President Trump and the US Congress have promised to reduce federal spending, through tactics that include cutting Medicaid and Medicare. What they fail to take into account is that sometimes investing in programs that work well can reduce spending while improving the health and well-being of people. A case in point: programs that help older adults and those who are disabled remain in their homes and out of long-term care facilities.
The proportion of the US population 65 years or older is expected to almost double by 2050, to more than 87 million, when surviving baby boomers will be older than 85 years and likely frail. Older adults’ needs for assistance in activities of daily living will increase, challenging both care delivery systems and costs. With the average annual cost of a private room in a nursing home now more than $100 000, keeping people in their own homes and communities could dramatically reduce federal Medicaid spending. But how can this be accomplished?
Several mature demonstration projects have been shown to prevent nursing home admission, but scaling them up will require start-up funding in communities nationwide, removing regulatory barriers, and embracing a social model of health.
The Altarum Institute Center for Elder Care and Advanced Illness has proposed a model called MediCaring communities for keeping frail elders in the community while enhancing quality of life and reducing the use of medical services. It requires a person-centered approach that integrates long-term services and supports (LTSS) with medical and nursing care. These services may include care coordination, home-delivered meals, dementia training programs for home health aides, home maintenance and modification programs to help with disability, and personal care.
Altarum conducted a rigorous financial simulation of 4 diverse MediCaring communities and found that they all reduced per-capita costs, and the savings could be used to shore up underfunded LTSS. The model also could be extended to older adults who are not yet frail and to those who are significantly disabled.
Altarum suggests that the Program of All-Inclusive Care for the Elderly (PACE) could launch a MediCaring community program if Centers for Medicare & Medicaid Services (CMS) rules were more flexible, for example, by allowing PACE programs to serve Medicare-only patients according to their health status. PACE started in San Francisco in 1973 with On Lok (Cantonese for “peaceful, happy home”), an organization serving an Asian American community. There are now 233 PACE centers in 31 states serving about 40 000 nursing-home eligible people older than 55 years. With capitated payments from Medicare and Medicaid (if approved by states), PACE programs assume financial risk and provide comprehensive social, medical, and nursing services. Services include adult day care, transportation to and from the center, food programs, home care, primary care, social services, and other preventive services, all at a lower cost than institutionalization.
Anne Montgomery, MS, deputy director of Altarum’s Center for Elder Care and Advanced Illness, says, “Expansion of PACE to Medicare-only beneficiaries who have LTSS needs—both those who are already nursing-home eligible and those who are not—makes enormous sense as we try to retrofit our existing care system to be more comprehensive and to include LTSS. This is a no-new-dollars approach.”
The CAPABLE (Community Aging in Place, Advancing Better Living for Elders) program could augment the MediCaring community model by building older adults’ capacity to remain in their homes. Initially tested with a grant from CMS, CAPABLE uses registered nurses, occupational therapists, and handymen to provide Medicare and Medicaid beneficiaries with home repairs, coaching on self-management to maintain independence, and making referrals, as needed. It reduces disability by improving ability to perform activities of daily living, and lowers rates of emergency department use, hospital readmissions, and depression. Sarah Szanton, PhD, RN, professor of nursing at Johns Hopkins University and founder of CAPABLE, reports that the documented cost savings are sufficient to prompt some home care agencies, 5 cities in Michigan, accountable care organizations, insurers, and others to adopt CAPABLE or integrate it into other models of care.
These and other demonstration models suggest that we can reduce costs by helping people stay at home as they age. But services must also include support of family caregivers, notes Claudia Beverly, PhD, RN, professor of nursing at the University of Arkansas and former director of the Arkansas Aging Initiative. “Family caregivers burn out when urinary incontinence and dementia set in, so they need training in complex caregiving, use of a well-trained home health aide, help with shopping and cleaning, or respite care.”
There are several barriers to implementing these and similar models.
First, states may look for ways to cut services if Congress deeply cuts federal Medicaid funding, even if investing in these models would control Medicaid spending on long-term care. Not all states have opted into the PACE program, despite the documented Medicaid savings.
Second, many communities are likely to need funds to create MediCaring communities based on the PACE model. PACE requires substantial preparation to establish a network of services, including housing for the day center, transportation, connections with medical and nursing care professionals, and administrative infrastructure. Peter Fitzgerald, MSc, executive vice president of policy and strategy for the National PACE Association, says, “PACE is not easy. You have to establish provider capacity, and that takes time.”
The Money Follows the Person Rebalancing Demonstration and the Balancing Incentives program authorized by the Affordable Care Act show that state incentives can increase the proportion of older and disabled people on Medicaid who can move out of institutions into home settings, with some of the savings going to support services.
For example, Balancing Incentives provided states with enhanced federal funding over 5 years for improving and expanding home and community-based services through an equitable, user-friendly, consistent process. The enhanced funds helped states create enrollment systems with “No Wrong Door”/Single Entry Point for all people in need of information about and access to LTSS, core standardized assessments, and conflict-free case management services. In an evaluation of the program, Mathematica found it successful in increasing the proportion of Medicaid beneficiaries in community settings at no detriment to their health and with increases in quality of life.
Third, regulatory barriers for Medicare and Medicaid get in the way, providing a “deregulatory opportunity” for the Trump administration. Certain regulations can facilitate the expansion of PACE, for example, such as expanding PACE to disabled people younger than 55 years and to older adults who are not yet nursing home eligible. This was authorized under the PACE Innovative Act but doesn’t have implementing regulations yet. The Bipartisan Policy Center has proposed, among other things, that Medicare’s payment risk adjustment incorporate a measure of functional impairment because it drives health care use and nursing home placement, and that Medicare pay for supportive services that can reduce the need for institutional care.
Peter Fitzgerald has a theory as to why we haven’t scaled up effective programs such as PACE: “We got so taken with the idea that we needed something new that we didn’t look at what has worked.” But this is changing, he adds, as caring for the boomer generation becomes a reality. I hope he’s right.
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