Medicare Does Not Provide Long-Term Care in Nursing Homes

Let me say it again: Medicare does not provide long-term care in nursing homes. The idea that Medicare does provide long-term care in nursing homes is one of the greatest enduring myths about Medicare. And, here's the scary part: I encounter this myth in discussion groups at all income and educational levels. I have seen the individual look of astonishment on the faces of clients and their families when I have had to debunk this myth and I have surveyed the faces of  groups where, only gradually, did audience members come to accept the truth.

In its September-October issue, Harvard's alumni magazine published  "Coping With Alzheimer's" repeating the canard only to have to  correct itself in the next issue. Medicare only covers rehabilitation care up to 90 days following a three day hospitalization.

Harvard Magazine should not be burying the correction on page 6 of the Letters section, it should be broadcast as a cover story because, although it is not news, it is new information for many Americans.

12/10/13: As Buzzell points out in the comments, I overstate. I stand corrected and thank Buzzell for the comment. Here’s what I should have said:

Hospital Admissions Mayhem

For some time, courts have been weighing in on HHS's decision to tie a Medicare beneficiary's hospital admission status to their formal hospital admission.  Formal hospital admission usually requires a written order of admission by a physician with the authority to do so and that written order is subject to retroactive audit by Medicare.  This all seems pretty straightforward. Now enter the concepts of "observation status" and revokable admissions and it all gets more complicated.

I have been marveling over the recent opinion of a federal district court in Connecticut  in Bagnall v. Sebelius (3:11-cv-0173-MPS).  Here we see the first principle — allowing the Secretary discretion to define "inpatient" for Medicare purposes — come up against the increasingly common use of observation status, either anticipatorily or retrospectively.

Let me be clear: it is possible for a Medicare beneficiary to be admitted to an acute care hospital, treated as an admitted patient in an acute care hospital for several days, discharged from that acute care hospital to a rehab facility (having met Medicare Part A's  requirement that such a discharge follow a three day acute care hospitalization to achieve maximum coverage) only to be advised  as much as two weeks later that they were in fact not admitted and that their hospital admission was revoked, leaving them with coverage only under less generous Medicare Part B with co-pays and deductibles for that now identified as  out-patient hospital care and for the rehab admission under Medicare Part B that may amount to thousands of dollars.

Now, when commercial health insurance companies make their nut by retroactively rescinding eligibility for health insurance we get so worked up about it that nothing less than the ACA itself tries to take this practice on by clarifying and narrowing the standard for retroactive rescissions.   From the perspective of the Medicare beneficiary, these retroactive determinations of non-admission are very similar indeed and the practice grows ever yet more common.

I understand very well the push and shove between Medicare and acute care hospitals over unwarranted admissions and the particular skepticism that attaches to one night admissions. But when we have put Medicare beneficiaries who, in good faith reliance, have acted on a hospital "admission" in the middle of this dispute, I am at a loss to know who we think we are hurting and who we think we are helping.

Disclosure is the default option of policy makers lacking the will to make a difference.  What might a Medicare patient's admission form now say:

Sign below to indicate you understand you are being admitted to Pleasantview Hospital, unless of course you aren't — something you can only know for certain several weeks from now, and that you accept full responsibility for all charges not covered by your insurer, unless of course they are not — something you can only know for certain several weeks from now….

In one of my favorite teaching cases from health law, a Georgia hospital argued that an incomprehensible liability clause was rendered enforceable by the addition of bold type to its presentation, so let's not omit the clarity bold type would surely add to the above clause.

Go Ask Alice

One of the ways I test my students’ working knowledge of
Medicare eligibility is by having them engage in a Medicare insurance
counseling simulation. This is no easy undertaking.  Medicare’s “layer cake” approach (one layer for in-patient
benefits, one layer for out-patient services, a third layer for prescription
drugs, a fourth for Medicare Supplemental Insurance (popularly known as
“Medigap”))  makes for a
complicated, fact intensive approach to insurance counseling. Of course, that
is part of the lesson.  Are
America’s seniors well equipped to choose, choose, and choose again on each
layer of the cake?  Is the Medicare
layer cake a splendid edifice to insurance design or a horse designed by a

The second biggest takeaway from the Medicare counseling
simulation is that original Medicare is a relatively thin benefit.  The fact that the vast majority of  Medicare
beneficiaries supplement with some type of Medigap plan (employer sponsored or sold by commercial
insurers in a structured marketplace with a wide
variety of price points) does not mean the original benefit is not thin.  At the very end of the financial
continuum, Medicare beneficiaries who have very low income and assets may
qualify for Medicaid simultaneously, making Medicaid a kind of Medigap for
them.  This is what it means to be
“dually eligible."

What about the seniors too well off to be dual eligibles but
too low income to be able to afford Medigap?  They gravitate to enrollment in Medicare Managed Care.

The way I see it, if you understand that Medicare Advantage
(Medicare Managed Care or Medicare Part C) may require that you trade in  your traditional Medicare (Medicare fee
for service) poker chips for a Medicare managed care plan poker chip that serves to
insulate you from original Medicare’s thinness,  you are not only learning something about how Medicare
works, you are also learning something about how we ration care.  Under Medicare Managed Care – as with all
managed care – we hide the hand of rationing by saying the insurance company is
engaging in utilization review.  Of
course they are, but the explicit purpose of managed care is both to lower cost
and improve quality. These goals remain constant in the Medicare form of
managed care, the plan of last resort for the  those too poor for Medigap but too
rich to be dual eligibles.  And so we ration Medicare unevenly.

So, who is Alice?   Alice is my own insurance counseling non-simulation.

Alice is a friend – a remarkably robust and lively
octogenarian  — who contacted me around Christmas to let me know that she had
fallen outside her home, broken her hip, had surgery, and was now in rehab
for her Medicare  sanctioned 21 day stay.  Her next missive let me know that, during Medicare’s open enrollment
this past fall, financial exigencies had pressed her to abandon fee for service
Medicare for a Medicare Managed Care plan.  And, you guessed it, the Medicare Managed Care plan kicked
in mid-treatment on January 1, 2013.

Health insurance policies sometimes make provisions for the
continuation of care of procedurally based medicine (but not so much chronic
care treatment) that straddles enrollment in two different health insurance
plans. Not so Alice’s new plan.

Alice is in no-woman’s land. Disenrolled from fee for
service Medicare – and unable to keep the surgical follow-up appointment
from a
surgeon who takes Medicare assignment but does not participate in
Medicare Managed Care – and moved to a Medicare Managed Care rehab
funded facility,
Alice was advised that this was her problem to unravel. Her new Medicare
Managed Care insurance plan vacillated between advising her she was not
enrollee in their plan and advising that, even were she an enrollee, no
follow up post-surgical appointment was necessary.

Alice, a wise women, approached me to ask if the best way
out of the mess was to charge forward with her new Medicare Managed Care plan
or to use the 45 day cancellation option of  Medicare Managed Care and regroup in Medicare fee for
service for a few months.

Although the thought of Alice having to argue with her new
insurance company from the comparative disadvantage of her painful position
made me uneasy, I wondered if cancellation made any sense.  Alice has had to sort through whether
she could afford traditional Medicare’s costs for her hip fracture in a system
with precious little price transparency. She has had to guess at her
anticipated exposure. The 
projected answer: without a Medigap policy, she probably cannot afford
to regroup in traditional Medicare for another few months.

So Medicare Managed Care it is, if she can persuade them she
is an enrollee.  Of course, she can
always appeal the decision to deny services and put together the records for an
appeal — from her rehab bed.

Bear in mind that Medicare is that portion of our health
care system that ranks highest in patient satisfaction data.

Or, you can go ask Alice.

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