Discuss leader's perspective on financial management connecting with course concepts, include citations. Reflect on what you learned, connecting with course concepts. I recommend a paragraph summarizing your leader's perspective on the topic followed by a paragraph reflecting on his/her responses, connecting with course concepts. For example, how does what your leader shared, compare or contrast with what you learned in class.

L09 Financing in the LTC System in the U.S.

Financing and reimbursement issues in long-term care continue to impact an individual's access to services. Unfortunately, when people lack access to much needed healthcare services and supports, it has a direct affect their quality of life.

Our society continues to struggle with how we are going to meet the needs of an aging population. Experts continue to warn us that we are not prepared to meet the demands of an aging population. Government programs continue to be stressed and are faced with limited resources and rising expenditures. Efforts to garnish public support have fallen on deaf ears as most members of society are averse to paying higher taxes. Many efforts to control costs are unsuccessful as providers struggle to provide high quality services with limited resources in what is a very labor-intensive industry.

Currently, the long-term care sector is financed through a variety of private and public sources as illustrated in Figure 9.1. Let's examine these sources in more detail.

Figure 9.1. Sources of Finance

Private

• Family, friends, out of pocket
• Commercial insurance, private LTC insurance

Public

• Medicare and Medicaid
• Veterans Administration and various Social Service Block Grants

L09 Private Sources of Payment

Private sources of financing long-term care include informal care, long-term care insurance, and of course, private pay.

Informal Care

Informal careis any unpaid care provide by friends and family. Informal care is generally provided in an individual's home, however many informal caregivers also supplement care at assisted living, personal care, and skilled nursing home facilities.

Informal caregivers assume the "bulk" of care to our older population with an estimated 40 million Americans providing informal care. Estimates suggest that the value of this care equates to $450 billion annually. (Family Caregiver Alliance, 2014). Although the estimates suggest a substantial savings for public sources of funding, informal care is not without its costs, of which the informal caregivers often absorb.

The costs take the form of both monetary and nonmonetary costs. In terms of monetary costs, the Family Caregiver Alliance (2014) estimates informal caregivers personally lose an estimated $659,139 over a lifetime due to informal caregiving obligations. The "loss" includes $25,494 in Social Security Benefits, $67,202 in pension benefits, and $566,443 in lost wages.

There are endless stories of the toll of informal caregiving on one's physical and emotional health. Perhaps, in lieu of reading how these challenges take their toll, watch Video 9.1. to take a look into the life of a caregiver:

Video 9.1. A Window Into the Daily Struggles of Long-Term Care(9:20)

Unfortunately, stories like these are rather commonplace. Informal caregivers continue to provide millions of hours of care yearly for a variety of reasons. For some individuals it is out of obligation, others perhaps to avoid a sense of guilt, or to retain a bond. Regardless of the reason, the challenge remains on how we as a society can support these individuals, as our current system is seriously lacking in much needed supports and services.

Before moving on to LTC insurance, take a moment to review AARPs short video, Video 9.2., recognizing the often thankless contributions of informal caregivers.

Video 9.2. A Day in the Life of a Caregiver | AARP(2:18)

LTC Insurance

The long-term care (LTC) insurance market struggles to gain ground in the United States. Less than 10% of individuals 55 and older have private LTC insurance. Generally, LTC insurance policies cover a limited amount of SNF days and HCBS days, often with a daily expenditure limit (e.g. $150.00 a day). (McSweeney et al., 2017)

The lack of interest in LTC insurance is attributed to several factors including

• high premiums;
• underestimating the risk of needing LTC, despite studies (e.g., Penn State, Georgetown, Lewin Group) indicating 70% of individuals will need some form of LTC in their lifetime for an estimated three years!;
• younger groups show little interest in planning for future LTC needs; and
• confusing LTC insurance options.

Likewise, many insurance companies are no longer offering LTC insurance due to difficulty in calculating projected costs. As consumers are increasingly aware of insurance companies "dropping" policies, they are even more hesitant to make that investment!

Private Pay (Out-of-pocket)

It is difficult to obtain a percentage of the older adult population who are paying for long-term care services out-of-pocket. Often residents may be listed as private pay while they are awaiting approval for Medicaid. Estimates generally range from 20-25% of the long-term care population served are using out-of-pocket funds to finance their care. For example, O'Shaughnessy (2012) reported an estimated 21% of the population were private pay, whereas AARP (2009) reports an estimated 25% of residents are private pay.

Unfortunately, when confronted with often difficult circumstances and the staggering costs of LTC, individuals are forced to make some difficult decisions. Often, these decisions involve examining other options such as reverse mortgages, annuities, and trusts.

Reverse mortgagesallow the home owner, age 62 or older and living in their home, with the home paid off (e.g., no mortgage) to access a loan based on the equity in the home. Although there are guidelines, the funds received from a reverse mortgage are not considered income, so do not affect an individual's Medicaid status. So, for example, if an individual needed to privately pay for assistance within their home, they can access the equity within their home to pay for services while remaining in their home.

Annuitiesare long-term care payment options that are based on a contractual agreement with an insurance company, allowing for a one-time case payment or in some instances multiple monthly payments. Annuities are based on disposable income, so the income does affect Medicaid eligibility.

Trustsare complicated legal agreements that permit assets to be used for specified long-term care services under specific legal and tax requirements. (McSweeney at al., 2017).

Now that we have covered the most common private sources of finance for long-term care, let's move on to the public sources. A bit more complex, however considering the majority of long-term care services are financed by public sources, it is imperative to have a solid understanding of how these funding sources operate.

1. In a home health care setting, how can one ensure high-quality care while also maintaining profitability and navigating various payor sources' complex rules, such as insurance companies and government programs?

This is what Virginia had answered: Sure, I can help with that. The biggest challenge in home care is navigating insurance programs, but since our office primarily deals with pediatrics, we are very comfortable working with Medicaid. We are aware of what each insurance company will approve and which ones may be more challenging to get authorization through.

The reimbursement for home care is very challenging and the pay is much lower compared to hospitals. For example, a hospital may charge $60 to $80 an hour for a nurse's work, while in home care, the reimbursement is usually around $45 per hour. This makes it difficult to recruit nurses, knowing that they could get paid more in hospitals. However, in home care, nurses get to work with one client, develop stronger relationships, and have more flexibility in their schedule.

To maintain quality, we focus on training and coaching our staff, and lots of supervision. It's important for us to keep our overtime under control since it can add up to significant costs. Despite the challenges, working in home care can be fulfilling, especially when you get to develop a strong relationship with your clients.

2. Could you give an example of a situation where you had to prioritize patient care while balancing the organization's financial viability and regulatory compliance? What were the outcomes of this task, and how did you approach it?

This is what Virginia had answered: When we are short on staff, it becomes difficult to assign cases to available nurses. This is especially true when the case requires special training, such as a high-tech case where a child needs a tracheotomy. In such cases, we have to decide whether to pay the nurse overtime to provide the child with the required care or to draw a line on overtime and leave the family responsible for the child's care.

Sometimes, parents are not available to take care of their child, which makes it challenging to find a way to provide care. We work with clinical managers and other offices to see if they have any available staff. However, the hiring process can be lengthy, and we cannot hire someone quickly.

To solve this problem, we have to be creative and find other ways to manage the case. Sometimes, we have to call our competitors and ask for help with the case. If we cannot find a solution, we have to call them and say that we cannot do it. It may be a little difficult to ask for help from our competitors, but we have to do it to ensure that our clients' needs are met.

L09 Summary and References

There is no denying the complexities of the interrelation of regulations, quality, and finance in the long-term care sector.

• Although Medicare Part A covers skilled nursing facility services, the coverage is not comprehensive and the required three-day qualifying hospital stay often presents a barrier to activation of the benefit.
• Medicaid continues to cover the majority of SNF services. However, slow payment and poor reimbursements are deterrents for many providers, thereby limiting access to quality services.
• Medicare continues to cover the majority of HCBS, again, similar to SNF coverage, the benefit is limited to skilled care. Custodial care is covered by Medicaid in many states, however many states have lengthy wait lists for many of the HCBS waiver programs.

As we face an aging population, the stress placed on these public programs will be tremendous. Although informal caregivers continue to fill many voids, it is not without a price.

References

Family Caregiver Alliance. (2014).Caregiving. Retrieved from caregiver.org

Kaiser Family Foundation. (2015).Waiting list enrollment for Medicaid section 1915(c) home and community-based services waivers. Retrieved from https://www.kff.org/health-reform/state-indicator/waiting-lists-for-hcbs-waivers/

McSweeney-Feld, M. H., Molinari, C., & Oetjen, R. (2017). Dimensions of long-term care management. Chicago: Health Administration Press.

O'Shaughnessy, C. V. (2012). The basics: National spending for Long-Term Services and Supports.