Under pressure from patient advocates and faced with the likelihood that Alzheimer's patients will be prevalent among their enrollees, Medicare HMOs are developing special programs to care for people with the disease.
"We have a quarter of a million people over age 65 who are enrolled in Kaiser plans in Southern California alone," said Richard D. Della Penna, M.D., eldercare coordinator for Kaiser Permanente's Southern California region. "Judging by the statistics, thousands of those people are in different stages of Alzheimer's. We saw the need to develop more continuity of care and take a proactive stance."
Oakland, Calif.-based Kaiser is one of three managed-care organizations that have partnered with the Chicago-based Alzheimer's Association to launch pilot programs targeting the needs of Alzheimer's patients.
In addition to Kaiser, United HealthCare of Ohio in Columbus and U.S. Healthcare in Blue Bell, Pa., are setting up demonstration projects.
Blue Cross and Blue Shield organizations in Arizona, Connecticut and Wisconsin also have expressed interest in developing programs, according to the Alzheimer's Association.
The demonstration projects will focus on filling the dearth of data on Alzheimer's patients covered by managed-care plans. They also will be used to develop models of care for Alzheimer's patients and to determine if the costs of caring for such patients can be spread more evenly.
The United States now spends
$80 billion to $100 billion a year on costs related to Alzheimer's, making it the third most expensive disease in the country, after heart disease and cancer. Seven out of 10 Alzheimer's patients live at home, while the other three are cared for in a nursing home, an assisted-living facility or another institution such as a psychiatric hospital, according to the Alzheimer's Association.
The National Institute on Aging funded one of the most recent studies to break down the costs. The study found that in 1990 the average annual costs for professional home care for Alzheimer's patients in Northern California was $12,572. Some 63% of these costs were paid out-of-pocket, according to the study. The Department of Veterans Affairs, private foundations, and state, county and local governments chipped in 22%, while Medicare covered 12% of the costs. Private insurance picked up 2% and Medicaid and HMOs each paid for less than 1%.
For those cared for in an institution, the study found the average annual cost for Alzheimer's patients in Northern California was $42,049. About 60% of these costs also were paid out-of-pocket, the study noted. Another 31% were covered by Medicaid, while Medicare covered only 3%. Private insurance, HMOs and other public sources combined accounted for 6%.
Wendy Max, an associate professor of medical economics at the University of California's Institute for Health and Aging in San Francisco and an author of the study, noted that the average annual costs of home care match those of an institution when the free help from family and friends is considered.
"We're shifting the burden of the costs to the families," she said. She explained that the public sector covers so little of the costs because "there are huge gaps in long-term-care coverage." She noted Medicare only covers long-term care for about a month and only following a hospital stay. Home care also is covered in limited circumstances. For Medicaid to kick in, the patient must "spend down to the eligibility level," she said, leaving many people in the middle without coverage.
Not surprisingly, Alzheimer's patient advocates would like to see Medicare HMOs pick up more of these costs by including services such as home care, adult day care, respite care and rehabilitation in their covered benefit packages.
However, Medicare HMOs and other insurers are not required to provide services that go beyond the limited Medicare benefits.
"Home care and adult day care are not benefited services, given the Medicare reimbursement structure, so we wouldn't provide those," said Della Penna of Kaiser.
Under a Medicare risk plan, the contractor receives a set amount from HCFA to pay for the care of a Medicare beneficiary. The plan puts itself at risk under the arrangement because it must absorb the cost of any services that go beyond the basic package.
Teresa Fama, deputy director of the Robert Wood Johnson Foundation's chronic-care initiatives in HMOs, argued Medicare HMOs may have more to gain than lose from covering additional services. She explained that they could help prevent a high-cost emergency room visit or an inpatient hospital stay, both of which typically are absorbed by a plan.
"What Medicare provides is a floor," she said. "Medicare doesn't prevent (HMOs) from providing services such as respite care that could end up reducing the cost of covered services. Saying `Medicare doesn't pay for it so why should we?' is a shortsighted view."
As HMOs move more aggressively into the seniors market, they are running headlong into such dilemmas.
Alzheimer's is the 11th leading cause of death among Americans 65 and older, according to the Centers for Disease Control and Prevention's National Center for Health Statistics. There is no known cure or prevention for the chronic disease of the brain, which eventually impairs memory, thinking and behavior to such an extent that the body's automatic systems shut down and death results from a variety of complications.
Most of the 4 million Americans afflicted with Alzheimer's are in the seniors age group targeted by Medicare HMOs. Some 10% of Americans 65 or older have Alzheimer's, according to the Alzheimer's Association. The numbers increase with age. Some 50% of those 85 or older have the disease. The association estimates that by the middle of the next century as many as 14 million Americans will have Alzheimer's.
At the same time, the number of older Americans joining managed-care plans is destined to increase, as the federal government continues to steer seniors into health plans in an attempt to bring down national healthcare costs.
Currently, about 10%, or 3.8 million, of the 37 million Medicare beneficiaries are enrolled in Medicare risk plans, according to the Robert Wood Johnson Foundation. That's up from 1.1 million Medicare risk enrollees in 1990 and only 309,000 in 1985, according to the foundation. And a report prepared by InterStudy, a managed-care research firm based in Excelsior, Minn., predicts that by 2000 as many as 12.6 million will be enrolled in Medicare HMOs.
Increased scrutiny from Alzheimer's patient advocates has come with the new territory.
Earlier this year, the Senate's Special Committee on Aging conducted a hearing on the effects of managed care on Alzheimer's patients.
Witnesses expressed concerns that managed-care organizations discourage the referral of Alzheimer's patients to geriatric specialists. They further cautioned that some managed-care companies don't provide access to a full range of services and warned that the healthcare market doesn't offer incentives for plans to develop programs that might attract patients with long-term, costly illnesses.
Alzheimer's patient advocates also have complained that Medicare HMOs lack standardized clinical protocols for identifying and treating Alzheimer's patients.
"If managed-care organizations don't have protocols for Alzheimer's patients, then people with Alzheimer's should stay in fee-for-service for as long as they can," said Katie Maslow, director of the Alzheimer's Association's initiative on managed care.
Patient advocates also would like to see information on the number of Medicare HMO enrollees with Alzheimer's, the type of services they receive and the costs of their care.
"The association is worried about managed care and what it will mean for people with Alzheimer's and other forms of dementia," Maslow said. "We're not sure they're receiving poor care in general, but since they don't have any data on their enrollees with dementia we can't say that managed care is any better or worse than fee-for-service."
The demonstration projects are designed to address most of these concerns. But while the projects share similar clinical goals of improving and coordinating care for Alzheimer's patients, they take different approaches to the issue of cost.
Della Penna said Kaiser's effort should roll out in early 1997 and will affect enrollees who use its Los Angeles and West Los Angeles medical centers. He said the focus will be on identifying Alzheimer's patients and aligning them with social workers who serve as their care coordinators.
The care coordinators will help patients navigate the clinical system and monitor their condition through regular check-up calls. They also will direct patients to resources in the community that offer home care, respite care and other specialized services found outside the plan.
Additional costs under this scenario, he explained, would be related to the salaries and benefits of the new case workers rather than to additional covered benefits.
Meanwhile, Helen-Ann Comstock, executive director of the Alzheimer's Association of Southeastern Pennsylvania, said U.S. Healthcare and the association began the planning process for their program earlier this month and likely will target enrollees in the Philadelphia area in the middle of next year.
Comstock said the organizations will be determining whether the HMO can underwrite the costs of providing enrollees with educational materials on Alzheimer's as well as the costs of training family caregivers.
While such services could be included in the basic benefits package, Comstock explained, others such as respite care and home care could be provided for an additional fee. "Everyone is anxious to come away with something that will provide a better service to the families but still be affordable," she said.
The Columbus, Ohio, project experiments the most with including Alzheimer's-specific services in its basic covered benefits package.
Patricia Carroll, United HealthCare of Ohio's vice president for health services, said skilled home care is covered as part of United's basic benefits package and respite care is provided on a case-by-case basis.
"The main purpose is to prevent chronic conditions from becoming catastrophic," Carroll said. "We want to maintain the health status of the member so they can remain in the home. We want to prevent secondary complications and reduce unnecessary emergency room and hospital stays."
For Alzheimer's patients, Carroll said United is contracting with Alzheimer's Home Care, a private, not-for-profit spinoff of the Columbus chapter of the Alzheimer's Association that specializes in providing home care for dementia patients. United will be the first managed-care organization to contract with the group.
Carroll said the contract with Alzheimer's Home Care has given United an upfront idea of how much the program will cost. She said each home visit to an Alzheimer's patient will cost United between $35 and $150, depending on the care required. The number of visits will be determined on a case-by-case basis, she said.
However, Carroll said, it's too early to tell whether the program will improve care and reduce costs overall. United rolled out its Medicare risk plan in Ohio on July 1 and had 3,500 enrollees by Sept. 1.
"We don't know about the costs yet," she said. "It's like AIDS when people were predicting the costs would be astronomical. We're not seeing that at all, at least not to the extent that was forecast."
Even so, Stan Jones, director of the Health Insurance Reform Project at George Washington University in Washington, predicted the demonstration projects would make more progress on the clinical side rather than the cost side.
He said managed-care companies have the potential to offer Alzheimer's patients the integration and coordination of services they may not have in the fee-for-service setting.
However, he said, competition among health plans typically discourages the development of programs tailored to chronically ill patients who may end up costing the plan more than healthier enrollees.
"The long-term incentives work against doing those special programs because they have to cut back on benefits or start charging a premium to cover the costs," he said.
The "acid test" for judging the success of the projects will be whether the companies advertise their Alzheimer's programs during open enrollment, Jones said. "If a company decided it could sell to Alzheimer's patients and come out ahead of the game, then you'd see advertising," he said.