At Home December, 2010

With Mass Home Care Vol 23 #12 Al Norman, Editor

State Cuts Nursing Facility Diversion Grant

On November 4, 2010, the Executive Offi ce of Elder Affairs announced that a counseling program located in nursing facilities across the state, designed to divert consumers in nursing facilities back into the community when they are converting from Medicare to Medicaid, was being cut from $6.418 million to $5.918

million. Since one third of the program year is over, cut-ting $500,000 from the funds remaining amounted to an 11.7% cut in the Comprehensive Screening and Service Model (CSSM) program. This is a program that saves state taxpayers roughly $3 for every $1 spent. It is the largest nursing facility diversion project in the state, and the most effective at bringing people out of institutions. Although this program is a direct service, the cut is being made by EOHHS because of “the shortfall in EHS/MassHealth administration and operations,” according to administration sources. In 2005, the MassHealth Offi ce of Long Term Care (OLTC), with the Executive Offi ce of Elder Affairs, implemented the CSSM initiative. The program focuses on discharge planning for

At Home December, 2010 2eligible MassHealth applicants and members cur-rently residing in nursing facilities by setting up community-based services that allow the person to safely return to living in a non-institutionalized setting. To facilitate this process, clinicians in the Ag-ing Service Access Points (ASAP) network assess nursing facility clinical eligibility and issue one or more short-term approvals while the clinician actively works with the nursing facility on the discharge plan for the applicant or member. Individuals who are con-sidered unable to return home, are given a long term approval for a nursing facility. An institutionalized in-dividual can be issued a series of short-term approv-als for as little as a few days or as long as several months. Some individuals will need long term place-ments, but others can be returned home with services.

An ASAP nurse conducts a medical assessment to determine if the applicant or member is in need of nursing facility services and if the stay will be short term or longer. The nurse determines the length of the short-term approval based on the individual’s medical condi-tion. One of the key goals of the program is to identify people who could return home to the community with ap-propriate services, thereby implementing the Medicaid mission found in Chapter 118E to help consumers live in the ‘least restrictive setting’ appropriate to their needs. One major focus of this funding is to identify individuals who can be transitioned out of the nurs-

ing facilities where they are already placed, and di-vert them to community settings. Many different kinds of screenings are done in the nursing homes under CSSM, but the most critical for the Common-wealth is the effort that goes into diversions from nurs-ing homes. For the 10 month period January 1, 2010 to November 1, 2010, a total of 1,589 elders received enhanced transitional assistance through CSSM. Of this amount, 741 individuals (46.7%) were success-fully discharged into the community. Annualizing that fi gure, the CSSM program is projected to divert 889 individuals in nursing facilities back to the commu-nity in calendar 2010. That makes CSSM the largest diversion program operating in the Commonwealth. Assuming an average Medicaid cost per nurs-ing facility of $51,100 per year, and an average CSSM/MassHealth waiver cost (using the cost of a “Communi-ty Choices” client including care management time and state plan services) of $29,582 per year, the CSSM pro-gram will save the Commonwealth roughly $21,518 per enrollee in the 2010 calendar year. This means the pro-gram produces an annualized savings of $19,129,502. After deducting the allocation of $6,419,162 for program expenses, the net savings to state taxpayers is $12,710,340. This means that for every one dollar in-vested in CSSM screenings, three dollars are saved in the cost of care. This is a conservative estimate, because it assumes all community diversions receive services at a “Choices” level of support. This savings is from nurs-ing facility screenings only. Included in the costs of the CSSM program are staff time screening individuals into the adult day health program, adult foster care program, group adult foster care, PACE program and the com-munity based waiver. All of these programs help keep people out of costlier institutional settings---but none of the cost avoidance savings from these activities have been calculated into the above cost-saving calculation. Funding for the CSSM program is handled through an interagency service agreement (ISA) be-tween the Division of Medical Assistance and the Exec-utive Offi ce of Elder Affairs. Of the total $6.4 million, $3.4 million is found in line item 4000-0300, which is a Medicaid administrative account. Although line item 4000-0300 is an administrative account, the CSSM is NOT an administrative program, it is a direct ser-

At Home December, 2010 3vice delivered in nursing homes to consumers directly. Funding for CSSM has been fl at since 2008. As a result of this static funding, the CSSM appropria-tion has not covered the actual costs of operating the program, and ASAPs have had to use other funding to cover each year’s defi cit. Based on a Mass Home Care survey of ASAP FY 2010 Uniform Financial Re-ports conducted in November of 2010, the total defi -cit funding for CSSM is approximately $1.3 million. ASAPs are putting $7.69 million into this program. “It makes no sense to cut a program that is saving the taxpayers money, and at the same time helping seniors to live at home,” explained Mass Home Care President Linda George. “This pro-gram is a key component of the Governor’s ‘Com-munity First’ plan. It’s a win for consumers, and a win for taxpayers. It should never have been cut.” Mass Home Care indicated that it will seek legislative support to restore the lost funding.

Health Care Law Confuses Seniors

It may be hard to imagine in the Deep Blue state of Massachusetts, but exit polls from the Novem-ber 2nd election indicate that voters aged 65+ com-prised 23% of all voters (up from 16% in 2008), and they voted Republican by a margin of 59% to 38%. Fear and anger over health care reform legisla-

tion was a major issue in the campaign, but a survey by the National Council on Aging (NCOA) suggests that most seniors are still confused or unaware of impor-tant aspects of health reform, or the Affordable Care Act, including its impact on their own Medicare cov-erage, the growth of Medicare, and the budget defi cit. NCOA surveyed elders on the top 12 facts that every senior should know about the health re-form law. Their “Straight Talk” poll revealed that only 17% of seniors knew the correct answers to more than half the factual questions posed about these key as-pects of new law, and only 9% knew the correct an-swers to at least two-thirds of the questions. None of the 636 older adults interviewed for the poll knew the correct answers to all 12 of the factual questions.

James Firman, President and CEO of NCOA, launched a “Straight Talk for Seniors on Health Re-form” campaign over the summer, which was aimed at helping seniors get the facts they need about health re-form and changes to Medicare. “Seniors need to know the key facts about health reform so that they can be in-formed consumers and educated citizens,” Firman said. The NCOA poll was conducted by Harris In-teractive for NCOA by telephone within the United States from July 9-12, 2010 among a nationwide cross section of 636 adults aged 65 and over. The margin of sampling error on the total sample was +/- 4.0 percent-age points. The poll was supported by a grant from The Atlantic Philanthropies. The poll revealed that even questions with the most direct bearing on seniors and their health drew high numbers of incorrect an-swers. For example, only 22% of seniors understood that the new law would not cut their basic Medicare benefi ts. Almost twice as many seniors (42%) held the incorrect view that the law would cut their basic Medicare benefi ts, while 37% said they did not know. With the federal budget defi cit looming large in policy debates, NCOA said it was striking that only 14% of seniors were aware that the new law is projected to re-duce the defi cit. Many more -- 49% -- incorrectly believed it would increase the defi cit. (According to projections by the Congressional Budget Offi ce, the law will reduce the defi cit by an estimated $124 billion over 10 years.)“The health reform debate was long and complicated and

often dominated by political spin that confused seniors,” said Firman. “The fact that this poll revealed that so many people are misinformed or don’t know much about the new law means we have our work cut out for us with the Straight Talk for Seniors on Health Reform campaign.” The NCOA poll suggests that seniors know less about health care reform than they think. Among old-er adults who said they considered themselves “very familiar” (9%) or ”familiar” (12%) with the new law, correct answers were few and far between, calling into question how well people were able to assess their understanding of the Affordable Care Act. “Seniors are certainly confused about the Affordable Care Act, but interestingly, many of them also overestimated their own degree of knowledge,” an NCOA spokes-man said. Those who said they were “very familiar” or “familiar” with the law only fared somewhat bet-ter than those who self-identifi ed as “not familiar.” In the “very familiar” and “familiar” categories, 65% got less than half the answers right, compared with 85% of the people who self-identifi ed as “not familiar.” A signifi cant number of seniors (38%) said they were “not at all satisfi ed” with the accuracy and reliability of the information they had received about the new law. Very few (7%) said they were “very satisfi ed” or “satis-fi ed” (17%). “Unfortunately, this fi nding comes as no sur-prise,” says NCOA’s Firman. “Everywhere I go, seniors tell me that what they really want is information they can understand and rely on, from an organization they trust, whose only agenda is helping them get the facts.” Seniors’ highest rate of correct answers came on a question about whether the law expands cover-age to 32 million uninsured Americans (43% cor-rectly answered “yes”). Seniors also showed rela-tively high awareness of the provision to gradually close the Medicare prescription drug coverage gap, or “donut hole,” with 42% giving the correct answer. Exploring a range of topics, from new care provisions to the fi nancing of the new law, the poll also found that:• Only 14% of seniors knew that the law does not cut Medicare payments to doctors; 45% an-swered incorrectly and 41% said they did not know. • Only 24% of seniors knew that it is projected to extend the solvency of the Medicare Trust Fund.

• Only 33% knew about the new, free year-ly wellness visit Medicare will now provide. • Only 34% knew that Medicare spending will con-tinue to grow under the new law, just more slowly.• 43% knew that the law expands cover-age to 32 million uninsured Americans. • 42% knew that the law gradually closes the Medicare prescription drug “donut hole.”• Only 22% knew about improvements in chronic care. • Only 33% knew about the new, free year-ly wellness visit Medicare will now provide. • Two out of three seniors either did not know (43%) or gave the wrong answer about the future growth of Medicare spending. NCOA says their poll shows that seniors’ fa-miliarity with the health care law is relatively low, and there is widespread confusion about key health reform facts. Large majorities of seniors showed very low awareness and understanding of the key provi-sions in the new law. NCOA concludes that there is hunger among seniors for better information about re-form. Unfortunately, the elections are a refl ection of fear and lack of information, rather than of knowledge.

Lame Duck Congress Poses Challenges For Aging Funds

The November 2nd elections will also have a big impact on elderly funding from the federal govern-ment. According to the National Association of Area Agencies on Aging (n4a) the mid-term elections creat-ed a new context for advocacy work as the “lame-duck session” of Congress began on November 15 and new opportunities and challenges for the 112th Congress. While there remain many unknowns, n4a pre-dicts a short lame-duck session—and that lawmakers will take up only those items that they cannot defer to next year. In October, Congress recessed for a six-week period allowing Members of Congress time to campaign for the November elections, without passage of all of the FY 2011 appropriations bills. The House and Senate returned to work on November 15, but the fate of the Older Americans Act (OAA) and other programs for the

federal year that began in October of 2011 is not clear. According to n4a, excellent increases for sev-eral OAA programs have been proposed by the Ad-ministration and the House and Senate committees re-sponsible for determining these annual appropriations. But neither the House nor the Senate spending bills ever made it to the fl oor for a vote, forcing Congress to pass a continuing resolution (CR) in order to keep the federal government operating. The CR runs through December 3 and freezes spending at FY 2010 levels.

Unfortunately, things are looking grim for these hard-won OAA increases. The most likely option is that the lame-duck Congress will defer the decision to the 112th Congress by passing a CR that will freeze spending at FY 2010 levels and run through February or March. In the fi eld of elderly transportation, advocates are working closely with Senator Herb Kohl (D-WI) to draft a bill focused on senior transportation issues. Negotiations on the bill’s provisions are progressing, and n4a remains optimistic the bill will be fi nalized in time to be introduced during the lame-duck session. There is also an Older Driver and Pedes-trian Safety and Roadway Enhancement Act (H.R. 3355), which is currently in discussions with Sena-tor Ron Wyden (D-OR) considering the lead as

sponsor of the Senate version of this legislation. N4a is also working to create more livable com-munities. Since the Livable Communities Act of 2009 (S. 1619) was marked up and approved by the Senate Banking Committee in early July, the bill has not ad-vanced further. However, advocates continue to work to build support for the legislation among key Senators. Over August and September, n4a made a push to get new co-sponsors on the bill, generating a number of state and local support letters. In related news, during October the Department of Housing and Urban Devel-opment (HUD), in conjunction with DOT and EPA as part the Sustainable Communities Initiative, announced the fi rst round of regional planning and project imple-mentation grants to communities totaling $150 million. In a housing related matter, HUD released in Oc-tober its draft legislative proposal to revamp the Section 202 elderly housing program. n4a met with HUD repre-sentatives to provide initial feedback on the proposal. A major part of elder advocates’ work this com-ing session on Capital Hill will surround the threat-ened dismantling of the Affordable Care Act (ACA), which has only been law since last March. House and Senate Republicans have threatened to tie up the purse strings to cripple implementation of the new law. n4a is working to advocate on regulations and other implementation issues, as well as looking for opportunities to help consumers make sense of it all.

Mass Wasting $96 Million on Medicare Hospital Readmissions

A new report from The Commonwealth Fund estimates that if Massachusetts’ performance on key health care performance measurements improved to the level of the best-performing state, the Baystate could reduce Medicare expenses by $96 million. The Fund’s “State Scorecard” enables states to compare their performance with that of other states across key indicators of health system performance. It provides states with achievable targets for improve-ment by assessing each state’s performance compared with the best performance attained by a state. By mov-

ing toward benchmark levels of health system per-formance, states could save lives, improve access to and quality of care, and reduce unnecessary spending. In the performance area “Avoidable hospital use & costs,” the Fund says Massachusetts ranked 33rd in the nation overall. Here are some of the key fi ndings from the State Scorecard for the period 2006/2007: :• Medicare 30-Day Hospital Readmissions as a Percent of Admissions: Massachusetts ranked 37% in the nation with 19.4% readmissions.• Percent of Long-Stay Nursing Home Residents with a Hospital Admis-sion: Massachsuetts ranked 17th at 14.8%.• Percent of Nursing Home Residents with Hospital Readmission Within 30 Days: Massachusetts ranked 21st at 19.5%.• Percent of Home Health Patients with a Hospi-tal Admission: Massachusetts ranked 40th at 34.1%. The Commonwealth Fund study also found that if Massachusetts’ performance im-proved to the level of the best-performing state for these indicators, then there would have been: • 20,769 fewer Preventable Hospital Admissions for am-bulatory care sensitive conditions among Medicare ben-efi ciaries (age 65 and older) and $149,825,553 dollars would be saved from the reduction in hospitalizations. • 5,933 fewer Hospital Readmissions among Medicare benefi ciaries (age 65 and older) and $96,080,883 dol-lars would be saved from the reduction in readmissions. • 2,527 fewer long-stay nursing home residents would have been hospitalized and $21,152,914 dollars would be saved from the reduction in hospitalizations.

GAO: Abuse & Neglect By Guardians

Some of the most vulnerable citi-zens in our communities are being exploit-ed by the people designated to protect them. That’s one of the key fi ndings from a new fed-eral report on guardian services. In September, the U. S. Government Accountability Offi ce (GAO) released a new report to the Special Committee on Aging in the U.S. Senate, titled Cases of Financial Exploitation, Neglect, and Abuse of Seniors. Here are some excerpts

from that report to the Special Committee on Aging: According to the U.S. Census Bureau, by the year 2025, the number of Americans aged 65 and older will increase by 60 percent. As citizens age, they may become physically or mentally incapable of making or communicating important decisions for themselves, such as those required to handle fi nances or secure their possessions. Compared to the general popula-tion, adults over the age of 65 are more likely to live alone than those of younger ages. Given these statistics, it is important to ensure that systems designed to pro-tect seniors from abuse and neglect function properly. Courts may appoint a family member, a profes-sional guardian, a nonprofi t social service agency, or a lo-cal or state agency4, to care for an incapacitated person.

While many guardians serve the best interests of the incapacitated people they are appointed to pro-tect, others have taken advantage of these vulnerable individuals, according to our previous reports. Given our prior fi ndings of guardianship abuse, you asked us to (1) verify whether allegations of abuse, neglect, or exploitation by guardians are widespread; (2) examine the facts and circumstances surrounding selected cases of abuse by guardians, including whether inadequate communication between courts and federal agencies placed these victims at further risk; and (3) proactive-

ly test selected state guardian certifi cation processes. To verify whether allegations of guardian abuse, neglect, or exploitation are widespread, we interviewed state investigators, attorneys, advocates for seniors, and family groups nationwide. We also reviewed federal and state court documents. The abuse alleged by these sources occurred in 45 states plus the District of Co-lumbia; however, this should not be taken to mean that alleged abuse by guardians is limited to these states… Examples of potential abuse, neglect, and exploi-tation included in the GAO report are as follows: • Public guardians appointed to care for an 88-year-old California woman with dementia allegedly sold the woman’s properties below market value to buy-ers that included both a relative of the guardian and a city employee. One of the public guardians also moved the ward into various nursing homes with-out notifying family members, who had to call the police to help them fi nd their relative. The woman developed bed sores during this time that became so serious her leg had to be amputated at the hip. • In Nevada, a former case manager in the public guard-ian’s offi ce who started her own guardianship business is accused of using her position to take at least $200,000 from her wards’ accounts, in part, to support her gambling habit. • A New York lawyer serving as a court appointed guardian reportedly stole more than $4 million from 23 wards, including seniors suffering from mental and physical impairments as well as children suffering from cerebral palsy due to medical malpractice. Some of the stolen funds were part of a court award intended to pay for the children’s medical and developmental needs. • In Arizona, court-appointed guardians allegedly si-phoned off millions of dollars from their wards, in-cluding $1 million from a 77-year-old woman whose properties and personal belongings, such as her wed-ding album, were auctioned at a fraction of their cost. • A Texas couple, ages 67 and 70, were declared men-tally incompetent and placed in a nursing home after the husband broke his hip. Under the care of court-appointed guardians, their house went into foreclosure, their car was repossessed, their electricity was shut off, and their credit was allowed to deteriorate. The cou-ple was allegedly given a $60 monthly allowance and permitted no personal belongings except a television.

• In 2001, a Texas probate judge was appointed a guardian for a 91-year-old woman who displayed signs of senility. She later changed her will for the fi rst time in 40 years, bequeathing $250,000 to the probate judge, the court ap-pointed guardian, the judge’s personal accountant, and the court-appointed attorney associated with her case. • A 93-year-old Florida woman died after her grandson became her temporary guardian by claiming she had ter-minal colon cancer. He then moved her to hospice care, where she died 12 days later from the effects of mor-phine. The woman’s condition was later determined to be ulcerative colitis, and the guardian’s claims that she had 6 months to live were false. In addition, the guardian is accused of stealing $250,000 from the woman’s estate.

• In Michigan, two former public guardians allegedly em-bezzled $300,000 from at least 50 clients between 1999 and 2009. One of the reported embezzlers used the wards’ funds to buy animal feed and other supplies for her farm. The GAO was asked to (1) verify whether alle-gations of abuse by guardians are widespread; (2) exam-ine the facts in selected closed cases; and (3) proactive-ly test state guardian certifi cation processes. To verify whether allegations are widespread, GAO interviewed advocates for seniors and reviewed court documents. To examine closed criminal, civil or administrative cas-es with a fi nding of guilt or liability in the past 15 years, GAO reviewed court records, interviewed court offi cials, attorneys and victims, and reviewed records from fed-

eral agencies. To test state guardian certifi cation, GAO used fi ctitious identities to apply for certifi cation in four states. GAO's results cannot be projected to the overall population of guardians or state certifi cation programs. The GAO could not determine whether allega-tions of abuse by guardians are widespread; however, GAO identifi ed hundreds of allegations of physical abuse, neglect and fi nancial exploitation by guardians in 45 states and the District of Columbia between 1990 and 2010. In 20 selected closed cases, GAO found that guardians stole or otherwise improperly obtained $5.4 million in assets from 158 incapacitated victims, many of whom were seniors. In some instances, guard-ians also physically neglected and abused their vic-tims. The guardians in these cases came from diverse professional backgrounds and were overseen by lo-cal courts in 15 states and the District of Columbia. The GAO found several common themes. In 6 of 20 cases, the courts failed to adequately screen po-tential guardians, appointing individuals with criminal convictions or signifi cant fi nancial problems to manage high-dollar estates. In 12 of 20 cases, the courts failed to oversee guardians once they were appointed, allow-ing the abuse of vulnerable seniors and their assets to continue. Lastly, in 11 of 20 cases, courts and federal agencies did not communicate effectively or at all with each other about abusive guardians, allowing the guard-ian to continue the abuse of the victim and/or others. Using two fi ctitious identities--one with bad credit and one with the Social Security number of a de-ceased person--GAO obtained guardianship certifi ca-tion or met certifi cation requirements in the four states where we applied: Illinois, Nevada, New York, and North Carolina. Though certifi cation is intended to provide as-surance that guardians are qualifi ed to fulfi ll their role, none of the courts or certifi cation organizations utilized by these states checked the credit history or validated the Social Security number of the fi ctitious applicants. An individual who is fi nancially overextended is at a higher risk of engaging in illegal acts to gener-ate funds. In addition, people with criminal convictions could easily conceal their pasts by stealing a deceased person's identity. The tests raise questions about the ef-fectiveness of these four state certifi cation programs.

Medicare Costs High For Nursing Facility Residents

In October, the Kaiser Family Foundation re-leased three new reports that examine the relatively high use of hospital and other Medicare-covered services and the associated costs of medical care for Medicare bene-fi ciaries who live in nursing homes and other long-term-care facilities. They also explored the potential for deliv-ery system reforms to improve quality and reduce costs. Policymakers have looked for ways to improve the delivery of care for the Medicare population, with particular emphasis on identifying and targeting the subset of benefi ciaries who account for a dispropor-tionate share of Medicare spending. The 2010 health care reform law includes a number of demonstrations, pilots, and programs designed to test interventions for relatively high-cost benefi ciaries, including interven-tions aiming to reduce hospital readmissions, control spending for post-acute care through bundled pay-ments, establish incentives for better care coordination through “accountable care organizations,” and create a new Center for Medicare and Medicaid Innovation. According to the Kaiser Family Foundation, relatively little attention has been focused on the medi-cal care and associated Medicare costs for the grow-ing number of Medicare benefi ciaries living in long term care facilities – a group who may be particularly well-suited for interventions designed to reduce un-necessary emergency room visits and hospitalizations, improve care management for high-cost populations,

and ultimately limit the growth in Medicare spending. In a report titled, Medicare Spending and Use of Medical Services for Benefi ciaries in Nursing Homesand Other Long Term Care Facilities: A Potential for Achieving Medicare Savings and Improving the Quality of Care, the KFF found that benefi ciaries living in long term care facilities account for a disproportionate share of Medicare spending, with relatively high rates of hos-pitalizations, emergency room visits, skilled nursingfacility admissions and other Medicare covered servic-es. The relatively high Medicare spending is incurred not only by long term care residents who die within the year, or those who transition from another setting into a long term care facility, but also by benefi cia-ries living in a facility throughout the calendar year. Studies indicate that 30 to 67% of hospital-izations among facility residents could be prevented with well-targeted interventions. Others have identi-fi ed factors that contribute to preventable hospitaliza-tions, including liability concerns, limited staff capac-ity, fi nancial incentives, and physician preferences. KFF says that successful efforts to reduce the rate of preventable hospitalizations could yield sav-ings to Medicare. Such efforts, if carefully implement-ed, could also help to improve the quality of patient care for Medicare’s oldest and most frail benefi ciaries. Some of the key fi ndings from the new Medicare LTC study include: • Benefi ciaries living in nursing homes, assisted liv-ing and other long term care facilities account for adisproportionate share of total Medicare spending. Medicare benefi ciaries living in long term care facil-ities for at least part of 2006, account for 6% of the Medicare population but 17% of total Medicare spend-ing. However, nearly half of the Medicare spending for these benefi ciaries occurred prior to their admission into a longterm care facility. Benefi ciaries who lived in long term care facilities for all of 2006 (i.e., survi-vors) account for 3% of the Medicare population, but 5% of Medicare spending. Benefi ciaries who lived inlong term care facilities in 2006 but died before the end of the year (i.e., decedents) account for 1% of the Medicare population, but 4% of Medicare spending.• Benefi ciaries living in long-term care facilities in 2006 are disproportionately represented among those

in the top quartile and top decile of Medicare spending. Among Medicare benefi ciaries who survived in long term care facilities for all of 2006, 41% were in the top quartile of Medicare spending, with average Medicare spending of $26,732; 17% were in the top decile of Medicare spending with average Medicare spending of $47,116. Among benefi ciaries living in long term care facilities who died before the end of 2006, 69% were in the top quartile of Medicare spending with average Medicare spending of $29,103; 31% were in the top decile of Medicare spending, with average spending of $48,883. Although annual spending for decedents is only slightly higher than spending for survivors, most decedents died before the end of the year and thus did not contribute a full year of spending to estimates.

Medicare spending for benefi ciaries who lived in long term care facilities for all of 2006 (including de-cedents) was $14,538 per benefi ciary--nearly twice the average Medicare spending for all benefi ciaries in 2006.• Benefi ciaries living in long-term care facilities have relatively high rates of hospital visits, emergencyroom visits, and skilled nursing facility admissions:Hospital Visits: More than one third (38%) of benefi -ciaries living in a long term care facility in 2006 (both survivors and decedents) were admitted to a hospital at some point in the year and 41% of these benefi ciaries (15% of all long term care residents) had two or more hospital admissions in 2006. Nearly a quarter of all hos-pitalizations (24%) were for ambulatory care sensitive

conditions (e.g., asthma, tuberculosis), which have been used to identify potentially preventable hospitalizations.Emergency Room Visits: About half (51%) of benefi -ciaries living in a long term care facility in 2006 had at least one emergency room visit during the year, and half of these benefi ciaries (26% overall) had two ormore emergency room visits.Skilled Nursing Facility Stays: More than one quar-ter (27%) of benefi ciaries living in a long term care facility in 2006 had a skilled nursing facility stay during the year, averaging 40 covered SNF days in 2006. Among long term care facility residents with a SNF stay in 2006, more than a third (36%) had an-other SNF admission before the end of the year.• Benefi ciaries’ average monthly Medicare spend-ing in the fi rst six months following a transition to aLong-term care facility is more than double the av-erage monthly spending for longer term residentswho lived in long-term care facilities for at least one year. Average monthly Medicare spending in the fi rst six months following a transition to a long term care facility is $2,069 per month---more than twice the average spending for benefi ciaries living at least a year in a long term care facility ($949 per month).• Reductions in hospitalizations among Medicare benefi ciaries living in long-term care facilities couldreduce Medicare spending. If hospitalizations among Medicare benefi ciaries living in long term care facili-ties were reduced by 25%, Medicare could save an es-timated $2.1 billion in 2010 alone. These illustrativeestimates take into account Medicare-covered Part A expenses incurred by benefi ciaries dur-ing their hospital stay exclusively, so may pro-vide a conservative indication of potential savings. On the one hand, these estimates do not take into account additional reductions in Medicare spending thatwould result from fewer ambulance transfers, emer-gency room visits, Part B expenses incurred during an inpatient stay, or post-discharge SNF admissions. But on the other hand, they do not take into account potential increases in Medicare spending that could result from interventions and services that may be needed to reduce rates of unnecessary hospitalizations.As policymakers move forward with interventions

designed to reduce Medicare spending associatedwith preventable hospital readmissions, as is called for in the new health reform law, greater atten-tion should be paid to the medical care provided to benefi ciaries living in long term care facilities.

Medicare Must Pay for “Maintenance” Services

A recent ruling by a federal court in Pennsylva-nia, Papciak v. Sebelius, Western District, Pennsylva-nia, September 28, 2010, will have far-reaching impact for Medicare benefi ciaries who need skilled care ser-vices in order to preserve their current functional status. A federal district has ruled that an administrative law judge (ALJ) with the U. S. Centers for Medicare & Medicaid Services (CMS) improperly denied Medicare benefi ts to a patient in a skilled nursing facility. The ALJ had concluded that "[i]t became apparent that no matter how much more therapy the Benefi ciary received, she was not going to achieve a higher level of function." After undergoing hip replacement surgery on April 28, 2008, Mary Beth Papciak, 81, developed a urinary tract infection and was readmitted to the hos-pital. On June 3, 2008, Papciak was discharged to a skilled nursing facility, where she received physi-cal therapy and occupational therapy. Upon Papciak's admission to the nursing facility, she was unable to ambulate and could not use her walker due to numb-ness of her hands due to what was later diagnosed as carpal tunnel syndrome. Papciak also had a history of cellulitis, anemia, cholecystectomy, chronic atri-

al fi brillation, hypertension, anxiety and depression. Papciak received therapy fi ve days a week; however, she made slow progress during her stay. Her therapy included physical and occupational therapy, treatment, self care, therapeutic exercises and thera-peutic activities. Her initial treatment was primar-ily for ambulation. Medicare paid for the skilled care Papciak received from June 3 through July 9, 2008. It was determined, however, that effective July 10, 2008, Papciak no longer needed skilled care because she had made only minimal progress in some areas, had regressed in other areas, and had been determined to have met her maximum potential for her physical and occupational therapy. As a result, Medicare denied payment from July 10 through July 19 because Pap-ciak was only receiving "custodial care," not the skilled nursing services required for Medicare coverage. Papciak appealed the decision denying cov-erage, and her appeal worked its way up the chain to an administrative law judge, which upheld the denial, which was then upheld by CMS's Medicare Appeal Counsel (MAC). After exhausting her administrative remedies, Papciak sought relief in federal district court. The federal district court sided with Papciak. The proper legal standard to be applied to determine if a patient is entitled to Medicare benefi ts in a skilled nursing facility is whether the patient needs skilled ser-vices to enable her to maintain her level of functioning.In the CMS Medicare Skilled Nursing Facility Man-ual, the reviewing authorities must give consideration to a patient's need for skilled nursing care in order to maintain her level of functioning. The relevant por-tion reads: "The services must be provided with the expectation, based on the assessment made by the physician of the patient's restoration potential, that the condition of the patient will improve materially in a reasonable and generally predictable period of time, or the services must be necessary for the establish-ment of a safe and effective maintenance program." Neither the ALJ nor the MAC addressed Papciak's need for skilled nursing care in order to maintain her level of functioning. This was er-ror, held a federal Magistrate Judge, requiring that the decision to deny her benefi ts be overturned.The ALJ had concluded that "[i]t became apparent that

no matter how much more therapy the Benefi ciary re-ceived, she was not going to achieve a higher level of function." Similarly, the MAC stated that "[d]espite the appellant's arguments to the contrary, the enrollee made little or no progress in therapy from the time of her admission to [the nursing facility] through her dis-charge from skilled care on or around July 10, 2008." A common misunderstanding about Medicare's skilled nursing facility benefi t is that the patient must show "progress" in order for Medicare to pay for her care. Indeed, federal regulations state that "[t]he res-toration potential of a patient is not the deciding fac-tor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities."

Medicare Home Health Services Used To Keep Elders Stable

On October 25th, a US District Court Judge in Burl-ington, VT, District of Vermont ruled in the case of Ander-son vs. Sebelius that Medicare should pay for home health services to prevent deterioration in a patient’s condition.

Sandra Anderson began receiving home health services from the Visiting Nurse Association of Chit-tenden and Grand Isle Counties (VNA) in 2004. She was 60 years old at the time, and had just returned home after being hospitalized for her second stroke. She suffered from urinary incontinence, "acute, but ill-

defi ned" cerebrovascular disease, hypertension, cog-nitive impairments including memory defi cit, limitedphysical mobility, slurred speech, and newly diag-nosed type II diabetes. Because of her cognitive im-pairments and immobility, Anderson required 24-hour supervision to remain safe in her home environment. Anderson's doctor certifi ed a variety of skilled nursing services for Anderson that included skilleddiabetic foot care, patient education on diabetes man-agement and a diabetic diet, overall management and evaluation of her care plan, and observation and assess-ment of her condition. In addition, Anderson received physical and occupational therapy, medical social ser-vices provided by a social worker, and non-skilled per-sonal care. Her doctor approved this care for six 60-day certifi cation periods from June, 2004 to June, 2005. Although care was certifi ed until June, 2005, An-derson's occupational therapy ended in September, 2004, and she was discharged from physical therapy in Decem-ber, 2004. Her Medicare intermediary covered the servic-es provided to Anderson during the fi rst certifi cation pe-riod, but denied coverage for the remaining fi ve periods.Anderson then sought review by an Administrative Law Judge ("ALJ"), and a hearing was held in February,2008. The ALJ upheld the denial of coverage for all 'fi ve of the challenged certifi cation periods, fi nding that "[t]he home health services provided to Sandra Anderson ... did not meet Medicare coverage criteria.” But the ALJ also said Anderson did not have to pay for these periods of care because the VNA did not suffi ciently notify Anderson that Medicare would not cover her services. The VNA was found responsible for the uncovered service charges. Anderson then appealed the denial of coverage to the Medicare Appeals Council ("MAC"), and the MAC, which upheld the ALJ’s decisions. So Anderson then turned to the courts for relief in January, 2009. Anderson’s lawsuit claimed that the Secretary violated the Medicare statute, regulations, and policy manual by applying an informal and unlawful "stabil-ity presumption"--whereby coverage is automatically denied for patients whose conditions are stable dur-ing the covered period. Anderson charged the stabil-ity presumption violated her Fifth Amendment due process rights. She argued that the ALJ erred by ap-plying this presumption retrospectively, evaluating

her need for skilled services from the benefi t of hind-sight rather than from the perspective of the attend-ing physician at the time the services were ordered. To receive Medicare benefi ts for home health care services, a benefi ciary must be: (a) confi ned to the home; (b) under the care of a physician; (c) in need of skilled services; and (d) under a plan of care. Skilled services "must be consistent with the nature and se-verity of the benefi ciary's illness or injury, his or herparticular medical needs, and accepted standards of medical and nursing practice." The issue before the ALJ was whether Plaintiff was "in need of skilled nursing ... services throughout the relevant time period, that is, whether she received compensable skilled services and whether such services were 'reasonable and necessary?"

Consideration is given to whether there is a "like-lihood of a future complication or acute episode" and whether the benefi ciary's condition and vital signs are "part of a longstanding pattern of the patient's condition, and there is no attempt to change the treatment to resolve them." The basis for determining whether skilled servicesare "reasonable and necessary" is from the forward-looking vantage point of the doctor. The services must be viewed from the perspective of the condition of the pa-tient when the services were ordered and what was, at that time, reasonably expected to be appropriate treatment for the illness or injury throughout the certifi cation period.

The District Court Judge wrote: “A patient's chron-ic or stable condition does not provide a basis forautomatically denying coverage for skilled services: The determination of whether a patient needs skilled nursing care should be based solely upon the patient's unique condition and individual needs, without re-gard to whether the illness or injury is acute, chronic, terminal, or expected to extend over a long period of time. In addition, skilled care may, depending on the unique condition of the patient, continue to be neces-sary for patients whose condition is stable.” The lower decisions erroneously concluded that skilled services for observation and assessment of a plaintiff’s con-dition are covered "only when there is a reasonablepotential for a complication or further acute episode, and not when a patient's condi-tion is stable and unlikely to change." The Vermont judge found that Medicare regula-tions say that "stabilization" determines the duration of skilled services, but do not, however, negate the pos-sibility that "skilled care may, depending on the unique condition of the patient, continue to be necessary for patients whose condition is stable." The court ruled that services must be viewed from the perspective of the condition of the patient when the services were ordered and what was, at that time, reasonably expected to be appropriate treatment for the illness or injury throughoutthe certifi cation period. The fact that skilled care has stabilized a person’s health does not render that level of care unnecessary. An elderly person need not risk a de-terioration of her fragile health to validate the continu-ing requirement for skilled care. The court noted that there had been several other cases in which "skilled care may, depending on the unique condition of the patient, continue to be necessary for patients whose conditionis stable." The District Court judge sent the case back to the Administrative Law Judge “to reexamine the needfor skilled services for observation and assess-ment from the perspective of the condition of Plain-tiff at the time the services were ordered, free from any presumption that if hindsight reveals Plaintiffs condition was stable throughout the covered peri-od, coverage for skilled services should be denied.”

Tax Breaks for Wealthy “Least Effective”

Can America bring down the federal defi cit and cut taxes for the wealthy at the same time? Analysis re-leased October 28, 2010 by the Mass Budget & Policy Center fi nds that extending the Bush-era tax cuts tar-geted at America’s highest-income taxpayers will add over $825 billion to both the defi cit and debt over the next decade, and extending these cuts would be the least cost-effective way of stimulating the national economy. According to the MBPC: The U.S. House and Senate are debating wheth-er to extend (or make permanent) all or only some of the Bush-era income tax cuts. The Congressional de-bate most likely will focus on whether to extend the tax cuts that affect only the wealthiest 2 percent of Ameri-cans — those with adjusted gross income (AGI) above $200,000 for single fi lers and $250,000 for married cou-ples. There appears to be general consensus that the tax cuts which also affect households with incomes below these thresholds should be extended or made permanent. Expiration of the high-end tax cuts will impact only the top 2 percent of all fi lers, with the large major-ity of the benefi ts going to fi lers with incomes above $1 million. In addition, even if these high-end tax cuts are allowed to expire, extending the “middle-class” Bush-era tax cut provisions — those cuts targeted toward people in lower-income brackets (below $200,000 (single)/$250,000 (married)) — still will provide the top 2 percent of fi lers with very large tax cuts. This is because

a portion of high-income fi lers’ total income falls within the tax brackets affected by the “middle-class” tax cuts. The “middle-class” tax cuts provide high-in-come fi lers with tax reductions fi ve times larger, on av-erage, than the cuts that go to middle-class fi lers. It is estimated that extending the tax cuts targeted at Amer-ica’s highest-income taxpayers will add over $825 bil-lion to both the defi cit and debt over the next decade. In the near term, the nation is struggling to generate the demand needed to pull itself out of the worst recession since the Great Depression. The Congressional Bud-get Offi ce (CBO) has determined that extending all of the Bush-era tax cuts would be the least cost-effective means of stimulating the economy among the 11 op-tions it analyzed. The CBO report specifi cally identifi es the very large percentage of total benefi ts going to high-income households as the principal weakness of the Bush-era tax cuts, noting that high-income households are the least likely to spend any tax cuts they may re-ceive, thus generating only limited additional demand.

The Bush-era tax cuts passed in 2001 and 2003 reduced tax rates for all income levels, but provided es-pecially large benefi ts to the highest-income fi lers. Ex-tending the tax changes affecting only those fi lers with incomes above $200,000 (single)/$250,000 (married) would deliver some $35 billion in tax breaks in 2011 to households with the highest 2 percent of incomes, and $680 billion to these households over the coming

decade. Roughly 80 percent of these benefi ts would ac-crue to households with incomes of $1 million or higher. It is not just the high-end tax cuts, however, that primarily benefi t wealthy households. Even the “middle-class” tax cuts — those rate reductions aimed at households with more modest incomes — deliver far greater benefi ts to high-income households than to middle-income households. On average, house-holds with incomes between $50,000 and $75,000 receive an annual reduction in their income taxes of about $1,100 from these “middle-class” tax cuts. By contrast, households with incomes above $200,000 receive annual average reductions of $6,300 as a result of these rate reductions. This is because the income tax operates “like a stair case, not an elevator.” A married person with a $1 million income does not go straight to the “top fl oor,” paying the top tax rate on all of that income. Instead, she would pay the low-est tax rate (10 percent, if the “middle-class” tax cuts are extended) on the fi rst portion (or “step”) of her in-come; a rate of 15 percent on the next portion of her in-come, etc., until she reaches the income level to which the top rate is applied (income above about $380,000). As a result, she is able to derive the full benefi t of the rate reductions at every “step” of income. A number of the “middle-class” tax rate reductions, however, apply to levels of income that far exceed what most middle-class families earn (income between about $140,000 and $240,000), and thus most middle-class families derive no benefi t from these rate reductions. A common misconception about the impact of al-lowing Bush-era rate reductions for the top two income brackets to expire is that this will negatively impact many small businesses. In fact, allowing these tax cuts to expire would affect only the top 3 percent of people with business income of any kind, let alone income from what most Americans think of as “small businesses.” Instead, much of this type of business income (S-corpora-tion and partnership income, i.e., income derived through business activity but fi led under the personal income tax code) goes to a small number of individuals involved in “concerns like large corporate law practices, accounting fi rms, and wealthy people who invest in fi nancial and real estate partnerships.” Overwhelmingly, it is not the mom-and-pop stores or small family businesses that will

be affected by expiration of top-end Bush-era tax cuts. Extending the Bush-era tax cuts for the highest-income fi lers is projected to increase both the national defi cit and the national debt by more than $825 billion over the next 10 years. The high-end cuts will reduce an-nual revenues by about $35 billion in 2011, but the annu-al revenue loss will grow with time, eventually reducing revenues by $97 billion in 2020. The cumulative total cost of these annual shortfalls over 10 years is projected to be some $680 billion added to the defi cit over the coming decade if the high-end Bush-era tax cuts are extended. This, however, is not the total cost that the cuts would create. At present, no corresponding spending cuts have been identifi ed to offset the $680 billion in projected revenue shortfalls. As such, the revenue shortfalls will require additional borrowing to fi ll the resulting budget gap in each of these years. This borrowing, in turn, will increase the national debt and thus will increase the an-nual cost of servicing this debt – in other words, annual interest payments on the national debt will rise. These increases in annual interest payments will add further to annual defi cits. Together, these higher annual interest payments will add another $146 billion to the projected 10-year defi cit cost total, bringing the combined total of annual increases in the defi cit to $826 billion over the period from 2011-2020 ($680 billion in lost revenue + $146 billion in interest payments = $826 billion). Annu-al revenue shortfalls and higher interest payments both will require additional borrowing, thereby increasing the national debt by an equivalent amount. As a result, over the 10-year period from 2011 to 2020, extending the top-end tax cuts will add $826 billion to the national debt. While budget defi cits and the national debt are very real concerns, in the near-term, the more pressing concern is the state of the national economy. The US currently is experiencing the effects of the worst eco-nomic downturn since the Great Depression. Reviving the economy and putting people back to work as soon as possible will place the US in a better position to ad-dress our defi cits and debt in the years ahead. To speed that recovery, however, leading economists agree that what is needed is stimulus from the federal government.Federal stimulus can take either of two forms, tax cuts or spending increases. The Congressional Budget Of-fi ce (CBO) analyzed the stimulative effects of 11 differ-

ent options, including extending all of the Bush-era tax cuts. The CBO analysis concluded that, among the op-tions considered, extending these cuts would be the least cost-effective way of stimulating the national economy, because such a large share of the benefi t goes to high-income households. High-income households are likely to save much or most of any tax cuts they receive, creat-ing limited additional demand and thus failing to stimu-late the economy. In other words, this type of stimulus -- but particularly the tax cuts for high-income households -- would provide the least “bang for the buck,” far less than increasing aid to the unemployed, reducing pay-roll taxes, or providing continued state fi scal assistance.

Grandparents Raising Grandchildren

A report released by the Massachusetts Com-mission on the Status of Grandparents Raising Grand-children estimates that 105,200 grandparents in Massa-chusetts are living with their own grandchildren under 18 years of age. 29,800 grandparents are responsible for meeting the basic needs of their grandchildren. The Commission was established by state law in the summer of 2008, and consists of 11 people who demonstrated a commitment the issues grandparents caring for grandchildren. The Commission’s primary purpose is to serve as a “resource to the commonwealth

on issues affecting grandparents raising grandchildren.” The Commission’s responsibilities include: fostering unity among grandparents raising grandchil-dren, communities and organizations in the state, by promoting cooperation and information sharing and encouraging collaboration and joint activities; serv-ing as a liaison between government and private in-terest groups with regard to the unique interest and concern to grandparents raising grandchildren; advis-ing executive and legislative bodies of the potential effect of proposed legislation on grandparents raising grandchildren; indentifying issues that are faced by relatives, other than parents, who are raising children.’ Grandparents raising grandchildren cut across social and economic status, and racial and ethnic back-grounds. The largest group of grandparents engaged in child rearing is the city of Boston, with an estimated 3,949 grandparents raising grandchildren. This next high-est community was Springfi eld, with 1,816,Worcester with 896, Lawrence with 748, and Brockton with 632. As for reasons why grandparents fi nd themselves raising grandchildren, the family situation may involve parents who have: mental illness, addiction to drugs or alcohol, are in jail, have neglected or abuse their chil-dren, were teenage mothers, had serious physical ill-nesses like HIV-AIDS, had a history of family violence, were unemployed, abandoned their children, were homeless, were divorced, were in the military, or die. Grandparents who take up this caregiver role face many challenges: they are often unprepared emo-tionally, physically and fi nancially. Their legal relation-ship with their grandchild can be problematic. Health insurance coverage for the grandchild can be an is-sue. Balancing work and family responsibilities is a concern, as well as changes in personal lifestyle and social contacts that grandparents experience. Grand-parents often have to learn new strategies in child raising, and deal with generational issues. There is also concern over the stigma of having to care for a grandchild, fears about their own aging, issues with other family members adjusting to the new real-ity, and transitioning for grandparenting to parenting. Despite all these challenges, the Commis-sion found that grandparents also underscore the rewards of being a caregiver: the relief over wor-

rying about the grandchild’s well-being; keep-ing the family together; the pride and sense of pur-pose that comes with parenting their grandchild. Grandparents interviewed by the Commission said that agencies which serve children are often too complicated and bureaucratic for the seniors to fi gure out, that sys-tems are inconsistent, and don’t work with each other, and cannot provide accurate and reliable information. There are many legal issues that arise, such as adoption complications, the rights of birth parents, grandparent visitation rights, legal expenses, etc. On top of these legal concerns, are the fi nancial issues that come with parent-ing grandchildren: altered retirement plans; paying for college; the cost of child care; housing/mortgage issues. Grandparents interviewed listed the fol-lowing service needs and concerns: fi nancial assistance, education, social and moral sup-port, information and referral, and legal aid. According to an Executive Offi ce of Elder Affairs report on the work of the Commission, there are 6.4 million grandparents in America who are liv-ing with their own grandchildren who are under age 18. There are 2.6 million grandparents who are re-sponsible for most of their grandchildren’s basic needs, and 493,000 grandparents who are caring for grandchildren and living below the poverty level. The Commission gathered information about these grandparents during its “listening and learning tour” which conducted 7 statewide visits in 2009 at local Councils on Aging and Community Centers. For further information about the work of the Commission, contact EOEA Undersecretary Sandy Albright at 617-727-7750.

Defi cit Commission: Social Insecurity

On November 10th, the Chairs of President Barak Obama's Fiscal Commission released a draft report recommending nearly $1.5 trillion in domestic and defense spending cuts from the federal budget over the next decade, much of it by shrinking the federal workforce and cutting salaries---and many reforms to defense spending, taxation, Medicare and Social Se-curity as well. The plan includes 58 ideas for savings

that range from $100 million to $28 billion. It's part of a broader proposal by the commission co-chairmen to save more than $3.8 trillion over the next decade. The Chairman’s draft plan was drawn up by Erskine Bowles, a Democrat, and Alan Simp-son, a Republican, both appointed by President Obama. Sen. Tom Coburn, R-Okla., a commis-sion member, helped draft the list of spending cuts. The plan outline begins with a statement of 10 guiding principles: 1. We have a patriotic duty to come together on a plan that will make America better off tomorrow than it is today. America cannot be great if we go broke.

Our economy will not grow and our country will not be able to compete without a plan to get this crush-ing debt burden off our back.Throughout our history, Americans have always been willing to sacrifi ce to make our nation stronger over the long haul. That’s the promise of America: to give our children and grand-children a better life. American families have spent the past 2 years making tough choices in their own lives. They expect us to do the same. The American people are counting on us to put politics aside, pull together not pull apart, and agree on a plan to live within our

means and make America strong for the long haul. 2. The Problem Is Real –the Solution Is Pain-ful –There’s No Easy Way Out –Everything Must Be On the Table–and Washington Must Leada. We must stabilize then reduce the national debt, or we could spend $1 trillion a year in interest alone by 2020.b. A sensible, real plan requires shared sacrifi ce –and Washington should lead the way and tighten its belt.3. It Is Cruelly Wrong to Make Promises We Can’t Keep. Our country has tough choices to make. Without regard to party, we need to be willing to tell Americans the truth. 4. Don’t Disrupt a Fragile Economic Recov-ery. Start gradually; begin cuts in FY 2012.5. Protect the Truly Disadvantaged. Fo-cus benefi ts on those who need them. En-sure an affordable and sustainable safety net.6. Cut and Invest to Promote Economic Growth and Keep America Competitive. Cut red tape and ineffi cient spend-ing that puts a drag on the economy and job creation. In-vest in education, infrastructure, and high-value R&D. 7. Cut Spending We Simply Can’t Afford, Wherev-er We Find It. End redundant, antiquated, ineffective spending. Cut ALL excess spending –defense spending, domestic discretionary spending, entitlement spend-ing, & spending in the tax code. Keep America safe, while rethinking our 21st century global role. Bring spending down to 22% and eventually 21% of GDP.8. Demand Productivity and Effectiveness. Use fi scal re-straint to promote savings through reforms and effi cien-cies that force government to produce better results. Set goal of 3% annual productivity growth in public sector. 9. Reform and Simplify the Tax Code. Broaden base, lower rates, and bring down the defi cit. Make Amer-ica the best place to start and run a business and cre-ate jobs. Cap revenue at or below 21% of GDP.10. Keep America Sound Over the Long Run. En-sure Social Security’s soundness and solven-cy. Reduce the long-term growth of health care costs. Reduce the debt burden as a share of GDP. The Comission plan makes fi ve basic recommendations:1. Enact tough discretionary spend-ing caps and provide $200 billion in illustra-tive domestic and defense savings in 2015.2. Pass tax reform that dramatically reduces rates, simpli-

fi es the code, broadens the base, and reduces the defi cit.3. Address the “Doc Fix” not through defi cit spend-ing but through savings from payment reforms, cost-sharing, and malpractice reform, and long-term measures to control health care cost growth.4. Achieve mandatory savings from farm sub-sidies, military and civil service retirement.5. Ensure Social Security solvency for the next 75 years while reducing poverty among seniors. According to the Chairman, their new plan “ensures lasting Social Security solven-cy, prevents projected 22% cuts in 2037, reduc-es elderly poverty, and distributes burden fairly.” The Bowles/Simpson reports makes the follow-ing recommendations for reducing health care costs:

Medium Term:• Fully offset the cost of the “Doc Fix” by asking doc-tors and other health providers, lawyers, and individu-als to take responsibility for slowing health care cost growth. Offsets include: Pay doctors and other providers less, improve effi ciency, and reward quality by speed-ing up payment reforms and increasing drug rebates.• Pay lawyers less and reduce the cost of defensive medicine by adopting comprehensive tort reform• Expand cost-sharing in Medicare to promote in-formed consumer health choices and spending

• Expand successful cost containment demonstrationsLong Term: • Contain growth in total federal health spending to GDP+1% after 2020 by establishing a process to reg-ularly evaluate cost growth, and take additional steps as needed if projected savings do not materialize.• Pay doctors, other health providers, and drug compa-nies less and improve effi ciency and quality. Replace cuts required by SGR through 2015 with modest reductions while directing CMS to establish a new payment system, beginning in 2015, to reduce costs and improve quality.• Require rebates for brand-name drugs as a con-dition of participating in Medicare Part D.• Increase cost-sharing in Medicare. Elimi-nate fi rst-dollar coverage in Medigap plans.• Replace existing cost-sharing rules with univer-sal deductible, single coinsurance rate, and cata-strophic cap for Medicare Part A and Part B.• Pay lawyers less and reduce the cost of defensive medicine. Enact comprehensive medical malprac-tice liability reform to cap non-economic and puni-tive damages and make other changes in tort law. • Place dual eligible individuals in Medicaid managed care.•Expand Accountable Care Orga-nizations and payment bundling. For longer term health savings:•Set global target for total federal health expendi-tures after 2020 (Medicare, Medicaid, CHIP, ex-change subsidies, employer health exclusion), and re-view costs every 2 years. Keep growth to GDP+1%.•If costs have grown faster than targets (on average of previous 5 years), require President to submit and Con-gress to consider reforms to lower spending, such as: Increase premiums (or further increase cost-sharing)•Overhaul the fee-for-service system•Develop a premium support system for Medicare•Add a robust public option and/or all-payer system On the subject of Social Security, the goals of the plan are: •Strengthen Social Security for the long haul by returning the system to sustainable solvency.•Prevent the 22% across the board ben-efi t cut projected to occur in 2037. •Reduce elderly poverty by putting into place a new, effective special minimum benefi t.

•Enable system to continue to pro-vide for a secure retirement as the popula-tion grows older and Americans live longer.•Reform Social Security for its own sake, not for defi cit reduction. To reduce elderly poverty, the plan adds new protections for the most vulnerable:•Add a new special minimum benefi t to keep full-career minimum wage workers above the poverty threshold.•Wage-index the minimum benefi t to make sure it is effective both now and in the future.•Provide a benefi t boost to older retirees most at risk of outliving other retirement resources. To Ensure Long-Term Social Se-curity Solvency, the plans says we must: •Increase progressivity of benefi t formula •Gradually move to a more progressive ben-efi t formula by creating a new bend point at the 50th percentile and reducing upper replace-ment factors slowly over time, phased in by 2050•Index retirement age to increases in longev-ity. This option is projected to increase the age by one month every two years after it reaches 67 un-der current law, meaning the normal retirement age would reach 68 in about 2050 and 69 in about 2075•Hardship exemption for those unable to work beyond 62•Switch to a more accurate measure of infl a-tion (chained CPI) for calculating COLAs•Include newly hired state and lo-cal workers in Social Security after 2020•Broaden the Payroll Tax Base: Gradually increase the taxable maximum to capture 90 percent of wag-es by 2050. Under current law, the taxable maxi-mum is pegged to growth in average wages. In 2009, the taxable maximum captured almost 86 percent of earnings, but it will fall to 82.5 percent by the end of the decade. Phasing into a higher taxable maxi-mum slowly will prevent large marginal changes and will prevent rapid buildup of the trust fund. •Promote Smart Retirement Decisions: Allow greater fl exibility in how benefi ts are claimed. Give retirees the choice of collecting half their benefi ts early and the other half at a later age to minimize impact of actu-arial reduction and support phased retirement options.•Direct SSA to design a way to provide for the early re-

tirement needs of workers in physical labor jobs. Require SSA to have accommodation in place before longevity in-dexation begins and set aside funds to pay for new policy.•Improve information on retirement choices. De-velop an education campaign to encourage great-er personal savings, delayed retirement, and phased retirement. Better inform benefi ciaries of the costs and benefi ts of collecting benefi ts early. Other alternative Social Security Options include: •Increase benefi ts for low-income widows •Cap spousal benefi t at one-half of average worker’s benefi t•Reinstate college benefi ts for child survivors •Tax cafeteria plans in same manner as 401(k) plans •Uncap the Disability Insurance (DI) portion of FICA taxes (1.8%)•Fully or partially tax employ-er-sponsored health insurance•Convert delayed retirement credit into one-time bonus •Include automatic stabilizer with fu-ture benefi t and/or revenue changes

Erksine BowlesThe Fiscal Commission’s recommenda-

tions for Social Security have attracted signifi -cant opposition. The Commission plan would:

1. cut retirement benefi ts by as much as 36% for young people entering the workforce today. Today’s 20-year old workers who retire at age 65 would see their ben-efi ts cut by 17% if their wages average $43,000 over their working lives, by 30% if their wages average $69,000 over their working lives, and by 36% if their wages average $107,000 over their working lives, ac-cording to the Social Security Chief Actuary. The proposed cuts would apply to retirees, disabled work-ers and their families, children who have lost parents, and widows and widowers. The younger a person is the deeper the cuts because of the increase in the re-tirement age and the changes in the benefi t formula.

2. Closes Social Security’s long-range funding gap primarily by cutting already low benefi ts, rather than by raising taxes on those who can most afford to pay. Ninety-two percent of Social Security’s projected fund-ing gap is closed by cutting promised benefi ts, ac-cording to the proposal. The benefi t formula change eliminates 45% of the projected shortfall, raising the retirement age eliminates 21%, and reducing the COLA eliminates 26%. Social Security's benefi ts are just $13,000 a year on average -- and should not be cut. Op-ponents argue that instead of cutting benefi ts, Social

Security’s long-range funding gap could be closed, as most Americans want, by requiring those employees (and their employers) who make more than $107,000 a year to pay Social Security taxes on all their wages.3. Raises the retirement age to 69. This is a 13% ben-efi t cut on top of the 13% cut already made when the retirement age was increased from 65 to 67, ac-cording to the Social Security Administration.4. Raises the early retirement age to 64. Most Americans claim Social Security benefi ts at age 62 even though the benefi ts are currently reduced by 25%, when they do so. Millions take early retirement because they work in physically demanding jobs, have health problems, or can no longer fi nd work. Raising the early retirement age will shut them out of the system when they are most vulnerable, potentially forcing them to seek disability benefi ts or welfare. Raising the retirement age also dis-criminates against lower-wage workers. Over the last quarter century, life expectancy of lower-income men increased by one year compared to fi ve years for upper-income men. Lower-income women have experienced declines in longevity. Yet, the higher retirement age ap-plies to rich and poor, healthy and sick, alike. In ef-fect, the proposal says to lower wage workers that they must work longer because the rich are living longer. 5. Reduces the annual Cost of Living Adjustment (COLA) for Social Security benefi ciaries. The "chained CPI" proposal would reduce benefi ts by 0.3% a year on aver-age. This will result in a 3.7% cut in benefi ts after 10 years in retirement beginning at age 65 and a 6.5% cut after 20 years, according to the Social Security Chief Actuary. If anything, the COLA should be increased because it does not adequately take account of skyrocketing medi-cal costs, which hit seniors and people with disabilities hardest. The change in the COLA calculation would be-gin in 2011 and affect all benefi ciaries, not just retirees.6. Men and women in uniform (and their families) will see their Social Security disability benefi ts cut deep-ly if they are seriously injured in combat. If they die in combat, their survivor’s benefi ts will also be cut substantially. And veteran’s retirement benefi ts will be cut signifi cantly just like for all other Americans. The Fiscal Commission draft report also pro-poses consolidated the tax code into three individual rates and one corporate rate, eliminating all $1.1 tril-

lion of tax expenditures, and dedicating a portion of savings to defi cit reduction and apply the rest to re-duce all marginal tax rates. The plan recommends cutting the federal workforce by 10%, eliminating 250,000 non-defense service and staff augmented contractors, freezing Defense department salaries for 3 years, reducing overseas military bases by one-third, and reducing military R&D spending by 10%.

MetLife Drops LTC Insurance

On November 11th, MetLife Inc. (MET) an-nounced that it was pulling out of the long-term care insurance market. The insurer has roughly 600,000 policyholders, or about 7.5% of the eight million policy holders in America. The profi tabil-ity of these policies is apparently not as great as MetLife would have hoped. The Wall Street Jour-nal described the LTC market as “small, but tricky.” According the American Association for Long-Term Care Insurance, insurers need a 10% to 15% increase in premiums to offset every 1 percentage-point decline in long-term interest rates. “In any environment, it's ex-pensive for the companies that sell it and it has tremen-dous future risks associated with it,” a spokesman for the group told The Journal. “The current economic situation makes this an especially diffi cult business right now.”MetLife has been ranked fourth in U.S. sales of indi-vidual long-term care policies in 2009, but this line of business, which is began in 1986, is still not a major

book of business for the company. Its LTC insurance sales accounted for $36 million in sales last year. Mas-sachusetts-based John Hancock Financial leads the way with $116 million in sales, and Genworth Financial was second highest at $108 million in sales. According to The Journal, John Hancock is seeking an average 40% increase in the states where it sells insurance for about 850,000 of its 1.1 million policyholders. This kind of “rate shock” is supposed to be regulated by state insur-ance departments, because it forces many policyhold-ers to lapse. “Rate stabilization” measures are part of the National Association of Insurance Commission-ers’ Model Regulation. Massachusetts has no specifi c LTC Insurance statute, only a weak set of regulations fi rst put in place in the early 1990s. Mass Home Care stopped trying to pass a meaningful consumer-based LTC statute in the Commonwealth, because the insur-ance industry would never let such legislation pass. Any insurance product that sustains such enor-mous rate hikes is a dangerous product for consumers, who get priced out before they use it. Some companies have insisted that they have not had to raise rates signifi -cantly. Mass Home Care issued a study 20 years ago called Risky Business, warning consumers of the diffi culties of sorting through this complicated and confusing product In an interview with Bloomberg News, MetLife Chief Executive Offi cer Robert Henrik-son said the insurer’s retreat from the long-term care market will make the company stronger be-cause prices for the coverage were inadequate.The coverage “does not allow you to have a nec-essary return on capital and still be competi-tively priced,” Henrikson said. “We felt just un-comfortable continuing to grow” in the business. Analysts say that rising costs for care, longer life spans and lower bond yields are pressuring profi ts from the business.“Because of the return on capital, we’re stronger” by not selling long-term care insurance Henrikson concluded. In a written statemenet designed to reassure its existing long term care insurance policyholders, the company said: “MetLife remains committed to our cur-rent LTCI policyholders and certifi cateholders and will continue to ensure that they receive quality service, particularly when needed most – at time of claim.”

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