By David M. Goldfarb, Esq., CAE
One might presume that the COVID-19 crisis could lead to the end of the long-term care industry as we know it and a true re-balancing towards home and community-based services.
The COVID-19 crisis in long-term care facilities has cut short too many lives and left others traumatized by long periods of isolation. As of July 9, 44 percent of all COVID-19 related deaths occurred in long-term care facilities, according to the Kaiser Family Foundation.
Given that nearly everyone with a chronic illness hopes to avoid a nursing home, one might presume that the COVID-19 crisis could lead to the end of the long-term care industry as we know it and a true rebalancing towards home and community-based services (HCBS). Yet, nursing homes do not owe their primary existence to private markets. The industry could not exist without Medicare and Medicaid. Our institutional bias is thus driven largely by political choices.
A key issue is that the Social Security Act guarantees nursing home coverage under Medicaid, but makes HCBS optional. Additionally, nursing homes receive much of their funding from Medicare for providing short-term, skilled nursing services.
As Professor Grabowski noted in his testimony to the House Ways and Means Committee on June 25, “Medicare is a generous payer, while Medicaid often pays below the cost of caring for these frail and medically complex individuals. Thus, the economics of nursing home care hinges on admitting enough short-stay Medicare patients to cross-subsidize the care of long-stay residents paid by Medicaid.”
Medicaid accounts for around 16 percent of state spending, according to MACPAC. Without federal assistance (which may or may not have occurred by publication), state and local governments are likely to face approximately $555 billion in shortfalls between 2020 to 2022, according the Center for Budget and Policy Priorities. These shortfalls could cause states to cut optional HCBS waiver services, reduce provider payments, and restrict eligibility where available.
COVID-19 thus threatens to hit long-term care providers most reliant on Medicaid the hardest. According to a recent report by the American Network of Community Options and Resources (ANCOR), “68 percent of [community providers for people with intellectual and developmental disabilities] reported having had to close one or more service lines, resulting in a 32 percent average loss of revenue.” Additionally, the report notes that these providers have, on average, one month of cash on-hand.
All of this increases the likelihood that without government intervention, unnecessary institutionalization could become more, not less, likely, despite the clear reasons for why we need to rebalance towards HCBS.
Thankfully, in my conversations with Republican and Democratic offices, both parties appear to understand the value of HCBS. The recent House Democratic COVID-19 package, the HEROES Act, would provide a 10 percent increase in federal medical assistance percentages (FMAP) for HCBS spending during the COVID-19 emergency period. At the time of this writing, bipartisan talks for a fourth COVID-19 package had yet to occur.
Hopefully, by the time you are reading this, we’ll have secured additional funding, even if modest, to keep the HCBS system afloat.
About the Author
David M. Goldfarb, Esq., CAE, is NAELA's Director of Advocacy.