recipients are a very strong voting contingent, and lawmakers are searching for ways to accommodate them, and yet do so economically.

One solution to this complex problem is an attempt to encourage Medicare recipients to assign their benefits to HMOs. This group has become commonly referred to as the "Medicare risk segment." A Medicare Risk contract involves an HMO that is capitated by HCFA for Part A and Part B services, at 95% of the calculated average fee-for-service costs of a region. Under capitation, of course, the HMO assumes financial risk for providing Medicare services. (There are many variations of risk contracts, but for the purpose of this column, we will use this concept.)

This portion of the population represents a large source of potential revenues and, as a not too surprising result, many HMOs have developed a "senior product" and are working aggressively to market it. How will this impact nursing homes? If a nursing home has entered into a contractual relationship with an HMO offering a senior product line, the facility will undoubtedly see an increase in its managed care census. An opportunity? That's very possible. Also possible is a major financial headache.

First, it makes business sense that the HMO will want to pay the facility less than the HMO receives from Medicare. The onus is on the facility, therefore, to consider the costs of its services carefully, and to project as accurately as possible its revenues as the Medicare risk population increases. Verification and authorization will be performed as always, but will be more complex, because the facility will want to ascertain patients' enrollment status and specific benefits from the HMO and from Medicare.

This can be accomplished, but the facility's greatest chance of success lies with the use of information systems and technology. And for the facility, this means investment, both in software and in staff training. Those who choose not to do so may have occasion to regret it.

For example: Patient X is referred by a hospital discharge planner and identified as being enrolled in the HMO's "Golden Years" program. The facility calls the HMO to verify and get authorization to admit Patient X. The HMO states that Patient X is Medicare Risk and that Golden Years is the primary payor, and the facility admits Patient X to a non-certified bed for seven-day course of treatment. Now comes the interesting part: The facility bills Golden Years for services to Patient X -- and gets a denial of payment letter, which states that Patient X is "Medicare primary" and therefore the facility should bill Medicare. Of course, the facility cannot do so because Patient X was not admitted to a certified bed. In short, the facility has just learned what "risk" really means.

Situations like this are occurring more and more frequently, as HMOs capture more of the Medicare market. Nursing homes can stay out of financial difficulty by: 1) having an understanding of the various types of reimbursement mechanisms involved, 2) including the right verbiage in managed care contracts, 3) investing in technology what will assist in cross-referencing patients and payors, 4) recruiting and training personnel in necessary documentation, 5) requiring such documentation and 6) interfacing often with contractual partners to make sure that both parties understand the different and changing systems and their respective responsibilities.

This, of course, will take some doing. Then, too, the jury is out as to whether the growth of the Medicare risk population is in fact "good" or "bad" from nursing homes' standpoint. Two things seem certain, though: The move to Medicare risk coverage is inevitable, and facilities are in as good a position as they will ever be to prepare for it, starting now.

Nurses' Growing Political Voice

The American Nurses Association has become a political power to be reckoned with -- a real powerPAC, one might say. PACs, or Political Action Committees, are a highly efficient way of gaining attention in Washington, since they coordinate special interest group campaign contributions to chosen Congressmen and Senators. Now the 30th largest of the nation's 4,000 PACs, and the third largest health-related PAC, ANA-PAC tripled the size of its donor base (from 8000 to 27,000) and total contributions (from $330,000 to over $1 million) during the 1993-94 election cycle.

"ANA was a major player in the health care reform debate of the 103rd Congress," says ANA-PAC chair Judith Leavitt, MEd, RN, FAAN. "When Congress failed to pass comprehensive health care reform, we knew it meant we had to work harder on nursing issues."

Specifically, those issues include working to "prevent the erosion of vital programs" such as safeguards for health care workers, funding for nurse education public health programs and outcomes research. First on the ANA-PAC's "lobbying hit list" are proposed Medicare and Medicaid cuts, which, the ANA believes, would have a significant negative impact on the safety and quality of health care. Time will tell whether the nurses' money "talks."

Laura Bruck

Cognex Treatment Easier

Since the drug's approval, the need for weekly liver function tests has likely made some physicians reluctant to prescribe Cognex (tacrine hydrochloride) for their patients with Alzheimer's disease. But with the FDA's recent approval of less frequent monitoring -- ten, rather than 24, blood tests during the first six months of therapy -- treatment with the still controversial drug may be more palatable for physicians, patients and caregivers alike.

Approval for the reduced monitoring was based on data that showed no difference in the incidence or severity of elevated liver enzymes or the risk for severe liver toxicity in 276 patients monitored every other week, compared with 6,500 patients monitored weekly. Debate continues, however, over whether the mild and temporary symptom reduction seen in some patients is cost-beneficial.

Laura Bruck

Are Today's Elderly Healthier?

While Congress and the Clinton Administration hash out a plan to keep Medicare from going broke in a few years, the elderly may have found a solution of their own: get healthier. Researchers at Duke University report an 11% decline in the rate of illnesses among the nation's elderly during the 1980s. This includes a reduction in the prevalence of seven of 16 common chronic conditions, such as dementia, arthritis, hypertension and circulatory disease. While the rates of some acute conditions, such as pneumonia and hip fractures, increased, and those of heart attack cancer diabetes and asthma remained stable, the declines in other conditions outweighed these increases. All in all, the average number of medical conditions per elderly person dropped from 2.5 in 1982 to 2.3 in 1989.

The findings, scheduled for publication this summer in the journal of Gerontology, were based in data from surveys of more than 30,000 people age 65 and older. With the Medicare-eligible population expected to grow to about 70 million over the next 30 years -- along with an anticipated chronic care bill in higher billions than ever -- the findings may be cause for a glimmer of optimism (or, for the nursing home industry, pessimism?). Already, preliminary analysis of data from a new study based on 1982,1984 and 1989 National Long-Term Care Surveys suggests that the downward trend in chronic illness is continuing.

Laura Bruck

Why Nursing Homes Need Medicaid

Though nursing homes have grasped this intuitively for some time, now there is documentation as to why Medicaid has become such an important revenue source. Estimates published in a recent issue of the journal Medical Care indicate that the cost of a one-year nursing home stay exceeds the assets, excluding principal residence, of more than half of the nation's elderly, and that the percentage of residents who are "spending down" is growing rapidly.

According to the researchers -- Brenda C. Spillmam, PhD, of the U.S. Agency for Health Care Policy and Research Division of Long-Term Care Studies, and Peter Kemper, PhD, formerly of AHCPR and now with the Center for Studying Health Systems Change -- only 44% of the elderly are admitted as private payers and are able to continue that way. Twenty-seven percent are Medicaid-eligible, and another 14% "spend down" during a stay -- more than twice previous national estimates of this population. Among the elderly population at-large, 6% can expect to enter nursing homes and spend down, and 17% overall can expect to require Medicaid coverage for a nursing home stay.

All of this is based on a one-year stay costing $30,000. Recent asset protection legislation adopted by Congress would add to the Medicaid burden, thou its impact should be relatively minimal, the researchers say, since it applies to married couples, and only 25% of nursing home users are married, and nearly one-third of those are already Medicaid-eligible or would have spent down under the old rules.

Women are at twice the risk of men of requiring Medicaid support (20% vs. 10.6%), largely because men are less likely to enter nursing homes and more likely to have other sources of support, such as veterans' benefits.

All of which indicates, of course, that elderly women are the most vulnerable to Medicaid "reform" efforts sweeping through various states.

Richard L. Peck