One long-term care reform proposal would save billions, report finds

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Certain long-term care reforms could save the government $35 billion over the next 10 years, while providing for  more effective reimbursement and post-acute care systems, according to a report released today by Avalere Health.

The report analyzes a long-term care reform proposal put forth by the American Health Care Association, the National Center for Assisted Living and the National Alliance for Quality Nursing Home Care. Highlights of the proposal include:

The creation of a new, site-neutral Medicare payment system for post-acute care based on patients' conditions and medical needs. Decisions would be based on more evidence using a standardized patient assessment tool.
The creation of a fully federalized, voluntary, catastrophic long-term care (LTC) benefit. Medicaid no longer would pay for LTC for seniors.    

An increased amount of private funds used for long-term care services. Individuals would share the cost burden of the new LTC benefit in the form of a personal responsibility allowance, scaled to income.  

The proposal would require the Centers for Medicare & Medicaid Services to base reimbursements not on where treatment is given, but on a Medicare beneficiary's condition and treatment requirements. AHCA, NCAL and Alliance expect this would shift funds toward nursing homes and skilled nursing facilities, where patient needs can be greater than some hospital settings.

The proposals would reduce expenditures by $81 billion over 10 years due to more cost- effective placement of Medicare patients in post-acute care settings, according to the report. These savings would offset the estimated cost of $46 billion related to launching a consistent federal long-term care program. This would bring total savings to $35 billion. Proponents of the plan hope these savings will make the proposals more attractive to legislators in Washington. Avalere Health conducted the study on behalf of AHCA, NCAL and Alliance.