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Major LTC Initiatives Could Emerge From Congress In 2009

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Legislation with a potentially large impact on long term care has been lying dormant in various Congressional committees over the last 2 years. Whether these bills find their way into law this year is a matter of conjecture, but a number of Capitol Hill observers believe 2009 could be a year that sees legislation addressing shortages in skilled nurses and primary care physicians in long term care, increased Medicare and Medicaid coverage, incentives for physicians to spend more time on patient care coordination and efforts to combat the high costs of treating chronic diseases.

Although the Obama administration’s plans for long term care remain vague, experts predict significant initiatives making an impact on LTC from the 111th Congress in 2009.

“I think they are going to have to address some LTC issues within the health reform mix, because really it’s the white elephant in the room,” says John Greene, legislative director for federal and regulatory affairs at the National Association of Health Underwriters, Washington.

Proposals to emerge are likely to include legislation introduced in the past 2 years but never voted on, such as bills to encourage home and community-based care and to extend Section 125 cafeteria plan to include consumers’ spending on long term care.

Sen. Chuck Grassley, R.-Iowa, said he thinks 2009 would be the year the Section 125 idea finally becomes law, Greene notes.

Greene also points out that growing numbers of employers have added LTC insurance to their basket of voluntary benefit options. This helps people realize the LTC coverage is important, he says, even though for now at least, they have to pay for it with after-tax dollars.

“Many employers put money for long term care on the table,” adds Green. “When you can do it pretax and take it with you when you leave [an employer], it makes it very attractive. Because it’s income protection, people want it. And with pretax treatment, it becomes very attractive.”

Both Sen. Edward Kennedy, D-Mass., and Sen. Max Baucus, D.-Mont., plan to propose important health care reform legislation. Greene thinks it is likely Baucus’ legislation will be folded into Kennedy’s.

Greene does not expect to see LTC provisions within any health care reform proposals, because doing so would be too expensive. “I see more private sector in the mix,” he says. “Congress can’t offer long term care as an entitlement when they’re already headed for a train wreck with Medicare and Medicaid costs.”

Medicaid already pays 49% of long term care costs now, he says.

Several bills that would increase access to home and community-based care under Medicaid, introduced in 2008, are likely to resurface in the 111th Congress, supporters say.

Congress is also being urged by groups such as the American Association of Homes and Services for the Aging to prevent the Centers for Medicare and Medicaid Services from cutting home health agencies’ reimbursement by 2.75% in 2009, and to assure that Congress rejects a freeze on home health payment increases.

President-elect Barack Obama’s campaign proposal for health care reform said little about LTC, although it did advocate home and community-based care options for seniors’ Medicaid choices.

Obama also proposed that Medicare pay for wellness programs to reduce the incidence of chronic disease and disabilities, a program that, if implemented, could help lower LTC costs, observers note.

Some experts say, however, that the economic downturn and the growing federal deficit may stifle new health care and LTC initiatives for the near future. The new President and Congress will face deficits that could approach $1 trillion in 2009, they point out.

Still, any Democratic health care initiatives that do reach the floor of Congress are likely to pick up votes from a number of Republicans in the Northeastern states, analysts say.

A number of lobbyists on the Hill are predicting federal regulation of assisted living facilities is highly likely.

Others expect moves to cut costs of chronic care paid for by Medicare. “That will be in play because people with chronic conditions have high health care costs,” says one lobbyist who asked not to be identified.

Although Medicare does not pay many LTC costs, its efforts to improve chronic care could ultimately reduce those costs overall, sources observe.

For similar reasons, legislation aimed at reducing shortages of nurses and primary care physicians in the LTC field could cut costs by improving care coordination and boosting the quality of care.

“The workforce issue, the ability to recruit and retain qualified workers, is a major contributor to long term care costs,” says one lobbyist. “As boomers age, there will continue to be a need for health care and long term care workers.”

Industry lobbyists hope Congress will put more money into training for health care workers, such as through community colleges.

“We think that [shortages of health workers] is a major driver of the increasing costs of care,” the lobbyist says. “We’re all in agreement that there aren’t enough workers. Insurers and providers are very aware of that issue.”

Among bills to increase access to home and community-based care under Medicare and Medicaid is the proposed CLASS (Community Living Assistance Services and Support) Act, S.1758, introduced in 2008 by Sen. Kennedy. The bill could provide coverage for individuals who can’t afford or are ineligible for LTC insurance. It would provide a cash benefit to individuals who become functionally disabled to help pay for LTC services. The bill’s House companion is H.R. 3001.

Federally-financed insurance under the CLASS Act would be available to most workers who pay a $30 monthly premium. In return, the government would give the disabled individual a check for $1,500 or $3,000 a month, depending on the extent of the disability. Workers would have to pay into the system for 5 years before being eligible to collect payments.

Sen. Baucus has also put forth a health care reform plan that, among other provisions, would expand Medicaid to cover everyone with incomes below the federal poverty line. It would also extend government-paid LTC services to home care. The plan is not yet in bill form.

Other bills proposed in 2007 and 2008 that are expected to emerge again in 2009 include the following:

? The Empowered at Home Act, S. 3327, sponsored by Sen. John Kerry, D-Mass., would make it easier for states to provide home and community-based services to Medicaid recipients. It would also provide an above-the-line deduction on premiums for qualified LTC insurance contracts along with a caregiver tax credit of up to $3,000 per individual with LTC needs. It would also expand tax-preferred cafeteria plans to include premiums on qualified LTC insurance contracts., provide consumer protections for LTC insurance and revise the income eligibility level for home and community-based services for elderly and disabled individuals. Its House counterpart is H.R. 7212.

? The Long Term Care Affordability and Security Act (S. 2337), sponsored by Sen. Grassley, would allow employees to pay for LTC insurance with pre-tax dollars and would permit employers to offer LTC insurance under cafeteria benefit plans, which give employees a choice of tax-exempt benefits, as well as to pay for LTC costs from flexible spending accounts. “Though we have lost one of our Senate Republican sponsors (Sen. Gordon Smith, R.-Ore.) and some of our House Republican sponsors in the election, it is likely that we will see this legislation reintroduced in the 111th Congress,” says Gail Steinberg, legislative director for the American Council of Life Insurers, Washington.

? The Comprehensive Long Term Care Support Act, H.R. 7095, sponsored by Rep. Stephanie H. Sandlin, D-S.D., would change tax rules to allow a deduction from gross income for LTC insurance premiums for the taxpayer and close family members. The deduction would be phased in over 3 years. It, too, would allow LTC insurance to be offered as a benefit under tax-qualified cafeteria plans and FSAs. It also proposes a $3,000 tax credit, phased in over 5 years, for caregivers of individuals needing LTC. The credit would be reduced for taxpayers with adjusted gross incomes over $75,000 or joint income of $150,000.

? The Tax Relief for Long Term Care Act, H.R. 6237, sponsored by Rep. Joe Courtney, D-Conn., proposes giving caregivers tax credits to pay for such expenses as training to provide care to family members. It also offers tax breaks for individuals paying LTC premiums. It would phase in a maximum credit of $3,000 between 2009 and 2013, which would be reduced for a taxpayer with an adjusted gross income exceeding $75,000 ($150,000 for a joint return).

? The Independence at Home Act (S. 3613), sponsored by Sen. Ron Wyden, D-Ore., would set up a 3-year Medicare demonstration project in 26 states for high-cost patients suffering from several chronic conditions, expanding their access to community based services. It also proposes a tax deduction for LTC expenses through flexible spending accounts and cafeteria plans. Its House counterpart is H.R. 7114.

It is also likely that legislative proposals for broad health care reform would include discussions of LTC as well, says ACLI’s Steinberg. She points out that in introducing his health reform proposal in November, Sen. Baucus stated that, “In the long run, fundamental reform of the long term care system will be necessary,” and “achieving ultimate success will require both public and private solutions.”

“It is likely that we will see legislation introduced very early in the 111th Congress,” Steinberg says. “It is unclear what any long term care component of that legislation might look like.”

Another analyst, who asked not to be identified, doubts that legislative proposals to add LTC premiums and costs to employer cafeteria and FSA plans are going anywhere this year. With the current dismal economy, he says, Congress is going to have a “pay as you go” mindset.

“So you have to find a way to pay for a tax deduction,” he says. “Paying for long term care with pretax dollars comes with a price tag in the billions of dollars.”

Elder Care Legislation To Look For In 2009

There are a number of other bills expected to arise this year that do not touch directly on LTC insurance but that could have an impact on LTC costs. Among them:

? The Fairness in Nursing Home Arbitration Act, S. 2838, sponsored by Sen. Herb Kohl, D-Wis., and Sen. Mel Martinez, R-Fla., would nullify mandatory arbitration agreements between LTC facilities and their residents or others acting on their behalf. Some nursing home providers say arbitration helps them avoid costly lawsuits, but supporters of S. 2838 say the bill would force providers to improve conditions in their facilities.

? The Nursing Home Transparency and Quality of Care Improvement Act, H.R. 7128, sponsored by Rep. Pete Stark, D-Cal., would clarify nursing home ownership, give residents and their families information about the quality of care at specific facilities and strengthen enforcement of quality standards for nursing homes.

? The Elder Justice Act, originally introducted in 2007 as H.R. 1783 by Rep. Rahm Emanuel, D-Ill., now Obama’s chief of staff, is aimed at preventing elder abuse and providing victim assistance. A similar Senate version is S. 1070.

? The Patient Safety and Abuse Prevention Act, S.1577, sponsored by Sen. Kohl, also seeks to curb elder abuse by requiring screening of employees with direct access to residents of nursing homes, skilled nursing facilities and other LTC facilities. Its House companion is H.R. 3078.

? The Community Choice Act, S. 799, sponsored by Sen. Thomas Harkin, D-Iowa, would give disabled individuals as well as older Americans equal access to community-based attendant services and supports.

? The Caring for an Aging America Act, S. 2708, would, among other provisions, establish a loan program to help physicians, physician assistants, advance practice nurses and social workers obtain gerontology or geriatric training. Sponsored by Sen. Barbara Boxer, D-Cal., its House counterpart is H .R. 6337.

? The Geriatric Assessment And Chronic Coordination Act, introduced by Sen. Blanche L. Lincoln, D-Ark., in 2007, would seek to reduce costs of treatments for the chronically ill individuals whose care puts them within the top 10% of all Medicare beneficiaries. The legislation would authorize Medicare to pay physicians for assessing and coordinating the care of persons who have either 5 or more chronic conditions or else dementia plus at least 1 other chronic condition.