Long-Term Care Partnership: Protecting Consumers and States from Catastrophic Expenditures

Long-Term Care Partnership: Long-Term Care Partnership: Protecting Consumers and States Protecting Consumers and States from Catastrophic Expendituresfrom Catastrophic Expenditures

State Coverage Initiatives Winter MeetingFebruary 8, 2008

Chad ShearerProgram Officer, CHCS

About CHCSAbout CHCS

Our Mission

To improve health care quality for low-income children and adults, people with chronic illnesses and disabilities, frail elders, and racially and ethnically diverse populations experiencing disparities in care.

Our Priorities Advancing Health Care Quality and Cost-Effectiveness Reducing Racial and Ethnic Disparities Integrating Care for People with Complex and Special Needs

Our National Reach48 states160+ health plans

BackgroundBackground

• Aging boomers• High probability of

needing nursing home services

• High cost of long-term care services

• Medicaid:– Largest payer for

nursing home services– Long-term care is

substantial portion of Medicaid spending

National Spending on Nursing Home Care,By Source of Payment (2005)

Total = $122 Billion

Medicare, 15.7%

Medicaid, 43.9%

Other Private Funds, 3.7%

Other Public Funds, 2.7%

Private Health Insurance,

7.5%

Out of Pocket Payments,

26.5%

Source: Centers for Medicare & Medicaid Services (CMS), National Health Expenditures

LTC Partnership History

•Robert Wood Johnson Foundation (Late 1980s)

– States and insurers collaborate on long-term care insurance product for those who might otherwise rely on Medicaid to finance LTC.

•Four states implement programs (Early 1990s)

– California, Indiana, New York, Connecticut

•Moratorium on new Partnership programs (1993)

– 4 original states allowed to continue

Partnership Benefits

•Asset Protection – If Partnership policies do not sufficiently cover the cost of LTC, beneficiaries may qualify for Medicaid while retaining a level of assets that would otherwise preclude them from eligibility.

– Attract middle-income consumers who might not otherwise purchase LTC insurance.

•Medicaid budget protection – GAO reported mixed results but original states and growth suggest budget benefit.

– Only a small portion of policy holders exhaust their private benefits

Partnership Resurgence

• Deficit Reduction Act (DRA) of 2005

– Eliminated moratorium on Partnerships

• Rules for new Partnerships

– Approved Medicaid State Plan Amendment (SPA)

– Consumer Protections – NAIC Model Act & Regulations

– Asset Protection – Dollar for dollar protection

– Inflation Protection – Depending on age of purchaser

• Original Partnership states deemed to have satisfied new requirements

Partnership Expansion

CHCS/RWJF Initiative

•Long Term Care Partnership Expansion

– Seed funding to 10 states developing partnership programs:

•Arkansas, Colorado, Georgia, Michigan, Minnesota, Ohio, Oklahoma, South Dakota, Texas, Virginia

•3 states operational, 3 with approved SPAs

– Technical Assistance

– Policy Briefs

– In-Person Meetings

Partnership Issues

• States implementing or considering partnerships must consider:

– Inflation protection

– Agent Training

– Policy Exchange

– Reciprocity

– Reporting Requirements

– Medicaid Eligibility Determinations

– Cost Effectiveness

– Outreach

Contact/Resources

CHCS – www.chcs.org – (609) 528-8400 Chad Shearer – cshearer@chcs.org Joanie Rothstein – jrothstein@chcs.org

• Long Term Care Partnership Program Technical Assistance Website - http://www.dehpg.net/LTCPartnership/

• Centers for Medicare & Medicaid Services (CMS) - http://www.cms.hhs.gov/DeficitReductionAct/09_LTCPartnerships.asp

• National Association of Insurance Commissioners (NAIC) – www.naic.org

• Long Term Care Group, Inc. - http://www.ltcg.com

• Provider Groups Financing Reform Agenda - http://www.aqnhc.org/email/20080115_2.html