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Assisted living an alternative to nursing homes
Barriers remain to providing the less costly option to patients on Medicaid.
Monday, July 23, 2007
Faced with a coming explosion in long-term care expenses created by aging baby boomers and skyrocketing health care costs, many states, including Ohio, are counting on the lower costs of assisted living to provide a buffer.
At about half the cost of nursing home care, assisted living aims at giving residents maximum freedom in their own private rooms or apartments while providing a security net that includes transportation, housekeeping, meals, personal care and 24-hour supervision. Unlike nursing homes, however, they cannot provide intensive nursing care for the more severely disabled.
Extras
Assisted living is the fastest growing type of housing in the country, according to the AARP. But until last year, Ohioans had no choice but to pay for assisted living out of their own pockets.
Creating affordable alternatives to nursing home care has been a long, hard road in Ohio, and assisted living has had the longest and hardest route of all, in part because of the legislative clout of the state's nursing home industry, said Bob Applebaum, director of the Ohio Long-Term Care Project at Miami University's Scripps Gerontology Center.
Through its employees and political action committees, nursing homes contributed $1.19 million between 2001 and 2004 to Ohio candidates as well as their political parties and caucuses, and spent another $200,000 on statewide candidates alone in the 2006 election, according to Ohio Citizen Action, a government watchdog.
Medicaid payments
Medicaid pays for two-thirds of Ohio's 76,000 nursing home patients, with a bill to the state of $2.8 billion in 2005. Ohio ranks ninth in the nation in per capita spending for each Medicaid nursing home patient. With the number of disabled elderly in Ohio expected to double by 2035, that bill can only grow.
Under the rules of Medicaid, a combined state-federal program, every disabled elderly person is entitled to nursing home care. But to offer the elderly other choices, such as assisted living or home care, states must apply to the federal government for a waiver.
In 1994, Ohio was set to launch a Medicaid waiver program for assisted living when the state legislature suddenly repealed the law.
"The nursing home industry basically got together and pretty much killed it before it could go into play," Applebaum said.
Recently, however, the industry has had a change of heart. One reason is that many nursing home operators now also operate assisted living facilities, said Pete Van Runkle, president of the Ohio Skilled Nursing Facilities Coalition, a lobbying group pulled together from the nursing home and assisted living industries. Runkle said the nursing home industry lobbied against the 1994 measure because it had too much red tape.
Program expands
Ohio enacted a Medicaid assisted living program last July and, with the help of the Skilled Nursing Facilities Coalition, expanded the program this July to include residents already living in assisted living facilities.
Only time will tell if assisted living becomes a true option in Ohio for the elderly of limited and modest means. Currently, fewer than 240 of the 33,000 assisted living residents in Ohio are covered by Medicaid, with only 58 of some 280 eligible assisted living facilities accepting Medicaid residents.
The assisted living industry says Ohio's current reimbursement rate has not been encouraging — a maximum of $2,700 per month. A Miami University study found that the industry's average monthly cost was $3,240 in 2005. Nor does the state formula take into account regional differences in costs.
"The rates aren't really what they need to be to entice a greater participation by providers," said Jean Thompson, executive director of the Ohio Assisted Living Association.
Officials at the Department of Aging say they studied industry costs before arriving at a reimbursement rate, citing a MetLife survey that found the average national cost for assisted living was $2,400 per month.
The larger issue is whether the assisted living industry in Ohio is willing to serve the elderly on Medicaid. From its inception in Ohio, the industry has targeted more affluent seniors and their children who can afford private pay, said Doug McGarry, executive director of the local Area Agency on Aging. The agency manages the Medicaid waiver program.
"I think there are probably some assisted living operators who have a preconceived notion of a Medicaid consumer that is not based on reality," McGarry said. "They're afraid they'll lose some of their existing residents because the folks on Medicaid aren't the ones at the country club."
To impress private pay clients, and assuage any guilt their children might have about placing their parents in assisted living, high-end facilities often have lavish, hotellike lobbies and special amenities, such as their own ice cream shops, beauty parlors and even post offices, McGarry said.
"They purposely designed and marketed their facilities so that they would be far nicer than the places where the parents came from," he said.
Resistance to Medicaid
Twenty-five years ago, nursing homes in Ohio offered the same resistance to Medicaid patients, McGarry said. "There were facilities that did everything not to serve the Medicaid consumer. The No. 1 complaint (to ombudsman offices) back then was discrimination against Medicaid consumers. Today, the nursing home industry knows that Medicaid is their best friend."
To entice developers away from the more lucrative private-pay markets, Arkansas has set aside federal tax credits specifically for low-income assisted-living facilities, cutting their finance costs in half. In addition, the state streamlined its Medicaid reimbursement policy and assisted-living regulations and assured developers that the rules would remain unchanged for 15 years.
Since 2002, Arkansas has opened seven low-income assisted-living facilities, with living space for about 280 elderly residents. The Arkansas strategy was developed with the help of the Coming Home program, funded by the Robert Wood Johnson Foundation and managed by NCB Capital Impact, a Washington D.C.-based nonprofit lender.
McGarry noted that assisted living is not the first Medicaid waiver program in Ohio to get off to a slow start. In 1990, Ohio launched Passport, which pays for in-home services as an alternative to nursing home care. After four years of operation, Passport was serving just 9 percent of the state's Medicaid long-term care patients. Ten years later, in 2004, Passport had grown to include 34 percent of Medicaid clients, McGarry said.
The savings to Ohio has been significant. With Passport's cost per client averaging $12,000 a year versus $60,000 per year for nursing home residents, the state is saving nearly $1 billion a year in Medicaid funding, McGarry said.
Assisted living may someday make a similar contribution, he said. Disabled seniors who require 24-hour supervision but not medical treatment can't qualify for home care but they don't really need the more expensive and restrictive care of a nursing home.
"Assisted living becomes that in-between (option) we've been lacking," he said.
