Fiscal Cliff Legislation Could Revamp Long-Term Care

The legislation avoiding the fiscal cliff,  the American Taxpayer Relief Act of 2012 (ATRA),  included 29 provisions affecting Medicare, Medicaid or other healthcare programs.  Other than altering the physician fee schedule to avoid a massive reduction in payments to physicians, the majority of these measures extended provisions that would expire in 2012 to 2013 or  made budgetary tricks like altering Medicaid disproportionate share payments in 2021 and 2022–those payments will undoubtedly be altered before they go into effect 9 years from now, thereby having no impact at all on hospitals.  Two  sections of the ATRA 2012, however, have the potential to dramatically change how long-term care is provided in this country. Section 642 of the ATRA repealed the Community Living Assistance and Services and Support (CLASS) program  which was included in the Patient Protection and Affordable Care Act (PPACA)(P.L. 111-148), and section 643 of the ATRA establishes a Long-Term Care Commission that has some interesting powers.

LTC Commission

The Commission is to develop a plan to establish, implement, and finance a high-quality long-term care system that ensures the availability of long-term care services and supports for individuals with substantial cognitive or functional limitations. Within 6 months of the appointment of the 15 member Commission, the Commission is to make a report that includes legislative language to carry out their recommendations. That language is to be introduced in the Senate and House within 10 days of the Commission’s approval of its report.

The Commission’s report is to examine the interaction of long-term care services in Medicare, Medicaid and private insurers.  The Commission is to make recommendations to improve those systems and the availability of long-term care in general.  It is to take into account demographic changes, as well as the potential for the development of new technologies, delivery systems, or other mechanisms to deliver long-term care.

To complete its work, the Commission has been given an appropriation of  10 percent of the remaining amount of $6 billion for a program to create qualified non-profit health insurers which is also being defunded by the ATRA.  The Commission is to work with the Medicare Payment Advisory Commission (MedPAC) and other groups.  Members of the Commission are to include individuals who represent the interest of  consumers of long-term care services, older adults, individuals with cognitive or functional limitations, family caregivers, healthcare workers from long-term care providers, private insurers, employers, and representatives of state Medicaid agencies and state departments of insurance.  The Commission can hire staff and ask for studies by the General Accounting Office  and the Congressional Budget Office.

CLASS Repeal

The Commission was created as way to find an alternative to the CLASS program, which was repealed by  the ATRA of 2012.  The CLASS program was designed to help individuals receive long-term care services in their homes.  Under CLASS, people would have  paid a premium and then received a cash benefit of not less than $50 per day, with which they could purchase long-term care services.  On October 14, 2011, the HHS Secretary suspended activities implementing the CLASS program for financial reasons.  A report by HHS determined that the CLASS program was not actuarially sound, meaning that it could not raise enough revenues to pay for the benefit.

PPACA Funding

A larger problem with the repeal of the CLASS program is that when PPACA was adopted, the Congressional Budget Office (CBO) estimated that CLASS would generate significant savings to the Medicare program and additional revenue that was used in determining how much PPACA would cost or save the government.  CBO estimated that the CLASS program would result in savings of  $70.2 billion to the Medicare program over a 10 year period.  In addition, CBO estimated that CLASS would generate $83 billion in premiums  during the 2012-2021 years. All of that money and expected savings are now gone.

Costly Care

HHS reported on the need for changes in how long-term care is provided primarily because it is so expensive. In its report on the actuarial soundness of CLASS, HHS stated that the cost of nursing home care can be $70,000 to $80,000 per year and that people who obtain long-term care services in their homes spend about $1,800 a month on those services.  These expenses are not covered by Medicare and are only covered by Medicaid once a person has spent all of their money and sold a number of assets.