Assisted living and medicare expenditures

The nation needs a wake up call and this assisted living article is the bell that will ring the nation:

Medicare expenditures for residents in assisted living: data from a National Study¬†Health Services Research, April, 2005 by Charles D. Phillips, Scott Holan, Michael Sherman, William Specta, Catherine HawesWhen one peruses Medicare expenditure data, one of the clearest distinctions between recipients is between those beneficiaries living in the community and those living in skilled or long-term care facilities. In 1996, Medicare per capita claims paid averaged $4,465 for beneficiaries in the community and $10,766 for those in facilities (Murray and Eppig 1999). However, while the living arrangements in facilities are fairly straightforward and limited in their variation, the living arrangements of those in “the community” exhibit considerable variation. Community dwelling beneficiaries range from those living completely independently in their own homes to those living in supportive housing and receiving around-the-clock care from family or employed caregivers.

This research focuses on Medicare expenditures for one group of community dwellers, residents in assisted living facilities (ALFs). In the last decade, assisted living (AL) was the fastest growing type of housing with supportive services for the elderly (American Seniors Housing Association 1998). The popularity of AL is easily understandable, it meets important consumer preferences for a mixture of services, privacy, and autonomy (Jenkens 1997; Kane, Baker, and Veazie 1998). Unlike many other forms of housing with supportive services, AL is paid for almost exclusively by private funds, although more states are now beginning to allow Medicaid payments for personal care for individuals in AL (Mollica and Snow 1996; Mollica 2002).

The Assisted Living Quality Coalition, composed of providers and consumer groups, offers one of the more generally accepted definitions of AL:

A congregate residential setting that provides or coordinates personal services, 24 hour supervision, and assistance (scheduled and unscheduled), activities, and health related services; designed to minimize the need to move; … to accommodate residents’ changing needs and preferences; … to maximize residents’ dignity, autonomy, privacy, independence, and safety; and … to encourage family and community involvement (p. 65). Using a definition of AL consistent with that above, but slightly more restrictive (see Methods section), a late 1990s study estimated that 11,459 ALFs operated nationwide, with over 611,000 beds filled by over 521,000 residents. In these facilities, the most common monthly charge was approximately $1,600 a month (Hawes et al. 2003).

While we now know the cost or AL, we know very little about the types and levels of medical expenditures by AL residents. More specifically, we lack information on expenditures by public payers such as Medicare for those elderly in AL. In addition, we lack research that provides any insight into what ALF characteristics might affect residents’ use of Medicare services. Recent research indicates that the presence of a full time Registered Nurse (RN) in an AL facility significantly reduced residents’ likelihood of transfer to a nursing home (Phillips et al. 2003). Possibly this or other ALF characteristics may affect residents’ use of Medicare services as well. To investigate these issues, the research questions on which information is currently lacking that this research addresses are: Question (I), “What are the Medicare expenditures for residents in AL?” Question (II), “What individual and facility characteristics drive differences in Medicare expenditures for AL residents?”

A secondary focus, within Question (I), is: “How do Medicare expenditures for individuals in AL compare with Medicare expenditures for the population of community-dwelling Medicare beneficiaries?” Unfortunately, the comparability of health and functional status between AL residents and community-dwelling beneficiaries in general cannot be assured, so the illustrative comparisons provided here should be considered preliminary and suggestive.


Defining AL

ALFs with 11 or more beds operating in the United States in the Spring and Summer of 1998 were the study’s target population. An eligible ALF had to be a facility that advertised as or called itself an ALE, primarily served the elderly, and had 11 or more beds, or a facility that did not necessarily call itself an ALF but had 11 or more beds, served the elderly, and provided (or arranged) meals, 24-hour staff, housekeeping, and assistance with at least two activities of daily living (which could include assistance with medications).

The initial sample for telephone interviews with the facility administrators used this definition of an ALF. Based on the initial telephone survey results, additional exclusion criteria were applied to determine which facilities would be included in a more elaborate on-site data collection that involved personal interviews with staff, families, and residents. Facilities excluded from the on site data collection included those that offered minimal privacy (i.e., any rooms or apartments housing three or more unrelated persons), those that offered minimal services (i.e., not offering assistance with at least two of three activities–medications, bathing, and dressing), and those that offered both low nursing services (i.e., no RN on staff and no willingness to provide even temporary nursing care) and low privacy (i.e., fewer than 80 percent of the resident accommodations were private). These facilities were excluded because they resembled traditional “board and care” homes more than ALFs. The lack of services or privacy indicated that these facilities did not operate within the parameters of what most consumers and industry representatives recognize as the “philosophy of assisted living” (Assisted Living Quality Coalition 1998).

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