Long-term Care Benefits in Medicare Advantage Plans: Reform Needed

 Five years ago, some analysts and policymakers hoped that allowing Medicare Advantage (MA) plans to offer long-term care (LTC) benefits would be a largely federally financed option for retired and disabled people for such coverage. This would be an alternative to underwritten private long-term care insurance, the unpopular process of spending down assets or questionable methods of eligibility to qualify for Medicaid followed up by uncertain estate recoveries, and politically difficult expansions of public social insurance programs. The result, however, has been quite modest, with MA plans having low penetration, and offering LTC benefits that are small and sometimes poorly coordinated. It is possible that the wide availability of other types of non-health benefits – such as groceries, rent, and transportation – in some MA plans may be crowding out LTC benefits. Additionally, recent and proposed payment cuts to MA plans would further reduce these LTC benefits.

Medicare currently provides some LTC benefits in certain circumstances. In particular, it will pay for up to 100 days of skilled nursing facility care following a three-day or longer inpatient hospital stay if the physician decides it is needed to improve or stabilize an ongoing condition treated during the hospital stay. Also, Medicare will pay for home health services if part-time or intermittent skilled services, like wound care or injections, are needed while homebound. As part of these services, some part-time home health aide care, like bathing and feeding, may be provided up to a combined 8 hours a day for a maximum of 28 hours per week. None of these benefits, however, include long-term custodial or personal care helping with activities of daily living (ADLs) when this is the sole care required.

MA plans allow Medicare beneficiaries to receive benefits from private plans rather than from the traditional fee-for-service (FFS) Medicare program. Through constraints of provider networks and utilization management, MA plans are able to provide required Medicare benefits (mainly physician and hospital care and usually drugs), albeit with a more flexible structure than FFS, as well as additional benefits, with an out-of-pocket spending limit, and sometimes premium rebates. Because Medicare pays private plans a partially predetermined rate that is risk-adjusted for each enrollee rather than a per-service rate, plans should have greater incentives than FFS providers to deliver more efficient care. Now, more than half of Medicare beneficiaries across most of the US are enrolled in over 5600 MA plans offered by 184 organizations; the MA share continues to grow.

Historically, the additional benefits in MA plans were strictly health-related, including dental, hearing, and vision benefits. In 2019, the Centers for Medicare and Medicaid Services broadened the definition to include in-home support services by home health aides, caregiver support, and adult daycare. In 2020, many MA plans were authorized to offer non-health supplemental MA benefits for the chronically ill or low-income, like food, meals, pest control, non-medical transportation, indoor air quality equipment, social club memberships, language classes, rent, utilities, pet care, telephonic spiritual care, hairstyling, and robotic pets. In 2024, more than a quarter of MA plans offered food benefits, but only 15 percent offered in-home support services. The former represents a 20 percent increase from 2023, while the latter experienced a 34 percent decrease.

In-home support services in MA plans include assistance with ADLs, generally available in two to four-hour increments, with a limit on the total number of hours in a given year, typically between 24 and 60 hours. Some MA plans limit these benefits to a post-inpatient-hospital stay. MA plans devoted to dually eligible (to Medicare and Medicaid) beneficiaries have a higher annual limit, generally more than 60 hours, some up to 124 hours, still a quite modest benefit (See ATI Advisory 2023). Moreover, there are concerns that the MA benefits are not well coordinated with those from Medicaid. Some MA plans have liberalized the Medicare skilled nursing facility benefit by not requiring a prior hospital stay.

It is indeed reasonable to include LTC benefits in MA plans to expand upon the basic Medicare coverage. The competition and displacement from extensive and expensive non-health related benefits, however, is not good public policy, given limited public resources to support needed health care at a time of massive and growing federal deficits and debt. Moreover, recent and proposed federal payment cuts to MA plans because of concerns that the risk-adjusted benchmarks are too generous will put further particular pressure on the modest LTC benefits. The menagerie of non-health benefits should be eliminated, and scarce resources devoted to real health coverage. Moreover, the entire Medicare program should be converted to premium support, to maximize its efficiency through competition and allow for focused consumer choice among essential health benefits, including LTC.

Mark J. Warshawsky is a senior fellow at the American Enterprise Institute (AEI), where he focuses on Social Security and retirement issues, pensions, long-term care, disability insurance, and the federal budget.

https://www.realclearhealth.com/articles/2024/10/02/long-term_care_benefits_in_medicare_advantage_plans_1062458.html