Long-Term Care Policy Issues

Long-Term Care Policy Issues

Charlene Harrington

“He who wants to warm himself in old age must build a fireplace in his youth.”

—German proverb

The population of the United States is aging with the number of adults aged 65 and older almost doubling (from 37 million to over 70 million between 2005 and 2030) from 12% to almost 20% of the population by 2030 (Institute of Medicine [IOM], 2008). With the aging of the population, the demand for long-term care (LTC) and the need for nurses and other personnel to provide services is growing rapidly. The IOM predicts a major shortage of health workers with geriatric training to address the growing needs of the aging population. With total LTC expenditures of $190 billion in 2007 (Hartman et al., 2009), LTC is a critical sector (9% of total health spending), but one that receives little attention from the nursing profession.

This chapter focuses on some of the policy and political issues facing nursing in LTC. First, it reviews the problems with the quality of nursing home care, the poor enforcement of federal quality regulations, and a lack of ownership transparency (intelligibility). Second, it examines nursing home staffing and reimbursement policies. Third, it discusses the need for expanding home and community-based service (HCBS) programs. Finally, nurses are urged to become advocates for older and disabled people who need LTC services.

Poor Quality of Care and Weak Regulatory Enforcement

Poor nursing home quality has been documented since the early 1970s and culminated in passage of the Omnibus Budget Reconciliation Act (OBRA) of 1987 to reform nursing home regulation (IOM, 2001). Although it was expected that OBRA 1987 would improve the survey and enforcement system and ultimately improve quality, these expectations have yet to be realized. A number of studies and reports have described the poor quality of some nursing homes (IOM, 1996, 2001, 2003). In 2008, over 90% of nursing homes received about 150,000 deficiencies for failure to meet federal regulations, for a wide range of violations of quality standards that result in unnecessary resident weight loss, pressure ulcers, accidents, infections, decline in physical functioning, and many other problems (Harrington et al., 2009). Almost 65,000 formal complaints were made to state regulatory agencies about poor nursing home quality, and 26% of nursing homes received deficiencies for causing harm or jeopardy to nursing home residents in the U.S. in 2008. Many studies during the past decade have documented the serious quality problems related to ongoing problems with the federal and state survey and enforcement system, including the complaint investigation process (U.S. General Accounting Office [U.S. GAO], 1999a, 1999b, 2002; 2003; U.S. Government Accountability Office [GAO], 2007, 2008).

State surveyors are often unable to detect serious problems with quality of care and allow most facilities to correct deficiencies without penalties (U.S. GAO, 2002; GAO, 2008). Some state survey agencies downgrade the scope and severity of deficiencies, and many states do not refer cases for intermediate sanctions (U.S. GAO, 2003; GAO, 2008). State surveys are problematic for reasons including the continued predictability of standard surveys and the inadequacy and lack of timeliness of consumer complaint investigations (U.S. GAO, 2003; GAO, 2008). Problems with poor state investigation and documentation of deficiencies and large numbers of inexperienced state surveyors in some states also occur, and federal oversight of state activities continues to be inadequate.

When violations are detected, few facilities have follow-up enforcement actions or sanctions taken against them (Harrington et al., 2004; Harrington, Tsoukalas, et al., 2008). The continued widespread variation in the number and type of deficiencies issued by states shows that states are not using the regulatory process consistently and are not following federal guidelines (U.S. GAO, 2003). Some state officials admit they are unable or are unwilling to comply with federal survey and enforcement requirements (Harrington et al., 2004). State enforcement problems are related in part to inadequate federal and state resources for regulatory activities, which have declined by 9% between 2002 and 2007 when adjusted for inflation (Harrington et al., 2004; GAO, 2009). U.S. Senate committees have held many hearings about nursing home survey problems and have repeatedly urged the Centers for Medicare and Medicaid (CMS) to improve the survey and enforcement process (U.S. GAO, 1999a, 1999b, 2002, 2003; GAO, 2007, 2008).

The federal-state nursing survey and certification process give the appearance that the government is doing something about the quality of care problems, but in reality the process does little to change or improve care. To ensure the safety of residents, strong improvement and increased funding for the survey and certification program are needed, and poor performing facilities should be terminated from Medicare and Medicaid.

Inadequate Nursing Home Staffing Levels

Low nurse staffing levels are the single most important contributor to poor quality of nursing home care in the U.S. Over the past 25 years, numerous studies have documented the important relationship between nurse staffing levels and the outcomes of care (IOM, 1996, 2001, 2003; Harrington, Zimmerman, et al., 2000). The benefits of higher staffing levels, especially RN staffing, can include lower mortality rates; improved physical functioning; fewer pressure ulcers, catheterized residents, and urinary tract infections; lower hospitalization rates; and less antibiotic use, weight loss, and dehydration (IOM, 1996, 2001, 2003). Three separate IOM reports have recommended increased nurse staffing in nursing homes, particularly RN staffing.

The average U.S. nursing home provides a total of 3.7 hours per resident day (hprd) of total RN and Director of Nursing, licensed vocational or practical nurse (LVN/LPN), and nursing assistant (NA) time (Harrington et al., 2009). Of the total time, most (62% or 2.3 hours) is provided by NAs, who have an average of 11 residents for whom to provide care with only 2 weeks of training. RNs provide only 36 minutes (0.6 hour) of time per patient day and must care for about 34 to 40 residents, although nurses usually have many more residents on nights, weekends, and holidays (Harrington et al., 2009). The most disturbing finding is that average RN staffing hours in nursing homes has declined by 25% since 2000, with RNs having been replaced by NAs (Harrington et al., 2009). This has reduced the quality of care at a time when nurse staffing levels are already inadequate to protect the health and safety of residents (CMS, 2001).

One study found widespread quality problems in most nursing homes: inadequate assistance with eating (only 4 to 7 minutes of assistance); verbal interactions during mealtime only 28% of the time; false charting (inaccurate documentation of feeding assistance, toileting, and repositioning); toileting assistance only 1.8 times on average in 12 hours; residents not turned every 2 to 3 hours; over one half of residents left in bed most of the day; walking assistance only one time a day on average; and widespread untreated pain and untreated depression (Schnelle et al., 2004). Comparing the results of the staffing study findings with studies of eight separate quality indicators (weight loss, bedfast condition, physical restraints, pressure ulcers, incontinence, loss of physical activity, pain, and depression), Schnelle and colleagues (2004) concluded that staffing levels were a better predictor of high-quality care processes than the eight quality indicators that were examined.

To ensure safe care, minimum staffing thresholds have been identified and need to be established in regulations. Schnelle and colleagues (2004) studied differences in the quality of care processes among selected California nursing homes with different staffing levels. They found that nursing homes in the top 10th percentile on staffing (4.1 hprd or higher) performed significantly better on 13 of 16 care processes implemented by NAs, compared with homes with lower staffing. Residents in the highest-staffed homes were significantly more likely to be out of bed and engaged in activities during the day and receive more feeding assistance and incontinence care.

A Centers for Medicare and Medicaid Services (CMS) (2001) report found that staffing levels for long-stay residents that are below 4.1 hprd result in harm or jeopardy for residents (if below 1.3 hprd for licensed nurses and 2.8 hprd of NA time). NA time should range from 2.8 to 3.2 hprd, depending on the care residents need, just to carry out basic care activities (CMS, 2001). This amounts to 1 NA per 7 or 8 residents on the day and evening shifts and 1 NA per 12 residents at night. When actual staffing levels were compared with the target goals recommended by the CMS report (2001), 97% of all facilities were found to be operating below the desired level in 2001. The recommended nurse staffing level in the CMS (2001) report was similar to the 4.5 hprd level recommended by experts (Harrington, Kovner, et al. 2000).

Unfortunately, CMS has not agreed to establish minimum federal staffing standards that would ensure that nursing facilities meet the 4.1 hprd, mostly because the potential costs were estimated to be at least $7 billion in 2000 (CMS, 2001). Most nursing homes are for-profit entities and are unlikely to voluntarily meet a reasonable level of staffing with regulatory requirements. If staffing levels are to improve, minimum federal staffing standards are needed, along with additional government funding to pay for the staffing. Some states have begun to raise their minimum staffing levels since 1999. California (3.2 hprd) and Delaware (3.29 hprd) have established high standards for direct care, and Florida established a 3.9 hprd total minimum standard (Harrington, 2008). These standards are improvements but are still well below the 4.1 hprd level recommended by the CMS 2001 report. Efforts to increase the minimum staffing standards that take into account resident acuity (case mix) should continue to have the highest priority at the state and federal levels.

Nursing Facility Reimbursement Reform

Nursing home reimbursement methods and per diem reimbursement rates influence the cost of providing care. In 2007, Medicaid paid for 44% of the nation’s total $131 billion nursing home expenditures; Medicare paid for 18%; consumers paid for 27%; and private insurance and other payers paid for 11%. Overall, the federal and state government paid for 62% of nursing home expenses (Hartman et al., 2009).

State Medicaid reimbursement policies have focused primarily on cost containment at the expense of quality and have established very low payment rates. The majority of states have adopted Medicaid prospective payment systems (PPSs) for nursing homes that set rates in advance of payments, which are successful in controlling reimbursement growth rates, but facilities tend to respond by cutting the staffing and quality levels (Grabowski et al., 2004).

To make matters worse, Congress passed Medicare PPS reimbursement for implementation starting in 1998 to reduce overall payment rates to skilled nursing homes (Medicare Payment Advisory Commission [MedPAC], 2009). Under PPS, Medicare rates are based in part on the resident case mix (acuity) in each facility to take into account the amount of staffing and therapy services that residents require. Skilled nursing homes, however, do not need to demonstrate that the amount of staff and therapy time actually provided is related to the payments allocated under the PPS rates.

As a result of Medicare PPSs, nursing home professional staffing decreased and regulatory deficiencies increased, showing the negative effect of Medicare PPSs (Konetzka et al., 2004). As noted previously, the level of RN staffing in U.S. nursing homes has declined by 25% since 2000 (Harrington et al., 2009). The average hours for licensed practical or vocational nurses held steady during the period, whereas the hours for NAs increased to replace the lost RN hours.

One policy option is to revise the Medicaid and Medicare PPS formulas to specify the minimum proportion of the payments that must be used for nurse staffing and therapy services. If the minimum amount of payments for nursing and therapy services were regulated, nursing homes would be prevented from cutting nurse staffing and using the funds for profit-making.

Despite the Medicare PPS rate cuts, excess profits have grown because Medicare does not limit the profit margins of nursing homes. A recent study showed that Medicare skilled nursing profit margins have exceeded 10% for the past 7 years and were 17.5% for for-profit facilities in 2007 (MedPAC, 2009). The median total margins for all payers were less (primarily because of low Medicaid payment rates). Facilities with very high profits appear to be taking profits at the expense of quality. Nursing homes with net income profit margins greater than 9% were found to have higher deficiencies and poorer quality of care, apparently because they were taking excess profits (O’Neill, et al., 2003). Strict limits on administrative costs and profit margins under Medicare and Medicaid PPS could be instituted to reduce the excess profit-taking by nursing homes.

Poor quality of care in nursing homes has been associated with low wages and benefits and high employee turnover rates (Harrington & Swan, 2003). Nursing home wages and benefits are substantially lower than those of comparable hospital workers (and lower than those in many jobs in the fast food industry and other unskilled jobs) and are generally well below the level of a living wage (CMS, 2001; Kaye et al., 2006). A CMS study (2001) found that NA wages and benefits need to be raised by 17% to 22% in order to retain employees and stabilize the workforce in long-stay facilities. Congress and CMS should ensure that state Medicaid rates include adequate amounts for nursing wages and benefits.

Corporate Ownership Transparency

For-profit companies have owned the majority of the nation’s nursing homes for many years and operate 66% of facilities compared to non-profit (28%) and government-owned facilities (6%) in 2007 (Harrington et al., 2009). Many studies have shown that for-profit nursing homes operate with lower costs and staffing, compared to non-profit facilities, which provide higher staffing and higher-quality care, and have more trustworthy governance (Harrington et al., 2001; Harrington, Zimmerman, et al., 2000; O’Neill et al., 2003; Schlesinger & Gray, 2005).

For-profit corporate chains emerged as a dominant organizational form in the nursing home field during the 1990s, promoted with the idea that they would be more efficient and have access to capital through the stock market. The proportion of chain-owned facilities increased from 39% in the 1990s to 52.5% of all nursing homes in 2008 (Harrington et al., 2009). The largest nursing home chains have been publicly-traded companies with billions in revenues. Research shows that shareholder value is pursued by such companies by using three interlinked strategies at the expense of quality: (1) debt-financed mergers, which place a burden on facilities to pay off their debts; (2) labor cost constraints including low nurse staffing levels and low wages/benefits to increase net income; and (3) noncompliance with regulatory requirements where regulatory sanctions are considered to be a normal cost of business (Kitchener et al., 2008). Many large nursing home chains own a number of related companies including residential care/assisted living facilities, home health agencies, hospices, pharmacies, staffing organizations, and other related companies. These related companies refer patients to each other and use their corporate interrelationships to maximum net revenues.

By 2007, private equity companies had purchased six of the largest chains with about 9% of nursing home beds; these companies have few reporting requirements (Duhigg, 2007). Shielded by private equity companies, the ownership of nursing homes has become so complex that it is increasingly difficult to identify the owners of nursing homes. Many large chains have multiple investors, holding companies, and multiple levels of companies involved, where property companies are separated from the management of facilities, largely designed to avoid litigation. The lack of transparency in the ownership responsibilities makes regulation and oversight by state survey and certification agencies problematic.

The new health care reform law begins to address these concerns. Nursing facilities receiving Medicare and Medicaid funding will have to disclose information regarding ownership, accountability requirements, and expenditures. This information must be made available to the public on the Medicare nursing home compare website (Kaiser Family Foundation, 2010). This provision was sponsored by the National Citizens Coalition for Nursing Home Reform (NCCNHR) and other advocacy organizations.

Home and Community-Based Services

LTC services that are needed for long periods (more than 90 days) are focused on providing assistance with limitations in activities of daily living and supporting those with cognitive limitations and mental illness. About 13 million individuals (over half under age 65) living in the community in the U.S. received an average of 31.4 hours of personal assistance per week in 1995 (LaPlante et al., 2002). More recent data show that about 11 million living in the community receive assistance with activities of daily living and 92% of those individuals received informal help from family and friends, and only 13% received paid help (Kaye, Harrington et al., 2009).

The cost of nursing home care was almost six times as much as home- and community-based services (Kaye, Harrington, et al., 2009). One reason for the high institutional spending is the oversupply of institutional LTC beds and the undersupply of HCBS. Although the number of nursing home beds grew and the aged population increased over the past decade, it is surprising to note that the average certified nursing facility occupancy rates in states declined from 90% in 1995 to only 85% in 2008, creating an excess supply of nursing home beds in many states (Harrington et al., 2009). The reductions in nursing home facility occupancy rates are probably related to the growth in residential care and assisted living facilities as substitutes and to the rapid growth of HCBS.

There are increased pressures to expand HCBS, especially in the Medicaid program. The public increasingly reports a preference for LTC provided at home over services in institutions, and this is encouraged by reports of serious nursing home quality problems (Kitchener et al., 2005). In addition, the 1990 Americans with Disabilities Act (ADA) and the subsequent legal judgment in the 1999 Olmstead Supreme Court decision require that states must not discriminate against persons with disabilities by refusing to provide community services when these are available and appropriate.

In response to the increased demand, Medicaid HCBS programs increased by 46% and expenditures increased by 104% from 1999 to 2005 (Ng et al., 2008). Combined Medicaid home health and personal care services, and home- and community-based waiver programs served 2.8 million participants, and expenditures were $35 billion in 2005 (Ng et al., 2008).

The Affordable Care Act (ACA) of 2010 includes some important provisions regarding long-term care, specifically for HCBS. First, it establishes a national, voluntary self-funded insurance program for purchasing community living assistance services and supports (CLASS program), an initiative that was sponsored by Senator Edward Kennedy. The program is established through the workplace, and premiums would be paid through payroll reductions on a voluntary basis. After paying into the system for five years, individuals with functional limitations could receive a cash benefit of not less than an average of $50 per day to purchase the non-medical services and supports necessary to maintain community residence. The program becomes effective January 1, 2011 (Kaiser Family Foundation, 2010).

Second, the law extends the Medicaid Money Follows the Person Rebalancing Demonstration program through September 2016 and allocates $10 million per year for 5 years to continue the Aging and Disability Resource Center initiatives. In addition, it gives states new options for offering home- and community-based services through a Medicaid state plan rather than through a waiver. The program allows states to provide Medicaid coverage for individuals with incomes up to 300% of the Supplemental Security Income payment level to receive home- and community-based services after October 1, 2010 (Kaiser Family Foundation, 2010).

Third, it establishes the Community First Choice Option in Medicaid to provide community-based attendant supports and services to individuals with disabilities who require an institutional level of care. This provision would offer states an enhanced federal matching rate of 6 percentage points more than their current federal funds. In addition, it creates the State Balancing Incentive Program to provide enhanced federal matching payments to eligible states to increase the proportion of non-institutionally–based long-term care services for five years starting in October 2011 (Kaiser Family Foundation, 2010). These provisions to expand home- and community-based services under Medicaid were sponsored by ADAPT, an advocacy organization for individuals with disabilities, and a coalition of consumer advocacy groups.

But there is strong evidence that the current supply of HCBS is inadequate to meet current and future need. State Medicaid program directors report that many disabled groups are not served by existing HCBS programs and that state programs lack adequate funding and have waiting lists (Ng et al., 2008). In 2007, only 30 states had Medicaid personal care attendant programs, and many states have limited services under their HCBS waiver programs. The waiting lists for HCBS have increased from 192,447 reported in 2002 to 331,689 in 2007, with waiting periods of 9 to 26 months to access services (Ng et al., 2008).

Some states have rapidly expanded their HCBS programs, but others lag behind, relying heavily on institutional services. In spite of the steady growth in HCBS spending, the Medicaid program reported spending $58.99 billion (58.5% of total LTC) on institutional LTC services and $41.8 billion (41.5% of total LTC) on HCBS services in 2007 (Burwell et al., 2008). Medicaid HCBS programs urgently need more funding to expand access to care at home and to prevent institutionalization.

The main opposition to expanding HCBS is the potential costs if additional Medicaid participants request new LTC services. One study showed that states offering extensive HCBS had spending growth comparable to states with low HCBS spending (Kaye, LaPlante et al., 2009). States with well-established HCBS programs had much less overall LTC spending growth compared with those with low HCBS spending because these states were able to reduce institutional spending. There appeared to be a lag of several years before institutional spending declined. In contrast, states with low levels of HCBS expenditures had an increase in overall costs, as their institutional costs increased. Thus, states that expanded their HCBS programs have not had increased costs or have had a reduction in their total LTC costs over time.

Public Financing of Long-Term Care

As of 2010, the only segment of the U.S. population whose cost of LTC is covered consists of individuals who live below the poverty threshold and are enrolled in Medicaid. Except for short-term postacute care, the rest of the population must either pay for care out of pocket or resort to privately-purchased LTC insurance. The financially crippling cost of LTC (as much as $90,000 per year) is one of the great fears confronting persons who are otherwise self-supporting, and few persons have either the means or motivation to insure themselves privately. Only about 7 million private LTC policies were in force covering 3% of the population aged 20 and older in 2005 (Feder, et al., 2007). Thus, this does not appear to be a viable financing mechanism for the future (Wiener, 2009). If individuals “spend down” to the poverty threshold, they can become Medicaid-eligible, making LTC a means-tested program. The spend-down requirements constitute a hardship to the patient, a social stigma, and dependence on public assistance that would be unnecessary if the entire population were insured.

A mandatory social insurance program for LTC offers distinct advantages over the current U.S. means-tested system. If everyone paid into the system, individuals would have access to coverage when they are chronically ill or disabled without the humiliation of having to become poor to receive services. By expanding the Medicare program to include LTC, the payment of LTC contributions early in a worker’s life could “prefund” at relatively affordable LTC services that generally are required late in life. Thus, the financial risk could be spread across the entire population so that individual premium costs or taxes would be relatively manageable, in comparison with the costs of insurance purchased when individuals are older and at high risk of needing LTC. Countries in Scandinavia, Germany, and Japan have adopted mandatory public long-term insurance systems that can serve as models for the U.S. These countries generally provide protection and coverage for persons who need LTC (Wiener, 2009). The area of greatest concern for any type of new public LTC program is cost. The nation should focus on the public financing of LTC insurance that would ensure that all citizens have adequate, high-quality LTC when they need such services. The CLASS provision of the ACA may have limited success because it is voluntary.


These policy changes for LTC that are embedded in PPACA would not have happened without major grassroots advocacy activities and a coalition of organizations supporting reforms for individuals with disabilities and those who are aged over a long period of time. This advocacy work did make a difference. Nurses and nursing organizations need to join forces with consumer groups to accomplish large-scale policy changes. These new long-term care reforms are major steps forward to the eventual goal of obtaining a comprehensive mandatory public long-term care insurance system for everyone in the U.S. who needs long-term care and supports.

But more needs to be done. We need a vision for advocacy in LTC that is multidimensional and long-range. Political efforts are needed at the local, state, and national levels. Community mobilization, public education, legislative reform, and legal actions are all needed to bring about policy changes to ensure access to high-quality LTC services. Consumer advocates and organizations, such as the National Citizens Coalition for Nursing Home Reform, ADAPT for disability rights, and the AARP, have taken a lead in reform efforts, but they need help to make progress. Nurses should join these organizations to work closely with consumer advocates.

For a list of related websites, please refer to your Evolve Resources at http://evolve.elsevier.com/Mason/policypolitics/


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Mar 18, 2017 | Posted by in NURSING | Comments Off on Long-Term Care Policy Issues

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