Will Congress "Reform" Long-Term Care?

Many politicians have viewed healthcare policy during the past 30 years as a competition between categories of providers. After all, the primary responsibility of Congress is deciding who gets what slice of federal tax revenues. When members of Congress decide to purchase one type of military aircraft, the company that designed the plane gets a life-sustaining contract and the competing manufacturers lose. Similarly, if a big chunk of funding for the National Institutes of Health is earmarked for cancer or HIV research, other diseases will receive fewer research grants.

One real-world example of this process occurred last year during the enactment of the Department of Veterans Affairs Health Care Personnel Act of 2000 (HR 5109). For two years, the VA had funded a pilot program to determine the cost-effectiveness of using private residential facilities to meet the non-emergency care needs of veterans who live far from VA hospitals. In Brevard County, Florida, the pilot found that contracted facilities provided care at roughly 85% of the cost for services at the Tampa and Palm Beach VA medical centers. However, a provision in HR 5109 to extend and expand the program to other rural areas was defeated last fall, despite the potential cost savings. The successful opponents of the experiment explained that their concern was the potential effect of the expanded pilot on VA hospital revenue--i.e., the money saved by private providers would be taken away from the politically connected public system.

In long-term care, the policy debate is often structured as a competition between residential facilities and home care. Obviously, when a client receives federal support for care in a nursing home, the providers of home care services are not also receiving money for serving that client. That situation smells like competition to Capitol Hill, and as a result, thousands of hours of effort have been spent in urging the federal government to favor either residential or homebased providers.

Dr. Rita Gallagher, a research fellow of the American Nurses Association in Washington, presented a typical entry in these advocacy wars at last November's annual meeting of the American Public Health Association. According to Dr. Gallagher, public policy is "distorted" by the traditional association of long-term care with nursing homes. She noted that skilled nursing facilities receive the lion's share of federal long-term care spending despite the fact that only 5% of "even the eldest elderly" live in such facilities. "While the skilled nursing facility does have a definite place in the long-term care continuum," she wrote, "the vast majority of necessary long-term care services can and should be provided within a community-based healthcare delivery system, utilizing a nursing care management approach."

Ann Howard, spokesperson for the American Home Care Association, agrees that home care agencies, hospitals and nursing homes are competing for the same limited federal dollars. Ever since reimbursement rates to home care agencies were slashed by the Balanced Budget Act, there has been a serious risk that the agencies could no longer afford to care for the sickest and most medically complex cases. Such cases would have to be absorbed by residential facilities even if it was possible for the client to receive care at home. However, Howard also says that the home care field is "fighting the wrong battle if we're fighting that nursing homes got some of our money and hospitals got even more."

In Howard's view, all types of providers share an interest in reimbursement that reflects patient needs and preferences regardless of the setting of care. "Too many decisions are made without the involvement of consumers," she explains, focusing particularly on HCFA policies that encourage the elderly to enroll in Medicare managed care plans. Although "HMOs are fine and appropriate for younger and healthier patients," she believes that plans to reduce costs by trying to limit care are counterproductive for the frail elderly.

There is a way out. According to Christine Gianopoulous, director of the Bureau of Elder and Adult Services of the state of Maine, a determined effort by state government can reduce the biases among categories of long-term care providers imposed by federal policy. In 1996, after years of hearing task forces advocate more community-based care, Maine reorganized state and federal funds to reward nursing homes for accepting residents with multiple impairments. In exchange, Maine initiated preadmission screenings for all nursing home residents to promote the use of home care, adult day care and caregiver respite programs for less-impaired patients. The net result is that Maine reportedly decreased long-term care expenditures by 7% between 1995 and 1998, while increasing the number of recipients of some funding by 19%.

Howard and her nursing home organization counterparts on the Washington scene worry that, given the record of past dealings, "funding reform" initiatives might be used by Congress for a less benign purpose. As Howard puts it, "Congress may leapfrog over the debate on the best form of care for the frail elderly and concentrate on demands for competitive bidding, exclusive contracting and bundling of services"--much like the Medicare managed care program. Congress's ultimate goal in adopting such changes might well be the erosion of the traditional Medicare system and its replacement with "backdoor" privatization. That's a threat to long-term care financing reform aimed at supporting the elderly in settings of their choosing. Opposing it could be the basis for common ground among all providers involved in the field.