by James C. Sherlock
We write here often about senior care, the companies that provide it and the politics around that business.
It is useful to understand the continuum of care to make sure we also understand the different financial situations which companies in different parts of that industry find themselves and the way they are overseen and paid in Virginia.
The larger corporations that offer these services often offer both facility and in-home care.
The basic descriptions below are offered for considering the business interests and therefore the lobbying efforts of the companies that provide the services. They are not meant for personal counseling.
Independent living and assisted living
Independent living and assisted living are licensed by the Virginia Department of Social Services. They are for people who need varying levels of help with activities of daily living (ADLs) but not nursing care. These facilities are generally not paid for by government programs.
Virginia’s Medicaid doesn’t directly pay for assisted living. It does pay for including medical services, behavioral health services, nursing facility services and “waiver” services for community-based long term care.
Nursing Homes, Home Care Organizations and Hospice
The Virginia Department of Health Office of Licensing and Certification (OLC) administers four state licensing and inspection programs:
- Nursing Homes (for both federal and state inspections)
- Home Care Organizations (HCOs)
- Hospices and Hospice Facilities
A nursing home is a facility in which the primary function is the provision, on a continuing basis, of nursing services and health-related services for treatment and inpatient care.
Medicaid pays for the majority of nursing home care in the U.S.—or all sorts of patients. Medicaid will pay for a nursing home only when it is medically necessary. In contrast, as of 2020, Medicare pays for approximately 13% of nursing home care; private insurance is used to cover even less. Medicare does not cover long-term care room and board in a nursing home.
Nursing homes are regulated by the Virginia Department of Health (VDH). Most nursing homes have both skilled nursing facilities (SNF) and long term care facilities (LTCF) on the same campus.
From a business perspective, nursing home SNF patients are largely paid for by Medicare. A SNF is often a profit center that offsets poorer financial results on the LTCF side paid for by Medicaid.
Long Term Care
Long-term care nursing homes provide long-term nursing care for medical conditions. Medicaid pays the bills for most people requiring long term medical care.
To be eligible for Medicaid long term care, one must be both financially qualified and have a medical need for care. Eligibility requirements are specific to the state, the Medicaid program or waiver, and one’s age group. The patient will be visited at home by a public health nurse and family services specialist who make the determination of whether the patient requires nursing home care.
There is an entire industry, including “elder law” attorneys, that helps make seniors eligible for Medicaid by spending down assets in qualified ways.
Skilled Nursing Facilities
Skilled nursing facilities provide primarily post-operative skilled nursing care and rehabilitation. Registered nurses are in charge with doctors on call. Medicare will pay for short-term SNF stays for specific situations, usually post-operative. The level of services available varies. Many facilities have both SNF beds and nursing home beds, including swing beds depending upon demand.
Skilled nursing facilities have one of the highest staff turnover rates in healthcare. Most of the licensed nurses are LPNs, and RNs tend to take on the management roles. The cost of nurses in general and RNs in particular drives the costs of SNF’s, and therefore the issue of how much RN time per 24 hours is needed for x number of patients is a hot one. Nurse shortages in SNF’s are very dangerous. Efficient and effective inspections are crucial.
Medicare will pay for the first 20 days, and the patient generally needs to pay co-insurance (currently $185.50 per day) for days 21-100. Medicare pays nothing after day 100.
Home Care Organizations (HCO) and Hospice
An HCO as defined by Virginia is
“any public or private organization, whether operated for profit or not for profit, that provides at a person’s Virginia residence one or more of the following services:
Home health services, including services provided by or under the direct supervision of any health care professional under a medical plan of care in a patient’s residence on a visit or hourly basis, to a person who has or is at risk of injury, illness, or a disabling condition and requires short-term or long-term interventions
Personal care services, including assistance in personal care to include activities of daily living provided in a person’s residence on a visit or hourly basis to a person who has or are at risk of an illness, injury or disabling condition
Pharmaceutical services, including services provided in a person’s residence, which include the dispensing and administration of a drug or drugs, and parenteral nutritional support, associated patient instruction, and such other services as identified by the Board of Health by regulation”
Home care services can be paid for by: Medicare, Medicaid, the Veterans Administration (VA), private health insurance and managed care plans as well as out of pocket.
The Commonwealth Coordinated Care Plus (CCC Plus) is run by DMAS. It provides care in the home and community rather than in a nursing facility (NF) or other specialized care medical facility. The CCC Plus program is a Medicaid managed care program contracted by the Department of Medical Assistance Services (DMAS). About 45,000 Virginians are enrolled. It saves Medicaid considerable money – about $15,000 per year per patient over a nursing facility.
Medicare pays health care services in the home if one meets certain eligibility criteria and if the services are considered reasonable and necessary for the treatment of your illness or injury.
Hospice is a coordinated program of home and inpatient care providing palliative and supportive medical and other health services to terminally ill patients and their families. Once a patient elects hospice, Medicare pays for the majority of the care.
This primer is offered as a resource for understanding the payers, and thus the politics of senior care.
Medicaid, a joint federal/state program, is lobbied both in Washington and in Richmond. The elder care industry is currently lobbying Congress to override some state variances in the program, raise reimbursements and weaken inspections.
Medicaid Managed Care (Medallion 4.0) is a very profitable business in Virginia. Contracts have been awarded by DMAS to six providers: Aetna, Anthem, Magellan, Sentara Healthcare’s Optima, United Health Care and Sentara’s Virginia Premier. Anthem is the single largest, but Sentara’s two HMOs together manage almost 50% of the MMC patients in Virginia.
The lobbying of the General Assembly for Medicaid expansion was fierce and successful.
The lobbying to reduce the frequency, efficiency and effectiveness of inspections has been similarly fierce and effective in Richmond. We saw the results in COVID deaths in senior care facilities.
As for investor value, on the large scale national level independent living and assisted living businesses like Brookdale Senior living are not as highly valued by Wall Street as nursing homes, particularly those with a thriving SNF business like the Ensign Group.
The General Assembly does not get a say in Medicare, so Medicaid is in bold print on the lobbyist menu every year.