All Eyes are on Medicare

  

            When the FDA approved Biogen’s new Alzheimer’s drug, aducanumab (brand name Aduhelm) on June 7, the reaction was surprise, dismay and, in some quarters, enthusiasm. But everyone was shocked by the drug company’s audacity in setting the price for the medication at $56,000 per year. As one STAT article put it, the only question about the consequences for Medicare, the insurer for close to 97 percent of Alzheimer’s sufferers, was whether the impact would be big, huge, or catastrophic. 

Pharmaceutical manufacturers figured out some time ago that they could bring out “specialty drugs,” typically targeted against a single relatively rare disease, if they charged ten or even a hundred times more than for an average medication. The list price of crizotinib (brand name Xalkori), for example, used against a relatively uncommon type of lung cancer found in non-smokers, is just under $20,000 for a one-month supply—and patients usually take the drug until they die or develop resistance to it. But aducanumab is intended for all people with Alzheimer’s disease, and according to recent Alzheimer Association estimates, that means 6.2 million people over age 65.

            The high price is especially disturbing because it’s not even clear that the drug works. A number of studies have been carried out with similar drugs, other monoclonal antibodies that, like aducanumab, were designed to mop up abnormal brain amyloid deposits, which are the hallmark of Alzheimer’s disease—but none of those drugs proved helpful in practice. The trials of aducanumab were likewise discontinued because interim analysis showed the drug was ineffective. Then, in a surprise move, the manufacturer nonetheless applied to the FDA for approval after a reanalysis of the data showed some evidence of benefit when the drug is given in high doses. The independent scientific review panel convened by the FDA to evaluate the data was not convinced, however, with 10 out of 11 members rejecting approval and one abstaining—but the FDA nonetheless approved the drug.

            Even if aducanumab does work, “work” means slowing the rate of decline slightly, not stopping or reversing the disease process. And the potential side effects of the drug are considerable: 40 percent of patients experienced brain swelling, in some cases of sufficient magnitude to cause nausea, vomiting, confusion, or visual changes. 

            Patients and their families, who are desperate for an effective drug against this progressive, ultimately fatal disease, are eager to try something with promise, anything. But they are worried about the side effects of aducanamab, about the need for regular MRI scans to monitor for those effects, and about its high cost.

            Most critiques of the new drug—and there are many, the NY Times alone has published eight articles on the subject between June 7, when the FDA announced approval of the drug, and July 9 , and STAT has published at least 16—assume that since it has been approved by the FDA it will necessarily be paid for by health insurers. In the case of aducanumab, that will principally be Medicare. In fact, CMS is not obligated to provide coverage for the drug just because the FDA approved it.

            Medicare, like all other health insurance companies, can decide what tests, procedures, and treatments it will cover. The relevant part of Medicare that will be responsible for paying for aducanamab, if Medicare covers the drug, will be Part B: oral medications fall within the jurisdiction of Medicare Part D plans (prescription drug plans), but medications administered intravenously in a physician’s office, such as aducanumab, fall under Medicare Part B. Most determinations of whether to provide coverage for this kind of treatment are made locally, by the private carriers that process Medicare claims. But the decision about coverage can be made nationally if requested by CMS, by the manufacturer, or by members of the medical profession, in which case the decision becomes binding on all the private carriers. Such “National Coverage Decisions” are reviewed by an internal arm of CMS, the Special Coverage and Analysis Group. For particularly controversial decisions, especially if they have social or ethical implications, CMS may request the guidance of the quasi-independent committee, MEDCAC, the Medical Evidence Development and Coverage Advisory Committee. This is a group of 100 experts including economists, ethicists, physicians, scientists and others, from whom a subgroup of 15 is selected to provide in-depth analysis on the particular test or treatment under consideration. 

            Since its inception, MEDCAC (or its predecessor, the Medicare Coverage Advisory Committee), has issued 348 National Coverage Decisions. These comprehensive analyses have addressed topics as diverse as cardiac pacemakers, Pap smears, and lipid testing. On rare occasions, they have dealt with drugs, for example, an intravenous medicine used in the treatment of heart failure, Nesitiride. When MEDCAC deliberates Medicare coverage for a particular intervention, it can recommend covering the intervention, not covering it, or restricting its use in specific ways. For instance, it advocated coverage of the Left Ventricular Assist Device, an invasive treatment that is almost but not quite an artificial heart, but it required a detailed informed consent process that included a social worker and palliative care expert along with the patient, family, and cardiac surgeon. Ultimately, Medicare approved coverage for the device but set reimbursement at $70,000 (the manufacturer’s price was closer to $200,000) and limited insertion of the device to a handful of medical centers across the country. 

            Medicare is required by federal law to provide coverage for anything that is “reasonable and necessary” for “the diagnosis or treatment of an illness or injury.” Despite years of often contentious debate, there is no precise definition of what this means. The FDA, by contrast, approves drugs and devices if they are “safe and effective.” In the case of aducanumab, it is arguable whether the drug is truly safe and effective, but surely it would be reasonable and necessary for Medicare to restrict the use of aducanumab to early disease (the only group in whom it was tested) and to require an elaborate informed consent process. While Medicare, by established custom, does not reject coverage based on cost-benefit analysis, it could set the price at a level comparable to those of the existing, only marginally beneficial drug treatments for Alzheimer’s disease, drugs such as rivastigmine (brand name Exelon, which has a yearly retail cost, when given as the brand name drug, of $823) and donepezil (brand name Aricept, which has a yearly retail cost, when given as the brand name drug, of $5380).

            Given the controversy swelling around Biogen’s new Alzheimer’s drug, the case for Medicare initiating the National Coverage Decision process is strong. The only reason for failing to do so is external pressure, whether by the manufacturer, by members of Congress under the influence of the pharmaceutical industry, or by the public. If CMS opts against this path or convenes MEDCAC only to reject its advice,* as the FDA did with its advisory committee, that would be a compelling reason to make CMS an independent agency, along the lines of the National Science Foundation, that is under control of a bipartisan board and whose director is independent of the President.

 

            *Between when this essay was drafted on July 9 and edited for publication today, CMS has in fact decided to proceed with a National Coverage Decision.

Vote: Your Health Depends On It

Earlier this month, the prestigious New England Journal of Medicine took the unprecedented step of publishing a political position paper in the name of the entire editorial board. Entitled “Dying in a Leadership Vacuum,” the journal urged Americans to vote out our “current leaders.” They based their argument on the mismanagement of the Covid-19 pandemic by America’s political leaders, naming no names but asserting that “when it comes to the response to the largest public health crisis of our time, our current political leaders have demonstrated that they are dangerously incompetent. We should not abet them and enable the deaths of thousands more Americans by allowing them to keep their jobs.”

While the disastrous handling of the pandemic is the most egregious failing of President Donald Trump, Senate Majority Leader Mitch McConnell, and others who could have made a difference, it is not the only area where our leaders promoted misguided health care policy—with disastrous consequences. I argued in an earlier post that “Trump is Bad for Your Health.” Today, as we approach the end of election season, I am going to spell out why Trump, Pence, their appointees (such as Alex Azar, Secretary of Health and Human Services), their Republican supporters in the House and the Senate, and fellow travelers in state governments (both legislators and governors), will be bad for the health of all Americans, older Americans in particular. It’s not just the pandemic performance that’s the problem: it’s the limitations on access to insurance, the roll-back of regulations that protect the environment, and the attacks on Medicare and Medicaid. 

Limiting access to health insurance: One of the major “accomplishments” of the Trump administration and endorsed by Republican legislators is its relentless attacks on the Affordable Care Act. The administration eliminated the “mandate,” the tax penalty on those who do not purchase health insurance. The mandate is an important part of what allows the ACA to work without driving up the cost of insurance: the fundamental principle of insurance coverage is that it works by distributing the risk over a large population; if people can opt out, only those who are sick will remain insured, raising the cost for everyone. And indeed, with the end to the mandate, health care costs have risen—making this a leading issue for the electorate, young and old. 

Rollbacks of environmental regulations: As of October 15, according to the NY Times, the Trump administration has rolled back or is in the process of rolling back almost 100 environmental regulations. Twenty-one involve air pollutants (plus 5 in progress); six involve water pollution (plus 3 in progress); and six involve toxic substances and safety (plus 2 in progress). Estimates are that these changes will result in thousands of extra deaths per year, affecting older people as well as those who love and care for them.

Attacks on Medicare: just this month, Trump issued an executive order designed to promote the privatization of Medicare. Ostentatiously and misleadingly titled “Protecting and Improving Medicare for Our Nation’s Seniors,” the order calls for shifting costs to beneficiaries, limiting choice of providers, and moving more and more patients into the private sector by joining Medicare Advantage Plans. 

Limiting Medicaid: among the many ways in which the Trump administration has undermined the role played by Medicaid in providing health care is a rule allowing states to cap Medicaid spending for poor adults. Through its endorsement of what are essentially block grants, the federal government is enabling states to reduce health benefits for those who gained coverage to Medicaid thanks to the ACA. In 2018, 12.2 million people were dually eligible for both Medicare and Medicaid. In addition to opting to cut back benefits under Medicaid, states have the option of refusing to allow Medicaid expansion. This is an approach authorized by the ACA that enables the near-poor to receive health insurance through Medicaid. To date, the governors and legislatures of 39 states (and the District of Columbia) have accepted Medicaid expansion; 12 states have not.

Regardless of where you stand on issues such as taxes, immigration, and reproductive rights, whatever your views on foreign policy, your health and that of your children and grandchildren is too important to allow supporters of Trumpian policies to remain in office. Whether they are found in the federal government (as senators, representatives, or in the executive branch) or state government (as legislators or governors), vote them out. Do it now. 

Why Trump is Bad for Your Health

            For years, older people have been more likely to vote than have their younger counterparts: in the 2016 election, 71 percent of Americans age 65 and older voted, compared to only 46 percent of those ages 18-29. They are likely to exert a major effect on the election again in 2020, especially in those swing states with large older populations such as Florida, Pennsylvania, Michigan, and Wisconsin. 

            Four years ago, 53 percent of voters over age 65 voted for Donald Trump, compared to 44 percent for Hilary Clinton. Whatever these voters thought in 2016, older individuals today should know that Trump is bad for the elderly. He's especially bad for their health.

            Among the most explicit and egregious ways that Trump has adversely affected the health and health care of older Americans is his failure to lead the country effectively in the coronavirus era. His unwillingness to develop and implement a coherent national strategy and his refusal to accept the science underlying public health recommendations have contributed to the high incidence of COVID-19 and the correspondingly high death rate from the disease—and people over the age of 65 account for 80 percent of all COVID-19 deaths in the U.S. 

            In addition, the Trump administration has pursued a vigorous policy of seeking to privatize Medicare, the popular and successful source of health care insurance for the vast majority of older people. For example, Trump issued an executive order in October, 2019 entitled “Protecting and Improving Medicare for Our Nation’s Seniors” which, far from either protecting or improving Medicare, aims to bolster private Medicare Advantage plans (a popular choice for some well elderly) to the detriment of fee-for-service Medicare (the long-preferred option for frail older people) while dismantling safeguards on access and shifting costs to beneficiaries. 

            Then there are the more indirect effects of Trump’s policies on the health of our oldest citizens: dramatically curtailing immigration means cutting off the major source of personal care attendants and nursing aides. These are the people who take care of older individuals who need help bathing, dressing, feeding themselves, walking, and going to the bathroom—both in nursing homes and in their own homes. Deregulation is translating into more polluted air and water, worsening existing conditions such as emphysema and asthma. Rolling back steps to control climate change is contributing to relentless global warming, which is not some abstract future problem but a reality today—and it is frail older people who have suffered disproportionately from hyperthermia and death during the recent heat waves and from the fires that have been ravaging the western US.

            The future under Trump would bring new threats to the health of older Americans. The budget that Trump has proposed for 2021 would significantly cut Medicaid, the federal/state program that is the main funder of nursing homes, where 1.4 million dependent older people live. The budget would also cut SNAP (Supplemental Nutritional Assistance Program) benefits—the food stamps nd other nutritional support for millions of older adults. 

            Purely in terms of self-interest, older Americans should be terrified of four more years of Trump. And, as the NY Times argued two years ago, “senior power is the sleeping giant of American politics.” With the latest estimates from the US Department of the Census indicating that the 52 million Americans over age 65 comprise 16.5 percent of the population, gray power is here; it’s time to exercise it.

What's the Risk?

            A new study of 5700 consecutive COVID-19 patients hospitalized in the New York area is making waves because it reports a high rate of underlying chronic disease, seemingly amplifying findings from Wuhan and elsewhere. But what is striking about this group of severely ill COVID-19 patients is not so much their associated chronic conditions as how similar they are to much of the general population.  

            The study, published in JAMA, reported obesity in 47.7 percent of patients, very much like the rate among adults generally: 44.8 percent of 40-59-year-olds and 42.8 percent of those over age 60 are obese. For high blood pressure and diabetes, the rates of disease in the COVID-19 patients closely resembled the rates in the older population in general. The study found high blood pressure in 56.6 percent of the COVID-19 patients; that’s awfully close to the rate of 60 percent found in the general population among people over age 65—and considerably higher than the rate of 33.2 percent found in the general population among people aged 40-59. And the study noted that diabetes was present in 33.8 percent of the very ill COVID-19 patients; that is fairly similar to the rate of 27 percent found among the elderly in general—and markedly higher than the 17.5 percent typically found in the general population of 45-64-year-olds.

            To better understand the significance of the observations about chronic conditions in the COVID-19 patients, the authors of the JAMA article need to examine age-specific rates of those disorders. Without this information, we can’t say very much about risk factors—except that obesity doesn’t seem to be much of a risk factor at all since its rate in the hospitalized COVID-19 is very similar to that in the general adult population. What about hypertension and diabetes?

            Since the median age of the patients in the JAMA study is 63, that means that about half the patients are elderly and about half are not. If all we know is that the rate of high blood pressure in the patients is 57 percent, then there are three possibilities: 1) that 57 percent figure applies across the board, regardless of age; 2) the rate among the half of the study population that’s over 65 is greater than 57 percent (in which case the rate among the half that are under 65 is less than 57 percent); or 3) the rate among the half of the study population that’s over 65 is less than 57 percent (in which case the rate among the younger patients is more than 57 percent). 

            Let’s put sample numbers on these 3 situations, comparing them to what we know about rates in younger and older people in general. In the first case, where the 57 percent applies to everyone, regardless of age, this would mean that the risk of high blood pressure in the older population is the same (or a little lower) than in older people without COVID-19, where it’s 60 percent; and much, much higher than in the younger population, where it’s 33 percent. In the second case, let’s suppose the actual rate of hypertension in the older COVID-19 patients is more like 70 percent (higher than the 60 percent in the well elderly); that would imply the actual rate in the younger COVID-19 patients must be around 44 percent (higher than the comparable rate in healthy younger patients of 33 percent). In the third case, let’s suppose that an average hypertension rate of 57 percent means the actual rate of hypertension in the older COVID-19 patients is 44 percent (much lower than among healthy elderly) and the actual rate among younger COVID-19 patients is 70 percent (much, much higher than among healthy younger adults). What’s noteworthy among these three possibilities is that only in one of them is hypertension a risk factor in the elderly (case 2); in the other scenarios it's either not a risk factor or is actually protective. Moreover, if it is a risk factor, it may well confer only modestly increased risk.

            Whatever the relationship between chronic disease and the severity of COVID-19, what is clear is that Americans as a whole have high rates of chronic disease. A recent international comparison of health found that the US has a rate of chronic disease and obesity that is twice that of other developed countries. Among fee-for-service Medicare beneficiaries, the latest statistics reveal that 20 percent have between 2 and 3 chronic conditions; another 23 percent have 4-5 chronic conditions, and fully 17 percent have 6 or more chronic diseases. 

            Before we make older people with diabetes or high blood pressure unnecessarily anxious about contracting COVID-19—or falsely reassure those older people who don’t have diabetes or high blood pressure that they are at low risk—we need a more careful analysis. Perhaps the real take-away message from the JAMA study is that the U.S. needs to do a better job preventing chronic disease.

If We Had 2020 Vision, What Would Nursing Homes Look Like?

Futurism is all the rage: worn down by the relentless drumbeat of Coronavirus hospitalizations and deaths, the mind-numbing unemployment statistics, and the unimaginable reality of parents trying to work while home-schooling their children, we are beginning to think about life-after-the-epidemic. Will movie theaters survive? Restaurants? What about orchestras and theater companies? Will doctors and researchers fly across the country and even across the ocean to attend conferences? Will anyone ever go on a cruise again? The answers to these questions have implications for how we will live our lives, for the environment, for the economy…the list goes on and on. But today’s NY Times speculates about another possible casualty of the COVID-19 outbreak, nursing homes. Battered by an acute rise in costs together with a precipitous decline in revenue as admissions fall, and shattered by their new reputation as a “petri dish for the worst pandemic in generations,” America’s nursing homes risk going under.

The US currently has roughly 15,400 nursing facilities which house 1.5 million of the oldest, frailest, most vulnerable people in the country. The Centers for Medicare and Medicaid (CMS) calls these facilities skilled nursing facilities; most of the rest of us refer to them as nursing homes. To confuse matters, the majority of these skilled nursing facilities (referred to as SNFs and pronounced “sniffs”) also provide care to another 1.5 million Medicare beneficiaries who are admitted for a short period, typically a few weeks, following an acute hospital stay. They are transferred from the acute hospital for rehabilitation or to complete a course of medical treatment prior to returning home. 

Skilled nursing facilities are paid by Medicare for short-term “post-acute care;” they are paid by Medicaid or privately, by the residents themselves, for long-term residential care. And while the subacute part of the business is profitable—according to the MedPAC (Medicare Payment Advisory Commission) “Report to Congress” just published last month, profit margins are 18 percent—the long-term residential component is not. Profit margins in the residential component are non-existent, with the latest, 2018 figures averaging negative 3 percent. Residential, long-term care SNFS were financially precarious before the COVID-19 epidemic. So, it is not surprising that they are faring especially poorly during the epidemic.

             
While the major toll, as the NY Times has reported, is the 7000 deaths among a total of 36,500 nursing home residents diagnosed with COVID-19, there has been a huge financial hit as well. One non-profit chain in Minnesota reported that the average 72-bed nursing home has been spending an extra $1922 per day on personal protective equipment for staff members and another $1500 per day for extra staff to care for residents who are in isolation or who are substituting for staff who are out sick. At the same time, revenue is down because facilities cannot fill their empty beds. Nursing homes have large fixed costs to cover salaries for staff, mortgage payments, food, and equipment. What they don’t have is much reserve. 

In light of these statistics, what will nursing homes do? What will happen to the 1.5 million Americans, who live in these facilities today? One way to imagine the future is by looking at the past. And it turns out that once before, in the not too distant past, the nursing home industry experienced a great contraction.

A funny thing happened in the late 1970s and early 1980s. Despite decades of growth of the elderly population and dire predictions about imminent shortages of nursing home beds, the demand for nursing homes fell. It fell because the baby boomers read books like “Tender Loving Greed” by Mary Adelaide (1974) and “Why Survive? Growing Old in America” by Robert Butler (1975) and concluded they didn’t ever want to go into a nursing home. Not only that, but they didn’t want to see their parents enter a nursing home. In response to the growing demand to stay at home and “age in place,” Medicare expanded its home health benefits: federal legislation in 1980 (the Omnibus Budget Reconciliation Act, known as OBRA 1980) relaxed prevailing restrictions on the ability of Medicare patients to receive nursing, physical therapy, occupational therapy, and other services in their homes. 

Then, in the mid-1980s, a new kid arrived on the block. Touted as promoting dignity and fostering independence, the new institution, which came to be called assisted living, was supposed to keep older people out of nursing homes by offering them the help they needed in the privacy of their own apartment. Between 1991 and 1999, the number of such facilities increased by 49 percent. Between 1998 and 2003, the number increased another 48 percent. Fortune Magazine reported that assisted living was a leading growth industry and that Wall Street investors were falling all over each other to get a piece of the action.

As assisted living and home care grew in popularity, the demand for nursing home care fell, relative to the population. That is, the absolute number of nursing home beds continued to increase, reflecting the growth of the older population in general and of the population over 80 in particular. But by 1980, the number of nursing home beds per person over 65 had begun to fall. A study published in 1985 projected the elderly nursing home population would rise from 1.2 million in 1980 to 1.9 million in 1995 and to 2.8 million in 2020. But here it is 2020 and the number of older people in nursing homes is back down to 1.2 million—the same level as 35 years ago.

Did nursing homes close in response to the fall in demand in the 1980s and 1990s? Some did. But many simply retooled. At just about the same time that assisted living began replacing nursing home care for many older individuals, Medicare made a dramatic change in the way hospital care was paid for, a change that would have an equally dramatic impact on nursing homes. What happened is that Congress passed legislation requiring that Medicare bill for hospital care using prospective payment. Accordingly, Medicare introduced the concept of “diagnosis related groups” in 1983, essentially paying a flat fee to hospitals for a given medical problem, say a heart attack or a broken hip, rather than reimbursing hospitals on a per diem basis. 

The implications of this payment model were immediately apparent to hospitals: since the rates assumed an average length of stay for a given diagnosis, any hospital that discharged patients sooner than the average made a profit and any hospital that discharged patients later than average sustained a loss. The incentive to discharge patients “quicker and sicker” was clear. How to do this with older patients, many of whom were weak and debilitated after their acute problem had been addressed, was less clear. 

Enter the skilled nursing facility, aka the nursing home. A little used proviso in the original 1965 Medicare legislation provided for “post-hospital extended care” in a “qualified facility having an arrangement with a hospital for the timely transfer of patients.” When acute care hospitals looked around for a place to which they could send patients (usually older patients) who were well enough to leave the hospital but not well enough to go home, they seized on this clause. Suddenly they saw nursing homes in a new light. Here were medical facilities that provided round the clock nursing care, room and board, and were accustomed to caring for older people. And those nursing homes had empty beds. 

Not only did nursing homes have empty beds but, as they soon learned, they would be reimbursed much more generously by Medicare if they used the beds for “rehabilitative” or “post-acute care” than they would be by Medicaid if they used them for long term care. On average, Medicare today pays $503 per patient per day for SNF care whereas, on average, Medicaid pays $206 per person per day for residential care.  As a result, use of the short-term skilled nursing benefit soared, going from minimal utilization in the 1980s to 2.2 million admissions in 2018, at a cost to Medicare of $28.5 billion. Not surprisingly, almost all skilled nursing facilities now accept short-term patients. A few take short-term patients only. 

So, what can this slice of history teach us about the predicament of nursing homes today? First, odds are that some nursing homes will close. Many of those that close will already have been operating at less than 100 percent capacity before the COVID-19 epidemic. Some will be temporarily bailed out by the large corporations of which they are a part, health care conglomerates that have other revenue streams. But the for-profit owners—and 70 percent of nursing homes are for-profit—will not want to borrow from Peter to pay Paul very long. They will seek to unload the failing parts of their empire as soon as possible. 

Other nursing homes will probably remake themselves. Just as their predecessors moved into the post-acute business from the strictly residential, long-term care business, today’s nursing homes may decide that the money is in the health care sector and not the residential sector. They might build on their “subacute” units—the parts of the skilled nursing facility that provide short-term care are typically physically separate from the remainder of the institution, expanding them and developing new capabilities. It would be a short leap to becoming a low-tech hospital, equipped to care for simple problems that are nonetheless too complex for patients to manage at home, such as relatively mild cases of pneumonia or kidney infections. Just as community hospitals provide some but not all of the services offered by large, tertiary care hospitals and transfer patients from one site to another if additional technologies are required, so too could skilled nursing facilities provide some but not all of the services offered by community hospitals. These new health care entities could be branded “infirmaries” or perhaps even “geriatric hospitals.” 

Acute care hospitals will in all likelihood be happy to see frail, elderly patients admitted to such facilities. They were desperate for an alternative site of care during the COVID-19 outbreak, either to house COVID-19 patients who did not require an ICU or to house hospitalized patients who had problems other than COVID-19. In the pre-COVID-19 era, they lost money on such patients because they often developed complications—falls, adverse drug reactions, acute confusion—that prolonged their hospital stay. 

What about the patients themselves? Where will they go if their nursing home goes bankrupt? After the dismal performance of the country’s nursing homes during the COVID-19 outbreak, some of which was preventable and some of which may well not have been, nursing home residents and their families will be very interested in moving to a different site of care. This will be challenging since today’s nursing home population is tremendously needy.

According to the most recent data, 41 percent of nursing home residents are dependent in four very basic daily activities such as bathing, dressing, or feeding themselves. Another 22 percent are dependent in five or more basic daily activities. In addition, cognitive impairment is widespread in nursing homes, with 24 percent of residents diagnosed with moderate cognitive impairment and 37 percent with severe cognitive impairment—where “severe” means profound limitations in communication and mobility and total dependence on others for personal care. Nonetheless, some nursing home residents will move to assisted living complexes. These facilities, which over time have come to serve an increasingly impaired population, will need to adapt to a still needier clientele. 

Other nursing home residents will move to the surviving conventional nursing homes, where they and their relatives will apply pressure to develop models of care that are fiscally sustainable and, at the same time, focus on supporting those capabilities that remain as well as compensating for those that have been lost. 

Change is often difficult and transitional periods are often marred by missteps. But if we learn from past mistakes and if we focus on what’s best for the oldest and the frailest among us, the almost inevitable shake up in the nursing home industry just may prove to be a good thing.

Insuring You Have Insurance

It was really outrageous. It sheds light on our crazy health insurance system—and it is a warning to anyone considering going without health insurance or who thinks mandatory insurance is unnecessary. Here’s what happened:

A family member recently received an “explanation of benefits” from his insurer. He had had had a CT scan for which the hospital performing the test charged $1717. Leave aside for a moment that this is a preposterous fee. He was billed $237.21. Why the difference? The difference was due to the “discount” he received because his insurer had negotiated a rate with the hospital that was 14% of the rate the hospital wanted to charge. The insurer didn’t actually pay a cent—my relative has a “high deductible plan” and has to pay all medical fees until he his family has spent $5000 in a given year. But because he has insurance, he had to pay $237, not $1717. Put differently, if my relative didn’t have health insurance, he would have been charged the full $1717 for exactly the same test.

The system is a bit like scalpers charging extraordinarily high rates for tickets to popular shows or sports events. As long as the system of multiple private insurers is in place, where each insurer negotiates its own deals with “providers,” it’s terribly important to have insurance. If you don’t, you’ll be scalped.

With the Affordable Care Act once again under siege, it is critical to remind everyone why having health insurance matters. This is important for the over-65 population even though virtually everyone over 65 qualifies for health insurance in the form of Medicare. It’s important to older people because their caregivers tend to be under 65: if they get sick and don’t seek treatment because they lack insurance, they won’t be able to serve as caregivers. And it’s important because if those who are not quite old enough for Medicare don’t have private insurance, they may opt to defer taking care of medical problems until they reach 65. This then puts a significant strain on Medicare when they do enroll, potentially raising the cost of the program and putting it in jeopardy.

Mandating that everyone have health insurance makes sense because insurance is only viable if low-risk individuals subscribe along with those at high risk. If sick people are the only ones who buy health insurance, it will become inordinately expensive. Imagine, for example, that nobody bought car insurance until after they had a car accident—and then they expected the insurance to kick in immediately. Then the only people paying a premium would be those who filed claims. The insurance company would have to charge rates that were high enough to make good on all the claims—which means you would probably end up paying the same amount for your policy as you would have paid to fix your car—or to cover the costs of medical care for anyone injured—after an accident.  In the case of health and disease, insurers can get around this problem by deciding that if people wait until they get sick to buy insurance, they won’t be covered for precisely the condition that led to their deciding to insure!

Just keep in mind, that in addition to all these reasons for everyone having health insurance, there’s one more. As long as we have a system of private insurers that negotiate rates with health care “providers” (hospitals, physician groups, etc.), you will pay much less for medical care if you have insurance than if you don’t, even if your insurer pays nothing at all. If this seems absurd, it is, but that is how the system works.

Now, there are other ways to address this problem other than exhorting or requiring everyone to purchase health insurance. We could give everyone health insurance—as is done with Medicare Part A for people over 65—and use tax revenues to pay for the policy.  Medicare sets rates (as long as it has a monopoly, it doesn’t have to negotiate with each provider individually) and in many states, providers are required to “accept assignment.” That means your doctor cannot turn around and bill you the difference between what they charge and what Medicare pays them. But in the current world, you go without health insurance at your own peril.

The Truth About Hospice

Hospice is widely touted as the best form of care near the end of life. As a result, the proportion of people who are enrolled in hospice at the time of death has been steadily increasing. Nearly half of all Medicare patients are receiving hospice care at the time of death. But a new report suggests that the quality of care they receive may not be what it should be. Moreover, a chunk of the $16.7 billion that Medicare spends on hospice (that was in 2016; it's more today) goes towards care that is unnecessary or not provided at all. What exactly is the problem? How widespread is it and how can patients and families identify hospices that provide high quality care?

While substandard care and fraudulent billing are distributed throughout the country, these practices occur disproportionately in the 64 percent of hospices that are for-profit. The bad behavior predominantly involves two specific variants of hospice care: general inpatient hospice care and hospice services that are provided within institutions, whether skilled nursing facilities or assisted living facilities. General inpatient care is an intensive form of care offered when symptom control cannot be achieved elsewhere (ie at home], so the patient is transferred to a hospital or skilled nursing facility. For this type of care, Medicare pays a per diem rate of $720, compared to $187 for home hospice (actually this is the rate for days 1-60, after that, the rate drops to $147 per day). The kinds of abuses that have been reported are indeed disturbing: the report gives several examples.

However,  General Inpatient Care accounts for only 1.5 percent of all the days that patients were enrolled in hospice. 

Other cases of allegedly inappropriate billing take place in Skilled Nursing Facilities (SNF) or in Assisted Living Facilities (ALF). Some instances were unequivocally fraudulent, as when hospices paid facilities to enroll patients in hospice, sometimes without the knowledge of patients or their families.  But again, it’s important to keep this in perspective.  A minority of hospice patients are cared for in these environments: 25 percent of hospice beneficiaries during the period the study examined (2006-2016) lived in a SNF and only 13 percent in an ALF.

Several of the criticisms leveled by the report are of questionable significance. The study says that many hospices fail to develop the mandatory “comprehensive care plan,” a document that spells out what services the patient needs and how they will be provided. This failing was especially egregious in the inpatient setting, where in 85 percent of cases, no such plan was documented. But the absence of a written plan doesn’t mean there was no plan or that inadequate care was provided. It means just what it says—the hospice did not create the requisite piece of paper. Maybe, just maybe, they thought it was a waste of time, a meaningless bureaucratic requirement.

Hospice care is also criticized for failing to provide physician visits. Actually, hospice does provide one physician visit. A face to face visit with a physician at the time of admission to hospice has been mandatory since 2011, so hospice patients do see a physician at least once during their hospice stay, which in many cases is short: over half of all hospice patients are enrolled for less than 30 days, and over one-fourth are enrolled for a week or less. Many hospice patients and their families would like more involvement of the medical profession, particularly their primary care physician or the relevant specialist, but that’s different from suggesting that the quality of care was poor because there were no medical visits at all.

Skilled nursing facilities are accused of double dipping, of billing Medicare for services that they already routinely provide as part of their usual care. This has been a worry since Medicare agreed to cover hospice care in a SNF. Care by nurses and nurses’ aides are a normal component of nursing home care. But that doesn’t mean that the services offered by hospice are redundant; on the contrary, the reason that hospice can be beneficial in the SNF environment is precisely because the usual nurses may not be skilled in pain management and the amount of aide time may be totally inadequate for a dying patient.

Lastly, the report argues that the payment system incentivizes hospices to minimize services and to cherry pick patients, selecting low-need, long-stay patients, such as those with advanced dementia, rather than high-need, short-stay patients, such as those imminently dying of cancer. We’ve known about this phenomenon for some time. In fact, CMS responded by modifying its payment system to pay more for the first few days of care and for the last few days of care and less for the in-between days. The practice of complementing high-cost patients with low-cost patients is only a problem if the low-cost patients don’t deserve to be enrolled in hospice at all. If they do, and there’s every reason to think they do, then it’s simply a good business strategy. Hospitals do the same thing when they add services for which they are generally reimbursed well to compensate for the services for which they are poorly reimbursed. The alternative would be to abandon the per diem payment system and go to fee-for-service. But that’s the model that is gradually fading away from the rest of the medical system because it promotes the use of volume rather than quality.

What should we conclude about hospice care in America? How should prospective patients respond to this report and how should Medicare respond? 

Patients and their families would do well to consult Hospice Compare, the CMS website, for basic information about quality. This tool relies principally on patient and family satisfaction surveys rather than objective measures, but it’s very revealing. Rather than add more measures, which is what the authors of the report propose,  I think the tool should be publicized: I was familiar with Hospital Compare and Nursing Home Compare, but I confess I did not know about Hospice Compare until recently--and the site was launched in August, 2017. 

If families have a choice between a not-for-profit hospice and a for-profit hospice, they may find it prudent to select the not-for-profit option.  On average, not-for-profit facilities are associated with higher quality care. 

As to steps that Medicare should take, increased across the board regulation, which is what the report advocates, seems unduly burdensome. Far wiser would be to target enhanced supervision and regulation to those areas that need it most, namely skilled nursing facilities and assisted living facilities. Stiffer penalties for malfeasance would also be wise. As with banking fraud, it’s not enough to slap the owner or executive director on the wrist. Jail time is a much more powerful disincentive to bad behavior. And the bad behavior we’re talking about here is neglecting people who are dying and in pain.