Senior Living News Wire

Government healthcare spending is set to skyrocket, costs of long-term care are steadily rising, while at the same time, most seniors’ wallets are strained thanks to the prolonged economic recession. Add to that dwindling government benefits programs such as Medicare and Social Security that are unfortunately linked to an enormous federal deficit problem, and the future of long-term care doesn’t look so rosy for the nation’s growing senior population.

Seniors aren’t Financially Prepared for Long-Term Care Costs

Retirement preparedness is at dangerously low levels, with two-thirds of Americans fearing they won’t have enough money for retirement, reveals a Gallup survey on biggest financial worries.

And it’s not just that people are worrying about not being able to afford their care; other studies show many won’t have the necessary resources.

Nearly half of the oldest baby boomers, at 47.2%, are thought to be “at risk” of not having enough resources to pay for “basic” retirement expenditures and uninsured health care costs, according to the 2010 EBRI Retirement Readiness Rating.

Long-term care was found to be the least understood and the greatest perceived threat to financial security for middle-income Americans, says a survey about retirement healthcare. Further, 66% of Medicare recipients either didn’t know if the program covers long-term care, or overestimated its long-term care coverage.

“Financial fallout from healthcare related expenses can devastate savings and strip away the enjoyment of one’s retirement years,” said Chris Campbell, vice president of strategic marketing and business development for Bankers Life and Casualty Company, in a statement about the survey.

Rising Costs of Senior Care

Meanwhile, last year’s Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs, conducted annually by the MetLife Mature Market Institute, found that costs of long-term care continue to rise.

Nursing home care cost an average $87,235 a year in 2011, while assisted living base rates rose to $41,724 a year, according to MetLife. And while home health aide service rates stayed about the same at $21 an hour, adult day services increased to $70 a day.

The average senior entering into an independent living facilities is in his or her mid-80s, while the average age for seniors to enter assisted living is getting pushed back to late 80s or early 90s, according to a market researcher, and the median age of nursing home residents at nearly 83.

With many choosing to retire in their mid-60s, how many of today’s boomers will be able to afford these kinds of costs 15, 20, or even 25 years down the road?

Dwindling Government Benefits Programs

The 65+ demographic currently makes up about 13% of the nation’s overall population, and it accounts for 36% of total U.S. personal health care expenses.  The elderly and disabled account for about 25% of Medicaid enrollment, but in 2003 consumed about 70% of the program’s spending on services.

However, the number of those 65+ is expected to triple by 2050, with 10,000 baby boomers turning 65 each day until 2030.

It makes sense, then, to learn that government healthcare spending is accelerating at an alarming rate. Federal programs like Medicare and Medicaid are expected to more than double, says the Congressional Budget Office in its economic outlook for fiscal years 2012 to 2022. In fact, by 2022, federal spending on healthcare programs will climb to $1.8 trillion—or 7.3% of the nation’s GDP.

About half of that spending growth will come from Medicare (whose spending is expected to rise 90% in the next 10 years), and about a third from Medicaid, the CBO says.

Meanwhile, back in 2011, the Social Security and Medicare Board of Trustees released a report announcing that the two programs were dwindling and would reach exhaustion faster than previously expected.

The Social Security Trust Funds will be exhausted in 2036, and the Medicare Hospital Insurance Funds by 2024, according to the report, respectively one year and five years sooner than former projections.

Senior Care Facilities, Medicaid & Medicare

A large number of nursing home residents today rely on Medicaid to pay for their care, but the federal budget squeeze means most states aren’t getting enough funding to fully reimburse facilities, and states can expect even less federal Medicaid matching in the coming years, according to a report conducted by the National Association of Medicaid Directors.

In 2011, skilled nursing facilities faced a more than $6 billion shortfall in Medicaid funding, revealed a report by ElJay, LLC, a firm with expertise in Medicaid cost reporting and analysis. This represented a 13% higher margin of loss compared to the previous year’s shortfall, and there’s a projected negative Medicaid margin of more than 14% for 2012, according to the study.

Currently about 63% of nursing homes residents have their stays funded by Medicaid, says the American Health Care Association (AHCA), while about 45% of the total nursing home bill is paid by the program, according to AARP.

While Medicare doesn’t pay for long-term nursing home stays, it does primarily support about 13% of nursing home residents, but keeping in mind the shorter duration of coverage, it actually serves as a primary payer for 52% of residents who have been in a nursing home for less than 30 days, says AARP, and it paid for 17% of the nation’s total nursing home bill in 2005.

A number of facilities either have been or are looking for a primarily private-pay census, but with personal finances not faring well after the Great Recession, it’s unclear whether or not this will be sustainable in the long term.

For those in the senior living industry, what does this mean? How will upcoming generations of retirees be able to afford their long-term care costs? How will facilities combat further cuts to Medicare, and state shortfalls for Medicaid matching? In the next few days, Senior Housing News is going to take a closer look into some senior housing and care options, alternatives, and opportunities.

Article topics will include:

• The plight of nursing homes as senior housing/care models continue to evolve
• “Affordable” assisted living models that use a state Medicaid waiver
• “Transitional” senior housing/”Granny” pods that can be built in an adult child’s back yard
• Senior living providers partnering with home health care agencies
• Design trends and aging-in-place

Any other suggestions for articles that fall under this general topic of long-term care costs, affordability, and the future of senior housing can be left in the comment section below or emailed.

Written by Alyssa Gerace

Even after steep cuts to skilled nursing facility reimbursements that went into effect last October, President Obama’s 2013 Federal Budget calls for still more Medicare payment and reimbursement reductions, causing associations representing the skilled nursing and home healthcare industries to blast back against the Administration’s strategy of “cuts only” without reforms.

The budget report proposes adjusting payment updates for certain post-acute care providers (such as skilled nursing facilities), equalizing payments for certain conditions commonly treated in skilled nursing facilities, and adjusting skilled nursing facility payments to reduce unnecessary hospital readmissions, saying that these policies will save approximately $63 billion in the next 10 years.

The report also points out that Medicare beneficiaries don’t currently make copayments for home health services, and proposes creating a copayment of $100 per home health visit when there are five or more visits that haven’t been preceded by a hospital or other inpatient post-acute stay. This would begin in 2017 for new beneficiaries, and is expected to save approximately $350 million throughout a 10-year timeframe.

Skilled Nursing and Assisted Living

This “cuts only” approach with no reforms is wrong, says the American Health Care Association/National Center for Assisted Living (AHCA/NCAL).

“Our organization’s approach has been to work with the Administration and Congress to improve the lives and care delivery while at the same time working to remove costs out of the system,” said Mark Parkinson, President and CEO of AHCA/NCAL. “We do that by reducing hospital readmissions, placing seniors in the most appropriate health settings, and redoubling our efforts on quality. We shouldn’t have an approach focused solely on cuts. Unfortunately, the President’s budget reflects that singular direction.”

This sort of budgeting “violates the basic contract between the government and beneficiaries” that covered services will be paid, he said.

“Medicare and Medicaid funding for senior health care should be fully paid for. We want to and will work with both parties and this administration to meet the commitments we made years ago to the Greatest Generation and their families,” said Parkinson, mentioning his association’s recommendations for an alternative to reducing Medicare reimbursements.

For its part, the Alliance for Quality Nursing Home Care also decried Obama’s budget.

“With America’s skilled nursing facility sector already slated to absorb $127 billion in Medicare reductions over the FY 2012-2021 budget window, any additional direct payment cuts in the FY 2013 federal budget will further jeopardize seniors’ access to quality care, worsen facility job losses, and risk pushing America’s second largest health facility employer over the edge,” said Alan Rosenbloom, present of the Alliance.

Home Health Care

Cuts to home healthcare will limit patient access to “clinically advanced, cost-effective care that an overwhelming majority of American seniors prefer,” says the Partnership for Quality Home Healthcare.

Instead of across-the-board Medicare cuts, the Medicaid and Medicare programs should be strengthened through integrity reforms, says the healthcare group.

“Simply put, there’s a better way to save money than by increasing costs on America’s seniors and endangering the high-quality, low-cost services they need. That’s why many lawmakers prefer program integrity reform, like the home healthcare community’s detailed proposal, because it generates billions in savings without harming innocent seniors or cost-efficient providers,” said Billy Tauzin, former House Energy Commerce Committee chairman and senior counsel to the Partnership for Quality Home Healthcare, in a statement.

The home healthcare community proposed payment reforms in 2009 that achieved nearly $1 billion in Medicare savings in 2010 alone, according to data from the Centers for Medicare & Medicaid Services (CMS)—equivalent to nearly $11 billion of savings in the next 10 years.

Armed with this data, the group believes this policy is evidence that “targeted program integrity reform can generate significant savings without impacting beneficiaries or cost-efficient providers.”

“We as Congress to strongly consider the solutions the home healthcare community has put forth, which achieve significant savings and delivery system improvements without asking our nation’s sickest and poorest seniors to shoulder the burden of an expensive copayment, which many patients simply cannot afford,” said Senator John Breaux (D-La.) in a statement.

Written by Alyssa Gerace

Sunrise Senior Living (NYSE:SRZ) announced on Feb. 13 that it is partnering with HGTV designer and host Emily Henderson for senior living design advice.

Henderson will serve as an interior design expert and spokesperson for Sunrise’s “campaign to help seniors and their families design spaces that address the changes caused by aging, as well as support the transition from a larger home to apartment-style living.”

Preserving the individuality of residents is important, said Henderson in a statement, and Sunrise hopes to encourage seniors to design their suites in ways that reflect their interests and personal histories.

The interior designer shares 10 tips for seniors and their families, including choosing contrasting wall/floor colors, adding safety rails, and using convenient, practical lighting.

Click here for more information and to see the rest of the tips

Written by Alyssa Gerace.

President Obama’s 2013 federal budget appropriates $475 million of funding for the Section 202 Housing for the Elderly program, which will remain available until Sept. 30, 2016, with several provisions.

The total obligations estimated for 2013, at $549 million, decreased substantially from the previous year’s $1.16 billion, and are broken down into five parts:

• $59 million for construction and expansion
• $285 million for Project Rental Assistance Contracts
• $89 million for Service Coordinators/Congregate Services
• $16 million for Senior Preservation Rental Assistance Contracts
• $100 million for State Housing Project Rental Assistance

Last year, the budget provided just under $375 million for the program. This year’s appropriations transferred $2 million to other accounts, reducing 2013′s discretionary appropriations to $473 million, with estimated net outlays for next fiscal year totaling $1.005 billion.

The budget mentions the Administration’s “efforts to improve the efficiency and efficacy of the Section 202 program” through the Section 202 Supportive Housing for the Elderly Act of 2010, which amended the original Act of 1959 and gave the Department of Housing and Urban Development new authorities, including new flexibilities to ensure that existing properties in the program aren’t lost as affordable housing stock when owners opt out of their responsibilities through pre-payment.

Other reform efforts include allowing HUD to provide Section 202 operating assistance directly to states, and are expected to result in cost savings for both state and federal healthcare budgets.

“These reforms will create and sustain significantly more affordable units at a lower initial cost than under the status quo, streamline and modernize the program to reduce administrative processing, increase the likelihood of successful completion within a shorter timeframe, and ensure that Section 202 units serve as a platform for elderly persons to live independently and age in place,” says the report.

Health Care and Nursing Homes & Health Care Refinance

The budget shows negative credit subsidy rates for HUD’s healthcare refinance and nursing home programs.

“Credit subsidy rates for 2013 reflect mortgage insurance premium increases for newly insured market rate multifamily housing and healthcare facility loans,” says the budget, which proposes 15 basis points on all types of healthcare and multifamily loans besides Section 221(d)(4) loans (20 basis points), and Section 223(a)(7) refinances (5 basis points).

However, these premium increases won’t apply to affordable housing projects, such as those which receive Federal rental subsidies or low-income housing tax credits.

The guaranteed loan subsidies for Health Care and Nursing Homes is projected to go from an estimated -1.34% in 2012 to an estimated -2.51% in 2013, even better than 2011′s -0.71%. Health Care Refinances are expected to have an estimated guaranteed loan subsidy of -4.45% 2013, compared to 2012′s estimate of -1.96% and 2011′s actual of -1.53%.

The two programs are expected to generate an estimated $219 million for the budget in 2013, with $13 million from Health Care and Nursing Homes and $206 million from Health Care Refinances. This is significantly higher than what’s expected to be generated in 2012, an estimated $145 million from both programs, and is much more than 2011′s actual of $54 million.

Guaranteed loan subsidy outlays for Health Care and Nursing Homes is an estimated -$12 million in 2013, compared to -$8 million in 2012. Guaranteed loan subsidy outlays for Health Care Refinances is an estimated -$188 million, more than 2012′s estimated -$114 million.

Suspension & Continuation of Senior Care-Related Programs

In other news, the 2013 budget assumes HUD’s suspension of issuance of new insurance on Section 223(d) operating loss loans to multifamily housing projects with a primary FHA mortgage, as they currently require a positive credit subsidy. In 2009, this program insured mortgages for two operating loss loans for a nursing home and an assisted living facility.

However, the budget continues “Section 223(d) operating loss loans to health care facilities with a primary Section 232 mortgage and Section 241(a) supplemental loans to FHA-financed multifamily housing, but beginning in 2013 these loans will be reported under the budget risk category of the primary FHA mortgage.”

Written by Alyssa Gerace

On Feb. 1, Trilogy Health Services LLC announced the purchased of a skilled nursing facility located in Greenville, Ohio, for an undisclosed price.

The company changed the name of the 51-bed facility, which opened in 1975, to Gade Healthcare Center.

“Gade Nursing Home has a long history of providing the very best in service to seniors, and that aligns with our mission of providing compassionate service that exceeds the expectations of every customer,” said Randall Bufford, president and CEO of Trilogy.

Trilogy said that it will operate the facility in its current location before moving operations to a newly-constructed Trilogy Village Model health campus at some point in the next 18-20 months. The site selection will be announced soon.

Written by Alyssa Gerace