Newly published article: The New Health Reform Law: The Impact on Elders and People with Disabilities
[June 17, 2010]
Donald N. Freedman

(This paper is based on a presentation by Attorney Freedman at a conference on health and hospital law, “Health Reform Essentials,” sponsored by Massachusetts Continuing Legal Education Inc., on June 2, 2010, in Boston, Massachusetts. What is commonly referred to as the new health reform law reflects changes enacted by two statutes, the Patient Protection and Affordable Care Act (or PPAC), and the Health Care and Education Reconciliation Act (or HCERA), which in some cases amended provisions of PPAC, in others, adding entirely new material. References to “the Act” in the paper may relate to provisions of either or both of these statutes.)


The new health reform law is expected to advance the quality and availability of health care in America on many fronts, particularly for people who are currently uninsured either because they cannot afford coverage or because they are denied coverage due to pre-existing conditions. In addition, many provisions are very important specifically for elders and people with disabilities, as they are designed to increase independence, choice and the ability to receive services in the community. The outcome reflects decades of advocacy efforts. For attorneys practicing in elder and disability law, learning to tap the potential of appropriate provisions of the Act, in coordination with Medicare, Medicaid and other existing and evolving programs, will provide major new opportunities and challenges. In this paper I will attempt to highlight and summarize some of the more important of these provisions.

Many provisions focus on helping elders and people with disabilities remain in home or other community-based programs, such as assisted living, rather than in institutional care in nursing homes. Government expenditures have historically been very heavily weighted toward nursing home care, serving about 1.5 million persons. In contrast, 9 million elders and 5 million people under age 65, at home, have significant health and personal care needs that are currently unmet. In many particulars, the new law is intended to address this imbalance.

THE CLASS INDEPENDENCE BENEFIT PLAN

The Act establishes the CLASS Independence Benefit Plan. The Plan is a self-funded public long‐term care insurance program, which will go into effect in 2014. CLASS stands for “community living assistance services and supports.” Many elders and people with disabilities who have unmet needs both for health services and also for “personal care” services. While health services are the domain of Medicare, Medicaid and private health insurance, CLASS targets personal care services. Personal care services involve assistance with basic living activities essential for fundamental functioning, such as personal hygiene, dressing, eating, transferring between bed and chair, toileting, and moving around. (These are sometimes referred to as Basic Activities of Daily Living.) Other daily activities may not be essential for fundamental functioning, but are necessary nonetheless for an individual to live independently in the community, such as taking medication, using the telephone, doing light housework, preparing meals, shopping for groceries, clothing and other needs and managing money. (Instrumental Activities of Daily Living.) CLASS targets other non-medical needs as well, such as adaptive equipment, accessibility modifications, adult day care and companion services. In many cases, it is these non-medical services that are essential to remaining at home, even though availability is limited under Medicaid, absent for people under age 60 in the state home-care program, and absent altogether under Medicare and private health insurance.

Recipients, after a five-year vesting period, will have access to a cash benefit averaging $75 per day ($50 minimum), or about $27,000 per year, depending on level of impairment. Benefits at this level are meaningful as a source of support for many home- and community-based services. However, they are insignificant in relation to the cost of long-term nursing home care. Therefore, participation in the program cannot be viewed as a substitute for long-term care insurance or financial and benefits planning.

The program is to be funded exclusively by voluntary pay-roll deductions. This means that participation will be limited to people who are working at least part-time, earning in excess of an income threshold to be determined. Non-workers will not have access to the program, nor will dependents or family members of workers. Participation by employers will be voluntary. This means that only workers employed by participating employers will have the chance to benefit, although self-employed people will be able to enroll through a government agency. Since the program will be operated without any contribution by employers or the government, and since younger workers may opt out, (all in contrast to Social Security), it may end up being be quite expensive for participating workers. (Information on premiums and other program details are not expected before 2013.)

HEALTH INSURANCE PROGRAM FOR YOUNG RETIREES

The Act establishes a new “reinsurance” program for early retirees. People retiring before age 65 typically face a potentially catastrophic gap in health insurance coverage. Retiree coverage is less and less available, and even with COBRA, there may be a gap until Medicare is available at age 65. Section 1102 of the Act establishes a temporary reinsurance program to provide reimbursement to participating employment-based plans, including (as clarified by Section 10102) plans sponsored by State and local governments, for part of the cost of providing health benefits to retirees (age 55-64) and their families. The program reimburses participating employment-based plans for 80 percent of the cost of benefits provided per enrollee in excess of $15,000 and below $90,000.

COMMUNITY FIRST CHOICE OPTION

The Act establishes an optional Medicaid benefit called the Community First Choice Option, through which States can offer community-based services and supports to Medicaid beneficiaries with disabilities who would otherwise require the level of care offered in a hospital, nursing facility, or intermediate care facility for the mentally retarded. The program provides personal care attendant services for activities of daily living, health-related tasks, and training in independent living. Individuals with income up to 300% of the federal benefit rate ($2,022 per month) would be eligible.

REMOVAL OF BARRIERS TO PROVIDING HOME- AND COMMUNITY-BASED SERVICES

Some provisions of the Act are intended to remove barriers to providing home- and community-based services by giving States the option to provide more types of such services through a State plan amendment rather than through a waiver. While this may sound like nothing more than bureaucratic jargon, it really should make it much easier for states to meet the needs of individuals with higher levels of need. A waiver is a special request Massachusetts has in fact made very extensive use of waivers under current law. The entire MassHealth program for non-institutionalized people under age 65 is under a waiver. The current waiver process for HCBS is cumbersome and unevenly applied, and in many cases is subject to arbitrary caps on services and numbers of participants. This change will make the process much more available, and is expected to eliminate the caps.

MEDICAID PROTECTION FOR RECIPIENTS OF HOME- AND COMMUNITY-BASED SERVICES AGAINST SPOUSAL IMPOVERISHMENT

Special Medicaid eligibility rules currently apply to nursing home residents who have a spouse living in the community. The rules are intended to provide at least a measure of financial protection to the community spouse under such circumstances. She is permitted to keep a certain amount of assets (currently about $110,000) and all her income, while her husband qualifies for MassHealth support for his nursing home placement. But what about the much more common situation of both the “ill spouse” and the “well spouse” living together at home? Massachusetts has a special program extending similar financial protections to spouses where the ill spouse is at least age 62. However, there are NO impoverishment protections for younger married people with long-term health and care needs such as might arise from early-onset Alzheimer’s Disease, Parkinson’s Disease, Huntington’s Disease, Multiple Sclerosis, stroke or trauma or any of the many other conditions that commonly arise prior to retirement age. To avoid utter impoverishment in such cases, couples may tragically be forced to consider separation, divorce or nursing home placement. The prospect of being able to access the full array of spousal impoverishment rules to couples of all ages at home has the potential for being a complete game-changer in planning for this population. Unfortunately, the Act commits to the reform for only a five-year period, beginning in 2014.

INCENTIVES FOR STATES TO OFFER HOME- AND COMMUNITY-BASED SERVICES AS A LONG-TERM CARE ALTERNATIVE TO NURSING HOMES

The Act provides new financial incentives for States to shift Medicaid beneficiaries out of nursing homes and into home and community based services, by increasing the federal Medicaid matching rate for states willing to orient their systems away from institutional care.

NURSING HOME TRANSPARENCY AND IMPROVEMENT

The Act sets many new requirements for disclosure of information of critical interest to persons choosing a placement, including details of ownership. The Act also requires nursing facilities to implement a compliance and ethics program to be followed by facility employees and agents; directs enhancements in the Medicare “nursing home compare” website; requires facilities to include dementia management and abuse prevention training as part of pre-employment initial training for permanent and contract or agency staff, and if the Secretary determines appropriate, as part of ongoing in-service training; requires the Secretary to establish a nationwide program for national and State background checks on direct patient access employees of certain long-term supports and services facilities or providers.

ELDER JUSTICE

The Act requires the Secretary of Health and Human Services, in consultation with the Departments of Justice and Labor, to award grants and carry out activities that provide greater protection to those individuals seeking care in facilities that provide long-term services and supports and provide greater incentives for individuals to train and seek employment at such facilities. Owners, operators, and certain employees of these facilities would be required to report suspected crimes committed at a facility. Owners or operators of such facilities would also be required to submit to the Secretary and to the State written notification of an impending closure of a facility within 60 days prior to the closure. In the notice, the owner or operator would be required to include a plan for transfer and adequate relocation of all residents.

MODIFICATION OF ITEMIZED DEDUCTION FOR MEDICAL EXPENSES

People may currently deduct medical expenses from their income for federal income tax purposes only to the extent that medical expenses exceed 7.5% of their income (defined in a particular way). The act increases the adjusted gross income threshold for claiming the itemized deduction for medical expenses from 7.5 percent to 10 percent. Individuals age 65 and older would be able to claim the itemized deduction for medical expenses at 7.5 percent of adjusted gross income through 2016.

CLOSING THE MEDICARE PRESCRIPTION DRUG DONUT HOLE

Medicare prescription drug coverage fully covers medications up to $2,830 per year (2010) and then nothing until out-of-pocket spending reaches $4,550 – the “donut hole.” More than 8 million Medicare participants now hit the donut hole each year, typically around Labor Day. The Act provides some immediate relief through a $250 rebate for all beneficiaries who enter the donut hole in 2010. Beginning in 2011, prescription drugs in the donut hole will be discounted 50%; the gap will be closed completely by 2020.

MEDICARE ADVANTAGE PAYMENTS

Medicare Advantage programs, where insurers receive payments from Social Security to provide health services in lieu of original Medicare, were expected to provide care more efficiently and less expensively than under Medicare. However, the opposite has been the case, and Medicare Advantage programs are substantially subsidized by the federal government. The Act phases down these subsidies, which will probably result in reduction of ancillary benefits (like health club dues) and make them less attractive as an alternative to original Medicare in conjunction with private Medi-gap insurance.

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