When is it time to consider nursing home placement? (2. cost & payment) by Catherine D'Ambrosio, RN, PhD

When is it time to consider nursing home placement? (2. cost & payment) 

by Catherine D'Ambrosio, PhD, RN                  dambrosi@uw.edu 

You want to do what is most beneficial for your elder and to take the very best care of them possible.  It is most likely why you're here on this site.  I will try to give you information that can help guide you through this process.

Having (and taking) the time to plan and consider your (nursing home placement) options and preferences before you are in a dire situation gives you power and leverage you will not otherwise possess.  

Delaying or postponing information gathering is not the same thing as delaying or postponing nursing home placement.  Ignoring the need for knowledge until you are in an urgent or emergent situation -can place you and your elder in a very compromised position.  Seeking-out the necessary knowledge and information (about nursing home placement decisions) in advance will reveal to you options and preferences you might never otherwise realize -until perhaps it is too late.

ORGANIZATION:

I've organized this set of blogs (on nursing home placement decisions) around three questions most often asked of me by elders and their family caregivers who are considering relocation to a nursing care facility.

This entry addresses the second (II) question of how much does nursing home care cost, and who pays for it?  Questions I and III are addressed in separate blog entries (but are listed below along with their links).

         I.    What are some of the signs that it may be time to being exploring nursing home placement?

    II.        How much do nursing homes cost and who pays for nursing home care?

A.   Does Medicare pay for nursing home costs? 

B.  What does Medicare cover? 

C.   When does Medicare cover the cost of nursing home care? / For how long?

D.   What are my options when Medicare payment for the nursing home runs-out?

E.   How do I qualify for Medicaid?

F.    What about long-term care insurance?

III.        We only have so much money, so how do we select the best nursing care facility?

 

This blog entry addresses the second question of:

 II.        How much do nursing homes cost and who pays for nursing home care?

Moderately priced nursing home care costs between $4000 and $8000 per month.  That amounts to $48,000 to $96,000 per year –every year for an average to a decent nursing home.  Up-scale nursing homes can cost substantially more.  

HOW AND WHY DOES NURSING HOME CARE COST SO MUCH?

Nursing care –because it is wholly and completely dependent upon human labor- -is extraordinarily expensive.  Nursing care provided in a facility (whether the facility is called a skilled nursing care facility, a nursing home, or a rehabilitation facility) -while extraordinarily expensive, it is still generally less expensive than private duty nursing care (LINK). 

WHY DOES MY ELDER'S CARE KEEP TAKING MORE OF MY TIME AND COSTING MORE AND MORE MONEY TO TAKE CARE OF AT HOME?

A frail elder’s functional capabilities will quite likely deteriorate over time, and for a (maybe protracted) period during this functional decline, your elder's basic nursing care needs will increase -in both intensity and complexity.

Oddly enough however, caring for a person in a vegetative state is less intensive, less complex and demanding, and far less time-consuming than caring for and assisting an elder who is struggling to maintain their function and independence.  

You can therefore reasonably assume the cost of necessary basic nursing care will increase over time -to a point.  The most intense and complicated basic nursing care needs occur while the elder is still struggling to maintain function, not generally after they have lost function. Supporting an elder's existing, but waining function is much more time-consuming, therefore expensive -than the provision of basic nursing care to an elder in a vegetative state.

What you want to avoid when you place your elder in a long-term nursing care facility -is the acceleration of this functional decline to the vegetative, totally dependent state.

If your elder is already in a totally dependent, vegetative state, determining your options and selecting the best nursing care facility becomes a much less complicated process.

 

A.   Who pays for nursing home care?

About half* of all nursing home costs (in the US) are paid for out of private pockets.  This means that half of all nursing home costs are *not* paid for by Medicare, Medicaid or private insurance of any form, but by the private savings and investments of individuals and their families. 

*This does not mean "you pay half and Medicare, Medicaid or long-term care insurance pays the other half."

By the time an elder requires routine and constant access to skilled nursing care, they have typically depleted or even exhausted their personal financial assets.  Consequently, most elders cannot afford to finance or pay for their stay in a nursing home for very long before they run out of money.

The rules for who pays, when, and under what circumstances can be quite complicated and there are many things you need to know and understand in order to navigate your way through the process of considering nursing home placement for your elder.  Four things I really want you to know -that don't really fit any place in particular in the questions are:

1.    The United States does not have filial liability laws.  The children of elders can be “rich as Roosevelt”, but are not legally liable for the payment of their parents’ health care expenses or long-term care needs.  This does not mean the children of elders cannot pay for their elder’s health care expenses, only that the children are not legally required to do so.

2.    Nursing care can currently be provided only by human nurses and nursing assistants.  Regardless of whether the nurse providing your care has a bachelor’s degree or a master’s degree from an Ivy League or other prestigious university, an associate’s degree in nursing from the local community college, is an LPN with a certificate from a vocational college, or is a nursing assistant who may have dropped-out of high school and completed a 75-hour (2 week-long) course on basic nursing care, human labor is exceedingly expensive. 

3.    Nursing care is currently wholly reliant upon human labor.  Human labor, particularly highly educated, dedicated and compassionate human labor is extraordinarily expensive to provide on a continuous basis.  Even elders who have lived frugally and saved a tremendous amount of money, will run through their carefully accrued savings very quickly once they are in need of continuous nursing care.

4.    Just because your elder needs the type of constant and on-going nursing care provided in an institution does NOT mean Medicare, Medicaid, or any private insurer –including long-term care insurance policies are going to pay for this institutional nursing care. 

B.   Does Medicare cover nursing home costs?

Medicare covers quite a lot of nursing home care, but does not pay for long-term nursing care that is deemed “custodial”.  Below is an explanation of how and what Medicare typically covers and some of the parameters for coverage:

1.    What does Medicare cover?

Medicare covers acute care hospitalizations for medically-diagnosed conditions.  Such (Medicare-covered) hospitalizations are determined, covered, and reimbursed according to the elder’s *medical diagnoses*, not their nursing care needs. 

Medicare will cover a pre-determined amount of post-hospitalization nursing home care in a Medicare-certified rehabilitation or skilled nursing care facility.  The duration of the elder’s stay in such a facility is based on the medically-diagnosed acute care condition that precipitated the hospitalization.

The (dollar) amount, duration, and circumstances under which Medicare pays for rehabilitation or skilled nursing care in a nursing home are very specific.  The amount of Medicare payment for an elder's stay in a nursing home is predetermined -often by factors that have little to do with the elder's chronic and on-going basic nursing care needs.

Medical diagnostic indicators largely determine the amount of Medicare reimbursement to the nursing home -which defines the maximum length of stay in the nursing home.  

While an elder's medical diagnoses might give some indication of the nursing care needs commonly (sometimes) associated with a particular medical diagnosis, such medical diagnoses are not however determinants of an individual's nursing care needs.

Medicare rates are determined by a formulaic labyrinth of rules based on geographic location, medical diagnoses, and many other (sometimes arcane) factors.  Private pay rates in a nursing care facility are generally substantially more than Medicaid rates.  

2.    When does Medicare cover nursing home (rehabilitation or skilled nursing) care?

Medicare may cover your elder’s transfer to and stay in a Medicare-certified nursing home (skilled nursing care facility or rehabilitation facility) after a minimum of a 72-hour long hospitalization.  Medicare coverage of this transfer and stay in a skilled nursing care facility is determined largely by your elder’s nursing care needs, but hinges also on your elder’s qualifying medical diagnosis.

Medicare does NOT pay for any stay in a skilled nursing facility, nursing home or rehabilitation facility if the stay is not immediately preceded by at least a 72-hour long hospitalization.

Having been hospitalized for 72 hours or more does not assure or in anyway guarantee that a subsequent stay in a skilled nursing or rehabilitation facility will be covered by Medicare.

 

3.    How long will Medicare pay for my / my elder’s care in a skilled nursing care facility / nursing home / rehabilitation facility?

a.    Once transferred to a rehabilitation or skilled nursing care facility, your elder’s length of stay in such an institution will depend upon their qualifying medically diagnosed condition and their rehabilitation potential. 

b.    In any case, Medicare will not under any circumstances cover more than 100 days in a skilled nursing / rehabilitation facility. Their (Medicare-funded) stay will most likely last no more than two to six weeks.

c.    Once your elder either:

                                                                  i.    Reaches their rehabilitation goals, their maximum function, or realizes their rehabilitation potential (meaning they’re not going to get any measurably better),

OR

                                                                ii.    Reaches the reimbursement cap (Medicare pays a pre-designated amount of money to the nursing home.  This pre-designated amount is determined by the medically diagnosed condition(s) that precipitated your elder’s admission to the rehabilitation facility).

-your elder will be discharged from the Medicare reimbursed portion of their stay in the rehabilitation facility. 

This is not to say that your elder is in any way ready to go home and function independently, or that you are prepared and able to provide the care your elder needs.  This is only to say that Medicare is done paying for your elder’s stay in the rehabilitation facility.

 

4.    What are our options when the skilled nursing care facility / nursing home / rehabilitation facility says “It is time for discharge.”?

Your elder’s options will vary widely depending upon precisely three things:

·         Your elder’s functional independence (which boils-down to their physical mobility and their cognitive ability to function)

·         Your elder’s personal financial assets

AND

·         Your elder’s access to (unpaid) family caregivers.

 

a.    After completing a qualifying 72-hour long hospitalization (with or without a stay in a rehabilitation facility), your elder may qualify for Medicare covered home health care visits. 

b.    In order to be eligible to receive any Medicare reimbursed home health care visits, the elder MUST (by law) be house-bound.  This means that if your elder is capable of being transported in a car, a taxi, a bus, or a car service to appointments or even out to dinner, they cannot legally receive Medicare reimbursed home health care visits.

c.    Medicare-reimbursed home health care is often not consistent with the expectations of elders and their family caregivers.  Families often tell me they expected 24-hour per day, private-duty RN care.  Many family caregivers are upset when they learn they must care for their ailing elder in addition to employment and childrearing responsibilities.

d.    Medicare covered home health care consists of home visits by several different professionals including:

                                                                  i.    Physical, occupational and speech therapies.

                                                                ii.    RN home visits which last anywhere from 15” to two hours at the most.  This does not mean the RN is there to physically take care of your elder –as is often hoped. 

The Medicare-reimbursed RN visit is there to assess key health parameters including, but not limited to: 

Ø  temperature and

Ø  other indicators of infection,

Ø  heart rate,

Ø  blood pressure,

Ø  respiratory rate,

Ø  pulmonary function,

Ø  problems with pain,

Ø  effectiveness of the current pain control regimen,

Ø  strength,

Ø  mobility,

Ø  medication regime, side effects, adverse reactions, compliance with medication regimen, or problems with medications

Ø  provision of any necessary wound care, and

Ø  Education of the elder and any family caregivers regarding the provision of nursing care to the elder.

                                                               iii.    Nursing assistant bath services.  The nursing assistant will arrive at or around appointed times up to three times per week to assist the elder with bathing or showering.  This does not mean that the elder will not need to be bathed at other times.

Provision of any or all of the above home visits does not imply or in any way guarantee that the elder will be happy or satisfied with the quality of therapy, nursing care assessment, or bathing service provided.  Ultimately, it only means the Medicare-reimbursed home visits will be made, any progress towards goals documented (keeping in mind these goals established for your elder are for Medicare reimbursement purposes.  These goals may or may not be of any consequence to you or your elder), and any visits will be charged to taxpayer-funded Medicare.

e.    Any Medicare-covered home health care visits will continue until one of the following occurs:

                                                                  i.    Your elder is no longer house-bound.

                                                                ii.    Your elder has reached the maximum number of Medicare-reimbursed home visits –as determined primarily by your elder’s medical diagnoses..

                                                               iii.    Your elder has achieved the goals established for their care or therapy.

                                                               iv.    Your elder is no longer improving or otherwise measurably benefitting from the home health care visits.

The home health care agency cannot and will not provide Medicare-reimbursed home visits that fall outside ANY of the above conditions.  There are two very simple reasons for this:

First, the home health care agency cannot obtain Medicare reimbursement for any visits made outside of these above stated conditions.

Second, if the home health care agency does provide home health care visits that fall outside of these above stated conditions and bills Medicare for such visits, that home health care agency, its owners, administrators, and its nurses will have committed something called “Medicare fraud”.  Medicare fraud is a crime.  This crime is punishable by substantial fines, revocation of licenses, prosecution, and even imprisonment. 

Although exceptions can be made if the home health care agency is willing and able to both obtain the necessary approval and assume the potential risk of denial of coverage, exceptions remain just that:  exceptions. 

f.     After discharge from the Medicare-reimbursed stay in the skilled nursing facility and / or the Medicare home health care, Medicare may continue to cover out-patient therapy appointments with physical therapists, occupational therapists, and speech therapists as long as:

                                                                  i.    the patient continues to improve, and

                                                                ii.    has not exceeded their predetermined visit allotment. 

 

g.    Medicare does NOT cover appointments with nurses, and does NOT cover or otherwise pay for any nursing care services not addressed in qualifying Medicare RN home visits or Medicare nursing assistant bathing services.  

Once your Medicare reimbursed home health care visits are finished, you will have no further access to professional nursing care unless you either hire privately and pay out of your own pocket, or place your elder in a skilled nursing care facility.

h.    Through a separate provision in Medicare law, Medicare will continue to cover physician visits for Americans who are 65 years and older.

 

5.    What is Medicaid and how do I qualify for it?  

Medicaid does cover (pay for) long-term institutional nursing care for qualifying elders.  There are several things you need to know about what it means to “qualify” for Medicaid and a Medicaid-funded nursing home bed.  Because of the tremendous State-to-State variation, this information is very general and is likely not entirely accurate for every State.  Please consult with a specialist in your area, your local Medicaid office, and / or the Federal and State Medicaid web pages (LINK).

a.    Medicaid, like Medicare –is federally funded.  Unlike Medicare though, Medicaid is also funded and administered by the individual States.  So each individual State runs its own Medicaid program.  Medicaid qualification criteria and Medicaid-covered health care services therefore vary quite a bit from state to state.

b.    Medicaid is not an entitlement available to everyone.  Medicaid is designed to meet the needs of America’s financially indigent (poor).  These are the people who have completely run out of money and must rely upon the State for their care.  Medicaid is a safety net.  It is a flawed program and therefore vulnerable to abuses and misuses by some as well as missing or denying coverage for others who are more deserving, or who should be covered.

c.    Because there are substantial differences regarding Medicaid coverage of children and persons under the age of 65 who are suffering from severe and permanent disabilities (such as spinal cord injuries), I will speak here only of persons 65 and over who have not previously been beneficiaries of Medicaid.

d.    Because this information I’m providing on qualifying for Medicaid is a general guide, please use this information only as a starting point, not the ultimate source.  I am a nurse, not a social worker, a lawyer, or a State Medicaid advisor. 

 

QUALIFYING FOR MEDICAID IN YOUR STATE:

Please consult with the Medicaid advisors, social workers, and privately hired lawyers who are familiar with the specific Medicaid laws in your State.  The people working in your local Medicaid office –while knowledgeable about Medicaid eligibility in your State -are not financial advisors.  They CANNOT advise you on how to manage your money (if you happen to have any). Therefore, if you have money or assets in excess of that which is allowable for Medicaid qualification, I urge you to consult with certified, master's prepared social workers and with lawyers in your geographic area.

 

A privately hired lawyer or a social worker *can* give you financial and legal advise you about your particular situation and likely eligibility for Medicaid.  They can assist you in protecting what assets can be protected –primarily to prevent impoverishment of the (Medicaid recipient’s) spouse. 

 In some states, even if you are not yet financially indigent, you can assign assets to Medicaid and obtain Medicaid rates for your elder's stay in the nursing home.  The advantage to this is that Medicaid rates are substantially less (sometimes by half) than the private pay daily rates for the same nursing home bed.

Nursing homes do not (of course) like for people to take advantage of this option (in the States where such options are possible) -for obvious reasons -they make less money.

This is not something I would advise you to try to accomplish on your own without either substantial research about your State Medicaid laws and provisions, or without consulting with a certified, Masters-prepared social worker or an attorney.

Please, PLEASE be careful when choosing a lawyer, social worker, case manager, or other privately paid Medicaid consultant to guide you through this process.  If it sounds too good to be true, it probably is (too good to be true).  Medicaid fraud is a crime and such crimes are punishable by law.

e.    In general, in order to qualify for Medicaid (not Medicare, the federal health insurance plan for American elders, but Medicaid a federal and State-funded health insurance plan for the poor), an elder must first be deemed and officially designated “financially indigent”.  This means (in general, noting there is substantial State-to-State variation in what I’m about to tell you, and even more variation in how the various laws are interpreted):

                                                                  i.    An individual’s income cannot exceed a State-specified percentage of the federal poverty rate (LINK).  There is wide variation in how this is interpreted and what is and is not allowed.  The individual and couple’s annual income cannot exceed somewhere between $10,000 for an individual and $30,000 for a couple –depending upon the geographic location and the individual State’s laws and provisos.  Some States require lower annual incomes, others allow higher.

 

Many individuals assign their income to Medicaid in order to qualify to pay the Medicaid rates in a nursing home –which are consistently lower than out of pocket rates paid to the same nursing home.  Again, please consult with the specialists in your State! 

 

                                                                ii.    In general, an individual or a Medicaid-qualified couple may retain ownership of the following:

·         their house or primary residence (some states limit the value of that qualifying home to $500,000, others maybe less, and many states do not stipulated a limited value)

·         one car (again, some states stipulate a value on the car, most do not), and

·         a burial plot and funeral allotment (noting wide variation from one State to another, the burial allotment allowed is sometimes around $1500).

                                                               iii.    In general (noting there is tremendous variation from State to State and many, many ways of interpreting these limits), in order to qualify for a Medicaid-funded Nursing Home bed, an individual elder who is living alone can possess up to, but not exceeding $5,000 in assets over and above their home, car and burial plot.  Assets include (but are not limited to):

·         Bank checking accounts

·         Bank savings accounts

·         Stocks

·         Bonds

·         Annuities

·         Certificates of Deposit

·         Trust funds (revocable and non-revocable)

·         Real estate and land holdings

·         Second homes

·         Summer, weekend and vacation homes

·         Rental properties

·         Boats –including, but not limited to: yachts, sailboats, and motor boats

·         Businesses

·         Shops and stores

                                                               iv.    A couple can possess up to, but not exceeding $10,000 in assets (as defined above) outside of the value of their primary residence, their one car, a burial plot and funeral allotment.

f.     Financially qualifying for Medicaid-funded services does not imply or infer that Medicaid will indiscriminately or even necessarily cover an elder’s stay in a Skilled Nursing Facility, Assisted Living Facility, Adult Family Home, or Senior Living Community.  Like the financial need, the physical need for nursing care must be quite desperate to qualify for Medicaid-funded care.

 

I have seen, taken care of, and consulted with a very wide array of elders and their families.  Just about every single elder I have encountered residing in a skilled nursing facility (nursing home) who is on Medicaid –is really in a very desperate situation.

 

A few of the elders I have met on Medicaid do have wealthy children.  Most do not.  Filial liability laws do not exist in the United States, so adult children are not liable to pay for their parents’ welfare or health care costs. 

 

g.    Obtaining a Medicaid-funded nursing home bed is *NOT* under any circumstances an ideal or enviable situation to be in.  Medicaid-funding is calculated to be the minimum amount necessary to feed, house and provide basic nursing care for impoverished American elders -who are typically physically frail and disabled.  The nursing care provided to poor American elders in Medicaid-funded beds is only rarely ideal nursing care. Medicaid is a safety net for the poor, paid for by the US taxpayers.  It will never therefore be ideal.

C.   What about long-term care insurance?

Nursing home coverage by long-term care insurance policies varies quite widely.  Some Long-Term Care Insurance Policies cover virtually nothing -under any circumstances.  Others cover all or a substantial portion of nursing home care for many months.

All Long-Term Care Insurance Policies come with lots and lots of fine print. My best advice to you is to:

• *Read it VERY carefully.*
• Ask any and all questions you can think of, and
• Get any and all answers in writing -signed and dated by a person (preferably a titled executive or officer of the company) who can be held accountable in the event of a dispute.

Some of the Long-Term Care Insurance Policies I have seen paid-out, pay the co-pays on the Medicare reimbursed portion of the elder's stay in a skilled nursing or rehabilitation facility.

Other Long-Term Care Insurance Policies pay all or a portion of the daily rate in a skilled nursing care facility after the Medicare-covered portion of the stay is completed.

Others cover many things, but only under some arcane (almost unachievable) conditions.

Remember, insurance policies are gambles.  You are betting against yourself when you buy an insurance policy.  You are betting you will get sick and need the insurance.  The insurer is betting you will not.

Insurance companies exist to make money.  They are not charitable organizations.  They will pay precisely what they agreed to pay, under the precise conditions they agreed to pay, and no more.  To default upon such an agreement is a prosecutable offense.  

If you feel your long-term care insurance policy is not paying as agreed, AND you have exhausted your communication with the insurer and are still certain they are not holding-up their end of the deal, you can inquire about obtaining assistance from your State's Insurance Commissioner.