Is There A Medicare Doctor In The House?

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Medical Nurse

Searching for ways to save money and improve care, Medicare officials are returning to an old-fashioned idea: house calls. 

But the experiment, called Independence at Home, is more than a nostalgic throwback to the way medicine was practiced decades ago when the doctor arrived at the patient’s door carrying a big black bag. Done right and paid right, house calls could prove to be a better way of treating very sick, elderly patients while they can still live at home.

“House calls go back to the origins of medicine, but in many ways this is the next generation,” said Dr. Patrick Conway, who heads the Center for Medicare and Medicaid Innovation, which oversees Independence at Home.    

In the first year of the experiment, Housecall Providers of Portland, Oregon, which had been operating at a loss, saved Medicare an average of almost $13,600 for each patient in the pilot project. Its share of the savings was $1.2 million. The house calls practice at MedStar Washington Hospital Center in Washington, D.C., cut the cost of care an average of $12,000 per patient.

Medicare reported overall savings of $25 million in the pilot’s first year, officials reported June 2015. From that money, nine practices earned bonuses totaling nearly $12 million, including a $2.9 million payment to a practice in Flint, Michigan.

After three practices dropped out, there are now 14 around the country participating in the project — including five sites run by the Visiting Physicians Association.

By all accounts, saving any money on these patients is a surprise. Independence at Home targets patients with complicated chronic health problems and disabilities who are among the most expensive Medicare beneficiaries. But a key study, published in 2014 in the Journal of the American Geriatrics Society, found that primary care delivered at home to Medicare patients saved 17 percent in health spending by reducing their need to go to the hospital or nursing home.

In addition to Medicare’s usual house calls payment, doctors in the Independence at Home project get a bonus if patients have at least 5 percent lower total Medicare costs than what is expected for a similar group of beneficiaries. Medicare keeps the first 5 percent of the savings and the house call providers can receive the rest. The doctors must meet at least three of the six performance goals — such as reducing emergency room visits and hospital readmissions, and monitoring patients’ medications for chronic conditions such as diabetes, asthma and high blood pressure.

Under the law creating the program, practices could join only if they make house calls to at least 200 patients with traditional Medicare who have been hospitalized and received rehab or other home health care within the past year. These patients also must have trouble with at least two activities of daily living, such as dressing or eating. The health care providers must be available 24 hours a day, seven days a week. They make visits at least once a month to catch any new problems early, and more often if patients are sick or there’s an emergency.

“You never know what you’re walking into,” said Terri Hobbs, Housecall Providers’ executive director. “This is a very sick group of people, with multiple chronic conditions, taking multiple medications and [they] have a very long problem list.” About half the Portland patients have some degree of dementia.

Yet the Medicare reimbursement for house calls is about the same as an office visit and doesn’t cover travel time or the extra time needed to take care of complex patients. It’s not enough to convince most doctors “to leave the relatively comfortable controlled environment of an office or hospital to do this sort of work,” said Dr. William Zafirau, medical director for Cleveland Clinic’s house calls program in Ohio, which has 200 patients in the Medicare pilot and plans to add 150 more.

A house calls doctor can see only five to seven patients a day. One reason is that a house call visit can take longer than an office visit, even after taking travel time into account. After Dr. Zafirau examines his patients, he also takes a look around the home. He may open their refrigerators to make sure they have enough food or see if medicine bottles are running low. He may arrange home-delivered meals or other social services.

How people are functioning is often the best indicator of their overall health.

The care can also extend to other professional services. Portland’s Housecalls Providers hired a nurse and a social worker to serve as an advocate for patients who enter the hospital. When the patient returns home, they visit. For example, an antibiotic, a hospital bed or oxygen.

Hospital admissions dropped so significantly that Hobbs expanded the transition team to serve house calls patients who were not part of the pilot program when they were hospitalized.

A similar team serves MedStar Washington Hospital Center’s house calls patients, said Dr. Eric De Jonge, director of geriatrics at the hospital and president-elect of the American Academy of Home Care Medicine. “When patients go to the hospital, there is very little contact from the primary care doctor with the hospital care,” he said. Independence at Home “is actually pushing back to reverse that trend.”

Ironically, Medicare doesn’t pay for the transition team even though Hobbs said it saves Medicare “a tremendous amount of money.”

Congress has authorized the Independence at Home program through October 2017, but some lawmakers hope there is enough support to extend it nationwide.  If not, Conway said his agency will not be able to continue the program.

 

Medical Technology Advances and Long-Term Care

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Couple on cruiseMedical advances have most definitely increased the number of years we live and have decreased the number of early sudden deaths. For example, identifying asymptomatic diseases through screening has helped to reduce their incidence and severity.

The overall results of medical advances are that:

 People are living longer and requiring additional years of care. 

 Hospital stays are shorter because more services are available at home.

 People are surviving more accidents, not always with full recovery, creating a

new group of LTC patients.

Some researchers argue that medical advances have increased life expectancy but have not delayed the onset of illness, predicting that declining death rates may actually increase LTC needs. That is, more people are living long enough to develop age-related conditions such as dementia, or they are living longer with existing disabilities and chronic conditions.

Advances in pharmacology and pharmaceuticals also impact the need for long-term care. These advances have not only reduced the symptoms of diseases but also have slowed their progression, thereby increasing longevity. However, increased longevity may necessitate periods of longer care.

The irony is that as medical advances help people live longer, the likelihood increases that long-term care will be necessary.

What is noninstitutional care? 

The U.S. Department of Health and Human Services reports that 31 percent of all caregivers are employed outside the home. This type of care is referred to as noninstitutional care.

Note that employed caregivers spend no less time on elder care than those who are not employed outside the home. Workers who provide elder care spend approximately four hours a day on caregiving in addition to their other responsibilities.

Consumer Attitudes and Understanding

Another social factor associated with the growing long-term care need is current consumer awareness and attitude. Generally, the public at large does not have a good understanding of the long-term care need, including why and how to plan for long-term care. Many simply deny that they will need long-term care; others believe, incorrectly, that Social Security, Medicare, or their existing health insurance will cover the costs.

They do not see long-term care as something one needs to plan for in advance, such as they would retirement. This attitudinal “disconnect” also explains one of the reasons why people may not consider the purchase of long-term care insurance.

According to a report issued by the U.S. Department of Health and Human Services, coverage purchased to cover acute medical care far surpasses the coverage purchased to cover long-term custodial care. Whereas almost all older individuals are protected from high acute medical care costs through Medicare and private Medigap insurance, a very small percentage have purchased long-term custodial care insurance.

This report cited the following, among others, as key factors limiting demand for long-term care insurance:

lack of information – Many underestimate the likelihood of requiring LTC services and the potential costs of those services.

 misperception of public and private programs – Many people believe that Medicare, retiree health plans, or Medicare supplement insurance covers LTC services. This is not the case.

 delayed preparation for/denial of long-term care needs – Many do not think about preparing for long-term care needs until the need arises. At that point, they may be too old or disabled to purchase insurance.

 long lag time between purchase and benefit payment – Long-term care insurance must be purchased before it is needed; often, this means a period of many years between purchase and when benefits are likely to be paid. Consumers prefer to spend their current dollars on coverage that provides a more near-term benefit, such as Medigap policies.

affordability – Many of today’s older consumers have low incomes and cannot afford long-term care premiums.

perception of need – Some consumers decide they do not need long-term care insurance because they have too few assets to protect or have family and friends available to provide care.

Consumer attitudes and perceptions notwithstanding, long-term care is a growing reality. It is also a very expensive reality.

The Cost of Long-Term Care

The medical, personal, and social services necessary because of an accident, a chronic illness, a disability, or simply the phenomenon of aging—services associated with long-term care—are among the most expensive of health care costs, especially considering the great numbers of people affected.

The actual cost of long-term care depends on where the care is received, what type of provider administers the care, and how long the care is required.

Some people require minimal assistance with only a few activities of daily living (ADLs) for a limited time.

Others require skilled nursing facility care for an extended period.

Unfortunately, no one can predict who will be stricken with the need for long-term care, what type of care will be needed, or how long the care will be necessary.

Planning for Long-Term Care

Given the likelihood of needing long-term care and the tremendous cost that this care entails, it is important that individuals plan for it—and the sooner the better. Certainly, there are barriers. For example, people tend not to think about becoming older and needing care, or they don’t anticipate that they will ever need care themselves; they resist the idea of becoming dependent.

They may believe [erroneously] that Medicare or their current health insurance will cover the cost of this type of sustained, ongoing care. They may find it difficult to raise this issue with their loved ones. Or they may underestimate the time and toll that future caregiving will demand of their family or friends.

Some are not aware of the tremendous costs of this care or how it is paid. Some may think of long-term care simply as nursing home care and assume that the “government” will cover the cost. Some are confronted with conflicting financial priorities. And some people may simply not know where or how to begin the planning.

But for every reason why people do not plan in advance for long-term care, there is a reason why they should:

Advanced planning for future care needs will allow for greater independence and choice as to where and how the care is delivered.

 Advanced planning can mean greater financial security, not only for those who may need care but also for their family and loved ones.

 Advanced planning can ease the financial and emotional toll on one’s family and release them from the burden of providing the care, if and when it is needed.

 Advanced planning will avoid the uncertainty, confusion, and mistakes that could arise in the event of a health care need.

 Advanced planning will promote a continued quality of life, as the person defines it, when care is needed.

Alternatives To Lapsing A Life Insurance Policy

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Nest Eggs       More than 100 years ago, in its landmark, Grigsby v. Russell decision, the U.S. Supreme Court ruled that life insurance is personal property. It can be bought and sold like any other property owned.

This means your life insurance policy has value to you or your family right now, not just when you pass away. Unfortunately, the vast majority of people are unaware of this simple fact.

The problem arises when the policy owner concludes they just can’t afford those premiums anymore, perhaps because they’re now in their retirement years and living on a fixed income. Or maybe they decide they just don’t need the death benefit anymore now that their children are grown, have steady jobs and built families of their own.

So, in the absence of knowledge about any other alternatives, most policy owners in this situation just lapse or surrender the policy back to the insurance company, accepting whatever small amount of cash surrender value is available.

Research available to the Life Insurance Settlement Association indicates that more than 710,000 policies are lapsed or surrendered each year — with a combined face value of more than $57 billion — by American seniors over the age of 70.

It’s important to contact your trusted insurance advisor [since it is their fiduciary responsibility] who can inform you of your options and instill awareness of alternatives to lapsing or surrendering a policy. 

But aside from the fiduciary issue, there is a common-sense test: if a person could lapse a policy for its nominal cash surrender value of $20,000 or able to sell that same policy to an investor for $150,000, they should be entitled to this information.

So, if a person has decided they no longer need or can afford a life insurance policy, what are the alternatives to lapsing the policy and surrendering it back to the insurance company?

Here are the primary options that you should know:

  • Maintain the policy through loans, using the policy or its cash surrender value as collateral;
  • Seek an accelerated death benefit, if possible;
  • Convert the policy to a long-term care health insurance policy, if possible;
  • Assign the policy to someone else as a gift or to a non-profit organization as a charitable contribution;
  • If it is a “term” policy, attempt to convert it to permanent insurance;
  • Reduce the death benefit (a lower “face value”) and the premiums; and
  • Sell the policy to a third-party investor through a life settlement.

As with any financial planning decision, there is no “one size fits all” answer to which of these options is best. The one that makes the most sense for you will depend on the your unique needs and desires as the policy owner — and that is where your trusted advisor, can play an invaluable role to guide you to the wisest decision.

90 percent of seniors who lapse policies without knowing about a life settlement indicated they would have considered that option had they known about it; and that 79 percent feel their advisors should inform them about a life settlement option.

Consider this story: A car dealership owner originally purchased a $488,000 life insurance policy to fund a buy/sell agreement with his business partner. After the business dissolved, his family continued to pay the premiums, but eventually decided the coverage was no longer needed.

He was planning to surrender the policy back to the insurance company for $6,800, then learned he had another option: to sell his policy to a life settlement company for $80,000. That’s more than 10 times what he would have received from the insurance company. The proceeds were divided among his three children, which they used to supplement their income.

If your main motive is to obtain cash in your hands — for retirement needs, health care expenses or simply to invest into other assets — then a life settlement is likely the best alternative. As a life insurance policy owner, when you enter into a life settlement, you can realize an average of seven times the amount of the policy’s cash surrender value, based on an analysis of a 2010 survey by the U.S. Government Accountability Office.

Perhaps that’s why 90 percent of seniors who have lapsed a policy would have considered selling it if they had known a life settlement was an option, according to a survey prepared for the Insurance Studies Institute.

Regardless of what you choose to do, just make sure that you are informed of all options before you lapse that life insurance policy.