Long-Term Care: How the industry is structured, how that structure creates wrong incentives and what we can do going forward

Nursing homes and long-term care, in general, are something that we tend to avoid thinking about. But the truth is, whether due to old age or disability, many of us do or will require help with daily living. The number of Americans from 65 and older is projected to nearly double over the next 40 years, and one study estimates that more than two-thirds of Americans who reach age 65 will need long-term care at some point in their lives.

 The good news is that there are plenty of upscale retirement communities where residents can transition if needed into full-time nursing care for the rich. Still, the bad news is that the vast majority of people receive long-term care at home. Unpaid and untrained caregivers provide around 80% of that care, often family members who want to keep their loved ones out of institutional care but don’t have the knowledge or the means to perform the medical tasks required.

 Taking care of someone at home is an incredible and complicated full-time job that’s almost always unpaid. In fact, in terms of lost wages, family caregivers’ labor totals about sixty-seven billion dollars annually. And the bad news doesn’t end there, as many older people aren’t even lucky enough to have a loved one able to take care of them at home. Most of these people will end up in long-term care facilities, where residents and staff make up less than 1% of the population but currently account for around a third of COVID-19 deaths in the United States.

 For years, we have known that the way the elderly are treated in these facilities is, at best, indifference and, at worst, abuse and neglect. And the pandemic ended up pushing an already heavily strained system to the absolute edge, with conditions so bad that every day we hear local news about it. Therefore now is time to investigate long-term care further, how the industry is structured, how that structure creates wrong incentives, and what we can do going forward.


Long-Term Care

 Long-term care has two main types of facilities: Nursing Homes and Assisted-Living.

 Nursing Homes are medical facilities overseen by registered nurses and staffed mainly by low-paid nursing assistants, which has obviously caused problems since its creation. A GAO report covering five years before the pandemic found that 82% of nursing homes had been cited for infection prevention and control deficiencies. The main reason for that is understaffing of nursing assistants that aren’t just overworked but really underpaid.

 The median national salary for that job is barely $30,000 a year, as nearly 70% of nursing homes are now for-profit institutions that don’t pay staff much, but they sure charge you a lot. The average per-person cost for a private room is $100,000 per year. Medicare only fully covers the first 20 days of nursing home care after an eligible hospital visit, then partially pays for up to 100 days and nothing more.

 The only other way to access taxpayer help to live in a nursing home is to impoverish yourself to the point you qualify for Medicaid, the government program for the poor, which crucially reimburses nursing homes at less than half the average daily rate paid by Medicare. And while you would like to think that nursing homes would treat all patients the same, whether they’re on Medicare or Medicaid, the truth is you might get two very different experiences.

As a general rule, if Medicare is paying, you may be billed for unnecessary treatments by these facilities, but at least the patient will receive semi-adequate care. If Medicaid is paying, these facilities will neglect the patient because they want to open a bed for a more lucrative one. And you would hope regulators would punish nursing homes for doing things like that, but the oversight in this industry has some massive gaps.

 For instance, the federal government keeps a list of “special focus facilities”, homes that maintain a pattern of having severe problems over a long period of time and therefore receive extra inspections. And there are 88 nursing homes on that list, not because there are only 88 homes that deserve to be, but because due to limited resources, the government has capped the list at that exact number, despite the fact they fully acknowledge an additional 400 facilities qualify for the program.

 Furthermore, the official website where nursing homes are rated from one to five stars features information, statics, and quality measures self-reported by the nursing homes that no one is double-checking. So, after everything we have learned so far, it’s not surprising that many might want to avoid a nursing home altogether, which brings us to assisted living facilities.

 Around a third of people in long-term care facilities are in an Assisted Living Facility, which costs far less than a nursing home, typically around $50,000 a year. Assisted Living started out as an alternative for those who needed help with crucial activities like dressing, toileting, taking medicines, and eating but only needed limited medical support. Just like nursing homes, the vast majority of ALF’s are for-prof. Still, unlike nursing homes, they are primarily paid for out-of-pocket so they are even less regulated, making it easy for basically anyone to start one, from uncredited individuals to big corporations.

 The most crucial difference between the two is that Nursing Homes have staff trained to meet medical needs of any magnitude, and Assisted Living Facilities don’t. But even though ALFs are supposed to be for people who require less medical care, recently, some of these centers have been aggressively courting dementia patients for memory care programs, among other things.

 And all this is possible, and even legal, due to our law’s vagueness, as some states require only 20 to 30 hours of specialized training for a facility to meet the requirements to care for this type of patient and others. And it doesn’t set a minimum number of hours of training to be credited to treat people with severe diseases and conditions.


So, what can we do?

 There are many ways the government can force facilities to improve, like increased oversight and enforcement or mandating that residents need to have access to a minimum amount of care per day. But the bigger fix might be to make it easier for as many people as possible to not end up in these institutions in the first place and instead receive whatever support they need at home.

 Nearly 90% of people over 65 want to stay in their homes for as long as possible; the problem is many of them can’t because under Medicaid, nursing home care is an entitlement, but home care is not. So, if you want to receive support in your home, you need a waiver from your state. And some states do this pretty well. More than 70% of the Medicaid money is spent on home and community-based services like skilled nursing visits and home care aides who can help with Washington’s daily tasks. The problem is that other states have waiting lists that can be many years long, and elders don’t have that much time.

 Propitiously, a discussion draft of a bill (HCBS Access Act of 2021) was recently introduced that would make home and community-based care an entitlement under Medicaid, and Biden’s proposed infrastructure plan actually calls for $400 billion to be spent on those same services. Know the key for this to work is that rigorous guardrails and oversight are needed to make sure that money is not misspent just in a different way. 

In the meantime, if a loved one or someone you know is immersed in a possible case of Nursing Home Abuse or Neglect, we invite you to have a free legal consultation with one of our attorneys to see what we can do for you.

Contact us at 866.999.2712 or through our website.