Mr. Chairman and Members of the Subcommittee:
It is a great privilege to be here with you today on behalf of Secretary Donna Shalala. I am indeed honored as the Assistant Secretary for Aging to be participating in this important forum
with a true friend and advocate within the U.S. Senate for older Americans - the Honorable Harry Reid.
I have been asked today to provide insights into the current and future state of long-term care (LTC) at the national level. This is indeed an ambitious task, because LTC as a policy and
program area is extraordinarily complex. I will attempt to provide a framework of federal LTC programs; indicate some of the key LTC issues facing policy makers at all levels; note HHS initiatives; and suggest possible future directions for LTC. I will also include a brief description of the LTC needs of older persons and their families and the importance of advocacy to ensure the emergence of a consumer-oriented, cost-effective LTC system. As I do this, I would ask you to keep in mind a number of trends. That is: 1) The older population will continue to grow. By the year 2020, there will be more than 70 million older persons in this country or more than twice
the number today. The older population also is getting frailer. Despite recent evidence of declines in disability rates related to longevity, the need for LTC services will continue to expand. 2) Women, the family members who most often serve as the primary caregivers, are spending a significant amount of time providing eldercare. Indeed, some experts have indicated that women spend more years providing eldercare than child care. Concomitantly, women tend
to be the primary consumers of LTC services because they generally survive their spouses, fathers, and brothers. 3) The older population is rapidly becoming more diverse as minorities live longer. For example, in 1990, 13 percent of persons 65 years and older were minorities. This percentage is projected to rise to 25 percent by 2030, almost doubling in 35 years. 4) Baby boomers, many of whom are now beginning to grapple in growing numbers with LTC concerns
related to their parents, will join the ranks of our older Americans starting in 2011. By that time their own potential LTC needs will have taken on a measure of reality.
Let me briefly highlight some of the important federally funded programs which serve older Americans who require LTC beginning with those in the U.S. Department of Health and Human Services (DHHS). The Administration on Aging (AoA), the agency which I head, grants and
authorizes the expenditure of funds under the Older Americans Act (OAA) to states and local communities for infrastructure development and the building of comprehensive and coordinated service delivery systems. These systems directly lend support to LTC needs through efforts to improve the coordination of other programs and funding streams. For example, OAA funds provide gap-filling services such as transportation and nutrition services and are used
for advocacy, coordination and other activities which help meet the needs and protect the rights of older adults. Here in Nevada, the Division on Aging Services under the leadership of my colleague, Carla Sloan, fulfills these responsibilities. Currently, Nevada receives $1.6 million for supportive services, including $50,000 for protective elder rights services such as the LTC Ombudsman and elder abuse activities; $2 million for congregate meals; $600,000 for home
delivered meals; $87,000 for disease prevention, health promotion activities; and $52,000 for the provision of in-home services for the frail elderly. I have attached for the record a summary of
some other programs administered by DHHS that address LTC.
With regard to federal funding of LTC, the Health Care Financing Administration (HCFA) administers the Medicaid program -- the largest source of public financing for LTC services for older adults. In FY 1996, approximately $16.7 billion in federal funds were expended for care in nursing facilities for the elderly. This included approximately $28.2 million for nursing home care for the elderly in Nevada. Approximately an additional $2 billion in federal funds was spent nationally for home and community-based alternative care for the elderly, including home health, personal care, and home and community-based waivers. Nevada received approximately $2.2
million of these funds. HCFA also administers Medicare, a program which mainly covers acute care benefits. However, the Medicare home health benefits cover some chronic care as well as post-acute care. In FY 1996, more than $16.7 billion was spent for home health benefits to meet chronic and post-acute care needs. A share of these funds has gone to serve the needs of older persons in this state.
Among the important agencies involved in LTC services outside DHHS are the Department of Housing and Urban Development (HUD) and the Social Security Administration (SSA). HUD, for example, administers the Supportive Housing Program for the Elderly (Section 202). In FY
1997, $645 million was appropriated to support this program nationally. SSA administers a variety of income security programs including the Supplemental Security Income (SSI) program
to provide cash assistance to aged, blind, and disabled individuals and their dependent family members. Many older persons use their SSA benefits, including SSI, to pay out-of-pocket LTC expenses, including board and care.
At the federal level we are also emphasizing quality through a number of means. Last Spring, the President appointed a Commission on Consumer Protection and Quality in the Health Care Industry for which Secretary Shalala serves as a co-chair. This Fall, the Commission approved a Consumer Bill of Rights which was endorsed by the President. Additional Commission recommendations are expected later this Winter addressing requirements for protecting consumers in managed care and fee-for-service plans.
These recommendations and their implementation will have important implications for consumers of LTC.
The OAA authorizes state LTC ombudsman programs. In all 57 states and territories and 550 localities, LTC ombudsmen investigate and resolve complaints related to the care of nursing home and board and care residents. In a number of states, ombudsmen also monitor the quality
of home care. This program provides a community presence in long-term care facilities by monitoring private and publicly-subsidized care.
The LTC issues which face national, state and local officials are complex. To offer a sense of this, let me just list a few major LTC policy issues.
Assisted living facilities are one of the fastest growing residential care options for older persons. Many states are wrestling with how much regulation is necessary to protect residents and ensure
quality of care while assuring sufficient flexibility to sustain a home-like environment, accommodate individual residents' preferences, and avoid discouraging developers.
Industry-driven Medicare home health benefits are being utilized increasingly to meet the LTC needs of older adults. However, the Office of the Inspector General (OIG) and the General Accounting Office have found this benefit to be very susceptible to abuse. The OIG evaluated a sample of 3,745 services in 250 home health claims in four states and estimated that 40 percent of the services did not meet Medicare reimbursement requirements.
Over at least the last two decades, Medicaid spending on nursing homes has risen. States are
making efforts to control costs and increase the provision of home and community-based
services. The rates of increase for nursing home expenditures have been declining and nursing
home utilization rates are beginning to come down. However, estimates of nursing home
expenditures continue to increase at rates beyond the overall inflation rate, e.g., 7.8 percent in FY
1995. Nursing home spending continues to be a significant part of total Medicaid expenditures
for older persons, e.g., almost 64 percent in FY 1995, with an additional 8 percent spent on home
Out of an interest in creating a more seamless, cost-effective system of care, federal and state
officials alike are giving increased attention to strategies for integrating acute and LTC through
mechanisms such as managed care, especially for those older persons who are dually eligible for
Medicare and Medicaid. Managed care organizations, primarily concerned with primary and
acute care in the past, generally do not have an established track record in LTC and many
advocates are concerned about this lack of experience. For these reasons, we need to monitor
closely provider performance.
From the beginning of his administration, the President has maintained a strong and continuing
commitment to health care reform. This commitment has been reflected in LTC efforts by
DHHS and other federal agencies. At the 1995 White House Conference on Aging, President
Clinton unveiled Operation Restore Trust (ORT) to combat fraud and abuse in the Medicare and
Medicaid programs, targeting in particular nursing homes and home health agencies with
questionable fiscal and care practices. Within DHHS, the Office of the Inspector General,
HCFA, and AoA, partnered, along with the Department of Justice, to carry out ORT
demonstrations in five states. The ORT demonstration has proved so successful that a full-scale
national effort is now underway.
The Administration supported the 1996 Health Insurance Portability and Accountability Act
(HIPAA) authored by Senators Kassebaum and Kennedy. The HIPAA clarifies tax treatment of
private LTC insurance and directs the Department of Treasury to prepare regulations for the
implementation of these provisions in consultation with DHHS.
Through the 1997 Balanced Budget Act (BBA), the President took important steps toward
improving and expanding health care access and quality. The BBA includes provisions for
developing a prospective payment system for home care and skilled nursing home facilities
under Medicare and the repeal of the Boren Amendment under Medicaid, all of which are
expected to reduce nursing home and home health costs. The BBA also provides for an
expansion of the PACE program, which represents one model for integrating LTC and acute care
using Medicare, Medicaid, and other dollars.
The AoA has been engaged for the last three decades in partnership with State and Area
Agencies on Aging in the development of a LTC infrastructure. More than half of all State Units
on Aging nationwide are administering Medicaid waiver programs, two-thirds are administering
the widely-appreciated Health Insurance Counseling and Assistance Program, and one half are
administering programs for adults with disabilities. Many area agencies have taken on similar
responsibilities at the local level.
While the scope and operation of LTC systems are complex and the issues pertaining to the
system of services, costs and quality of care are challenging, the heeds of most frail older
Americans and their families are relatively simple. The majority of older Americans live at
home or in small community residential settings. As survey after survey has shown, older adults
and their families the payers of the major portion of LTC costs, prefer to have services provided
in their homes and communities rather than in institutions. Long-term care, particularly when
it is delivered in the community, does not generally involve expensive medical care. For the
most part, it entails basic assistance with dressing, eating, using the bathroom, and other
activities of daily living. Personal care, meal preparation, or chore services - whether provided
by one of the millions of volunteer caregivers, family members, neighbors, friends, or by a paid
service provider - can help older persons remain in their homes as long as possible. As simple as
the needs of a frail older person may be, some basic infrastructure must be in place and
accessible to them. For instance, an ideal home and community-based care system would
include the following services, as appropriate: personal care, homemaker, and chore services;
congregate and home-delivered meals; adult day care; rehabilitative care; assisted transportation;
home health care; supportive services for caregivers; and assisted living. Because older
Americans often have multiple and changing health and social service needs, effective HCB
service programs also require administrative arrangements that facilitate the coordination of and
access to HCB and institutional services, including discharge planning, case management,
pre-admission screening, and linkages to medical providers.
In light of the gift of longevity with which a growing majority of Americans are now blessed, we
must engage as a nation in ensuring that we have an architecture for longevity in place; i.e., a
design for the future which acknowledges long life as a reality, is sensitive to the needs of current
elders, and is informed by the likely requirements and contributions of the largest cohort of older
adults this world has yet to see - the baby boomers. Let me thus suggest four areas where more
attention must be focused at the federal level if we are to empower all Americans as well as
develop a LTC system which resonates with the broadest spectrum of our population.
- We must ready America for longevity. That is, those of us in federal positions of
responsibility must be sure that all Americans are aware of and prepared for the challenges and
opportunities which lie ahead for our communities, families, and ourselves as the gift of
longevity begins to manifest itself in even more pronounced ways. To the extent that life
expectancy is increasing and disability rates among the elderly are declining, we need to foster a
climate of "active aging", where society can continue to draw on the talents of its older citizens.
At the same time, frail elders with disabilities need access to appropriate long-term care services
in their communities.
- We must give greater emphasis to consumer education and protection. Although
increased choices are leading to healthy market competition and in most cases improved
potential consumer options, the number and magnitude of these choices is bewildering to many
older persons. As you know, HCFA is launching a number of consumer education efforts around
the new preventive benefits and managed care options under the BBA. We support these and are
working closely with them. In addition, last year we transmitted to the aging network our
managed care principles which suggested broad roles in advocacy, information and assistance,
benefits counseling, quality assurance, care management, and consumer protection, including
adopting the ombudsman function in managed care. Because the aging network is so concerned
about the relationship of managed care to LTC, it is important that we encourage them to
establish a clear understanding of what approaches they will adopt in relation to managed care
organizations, particularly in regard to advocacy and consumer protection.
- We must encourage public-private partnerships as well as partnerships among federal
agencies which can generate more resources, new creative approaches, and which recognize
and address the diverse needs of a longevous population. There is hardly enough that we can
do in this regard, particularly if we are committed to fostering the development of more
coordinated and effective services. The AoA and I take the coordination and advocacy
responsibilities seriously. We are already beginning to plan how these might be carried out
through partnerships with others.
- We need vigorous experimentation and testing to determine what is working and at what
cost. The HCB waiver program has expanded dramatically and supports reforms that can make
HCB services a more attractive alternative to institutional care. I submit that the Title IV
research and demonstration program under the OAA is another important vehicle for doing the
type of demonstrations that are needed in LTC, particularly for non-nursing home eligible older
persons. As most people in the field recognize, Title IV has been the testing ground for many
important developments in LTC, e.g., On Lok (the predecessor of PACE), case management
(particularly under the channeling projects), the LTC Ombudsman Program, and national LTC
resource centers and state planning grants.
This concludes my assessment of the current state of LTC at the national level and some of the
future possibilities for improving services for older persons. Obviously there is much we all must
do at every level of government to institute needed changes in the way LTC is organized,
financed and delivered. The AoA is just one of many agencies that has an important role to play
in this endeavor. Nonetheless, it is an important role. The OAA authorizes the AoA to be an
"effective and visible advocate for older persons' within DHHS and other departments and
agencies, and to coordinate federal, state local and private programs to "establish a nationwide
network of comprehensive and coordinated services" for older persons. As the new Assistant
Secretary for Aging, I am anxious to begin initiating discussions with others with the goal of
promoting the development of more effective LTC systems for older persons and all those
Finally, I would like to thank you, Senator Reid, for providing me with this opportunity to be
here with you in Nevada and to present testimony before the Senate Special Committee on Aging
on this important topic. I look forward to the rest of this morning's hearing, and working with
you as we move forward toward improving LTC services. I will be happy to answer any
questions you might have.
SUMMARY OF OTHER DHHS PROGRAMS RELATED TO LTC
The Administration for Children and Families (ACF) administers the Social Services Block
Grants which are awarded to states and may be used to provide a broad array of supportive,
social, and personal care and assistance services to persons in need of home and
community-based assistance, including the elderly. In FY 1997, $13.9 million was allocated to
The Substance Abuse and Mental Health Services Administration (SAMHSA) administers,
among other programs, the Community Mental Health Block Grants which are formula grants to
each state to carry out comprehensive community mental health services for all populations
regardless of age. In FY 1997, Nevada received $1.4 million under this program.
The Health Resources and Services Administration (HRSA) has administered since 1992 a State
Alzheimer's Disease Demonstration Program which is designed to demonstrate new approaches
to providing home and community-based services to Alzheimer's victims and their families.
Currently, $6 million is allocated to 15 states. While Nevada is not one of these states, the new
approaches under development will be of use in planning community-based approaches to
addressing the issues of Alzheimer's disease.
The office of the Assistant Secretary for Planning and Evaluation (ASPE) funds a large number
of national policy research studies relative to disability, aging and LTC. Currently, two of their
most significant ones are the evaluation of the Cash and Counseling demonstrations funded by
the Robert Wood Johnson Foundation and a national study of assisted living. The cash and
counseling demonstrations are designed to test new methods of providing consumer-directed
services for the elderly and the disabled. The assisted living study is examining the
state-of-the-art of the emerging area of assisted living and how it fits into the development of
LTC systems around the country. Both of these studies have important policy implications for Nevada
and other states.