Massachusetts Longterm Care Financing Advisory Committee

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• Massachusetts Long-term CareFinancing Advisory
  Committee

A Presentation to the MA Health Care Quality
Cost Council December 16, 2009
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Presentation Summary

• Mission of the Long Term Care Financing Advisory
  Committee
• Focus so far
• Understanding LTS population parameters, needs
  current coverage / lack there of and the cost of
  doing nothing
• Establishing principles
• Looking at coverage improvement options
• LTC private insurance contribution strategies
  Medicaid improvements other
• Addressing needed concomitant other sector
  developments
• Next Steps
• March-April Report

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LTC Policy in MA

• The Patrick Administrations long-term care
  policy is community first, an approach that
  emphasizes maximizing independence in home and
  community settings while assuring access to
  needed institutional care.
• Roadmap established in Community First
  Olmstead Plan last year
• Reflects federal recommendations pursuant
  to Olmstead v.
  L.C decision (1999) requiring
  states to provide services in the most
  integrated
  settings appropriate to the needs of individuals
  with disabilities.
• Establishes LTC Financing Advisory Committee

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Long Term Care Financing Advisory Commitee

• Emanuel Alves
• Kevin Beagan
• Joe Bellil
• Bruce Bullen
• Sheldon Bycoff, PhD
• Marc Cohen, PhD
• Jessica Costantino
• Dean Denniston
• Mike Fadel
• Len Fishman, JD
• Representative Mary Grant
• Ann Hartstein, Convener

Senator Patricia Jehlen Phil Johnston Paul
Lanzikos Kevin Mahoney, PhD Tom Manning Bob
Master, MD Jean McGuire, PhD, Convener Scott
Plumb Rachel Richards (for Terry Dougherty),
Convener Elissa Sherman, PhD David Stevenson,
PhD Amy Weinstock, JD
Project partners MA Executive Office of Health
and Human Services, MA Executive Office of Elder
Affairs, UMass Medical School/Commonwealth
Medicine, Massachusetts Medicaid Policy Institute
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Advisory Committee problem statement

• The financing system for long-term care supports
  (LTS) in Massachusetts is
• fragmented among various public and private
  payers and unpaid informal caregiver supports
• centered on insurance-based programs that
  primarily cover services that are medically
  necessary, when most individuals LTS needs and
  preferences are for community-based social
  supports
• insufficient to support current and projected
  needs and
• heavily dependent on state public assistance
  programs that have limited resources and base
  access to LTS on an individuals income, age,
  type of disability, etc.
• Projected increases in the population of elders
  and individuals with disabilities who will need
  LTS, a projected decline in the availability of
  informal supports for LTS, and continued
  insufficient workforce capacity to provide LTS
  will exacerbate these problems.

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Advisory Committee Objective

• To identify and prioritize short-term and
  long-term strategic options for reforming the
  financing system for LTS for elders and
  individuals with disabilities in Massachusetts to
  support a range of LTS and a sustainable mix of
  personal and familial responsibility, private
  financing mechanisms and public assistance in a
  manner that
• maximizes independence and
• assures access to the necessary continuum of LTS.

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The MA PopulationUsing LTS

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Long-Term Supports (LTS) help people with
disabilities meet their daily needs and improve
the quality of their lives over an extended
period of time
LTS may be provided at home, in community
settings, or in institutional facilities
Range of Long-Term Supports
Education, employment and housing services also
are necessary components of successful community
living for people with disabilities of all ages
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People with disabilities comprise nearly 15 of
the total MA population those with a LTS
disability comprise about 10 of the total MA
population (630,000)
Source 2007 American Community Survey (ACS),
U.S. Census Bureau, tabulations by authors.
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More than half of the people with a LTS
disability under age 65
People with LTS Disability in MA, by Age Group
(2007)
Total Age 5 626,280
Source American Community Survey (ACS) for
Massachusetts (2007). Tabulations by Authors.
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People with LTS Disabilities who need assistance
are distributed across income and age cohorts
Does not include persons who were
institutionalized, in military group quarters or
college dormitories, or unrelated individuals lt
age 15. Source 2007 American Community Survey
(ACS), US Census Bureau, tabulations by authors.
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Key Facts IllustrateThe Problem

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The number of people with a LTS disability is
projected to grow by 15 from 2007 to 2020
(compared to 6 growth for the total MA
population)
People age 5 with a LTS Disability in MA, by Age
Category
15 Change
Source 2007 American Community Survey (ACS),
U.S. Census Bureau, tabulations by authors.
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LTS spending is projected to increase with the
changes in the population

• Projected National Spending on Long-Term Care
  Expendituresfor the Elderly, 2000, 2020, 2040
  (in 2000 dollars)

Note comparable figures on spending for
non-elderly individuals with disabilities are not
currently available.
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The current LTS system is heavily dependent on
institutional care but community LTS spending is
increasing
MassHealth Nursing Facility Spending as a Percent
of Total MassHealth State Plan Long-Term Care
Spending (in millions)
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Unlike acute care, there is little
employer/commercial insurance participation in
financing LTS

• Estimated Percentage of Share of Spending
  forLong-Term Care for the Elderly

Values are calculated on the basis of how much
such care would cost if it were provided through
formal means. Estimates are from Department of
Health and Human Services, Office of the
Assistant Secretary for Planning and Evaluation,
Administration on Aging, Informal Caregiving
Compassion in Action (June 1998), inflated to
2004 dollars. Note comparable figures on
spending for non-elderly individuals with
disabilities are not currently available.
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Medicaid is the primary payer of LTS nationally
and in Massachusetts

• National Spending for Long-Term Care, by Payer
  (2005)

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The number of elder and disabled MassHealth
members who needs community LTS is projected to
continue to increase
Source MassHealth Office of Finance
Note Projections are based on current utilization
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Challenges in Changing theFinancing of LTS

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LTS Need and Unmet Need are hard to
predictSimulated Distribution of Years of LTS
Need at Age 65

• Kemper (2005)

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Cost of LTS Vary Greatly Across
IndividualsSimulated for 65-year-old (2004)

• Kemper (2005)

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Existing Private Financing Mechanismsare limited
in their use and utility

• Financial Transactions
• Sales of Assets
• Reverse Mortgages on Real Property
• Viatical Settlements on Existing Life Insurance
  Policies
• Insurance Products
• Life Insurance Policies
• Cash Values
• Accelerated Death Riders
• Long-Term Care Riders
• Annuity Contracts
• Regular Annuity Payments
• Long-Term Care Riders
• Long-Term Care Policies

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Long Term Care Insurance in MA has had slow
growth and inadequate protections

• 7 of eligible individuals currently purchase
  private LTC insurance
• MA is one of 9 states that has not adopted
  national standards (NAIC)
• No required special training for producers
• No prior approval of marketing materials
• No restrictions on 1st year commission levels
• No rate stabilization provisions
• No contingent benefits when policyholders lapse
  after implementation of large rate increases
• No guidance to judge whether product is suitable
  for the specific applicant
• MA is not a LTC-Partnership state
• Massachusetts operates under a quasi-Partnership
  grandfathering rule
• plans have special disclosures, but language is
  not clear
• holding plan that meets MassHealth minimum of 2
  years at 125/day when entering nursing home
  qualifies for certain MassHealth exemptions
• Becoming a Partnership State requires statutory
  changes

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Medicaid is biggest payer but access to similarly
needy people is uneven both in terms of finances
Income
Assets
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and in terms of coverage

• For those elders and disabled who are Medicaid
  eligible, obstacles to needed accessing LTS, in
  setting of choice or right setting, still exist
  due to
• HCBS v. institutional LTS-bias
• Population specific, clinical and disease /
  diagnostic limits to more comprehensive waiver
  HCBS services
• Service limitations (no cueing and monitoring for
  PCA)
• Lack of care integration / management

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Current LTS Financing System
State Programs
High LTS NEED Low
Medicaid Spend-down
Medicaid Other State Programs
Personal Resources (includes Informal Caregivers)
LTC Insurance
Low

High FINANCIAL RESOURCES
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University of Massachusetts Medical School EBD
Consulting Services, LLC
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Frameworks Adopted by LTC Financing Advisory Group

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Objectives for a reformed LTS financing system

• Shared responsibility
• Pooled/spread risk through public or private
  insurance
• A focus on consumer needs, preferences and
  control
• Integration of medical and social services
• Support for family caregivers
• A strong safety net for the poor and most
  vulnerable
• Evidence-based solutions
• Flexibility
• Quality
• Access
• Efficiency
• Fairness/equity
• Sustainability
• Popular support
• Societal benefit

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LTS Financing Principles

• The reformed LTS financing system will
• Ensure a strong public safety net for the poor
  and most vulnerable.
• Limit financial pressure on the state financing
  system so that state funds are preserved for
  those most in need.
• Encourage personal responsibility for financing
  LTS to the maximum extent possible.
• Enable middle income people of all ages to access
  the LTS they need without becoming impoverished.
• Ensure appropriate participation of and support
  for informal caregivers.

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Modeling of Multi-part Strategy is underway

• Expand / Improve Private Long Term Care Insurance
  Market
• NAIC standards
• Potential Partnership strategy
• Assess / forecast other private financing
  opportunities
• Address inequities in MassHealth access /
  coverage
• Model contribution program

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Modeling of multi-strategy approach is underway
(This model assumes Mandatory Contribution
Program)
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One Scenario of Future Financing Components
State Programs
High LTS NEED Low
Medicaid Spend-down
Medicaid (Enhanced) Other State Programs
Personal Resources (includes Informal Caregivers)
LTC Insurance
Contribution Program
Low

High FINANCIAL RESOURCES
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Improving Financing Options is only one Component
of Addressing LTS Needs in MA

• LTCF Advisory Committee will be addressing the
  following related issues in its final report
• Public awareness and access to information
• Integrated financing and care delivery
• Quality
• Affordable and accessible housing
• Employment
• Workforce capacity and development
• Transportation

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Challenges Still Ahead

• Completing analysis of cost exposures / offsets
• Determining assumptions about cost controls
  available through integrated financing and care
  management systems
• Assessing public perspectives
• Recognizing limits of current process and
  forecasting ongoing analytic and development needs

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Advisory Committee Timeline

• Meetings
• Kick-off Summit held on January 30th, 2009
• 9 Meetings occurred between March and December,
  2009
• Remaining meetings scheduled for
• January 7th and February 25th, 2010
• Public input sessions
• 2 public sessions planned for early February 2010
• Metro Boston Northampton
• Web-based information and opportunities for input
• Information and presentations available at
  mass.gov/hhs/communityfirst