quality

I’ve decided to write a five-part series on AAHSA’s advocacy agenda. Because health reform is such a national priority and the economy is so oppressive to our members right now, I will begin the five-part series with FINANCE. The next report will be on QUALITY.

Let me start with a quote from Tammy Marshall, one of our leaders from Loretto in New York. Tammy said, “I will travel to the ends of the Earth and speak with anyone that will listen, when it comes to advocating for those needing long-term services and supports.”

Like most of you, Tammy manages complex short- and long-term issues. She has decided to advocate, not just cope.

She recently participated in a panel discussion with Rep. Dan Maffei (D-N.Y.) and discussed how long-term services and supports need to be part of health care reform. She understands that service and advocacy are two sides of the same coin. And Tammy knows that current public policy is outdated, making it increasingly difficult to fulfill our missions.

So, let’s about financing. The current means of financing aging services is fragmented, unpredictable and unsustainable. Capital for development has slowed to a trickle. Consumers have fewer dollars to pay out of pocket for services. State governments are going broke from the Medicaid burden, and the federal government has a Medicare program with costs out of control.

Many members are coping amazingly well with this highly stressful environment in numerous creative and aggressive ways. How are they coping, you might ask? Attention to operational costs, creative marketing, debt renegotiation, sale or closing of nursing homes, consolidations with other providers, fundraising, developing low capital outreach services, increasing stronger Medicare margins, and participating in more aggressive advocacy. Fortunately, only a small number face financial catastrophe.

We are in an unprecedented era of change. As the president has stated, we are between the devil we know and the devil we don’t know. Over the next 10 years, long-term services and supports need to be financed through a national insurance pool as reflected in the Community Living Assistance Services and Supports (CLASS) Act of 2009 provisions of the bill from the Senate Senate Committee on Health, Education, Labor and Pensions (HELP). The Congressional Budget Office (CBO) noted Medicaid savings are achieved in year six and beyond. The Senate HELP Committee amended the initial bill to ensure solvency well into the future. It has substantial bipartisan support from the committee. Even more importantly, it helps young and old alike cope practically and financially with challenges that 70 percent of American families will face.

This method of financing should create new service opportunities for our members, and it should take pressure off Medicaid. In short, it will revolutionize our work in very creative and constructive ways.

Meanwhile, Congress and the White House are focused on the federal budget. Short term, they are looking for Medicare cuts. Each provider sector is negotiating with policy leaders to address how to pay for health care reform and to curb cost escalations.

Some policy leaders want us to forgo our Medicare market basket adjustment as a means to immediate cost cutting along with refinements to RUGS categories and non-therapy ancillary payments. Longer term, there is talk of “bundling” payments for post-acute conditions to save money and manage care through qualified health providers who would have the authority and accountability for care and costs.

We believe that our financial contribution to health care reform is the financing plan outlined above. The savings are significant, and the plan reflects our sector’s commitment to re-engineer services over the next decade. In addition, we pledge to come up with responsible plans for “bundling” that include support for our members who know how to manage care well…and efficiently.

Government concern about care management is legitimate. The facts are overwhelming that quality of life is lost and Medicare dollars are wasted in “transitions” that older people and their families navigate when a health crisis occurs. When the time for hospital discharge occurs, we get what I call a “Yellow Pages” approach to post-acute recovery. Families must find help under pressure and manage the transition through multiple provider options by themselves. No one is in charge. Few professionals have responsibility beyond their provider silos. Hospital re-admissions within a short period of time are an epidemic.

Successful exceptions that provide effective care managed across time, place, and providers are CCRCs, hospice, comprehensive home health, PACE, SOURCE and some Medicare managed-care plans. Current health care reform bills are considering a variety of approaches to address lack of care coordination, but we believe that any responsible approach to so-called bundling will take four to five years to plan. We are determined to provide thought leadership to this process.

A complementary approach to doing our part to improve care management through these inevitable transitions is an emphasis on “housing with services” models. Our initial applied research studies with members reflect fewer unnecessary institutional placements and fewer emergency room visits when services are available and well coordinated. These might be especially effective when partnered with PACE or similar programs.

Tinkering with RUGS and non-therapy ancillaries is likely to occur through the administration but keeping the market basket is crucial and must be dealt with through Congress.

Which brings me to Medicaid. The stimulus plan provided two years of support for Medicaid, which governors largely control. The use of those funds varies by state, and there is no national plan for dealing with the situation after the two years. Because Medicaid is a large component of states’ budgets, which are stressed for other reasons, states are looking for new taxing mechanisms that our members have to respond to on many fronts.

The Medicaid situation, which is already inadequate and volatile, is now compromised even further by the Medicare discussions about the market-basket elimination. Medicare and Medicaid have a complex relationship often hard for policy makers to understand. (In fact, some still do not know the difference between the two!)

Superficial understanding of these crucial programs leads to ill-conceived policy decisions with major ripple effects. So, here’s the superficial understanding that we must fight: The Medicare Payment Advisory Commission (MedPAC) concluded that skilled nursing facilities (SNF) have substantial profit margins, therefore no harm done to eliminate the market basket. Here’s the true story we must get across: Medicare subsidizes Medicaid in virtually every state. Providers who care for complex patients (mostly not-for-profits) have negative Medicare margins on top of negative Medicaid margins.

Harm done? Enormous! Since a significant percentage of SNF costs are associated with staffing — mostly direct-care workers — losses are often reduced by cutting those who provide the service. The irony is that staffing is still the best known proxy for care. So, the market basket further undermines Medicaid, which leads to staffing issues, resulting in lower quality. That’s the real story.

Let’s turn to the issue of access to capital. Local banks are becoming new friends to members for smaller capital projects like “small houses,” renovations and additions. But a revised capital plan is needed. We are working with members of Congress, our closest investment banking friends and our members to create a new short- and long-term capitalization plan. We anticipate that such a plan could be presented to Congress and the administration late this year or early next year after health care reform is out of the spotlight. In the meantime, we are working with HUD to increase flow of those funds (we are optimistic about more HUD 202 money), and we are helping CCRC members and investment bankers where possible to increase investor confidence in the enduring success of our organizations.

AAHSA has charged various task forces and cabinets of member experts to continue to move these issues forward, and these issues are priority discussions at every AAHSA board and staff meeting.

While we feel stress now, the devil we know is at our door. To turn a phrase, the angels we don’t know (in the form of innovation) are out there for us. You and I must continue the not-for-profit tradition of going to the ends of the Earth to advocate for the right policy for the right reasons.