It isn’t news that needing  long-term care services can be brutal on your finances but a new study shows just how it can destroy your assets.   

Median household wealth for those who spend fewer than 30 days in a nursing home is about $108,000. But after 6 months, many nursing home residents are effectively broke, with median assets of barely $5,000. In other words, after 6 months in a nursing facility, half of all residents lose essentially all their wealth. This includes both their home equity and financial assets. 

The study was done by Sudipto Banerjee of the Employee Benefit Research Institute and based on data from the respected Health and Retirement Study, which tracks the health and finances of Americans over 50.

It is important to note that EBRI looked at all nursing home admissions, including short, skilled care stays. Medicare normally pays for the first 20 days and for part of the next 80 days for patients who are undergoing rehabilitation or post-acute care. But it does not pay for long-term care in a nursing facility (or at home).  In 2010, about 40 percent of the admissions in this study were for 30 days or less, Banerjee told me.

The EBRI study also looked at the effect of a nursing home stay on average, rather than median, wealth, though those estimates can be skewed by a small number of very high-net worth people. Still, the story is the roughly same:  Long-term care services suck the life out of your nest egg. After six months, nursing home residents will, on average, lose half their assets.   

Banerjee found that about one of out every seven (14 percent)  nursing home residents had private long-term care insurance in 2010. That’s up from 6.4  percent in 2000 but still a very low percentage. By contrast, this study found that about one-third of those admitted to nursing homes were covered by Medicaid, the joint state/federal health insurance program for the poor.

Other studies estimate that about 60 percent of all nursing home costs are paid by Medicaid, which overall spends about $120 billion a year on long-term care services (including both home care and nursing home stays).

The EBRI study also found an increase in long-term care insurance coverage for home care, although the number of insured remains small.  In 2010, about 14 percent of those getting paid assistance at home reported having long-term care insurance, up from about 9 percent in 2000.  

Interestingly, those who never enter a nursing home at all have signficantly more assets than those who do, with median wealth of about $174,000 compared to $102,000. 

This may be because nursing home entrants are, on average, older. But it may also be because by the time someone has entered a nursing facility, she has already spent much of her wealth on medical care or perhaps long-term supports and services at home.

At more than $200-a-day, long-term care in a nursing facility is expensive and we are not prepared, as families or as a society, to pay for it. The EBRI study shows the consequences of that lack of preparation.

A Pennsylvania state appeals court has ruled that the adult son of a nursing home resident is responsible for her unpaid $93,000 bill. And the decision has some elder care lawyers wondering if this is just the beginning of a trend.

Pennsylvania is one of 30 states that have filial responsibility statutes—laws that impose a duty on adult children to care for their indigent parents. About two-thirds of those states, including Pennsylvania, allow long-term care providers to sue family members to recover unpaid costs. The rest, including states such as Massachusetts, have no recovery provisions. However, failing to care for a parent is a criminal offense. In the Bay State, the penalty is a $200 fine or up to one year in jail.

The rules vary widely from state to state.  But most take into consideration the adult child’s ability to pay. For example, a daughter would be protected if she also has extensive bills for her own child’s college education. In some states, such as Maryland, only the nursing home resident is responsible for a bill, although family members can voluntarily agree to help pay.  

And federal law prohibits states from going after families after someone is already eligible for Medicaid long-term care benefits or from including an adult child’s income and assets when determining whether a parent is eligible for Medicaid. So this is really about what happens before people they enroll in Medicaid.

The Pennsylvania case involved a woman who spent six months in a nursing facility recovering from an auto accident.  She had monthly Social Security and pension income of only $1,000, far less than the cost of her care. While she applied for Medicaid, that process can take many months and, in this case, the woman left the facility while her application was pending.

As a result, the nursing facility sued her son for her unpaid bill. He argued that she was not indigent since she had some income and that, even if she was, other family members also had an obligation to help and all the burden should not be placed on him.

The appeals court disagreed. It said that in Pennsylvania someone does not have to be destitute to be indigent. Family members are responsible even if she has income but has insufficient means to pay for her own care.  

The court also ruled that the facility could arbitrarily go after any family member it wanted, as long as it could prove that relative had the resources to pay.  For more details about the case, take a look at the Elder Law Answers Website, which brought the case to my attention.

These filial responsibility laws are not new. In fact, they can be traced back 400 years to Poor Relief laws in England.  In the U.S. many states have had them on the books for decades, but they have been rarely enforced.

That may be changing. With the costs of long-term care rising (an average nursing home stay now exceeds $200/day), and with increasingly strict Medicaid rules making it tougher for people to receive government assistance, senior services providers may find themselves stuck with more unpaid bills. These suits may generate bad publicity but may also be a facility’s only recourse.

While these laws don’t directly apply to Medicaid recipients, they may force children to pick up their parents’ long-term care costs long before mom is ever eligible for Medicaid. Such a step could still shift significant costs from states to families.

Why would House Republicans slash programs that make it possible for the frail elderly and adults with disabilities to live at home? Especially since the alternative would often be more costly nursing home care.

GOP lawmakers say they support Medicaid’s Home and Community Based programs that provide long-term services and supports in the community rather than in nursing homes. Many GOP governors are leading efforts to shift Medicaid spending to home care. Yet, the new House GOP budget would slash the very federal programs that provide the infrastructure this vulnerable poulation needs to stay at home.

The House would not directly cut Medicaid long-term care benefits themslves. But it would entirely eliminate funding for the Social Services Block Grant program, which helps fund Meals on Wheels, transportation, and other important assistance for people with chronic disease who live at home. It would also eliminate or cut other key programs for respite care, food stamps for low-income seniors, and other key services

Even with a well-functioning Medicaid home care program, it is not possible for the low-income frail elderly to live safely at home without these additional supports. Medicaid itself does not pay for these services but they are often not available without other federal support.

Without this assistance, many frail elderly will have no choice other than to move into a nursing facility–an inappropriate setting for many and a more costly option for Medicaid.

The block grant cuts are especially curious because House Republicans say they support the oncept, which provides states with far more flexibility than typical federal programs. Indeed, the House GOP likes the idea so much that it wants to turn Medicaid into a block grant.

The losers in these cuts would be the frail elderly, adults with disabilities, and their caregivers. But governors,including many Republicans, would also suffer because they’d end up footing the bill for that costly nursing home care.

This budget will never pass the Senate, at least not this year. But budgets send an important message about a political party’s priorities. And these seem pretty strange. 

I understand that House Republicans are anxious to find ways to stop scheduled cuts in defense spending that are due to take effect at the end of the year. But slashing home care services for vulnerable seniors is an especially bad way to do it.

I recently had the opportunity to participate in a panel on end-of-life care jointly sponsored the Charles E. Smith Life Communities in Rockville MD,  Suburban Hospital in Bethesda, MD,, and Sibley Hospital in Washington, D.C. The session was part of a day-long program on care transitions and highlighted the special importance of  caring for the dying.

My fellow panelists and I brought a wide range of perspectives. I represented the views of patients and their families. Rabbi Jim Michaels is a chaplain who serves residents and patients at the Charles E. Smith continuing care community; Dr. Thomas Smith is an oncologist and director of palliative care at Johns Hopkins; Steven A. Widdes is a noted elder care attorney; and Dr. Richard Alcorta is an emergency room physician, the Maryland State EMS medical director, and the man who plays a key role in implementing the state’s MOLST program.

MOLST, or Medical Orders for Life-Sustaining Treatment, is a form that allows people to make their medical wishes known to health profressionals. In some states, it is called a POLST, or physician order.

Despite our very different backgrounds and perspective, we all ended up delivering a similar message: It is essential that everyone involved with a dying patient communicate. This is important for all patients–and rarely done well. But when it comes to the highly emotional and complex issues surrounding end of life, it is especially key.

That means physicians should honestly and compassionately discuss what is happening with a patient and her family. When someone is diagnosed with a fatal disease, they must be told. 

Not long ago, doctors rarely had these conversations. That is changing, but not fast enough. There are still physicians who won’t give patients the “bad news” because they believe people will “lose hope.” In fact, many dying patients already suspect they are dying. Often, they want to talk about it. They need a doctor willing to have the discussion.

If a doctor is not comfortable talking about death, he can turn to others for help. Palliative care teams are invaluable, though attending physicians need to request their assistance much sooner than they often do. Clergy and chaplains can provide special assistance. And, often, hospice can play a big role (full disclosure: my wife is a hospice chaplain).

These discussions should also involve the family. Often relatives disagree about end-of-life issues. But when they can, the patients themselves should make the decisions. That’s one reason why advance directives such as MOLST forms are so important. They encourage families to talk.

And usually, if family members are able to air their disagreements, these disputes can be resolved. Not always, of course. But surprisingly often.  

Health and personal care in the 21st century is complicated. It often provides multiple providers–primary care doctors, specialists, nurses, physical therapists, pharmacists, and others. And it takes place in a wide range of settings–home, hospital, nursing home, and assisted living facilities. Getting those care transitions right is critically important  but all the more so when a patient is dying. 

The hospital and nursing home administrators, care mangers, nurses, doctors, and other health professionals who came to this conference cared enough to take a day out of their schedules to listen to what we had to say. I hope they take some of it to heart.

The overuse of antipsychotic drugs “is one of the most common and longstanding, but preventable practices causing serious harm to nursing home residents today,” Toby Edelman of the Center for Medicare Advocacy told the Senate Aging Committee last week.

She said these drugs are often used off-label (that is: for purposes other than the ones for which the FDA approved them) and that overuse both costs Medicare hundreds of millions of dollars and harms patients.  

Last year, an investigation by the federal Department of Health & Human Services inspector general found that 14 percent of nursing home residents were prescribed anti-psychotics but 8 in 10 were off-label, and, thus, not for treatment of mental illness.

Still, this is not a simple issue. Sometimes, aides cannot provide basic hygiene for dementia patients without the use of these meds. Patients can be too violent or agitated for an aide to change their diaper or bathe them.

Edelman said the Center is not opposed to all uses of these medications but rather wants nursing facilities to try other solutions first.  

Alternatives to drugs can be time consuming and may require special skills. For example, a patient may react poorly to a specific aide—not because the aide is not competent but because there is something about her that triggers agitation. A nursing home can figure this out and make adjustments. But it takes time and training.

Similarly, many dementia patients resist being given a shower, so bed baths may reduce agitation and be more appropriate. Yet, this too requires taking the time to understand why the patient or resident is uncomfortable and finding a better solution.  

Alternative therapies, such as music and other non-pharmacologic solutions,  may also work, although we need more evidence-based research to know for sure.

Dr. Jonathan Evans, the incoming president of the American Medical Directors Assn., urges that caregivers learn ways to better understand why a patient’s behavior changes and to address the causes.  But, for too many facilities, it is easier to give a patient a pill.

This fall, the Consumer Consortium for Advancing Person Centered Care and the UCLA Luskin School of Public Affiairs, with the support of the U.S. Senate Committee on Aging, will hold a forum on non-drug interventions for people with dementia. The goal will be to develop consensus best practices for the use of non-drug alternatives.  (Full disclosure: I serve as an unpaid member of the leadership council of the consortium’s parent organization).

This initiative follows an Aging Committee hearing last fall on the issue.  The use of anti-psychotics is an important and complex issue. This is an opportunity for medical professionals, nursing facilities, researchers, and consumers to work together to find cutting-edge ways to care for dementia patients in the safest and most effective ways possible.

The Metlife Mature Market Institute has released its annual survey of the cost of long-term care services, including nursing homes, assisted living facilities, adult day programs, and home care. And the news is not good. On average, provider costs rose far faster than the rate of inflation. The only exceptions were home care services, where costs were unchanged from 2010 to 2011.

On average, nursing home costs rose from $229 a day for a private room in a nursing home to $239, or more than $87,000 per year. Adult day program costs rose from $67 to $70. And the average monthly cost of assisted living rose by 5.6 percent from $3,293 to $3,477, or about $42,000 annually. Keep in mind, these are costs to consumers who pay out of their own pocket or with long-term care insurance benefits. Medicaid normally pays far less.   

While assisted living facilities costs rose faster over the past year than nursing homes, they remain far less expensive–only half the cost on average. For dementia care, a private room in a skilled nursing facility costs $92,000 on average while a unit in an assisted living facility costs about $55,000.

However, consumers need to be very careful about assisted living costs, which can often jump substantially if residents need additional care. For instance, a facility will add, on average, $307 per month for helping a resident bathe, an extra $530 a month for other personal care such as toileting, transferring, or incontinence care, and an extra $370 per month to help manage medications.

Adult day programs remain a relative bargain at just $70-a-day. Yet, they remain underused.

Just as important as national averages is the wide variation of costs around the country. In Alaska, for example, a nursing home costs costs a staggering $655-a-day for a private room, while the cost in rural Louisiana was $141-a-day.

Similarly, home health aides cost only about $9-an-hour in Louisiana but more than twice as much, or $19, in New Hampshire.

Even as the costs of care continue to rise, the nation remains unable to figure out how to pay for these services. Americans don’t save–fewer than of those 65 and older have financial assets of $55,000 or more and only about 7 million have private long-term care insurance.  And, of course, the CLASS Act, the attempt to create a national long-term care insurance program, has been abandoned by the Obama Administration. As a result, these paid services are simply out of reach for many, who have little choice but to rely on relatives and friends. 

The MetLife report is just the latest evidence that our system of long-term care is broken for all but the well off.

Skilled nursing facilities whose patients are too frequently admitted to the hospital would face stiff new penalties according to the deficit reduction plan proposed by President Obama on Sept. 20. These admissions are often caused by falls, infections, or poor medication management.

Overall, as part of a broad deficit reduction plan, Obama would cut more than $300 billion from projected Medicare and Medicaid spending. Some would come from cuts in general payments to nursing homes, home health agencies, other providers, and drug companies. Some would result in higher out-of-pocket costs for seniors themselves.  But one little-noticed provision is aimed squarely at facilities with high hospital admission rates.

An estimated 40 percent of nursing facility residents are admitted to the hospital in a typical year, and one-quarter of these may be preventable, according to the Kaiser Family Foundation. A congressional review panel estimates that about 14 percent of patients discharged directly from hospitals to skilled nursing facilities are sent back to the hospital for conditions that could have been avoided.

I’ve seen hospital emergency rooms filled with very frail seniors on Friday afternoons. Why? Because nursing homes know they won’t have enough weekend staff to care for their sickest residents, so they simply send them back to the hospital. The new rules could stop those practices.

And the penalty for violations would be steep: Nursing facilities would lose up to 3 percent of their Medicare payment. For institutions whose margins are often razor-thin, three percent could be the difference between success and failure.

Because this is a Medicare penalty, it would only apply to those patients who are receiving rehabilitation or recovering from a hospital stay. It would not apply to long-stay residents receiving Medicaid.  However, these changes could easily be expanded to Medicaid as well.

This readmission rule is similar to one soon to be imposed on hospitals under the 2010 health law. And while those hospital penalties have not yet kicked-in, they have already fundamentally changed the way those institutions think about their patients. Today, because Medicare pays for admissions no matter what the cause, the current system perversely encourages round trips to the hospital, especially in poor performing facilities with lots of empty beds.  After all, a readmitted patient generates revenue.  The hospital readmission rule radically changes those incentives.

If Congress approves Obama’s idea, nursing homes also may have to rethink the way they do business. They’ll have to more carefully care for patients even as other provisions of the health law encourage them to treat more complicated cases. To make the challenge even more difficult for nursing homes,  Obama has also proposed reducing overall payments for post-hospital nursing home care by $32 billion over 10 years.

Skilled nursing facilities are also feeling pressure from hospitals themselves to reduce readmissions. Now, by hammering nursing homes directly, Obama would only reinforce the message.

Despite common perceptions, most facilities do a good job caring for very challenging patients.  And many are actively refocusing their businesses to care for patients who not long ago would still have been hospitalized. Obama’s efforts to reduce admissions from nursing facilities have the potential to improve the quality of care. But he needs to be careful that they don’t also slow the trend towards more post-acute care in skilled nursing facilities, which has the potential to both save money and itself improve patient care.

In a move that shocked many in the elder care community, California has ended funding for its adult day care program. The question now is what will happen to the nearly 5,000 others that operate throughout the country.

California’s $169 million program serves about 35,000 low-income seniors and other adults with disabilities.  The program will end in January when state Medi-Cal funding (the state’s version of Medicaid) is shut off for 300 adult day health centers around the state.

Adult day provides socialization, exercise, mental stimulation, assistance with activities of daily living, and often meals and health monitoring. Many also provide transportation from home to the care center and back. Fees usually run around $70 per day and while some adult day centers do serve a private pay population, many rely on Medicaid funding to make ends meet.

In recent days, California governor Jerry Brown has proposed an alternative. He’d pay the state’s Medicaid managed care insurers an additional $60-per-patient per-month to assess day care participants’ needs and help develop alternatives.  However, fewer than one-in-five adult day attendees currently participate in managed care programs and advocates question whether alternative care settings will be accessible for many of them.

Adult day has had strong support from the aging community who see benefits both to recipients of the services and their family caregivers.

One key benefit is the respite that adult day provides caregivers. A long-running research project by Steven Zarit and colleagues at Penn State, as well as other studies, support that claim. They found that caregivers have less stress and depression for as long as a year after  their loved ones begin using adult day services.

I certainly found that to be true in the interviews I did for my book, Caring for Our Parents. I don’t know what caregivers like May Barrett, who was caring for her husband Walt who suffered from both Parkinson’s and dementia, would have done without adult day.  Having a few days a week where she could take a break while knowing Walt was well cared for was critical to her own health.

In addition, caregivers report that relatives with dementia seem more alert and have fewer behavior problems after spending the day at a center. This, in turn, may be one reason why caregivers report lower levels of their own stress.

Advocates also argue that participating in adult day programs can delay the need for nursing home care and allow people to stay at home longer. Importantly at a time of state fiscal distress, they say this saves states money since the cost of adult day is less than one-third of the cost of a stay in a nursing facility.

However, research support for this claim is inconclusive. Zarit, for example, reports that people who use adult day do remain home longer when daughters are their primary caregivers. However, when a wife is the primary caregiver, use of adult day may accelerate a move to a nursing home.

Another important question, also not well researched, is whether people to attend adult day are less likely to be hospitalized than those who do not, and if they have better overall health outcomes.

For a nice review of both the benefits and unanswered questions about adult day, take a look a this report by the Metlife Mature Market Institute.

In an era of growing cuts in public support for long-term care for frail seniors and adults with disabilities, government is going to be making some very tough choices about which programs to fund and which to cut. I think adult day is a keeper, but advocates will need stronger evidence of its economic benefits. If not, given that California often leads change, public funding for these adult day is in extreme danger.

We all know the sad story: Despite extensive rehab, a patient in a skilled nursing facility is failing. Instead of improving, she is finds herself returning to the local hospital with trouble breathing, heart failure, or unmanaged pain. Eventually, she may die in the hospital hooked up to a ventilator and feeding tube that she never wanted.

A team at Hebrew SeniorLife in Boston has tested a new model of care aimed at reducing those rehospitalizations. During a 2009-2010 demonstration, Hebrew SeniorLife’s  rehab facility reduced hospital visits by nearly 20 percent with a three-step process. It started by learning more about the kind of care patients and their families want, increasing the use of palliative care teams, and improving communication with hospitals. The final step is a regular interdisciplinary staff conference to review unplanned discharges to determine what went wrong and how to fix it.

This revolving door from hospital to nursing home and back is more common than we think.  In 2006, one-quarter of patients discharged from a hospital to a nursing facility ended up back in the hospital within 30 days, according to a recent article (behind a paid firewall) by Vince Mor and colleagues. These hospitalizations are often bad for patients and their families, and, Mor estimates, cost Medicare more than $4 billion-a-year.

The Hebrew SeniorLife program began at admission, where the rehab center collected information on what medications the patient used, what  advance directives she had, her health status and functional skills, and importantly whether she had been hospitalized three times or more in the past six months. If her answer to the last question was yes, a palliative care team met with the patient to discuss realistic treatment goals, and whether she could be best cared for in a hospital, nursing facility, or at home. Mostly, the team focused on learning what the patient wanted. Details on the progam appear in the June issue of the Journal of the American Geriatrics Society.

Finally, the facility organized a bi-weekly interdisciplinary meeting, called the Team Improvement for the Patient and Safety (TIPS) conference to review problems. Unlike many such conferences, this one is open to the entire nursing home staff from physicians to maintenance workers and also includes participation from the team that cared for the patient in the hospital and even outside experts.  The sessions are run by Dr. Randi Berkowitz, the rehab center’s medical director.   

Can other facilities copy this model? Maybe. It costs some additional money that is not reimbursed though Medicare. However, it may fit well with some provisions of the 2010 health law, including Accountable Care Organizations and bundled payments, where hospitals, nursing facilities, doctors, and other providers team to provide better integrated care  to chronically ill patients. In addition, the 2010 law’s strict limits on payments for hospital readmissions will create new incentives for hospitals and nursing homes to partner to prevent costly roundtrips.

This model may end up saving money but nobody really knows. It may also improve staff morale and increase collaboration at nursing facilities—no easy task. The real benefit, though, would be to keep very vulnerable patients out the hospital, reduce their odds of delirium and infections, and perhaps  give them a better quality of life.

New federal legislation would make it easier for states to deny Medicaid health and long-term care benefits to the frail elderly and younger adults with disabilities.  The new rules would also apply to low-income women and kids who rely on Medicaid for their medical care.  

The proposal, introduced yesterday by Representative Fred Upton (R-MI) and Senator Orrin Hatch (R-UT), would repeal an obscure piece of federal law known as maintenance of effort (MOE in Washington-ese). That law allowed states to take extra federal Medicaid funds but only in exchange for their promise to not toughen eligibility rules. The Upton-Hatch bill would allow states to bar new enrollees or even deny coverage to some people who already get Medicaid.

This could be especially difficult for seniors who are enrolled in Medicaid home care programs, which often allow participants to keep a few more dollars in assets or retain a bit more monthly income than usual. If the new law passes, states could save money by tightening financial standards or requirements for minimum levels of care.  

Medicaid, which is funded jointly by the states and the federal government, is the nation’s biggest single payer of long-term care costs. It covers more than 40 percent of all expenses, both in nursing facilities and in the community, at a cost to the federal government of more than $100 billion a year.

Currrently, cash-strapped states can reduce Medicaid costs by cutting payments to doctors, nursing homes, and other providers. But they can’t cut benefits or reduce eligibility.

In recent weeks, Hill Republicans and some governors have been pushing to cap the federal contribution to Medicaid or turn it onto a block grant  in exchange for giving states broad flexibility in the way they run the program. The House budget plan adopted in April would cut the federal share of Medicaid by nearly $800 billion over the next decade. 

No sensible governor would turn his back on a share of $800 billion. But I suspect that, all along, the real target for governors was the MOE rules. In other words, they still want the money, but without the strings.

In some respects, states should have more flexibility, especially if they are going to use the opportunity to design creative new ways to deliver quality, cost-effective care.  But cutting off benefits to the sickest and poorest in society is not productive.

Sponsors of the bill say it will save Medicaid dollars.  No doubt. But it will likely increase the costs of Medicare since people getting poor long-term care (or losing it entirely) are likely to end up in the hospital, where Medicare foots the bill.  Repealing the MOE would also increase the number of uninsured, shifting costs to providers that, eventually, will be passed on to other consumers.

There is not much chance that Congress will turn Medicaid into a block grant–at least not before the 2012 elections. But I would not be a bit surprised to see something like this MOE law pass.