Several Nursing Homes Are Now Offering Health Insurance

A few nursing home companies have begun selling their own private Medicare insurance policies across the country, promising close coordination and giving clinicians more authority to decide what treatments they will cover for each patient.

These plans are new to the Medicare Advantage market, where private plans have grown in popularity as an alternative to traditional fee-for-service coverage. In contrast to other plans, these policies provided by long-term care companies frequently place a nurse in the skilled nursing facility or retirement village, where they can speak directly with staff and assess patients’ conditions. Some organizations provide primary care doctors and nurses to residents in their homes or affiliated assisted living facilities or retirement villages in order to prevent hospitalizations.

“The traditional model makes decisions on paper, whereas in our model, these decisions are made by clinicians who are really talking to the staff and seeing the patient,” said Angie Tolbert, vice president of quality at PruittHealth, which began offering its plan to residents in 10 of its Georgia nursing homes last year. “There has been a significant shift in mindset.”

Such plans are not preferred by everyone. Some patients in disputes with insurers have blamed nursing home staff — who work for the same company — for failing to assist them in challenging coverage decisions. They claim the company has an unfair advantage over Medicare recipients.

“There’s a conflict there,” Toby Edelman, senior attorney at the Center for Medicare Advocacy, said.

According to her son, J.J. Daiak, Faith Daiak signed up for an Erickson Advantage plan sold by a nurse whose office was in the main village building at an Erickson Living retirement village in Silver Spring, Md. She was sent to her village’s skilled nursing facility after a bout with the flu last February weakened her enough to require a 10-day hospitalization. The insurer repeatedly tried to cut her stay short.

Erickson Advantage initially stated that it would no longer pay for Daiak, 88, because she was not improving in the nursing home. Her son argued that Medicare explicitly stated in the 2014 settlement of a class-action lawsuit that patients do not have to be improving to qualify for skilled nursing care.

Daiak’s appeal was denied, but the case was put on hold in March when her rapid weight loss in the nursing home sent her back to the hospital, according to him.

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When Daiak returned to the nursing home with a feeding tube in her stomach, the insurer attempted to shorten her stay by claiming she did not require that level of care. After noting that Medicare’s manual stated that feeding-tube maintenance required the skilled care of a nursing facility, the family successfully appealed that decision.

Erickson Advantage announced in April that it would no longer pay for Daiak’s stay. J.J. Daiak said the company reversed its decision after Kaiser Health News inquired about the case. He claimed that the plan failed to explain its turnaround.

Dolphine Williams (left) and Rita Coopersmith pay a visit to Faith Daiak on May 12, 2017, at the Riderwood-ArborRidge Skilled Nursing Facility in Silver Spring, Md. (Photo courtesy of the Daiaks)

While this Medicare Advantage plan advertises a “team that knows you personally and wants to help,” J.J. Daiak said the registered nurse at Erickson’s Silver Spring community was unhelpful. “All I see is her attempting to get Erickson out of paying for the nursing home,” he explained. He then changed his mother’s Medicare coverage to traditional Medicare with a supplemental Medigap policy, which she had until this year.

Erickson Living, the nursing home’s and insurer’s parent company, declined to comment on specific cases but noted that Medicare has given its insurance plans the highest quality rating of five stars. According to the company in a written statement, “medical service determinations for Erickson Advantage members are based on reviews by licensed clinical staff and clinical guideline criteria.” Our primary goal is to ensure that the healthcare provided to our residents meets the needs of the patient and follows established clinical treatment protocols.”

According to Edelman, the disagreement is especially troubling because Erickson’s retirement villages are marketed with the promise that the company will care for seniors at all stages of aging. “They don’t tell you what they’re not going to pay for,” she explained.

The overall Medicare Advantage market has nearly 18 million enrollees. Medicare pays private insurers a set amount for each beneficiary’s care. In theory, this payment method motivates insurers to keep patients from requiring expensive medical services such as hospitalizations.

A subset of Medicare Advantage plans is specifically designed for people who require or are expected to require at least 90 days of skilled services from nursing homes, assisted living facilities, or other long-term care facilities. With approximately 40,000 enrollees, UnitedHealthcare directly offers three-quarters of these plans, far more than those offered by nursing home companies. According to Matthew Burns, a spokesman for UnitedHealth, the majority of the company’s plans are rated four stars or higher on Medicare’s five-star quality scale.

“Our plans provide members with quality and peace of mind — and they meet CMS quality and performance standards that range from above average to excellent,” he said in a statement.

Erickson’s policies, which have around 200 enrollees and were the first Advantage plans offered by a long-term care operator, are also underwritten by United. Erickson Advantage decides when a nursing home stay is covered under the agreement.

According to Nick Williams, PruittHealth’s care integration officer, the company’s Medicare insurance plan has resulted in 30% fewer hospitalizations among residents since it launched last year. The company plans to extend insurance coverage to residents at 42 of its other Georgia nursing homes. This model is being tested by other nursing home chains in Missouri, South Carolina, Virginia, and elsewhere.

According to Anne Tumlinson, a Washington health care industry consultant who specializes in long-term care, when a nursing home’s company is responsible for the cost of their patients’ hospitalizations, it is more likely to make efforts to prevent them.

“It allows them to get out of hospitalizing people at the drop of a hat,” she explained. “If you live in a nursing home or assisted living facility and they have one of these plans in place, they will be investing heavily in 24/7 access to primary care.”

She claims that because large insurers have so many different types of enrollees, they are less focused on the specific needs of nursing home patients. “They’re too big, too bureaucratic, and they’re insurance companies, not providers,” she said.

The Expenses Involved for Patients

Suzanne Carmick of Hingham, Massachusetts, has been frustrated by the Erickson plan’s refusal to pay for the majority of her mother’s extended stay. Lorraine Carmick, 98, was admitted to Erickson’s nursing home after being hospitalized. Eleven days later, Erickson Advantage informed Suzanne Carmick that it would no longer pay for the facility because her mother was strong enough to move with the assistance of a rolling walker. Nursing home stays are not covered by Medicare if a patient does not require daily physical therapy. Erickson stated that two or three days would suffice for Carmick.

Suzanne Carmick filed an appeal, claiming that Erickson exaggerated her mother’s recovery, despite the fact that she had dementia, an infection, and was wearing two stiff leg braces. She claimed that having therapy provided in the nursing home five days a week would help her mother recover faster.

“She is still unable to stand, sit, or move… without an aide pulling her up or placing her in a chair,” Carmick wrote. “She’s getting better, but she’s supposed to stop or reduce her PT [physical therapy], and she has to start paying out of pocket?”

Following a week’s extension, the nursing home began billing her mother at the $463 daily rate, which increased to $483 this year as Lorraine Carmick remained in the nursing home. Based on the testimony of the nursing home staff — all Erickson employees — a Medicare appeals judge later ruled Erickson’s action was justified. Carmick would have avoided more than $30,000 in bills if the insurer had covered a maximum stay. Suzanne Carmick said her mother has been on a six-month waiting list for a bed on a lower-cost floor of the nursing facility.

“It’s a closed system,” she explained, “where the skilled nursing facility, physicians, and Medicare Advantage plan are all the same.” “At this point, the Erickson Advantage plan is proving to be quite a disadvantage.”

KHN’s coverage related to aging & improving care of older adults is supported by The John A. Hartford Foundation. Coverage of aging and long-term care issues is supported by The SCAN Foundation.

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