Bullet: Donor-Only Zone Sample --
The Data Base
February 20, 2002
*** Enrollment for the Center for Long-Term Care
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for details on the class.) Thanks
for your outpouring of interest in the possibility of attending LTC Graduate
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Today's Bullet gives our general readership a
peek at content usually available only on the Center for Long-Term Care
Financing's donor-only zone. What
follows is an example of a feature we call "The LTC Data Base."
In the Data Base, we track new studies and reports and give you key data
and statistics you need to know. On
Friday of this week, we'll offer you a sample of another donor-only-zone feature
called "The LTC Reader." Both
the Data Base and the Reader already have five entries posted in The Zone.
We're adding two more entries to the Reader today.
The LTC Data Base, The LTC Reader, and our ongoing LTC Week
in Review feature are only available to donor-only-zone Center contributors.
So, don't miss a single item as we post it. To qualify, contribute $100 or more (annually) to the Center
for Long-Term Care Financing (either online or by mail, instructions at http://www.centerltc.com/support/index.htm);
then email firstname.lastname@example.org and give her your desired user name and password
(up to 10 characters each.) She
will activate your gateway to The Zone usually within a day.
The Data Base #5: New
CMS Data on Nursing Home Expenditures is Misleading
Go to http://www.hcfa.gov/stats/nhe-oact/tables/t7.htm
and check out the latest (2000) CMS (nee HCFA) data on nursing home
You'll find comparative annual data for 1980, 1988, 1990
and every year from 1993 to 2000 shown by source of payments, i.e.
out-of-pocket, private insurance, Medicaid, Medicare, etc., and by total amount,
per capita amount and percent distribution.
Here's why this data is misleading and, more importantly,
why it is important for you to understand what it really means:
that Medicaid paid only 48.1% of nursing home costs in 2000, up from 43.9%
in 1990. This would suggest
that Medicaid's contribution to nursing home costs is relatively minor,
under half. The truth is,
however, that Medicaid recipients must also contribute most of their income
toward their cost of care on Medicaid.
Thus, nearly 70% of all nursing home residents are on Medicaid even
though Medicaid itself pays less than half of nursing home costs.
Because Medicaid nursing home residents tend to be the longest
stayers, nearly 80% of all nursing home patient days are paid, at least in
part, by Medicaid. The reason this is so critical is that if Medicaid pays
even $1 of a resident's cost of care, the nursing home receives the
notoriously low Medicaid reimbursement rate--80% of the private pay rate on
average and often less than the cost of care.
BDO Seidman reports that Medicaid pays nursing $3 billion per year
less than the cost of care nationally.
This accounts in part for the terrible financial situation America's
nursing homes find themselves in today.
consider that out-of-pocket (OOPs) nursing home costs as reported by CMS for
2000 are only 27.0%, down 28% from their level of 37.5% in 1990.
Clearly, the public's direct exposure to nursing home costs has
plummeted in the past decade. But
the truth is much more dramatic than the statistics suggest.
Approximately half of the so-called "out-of-pocket" costs
reported by CMS are really just "spend-through" of Social Security
income of people who are already on Medicaid!*
This gives the lie to the conventional wisdom that people all across
America are spending down into impoverishment to pay for nursing home care.
about Medicare? We still see
sales brochures that say Medicare pays for only 2% or 3% of nursing home
expenses. That has not been
true for over a decade. Medicare
paid 10.3% of all nursing home costs in 2000, up from 3.2% in 1990, a 322%
increase in only 10 years.
private long-term care insurance, how much does it pay for nursing home
care? CMS reports that 8.1% of
nursing home costs are paid by "private health insurance."
We frequently see this figure reported as the amount private LTCI
pays for nursing homes. That's
not what the number means. LTCI
usually pays a beneficiary, not a nursing home.
No one knows how much LTCI benefits contribute toward nursing home
costs, because there is no way to measure that amount.
The misleading figure reported by CMS is a derived number computed by
subtracting all the known sources of nursing home finances from the total
and assigning the remainder to "private health insurance."
In other words it is a pure guess.
The only hard data on private health insurance payments for nursing
home care are for payments by major medical policies or Medicare
supplemental insurance policies.
What this all means is that, despite the misleading data
reported by CMS, the reality is that the vast majority of all nursing home costs
in the country are paid directly or indirectly by public programs (directly by
Medicaid, Medicare, the Department of Veterans Affairs, etc. and indirectly by
Social Security income of people on Medicaid) and the exposure to out-of-pocket
expenditure of assets (not income) by the public is no more than 10% to 15% of
total nursing home expenditures.
These facts go a long way toward explaining why the public
is in denial about long-term care costs and why so few Americans plan early to
save, invest or insure against this risk.
McCall, "Long Term Care: Definition,
Demand, Cost, and Financing," in Nelda McCall, editor, Who Will Pay for
Long-Term Care, Health Administration Press, Chicago, Illinois, 2001, p. 19.
"The LTC Data
Base" is a feature offered by the Center for Long-Term Care Financing to
donors of $100 per year or more. We'll
track new studies and reports and give you key data and statistics you need to
know. We hope this new feature will
help you attain and maintain a high level of
knowledge and competency.