Deck 10: Long-Term Care

Question 1

Increasing demand for long-term care is associated with macroeconomic and demographic trends as well as individual life style choices. For instance, higher workforce participation by women has raised the opportunity cost of care giving.

Answer 1

True

Question 2

Home health care providers meet only functional and social needs of patients.

Answer 2

False

Question 3

Medicare accounts for more than half of all nursing home funding.

Answer 3

False

Question 4

Originally, Medicaid has been created to provide medical insurance for indigent women and children. Now, however, the majority of Medicaid expenditures are for the elderly.

Question 5

Nursing homes set their prices by estimating the elasticity of demand for private pay patients. Typically, nursing homes first try to fill as many of their beds as possible with patients willing to pay prices above the Medicaid reimbursement rate. Only then they proceed to fill the remaining beds with Medicaid patients.

Question 6

An economist is asked to choose an appropriate cost escalation index for long term care providers. Using an index that relied more on housing and employment cost indices than on technology cost increases would probably result in lower cost escalation than a more general hospital cost index.

Question 7

The existence of financial reimbursement cycles reflects the self-interest of all parties involved in the provision of medical and long term health care services.

Question 8

Middle and low income taxpayers benefit from several federal tax incentives to buy long term care insurance.

Question 9

More than 10% of U.S. health care spending goes to nursing homes.

Question 10

Long term care facilities covered by Medicaid include facilities for the mentally impaired and the permanently disabled.

Question 11

In the market for nursing home services, after reaching the quantity where the private market's willingness-to-pay matches the Medicaid reimbursement rate, demand becomes essentially perfectly elastic at the Medicaid reimbursement rate, as all remaining beds can typically be filled with Medicaid patients.

Question 12

Payments to hospices from Medicare can be characterized as having reached the fourth stage of a typical financial reimbursement cycle: total cost control through global budgets.

Question 13

The full economic impact of nursing home certificate of need restrictions on a local economy is difficult to quantify because

A) it is difficult to measure the opportunity cost of the real estate that could have been used for a nursing home.
B) it is difficult to measure the opportunity cost to the Medicaid program of the patient per diem payment.
C) fees for filing a CON application vary significantly from state to state.
D) it is difficult to measure the opportunity cost of the caregivers who are financially uncompensated while caring for loved ones waiting for a nursing home space.
E) more economic analysis is needed.

Question 14

Payments to physicians from Medicare can be characterized as having reached which stage of a typical financial reimbursement cycle?

A) The First Stage: fees paid to trusted voluntary organizations.
B) The Second Stage: cost reimbursements.
C) The Third Stage: complex administered prices.
D) The Fourth Stage: total cost control through global budgets adjusted to match growth in GDP.
E) The Fifth Stage: start over.

Question 15

Payments to hospitals from private insurers can be characterized as having reached which stage of a typical financial reimbursement cycle?

A) The First Stage: fees paid to trusted voluntary organizations.
B) The Second Stage: cost reimbursements.
C) The Third Stage: complex administered prices.
D) The Fourth Stage: total cost control through global budgets adjusted to match growth in GDP.
E) The Fifth Stage: start over.

Question 16

The institution of payment according to one of eighty home health resource groups (HHRGs) limits the payments to a provider over a 60 day period. No matter how many times a provider visits a home during the 60 day period, the price remains at the HHRG designated amount. This is an example of which stage of the financial reimbursement cycle?

A) The First Stage: fees paid to trusted voluntary organizations.
B) The Second Stage: cost reimbursements.
C) The Third Stage: complex administered prices.
D) The Fourth Stage: total cost control through global budgets adjusted to match growth in GDP.
E) The Fifth Stage: start over.

Question 17

Which of the following statements is incorrect?
The practice of transitioning post-acute-care hospital patients to nursing homes

A) may generate some savings to Medicare due to shortened hospital stays.
B) may overstretch Medicaid budget.
C) is profitable for nursing homes because it fills beds that would otherwise stay empty for prolonged periods of time.
D) aims to achieve system-wide cost savings due to substitution of expensive hospital care with less expensive nursing home care.
E) has not really generated the level of system-wide savings that were originally anticipated because demand for new services provided outside of the hospital has exceeded savings from shortened hospital services.

Question 18

The case-mix reimbursement system for nursing homes may not be perfect because

A) it provides nursing homes with incentives to admit only severely ill patients.
B) it provides nursing homes with incentives to admit only less costly patients.
C) even with differential payment rates, if differences in payment rate are not correctly matched with differences in cost, nursing homes may find it profitable to accept some patients while turning others away.
D) when the state pays only a single fixed rate per day for nursing home care, it means that some patients may be denied care.
E) with revenue per day fixed, a nursing home can increase profits by accepting only less costly patients who need very little care.

Question 19

Medicaid payments to nursing homes using a case-mix adjustment

A) makes it harder for patients who are sicker to get care.
B) is an effort to relate the cost of care with the severity of patients' needs.
C) uses the DRG system of administered prices.
D) always considers resource utilization groups (RUGs).
E) reflects certificate of need requirements.

Question 20

Which of the following statements about the certificate of need legislation is false?

A) Patients benefit from the certificate of need legislation in the nursing home market, since CON legislation ensured incentives for nursing homes to provide high-quality care to attract more patients.
B) Current providers benefit from the certificate of need legislation in the nursing home market, as they face less competition from potential market entrants.
C) Taxpayers benefit from the certificate of need legislation in the nursing home market, since they have less nursing homes to support through tax payments to Medicaid.
D) State regulators benefit from the certificate of need legislation in the nursing home market, as CON regulations reduced state Medicaid budgets.
E) Nursing home owners benefit from the certificate of need legislation in the nursing home market, as restricted entry into the market leads to excess profits.

Question 21

Long term care insurance

A) pays more than 10% of U.S. nursing home and home health care bills.
B) is widespread in the U.S.
C) is popular because significant financial benefits go to the heirs of the individual who purchased the insurance.
D) must be purchased so far in advance of anticipated need that savings become a good alternative to insurance.
E) pays mostly for medical care, with less budget allocated to lifestyle choices, such as housing, food, social amenities.

Question 22

The wealthiest group in America is in the age category of

A) 35 to 44 years old.
B) 45 to 54 years old.
C) 55 to 64 years old.
D) 65 to 74 years old.
E) 75 and older.

Question 23

It would be safe to predict that the graph showing the relationship between the individuals' income and nursing home utilization

A) is positively sloped.
B) is negatively sloped.
C) has a U-shape.
D) has an inverted U-shape.
E) can be either positively sloped or U-shaped, depending on the assumptions about other demographic characteristics.

Question 24

Long term care insurance

A) is not useful to the family of a policyholder.
B) is just as popular as traditional indemnity type health insurance.
C) cannot be purchased after age 65.
D) is unpopular because financial benefits really accrue to the survivors, heirs and family members of the person receiving care, not the beneficiary.
E) can be used to cover residence at selective over-55 living communities.

Question 25

Explain how the market for nursing home care is a two part market in which those who can afford to pay out of pocket subsidize those with less money who are dependent on Medicaid to pay for nursing home. It may be helpful to draw a graph of the market demand.

Question 26

After the CON legislation has been repealed in several states, how did the nursing home markets in those states respond? Who benefits when certificate of need legislation (CON) is repealed in the nursing home market?

Question 27

What are some of the difficulties in implementing case-mix adjusted payment schedule in nursing homes? What are the criteria used to determine a case-mix weight? What are the strengths and weaknesses of such a system?

Question 28

Use the concept of cost control by substitution to explain how the efforts to reduce healthcare costs by making cataract surgery an ambulatory surgery have actually increased Medicare spending on cataract surgery.

Question 29

Research shows that much more money is spent on medical care for the elderly today than 50 years ago. What is the likely reason? Do today's elderly tend to be sicker and more likely to be disabled than in prior years?

Question 30

Discuss your opinion about the efficiency (or lack of thereof) of the Medicaid reimbursement mechanism for nursing home care. Do you expect the Medicaid reimbursement mechanism for nursing home care to change in the future, or to remain as is? Why?