Wisconsin Lawyer
Vol. 77, No. 10, October 2004

Issues Affecting Long-Term Care

by Brian R. Purtell

This morning 36,000 of the most frail and elderly Wisconsin residents were helped with their morning routine, were dressed, groomed, and fed. They received compassionate and professional care from thousands of skilled nurses and nurse aides. Throughout today, these caregivers will provide countless acts of dedicated service, which won't make headlines because the media doesn't consider this routine care to be newsworthy.

Despite what you read in newspapers, see on the nightly news, or even what you might infer from reading the articles on long-term care in the August Wisconsin Lawyer,¹ the vast majority of this year's 13 million patient days in Wisconsin nursing homes will not involve allegations of abuse, neglect, or mistreatment.

This week thousands of elderly Wisconsin residents and their families will have to navigate the long-term care delivery system for the first time. Elderly patients, having been informed by hospital staff of their imminent discharge and the need to find an appropriate nursing home, assisted living facility, or some form of home-based care, will face a range of questions and concerns including those involving appropriateness of placement, eligibility and coverage, and quality and safety. Few will have taken advance steps to address these issues.

The August Wisconsin Lawyer contained a series of articles focusing on the issue of abuse in Wisconsin long-term care facilities. Readers may have come away with the impression that the only ways that Wisconsin lawyers can address concerns as to the quality of care being provided are to litigate, regulate, and prosecute. This article explores additional options for lawyers who advise elderly clients, provides information about and context to the problems facing the long-term care provider community, and should serve as a wake-up call to lawyers in their roles as advisors, taxpayers, and likely future consumers of long-term care.

Issues Affect Lawyers Across Practice Areas

Attorneys who represent long-term care providers know that the vast majority of providers work tremendously hard - often in the face of significant obstacles - to provide the highest level of care to the residents they serve. Individuals familiar with the long-term care delivery system understand that it is a complicated labyrinth of programs, is plagued by inadequate funding and stifling regulations, and is saddled with chronic shortages of qualified caregivers. State and federal budget deficits, coupled with an impending collision of an explosion in demand for services and a diminishing supply of workers, will further compound the obstacles and challenges to providers and consumers. Persons who are familiar with this system will not make excuses for any individual or entity engaged in intentional abuse or neglect of vulnerable individuals. They recognize, however, that such deplorable behavior is the exception, not the routine.

Lawyers advising elderly clients and their families need to understand more than simply who and how to sue when problems arise. In the coming years it will become increasingly important that a wider sector of the legal community know more about long-term care issues. The continued demographic shift, with more individuals who will themselves need or be responsible for another's long-term care needs, will affect Wisconsin lawyers as practitioners and as potential consumers or caregivers.

Long-term care issues will not be limited to elder and health lawyers. For example, long-term care issues will require employment and business lawyers to address policies for employees needing to alter their work schedules to tend to their aging parents. Tax and estate planners will need to keep current on changes that state and federal authorities propose and implement to address problems in the payment systems. Municipal and real estate lawyers increasingly will be called on to address senior housing issues, which present complexities beyond traditional real estate and zoning questions. Long-term care providers likely will continue to need the services of bankruptcy practitioners. More lawyers will be needed to develop and draft documents for powers of attorney for health care, guardianships, and personal finance matters. Basic skills related to long-term care, such as understanding the variety of funding mechanisms, differentiating between the scores of long-term care providers, understanding eligibility requirements, and at a minimum, having the knowledge needed to dispel myths and misconceptions related to providing and funding long-term care, will become tools-of-the-trade for a wider variety of practitioners.

While it is not reasonable or practical for every Wisconsin lawyer to become expert in the legal complexities of long-term care issues, a working understanding of the system will become increasingly invaluable to more practitioners. It is not possible to discuss the entire range of issues in a few pages, but the following overview can provide the first step toward greater understanding.

The Basics of Long-term Care

Who Pays, Who Doesn't. Most Americans mistakenly believe that they have long-term care "coverage" in place, because they think (erroneously) that Medicare will take care of their long-term care needs. While this federal program does pay for some long-term care services, it covers neither extended nursing home stays nor assisted living. The vast majority of long-term care funding is provided by Medicaid. This joint state-federal program dominates the delivery system and is responsible for the payment of care fees of almost 70 percent of all nursing home residents. While Medicaid waiver programs, like Wisconsin's Community Options Program and Family Care pilot projects, provide some home and community-based services, the former typically involves lengthy waiting lists and the latter is in its infancy with future expansion uncertain due to multiple factors. These Medicaid waiver programs, popular with consumer groups, vie for funding to serve increasing numbers of individuals; however, as with most of the long-term care delivery system, these programs continue to battle over the same pool of money that already is not sufficient to adequately reimburse provider costs. Recent state and federal budget crises have accentuated the need to completely overhaul the payment system for long-term care.

The remainder of long-term care costs are borne primarily by Medicare supplemental policies, long-term care insurance, or individuals paying privately for care and housing needs. Given the incorrect assumptions as to who pays for long-term care services, few people have made adequate financial preparation efforts. Consequently, each year many individuals are impoverished by the costs of their needed care and services.

Who Provides Long-term Care. The long-term care delivery system is a wide network of providers across the continuum of care. Nursing homes dominate the higher acute-care level of this continuum, providing care to frail and dependent individuals with complex medical problems. In the past, many individuals with these same high levels of need would have been cared for in hospitals. There are two general categories of nursing home residents: restorative/therapeutic patients and longer-term custodial care residents, an increasing number of whom suffer from various forms of dementia. The first category represents a growing number of patients in today's nursing homes. Patients who have had a hospital stay for an acute condition and are released to a nursing home for a short-term stay represent an increasing number of nursing home residents. While overall annual nursing home patient days continue to decline, admissions actually have increased dramatically due to the growing reliance on nursing homes to provide post-hospital restorative care.

Wisconsin currently has about 400 nursing homes. All are licensed by the state and are subject to the requirements of Wis. Stat. chapter 50 and Wis. Admin. Code chapter HFS 132 regulations. Most also are certified for Medicare and/or Medicaid,² requiring compliance with federal statutes and regulations in addition to state licensing requirements.

What program pays for nursing home care depends on an individual's eligibility status and the need for being at the facility. Medicare covers only skilled nursing services rendered to help a beneficiary recover from an acute illness or injury. Nursing home coverage falls under Part A of Medicare and is very limited. If the patient is eligible, Medicare will cover the first 20 days of the nursing home stay. For days 21-100, the patient must share, or co-pay, for the cost of care. Part A eligibility requires that: 1) the nursing home be Medicare-certified; 2) the patient requires daily continuous skilled nursing or skilled rehabilitation services; 3) the patient be admitted to the nursing home within 30 days after a three-consecutive-days stay in a hospital; and 4) a physician certifies that the patient needs skilled nursing services for the same or related illness for which the person was hospitalized.

Medicare Part B may help pay for some services provided in a nursing home. Under Part B, enrollees must pay an annual premium and a deductible for all Part B services, after which Medicare pays 80 percent of the reasonable charges for covered services.

Medicaid, referred to as Medical Assistance (MA) in Wisconsin, pays for a majority of all nursing home stays. Medicaid is a need-based program, eligibility for which limits the beneficiary to having very modest assets. To qualify for Medicaid, an individual must satisfy very specific income-based limitations. In many cases individuals must "spend down" their nonexempt assets by paying for services out of pocket until they reach the eligibility level.

Private insurance and managed care programs cover a small percentage of nursing home patient stays. Medicare supplemental policies help individuals in paying Medicare copayments. The remainder of nursing home stays are paid for privately by individuals who do not qualify for Medicaid or Medicare coverage. To the extent of their resources, private pay individuals have greater flexibility in choosing a facility and availing themselves of certain amenities not available to Medicaid or Medicare recipients, such as private rooms.

Assisted Living

Within the past decade there has been a dramatic increase in the assisted living facility market. The assisted living community is comprised of two primary types of licensed entities, community-based residential facilities (CBRFs)³ and residential care apartment complexes (RCACs).⁴ Assisted living facilities are not regulated by federal authorities; instead they are created and licensed by the state of Wisconsin. Calls for federal regulation are countered by providers' objections, based on their concerns about rigid regulations that will stifle innovation and the ability to meet changing consumer needs and preferences.

Individuals served in CBRFs and RCACs tend to have lower nursing and service needs; however, both types of entities are permitted to provide limited hours of nursing care. The vast majority of assisted living services are paid for privately.

Home and Community Programs

The long-term care continuum is rounded out with such providers as home health and personal care agencies. These regulated providers cater to the needs of individuals in their own homes or may contract to provide services in an assisted living setting or in a senior housing complex. Adult day care represents a growing service area to assist families in caring for aging friends and relatives. Limited public financing is available for home and community programs; however, there is growing momentum to expand Medicaid services to cover more individuals.

Challenges of Long-term Care Providers and Impact on Consumers

Even the most dedicated and well-intended providers face daunting obstacles in providing the highest quality of care. Inadequate reimbursement for services for residents with increasingly complex medical and behavioral needs, staffing shortages, regulatory enforcement mechanisms, skyrocketing health and liability insurance, and the increasing threat of civil and criminal actions affect the quality of care provided.

Medicaid represents a significant portion of the Wisconsin budget; however, the Medicaid reimbursement rates paid to nursing homes rarely cover the actual costs associated with the care of each resident. On average, a Wisconsin nursing home loses $16.58 per Medicaid patient per day.⁵ Annually, the cumulative difference between cost and reimbursement for all Wisconsin nursing homes exceeds $148 million.⁶ Nursing home providers are dependent therefore on shifting costs to Medicare patients and the dwindling number of private pay patients to make up for the losses incurred by care provided to Medicaid recipients. The financial distress within the nursing home provider community has led to the closure of more than 35 Wisconsin facilities within the last three years.

Nursing home dependence on Medicaid as a primary reimbursement mechanism affects the ability to provide high quality care. The difference between the costs of caring for Medicaid residents and the reimbursement translates to difficulty attracting and retaining a top quality workforce, staffing at levels commensurate to reimbursement, and postponing or canceling significant capital improvements.

Staffing Issues

The most common complaint heard from critics of long-term care providers concerns the adequacy of staffing, both in numbers and in training levels. While Wisconsin has statutory minimum staffing requirements for nursing home providers,⁷ addressing staffing concerns is more complex than simply increasing minimums. First, these minimum staffing levels are usually irrelevant, because most providers staff in excess of the minimums due to the increasingly serious health problems of residents and the regulatory and professional expectations that require facilities to staff sufficiently to meet the needs of all residents. Second, appropriate staffing levels depend on a wide variety of factors, including the condition of residents and a given facility's mix of residents and staff.

Calls to increase minimum staffing requirements fail to acknowledge that facilities already staff well above these requirements: currently, the state average for combined nursing services is 3.3 hours per day per resident, compared to the required 2.5 hours for the skilled nursing level of care. Notably, Medicaid only reimburses facilities for nursing-related labor costs up to 2.85 hours/day/resident. Legislative initiatives to increase minimum staffing quickly die on the legislative vine when the $100 million-plus price tag associated with such increases is explained.

Even assuming the ability to afford large increases in staff, the available workforce picture is bleak. Throughout the health care system, the demand for nurses, in particular, is huge. Nursing shortages are compounded by educational system limitations, because waiting lists for admission to nursing programs are not uncommon. While efforts are underway to increase the capacity of nursing programs, retirements within the aging workforce population will likely negate any increases in the number of younger workers.

Litigation, Regulation, and Prosecution

While Wisconsin has not experienced the litigation crisis that ravaged Florida, Texas, and California providers, the insurance rates for local providers have been affected by dramatic claims in other states. Liability coverage nationally has jumped annually from $310 per bed in 1992 to $2,290 per bed in 2003.⁸ It is estimated that $6.27 per patient day goes toward covering direct and indirect costs of litigation. Facilities with no claims history are being saddled with higher premiums, expending money that otherwise could go toward care.

Regulations, a natural concomitant of participating in publicly funded and licensing programs, are intended to protect consumers. Failure by providers to comply with the multitude of regulations can result in fines, denial of admissions, conditional licenses, and revocation or decertification. Theories vary as to the appropriate methods and levels of enforcement. Some observers argue that the enforcement system for noncompliance requires greater punitive measures, while others question the wisdom of imposing primarily monetary punishments on an already financially struggling system.

In recent years, federal, state, and local prosecutors have paid more attention to long-term care situations. Several high profile prosecutions involving quality of care issues have made many long-term care administrators and nursing directors question why they work in a field in which they might be enmeshed in a criminal prosecution through the missteps of others.

The threats of litigation, prosecution, and regulatory enforcement have resulted in defensive, precautionary recordkeeping that consumes nursing and administrative staff, taking time away from providing actual resident service. Daily pressures and constant negative portrayals of the efforts of dedicated professionals are driving qualified leaders from the long-term care field.

Role of Wisconsin Attorneys

Wisconsin's long-term care professionals strive to provide needed care to the most frail elderly and disabled individuals in this state, while further attempting to call attention to the inherent problems within the system. Wisconsin lawyers have a place in addressing the future of long-term care, both on behalf of their clients and in their leadership capacity within their communities. Knowledgeable, informed, and reasoned voices are needed to resolve these important issues. If serious attempts at reform are not made, the current challenges facing the system will pale in comparison to those looming as the baby-boom population begins to enter the long-term care delivery system. There is plenty of talk about the importance of saving Medicare and Social Security, but only recently have there been serious efforts on the federal and state level to comprehensively address this complex problem. The analytical skills and reason-based thinking of lawyers can add to the legitimate dialog and help to separate sound analysis from rhetoric.

In addition to adding their voices and expertise for the future, lawyers can take practical steps now to advise and protect elderly clients. While representing a client, lawyers may be in a position to assist before care and treatment problems escalate. Rather than advising family members to maintain a paper trail to document damages with an eye toward a lawsuit, bringing concerns to the attention of the facility administrator may be the most effective and responsible action. Requesting a meeting with the appropriate supervisor is the most direct way to effectuate change.

For individuals in the community at risk for physical and financial exploitation, initiating a guardianship may be needed. Any interested person can petition for a guardianship.⁹ Further, if a person is concerned whether a guardian or health care agent is acting in the best interests of the ward or principal, an interested party can take steps to intervene.¹⁰

Subtle forms of financial exploitation of elderly people can come from within the family. Lawyers should be wary of the motives and possible implications of certain requests for their services on behalf of an elderly person. Transferring title of a nursing home resident's home, often at the request of an adult child, may trigger an illegal divestment, rendering the resident ineligible for MA for several months, depending on the home's value. This may leave no source of payment for the nursing home stay. The facility is not expected to provide care for free and is entitled to initiate the drastic measure of an involuntary discharge for nonpayment, leaving the vulnerable person without needed care and services.

Before advising a client on qualifying for Medicaid, the attorney should help the client appreciate the ramifications, the most important being the limitation of options available once a person is on Medicaid. Because Medicaid does not cover most home- and community-based programs, successful divestment to qualify for Medicaid may result in the client having to choose either admission to a nursing home or being placed on a waiting list for a Medicaid waiver program. Further, the choice of available facilities and level of amenities may be limited by virtue of Medicaid status. Once presented with these realities, some clients may reconsider the importance of preserving their estate for their heirs. Additionally, it often is the case, the children of the elderly person that are seeking Medicaid estate planning for their parents. In such situations, advisors should clarify who is their client to ensure that the true client's interests are protected.

Attorneys representing long-term care providers continue to encounter health care power of attorney documents that do not comply with the requirements of Wisconsin statutes. While a technically flawed document could be useful for discerning an individual's expressed wishes, in the regulated long-term care setting, providers often must inform residents and family members that their document is insufficient out of concern that a regulator will spot a glaring, albeit technical, defect. The most common omission on such documents is the required introductory language or certification by the attorney (found in Wis. Stat. section 155.30(2)). Attempts to create a single hybrid power of attorney for health care and finances document under chapters 155 and 243 is the second most common problem. While such a document arguably can be created, the explicit language within the respective statutes as to content and execution requirements too often results in technical inadequacies. Counsel should thoroughly review these statutes before drafting such documents for clients.

The most significant advice attorneys can provide their clients is to prepare in advance for their future needs. Effective preparation for possible long-term care, whether it is discussions about long term-care insurance while an individual is young enough to afford it, or establishing a fiscal plan to allow the individual choices and options, requires thought and planning well in advance of needs.

Endnotes

¹Jason T. Studinski, Abuse and Neglect in Long-term Care Facilities: The Civil Justice System's Response, 77 Wis. Law. 8 (Aug. 2004); Linda Dawson, Preventing Abuse and Neglect in Health Care Settings: The Regulatory Agency's Responsibility, id. at 12; William E. Hanrahan, Seeking Justice in Death's Waiting Room: Barriers to Effectively Prosecuting Crime in Long-term Care Facilities, id. at 16.

²Medicare-certified nursing homes are designated as Skilled Nursing Facilities (SNF). Medicaid-only facilities are designated as Nursing Facilities (NF).

³CBRFs are licensed under Wis. Stat. chapter 50 and Wis. Admin. Code chapter HFS 83.

⁴RCACs are licensed or registered under Wis. Stat. chapter 50 and Wis. Admin. Code chapter HFS 89.

⁵A Report on Shortfalls in Medicaid Funding for Nursing Home Care 80 KB, BDO Seidman LLP (December 2003).

⁶Id.

⁷Wis. Stat. § 50.04(2)(d).

⁸Long Term Care General Liability and Professional Liability 204 Actuarial Analysis, Aon Risk Consultants Inc. (June 2004).

⁹See Wis. Stat. ch. 880.

¹⁰Id.; Wis. Stat. § 155.60.

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