Kathleen F. Jett
Economic and legal issues
THE LIVED EXPERIENCE
When I was growing up life was hard. We were so poor we couldn’t do much but to hold on tight. When I was lucky I could get work plowing a field and make $1.00 an acre. You work hard, and you make do. There were not such things as going to a doctor or a hospital, you just did the best you could do and pray you don’t get sick. Then when I turned 65 I got a little check from the government and a red, white, and blue insurance [Medicare] card. The check isn’t much, only about $564 a month, but you know I just consider myself blessed and better off than ever before. And now I don’t worry about my health, I will be taken care of.
Aida, age 74
Learning objectives
Upon completion of this chapter, the reader will be able to:
• Describe the major methods of financing health care for older adults.
• Compare the costs to the consumer between Medicare and Medicaid.
• Discuss the potential impact of health care financing in long-term and home health care.
• Describe the roles of the nurse as case and care managers.
Glossary
Prospective payment system (PPS) A system in which the payment of a health service is calculated in advance and based on a number of factors, including diagnosis and age of the patient rather than the actual costs and length of the care needed.
The Social Security Act The legislation passed in 1935 that provides regular income for older persons.
Title XVIII of the Social Security Act The federal legislation providing for Medicare for all eligible persons 65 years of age and over, the permanently disabled, and those with end-stage renal disease.
Title XIX of the Social Security Act The federal legislation providing for Medicaid to individuals at least 65 years of age and select others with very low incomes.
Title XVI of the Social Security Act The federal legislation that established Supplementary Security to elders with extremely low incomes and few assets.
evolve.elsevier.com/Ebersole/gerontological
People living in the United States represent all levels of education, experience, and income. However, all have in common the potential need for health care. It is rare to meet an older adult who does not have experience in some way with both the past and the present health care systems either in the United States or their country of origin. Today’s system in the United States is in a state of flux and stress as we find a way to care for the ever increasing number of older adults in the face of skyrocketing costs and financial constraints. For gerontological nurses to provide the best care to older adults, it is helpful to have a basic understanding of the health care system and financing associated with the care they provide and a working knowledge of some of the legal issues older adults face.
This chapter will review the major mechanisms by which eligible elders in the United States receive a basic income and health insurance in place at the time of this writing. It will proceed to discuss common legal issues elders face that the nurse should know, and last offer a discussion of elder mistreatment.
It is recognized that the Affordable Care Act of the Obama administration has affected the health of older adults in at least two major ways already. The first is expanded access to preventive care (see Chapter 1) and the second is the tightening of the “donut hole” related to medication costs discussed later in this chapter. These may change in the near future or other aspects may evolve.
Social security
The health care system of today and its financing began in 1935. There had been an exodus from the country and farms into the cities and the factories in the early 1900s, changing the social and financial basis of the family. In the country, an elder worked in some way until death, but this was not possible in cities given the exceedingly difficult work of the factories. For the first time people were retiring by reason of disability. The word retiring, which had meant “to withdraw from public” in the 1800s, now meant “no longer qualified,” with dramatically different implications (Achenbaum, 1978).
The family, no longer able to provide all the care to their elders, looked to the federal government for help. In 1935 the Social Security Act was passed. The Social Security program, established at the time of the Great Depression, was considered by many to be one of the most successful federal programs. Its primary function was to provide monetary benefits to American citizens and legal residents at least 65 years of age to prevent their dependency on their families.
Social security (SS) was designed as a pay-as-you-go system. Payroll taxes collected from employees and employers are immediately distributed to beneficiaries (retirees, the disabled, or eligible spouses). In 2012 payroll taxes were collected on the first $110,100 of an individual’s income. Social Security funds, although individually deposited by employers and employees, are not reserved for any one individual. No one has an account set aside in his or her name. All funds that are not immediately paid out to beneficiaries are “borrowed” by the federal government for regular operating expenses.
As long as the amount of contributions from the workers exceeds those paid to the beneficiaries, the program can continue as designed. At the time of its inception the system was constructed to transfer funds from those believed to be relatively well off (workers) to those believed to be relatively poor (retirees). Social security and a number of programs that followed were set up as “age-entitlement” programs. This meant that an individual could receive the benefits simply because of age and regardless of need. In other words, the monetary support is available to those persons at a certain age regardless of other sources of personal income or assets. They were and are, however, limited to United States citizens and legal residents older than a certain age who have previously earned the required amount of “credits” or married to someone who has. Earnings are translated into “credits,” with one credit equivalent to $1130 in 2012. A minimum of 40 credits are required for all persons born in 1929 or later (U.S. Social Security Administration [SSA], 2012a).
At the same time, the amount of Social Security benefit is calculated in part on the person’s average salary during 35 of his or her working years. If one did not work a total of 35 years, nonworking years count as zero in the calculation. This has been most beneficial to older white men, who are more likely to have worked the most consistently and at higher salaries than all other groups of workers. It has been most disadvantageous for persons of color and many women who took time off to care for a child or parent (Hooyman & Kiyak, 2008). The amount of benefit potentially increases each year on January 1 as a cost-of-living adjustment (COLA). In 2012 the COLA was 3.6% and the average SS retirement benefit was $1230 for the 39 million persons at least 65 years of age (SSA, 2012b). Twenty-two percent of all married elders and 43% of unmarried elders depend on Social Security for 90% of their income.
In an effort to save money the SS system has been increasing the age when one is eligible for full benefits. Those born in 1938 were eligible to begin receiving partial SS benefits at age 62; however, they had to wait until age 65 if they wanted to receive their full benefits. The age at which one becomes eligible is increasing slowly and will transition to at least 67 years of age for those born in 1960 or after (SSA, 1984).
Supplemental security income
Not all older persons living in the United States have Social Security benefits adequate to provide even the most basic necessities of life. This has been true especially for persons who have spent their lives employed in the agriculture industry or as domestic workers and were paid very low wages, often on a cash basis. Supplemental Security Income (SSI) was established in 1965 by Title XVI of the Social Security Act. SSI provides for a minimum level of economic support to older adults. Among the requirements is very low income. Income includes monetary gifts, food, and shelter provided by others. Federal SSI payments are calculated on total monthly income with potential supplementation to the maximum allowed by the state of residence. The Federal SSI benefit to about 2 million persons at least 65 years of age was $698 in 2012 (SSA, 2012c). If one’s income or the contributions of others increases, the payment decreases accordingly.
Medicare and medicaid
History
In 1934 President Franklin D. Roosevelt tried to create a plan to provide universal health insurance for the citizens in the United States. This was met with unbeatable opposition from groups such as the American Medical Association and, by poll, the majority of the American public (Cantril, 1951). Except for a few successful insurance plans for working people, health care was on a fee-for-service, out-of-pocket basis. This meant that each health care service could be purchased from one’s own funds, or “pocket.” When costs were reasonable, many older adults could continue to pay for their care. However, as people began to live longer with more health problems, and as technology advanced and costs rose, paying for the costs of health care out-of-pocket grew harder and even impossible for many older adults who were entirely dependent on the limited incomes of Social Security.
In 1965, through the efforts of President Lyndon B. Johnson, legislation (Title XVIII of the Social Security Act) was passed creating an insurance plan (Medicare A) covering the costs of hospitalization for all persons eligible for Social Security, SSI, or railroad retirement benefits. A second subsidized insurance plan (Medicare B) could be purchased, to cover the costs of seeing health care providers and several other services. The costs of outpatient medications were not covered by Medicare until 2006, when Medicare D was created.
Medicare was meant to provide insurance coverage for medical care to the elderly and disabled regardless of their financial situation. Another amendment (Title XIX) to the Social Security Act created a second form of insurance for the elderly, the disabled, and children with low incomes, known as Medicaid. Medicaid was designed to help states defray expenses of the very poor; this included elders who did not qualify for or could not afford to purchase the supplemental health policy (Medicare B) or to pay the required copayments.
Medicare
Medicare is administered by the Centers for Medicare and Medicaid Services (CMS) (www.cms.gov) and is a part of the Department of Health and Human Services, a special Federal entity created to improve the administration of the programs. In 1966, just over 19 million people at least 62 years of age were enrolled in Medicare. In 2008 (latest data available) this number had increased to about 37.5 million over 62 and an additional 7.7 million younger, disabled persons (CMS, 2008).
To be eligible for Medicare today, one must be eligible for Social Security. Otherwise, coverage may be purchased. Medicare consists of four parts (Box 23-1). Medicare only covers select services and requires that these services be considered medically necessary. This means that the services are prescribed and are needed for the diagnosis or treatment of a medical condition, meet the standards of good medical practice, and are not performed for the convenience of the health care provider (CMS, 2011).
Medicare A
Unless previously disabled, a person first becomes eligible for Medicare A in the 6 months surrounding his or her 65th birthday (from 3 months before to 3 months after the birth month). If a person does not apply during that time, he or she has to wait for the next “open enrollment period” in the spring of each year with benefits beginning on July 1. Penalties may be charged (CMS, 2011). Medicare Part A is a hospital insurance plan covering acute care, acute and short-term rehabilitative care, and costs associated with hospice and home health care under certain circumstances.
In 2012 Part A is free to those who receive Social Security or can be purchased for a monthly fee of up to $440 (CMS, 2011). The coverage and copayments under Medicare A vary by setting under the original fee-for-service plans. When acute care is needed, the patient responsibility can be quite high, including a deductible of $1156 (as of 2012) for days 1 to 60 and a copay of $289/day for days 61 to 90. Each beneficiary has a 60-day lifetime reserve at the copay cost of $578 per day; there is no coverage after 90 days. These copays are repeated every time the person is readmitted to an acute care facility with the exception of the lifetime reserve [2012 figures] (CMS, 2011).
Medicare A also pays 100% of the costs for the first 20 days in a skilled nursing facility if the purpose is for rehabilitation. There is a copay of $144.50 for days 21 to 100, and no coverage after that (CMS, 2011).
When the assistance needed is limited to personal care or medication supervision, it is not covered by Medicare at all. For home health care to be paid by Medicare, the care must be provided at the written direction of a physician. Ongoing supervision can be provided by either a physician or a nurse practitioner. It must be through a certified agency and for the purposes of active rehabilitation similar to that seen in the skilled nursing home setting. There are no copayments for home health care. Copays for hospice care are limited to 5% for inpatient short-term respite stays to provide temporary relief to the caregiver or for acute symptom management that cannot be handled at home (CMS, 2011).
Medicare B
A person who is eligible for Part A must apply for Part B through the local Social Security Administration office (www.socialsecurity.gov). At that time the person will be asked to choose either Medicare B or a Medicare C plan as an alternative plan that is available in the area. Medicare B covers the costs associated with the services provided by physicians; nurse practitioners; outpatient services (e.g., lab work); qualified physical, speech, and occupational therapy; and some home health care equiptment. Medicare C replaces Medicare B and is a managed care plan similar to what we know as a health maintenance organization (HMO). Many older adults are being encouraged or directed to enroll in Medicare C plans rather than the Original Medicare.
The Original Medicare B Plan is based on a traditional fee-for-service arrangement; the patient receives services from a provider for a medical problem, a bill for the costs of the care is sent to Medicare (through a carrier) or to the patient, who can submit the claims, and the provider or the patient is reimbursed. In 2012, after a deductible of $140 a year, Medicare reimbursed physicians at a rate of 80% of what Medicare considers an “allowable charge” for necessary medical services (mental health is limited to 60%) (CMS, 2011). The patient is responsible for the remaining 20% (or 40%) of the charge. A provider who “accepts assignment” cannot charge a patient any more than the 20% of the “allowable charge.” The number of physicians who accept assignment is decreasing rapidly.
A provider who does not accept assignment may charge the patient up to 15% above the allowable charge. With the Medicare B Plan, the patient is responsible for an annual deductible, copays, coinsurance charges, and a monthly premium based on income and marital status. The premium is usually deducted directly from the monthly Social Security check. In 2011 the average monthly premium for Original Medicare Part B was $115.40, with the premium increasing for those with adjusted gross incomes of greater than $214K for an individual or $428K for a couple (CMS, 2011).
The advantages of the Original Medicare Plan include choice and access. The person can seek the services of any provider of his or her choice, without a referral. Many people with the Original Plan purchase what are called Medigap policies to cover the deductibles and copays.
Medicare C
The type and availability of Medicare Advantage Plans (Medicare C) depends on location and may include a preferred provider organization (PPO) plan and/or any number of managed care plans (MCPs). Not all plans are offered at all locations. All provide extra benefits beyond those covered by the Original Medicare B; they may require only small copays but have special rules that must be followed, and they may charge extra premiums for the added services. Referrals for services are always required. Premiums vary by type.
The PPO plans work like the Original Medicare except that only specific providers can be used (those in the network) and the allowable charges are preset. Any additional services and fees or copays vary by plan. A patient may choose to be seen by a provider outside the PPO network for an additional charge.
In MCPs (also known as HMOs), the consumer “enrolls” to receive services from assigned specific locations and providers. There are fewer out-of-pocket costs unless an individual decides to see a provider or seek a service without a referral or outside the system to which he or she has subscribed. These are not usually covered at all. Medicare contracts with MCPs to provide comprehensive services, financed by Medicare premiums. The best of these are complete health care systems with highly trained physicians, nurse practitioners, and other health care professionals working out of single or regional completely equipped medical centers. Medical services are expected to emphasize preventive medicine, comprehensive care, periodic physical examinations, and immunizations.
Capitation is imposed on MCPs by Medicare; this means that the plan is paid a certain fixed amount each day for each enrollee regardless of the amount of care given, and with this amount all needed care must be provided. Although the intention of this design was to increase preventive care, in some cases, this has created abuses and horror stories in which elders were denied necessary treatments, presumably motivated by the plan’s desire to lower its costs. Now patient protection laws allow consumers to lodge complaints and initiate legal action against the suspected abuse. The Center for Patient Advocacy supported a much needed bill that became law in October 1999, which allows appeals when an MCP denies care, guarantees access to specialists when needed, ensures that health-related decisions are made by health care providers rather than bureaucrats, and holds MCPs legally accountable for medical decisions that cause harm.
HMOs that have been granted Medicare capitation cannot refuse applicants based on preexisting health conditions. The supplemental services offered may save the participant a considerable amount in the costs of medications, assistive devices, and professional consultation charges. The negative aspects of HMOs and managed care are the access barriers to specialists and high-tech procedures and treatments. Some HMOs provide extensive health education services, support groups, and telephone support services to the homebound.
Medicare D
Medicare D was created as part of the Medicare Modernization Act of 2003 and is an optional prescription coverage plan. People must enroll within 6 months of initial Medicare eligibility. Otherwise they have to wait until the next open enrollment period, with a penalty based on the number of months they waited to enroll. Medicare D is not one plan but is a designation for dozens of private plans that meet certain criteria and are approved by the CMS. The premiums vary by company, reflect the range of medications covered, and can be deducted from one’s Social Security check. In 2012 the annual deductible was $320. For drug costs between $321 to $2930 there is approximately 75% coverage. Between $2930 and $4700 patients fall into what is referred to as the “donut hole” when there is no coverage. After $4700, coverage is at about 95%. While there is still no coverage in the donut hole, a provision of the Affordable Care Act is that pharmaceutical companies are required to provide a 50% discount for brand-name drugs and the person is responsible for 86% of costs of generic drugs during this period (CMS, 2011).
Medicaid
For elders with very low incomes (including all persons receiving SSI), Medicaid may be available to offset the high Medicare copays and deductibles, as well as to provide additional health benefits such as drug coverage.
In 2012 Medicaid provided health care insurance to 4.6 million persons at least 65 years of age or older at a cost of more than $15,869 per person. Nearly all of these persons were “dually eligible” or qualified for both Medicare and Medicaid. State Medicaid programs paid for 41% of all the nursing home and home health care in the United States in 2008. This included $47.7 billion ($29,533 per beneficiary) for 1.6 million of the people in nursing homes and $6.6 billion ($5789 per person) for 1.1 million at home (CMS, n.d.).
As of 2010 the minimum eligibility criteria for Medicaid for the elder living in the community was 133% of the Federal Poverty Level ($29,700 for a family of four). Other eligibility criteria include residency (usually five years in the U.S.) immigration status and documentation of citizenship (CMS, n.d.). Within the broad guidelines established by the federal government, each state establishes its own eligibility criteria, determines the types and extent of services to be covered, sets the payment rates to providers, and administers its own programs. States pay about 40% of the costs. This means that the Medicaid services available to the poorest of the elderly are dependent on the affluence and the policy of a given state. Alabama, with one of the highest percentages of poor residents, also has one of the lowest state incomes and therefore one of the lowest levels of Medicaid services. In most cases, Medicaid covers more services than Medicare, including custodial care in nursing homes.
More states are turning to Medicaid MCPs and HMOs and requiring persons who are dually eligible to enroll in these plans, in an attempt to control costs. Waiver programs, that is, alternative and sometime innovative models are used in some states to further control costs by helping keep Medicaid-eligible elders in their own homes and out of nursing homes with extra support. Medicaid does not help the near-poor, who cannot qualify for aid but cannot afford basic health care. In some states there have been “Medically Needy” and Medicare Saving Plans programs, with month-to-month Medicaid coverage the months the elders’ medical expenses make them temporarily eligible for Medicaid. With the financial crisis that states have been experiencing, many of these programs have been abandoned and services under Medicaid have been reduced. The premise of Medicare and Medicaid managed care is that better outcomes will result from systems of care that integrate professionals in responsive teams, maximize the use of subacute care, and provide incentives to reduce the reliance on institutional acute care. Managed care systems are most effective for individuals enrolled over a long period who use ongoing primary care and preventive strategies to maintain health and avoid high-cost emergency services and intensive treatment.
Care for veterans
The Veterans Health Administration (VA) system has long held a leadership role in gerontological research, medical care, and extended care. A great deal of the research that has guided gerontologists was generated through the VA system. In addition, the vast majority of geriatric fellowships have been provided through the Department of Veterans Affairs (VA) to physicians, nurse practitioners, and nurses. The VA system has been a model for continuity of care in the various care provider systems in place. Early on, this system provided VA-run nursing homes, home care and community-based primary care programs, respite care, blindness rehabilitation, mental health, and numerous other services in addition to acute medical-surgical provisions. As a result of a combination of budget cuts and growth of the covered population, services have become more restricted, but the needs of veterans, especially those who were active in a war zone, have remained a priority.
At one time, veterans’ hospitals and services were available on an as-needed basis for anyone who had served at any time. It was not necessary for individuals to use their Medicare benefits. However, this system has undergone significant change. One of the first changes was restrictions placed on the use of veterans’ hospitals and services. Instead of coverage for any health problems, priorities were set for those problems that were in some way deemed “service-connected”; in other words, the health care problem had to be linked to the time the person was on active duty. In addition, those with Medicare are expected to apply for and use that payment mechanism first before the VA will cover the medical expenses, usually through TRICARE described later in this chapter.
For those veterans who served in a war zone and receive a military pension there is additional monetary support available to them if they need assistance with ADLs. The application process to the program called “Aid and Attendance Pension” is quite cumbersome but may be especially helpful for those who need custodial care at home or in an assisted living facility (see Chapter 3). The veteran may qualify (Box 23-2) for monetary help for their own care or that of a spouse, of up to $2022/month per couple depending on circumstances (2012 figures). Other benefits change from time to time, such as the recent availability of funds to reimburse a veteran for travel to and from a doctor’s office. For those living in rural areas or dependent on companion transport services this can be quite helpful. The elder is encouraged to find out more about these and other programs on http://www.facebook.com/VANFSG#!/VeteransAffairs.
BOX 23-2
Eligibility of VA Aid and Attendance Improved Pension
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