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LTCI Watch: OOPs

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The Federal Reserve Board is holding the benchmark interest rates it controls near zero because, supposedly, the overall inflation rate is near zero. So low, supposedly, that we’re all at risk of fainting from how horribly steady prices are.

Insurance companies have been posting survey reports showing how amazingly steady nursing home prices and other long-term care (LTC) facilities’ and service providers’ prices have been.

Meanwhile, when I look at my checking account at the end of the month, there’s no evidence whatsoever that the real prices I really pay are holding steady.

How is it possible that costs can be going up so much when “prices are holding steady”?

When the Centers for Medicare & Medicaid Services (CMS) released the 2016 Medicare Advantage plan menus this week, officials boasted about how steady the enrollees’ monthly premiums will be. About 95 percent of enrollees will have access to plan options that charge no monthly premiums, and the number of zero-premium options will increase about 2 percent, to 9.751. 

About 28 percent of the plans will be zero-premium plans.

See also: Medicare Advantage plan count rises

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But several analyses of the plans’ maximum out-of-pocket (OOP) cost limits suggests those limits will be increasing considerably. One example that was easy to pull out of the 2016 plan spreadsheet files: The number of zero-premium 2016 plan options with an annual OOP maximum of $3,000 or less will fall 18 percent, to 299.

It’s possible, but a little complicated, to figure out how to analyze the Medicare Advantage plans OOP maximums, even though CMS, to its credit, provides great, easily searchable and sortable spreadsheet versions of the data files.

In many other insurance markets, and many other areas of life, measuring the cost and scope of “extras” is much more difficult. 

In the LTC sector, it would be interesting to see what private-pay nursing home residents and assisted living facility (ALF) residents and their families really pay per year, all in, and compare changes in the true “all-in” costs with the headline monthly or daily cost figures. 

One concern: It could be that facilities hold down the easy-to-get base rate figure by shifting bills for laundry, birthday cakes and cable TV into an “extras category,” and, maybe, by limiting the percentage of residents who qualify for the facility base rate. 

It seems as if one great service LTC planners can provide is giving their clients a sense of what the LTC headline costs at a given facility in a given market really mean. Are the nursing homes and ALFs making a reasonable effort to provide their real prices, or are some playing an LTC facility version of manipulating the OOPs?

See also: EBRI: Real LTC spending