[COMMITTEE PRINT] MEDICAID AND FAMILY RESPONSIBILITY: WHO PAYS? A BRIEFING BY THE SUBCOMMITTEE ON HUMAN SERVICES OF THE SELECT COMMITTEE ON AGING U.S. HOUSE OF REPRESENTATIVES NINETY-EIGHTH CONGRESS ' FIRST SESSION MAY 16, 1983, NEW YORK, N.Y. Comm. Pub. No. 98-388 Printed for the use of the Select Committee on Aging U.S. GOVERNMENT PRINTING OFFICE | 23-433 O WASHINGTON : 1983 ''9334- 66 Dx PUBL. SELECT COMMITTEE ON AGING EDWARD R. ROYBAL, California, Chairman CLAUDE PEPPER, Florida MATTHEW J. RINALDO, New Jersey, MARIO BIAGGI, New York Ranking Minority Member IKE ANDREWS, North Carolina JOHN PAUL HAMMERSCHMIDT, Arkansas DON BONKER, Washington RALPH REGULA, Ohio THOMAS J. DOWNEY, New York NORMAN D. SHUMWAY, California JAMES J. FLORIO, New Jersey OLYMPIA J. SNOWE, Maine HAROLD E. FORD, Tennessee JAMES M. JEFFORDS, Vermont WILLIAM J. HUGHES, New Jersey THOMAS J. TAUKE, Iowa MARILYN LLOYD, Tennessee JUDD GREGG, New Hampshire STAN LUNDINE, New York GEORGE C. WORTLEY, New York MARY ROSE OAKAR, Ohio HAL DAUB, Nebraska THOMAS A. LUKEN, Ohio LARRY E. CRAIG, Idaho GERALDINE A. FERRARO, New York PAT ROBERTS, Kansas BEVERLY B. BYRON, Maryland COOPER EVANS, Iowa WILLIAM R. RATCHFORD, Connecticut JAMES A. COURTER, New Jersey DAN MICA, Florida LYLE WILLIAMS, Ohio HENRY A. WAXMAN, California CLAUDINE SCHNEIDER, Rhode Island MIKE SYNAR, Oklahoma THOMAS J. RIDGE, Pennsylvania BUTLER DERRICK, South Carolina JOHN MCCAIN, Arizona BRUCE F. VENTO, Minnesota MICHAEL BILIRAKIS, Florida BARNEY FRANK, Massachusetts GEORGE W. GEKAS, Pennsylvania TOM LANTOS, California MARK D. SILJANDER, Michigan 4 RON WYDEN, Oregon CHRISTOPHER H. SMITH, New Jersey DONALD JOSEPH ALBOSTA, Michigan ; GEO. W. CROCKETT, Jr., Michigan WILLIAM HILL BONER, Tennessee IKE SKELTON, Missouri DENNIS M. HERTEL, Michigan ROBERT A. BORSKI, Pennsylvania FREDERICK C. (RICK) BOUCHER, Virginia BEN ERDREICH, Alabama BUDDY MacKAY, Florida HARRY M. REID, Nevada NORMAN SISISKY, Virginia TOM VANDERGRIFF, Texas ROBERT E. WISE, Jr., West Virginia BILL RICHARDSON, New Mexico Jorce J. Lamsrinos, Staff Director Pau. SCHLEGEL, Minority Staff Director SUBCOMMITTEE ON HUMAN SERVICES MARIO BIAGGI, New York, Chairman WILLIAM J. HUGHES, New Jersey OLYMPIA J. SNOWE, Maine, : DONALD JOSEPH ALBOSTA, Michigan Ranking Minority Member TOM LANTOS, California MATTHEW J. RINALDO, New Jersey BEN ERDREICH, Alabama CLAUDINE SCHNEIDER, Rhode Island BUDDY MacKAY, Florida MICHAEL BILIRAKIS, Florida BILL RICHARDSON, New Mexico CHRISTOPHER H. SMITH, New Jersey THOMAS J. DOWNEY, New York JAMES J. FLORIO, New Jersey Rosert B. BLancato, Staff Director Teresa S. KaraMANos, Director of Research CAROLEEN WILLIAMS, Minority Staff Director (i) ''aed, ss ans HD 104 YS N37 3 [FEB CONTENTS Pub/ Page Opening statement of Chairman Mario Biaggi....scccsccccsssccssecssessssessssesssesssescssecesseeee, 1 CHRONOLOGICAL List oF WITNESSES James L. Scott, Associate Administrator for Operations, Health Care Financ- ing Administration, Department of Health and Human Services...................... 5 Panel One: Barbara J. Collins, staff attorney, Brookdale Center on Aging, Hunter College Institute on Law and Rights of Older Adults, New York, N.Y..... 16 Daniel Callahan, director, The Hasting Center, Hastings-on-Hudson, N.Y.. 23 Dr. Robert Morris, D.S.W., professor emeritus, Heller Graduate School Brandeis University ......c.ccccccccsscssssssssssssessecsessteaecse 3 26 Myer Haspel...........ccccee 7 33 Mir Sapiro .0.........ssoesscssecossesesesasessssesansussensnscroernpuessassfussrevessesestavestescesstebecueccecnncthe, 35 Panel Two: Edward H. Duggan, president, Congress of Senior Citizens of Greater NOW. Yorks... cccosseesicssesssssinsscprnesevetoecivedioat tsonetsacdactadetca ti, bas Salli nance 387 Sbabe 28st iis eesnessescseeecdvesiasbovscochocneetiaauieie ge Be ge hee 41 Panel Three: Elsie I. Griffith, executive director, Visiting Nurse Service of New York.... 46 Donna Barnako, director, Government Relations, for the National Coun- cil of Health Centers, New York, N.Y.............. see . 49 Margaret Teichman.......c.cccccccsssssssssssssssessessscsessvssscssessesseees 75 Eleanor Morris, Citizens’ Committee on Aging of the Greater New York o.....sceccsecsssessssssssessssessusessssssessssssssussssssssvssisessssessissscsestecesseecseccesece 76 APPENDIX Additional material received for the record: Toby S. Edelman, staff attorney, National Senior Citizens Law Center, Washington, D.C., prepared statement ......ccscsecssssesssessssessssesseesssesssesssseessesessee, 81 Letter to Department of Health and Human Services Secretary Margaret Heckler dated April 14, 1983, from Chairman Mario Biaggi nee 105 Response to Chairman Biaggi’s April 14, 1983, letter from Carolyne K. Davis, Department of Health and Human Services, Health Care Fi- nancing Administration .........ccccccccccsscsssssssssssssssesessessesssssssessessssesustesecerseserscecevese 107 '' ''MEDICAID AND FAMILY RESPONSIBILITY: WHO PAYS? MONDAY, MAY 16, 1983 House OF REPRESENTATIVES, SELECT COMMITTEE ON AGING, SUBCOMMITTEE ON HUMAN SERVICES, New York, N.Y. The subcommittee met, pursuant to notice, at 9:40 a.m., in room 305C, 26 Federal Plaza, New York, N.Y., Hon. Mario Biaggi (chair- man of the subcommittee) presiding. Member present: Representative Biaggi of New York. Staff present: Robert B. Blancato, staff director; Teresa Kara- manos, director of research; and Becky Surma, research assistant. OPENING STATEMENT OF CHAIRMAN MARIO BIAGGI Mr. Biacct. The hearing is called to order. I am pleased to con- vene this hearing of the Subcommittee on Human Services for a first time congressional examination of family responsibility under medicaid. This hearing is necessitated because of an action taken earlier this year by the administration when it advised States they could now require contributions by family members for the care of elder- ly relatives as part of their State matching mandate, under the medicaid program. The subcommittee meets today neither to praise nor bury the new policy of the administration. Rather we are here to get some necessary Clarification as to what it means, not just to the States, but more importantly to the public. We also hope to convince the administration to make some neces- sary revisions in the policy to make it more equitable. Before discussing the limited specifics of the policy, let me ex- press my concern about the method by which it came about. It came in the form of a February special supplement to the medicaid manual transmitted by the Department of Health and Human Services in Washington, to State medicaid offices. Bureaucrats com- municating internally with other bureaucrats with the public find- ing out after the fact. That is no way to make policy of this magni- tude. Medicaid is the largest Government provider of long-term-care services, with expenditures totaling some $16 billion a year. Some 43 percent of the national nursing home bill is paid by medicaid. And there is no question that the continued rise in the medicaid expenditures is of concern to all of us. (1) ''2 The question is in our quest for reforms. We should not apply the sword of economy in a way to cause harm to those in need. The reasons why medicaid costs have risen are many. One, there are more older people needing services, there has been a constant inflation in the providing of service level, and there was a period of years where State expenditures were shifted to the Federal Government. As the cost of medicaid increases, so too should the reforms be directed at all sides. Presently medicaid assumes approximately 55 percent of the total cost program, with the remainder coming from State match- ing funds. It is to these State matching funds that the new family responsibility requirements are being attached. . If mandating family responsibility is helpful to reducing the overall cost of medicaid, then it should be given careful considera- tion. However, that is a big “if.” Research does not bear out that premise. For example, the Health Care Financing Administration, which would implement the responsibility rule, estimates that first-year savings would total $100 million, but the cost to administer the pro- gram would total $75 million, for a net saving of only $25 million. When compared to potential hardship directed at families, it seems hardly worth the cost. Further, it does not appear that the States are working all too quickly to implement the new HHS rules on family responsibility. Presently only three States, Indiana, Idaho, and Virginia, have passed laws requiring family contribu- tions under medicaid. Yet there are no regulations to implement these laws. Another 11 States, in direct response to this HHS ruling, have legislation pending. Governor Cuomo has asked the New York State Legislature to approve a demonstration project to test the feasibility of such a family responsibility requirement, and such en- abling legislation is pending. I believe that no State should implement laws unless and until HHS provides more specific direction in their policy in areas relat- ed to income eligibility and choice of care. The HHS policy directive is more sorely deficient in its failure to address the very real issue of income eligibility. Few would quarrel with the premise that people making six-figure incomes should pro- vide some financial assistance to elderly parents or relatives. How- ever, can we expect people in low-income brackets to assume the very high costs associated with skilled nursing home care costs, which can be as high as $3,000 a month. One cannot forget that the people on medicaid are the lowest income strata and many of their adult children may also be in sim- ilar economic straits. It is patently unfair to assess the same finan- cial responsibility to each group as seems to be indicated in the HHS rule. I am also deeply concerned that this directive seems to only relate to family contributions to nursing home care under medic- aid. If the Government is to require people to pay for part of the costs of health care provided to the aged parent or relative, it seems only fair that they should have a choice as to what type of care they are paying for, for example, institutional, community- ''3 based or home care. There is nothing in the directive which indi- cates such a choice would in fact exist for these adult children. I consider it vital that the policy be revised to include specific income eligibility standards, either through sliding scale fee sched- ules or through outright exemptions from fiscal responsibility for those in low income categories. Further, the policy should permit greater flexibility in the terms of the care provided under medicaid. For family contributions only to go towards nursing care is arbitrary and goes against the nation- al trend of encouraging deinstitutionalization of our elderly popula- tion. As we enter the discussion about family responsibility for the care of the elderly, I hope that greater consideration can be given to proposals such as my bill H.R. 76, to provide tax credits for those persons providing care for an elderly parent or relative in the home, for those expenses not covered by medicare or medicaid. This has always seemed a fair and humane approach, especially when compared to the unnecessary institutionalization of our el- derly citizens. Nursing home care should be considered a last, nota first resort for older people. Statistics indicate that 80 percent of all home health care for older people is provided by family members. I am anxious to learn the views of the witnesses today on the new family responsibility rules put forth by the Administration, and I also hope to emerge with a better understanding of the ramifications of this new policy from the economic as well as the social perspective. [The prepared statement of Chairman Biaggi follows:] PREPARED STATEMENT OF CHAIRMAN Mario BIAGGI Ladies and Gentlemen, I thank you for coming to this hearing to offer your opin- ions on the Administration’s policy with regard to family responsibility and Medic- aid. I scheduled this hearing in light of the many reports in the press which indicat- ed to me that there was and continues to be a great deal of concern and debate over what may prove to be a practical policy. I have not come prepared to praise or con- demn the HHS policy. I do have questions for the Administration and for the other witnesses about the development and implementation of this policy which I hope will be answered in the course of this hearing. The policy to which I refer was transmitted to State Medicaid Directors as a spe- cial supplement to the Medicaid Manual in February of this year. The policy states that “States may require adult children or other relatives of Medicaid recipients to provide financial support to adult relatives under statutes of general applicability”. Daniel Bourqoe, Deputy administrator of HCFA, who supervises the program, has indicated that this transmittal is a clarification of the existing law. He has said the policy represents a Federal response to State initiatives. Many organizations inter- ested in the walfare of the elderly have opposed this policy simply on the grounds that it is inconsistent with Medicaid statutes, regulations and intent. Today we will investigate the historical development of this policy. Specifically, we will pay close attention to the reasons why it was determined to transmit this policy without the benefit of public input. We are all aware that Medicaid costs have outstripped rev- enues in the majority of the States and the Federal government in curtailing out- lays. The sharply rising cost of institutional care under Medicaid is a major reason for the current concern with family responsibility. Total Medicaid expenditures have reached $16 billion per year. Approximately 43 percent of these outlays were made for nursing home services making Medicaid the largest single government provider of long-term care services. Total expenditures for Medicaid have continued to rise as a result of a variety of factors including higher utilization due to the growth in the elderly population, general inflation, intensifica- tion of service, and the shifting of expenditures from States to the Federal govern- ment. The concept of family responsibility has gained popularity among officials at both the State and Federal level who are attempting to trim their Medicaid expend- ''4 itures by turning to families for contributions toward elderly relatives’ long-term care. By requiring people to share in the financial burden of their indigent relatives’ medical care, it is hoped that additional sums will be collected and applied to the costs of care and, in some cases, that the “cost-sharing” mechanisms will act as a deterrent to nursing home placement. It is reasonable that financially troubled States should look for means by which they can continue to operate their programs. Limited Medicaid funds should be utilized for those most in need in order that bene- fits do not have to be limited or eligibility restricted. HCFA has indicated that they chose to pursue this “backdoor” method of trans- mitting this policy in response to State initiatives. To date, we are aware of only eleven States, including Wisconsin, Delaware and Georgia, which are considering enabling legislation. Three States, Indiana, Idaho and Virginia, have passed bills calling for family responsibility, however no regulations have been promulgated. Governor Cuomo of New York has asked the Legislature to approve a demonstra- tion project to rest the feasibility of such a requirement, and both houses of the Leg- islature are considering legislation. The bill under consideration in the Wisconsin legislature would establish a sliding scale for contributions by children to the nursing home care of their parents. Chil- dren over 18 with annual incomes of $50,000 would have to pay $7.50 a day towards the care of their relatives receiving care under the Medicaid program. Children with taxable incomes between $30,000 and $35,000 would pay $3.25 a day. As we analyze the relative merits of this policy, we find a consistent vagueness surrounding its meaning and purpose. HCFA is claiming that savings of several mil- lion dollars will result from the implementation of this policy. A report prepared for HCFA in 1979 states that “expanded asset tests with the instruction of legal respon- sibility of selected children of institutionalized adults are not promising sources of large additional sums of money, but in the interest of equity, the asset situation should be reexamined”. Recently HCFA spokesmen estimated that savings of $100 million could be realized with the implementation of the February transmittal and that the costs of administering the program would be approximately $75 million—a gross savings of $25 million. While I am fully supportive of the notion that adult children have a personal re- sponsibility to their indigent parents, I am concerned that States, in their eagerness to salvage their Medicaid programs, may pass regulations that unjustly burden fam- ilies. The majority of the Medicaid population is, by definition, low-income, as are the adult children and relatives of most recipients. To mandate financial support irrespective of income, would impose an undue hardship on such families. Such action would also decrease the family’s usable income and many eventually lead to an increase in public assistance payments to such families. To our knowledge, the States have received no guidance from HCFA as to the development of financial re- quirements. It would seem most logical that some type of recommendation would be forthcoming. A recent editorial in the Washington Post suggested that policy makers should not be overly concerned with the mechanics of this policy but should instead focus on the question of equity. In other words, if there are adult children who are know- ingly avoiding their responsibilities to their indigent parents and who are financial- ly able to assist them in the payment of their medical care, they should be encour- aged in the strongest sense to do so. Those family members who are unable to pay should not be concerned that the government will make eligibility and services con- tingent upon payment. The right of the elderly indigent to medical care, regardless of the economic status of their children, is and has long been an accepted part of the financial responsibility of Federal and State government. In addition to the savings claimed to have been achieved by family contribution to nursing home care, HCFA has apparently assumed that savings will be realized be- cause families will be deterred from placing their elderly member in the nursing home. This assumption rests on the myth that filial abandonment is practiced to a great extent in this country. Study after study has proven this untrue—families are the predominate care givers to the elderly living in the community. Family mem- bers are providing supportive services critical to the elderly individual continued maintenance. Families are making themselves available to give financial support and, in fact, provide services directly to their parents. To illustrate these facts, consider the following points: Seventeen percent of the total population over 65 years of age, 3 to 4 million people, have been estimated to be functionally dependent. In 1966, 4 percent of those aged 65 and over were institutionalized—prior to the availability of reimbursement. Today, 5 percent of those over 65 are institutional- ized, an increase of only 1 percent. '' 5 The average age of a nursing home resident is 83, making it highly likely that his or her children would be included in the elderly category themselves. For every one elderly person in an institutional setting, there are two residing in the community, primarily under the assistance and care of family members. National health statistics show that approximately 80 percent of all home health care for older people is provided by family members. Forty percent of adult children who are caring for an older parent in their homes spend 40-plus hours a week, the equivalent of a full time job, in caregiving activi- ties. It is clear that the availability of an informal support network is a critical vari- able in delaying institutionalization. Institutionalization is the last resort which families consider in the care of an elderly family member. When the personal finan- cial resources of the family are exhausted, and when the family member’s disability requires care beyond that available in the home, institutionalization is precipitated. In light of these facts efforts must be made to support families that wish to continue to maintain their elderly family member in the home rather than turning to more expensive institutional care. The assumption behind the deterrent effect is that there are available alterna- tives which have not been pursued. For example, the following positive financial in- centives could be employed to contain increasing State Medicaid expenditures: My own bill, H.R. 76, which offers a tax credit to families who maintain an elder- ly dependent in their home for over one-half of the taxable year; Allowing tax deductions for children who contribute to the support of elderly par- ents; Provide federal grants or tax credits to children who add or convert living space to allow a parent to reside in their home, and Ending existing eligibility disparities that allow higher Medicaid eligibility for the institutionalized. Presently, public programs provide more support for institutional forms of long- term care than for community-based services. Family caring responsibilities and changing demographic trends indicate that policies should be developed that will re- inforce or give incentives to families so that choices other than institutional care will be available to the elderly and their families, Optimally, policies should be de- veloped that strive to complement and combine effectively the efforts of formal and informal services to provide support and respite to elderly individuals and to their families. Mr. Bracai. At this point, I would like to state for the record that Congressman Matthew Rinaldo of New Jersey had agreed and was scheduled to join this committee at this hearing, but we re- ceived a call early this morning that an emergency developed that will prevent his presence. I am also advised that the mayor was to have a representative here this morning. To date he has not arrived. If he has, he has not made his presence known. So in light of that, we will proceed with ese Administration witnesses, Mr. James L. Scott and Mr. William Toby. Mr. Scott is Associate Administrator for Operations of Health Care Financing Administration. Mr. Toby, if I recall, you are the Regional Director, if my memory serves me well. STATEMENT OF JAMES L. SCOTT, ASSOCIATE ADMINISTRATOR FOR OPERATIONS, HEALTH CARE FINANCING ADMINISTRA- TION, DEPARTMENT OF HEALTH AND HUMAN SERVICES Mr. Scorr. Thank you, Mr. Chairman. I am pleased to be here today, Mr. Chairman, to join in your discussion. We think that the discussion of the role of family member’s financing and caring for their elderly relatives is an important topic of interest to all of us. In addition, I would like to commend you for convening such a hearing to investigate what we believe is one aspect of a very seri- ous problem. ''6 As you indicated in your opening remarks, the dramatic rise in expenditures for long-term care over the last several years, coupled with shrinking public dollars available to pay for that care, obli- gate all of us to examine alternatives to our existing approaches to financing long-term care. It is within this context that I would like to focus my oral re- marks today on two primary subjects: The transmittal that you dis- cussed and the bill that you have introduced. Over the past several years, the Department has been petitioned by several States for the authority to permit them to require con- tributions from adult children who can afford to pay for care for indigent parents. Such proposals have been evaluated in light of the current Health Care Financing Administration’s basic policy on family re- sponsibility, which has been and continues to be—these are impor- tant points—that the State medicaid plan may not require, as a condition of eligibility or continued receipt of benefits, that a per- son’s adult child provide financial support. Only the financial re- sponsibility of spouses and parents for their minor or disabled chil- dren may be assumed, or deemed, in determining eligibility. Secondarily, nursing homes may not require of the medicaid re- cipient or his or her family any additional or supplemental pay- ee as a condition of admission or continued stay in a nursing ome. : Our February transmittal did not change these basic policy premises. What it did was to clarify that a State’s medicaid pro- gram is not in conflict with the medicaid statute if medicaid appli- cants or recipients receive payments from their adult children under the following circumstances: No. 1, the State’s family responsibility requirements are imposed under a state statute of general applicability and are not being ap- plied only to medicaid eligibles. No. 2, these contributions count as recipient income and are used to offset costs, the same as recipient income from any other source, such as a small private pension. And, finally, only contributions actually received are considered in calculating nursing home payments, and a person’s eligibility and benefits may not be jeopardized if a required contribution is not made. I would like to emphasize that HCFA has not made adult chil- dren responsible for paying a parent’s nursing home costs. The agency has merely determined that State laws requiring contribu- tions for support the dependent elderly do not violate title XIX, so long as they are generally applicable, that is, they do not apply solely to medicaid recipients, and are not established as part of the State medicaid plan. This transmittal was developed to clarify medicaid policy in re- sponse to a request from Indiana and from a number of other States, which have or are considering enactment of State laws of general applicability requiring adult children to support their de- pendent parents. The States have always had the authority to legislate issues of family responsibility such as divorce law and child support. We be- lieve that the equity of any family responsibility law which the ''7 State now chooses to implement is most appropriately a matter for the State to determine. At this time, no State, to our knowledge, is actually enforcing family responsibility requirements. One State, Idaho, has recently enacted a law, and is in the process of developing the appropriate administrative framework for its enforcement. Virginia and Indi- ana have laws which they are not enforcing. Other State legisla- tures, I believe, including the one here in New York, are currently debating bills involving some form of family responsibility. For ex- ample, one State contemplated the requirement of contributions on a sliding scale based on income in the 1-to-3-a-day range for people earning above $20,000 to $30,000 per year. In addition, we under- stand that one of the States considered a proposal that would have made adult children whose taxable income reached a level of $115,000 almost entirely responsible for the cost of their parent’s care. It is apparent that many States are examining this alternative as one means of relieving fiscal pressure on the fastest growing seg- ment of their medicaid programs: nursing home care. This is hardly surprising if one examines the proportion of total medicaid expenditures devoted to institutional care. All States par- ticipating in medicaid—and there are 49 of those—cover some form of nursing home care. In the 1981 fiscal year, approximately 43.5 percent of medicaid expenditures went to nursing homes. This amounted to approximately $7 billion in Federal costs in fiscal year 1982 and $6 billion in State costs. The portion going to nursing home coverage has increased steadily since 1973, growing from 35 percent of total expenditures then to the just mentioned 43.5 per- cent in fiscal year 1982. The rate of growth has been due primarily to increases in payments for intermediate care facilities. In our statement for the record, we have several pages of com- ments on some of the alternatives that because of the time limit, I would like to omit in these brief oral remarks and go right on to discuss your bill. Mr. Bracai. We will have your entire statement submitted. Mr. Scort. Thank you, sir. There are a few comments I would like to make on HR. 76. We believe that your tax credit concept is an approach that merits seri- ous consideration. As you cite in your statement in the Congres- sional Record, HCFA has estimated that between 60 and 80 percent of the care received by the impaired elderly is provided by mem- bers of the family or friends who are not compensated. It is important that we continue to encourage family members and friends to increase or at least maintain in the aggregate the level of care that they now provide. To do so would require the con- sideration of a wide range of incentives. One of these may very well be a tax credit. We are evaluating this approach, as well as other incentives, to help keep elderly people in their homes. One problem that we do have, sir, is a lack of concrete program- matic data. Although some research has taken place on this sub- ject, we believe much more is needed. We do not know, for exam- ple, whether a tax credit by itself would induce an adult child to keep his parent out of a nursing home. We do not know whether other incentives, such as home training or better coordination of ''8 community services, might be able to do this as effectively or at a lower cost. We have to look at the effect and the interaction of all factors, such as the provision of respite care and better training for care givers, before we can choose one approach over another. Unfortunately, I cannot provide you with an official Administra- tion position on your bill, as it is a tax credit bill and tax policy is responsibility of the Department of the Treasury and executive MB. Mr. Bracat. But it is nice to know you indicated some support for it. Mr. Scort. Certainly, sir, we think it is something that has to be examined. It is not an approach that many in the Department and I feel can simply be rejected out of hand. There are a broad range of options available and we have to look at all of them. Mr. Braact. It would be a broader application of almost the same principle, at least the idea of keeping the elderly out of institu- tions. Mr. Scort. I think that is one thing that everybody involved in the whole medicaid arena agrees with. In conclusion, sir, we share your concern that the financing of care for the dependent elderly has become a critical problem, both for families and for Federal and State governments. Family respon- sibility proposals which provide for financially able families to con- tribute to the cost of care do not detract from the goals of the med- icaid program. Given the flexibility to explore this approach, States may be able to conserve and target limited funds to those most in need. The policy we have enunciated neither prescribes a specific family responsibility formula nor requires States to adopt any such system. In addition, we look forward to working with the Congress to build upon other alternative approaches to nursing home care and to consider any new initiatives which might help solve the problem we are now facing. Mr. Chairman, Mr. Toby and I would be glad to answer any ques- tions you might have. [The prepared statement of Mr. Scott follows:] PREPARED STATEMENT OF JAMES L. Scott, ASSOCIATE ADMINISTRATOR FOR OPER- ATIONS, HEALTH CaRE FINANCING ADMINISTRATION, DEPARTMENT OF HEALTH AND HuMAN SERVICES I am here today to join your discussion of the role of family members in financing and caring for their elderly relatives. I commend you for convening a hearing to investigate one aspect of what we all agree is a serious problem. The dramatic rise in expenditures for long-term care over the past several years, coupled with shrink- ing public dollars to pay for that care, obligates us to examine alternatives to our existing financing approaches. Traditionally, States have had two alternatives available to them to address fi- nancing concerns: 1. adjustments to reimbursement rates, or 2. adjustments to eligi- bility. Neither of these two alternatives are fully satisfactory and so we must continue to search for other approaches to supplement the above two. It is within this context, that I would like to discuss our recent (February 1983) medicaid manual issuance that addressed the legality of State laws requiring contri- butions from relatives to medicaid recipients and the concept of tax credits as a means to increase family responsibility. ''9 The issue of legal family responsibility has a history that goes back to colonial times and was a common feature of locally administered, means-tested public assist- ance programs in many States into the 1960’s. As the Federal Government took on more financial responsibility, “entitlements” to assistance for certain specified groups of people replaced more traditional public assistance concepts. These “enti- tlements” to services, however, remain available only for those who meet income and resource requirements. Over the past few years, the Department has been petitioned by the National Governors’ Association and several States for authority to permit States to require contributions from adult children who can afford to pay. Such proposals violate cur- rent Health Care Financing Administration (HCFA) policy on family responsibility which has been and continues to be that: The medicaid State plan may not require, as a condition of eligibility or continued receipt of benefits. That a person’s adult child provide financial support. (Only the financial responsibility of spouses and parents for their minor or disabled children may be assumed, or ‘“‘deemed.”’) Nursing homes may not require of the medicaid recipient or his/her family addi- tional or supplemental payments as a condition of admission to or continued stay in the nursing home. The February transmittal did not change this policy; what it did was to clarify that a State’s medicaid program is not in conflict with the medicaid statute if med- icaid applicants or recipients receive payments from their adult children under the following circumstances: The State’s family responsibility requirements are imposed under a State statute of general applicability and are not being applied only to medicaid eligibles. These contributions count as recipient income and are used to offset medicaid costs, the same as recipient income from any other source. Only contributions actually received are considered in determining medicaid eligi- bility or calculating nursing home payments, and a person’s eligibility and benefits may not be jeopardized if a required contribution is not made. I would like to emphasize that HCFA has not made adult children totally respon- sible for paying a parent’s nursing home costs; the agency has merely determined that State laws requiring contributions for support of the dependent elderly do not violate title XIX so long as they are generally applicable (i.e., do not apply solely to medicaid recipients) and are not established as part of the State’s Medicaid plan. This transmittal was developed to clarify medicaid policy in response to requests from Indiana and a number of other States which have or are considering enact- ment of State laws of general applicability requiring adult children to support their dependent parents. The States have always had the authority to legislate issues of family responsibility such as divorce law and child support. We believe that the equity of any family responsibility law which a State now chooses to implement is most appropriately a matter for the State to determine. At this time, no State, to our knowledge, is actually enforcing family responsibili- ty requirements. One State—Idaho—has recently enacted a law and is in the proc- ess of developing an administrative framework for its enforcement. Virginia and In- diana have laws which they are not enforcing. Other State legislatures are current- ly debating bills involving some forms of family responsibility. For example, one State contemplated the requirement of contributions on a sliding scale based on income, in the $1-$3 a day range for people earning above $20,000-$30,000. It is apparent that many States are examining this alternative as one means of relieving fiscal pressure on the fastest-growing segment of their medicaid pro- grams—nursing home care. This is hardly surprising if one examines the proportion of total medicaid expenditures devoted to institutional care. All States participating in medicaid (49) cover some form of nursing home care. In fiscal year 1982, approxi- mately 43.5 percent of medicaid expenditures went to nursing homes. This amount- ed to approximately $7 billion in Federal costs in fiscal year 1982 and $6 billion in State costs. The portion going to nursing home coverage has increased steadily since 1973—growing from 35 percent of total expenditures to 43.5 percent in fiscal year 1982. The rate of growth has been due primarily to increases in payments for inter- mediate care facilities. INCENTIVES FOR AVOIDING INSTITUTIONALIZATION I agree completely with you that it is critical for both aged people and their de- pendents to avoid institutionalization if possible. The Department and the Congress have recognized this for a long time. Enforcement of family responsibility require- ''10 ments is one approach available to States to control and manage their medicaid ex- penditures. Before commenting specifically on your bill, I would like to review briefly with you several initiatives we have underway. HOME- AND COMMUNITY-BASED SERVICES WAIVERS Many elderly persons live in institutions not because they could not be cared for in the community, but because of the difficulties in obtaining and paying for the health and social services they need to be cared for in the home. With adequate home and community based services, many of these individuals could remain at home or in the community. Section 2176 of Public Law 97-35, the Omnibus Budget Reconciliation Act of 1981, authorized the Department to grant waivers of medicaid requirements in order to permit States to offer a wide range of home and community based services that a person may need in order to avoid institutionalization. We have received 71 propos- als from the States. To date, we have approved 40 requests in 31 States with 22 re- quests still under consideration. Approximately 43,000 medicaid recipients who would otherwise require nursing home care are now or will soon be receiving serv- ices in their homes and communities under these waivers. The States have shown through these new programs that they are extremely interested in meeting the needs of recipients in new and creative ways. COMMUNITY-BASED CARE Because of the need to develop new knowledge in this area, HCFA has initiated a number of community care projects to test whether providing and managing an ap- propriate mix of health and social services directed at an individual client’s needs without sacrificing quality of care can be accomplished outside of institutions. Sever- al earlier demonstrations have indicated that, unless controlled, community services can be very costly. This increase in cost results from poor targeting or serving per- sons not at risk of institutionalization and over-reliance on publicly funded commu- nity services. As a result of these findings, HCFA and the Department have implemented a major research project, the national long term care channeling demonstration, that builds on our past demonstration efforts. The channeling demonstration has been designed to improve upon past demonstrations so that we target on the most im- paired population. We hope this demonstration will answer many of the basic ques- tions surrounding community care and will provide important information for ad- dressing long term care issues. AFDC HOME HEALTH AIDE PROJECTS We are conducting seven AFDC home health aide demonstration projects—includ- ing one in New York—to train and employ eligible AFDC recipients as homemakers and/or home health aides. Each State will train about 500 AFDC recipients to pro- vide long term care services to elderly and disabled individuals who without these services would likely be institutionalized. The major issues to be examined in the demonstration are: (1) the extent to which training AFDC recipients as homemak- ers/home health aides is feasible and results in eventual nonsubsidized, productive employment for the trainees; and (2) whether the provision of homemakers/home health aide services to elderly or disabled individuals, who would not otherwise re- ceive those services, results in a lower use of institutional care. H.R. 76 The tax credit concept is another approach that merits serious consideration. As you cite in your statement in the Congressional Record, we have estimated that be- tween 60 and 80 percent of the care received by the impaired elderly is provided by family members or friends who are not compensated. Given this situation, we then must consider the implications of a tax credit approach. We agree that it is important to encourage family members and friends to in- crease the amount of care they provide disabled elderly beyond the 60 to 80 percent figure. To do this, we must examine various incentives. One of these is a tax credit, along the lines of H.R. 76. We are evaluating this approach as well as other incen- tives to keep elderly people in the homes of their loved ones. One problem is the lack of data. Although some research has taken place on this subject, much more is needed. We do not know, for example, whether a tax credit by itself would induce an adult child to keep his parent out of a nursing home. We do ''11 not know whether other incentives would do this more effectively or at lower costs. We have to look at the effect of other factors. Such as provision of respite care and better training for care givers, before we can choose one approach over another. I cannot provide you with an official Administration position on you bill as tax policy is the responsibility of the Treasury Department and the Office of Manage- ment and Budget. We did, however, ask our actuaries to estimate the potential cost of H.R. 76. Our actuaries’ preliminary estimate is that the cost to the Federal Government of your specific proposal could be as high as $600 million in fiscal year 1984. This is because many families now take responsibility for the care of their elders and do not need the inducement of a tax credit to avoid institutionalization. CONCLUSION In conclusion, we share your concern that the financing of care for the dependent elderly has become a critical problem both for families and for Federal and State governments. Family responsibility proposals which provide for financially able families to contribute to the cost of care do not detract from the goals of the medic- aid program. Given the flexibility to explore this approach, States may be able to conserve and target limited funds to those most in need. The policy we have enunci- ated neither prescribes a specific family responsibility formula nor requires States to adopt any such system. We look forward to working with the Congress to build upon the other alternative approaches to nursing home care that I have described this morning and to consider any new initiatives which might help solve the prob- lems we are facing. I will be happy to answer any questions that you may have. Mr. Biacci. Thank you very much, Mr. Scott, for your testimony. Frankly, it provides a lot of information for us. It helps clarify the issue substantially. It is unfortunate that it required a congression- al hearing to get it. We wrote to Secretary Heckler making similar requests for some clarification and no response was forthcoming, and we regret that. It may well be that she was overwhelmed with work. I know she is sympathetic and generally responsive. When you talk in terms of an issue that is so laden with potential for harm, we could not afford to wait for that information. Mr. Scorrt. I understand that, Mr. Chairman, and I apologize for that delay. I did not become aware of your letter, in fact, until late on Friday afternoon. As you well know from running a congres- sional office, there is lots of mail that comes in on these controver- sial topics and it seems that on occasion that things do not get an- swered as quickly as they should. We have begun to draft a report in response to your questions and I can assure you we will proceed very quickly to get a response back to you. Mr. Bracat. I have no quarrel with your good intentions and I am just delighted that we have the advantage of your testimony be- cause it sheds a great deal of light on the subject. Let me see if my understanding is right, because in the large sense I am probing, groping rather than probing, it could be a little bit of each, but your proposal gives the impression that you are dealing only with this one area of institutionalization, nursing care. We would prefer to think that you should have a broader ap- proach, that it should be more inclusive. Is my understanding of that right? Mr. Scorr. Mr. Chairman, our idea is very permissive. What we want to do is to make sure the States understand that there is no Federal prohibition to family responsibility activity. It has only been talked about in terms of application to nursing home care. As I have listened to your opening comments and your ''12 question, I do not know why if—under a law of general applicabil- ity—adult children have responsibility to assist their elders for nursing home services. That same requirement could not be ap- plied to other services. I do not see that we are restricting it entire- ly to nursing home care, although that has been the context within which most of the States have talked about family responsibility quite frankly, because of the amount of money that is involved in such care. Mr. Bracci. You state something about the policy being permis- sive. Now, was there any prohibition on the States prior to this proposal? Mr. Scorr. Well, that gets us back to the issue of, “Is this or is this not a change in policy?” There has been a longstanding policy that the income of relatives, such as adult children, brothers and sisters, could not be considered as part of the income for determi- nations of medicaid eligibility. And we have not changed that. There has also been a longstanding policy against supplementa- tion, where nursing homes would seek to require additional funds from a family for people to stay at a nursing home. We have not changed that. A lot of people, I think, have misunderstood what we are doing. We are not really talking about something in terms of eligibility, as much as we are saying that if States have a general approach to family responsibility, that this is not a Federal prohibition to those kinds of activities. Mr. Bracct. So in fact HHS has nothing to do with fixing any standard of recovery. It would be a State situation? Mr. Scorr. We would certainly want it to be that way, Mr. Biaggi. That is the way we think it should be. The medicaid pro- gram has been a Federal/State partnership, and like all Federal/ State relationships, it ebbs and it flows. You know sometimes one partner is more predominant than the other. Right now, I think with changes to medicaid enacted by Con- gress in 1981 and 1982, we are sensing more of the control of the program coming back to the States. We think that in this area, given the great variations in income levels and nursing home situa- tions in the States these are issues much better left to the discre- tion of State legislatures and State medicaid agencies. Mr. Bracci. So it would seem to me, despite the fact that we have the laws on the books of some States, there seems to be reluc- tance or at least some inhibition in those States to implement those laws. Mr. Scort. It is a very new concept in a lot of ways. Many of the people you are going to hear from today are going to talk about difficulties in administration of the concept and certain issues of equity. And all of these things are going to be quite controversial. States are going to need to proceed, I think, with a great deal of caution. We would want them to proceed with a great deal of cau- tion, to make sure that before a statute is enacted, there is full and careful airing of all points of view. Thus, the kinds of things that you mentioned earlier—such as sliding scales and income levels— are ail well addressed. Mr. Braaai. With relation to H.R. 76, my bill on tax credits, you estimate that it might cost some $600 million, and also stated you ''13 did not have enough data on which to base an official position. Al- though on principle, you seem to be sympathetic. Is there any study underway, any effort underway to obtain this information? And if so, how far along are we? Mr. Scort. We have a variety of things underway, Mr. Chairman, that will yield a great deal of information about the whole long- term-care problem. The home and community based waivers that were part of the 1981 Omnibus Budget Reconciliation Act are giving us a great deal of information about the different ways that services can be organized, so as to enable us to substitute home and community care for institutional care. In addition, we have our national long-term care channeling project which enables us to look very carefully at the way that we can better organize services and help the elderly make better use of services that are available in their communities. So we think there are lots of things going on that would yield positive research results in the whole area of long-term care. As to whether there are specific research projects that deal with tax credits and how that works, no, sir, we do not have any that are that narrowly de- fined. Mr. Biaaat. In light of that response, would my conclusion be ac- curate if I told you the impression I got is that there is no real major effort being taken and that we cannot really look forward to a policy position from your agency with relation to this issue? Mr. Scott. I am sure that there will be an administrative posi- tion. As you well know, we have two kinds of folks. We have the budget folks and the policy folks. Mr. Bracai. We will deal with the budget folks later. Let us talk—we are always fighting them anyway, no matter what we do. Let us deal with the substance of the issue. Mr. Scort. I would hope—and there are a lot of people involved other than myself—that as we come forward with our fiscal year 1985 and 1986 budget proposals, we will be able to address this issue and look at the ways we can encourage more people to be taken care of at home. As I said, there are a broad range of options possible. I do not know ultimately what our position will be on whether or not a tax credit should or should not be part of that package. I know it is an idea that has to be looked at very carefully. It is something that cannot be dismissed without very careful consideration. Mr. Bracci. In your determination, would you be considering the extent of the cost of keeping the elderly out of the institutions? Mr. Scort. Yes, sir. That is one of the things we would look at. We are in the second phase of our national channeling demonstra- tions. One of the things we learned in the first phase is that with- out rigorous controls to insure that services are focused at the target population which is most at risk, home services in the aggre- gate can become very expensive. The reason is that voluntary serv- ices that were provided free of charge by family and relatives are replaced by publicly financed services. That is an issue we must be very careful with. And, second, we need to focus those kinds of efforts on, like I said, aiding the population which is most at risk. 23-433 O—83——2 ''14 Mr. Braacct. I think you stated that we would be receiving re- sponses. Mr. Scott. Yes, sir. Mr. Bracci. There were a number of questions we posed, but I wonder if you could answer one of those questions now. I think it is critical and germane. Is there statistical information available which indicates that there are significant number of adult children and other relatives who are denying their responsibility in the care and support of the reiatives who are medicaid recipients? Mr. Scort. The simple answer to that, sir, is no. Mr. Braaat. If that be the case, then how do you develop a policy? Mr. Scott. The policy came about, as a result of a letter we re- ceived from the State of Indiana sometime in 1981, asking us about its ability to implement a family responsibility law. The inquiry, to my understanding, sir, asked the question in a slightly different way from what had been asked before. As I indicated, much of the concern in this area in the past has had to do with the question of deeming income for eligibility and family supplementation of nurs- ing home bills. But the State of Indiana asked the question a little differently. Our Office of General Counsel took a look at the re- quest and found that the method the State was planning on using—a statute of general applicability—was not in fact contrary to the medicaid statute. With that interpretation in hand, we decided it was policy-signifi- cant and issued the transmittal to all of the States. So it is a matter that the States had asked for it. The National Governors Association and the American Public Welfare Association are also very interested in this subject. But that is the way the policy came about. It was not a matter that someone had come forward with tables and statistics describing what the problem is. Mr. Braaat. I understand what you are saying, but I made refer- ence to the manner in which this policy developed anyway as bu- reaucrats talking to bureaucrats. That is what is coming through loud and clear, there has not been any public input. People who are out in the networks and who would be closest to the scene, clos- est to those who might be affected, who might have some better feel, with all due respect to bureaucrats and even to legislators who hibernate in Washington sometimes, kind of lose touch. Unless you are out there getting that public input, you are not very likely to develop the kind of a policy that could be as meaningful as you would if the public had an opportunity to speak. That is one of the things that concerns me. Mr. Scott. Well, in retrospect, I am not sure I would have done it the same way, but that is the way we did it at the time. We looked on it, as I indicated, as a legal interpretation. One thing I think is important to keep in mind Mr. Chairman, is the way that policy in medicaid is made. A portion of it is Federal, but a great deal of it is State. So before something like this could go into place and actually touch any of the people in our country, it has got to go through the State process. We are only stating that the statute permits States to have these kinds of laws. However, before a State can in fact pass such a law, I believe that there would be a wide open public process. ''15 There would be hearings that would be required before State leg- islative committees. Rules and regulations would have to be pro- mulgated for the details. I feel that before anybody would be im- pacted by such a proposal, there would be ample opportunity for public comment. The difference is that the focus would be in the State capital in- stead of in Washington. Given the diversity of medicaid programs and the diversity of the States, that is the appropriate focus for public input. Mr. Bracci. We do not differ then, except that we are talking further along the line and really focusing attention on the States. I do not think you should ever sever the umbilical cord. The Federal Government should never sever the umbilical cord to the issue. Mr. Scott. We will not, Mr. Chairman, but I am glad you men- tioned that. One of the points that we wanted to be sure we could make today is that this is a Federal/State partnership. While this is an area where States will have a considerable amount of flexibil- ity, Mr. Toby and his staff and all of our other regional offices assess the State medicaid programs on an annual basis. To the extent that a State would be involved in something that was con- trary to the medicaid statute, we have the capacity, the authority, ane can assure you—the willingness to bring those activities to a halt. Mr. Braaat. I think that is important, because our experience with legislation regarding many social issues in our country is that some States are more understanding and sympathetic than others. And we just cannot let them run amuck. I think Governor Cuomo’s proposal of studying the feasibility is a very reasonable way to approach it, because I think we are all doing the same thing at this point. And I am confident that New York State will deal in a sympathetic fashion, but I am not so sure that all the States in the nation would do likewise. I am heartened by the fact that you assure this committee that you will be there as the overseer in a sense. Mr. Scott. We do. Every year there is an annual assessment process and we are very sensitive to what that Federal role is. Mr. Bracai. Tell me, is the terminology in your transmittal with relation to adult children or other relatives, meant to include sis- ters, brothers, stepchildren, stepparents, aunts, uncles, grandpar- ents, and cousins? Mr. Scott. Again, sir, we have no specific definition in mind. We will rely on the good judgment of the State legislatures. Mr. Braaai. Mr. Scott, we are sure by the time this hearing is over, other thoughts will come to our minds. Mr. Scott. I have a sneaking suspicion you are right. Mr. Biaacai. And we reserve the right to send you some questions for your responses for the record. Mr. Scott. We would be happy to respond, Mr. Chairman. Mr. Bracci. Thank you very much. I think your testimony has been very helpful. I feel substantially more comforted now after I have heard you, than I was coming to this meeting. It seemed to be a proposal that put us all on edge to say the least. Mr. Scott. Thank you, sir. We appreciate the opportunity to be here. ''16 Mr. Biacci. Thank you, Mr. Scott, and, Mr. Toby, thanks very much. The first panel consists of Barbara Collins of Brookdale Center on Law and Social policy; Dr. Daniel Callahan, director of Hastings Center; and Dr. Robert Morris, professor emeritus, the Florence Heller Graduate School, Brandeis University. Ms. Collins. PANEL ONE, CONSISTING OF BARBARA J. COLLINS, STAFF AT- TORNEY, BROOKDALE CENTER ON AGING, HUNTER COLLEGE INSTITUTE ON LAW AND RIGHTS OF OLDER ADULTS, NEW YORK, N.Y.; DANIEL CALLAHAN, DIRECTOR, THE HASTING CENTER, HASTINGS-ON-HUDSON, N.Y.; AND DR. ROBERT MORRIS, D.S.W., PROFESSOR EMERITUS, HELLER GRADUATE SCHOOL, BRANDEIS UNIVERSITY STATEMENT OF BARBARA J. COLLINS Ms. Couns. Good morning. I would like to State that I am an attorney for the Brookdale Center on Aging, Hunter College, and it is the Institute on Law and Rights of Older Adults. I just wanted to correct the title. It is rather a long one. With respect to the issue of legally mandated relative responsi- bility and specifically filial responsibility, because that does seem to be the actual thrust of the proposals, I believe that two questions have to be addressed. First, are the laws proper; and, second, are they practical? As an attorney, I will focus on the legal aspects and I hope to provide a summary of some of the points that must be considered. I will also be differing somewhat in my interpretation of the transmittal which Mr. Scott discussed. As an advocate for the elderly, I suggest that proposals to extend relative responsibility laws to make adult children liable for the support of their parents should be examined from the perspective of the aging individuals who will be most affected. And I raise an additional question. Will such laws benefit or harm the elderly in- dividual? This is a question that has been discussed in broad soci- etal terms and I do not feel enough attention has been paid to that aspect of the policy. Mr. Biacct. Well, we just started with it, Ms. Collins. Ms. Coutts. I did not mean here today, but in general discus- sions. Mr. Bracat. Clearly the point you raise will be expounded on. We have some witnesses here that I think will provide some human re- sponses in human terms and we understand it. We understand the possibility of an adult who is some 80 years or 85 years of age re- quiring their children to support them. The policy would require their children to support them, and they themselves may be some 65 years old, they will be senior citizens themselves. And they may find themselves in poor economic straits. And you will find the poor elderly person being required to pay partially for or in toto for the care that a parent is receiving in a nursing home. Of course, it is a totally unacceptable hypothesis and situation. Ms. Cotuins. That is the kind of inquiry I think should be per- formed. ''17 Mr. Biacci. We intend to do it, every perspective. And we appre- ciate yours. Ms. Couns. OK. I would like to give a.little bit of a historical perspective. Those who favor filial support statutes imply that such laws are grounded in a venerable legal tradition which incorporat- ed the concept of the commandment to “Honor thy father and thy mother.” In fact, filial responsibility is not a part of a common law tradition, but a concept introduced in connection with the poor laws of Elizabethan England. Adult children, even.wealthy adult children, were not legally re- quired to provide financial assistance to their less well off parents. Only when the parents were on public assistance of some kind did the moral duty translate to a legal support obligation. And in characterizing the aid which gave rise to the laws, Profes- sor Ten Broek in the Stanford Law Review, stated that this was, “an age of hypocrisy and aristocracy.” At that time the poor were a politically unenfranchised class and they certainly were not pro- tected by anything similar to our own constitutional provisions. Some of the features of the poor laws included forced labor for children and for the elderly, and such things as indenture and transport back to districts where they came from. There was no concept of the dignity or the civil liberty of indigent people. And the laws operated to require financial contributions from, as well as to elderly relatives. Grandparents, for example, were responsible ye supporting grandchildren, if they were likely to become public charges. I state these facts because they debunk attempts to sentimental- ize filial responsibility laws as codifications of an ethical ideal. Whatever ethical or moral justifications are advanced, and I be- lieve that they have philosophical validity, the primary intent of filial responsibility laws was and still is a financial one. In connection with the medicaid program, I differ from Mr. Scott. The lawmakers and administrators consistently have rejected the notion of extending family responsibility support requirements beyond spouses for one another and parents for minor children. This policy was expressed by Congress when it enacted the medical assistance program in 1965, and that is contained in the statute itself, and also in the Senate Finance Committee report which stated the purpose of the provision that Mr. Scott cited at section 1902 of the statute. This interpretation was affirmed by the Department of Health and Human Services, which was then Health, Education, and Wel- fare, in its regulations implementing the medicaid program, and Mr. Scott did not discuss those regulations. However, section 435.602 and section 436.603 of the Code of Federal Regulations, title 42, explicitly state that States can neither consider income and re- sources in determining eligibility, nor can they collect reimburse- ment from relatives, other than a spouse or parent in connection with the medicaid program. This policy was reiterated in several unofficial statements and memoranda over the years, and among them there was an information memorandum in April 1975 and a memorandum in April 1977. In light of a Massachusetts request for a waiver of this proposal, the Administrator of the Health Care Fi- nancing Administration, in 1977, a Mr. Robert Derzon, stated, ''18 “that Congress, both in the original deliberations on the medicaid legislation in 1965, and on the occasion of several subsequent pro- posed amendments thereto, invariably.raised and overwhelmingly rejected the policy question of mandatory financial responsibility of adult children for the health care of their parents.” These policy statements did not merely reject the concept of con- sidering contributions in light of eligibility determinations. They rejected the concept on a broad scale. And States implicitly recog- nized that this was a ban on collecting funds from the adult chil- dren, by conditioning their attempts to implement filial responsibil- ity laws on obtaining waivers from Health and Human Services. The propriety of the waivers was doubted by many in itself. How- ever, the States at least assumed that they did have to get a waiver, under the waiver provision of the Social Security law to im- plement these plans. Therefore, it was not a clear-cut policy that States could seek reimbursement or have laws of general applica- bility. I think that is confirmed by the fact that as recently as the Wis- consin proposal, in November 1982, and Governor Cuomo’s 1983 budget proposal in New York, States were still talking in terms of obtaining waivers. Then in February 1983, the transmittal that we heard about was issued. And I believe that this was a reversal of previous policy, and it has been widely criticized as an attempt to circumvent the legislative and administrative processes. Therefore the legality of that action has been questioned. Even if the legislation might allow that interpretation, the regu- lations would not, and there has been no administrative procedure followed in making changes to the regulations. There is every prospect that implementation of the State laws on the basis of this transmittal would give rise to a lot of litigation and challenges would be brought in the State courts. It has been asserted that action by Congress would actually be required to permit filial responsibility provisions to be implemented by the States. Even if the statutory and regulatory barriers of implementing filial responsibility laws in the medicaid program were removed, there would be other legal problems. The medicaid manual transmittal speaks of laws of general ap- plicability, but it is evident that State laws would have to define categories of individuals to whom the laws would apply. Selection of categories of individuals, such as aged, indigent or institutional- ized, would present problems of equal protection of the laws under the 5th and 14th amendments of the U.S. Constitution. At present, I am not aware of a Federal precedent which would decide this equal protection issue. And State laws would vary. Many court challenges would be likely to be brought to challenge such laws on the equal protection basis. My conclusion is that State filial support laws are improper under the existing medicaid statute and regulations and might be held to be constitutionally improper as well. That, of course, will take consideration by appropriate courts and I believe that would delay implementation significantly. ''19 Another set of legal problems would arise from attempts to im- plement the laws and I believe that those problems should be con- sidered in light of the question of practicality. There are numerous problems, and I am going to highlight just some of them. How would the States conform to due process requirements of notice and opportunity for a hearing? In New York, it seems likely that many of these cases would end up in family court. What standards would the court use in determining ability to pay and would statutory or equitable defenses such as lack of con- tact between parent and child or previous abuse, abandonment, et cetera, be entertained? The medicaid manual transmittal does not define the word “rela- tive’ and you raised that question. I feel that is an important one, especially with respect to inlaws and parents of the other spouse in marital situations. Also, I feel that there is a potential conflict or interplay between spousal responsibility laws and filial responsibility laws. Would el- derly spouses in the community be made to spend down to the med- icaid level before adult children were required to reimburse the State for nursing home costs? Currently there is some leeway, at least in New York State, allowing spouses to keep money necessary to support themselves in the community. Could this still be done if children were going to be looked for to supplement the nursing home bills? Also, there would be problems of conflicts between State laws, and in the absence of uniformity, how would collection proceedings be instituted against out-of-State children? There are problems of constitutional privacy rights, what disclo- sure requirements could be enforced and what sanctions could be brought against elderly medicaid recipients who did not or could not provide information. I have seen situations where a nursing home patient is not even able to remember or provide data on their own resources or re- sources held jointly with a spouse. How would this lack of knowl- edge be treated? Proposals for filial responsibility are often likened by their pro- ponents to child support collection programs, and I feel there are serious problems with that analogy. For example, parental support obligations are tied in not only to need and dependency of a child, but to the parents’ custody and control of the child. Will adult chil- dren have authority in decisions to be made regarding the parent? Will they be able to disclaim responsibility if parents do not follow their advice or recommendations? The potential collection period in the child support case is for the duration of minority. However, nursing home patients often sur- vive for only a brief time following institutionalization. Few reside in these institutions for periods of many years. Will the State recoup its administrative and enforcement costs if it must seek court ordered support in such cases? Those are examples of the legal problems that I feel would arise. I think they serve to point out the complexity of drafting and im- plementing filial responsibility laws. Indications which I have received from professionals in the field of aging and from individuals who have called the Institute on Law ''20 and Rights of Older Adults, and who attended a colloquium that we sponsored recently on this issue, indicate that these laws would be extremely unpopular. Many people could, therefore, be expected to seek ways to avoid compliance or to have the laws declared invalid. This would add significantly to the costs. And I feel that it would reduce any kind of practical cost saving that could be realized from the implementation of the laws. The Elizabethan concept of rendering public aid to the poor, sick, and elderly, was a significant policy change. Just as important, or perhaps even more so, was a development in our own recent histo- ry, of the idea that indigent individuals are entitled to receive cer- tain kinds of public assistance. For the elderly especially this was a critical change, in that it seemed to recognize years of contribution to society, and provide reciprocation in the form of benefits. This removed some of the stigma of dependence which elderly people fear so much. Thus far, the medicaid program has provided at least a minimal guarantee of needed health care to the eligible elderly without forc- ing them to turn to their children. Filial responsibility laws will erode the entitlement concept, and will cause parents to enter into a relationship of dependency upon their children. This appears to be a diminution rather than an expansion of legal rights of the el- derly and will appear to have a harsh effect upon them and upon their families. From the perspective of the elderly parent, therefore, my ques- tion about the effect seems to be answered that filial responsibility requirements will not be beneficial. I would like to point out that positive incentive will not remove the problem raised by filial responsibility laws and if they are con- currently passed, I think that the problems will still be serious. Mr. Biacai. Let me ask you this, Ms. Collins. I think you have made two points clear. I am more sympathetic to the second one. The first one you talked about constitutionality. Well, that is always in question. We do not permit the constitutionality question to interfere with the legislative process because no matter what you do it is always subject to that consideration. But what more importantly is that you stated that this proposal would in fact be in violation of many provisions of existing law. Ms. Cou.ins. Well, I believe the previous policy and the regula- tions in the medicaid program are violated. Mr. Biacat. I think that is important. And your testimony in that regard will be most valuable and helpful to us. I assure you that will be pursued by the committee assiduously. You have been very helpful in that regard. Thank you. [The prepared statement of Ms. Collins follows:] PREPARED STATEMENT OF BARBARA J. COLLINS, STAFF ATTORNEY, BROOKDALE CENTER on AGING oF HUNTER COLLEGE, INSTITUTE ON LAW AND RIGHTS OF OLDER ADULTS, New York, N.Y. With respect to the issue of legally mandated relative responsibility, specifically filial responsibility, I believe that two basic questions must be addressed: Are such laws proper and are such laws practical? As an attorney, I will focus on the legal considerations, and I hope to provide a summary of the points which must be ana- lyzed in order to arrive at valid answers to these two questions. As an advocate for the elderly, I suggest that proposals to extend relative responsibility laws to make ''21 adult children liable for the support of their parents should be examined from the perspective of the aging individuals who will be affected, and I raise an additional question: Will such laws benefit or harm elderly individuals? I would like to start by placing relative responsibility laws in historical perspec- tive. Those who favor filial support statutes imply that such laws are grounded in a venerable legal tradition, which incorporated the concept of the commandment to “Honor Thy Father and Thy Mother”. In fact, filial responsibility is not a part of the common law tradition, but a concept introduced in connection with the poor laws of Elizabethan England. Adult children, even wealthy adult children, were not legally required to provide financial assistance to their less well-off parents. Only when the parent sought public assistance of some kind did the moral duty translate to a legal support obligation. The age which gave rise to filial responsibility laws was, to quote Professor Ten Broek, writing in the Stanford Law Review, one “. . . of autocracy and aristocracy in which labor and the poor were a separate and degraded class, politically unen- franchised, economically subjugated, and unknown to the benefits of the Constitu- tion”. 17 Stanford Law Review 644 (April 1965). Poor persons, including children and the elderly, capable of any sort of labor were required to work and could be indentured or otherwise “placed”. There was no concept of the dignity or civil liber- ty of the indigent. The laws operated to require financial contributions from, as well as to, elderly relatives. Grandparents were responsible for the support of grandchil- dren in danger of becoming public charges. Such a provision was a feature of New York law, along with filial responsibility, until the mid-1960’s. I state these facts be- cause they debunk attempts to sentimentalize the development of filial responsibili- ty laws as codification of an ethical ideal. Whatever ethical or moral justifications are advanced, and no matter how valid they may be philosophically, the primary intent of filial responsibility laws was, and still is, financial. In connection with the Medicaid program, it is clear that lawmakers and adminis- trators alike considered and consistently rejected the notion of expanding family support requirements to extend beyond spouses for one another and parents for minor children. This policy was expressed by Congress when it enacted the Medical Assistance Program in 1965 (see 42 United States Code, Section 1896a (a\(17\(D) and Senate Finance Committee Report, S. Rep. No. 404, 89th Cong., Ist Sess. 77 (1965). It was affirmed by the Department of Health and Human Services (then Health, Edu- cation and Welfare) in the regulations implementing the Medicaid program (see 42 Code of Federal Regulations, Section 435.602 and Section 436.603) which explicitly state that state agencies can neither consider the income and resources of nor col- lect reimbursement from any relative other than a spouse or parent in the Medicaid program. The policy was reiterated in several unofficial statements and memoranda as well. (See Information memorandum MSA-75+15 April 4, 1975 and Memorandum issued April 22, 1977 entitled “Field Staff Information and Instruction Series fiscal year 77-51, Medicaid—Financial Responsibility of Relatives.”) In a letter to the Massachusetts Commissioner of Public Welfare in August 1977, the then-Adminis- trator of the Health Care Financing Administration, Robert A. Derzon, stated that a panel constituted to consider the state’s request for a waiver of the relative respon- sibility restriction and “. . . pointed out that Congress, both in the original delibera- tions on the Medicaid legislation in 1965, and on the occasion of several subsequent proposed amendments thereto, invariably raised and overwhelmingly rejected the policy question of mandatory financial responsibility of adult children for the health care of their parents’’. States wishing to implement filial responsibility laws implicity recognize the ex- istence of the statutory and regulatory ban on consideration or collection of funds from adult children by conditioning their attempts to implement such laws on ob- taining waivers from Health and Human Services. The Wisconsin bill introduced in November of 1982 and Governor Cuomo’s 1983 budget proposal in New York both anticipated the necessity of obtaining waivers. However, in February of 1983 in a transmittal of a State Medicaid Manual provision, the current personnel at HHS apparently reversed previous policy and said that states could require payments from “adult family members” for the support of adult relatives under statutes of “general applicability”. This action has been widely criticized as an attempt to cir- cumvent the legislative and administrative processes, and is of dubious legality. There is every prospect that implementation of state laws on the basis of the trans. mittal will give rise to litigation. It has been asserted by critics of the transmittal that action by Congress would be required to permit state filial responsibility laws to be considered with respect to the states’ Medicaid programs. Even if the statutory and regulatory barriers to implementation of filial reponsibi- lity laws in the Medicaid program were removed, there would be other legal prob- ''22 lems. Although the February, 1983 transmittal speaks of laws of “general applicabil- ity”, it is evident that state laws will define categories of individuals to whom the support requirements will apply. Selection of a category of individuals, such as the aged, indigent or institutionalized, presents problems of equal protection of the laws under the Fifth and Fourteenth Amendments of the United States Constitution. There is at present no Federal Court precedent of which I am aware settling the equal protection questions raised by filial responsibility laws. As state laws would vary, multiple court challenges would likely be brought. Thus, state filial support laws appears to be improper under the existing Medicaid statute and regulations, and might be held to be Constitutionally improper as well. Another set of legal problems will arise from attempts to implement filial respon- sibility laws and must be considered in connection with the question of practicality. These include the following: How will states conform to due process requirements and provide notice of the required contribution to children? How will states provide an opportunity to be heard on the issue of financial responsibility? In New York it seems probable that many of these cases would end up in Family Court. What standards would the court apply in determining ability to pay? Would statutory or equitable defenses, such as lack of contact between parent and child, be enter- tained? There would be problems relating to the scope of the laws. Under the Medicaid Manual transmittal “relative” is not defined. Who would be responsible for support- ing the indigent elderly person? Would in-laws be required to pay for the parent of the spouse? Would elderly spouses in the community be made to spend down to the Medicaid level before adult children would be liable for the cost of a parent’s nurs- ing home care? In the absence of conformity in state laws, how would support re- quirements be enforced against out-of-state residents? How would constitutionally protected privacy rights be honored? What disclosure requirements could be enforced? What sanctions could be brought against elderly Medicaid recipients who did not or could not provide information? Proposals for filial responsibility are often likened by their proponents to the child support collection programs. There are problems with that analogy. For exam- ple, parental support obligations are tied in not only to the need and dependency of the child, but to the parent’s right to custody and control. Will adult children have authority in decisions to be made regarding the parent; will they be able to disclaim the support obligation if parents do not follow their recommendations? The poten- tial collection period in a child support case is for the duration of minority. Nursing home patients often survive for a brief time after entering the institution, few reside in these institutions for periods of many years. Will the state recoup its ad- ministrative and enforcement costs if it must seek court-ordered support in such short-term cases? The problems of drafting and implementing filial responsibility laws are numer- ous and complex. Indications from the professional community and from individuals who have called the Institute on Law and Rights of Older Adults and attended our colloquium on this issue are that these would be extremely unpopular laws. Many people could therefore be expected to seek ways to avoid compliance or to have the laws declared invalid. Thus, filial reponsibility proposals do not appear to promise significant cost savings and would not serve a practical purpose. The Elizabethan concept of rendering public aid to the poor, sick and old was a significant policy change. Just as important, perhaps more so, was the development in our own recent history of the idea that indigent individuals are entitled to re- ceive certain kinds of public assistance. For the elderly especially, this was a critical change, in that it seemed to recognize years of contribution to society as worthy of reciprocation. This removed some of the stigma of dependence. Thus far, the Medicaid program has provided at least a minimal guarantee of needed health care to the eligible elderly without forcing them to turn to their chil- dren. Filial responsibility laws will erode the entitlement concept and will cause parents to enter into a relationship of dependency upon their children. This appears to be a diminution rather than an expansion of legal rights, and a change which will have harsh effects upon the indigent elderly and their families. From the per- spective of the elderly parent therefore, filial responsibility requirements will not be beneficial. In light of the factors discussed, extension of relative responsibility within the Medicaid program seems to be poor policy, Positive incentives encouraging families to support their elderly members appear to be preferable. However, such measures will not undo the problems created by mandatory filial support provisions. Incen- tives should be used in place of, not in addition to relative responsibility laws. ''23 Mr. Braaai. Dr. Callahan. STATEMENT OF DANIEL CALLAHAN Dr. CALLAHAN. Ms. Collins has commented on the legal situation. I would like to comment on the moral status of the relationship be- tween children and parents, since I assume that all proposals which suggest that children might have a responsibility for their parents do rest on some kind of moral premise of the relationship between children and parents. The traditional argument in favor of a filial obligation to provide support is that of simple justice and equity. Since parents make a sacrifice to raise and rear their children, it has been argued that those children in turn ought to feel obliged to help their parents should their parents require help. Yet the symmetry of that kind of moral argument is misleading. Children do not, of course, pick their parents or choose to be born. They voluntarily enter into no contract with their parents to provide care to them, should the parents require it. Nor, in any case, do all parents act responsibly toward their children. Are we to say that children should support their elderly parents even if those parents were unloving, possibly harmful? To point out problems of that kind is not to deny that children can have obligations toward elderly parents. I would want to hold that there is at least a debt of gratitude, and that the affection which exists in healthy parent-child relationships will itself be a source of caring and felt obligation. Unless parents have treated the children very badly, children ought to respond to their parents with love, and provide at least emotional and psychological support to them. That would seem to me a basic moral requirement, and it is hardly any surprise that there is a biblical commandment that we ought to honor our father and our mother. It is, however, a large leap from noting how moral obligations may naturally develop to make them a matter of law, and then using that possibility as a way of saving public money. So far as I can see, the only basis for declaring a legal obligation would be that of a contracted debt that children owe parents, but whatever the nature of the filial bond, it is not a standard contractual rela- tionship. There is an even deeper problem. Any attempt to use the power of the State to tax children to support their parents could repre- sent a very serious threat to the kind of integrity that ought to per- tain in the relationship between generations. Just what is the nature of that threat? It is simply that the needs of two, or possibly three, generations are pitted against each other, thus opening the way for profound moral dilemmas and con- flict. Typically enough, children old enough to be called upon to provide financial help for their aged parents will be at just that age when they themselves should be preparing for their own retire- ment and old age. Moreover, they are likely to be also at an age when they will still have responsibility for the care and support of their own children. To be forced to make a choice between their own children and their own parents, or to be put into a position of threatening their own old age, is to force upon people moral dilem- ''24 mas of a kind that can be unbearable and that no decent society should tolerate. It is with that moral context as background that I would like to examine some specific recent proposals to require children to con- tribute to the support of their elderly parents. I will not here repeat what Ms. Collins already mentioned, the Elizabethan poor law, and she pointed out that the history of no- tions of the responsibility of children toward their parents really finds its legal roots in those laws. At present some 26 States have laws on their books that can require children to contribute support to needy parents. One may well grant that these are difficult economic times, that the care of the elderly is imposing a considerable and increasing burden on society, and that children ought to feel moral obligations toward their parents. Should one, therefore, conclude from that combination of circumstances that children ought to be forced, by the States, to provide assistance to their elderly parents? I think that conclusion does not follow at all. As I have already suggested, while there are certainly reasons in private morality why children ought to honor and respect their parents, it cannot be said that there exists a contractual obligation on the part of children to do so. Moreover, it should be recognized that the bond between parents and children can be, in many circumstances, a most delicate one, and to coerce children on behalf of their parents is not likely to enhance the relationship between the generations, or to produce a happy social situation. At the very least, the historical experience of various States in attempting to require children to contribute to the support of their needy parents has been mixed at best. There are a large number of enforcement problems, a variety of cases indicating highly unpleas- ant squabbles, and a considerable expense in even trying to collect the support money. Both as a moral matter, and as a practical one, there seems little benefit in requiring children to support their par- ents. A far more promising, less destructive approach would be to offer attractive incentives to families to provide care for their elderly members. Mr. Biacet. Dr. Callahan, you said there is little incentive for children to support their parents, what do you mean by that? Dr. CALLAHAN. I am sorry. I could not hear you. Mr. Braacat. Why do you not back up a sentence or two. Dr. CALLAHAN. Both as a moral matter and as a practical one, there seems little benefit in requiring children to support their par- ents. Mr. Braacai. Expand on the practical aspect. Dr. CALLAHAN. Well, I think it is a practical problem. The diffi- culties of collecting, of determining who among various children in a family ought to bear comparative responsibility of supporting the parents. The problem, of course, of trying to get money from chil- dren who live in different States from the parents. It seems to me that simply going through the process necessary to find out, (a) if the children have the money, to (b) collect it from the children, to (c) adjudicate the relative responsibility among the ''25 children in a family, would be a very difficult administrative prob- lem. And in this case it seems to me that if one combines the moral objections with the practical problems, one finds a very weak case for trying to raise money in this fashion. Mr. Biacct. To put it another way, the effort would not be worth- while. It would not be cost effective. Dr. CALLAHAN. I do not think it would be cost effective. If one had a situation where this would seem to be a tremendously prom- ising way of raising money over against some serious moral objec- tions, you might have a real tension. But I think in this case there seems to be nothing strongly supporting the idea. Mr. Biaaai. I just wanted to emphasize that point for the record. Dr. CALLAHAN. I think, by and large, from what we know of the relations between children and their elderly parents, in this coun- try, that relationship is generally a healthy one. Children do not, by and large, want to see their parents institutionalized. The ma- jority of children in this country do stay in contact with their el- derly parents. And most evidence would indicate that they are pre- pared to provide social, emotional, affectional support of one kind or another. Given that relatively healthy situation, it seems far wiser to look for some positive incentives and inducements to encourage children not only to do what they can for their parents, but to make it possi- ble for them to do a bit more than they might otherwise do. I think the proposed bill H.R. 76 seems to me to be a good exam- ple of a sensible incentive program. A tax credit for those families prepared to take in elderly parents, would be both a great boost for families emotionally prepared to do so and yet would not represent a significant drain on potential tax revenues. Very few children seem to exploit their financial relationship with their parents, and many would be prepared to take their par- ents in if it were financially feasible. The amount of a tax credit as proposed by H.R. 76 is hardly large enough to be an inducement to take financial advantage of parents, it seems to me, but it may be significant enough to provide just the impetus necessary in many cases for children to come to the assist- ance of their parents. I would close by saying that the family is under great stress and strain in this country at present. It certainly does not need the added problem of still another burden on its interior life. Indeed nothing should be done that would pose a threat to the relationship between parents and children. There is no doubt in my mind that an effort to force children to pay for their parents’ support, even if that payment did not impose a great financial burden, would intro- duce a wrong and potentially harmful ingredient in the parent- child bond. Far better to seek solutions that build upon present af- fection, which take account of the unwillingness of many children to see their parents put in institutions, and which encourage and abet the desire on the part of children to give real assistance to their parents in their elderly and declining years. Thank you. Mr. Braact. Dr. Morris. ''26 STATEMENT OF DR. ROBERT MORRIS, D.S.W. Dr. Morris. What I have to say would probably reinforce what has been said by Dr. Callahan and Ms. Collins. At the Policy Insti- tute at Brandeis University, we have looked at this subject over some period of time and I believe our conclusion can be summa- rized thus: it is sound and desirable public policy to encourage a constructive partnership between families and the Government. Unfortunately the means as proposed by the HCFA regulation, seems to us to be ill advised, counterproductive and will cost more than it is worth. I would like to suggest a few reasons why that conclusion can be supported and suggest constructive alternatives to the one pro- posed. In the first place, the proposal in the HCFA regulation seems to be based upon an assumption that children, adult children, are likely to abandon or neglect their elders. An examination of the facts indicates the contrary; that adult children are doing a great deal now, without regulation, without legislation, to help their elders. We might be better advised to concentrate on how to main- tain and sustain what seems to be a natural process of family caring, rather than trying to impose regulations applying to every- one in the effort—which I think would be vain—to find a few ne- - glecting relatives. Mr. Bracci. Excuse me, Doctor. Just let me ask a question, and just be in a sense a devil’s advocate. Given the statement that you have just made, that most children are supportive of their parents, and I agree. But I do not know whether that is really what the intent of the proposal is. Is not the intent of the proposal to reduce the cost and have the children pay for some of the cost of the institutionalization? Dr. Morris. That is what I am coming to. What I am coming to is the question of whether the amount of money that would be re- couped by regulation, bearing in mind the costs of administration that will be required and the probable damage to family relation- ships warrants the gain. In the first place, consider older people in institutions, in nursing homes primarily. We begin with the spouse and what they are doing now with their resources. The last comprehensive survey of information on the subject indicates that spouses who are not in a nursing home are paying about 25 percent of their income, of their income now, to support their elder spouse in a nursing home. And that is in a situation where those spouses have average incomes of only $8,000 a year. So the prospect for squeezing them further, does not seem to be very substantial. If you look to children, who have an older parent in a nursing home, only about 10 percent of those adult children have incomes above $20,000 a year, and their median income is only $15,000. I would suggest that if these are adult children with their own families, the margin for squeezing much more out of them, espe- cially since they are making small payments on average, a couple of hundred dollars a year, is not much. The regulation does not have a very persuasive case. ''27 If you go outside of the nursing home, consider the fact that by varying estimates, 60 to 85 percent of the elders with a disability— I am not talking about someone who is hail and hearty—are al- ready helped by family members. Some, perhaps 15 to 20 percent, live with their adult children, and certainly 80 percent overall are given a great deal of help financially and with personal care. The important point is, that this is uncompensated personal care. If that uncompensated personal care and help with medical proce- dures in the home was not provided by relatives to very disabled elderly that help would have to be provided by others, and be paid for—probably—by medicaid. That public cost does not now arise. I suggest that children are not avoiding their responsibilities in the aggregate, although there may be minor exceptions. There are serious limits on what would be gained by the regula- tion, given the circumstances. The income of adult children, on average, is that of a modest or low income population. After all, it is the medicaid population we are speaking of. If the adult children are not likely to have substantial margins and the spouses do not have substantial margins of income, what would one expect to get in the way of tax relief for the taxpayer. Mr. Bracci. I raised the hypothesis before. If you recall, I made reference to elderly persons in an institution with 75, 80, 85, with children, who themselves would be senior citizens. And the age of pe elderly in these institutions are generally run around that igure. Dr. Morris. About 80 or 85 years old. Mr. Biacct. So the case is more likely than not that we will have children who themselves are senior citizens, who may find them- selves in a similar economically stressful condition. I do not think, as you said, you can hardly squeeze any additional dollars out of them. They require all the money they can to live in the present circumstances. I think what you have said and I think we said it earlier in our testimony, that the administration contends it would save $100 mil- lion, but it would cost $75 million to administer this proposal. I think the whole picture is optimistic with a net of some $25 mil- lion. I am not so sure that would be true. Even to come on the plus side for $25 million, when you know the age of the elderly in the institutions. There may be some children that are 50-55, but I do not think there are enough of them to make up the difference. And then they would have their own economic difficulties. I stated that because it is one that is practical. Ms. Collins says it is a question of proper and practical. The practicality of this pro- posal, although it may have some theoretical merit to it from an administrative point of view, but in fact, if it were implemented, would it produce the kind of returns that the Government would like? Would it ease the burden of supporting medicaid? Dr. Morris. I think the burden of what I am saying supports what you are suggesting. It would not. There are other reasons, beyond the ones that I have already mentioned. Putting the best light on the HCFA intent and aim, and assuming that there may be some younger children who have some means, the question is are there enough of them? Mr. Braaai. That is true. ''28 Dr. Morris. What would it cost to recoup from them? Ms. Collins has mentioned some of the legal complication. If you consider what is likely to happen in the 50-odd States. One can visualize years of litigation trying to enforce legal responsibility on this rather small paceme of children who may have some means, but not a great eal. Massachusetts 2 years ago did try something of this sort, or at least thought very seriously, about recouping from adult children the cost of caring of elders who were in State mental hospitals. After looking at that very closely and experimenting with some of the ways of dealing with that, the State agency came to the conclu- sion early on that the costs were not worth it. It would simply cost more to collect the money than it would ever get back. So the as- sumption that you might get $25 million, which I think is insignifi- cant in the first place, is very unlikely to be realized. It is much more likely to cost more than will ever be regained. One further point about how much children are doing. I keep emphasizing this because I believe that the HCFA regulation is based upon the erroneous assumption that there is more that can be done than is now being done. It is based upon a misestimate of how much is being done. The regulation now encourages all the States to proceed under the same misconception, and that would be unwise. There was a recent study completed in Cleveland, Ohio, on a large sample of elderly people living with their adult children. This happens to be an unusual population because the elderly had on the average five adult children in the northeastern Ohio area. Four out of five of the children were making it possible for those elders to be maintained in their own home. At the most optimistic esti- mate, there might be one additional child, who is not doing all that that child might do. Another point about what could be gained, which is often forgot- ten is that 20 percent of elderly people have no children of any kind, and have no relatives. So when you begin administering the regulation, you are going to find 20 percent have no children. Of the children perhaps 80 percent are doing as much as they can. You are going to have a rather small percentage you are going to go after. Mr. Bracet. You are reinforcing our mutual premise. ar Morris. I hope the HCFA administration would recognize this. Two other things I would like to say, if I may have a couple of more minutes. Mr. Braaat. Sure. Dr. Morris. I recognize the value of trying to contain the escala- tion of costs in this field. But there are two things underway which are absolutely uncontrollable by any law, and those uncontrollable pressures are going to rise over the next 20 years the costs in any event. The question is what is a fair and reasonable distribution of those costs; how much of those uncontrollable increasing costs can be offloaded on families. The first uncontrolled pressure is our pop- ulation. In the next 17 years, by the year 2000, the proportion of older people over 85 years of age is going to go up 75 percent and '' 29 the proportion of single or unmarried or widowed women over the age of 75 is going to go up by the same amount. Those are the two categories which are most in need, most vulnerable, have the great- est difficulty of surviving in their last years. And those pressures are going to increase, and nothing that anybody does is going to stop that. So we have to anticipate from the point of view of public policy some further investment, in order to maintain the partner- ship between families and the Government. I would like to add a few words about some remedies that I think are better than HCFA proposes. The bill that you suggested, H.R. 76, tax credits, is very worth pursuing. Some thought ought to be given to whether the tax credit could not be extended to adult chil- dren who are helping their disabled elderlies live in their own homes, not in the residence of the adult child. I make that point because most of the disabled elders and most elders, for that matter, live in their own homes to begin with. Mr. Braact. As long as they can. Dr. Morris. As long as they can. But with home care services and with the help of relatives, the numbers able to live in their own home until they die have gone up phenomenally. I speak from personal experience. My mother at 97 lived in her own home. Mr. Biacci. You have a genetic advantage, Doctor. Dr. Morris. But she lived until 97 in her own home and main- tained it. We helped, and friends and neighbors and family helped. But she did not go into a nursing home and there were no public funds expended. I think there is much more of that kind of mutual aid and sup- port that we never know about that is going on now. It may very well be damaged for such matual aid is a fragile structure of rela- tionships easily destroyed by misguided efforts to use a meat ax ap- proach in legislation. We ought also to concentrate on trying to maintain this level of familial support that now exists, which the tax credit idea rein- forces. I would personally like to see it expanded beyond families all living under one roof. Mr. Biacai. Except that we find in the legislative process very much like social security and all of the other social programs, that you must get that camel’s nose in the tent first. Dr. Morris. I am very well aware of that. Mr. Bracct. I could not agree with you more. Dr. Morris. I also think continued pressure ought to be exerted to control the costs of medical care, rather than trying to shift the payment of those costs. I am speaking about the incentives which might be introduced, perhaps not the subject of this hearing, to en- courage the medical system to use less costly modes of care than is now the case, to reduce the rate at which health care providers continue to increase their costs and their income way beyond the rate of inflation. There are cost containment measures which are being experi- mented with and they are much more promising. Mr. Bracai. Well, one of the proposals that seems to be getting underway is prospective reimbursement, as an alternative. Certain- ly the path down which we have been going is impossible. The costs of medical care continue to skyrocket. And in the end the provider 23-433 O—83——3 ''30 and the taxpayer—maybe not the provider, but the ultimate con- sumer and the taxpayer being, not shortchanged, but they are being burdened. Dr. Morris. My institute has been very much behind the idea of prospective reimbursement. There is one aspect to be watched for which needs monitoring rather carefully. It is quite possible, even probable, that with nothing else being done under prospective re- imbursement, that medical care institutions are going to neglect people with the most severe disabilities. There is nothing to safe- guard against that. I do not know who it was that mentioned on this panel, the possi- bility of training family members. There is a marginal gain to be had in helping family members learn better how to deal with some of the more difficult aspects of caring for older people. Mr. Braaat. I think you can qualify that it would be marginal benefits. I think most have just grown into the situation. If the family members have the elderly at home, they have lived with it. The affection and care just produces the kind of attention and training that is necessary. Dr. Morris. That is true, but there have been two studies done recently about the pressures that build up on families. And there is a tipping point which is reached. Mr. Bracct. Well, the pressures that build up on families for the most part is economic. And that is, frankly, what developed the notion of my bill, which provided tax credits. We found there is a lot of elderly abuse, abuse of the elderly, especially when they were living at home. Dr. Morris. One other idea, and that is to modify cost sharing on the medical side through coinsurance and deductibles, which is a medicare, not a medicaid problem. But it would be interesting to consider whether we could ever consider a progressive pattern of coinsurance, which means that the coinsurance rate rises as family income does, rather than being a flat rate, which is regressive for most people. I think that is all I want to say, Mr. Chairman. I want to thank you for the opportunity to speak. [The prepared statement of Dr. Morris follows:] PREPARED STATEMENT OF ROBERT Morris, D.S.W., ProressoR EMERITUS, HELLER GRADUATE SCHOOL, BRANDEIS UNIVERSITY The Levinson Policy Institute of the Heller Graduate School, Brandeis University, has studied the problems of long term care for the elderly for the past ten years, and completed a special analysis of the subject of family responsibility in 1980. Health and personal care of the elderly, as their physical vigor declines, has long been a responsibility shared by families and government. I assume that family care and shared responsibility should be a foundation for any public program. Natural family tendencies and fair-sharing should be encouraged by all reasonable means. I want to discuss briefly why the current proposals of the Health Care Finance Ad- ministration are ill-advised and damaging to the maintenance of a constructive partnership; and to suggest some alternative approaches. MISCONCEPTIONS UNDERLYING THE HCFA APPROACH—EXTENT OF CURRENT FAMILY HELPING By implication, the proposal assumes that adult children or spouses are doing less than they reasonably could to care for their elders or their ill spouses. But we find that families are already helping a great deal. Family responsibility must be divided between that of the spouse of a sick elder, and that of grown children who may be ''31 living in separate households. The ability of aged spouses to do more than they do now is very limited, given the rigors of Medicaid and SSI screening. (The small numbers with assets, including a home, who have escaped the poor relief collection methods are considered separately.) In 1976, husbands or wives paid an average of over $2,000 a year for nursing home care for their spouses, although spousal mean income was under $8,000 a year. Not much room to pay more out of income when 25 percent already is paid for such care on average. For children, only 10 percent of adult children of nursing home residents have incomes above $20,000, and the median income of the children is only $15,000. The margin for paying much more for Medicaid can only come, for most of them, from beggaring themselves and their children. Despite this, in 1976 such children paid an average of $160 per year per Medicaid nursing home resident. Outside of nursing homes, 60-85 percent of elders with disability are already helped by family members without public cost. Eighteen percent of these elders live with children, and 80 percent are seen and helped regularly with personal and nurs- ing attendant care and money. In a recent study in Cleveland, the elderly living with children were found to have on average five or six major physical impair- ments, and one-half had mental difficulty. They were not a sturdy, healthy group of elders. For example, 16 percent has colostomies or catheters and needed help to change and manage them. Well over half that help was provided by relatives. If they did not get such family help, the medical and nursing help provided by service agencies—and perhaps paid for by Medicaid—would have doubled and so, most likely, would the public cost. In personal care with activities of daily living, a crucial part of living for the ill elderly, 55 percent of such help was currently given by relatives in the Cleveland sample, without public compensation. Wherever medical costs are controlled, it occurs because families provide this personal care. To shift their contribution from this personal care to paying medical bills will undoubtedly undermine the ability to live at home and will increase the tendency to rely on higher cost medical and insti- tutional care since public policy would be seen to prefer such a solution. LIMITS ON THE POTENTIAL FOR TRANSFERRING MORE COST TO FAMILIES I begin with the assumptions that families able to do so should pay a fair share, or all, of the costs of their sick elders. But what is a fair share, given the help al- ready given without pressure or regulation? The attempts to assure that able fami- lies pay more for nursing home care may produce quite minor income at a cost which may be very great. To reach the few families, other than spouses, with sufficient income worth wor- ring about, and who are not already doing their share, would require a significant increase in a bureaucracy to locate and pressure these relatives who may live in distant states. There is also a swampland of state law which probably limits the en- forceable legal liability of grown children for the costs of parents’ medical care. Even if such laws are not a barrier, the problems of locating and identifying income capacity of grown children in several parts of the country will be formidable. Income data for relatives—especially those whose parents are Medicaid-eligible—do not permit an assumption that most of them can be forced to pay more than they now do. To penalize all for the sake of forcing a few, while legal and regulatory pro- cedures are spun out, is hardly in the American tradition and would have serious public consequences, to say nothing of the disruption in family relationships. Even if access to medical care via Medicaid is not blocked during this process, all evidence indicates that many—if not most—elders would simply deny themselves medical care rather than initiate action against their children. Given the limited financial resources of these families anyway, the result is not only a cruel demand of health care to people at a most vulnerable stage in life, but it will probably pro- duce a rise in more serious health problems (due to neglect) which will cost the health system more through increased hospitalization. But aside from ethical and political considerations, the sheer administrative cost of the exercise is likely to be very great. The HCFA estimate that an expenditure of $75 million will yield a $100 million return seems wildly optimistic. It much over- estimates the money likely to be recouped, and it grossly under-estimates the collec- tion costs. If all state as well as federal costs are included, a net loss can be expect- ed. If new staff is not added for collection purposes, staff effort will certainly be di- verted from the main task of service administration to income collection, which can only lead to a deterioration of public services. A few years ago, the Department of Mental Health in Massachusetts initiated an effort to collect from relatives with family in state mental hospitals. It soon came to the conclusion that the costs would ''382 be much higher than the money which could be raised, so the plan was dropped. (The recent reported success of pursuing fathers of small children for support pay- ment is not relevant for, in that case, legal obligation and means for locating work- ing fathers are relatively simple and easy to organize.) The Cleveland study found in its sample that while elders had an average of five children within a hour’s drive, four are already helping, only one might do more. Is the cost in administration, and the cost in terms of damaged family relationships, worth it to squeeze this 20 percent when we know nothing of their ability to do more? To add to these limitations, we cannot ignore the fact that at least 20 percent of all elders have no children or living relatives at all, and this proportion may be even higher in a Medicaid nursing home population. In sum, if we add up these numbers: 1. elders without a living relative; 2. elders whose relatives are already helping a great deal; 3. elders whose relatives have very limited, if any, slack in their resources to do more, then we are justified in doubting whether the exercise is worth starting at all; the costs will exceed the recoupable amounts. LONG TERM UNCONTROLLABLE PRESSURES ON PUBLIC COSTS Public policy also needs to come to terms with the uncontrollable upward pres- ~ sures on expenditure due to changes in population makeup. By the year 2000 (17 years away), there is conservatively projected an increase of 81 percent in the num- bers and proportion of aged over 85 years of age; and a 76 percent increase in the proportion of widowed or single women over the age of 75. These are the two sectors of our population most feeble and vulnerable, which will need more supportive pro- tection regardless of the minor changes in recoupment of funds from relatives. In that same time frame, the per capita costs of Medicaid are going to rise no matter what else is done, unless government abrogates its part of the partnership with fam- ilies and abandons its older citizens. MORE SENSIBLE REMEDIES Since total expenditures will rise, and the tax burden is high, we should consider a few sensible steps which can be taken to contain the rate of growth, consistent with the idea of a fair partnership between families and government. 1. The most important and promising approach is that of medical cost control, not shifting the cost burden. We can reduce the incentives which encourage our medical system to use hospitals and nursing homes when not always necessary. We can reduce the rate at which the incomes of health providers and the enrichment of medical institutions goes on faster than inflation or faster than growth in the GNP. Much of these medical charges are shifted to patients and taxpayers who have little protection. 2. We can treat home care and nursing homes on an equal footing; for example, cutting the repayment to proprietary firms for their capital costs and giving home care providers modest capital start-up cost reimbursement. This will substitute home care, with family help, for higher cost institutional care in a significant pro- portion of cases. 3. We can devise incentives to encourage families to maintain their present level of caring rather than wasting money by trying to get more from those of limited means. Tax credits (as in H.R. 76) may be one such incentive; although such credits as now planned penalize those elderly who want to keep their own homes with their children’s help, and force them into greater dependency by moving in with their children; and it benefits those who have higher incomes and tax liability, not those whose earned income is too low to be much taxed. We could encourage a much larger number of families if the tax credits were extended for care beyond the tax- payer’s residence. Other forms of cost-sharing might be devised, provided they are progressive not regressive in nature. By that I mean that the proportion of cost to be shared rises with income, which places the sharing where it is most fair, with those of greater means. Co-insurance could be made fair and progressive, rather than regressive and unfair for the most vulnerable. Cost-sharing need not be in dollar terms only. It is possible to deliver partly reim- bursed home care services to families which agree to maintain a level of unreim- bursed personal attendant care with their own labor. A New York City study by the Community Service Society indicates that such families keep their part of such an agreement and do not increase their demand to shift more time and cost to a public- ly paid provider. Such agreements could encourage families not now doing all they '' 33 can to increase their efforts and, even mote important, they can reduce the rate at which family members burn out their ability to provide care outside a nursing home. In a minor way, some training for family members might be useful to teach them how to provide the very difficult and complex physical and nursing care which many home care patients require. Family members taught to change colostomy bags or to transfer wheelchair patients wear out less rapidly than those not so trained. In conclusion, a more practical approach to family responsibility is to give fair encouragement to maintain the average high level now borne by families. To this can be added cost control on medical charges plus progressive, not regressive, cost- sharing. Data sources cited 1. “Survey of Institutionalized Persons, 1976.” Special Studies Series P-23, No. 69. U.S. Department of Commerce, Bureau of the Census. 2. Linda S. Noelker and S. Walter Poulshock. “The Effects of Caring for Impaired Elderly in Residence.” Final Report. Cleveland, Ohio: The Benjamin Rose Institute, 1982. 3. “Statistical Abstract of the United States,” 1981. 4. Dwight Frankfather, Francis G. Caro, and Michael Smith. “Family Care of the Elderly.” Lexington, Mass.: Lexington Books, 1981. Mr. Bracci. Thank you, Dr. Morris, Ms. Collins, Dr. Callahan. The questions I had I interjected in the course of your testimony. I assure you that this committee is grateful to you because your con- tribution was significant, each of you in your own way. And if you have your statements, I would like to have them for the record. The record will be open for a period of 2 weeks. Thank you very much. We will take a 5-minute recess. [A short recess was taken.] Mr. Biaaat. The hearing is called to order. Mr. Myer Haspel. STATEMENT OF MYER HASPEL Mr. Haspet. I am Myer Haspel. I feel really at home here be- tween our Congressman Biaggi here and Bob Blancato since we have known each other for quite a while. I am not going to make a speech. I am going to say what the people around here said. We feel the same issue hurts every nurs- ing home today by regulating the lifestyle in the nursing home by putting a burden on our relatives. The average age, in our nursing home—the Daughters of Jacob— is 85 years old. We are active in every admission and different things there, and many other issues. We already have the relatives today that have been admitted to our nursing home. They make an application and they are ready to come in. Our home reminds us that our families are in the build- ing. We are coming into a home where our fathers and mothers spend the rest of their lives. The burden that would be placed on these people is really very difficult. These relatives are retired people and elderly people, too, and sick people. They try to survive in their home where they are today. Unfortunately, many relatives are coming into our home. It is degrading to come from the outside. The children and also the residents of the Daughters of Jacob feel very bad about it. They could hardly make a living on their own. Really, today with infla- tion and everything that is going on through the country, with our administration today, with everything so high, they are still living ''34 in a home, in a certain home that is really not fit. Rentals are so high. I could give you many, many facts there. We try to stay at home as long as possible. Our people in the Daughters of Jacob, we had a residents council meeting. There were over 100 people in that meeting. It is actually sickening to them to hear that their children may have to carry certain responsibilities for them. These people feel they contribute many things to the lifestyle and we contributed a lot to society. We gave a lot of money into the Government, in which we start from our youth and we paid taxes and everything. Now if these rules are adopted, we will have to come to our family. I think it is absolutely not right. This is something we really have to speak up about. The gentleman before me spoke very softly. He made a big, big long speech. I tell you, frankly, there is nothing really I could take out of that speech. I think he was speaking on the other side of the fence, the other way around. He does not know what the nursing home, he does not know what hospital care is. We, the people who are living there, where I live, in the institution the Daughters of Jacob, we know. I am fully responsible to the people to a certain extent. But the way to make life better for them, and here they come around to tell our families, the children to keep their family at home. As they said there with a deduction or credit or some- thing, is not enough. Our family needs care in there. You should provide for them a 24-hour service, something to keep them at home, you know what I mean? Even with a deduction or credit, where is the credit going to come? Many of those people are retired. They paid their taxes al- ready. I think it is absolutely unfair. If you could promise them, as the gentleman said, provide for them nursing and good care in the home, it would be a wonderful thing. But in reality, I do not think it will ever come to it. It is not an issue. Maybe if you fight it hard enough, it may reach in 2 years or 3 years later, because everything is going in slow motion. We are interested at the present time, we cannot get passed by Congressman Biaggi and the panel over here, to leave us the way we are living today. If we cannot do anything better, I mean in general, the Government, our President, let us live our style the way we have lived the few years we have had to live. I am considered the baby in the nursing home down there. I came in just for a while, but I loved the people so much that I became active. As Congressman Biaggi knows, we are on every committee and everything. This is something that really they are interested in trying to forget, take away their responsibility from our family. My daugh- ter, of course, is a little younger, and she is supporting her hus- band at the present time, a man who has a heart condition and ev- erything. She has to support him with medical care. You go to a doctor. She had something yesterday. She came to visit me. She had a certain splinter and was charged $75 to just take the splinter out. '' 385 Let us not place more responsibility with our children. Let us see where we can find a way to improve nursing homes and not dis- grace the nursing homes. Of course, this will apply to many other nursing homes, but I am really interested in the home where I live. I feel this is the most outstanding home, because I know many nursing homes. I feel this is the place, my home, and I want to finish my lifestyle with digni- ty and with peace and quiet. We do not hear everyday news come through like this issue we are talking about today. Every time some news comes through on the TV or in the newspaper, this does not help either side. It both degrades the family and our children. Let us keep it the way it is and let us not place more responsibility on our children. Mr. Bracat. What you are saying, if it is not broke, do not fix it? Mr. HaspE.. That is right. Mr. BraGai. How old are you, Mr. Haspel? Mr. Haspkt. I was born in 1911. I will be 72. I came here by coin- cidence into the Daughters of Jacob and I could now really get out. I like it so much because there are lovely people there. The admin- istrators are very lovely. We work hand in hand together. Mr. Sha- piro sits next to me. I want to introduce Mr. Shapiro. He is by him- self and he is trying to make life so good for us all in the DOJ, as do all our administrators there. I say leave us alone. You cannot do anything better. We should not get anything worse. I hope you will realize that I am not using high tone language, because to you I do not have to speak. I have another voice too. I went to Albany recently. I got a little aggravated on a certain issue at one of the legislatures down there. Then of course they came down here. I told them to wake up certain bills that were sleeping already for 3 years and they are still asleep. They never took any action. Even the bills which were passed lately by Assemblyman Weinstein, through the assembly, and they are sleeping now in the Senate. Why they do not wake up these bills and see something. No-cost bills are laying down there, no money involved in that, and they would not push it through down there. Mr. Biaggi, and other people like you, you can do a lot of things for us. We rely on you really. You always do the job, and you are going to continue doing a good job. I want to give my blessing to you. May God bless you. Continue the good work. Mr. Bracat. Thank you. Mr. HaspeEt. For many years to come. Mr. Bracct. Thank you, Mr. Haspel. Mr. Shapiro. STATEMENT OF MR. SHAPIRO Mr. SHapiro. I want to basically make one comment. I am not sure if this was made this morning. One of the things that we have been finding in this social phenomena of the elderly, is that the people that are now coming into the homes for the aged are older, sicker, and a lot more complex in providing them with medical and nursing care. In fact, we know for a fact, that the average stay for a person that comes in now at age 87 or older, is less than some- times 4 months. The average stay at the home, when a person ''36 comes in at a younger age, is rougly about 82, 83, is somewhere around 4 years. So that the number of significant, acute and chronic problems that people have, seems to have a decided factor in the length of time they remain in that facility. The other thing that seems to happen is that relatives are bring- ing their parents into facilities like ours when the enormous pres- sure, enormous crisis has built up and they no longer can take care of that particular problem. So that what we are faced with is an enormous task of trying to do something about that particular per- — health problem when frequently you are no longer able to do that. And despite the fact that the magnificent kinds of medical and nursing care that we provide frequently you are just unable to take care of that elderly body and put it back as it once was. There is just no way to do it. I am not sure if that was mentioned, but I thought I would men- tion that in passing. Mr. Baca. Interesting. The fact that you point that they are coming in older and sicker. Mr. Suapiro. Yes. We had an admission just the other day, to give you an example of what we mean by that. This particular indi- vidual was 87 years old, had six major chronic problems, including diabetes, angina, et cetera. On the average we find between four and six chronic problems. We have had some people who have had as many as 18 chronic problems that they have been faced with. That is at the time of admission. Mr. Haspet. Only last week was admitted two patients 97 years old, a doctor, a dentist, and a medical doctor was admitted, 97 years old. They brought him in on a stretcher. They brought them in, put them right into bed on the ninth floor where I am. Here they are bringing in old people. The family is really in pain when they have to separate with the children and they must bring them in. And you can see exactly who the family are. Elderly people. A man and wife who bring them in. They are old people and when they cannot take any care anymore, they say go to the nursing home. This is the problem. That is why we cannot pay because we are admitting already people who their father and mother lived in our nursing home, we are admitting the children already, which we had a few admissions already. And I happen to be one of a committee, where we are trying to give a hand to those people. This you see exactly how these people are. That is why I say let these people alone, because the relatives already and the families are elderly people, and they will come in soon to our home. Mr. Braaai. You are reinforcing what we said before. I am not so sure the administration or anyone has really assessed the age of the residence of the nursing homes, but we know they are in their late 70’s, 80’s, and 90’s, and they themselves have families that are senior citizens themselves, who have their own problems. Mr. Suapiro. I would like to share with you another interesting phenomenon. I have been at the Daughters of Jacob now for about 12 years. We have the largest number of 100-year-olds in the time that I have been there. We now have 20 people over 100 years old. '' 387 The oldest person is 105, and the youngest of that group is 100. It is quite interesting that this phenomena is also spreading across the United States. There are now over 25,000 people over 100 years old in America. I am not saying that all of them live in nursing homes, but I sus- pect that quite a few do. Mr. Bracci. Thank you, Mr. Shapiro and my good friend, Mr. Haspel. God bless. Mr. Haspet. God bless you. Mr. Biacat. The second panel is Jeffrey Ambers and Victor Ro- senthal, Nursing Home Community Coalition of New York State, and Edward H. Duggan, president of the Congress of Senior Citi- zens of Greater New York, who have been in the forefront in the battle lines for seniors since time immemorial. And they are pros at this. I would ask you, if you have written statements, we will take them for the record, and if you would summarize. We have some time constraints. That always happens. Time gets away from us. If you could summarize in 5 minutes, we would appreciate it. Thank you very much. PANEL TWO, CONSISTING OF EDWARD H. DUGGAN, PRESIDENT, CONGRESS OF SENIOR CITIZENS OF GREATER NEW YORK; JEF- FREY AMBERS AND VICTOR ROSENTHAL, NURSING HOME COM- MUNITY COALITION OF NEW YORK STATE STATEMENT OF EDWARD H. DUGGAN Mr. Duaaan. Mr. Congressman, and staff, thanks for the invita- tion and the opportunity to speak to you. May I, with your indul- gence, I prepared a very short statement. It is a little bit broader. I am Edward Duggan, and I am here wearing a couple of hats today, first as an executive board member of the National Council of Senior Citizens, and as president of the Congress of Senior Citi- zens of Greater New York. Now that our social security financial programs have been re- solved for the foreseeable future, seniors will be facing a new and equally important battle for health care. Recently the Senate com- mittee made recommendations to cut $23.6 billion of medicare in the next 5 years. If these are made, this will just increase the out- of-pocket cost for medicare beneficiaries, higher premiums on part B, and I am virtually certain should come the Senate budget reso- lution, should they pass that. We seniors are embarking on a number of major campaigns against all these cuts. I will fill you in on that in a moment. We are determined more than ever to fight, not only to protect and improve our health plan, but to enact strong cost containment legislation for the whole health care system. Medical inflation continues to grow unchecked in spite of lower general inflation rates. Medicare and the growing elderly popula- tion are not the cause of this inflation. The real problem lies in the health care system which allows, and even encourages, doctors and hospitals to charge whatever they want for health care and health care services. A recent study showed that of the the expected 13.2 percent in- crease in medicare between 82 and 95, 82 percent of that can be ''38 attributed to hospital costs. We must not allow Congress to use medicare as a scapegoat for this problem. We must urge every Con- gressman to support legislation which will address not just medi- care, but the entire medical and health care system. Senator Kennedy has recently introduced a measure for such control. Another very worthy piece of legislation is Congressman Biaggi’s H.R. 76, which I will touch on here, if I may. It is important to remember that this battle to protect medicare and regain control of skyrocketing health care costs, will be an all- out, no holds barred fight. We do not want medicare to become so costly that it is only a program for the rich. Unless we act now, that is exactly what is going to happen. Trying to keep this from happening is what we affiliated groups are doing in the next several days. May 20 we are having a big rally at the Presbyterian Hospital Community Health Center at 179th Street and Washington Avenue. May 25, Health in Action, at Lincoln Center, Age in Action. We will turn out between 20,000 and 25,000 people, as we do each year. June 10 at the High School Fashion of Industries, again, these five or six major organizations, all together, have a rally. All of our legislators are being invited there. June 16 another citywide Advocates for Seniors are having theirs. The Congress of Senior Citizens on June 22 are going to surround this building with thousands of people with an informational picket line. Again, all of our organizations working with us. Mr. Congressman, I remember hearing the expression, “When we get old, we have a lot of answers and nobody asks the questions.” I was called out of here a moment ago by channel 11 and asked where did our, my two major organizations. I am also cochair of Save our Social Security nationwide. Mr. Braacat. You saved it. Mr. Duaaan. I know it. Thank God. With the help of you and a lot of others. Although it was a castor oil treatment, it was tough going down. Out there they asked me about what was our stand on these things. We are against this because it is not a well thought out thing. It is not put together properly. It is not a workable thing. I do not think it is a legal thing, if it were challenged. You mentioned a couple of recent States. Another one, more recent again. Georgia passed that legislation for many years. No one dares to go forward with it. They are afraid they will wind up with egg on their face. This is not a well thought out thing in this. There are moral problems in this. A son or a daughter who is going to care for their parents, they are going to take care of them anyway. One who can and will not, still will not. All the persuasion is not going to work. It is like the fathers who duck the responsibility of their children. It is a thing that just doesn’t work out. And I think your H.R. 76 is a good attack on that. If it has to come, it is a reasonable answer to it. And as you get older, you do not shake things off too quickly. It can happen. We find out that a lot of things we thought could not happen, did happen. ''39 Again, thank you very much. I have heard a lot about old age, and I may close with a little witicism if I may. Just recently I ran into a fellow 97 years old who still does not use glasses. He slugs it right out of the bottle. Thank you again. We appreciate your help. We are going to continue to look for your help. Mr. Bracat. Mr. Rosenthal. Mr. RosENTHAL. I am going to let Mr. Ambers go first. Mr. Ambers. STATEMENT OF JEFFREY AMBERS Mr. Ampers. My name is Jeff Ambers. I am speaking for the Nursing Home Community Coalition, but also as executive director of FRIA, Friends and Relatives of Institutionalized Aged. At FRIA we have over 4,000 members, all who are relatives or friends of people in nursing homes so we know how families think about these proposed new regulations. First, I would like to talk about something that has not been dis- cussed today and that is we do already in fact have family responsi- bility. We have filial responsibility for cost both real and inkind. Families are doing a lot to support the frail, elderly relatives. They support them at home until the last possible moment, until nursing home care is needed and there is no other choice. The families can no longer take care of them at that time. There is a lot of money expended in that. Also, which nobody mentioned today, is that when a relative goes into a nursing home, in many cases there is still a community spouse. The families are still taking care of that community spouse, whether that spouse is living in the family’s home or independent- ly. So family resources are still being continued to pay for the com- munity spouse. Also, I will say the unsayable. There are a lot of incidental costs associated with gaining admission to nursing homes in New York State this year. There is a tremendous shortage of nursing home beds in New York State. In order to get into many institutions in New York State, families have to pay for certain costs. And I will elaborate on that. They are quite extensive, and have nothing to do with medicaid. They include contributions to the building fund of that institu- tion. Mr. Bracci. You mean they are coerced into making these pay- ments in order to gain admission? Mr. Ampers. Yes, they are. Yes, sir. Mr. Bracct. It is a form of extortion. Mr. Ampers. It is, sir. But we have a nursing home bed shortage and we have homes with good reputations and we have families that want to do the best possible thing for their elderly relatives, and they will do anything to get them this type of care. So they make contributions to the building fund. So the families also, in many Cases, agree to pay for the costs privately of nursing home care for 1, 2, or 3 years out of their own funds, before the parents will even apply for medicaid. This is also something that is not right. It is not legal. But it is done every day. ''40 Also, families are also requested to assume the cost of additional aids for their relatives, once they go into a nursing home, above and beyond the care that the nursing home says they can provide. If your relative needs a lot of care, the home will say to you at ad- missions time, “Listen, we will accept your relative, but you will have to kick in additional aid money.” So you have building fund money. You have money that you pay privately for 1 or 2 years. You agree to that. And you also have the cost for aid. So those are additional costs that families are paying right now. Mr. Bracai. So if this proposal becomes effective, the families will be required to make additional payments? Mr. Ampers. Above that. That will continue. Because this propos- al does not deal with the fact that there is a tremendous nursing home bed shortage. There is no marketplace for nursing home care right now. There is no competition. It is a very bad state of affairs. So families are kicking in financially more than anybody could imagine, except for those families themselves. When we suggest to the families in FRIA that they do a test case on this, that it is il- legal for contributions to be asked, they are not interested in doing it because they are interested in the welfare of the relative, getting them in that home. And once that relative is in that home, they do not want to do anything that would endanger their relatives well- being and health. So it is our contention that we do in fact have family responsibil- ity. I do not want to say, too much has been said over and over again. FRIA got a lot of calls from relatives when the New York Times story came out on these new regulations. Relatives are very concerned. They are, for the most part, just getting by themselves. They are in their 60’s. They have family responsibilities. They are very, very worried about this. And we are going to do everything we can to see that this does not come into effect. This is extremely detrimental. One last thing. Families, in addition to whatever I have said about supporting their relatives, are also taxpayers. They are also paying taxes that support medicaid. And I think what really has not been addressed today, and I will just close with this, is in fact we are looking at filial responsibility. We are not really looking at societal responsibility. I believe that society has the responsibility for taking care of the health needs of the frail elderly. If health care costs are going up, Government should do a better job of regulating the health care industry and the costs. Or, in ad- dition to that, if costs are going up, it is society's responsibility to the frail elderly. Mr. Bracci. I think society has responded, frankly, by virtue of the fact that the Federal Government and the State governments are providing funds. The question is, we have a system in place that seems to be reasonably effective. Now, does this proposal impact negatively on the status quo or does it not? That is what we're trying to determine today. So far testimony we have received, reinforced by your own statement, indicates that it has a negative and really traumatizing effect. Not simply on the system, but on all “ the peace involved. Not only on the residents, but on their fami- ies as well. ''41 Mr. Ampers. And that will affect the family’s relationship with the residents also. And an important part, as Mr. Rosenthal I am sure will go into, an important part of the health and well-being of the nursing home resident, is his or her relationship with their family. Mr. Biaacat. Mr. Rosenthal. STATEMENT OF VICTOR ROSENTHAL Mr. Rosentuat. Yes, thank you, Congressman. My name is Vic Rosenthal. I am from the Coalition of Institutionalized Aged and Disabled, which is a statewide organization, comprised of 115 nurs- ing home resident councils. And the particular thing that our coali- tion is trying to respond to is making residents in nursing homes more independent and more able to look after themselves. Now, you had alluded to earlier, and I move away from what I had written in testimony form, the idea of the human element. Sometimes we lose sight of the human element. We talk too much about the costs. Mr. Bracct. And the budget. Mr. RosENTHAL. And the budget. And we lose sight of the fact that we are dealing with elderly individuals and their families. And Mr. Haspel and Mr. Shapiro spoke about the fact that we are dealing with people in their 80’s and 90’s and even people over 100. And I think if we look at the human element, we have to consider, first of all, is the trauma alone of entering a nursing home. The trauma both to the elderly person himself or herself and to the family. What I think people fail to realize is the nursing home in virtually ever case is the last resort. It is the last alternative along the continuum of long-term care. Mr. Braaci. Well, it should be. Mr. RosenTHAL. Right. And I agree with that. But the fact is that I think a lot of people think, they have this misconception that relatives will dump their family members in a nursing home because they do not want to look after them anymore. And that is a misconception. But going back to this whole idea of a trauma. We are talking about people, elderly people, who for years have been taking care of themselves. They are in their 80’s and they worked for 40 or 50 years. They were independent. They made their own decisions. And all of a sudden they find themselves, because of their lack of health, because of the lack of alternatives, they find themselves in a nursing home where they are no longer independent. Decisions are made for them with respect to what they eat, what they wear, when they go to the bathroom, et cetera. And this trauma can be very, very difficult for them to bear. And what we find, as Mr. Sha- piro indicated, is that a lot of nursing home residents die during the first few months of their living in that nursing home. If you add to this trauma the fact that they are going to be more of a burden on their families, it will make that trauma that much ’ more difficult to deal with. Because in fact what happens is a lot of these elderly people, when living in a community already feel like a burden. And they are reluctant to deal with any social programs. I am sure you are ''42 aware of how often elderly people do not want to go on food one do not want to take medicaid, because there is a pride in- volved. When recognizing this reluctance to go onto medicaid, if you add to that the fact that their children, who the last thing they want to do is be a burden to, will then have to pay for some of their costs, it is going to make it that much more difficult to accept. And it is our fear, and what a lot of the residents at our coalition are an- gered about, is that it is going to serve as a denial. Residents will deny going into nursing homes. They will do anything they can to stay out. And we accept the notion of trying to find other alterna- tives, but not at the expense of their health. And if we are just going to try to keep residents out of nursing homes, elderly people out of nursing homes, just for the sake of not institutionalizing people, we are missing sight of the fact that in many cases, that is exactly what a person needs. They need 24-hour care. They need the care of an institution. And we cannot further burden these people by telling them that the only way they can go into a nursing home is if their families who have their own respon- sibilities kick in money to care for them. Now, as Mr. Ambers said, what we are going to wind up doing is just driving a greater wedge into the family. And I do not think anyone wants to see that happen. As it is, it is difficult enough for people to go and visit their family members in nursing homes, often because of guilt, because of other responsibilities. And if they feel burdened and feel that they have this financial responsibility, there is going to be this conflict that is going to lead very often to driving this wedges, as I alluded to. Another thing is, you celebrated Nursing Home Residents Day with us a couple of weeks back. And I think what is very apparent from days like that is what residents are trying to strive for, is some degree of independence—some degree of self-determination. They should not give everything up when they enter a nursing home. And as I say, as difficult as it is for them to accept medicaid, if they are going to be able to be somewhat independent, you do not want them to feel that their care there is directly dependent upon possibly the financial ruin of their family. And they have to feel that they can still survive somewhat on their own. That with all the taxes they pay, with all the years that they have worked in society, that their reward is that they should be able to get quality health care, without destroying their family. Now, one last point I would like to mention is related to your particular legislation, H.R. 76. And I think that is a real step in the right direction. I think what we really need to do is provide in- centives to families. We need to provide incentives so that families who want to take care of their relatives, and who are trying to, we will make it more feasible for them to do so by giving them tax credits, by giving them breaks. I think when you compare these two alternatives, the one that you proposed, with the administra- tion’s proposal, we are talking about an incentive versus a disin- centive. Yours is an incentive plan. It is saying to the family here is an incentive, here is a way to make your life more manageable so that you can care for your elderly relative by giving you a tax break. '' 43 On the other hand, the other proposal, it is a disincentive. It is saying to the families that we do not want you to put anyone in an institution, and if you do, we are going to punish you by making you pay money. Rather than trying to give them the means to take care of them, we are in fact going to say to them, we are going to do anything we can to keep them out, regardless of what their needs are. And I think if you want to choose the better alternative, whether we want to make people want to keep their families at home or force them to keep their families at home, the choice should be for the incentive plan, and not the other way. Mr. Bracci. Gentlemen, thank you very much. [The prepared statements of Mr. Ambers and Mr. Rosenthal follow:] PREPARED STATEMENT OF JEFFREY AMBERS The Department of Health and Human Services’ new interpretation of the Feder- al Medicaid Law that would permit the states to require adult children to subsidize the costs of their parent’s nursing home care, is all ill-conceived policy, Its imple- mentation is likely to produce serious inequities in enforcement and result in addi- tional hardships for those already bearing the brunt of nursing home costs. It ig- nores the contributions, both monetary and non-monetary, which families already make prior to and throughout the period of a relative’s institutionalization. It will also serve to discourage the frail elderly from seeking needed nursing home care. For these reasons we urge the Department to rescind its new policy on family re- sponsibility for nursing home costs. The Department of Health and Human Services assumption that significant rev- enues from families are available to subsidize nursing home costs is wrong. Many elderly nursing home residents have no children. It is also important to recognize that the average nursing home resident is well into their 80’s, while their children are themselves in their 60’s, nearing retirement age, and having their own health expenses to deal with. The myth that young affluent children are living in luxury while their parents are being cared for at public expense in patently false. The Department’s new policy does not take into account the tremendous contribu- tions families continue to make to the health and well being of their elderly rela- tives. Families place their relatives in nursing homes only as a last resort, caring for them at home and without financial assistance until institutional care is re- quired. Families also continue to care for the community spouse of a relative in a nursing home. Furthermore, there are certain “hidden costs” that families are often “pressured” to assume if they wish admission of their relatives to a number of New York State nursing homes. They are encouraged to make building fund contributions, to pri- vately pay for costs of care for at least one year, and to pay for the costs of private nursing aides. Moreover, family members and personal friends of nursing home residents regu- larly supplement the care privided by staff; assisting with the delivery of meals, feeding disabled patients, and doing personal laundry. Many of these chores are bur- donsome for working families, yet are to often performed because facilities do not provide sufficient staff to carry out needed services. As a budget-cutting measure, the Department’s new policy is part of a smoke- screen to hide one of the most critical issues in the health care system: rapidly rising costs. Rather that concentrate on how our Medicaid dollars might be better spent, it directs public attention to the relatively paultry contributions to be ob- tained from indivudual families. Doubtless, Medicaid expenditures have skyrocketed in recent years. Indeed, Medicaid is the most rapidly increasing component of many state budgets and constitutes between 10 and 15 percent of many states’ operating funds. The fastest rising segment of these budgets has been nursing homes, now comprising 41 percent of most state Medicaid costs. While Medicaid expenditures have skyrocketed, however, studies throughout the nation have shown repeatedly that many providers—especially nursing homes—have reaped large and ever-in- creasing profits. Rather than improve the quality of care, these public funds have turned the long-term care system into a gigantic shell game of corporate mergers, ''44 lucrative real estate transactions, kickbacks, and expensive management consulting contracts. We share the Department’s concern about rising Medicaid expenses— their victims, afterall, are the frail elderly poor and the Amercan taxpayer. Howev- er, we contend that the only real solution for controlling these costs is not to expand the pool of revenues by reaching into the pockets of the poor, but to demand thor- ough and effective government accountability for how our tax dollars are spent. Even beyond these policy implications, the Department’s new policy regarding family responsibility raises significant technical problems. All go to questions of en- forcement. By its ambiguous language, the Department’s transmittal offers little or no guide- line by which the states are to create their own regulations requiring families to contribute to Medicaid expenses. Thus there is likely to be a different version in every state, each with different requirements, processes, and penalities. Because of this society’s mobility, much of the implementation of these regulations is likely to be interstate. It is difficult to predict what form they will take. Nonetheless, the critical questions are known: who will pay, how much will they pay, and how will these payments be collected and enforced? At issue are significant problems of equity. : Who among a Medicaid recipient’s family will be required to contribute toward his or her care? The Department does not say. Will responsibility be limited only to the immediate children, or will it also apply to brothers, sisters, cousins, and aunts? Will it apply only to blood relations, or will step-children also be included? Will married persons be responsible for their in-law’s care? How will the burden be divided among family members of different means and among relatives who live in different states? Certainly, the mobility of families today, with parents often living long distances from their children, make this a criti- cal issue. Since states have jurisdiction primarily within their own boundaries, how will, say, the state of Ohio, where a parent lives in a nursing home, require a son who lives in Texas and a daughter who lives in Oklahoma to pay toward their par- ent’s care? How much will family members be required to pay? Will differing state require- ments mean that a relative in one state would be required to make different pay- ments than a relative in another? What kinds of means tests will be used to deter- mine individual contributions? Will they be sensitive to those who have significant other responsibilities, such as raising a family? Clearly, this new policy will weaken family ties if, in its implementation, it pits the generations against each other, caus- ing one to go without in order for the other to obtain needed services. How will the states determine a family member’s assets? In applying for Medic- aid, will the elderly person be required to disclose the identities and assets of his or her children? Will the children’s assets, as will the elderly person’s, be weighted in determining Medicaid eligibility? Means testing of adult children who are them- selves creating independent lives would constitute a significant invasion of privacy. In an Administration that supports the enhancement of individual dignity and pri- vacy, such an outcome violates a basic tenet upon which this country was founded. How will the states collect payments from family members? Will payments be made to the nursing home directly or used to reimburse the state? If the former, what is to stop nursing homes from requiring up-front and ongoing contributions— now illegal under Medicaid—as a condition of admission, when in fact a means test would make such contributions unnecessary? Finally, what will the Administration’s plan cost to implement? History shows that tightening eligibility restrictions in benefit programs adds significantly to the program’s overall costs. In this case, we fear that another large and cumbersome bureaucracy will be added to the current welfare bureaucracy, distributing financial responsibility among family members, following them whereever they live, imposing financial liability, and prosecuting those who fail to pay. Such a system already promises to become an administrative nightmare, both difficult and expensive to im- plement and enforce. Given the nature of bureaucracies, its burden is likely to fall heaviest on those who agree to pay and least on those who do not. Surely any sav- resulting from such a program will soon be offset by its increased administra- ive costs. PREPARED STATEMENT OF Vic ROSENTHAL My name is Vic Rosenthal. I am the Executive Director of the Coalition of Institu- tionalized Aged and Disabled, a statewide organization of 115 nursing home Resi- ''45 dent Councils which represents over 20,000 residents. We are a member of the steer- ing committee of the Nursing Home Community Coalition of New York State. Much of the attention regarding who pays for nursing home care has focused on the family responsibility and the burdens to be placed on the adult children. The positions stated by Jeff Ambers must be understood; children don’t have the re- sources nor should they be burdened as the Department of Health and Human Serv- ices proposes. During the discussion of family responsibility, very little attention has been fo- cused on the residents entering nursing homes. Demographics indicate that the demand for nursing home care will continue to increase as the number of individ- uals over 85 increases. Nursing home residents undergo a great amount of trauma when entering a nursing home. There is fear and uncertainty about giving up a life they knew in the community and entering an institutional life comprised of rou- tines, dependency and no privacy. This trauma is often exacerbated by the residents’ separation from friends and family, especially children. We know that children experience a tremendous amount of guilt when they realize they cannot care for their elderly parent any longer and the parent, in turn, feels like a burden to the child who may be raising a family of his/her own or may be nearing retirement. It is important to realize that nursing home residents are getting older and more infirmed and, in turn, their children are also older and more frail. We can say without question that to add the additional responsibility and burden to the family of contributing towards the cost of care for the residents will signifi- cantly add to the emotional strain on the children and parents. Nursing home resi- dents have already felt like a burden to their children when living in the communi- ty and needing support. Now that burden will become that much more severe. People in their 80’s are proud of their ability to pull themselves through hard times, and only reluctantly accept Medicaid and other social programs. They feel it is de- meaning to have to rely on the government. These individuals will feel crushed if they know that their children have to contribute to the cost of their care when fi- nancially it may create a serious hardship. As a result, the adult children will feel burdened financially, and the parents (residents) will feel guilty and even more dependent. The end result can only drive a wedge between parent and child, and perhaps the child will visit the nursing home less often. We must not allow families to be broken up any more than they already are nor reduce residents to increased dependency and isolation. Many of the mem- bers of our Coalition, residents of nursing homes, have reacted angrily to the thought of this new policy and have indicated that the last thing they could ever accept would be the financial ruin of their children. This is totally against the main goal of our Coalition—an increase in the independence and self-determination of residents. The end result in many cases will be the elderly parents’ refusal to enter a nurs- ing home. I have already mentioned the elderly person’s fear of a nursing home and the reluctance to accept Medicaid. The thought of financially burdening their chil- dren will surely keep many elderly people out of nursing homes. Individuals who really need nursing home care will live anywhere and do anything to stay out of a nursing home and hurt their children. Everyone supports the notion of helping people stay in the community, but the gatekeeping method (keeping people out of homes) should not be the fear of bankrupting the children of potential residents. Too many elderly people need nursing home care (many of them are backlogged in hospitals) and if they refuse to enter a nursing home, they will have no alterna- tive, and their health will increasingly suffer. Medicaid is designed to enable the medically poor to gain access to quality health care. This is particularly important when you consider that most homes in New York City cost over $2500 per month. This policy will surely deny access to many frail, elderly people who will refuse to enter nursing homes if it means burdening their children. In addition, the trauma to elderly people will be increased that much more. When you consider that in many cases the condition of nursing home residents worsens at the early stages of living in a nursing home, because of trauma, the added feeling of guilt can only worsen the frail condition of residents. We have one more fear regarding this policy and that is the threat of punishment to families, including the residents, if contributions are not made. This goes to the central question, who will pay? We wonder whether the frail elderly residents will be denied Medicaid, and thus denied admittance into a nursing home, if their fami- lies are unwilling or unable to pay. Everyone knows that Medicaid expenditures for nursing home care are accelerating at a rapid pace, but we cannot cut these costs on the backs of the poor, frail elderly. No prospective nursing home resident should be 23-433 O—83——4 ''46 denied Medicaid eligibility and thus admittance into a home because their family does not contribute. States are considering punitive actions against families who do not contribute, with the end result being the denial of needed long term care for the frail elderly. This policy, if adopted, will then destroy Medicaid’s intent—the accessibility of quality long term care for the poor, frail and infirmed. As a result, many poor people will be denied access to nursing homes, and this will be clearly discriminato- ry in favor of individuals who can afford to pay their own way. This policy is dis- criminatory in that it singles out individuals in need of nursing home care but says nothing about all other individuals on Medicaid. This policy must be rescinded now. We cannot allow the frail elderly to lose serv- ices they gravely need because the Reagan Administration wants to trim Medicaid by keeping people out of nursing homes. The frail elderly in this country should not be denied access to nursing homes because of their families’ financial status or will- ingness to pay nor should the elderly be made to feel more dependent or guilty for their inability to care for themselves in their later years. Finally, I would like to comment to Congressman Biaggi’s bill, H.R. 76. We whole- heartedly support the idea of providing tax credits to families who wish to care for their elderly relatives at home. This is an important incentive for the establishment of community alternatives to nursing home care and is a timely response to an issue which was repeatedly raised at the 1981 White House Conference on Aging. We strongly support this bill but don’t view it as being coupled with the Adminis- tration’s proposal on family responsibility regarding nursing homes. The tax credit incentive will clearly make it feasible for families who reluctantly place their rela- tives in nursing homes as a last resort to keep their relatives at home with them. However, families should not be punished by forcing them to struggle to contribute for nursing home care when they use this only as a last resort. Families, who have the capability, are usually very willing to voluntarily contribute to the cost of care, and we support their contributions. H.R. 76 should be passed to enable families to afford to care for their relatives at home but adult children and the frail elderly should not avoid institutionalization when it is necessary, simply because the family lacks financial resources. The government must use incentives to encourage families to care for the frail elderly and not use disincentives to discourage the use of needed nursing home care. [Note: Significant portions of this testimony have been drawn from the: “Prelimi- nary Statement of the National Citizens Coalition for Nursing Home Reform.”’] Mr. Biaaat. Elsie Griffith, chairman of the board of directors, National Association for Home Care, and Donna R. Barnako, direc- tor of Government relations, National Council of Health Centers. PANEL THREE, CONSISTING OF ELSIE I. GRIFFITH, EXECUTIVE DIRECTOR, VISITING NURSE SERVICE OF NEW YORK, AND DONNA R. BARNAKO, DIRECTOR, GOVERNMENT RELATIONS, FOR THE NATIONAL COUNCIL OF HEALTH CENTERS, NEW YORK, N.Y. STATEMENT OF ELSIE I. GRIFFITH Ms. GrirritH. Mr. Chairman, my name is Elsie Griffith and I am here today in two capacities, first as the chief executive officer of the Visiting Nurse Association of New York, which is the largest voluntary home health agency in the Nation, and also as chairman x the board of the directors of the National Association for Home are. I am very pleased to have the opportunity to present my views on the Health Care Financing Administration’s directive on section a of the State medicaid manual. I believe this directive is il- egal. Changing the interpretation of section 1902(a)17(D) constitutes, I think, a substantive change in the law and as such should and could only be legally done through congressional action. Even if such change in requirements could legally be implemented outside '' 47 the legislative process, it would involve a significant change in policy. Therefore, it would be required minimally to meet the regu- lation promulgation requirements of the administration’s Proce- dures Act. Regardless of the legality of this directive, there are serious ques- tions as to whether it is sensible. I believe this directive is an un- justified moral intrusion by the Federal Government, contrary to the theory of medicaid and explicit congressional intent. It is ironic that this is being done by an administration that claims it wants to encourage preservation of the family and not have the Government unnecessarily meddle in the lives of Americans. The basic point is that there are certain familial obligations which are recognized as also being legal obligations. In medicaid, this is properly recognized by the required responsibility for spouses and for parents for children. On the other hand, the responsibility for one’s parents and rela- tives is not a legal obligation. I think we can all agree that ideally a person should be accepting some responsibility for parents or dis- abled relatives, but this morality cannot be legislated, and any at- tempt to do so would prove counterproductive. It could create undue hostility between children and their parents, which might result in more physical and mental harm than the potential bene- fits in reducing State and Federal medicaid costs. Beyond these legal and moral issues, it is important to look at the real reason why this new interpretation was put forth. This di- rective constitutes another shortsighted attempt to contain Federal and State financial obligation under the medicaid program by shift- ing more financial responsibility, in this case to the relatives of beneficiaries. If this is the goal, as I believe it is, it is really ill-con- ceived. This directive creates an undue hardship on those who have fewest resources. A more sensible approach to lowering government outlays for medicaid nursing home costs would be to shift the emphasis of medicaid payments, with the current institutional bias, to a nonin- stitutional community-based and home-based emphasis. Both medi- care and medicaid benefits have tended to focus on institutional benefits, yet 95 percent of the elderly are not institutionalized, and many that are, are inappropriately placed because Federal reim- bursement is available for such care and not for other types of services. A report by the U.S. General Accounting Office has esti- mated that 20 to 40 percent of the approximately 1.3 million older Americans who reside in U.S. nursing homes on any given day could live in community settings if home care services were availa- ble. Evidence from numerous studies indicate that increasing commu- nity care and home-based care generates greater satisfaction on cli- ents and greater longevity and does, if properly targeted, result in substantial cost savings to the Government. At the same time, such care reinforces the cohesion of the basic extended family unit, which I believe is a goal we all hold equally as high as cost effectiveness. What I would suggest is that the Government encourage families to give more care to their relatives at home by supporting one of the many currently pending legislative proposals, providing tax ''48 credits for families caring for their elderly, the infirm, and disabled relatives at home. You have recognized the wisdom of this approach, I think, and have echoed my sentiments in your remarks introducing the H.R. 76 this session. This concludes my testimony, and thank you for giving me the opportunity to appear today. I would be pleased to respond to any questions. I have tried to cut out some of the things that you have already heard. Mr. Biacaci. Thank you, Ms. Griffith. If you have that entire statement, I would put it in the record. Ms. GrirritH. We do have. Mr. Braact. All right. Thank you. [The prepared statement of Ms. Griffith follows:] PREPARED STATEMENT OF ELsIE I. GRIFFITH, EXECUTIVE DirEcToR, VISITING NURSE SERVICE oF NEw YorK Mr. Chairman and Members of the Committee, My name is Elsie Griffith. I am here today in two capacities. I am the Executive Director of the Visiting Nurse Service of New York, which is the largest voluntary certified home health agency in the nation. Founded in 1893, VNSNY services the boroughs of Manhattan, Bronx and Queens with a total of seven filed service centers. VNSNY employs approxi- mately 1,200 staff with a operating budget of over $43 million. In 1981, the staff pro- vided a record one million visits to 78,145 cases and nearly 2.8 million hours of Home Health Aide services. I also serve as the Chairman of the Board of Directors for the National Associ- ation for Home Care (NAHC). NAHC is the nation’s largest organization represent- ing home care professionals and paraprofessionals. Its 1,200+ members include large and small home health agencies, free standing, hospital and nursing home- based agencies, Visiting Nurse Associations, major corporate chain, homemaker/ home health aide agencies, and hospices. I’m very pleased to have the opportunity to present my views on the Health Care Financing Administration’s (HCFA) directive on Section 3812 of the State Medicaid Manual. I believe this directive is illegal. Section 1902(a\(17)\(D) of the Social Secu- rity Act clearly says that States “may not take into account the financial responsi- bility of any individual for any applicant or recipient of assistance,” except for par- ents of children and for spouses. HCFA asserts that since a State statute of general applicability is not part of the State Medicaid plan, such a statute requiring support would not violate the Medicial law. It is clear that it would be illegal for any State to approve a Medicaid plan and then promulgate laws which contradict or circum- vent the Plan. If such were permissible the Medicaid law and the HCFA approval process for plans would be meaningless. Congress had no such intent. Changing the interpretation of Section 1902(a)(17\(D) in such a way constitutes a substantive change in the law, and as such, should and could only be legally done through Con- gressional action. ven if such a change in requirements could legally be implemented outside the legislative process, it would involve a significant change in policy. Therefore, it would be required minimally to meet the regulation promulgation requirements of the Administrative Procedures Act. This kind of substantive change, if not pursued through a change in the law, should be sought through a proposed change in regula- tions and not by an administrative directive. Regardless of the legality of this directive, there are serious questions as to whether it is sensible. I believe this directive is an unjustified moral intrusion by the Federal government, contrary to the theory of Medicaid and explicit Congres- sional intent. It is ironic that this is being done by an Administration that claims it wants to encourage the preservation of the family and not have the government un- necessarily meddle in the lives of Americans. The basic point is that there are certain familial obligations which are recognized in the law as also being legal obligations. In Medicaid, this is properly recognized by the required responsibility for spouses and for parents for children. On the other hand, the responsibility for one’s parents and relatives is not a legal obligation. I think we can all agree that, ideally, a person should be accepting some responsibili- ty for parents or disabled relatives; but this morality cannot be legislated, and any '' 49 attempt to do so would prove counterproductive for several reasons. First, it could create undue hostility between children and their parents, which might result in more physical and mental harm than the potential benefits in reducing State and Federal Medicaid costs. Second, it could force persons with low or marginal incomes to either apply for public assistance and Medicaid themselves, or to increase their allotment if they are already on welfare, due to a legally mandated payment for relatives. Beyond these legal and moral issues it is important to look to the real reason why this new interpretation was put forth. This directive constitutes another shortsight- ed attempt to contain Federal and State financial obligations under the Medicaid program by shifting more financial responsibility—in this case, to the relatives of beneficiaries. If this is the goal, as I believe it is, it is ill-conceived. This directive creates and undue hardship on those who have the fewest resources. The bulk of the Medicaid population is low-income, by definition, as are the adult children and rela- tives of most recipients. To mandate financial support, particularly irrespective of income, would impose an unreasonable burden on such people. A more sensible approach to lowering government outlays for Medicaid nursing home costs would be to shift the emphasis of Medicaid payments, with the current - institutional bias, to a non-institutional community-based and home-based emphasis. Both Medicare and Medicaid benefits have tended to focus on institutional benefits, yet 95 percent of the elderly are not institutionalized, and many that are, are inap- propriately placed because Federal reimbursement is available for such care and not for other types of services. A report by the U.S. General Accounting Office has esti- mated that 20 to 40 percent of the approximately 1.3 million older Americans who reside in U.S. nursing homes on any given day could live in community settings if home care services were available. Even Dr. David Axelrod, the New York Commissioner of Health, has stressed the need for alternatives to nursing home care. In a recent letter to the New York Times, Axelrod stated that “according to the Health Planning Commission study . . may of those occupying nursinghome beds do not belong there—they could be cared for, with better results, in their own homes by home-health agencies.” Evidence from the Section 2176 waiver programs and numerous other studies in- dicates that increasing community care and home-based care generates greater sat- isfaction among clients and greater longevity and does, if properly targeted, result in substantial cost-savings to the government. At the same time, such care rein- forces the cohesion of the basic extended family unit, which I believe is a goal we all hold equally as high as cost-effectiveness. What I would suggest is that the govern- ment encourage families to give more care to their relatives at home by supporting one of the many currently pending legislative proposals providing tax credits for families caring for elderly, infirm or disabled relatives at home. Congressman Biaggi has recognized the wisdom of this approach and has echoed my sentiments in his remarks introducing H.R. 76 this session. Another alternative approach would be to allow utilization of home care to a greater extent than currently permitted under the law. Specifically, I would suggest that Congress consider legislation to allow home care over extended periods of time for persons who otherwise would be admitted to nursing homes, with the proviso that such care be less costly than institutionalization. This approach has been dis- cussed before and legislation will be introduced shortly by Senators Hatch, Heinz, Bradley, and Packwood taking this direction. This concludes my testimony. Thank you for giving me the opportunity to appear today. I would be pleased to respond to any questions you might have. Mr. Braaai. Ms. Barnako. STATEMENT OF DONNA BARNAKO Ms. Barnako. My name is Donna Barnako, Mr. Chairman. I am director of Government relations for the National Council of Health Centers in Washington. And I am pleased to be here today to offer our support and endorsement of your legislation H.R. 76, and to discuss the merits of the family responsibility issue. The National Council of Health Centers is an association which represents multifacility nursing home corporations. Our member firms also provide many other health services to the elderly, such as home health and hospice. ''50 I think I am here in a somewhat unpopular position today, but the national council believes it is entirely appropriate to allow States to seek contributions from families to share in the support of their elderly nursing home patient. However, the medicaid eligi- bility of the patient and his or her admission to the nursing facility must not be contingent upon the receipt of those funds. It is important to understand that the recent action by the De- partment of Health and Human Services has not mandated that children pay for a portion of their parents’ medicaid nursing home bill. It merely permits States, if they choose, to seek legislation in their own State legislatures. Thus, the Federal Government’s role is one of permitting States to develop a proposal which fits their needs, which would then be debated in State legislative bodies. If the legislation gained passage, it would be implemented through regulation with ample opportunity for public review and comment. In the 1960’s and early 1970’s, family responsibility was an inte- gral part of the medicaid program in several States. A number of different approaches were used successfully to provide added funds to the then new medicaid program. At the time, nursing homes re- ceived contributions not only from family members, but from friends, church groups, and philanthropical organizations. Since that time, States have been forced to rely solely on the medicaid program, financed by Federal and State matching funds for all of these services. This reliance on a single financing source, has led to the difficulty States are experiencing today. As Mr. Shapiro mentioned in the previous panel, the patients that are entering nursing homes today are much older, sicker, and have more functional impairments than those of 5 or 10 years ago. The General Accounting Office is just about to release a report to that effect. They had a preliminary report last summer, and the final report is going to be discussed next Monday at a hearing Mr. Waxman is going to be holding. Mr. Bracat. Ms. Barnako, is not what you are saying consistent with what previous witnesses have stated, that the residents are getting older and sicker? If they are getting older, their children are obviously older? Putting many of them in the position of having to squeeze out a few extra dollars to provide for their par- ents in the institutions, when they themselves are having difficulty living. Twenty percent of the residents in institutions that have no rela- tives. I am not quarreling with the concept theoretically. It makes for good business management. What I am quarreling with is its appli- cation. I am quarreling with the consequences that flow. And I am quarreling with the cost effectiveness of the entire operation. In my judgment, at the end, the moneys that are saved if any, the net if any, will hardly be worth all the difficulty, discomfort, and trauma that would be created. You heard witness after witness testify. You know what they are saying is the truth. We all know that we are involved in this area of concern with the elderly in the nursing home and the institu- tions. '' ol I have asked you a couple of questions, and theoretically yes, it makes sense. Practically, why go through all of this whole process with no real benefit to be attained and many, many liabilities and injuries to be inflicted? Ms. BARNAKO. Well, the patients definitely are getting sicker. And I think that the studies will show that out on a statistical basis. Mr. Braact. I do not quarrel with that. Ms. Barnako. But I think it would be our viewpoint that there are States that would like to try this. They have thought out the issue, they have developed the legislation, and they should be al- lowed to do that within the States. It should not be the Federal Government’s role to say across the board, no, you cannot do this. If it is not appropriate for New York, well, that is fine. But if Ten- nessee, Georgia, or Indiana would like to try it and if they feel that they can develop a program that would be acceptable in their State, and get the legislation passed and do it, then they should be permitted to do so. Mr. Biacci. Except we have seen history, not simply in this issue, many issues, where the different States have different philo- sophical attitudes and they are implemented through legislation to the disadvantage of people. It was necessary then for the Federal Government to come in and take an overall approach. That is our concern. I have stated early on, I believe Governor Cuomo’s approach with relation to a feasibility study is a reasoned approach. It determined exactly what the status would be and what the worth would be of the undertaking. In the end I am sure there will be some sense of compassion factored into the legislative deliberations of the State. We have witnessed in many States in our country where there has been a lack of sensitivity, not simply in this area, in many other areas. I do not have the same assurance and are not comfort- able with leaving issues like this to be determined by the States. Some take a hard-nose approach. I can envision States telling children to sell their homes in order to assist the payment of institutions. And I am not being overdra- matic. We have seen it in connection with public assistance. If they have a car in the computation of income, the first thing they are told is sell the car. And these things are vital to the life of people. I am simply not comfortable to leave an issue like this to the in- dividual States without a strong Federal presence. Ms. BaRNAKO. The amount of contributions in the proposals and legislation that we have seen that the States have developed has really been fairly nominal. The most that anybody has been talk- ing about is for the people earning over $50,000 a year, $300 a month, and that is the very most. And on a sliding scale down to $100 a month. I would give my mother everything I have. Mr. Biacci. I am sure you would. And you know something, every other child would. Again, as I said early on, in connection with another facet of this discussion, that all you want, first you get the camel’s nose into the tent. The $300, or $500, or $100, well, that is the way we start. Before you know it, the State is saying a little bit more. The State of New Jersey did not have income tax. I think they are talking ''52 about 1 percent, and now they are moving up each year. I do not know what they are up to now, 4 or 5 percent, and I predict it will go up further. It is inevitable. As inevitable as night following day. That is the way process is. Government process is no mystery. We watch the pattern that follows in many, many issues. Certainly there should be a clear understanding, more data, more certainty, whether or not this whole process will be as productive as the advo- cates think it may be. And if that be the case, then you have a bal- ance factor. Then you make a determination. But to propose it and implement it, when you say by States, the fact is the notion that the Federal Government has given the States permission to do it, is tantamount to approval. It is tantamount to approval on the part of the Federal Government. Whether in fact it is or not, is not the point. Perceptually it can be regarded as that. And that is my con- cern. A number of concerns, really, but we do not quarrel with your position. Ms. BARNAKO. The nursing homes are in a difficult position in this regard, because we are not going to stand to gain directly from the collection. Mr. Braact. I know that. Ms. BARNAKO. By the same token, we took at what is happening now in the State medicaid programs with enormous cutbacks in benefits and eligibility. Last year, the rate of increase in the medic- aid program was held to below 10 percent for the first time in the history of the medicaid program. From the perspective of nursing homes, this means less dollars, which is a very serious matter when coupled with the information that the patients are getting much sicker. We heard here today of nursing homes that are admitting patients 97 years old. New York is the exception as far as a $60 or more medicaid rate. Nursing homes in many States are still getting only $30 or $40 a day to pro- vide total care for their patients, many of whom are very, very sick 85- or 90-year-olds. Budgetary problems in the States has resulted in a lid on payments to nursing homes and the pressure is building. The cost of nursing home care is going to quadruple by 190.That means that in 1990, the State share of medicaid is going to equal the total cost of medicaid nursing home care now. We feel that something has got to give. And we are looking at every possible way of alleviating that burden. Mr. Brace. Thank you very much, Ms. Barnako. [The prepared statement of Ms. Barnako follows:] STATEMENT BY THE NATIONAL CoUNCIL OF HEALTH CENTERS Mr. Chairman and members of the Committee, my name is Donna Barnako and I am Director of Government Relations for the National Council of Health Centers. I am extremely pleased to be here today to offer our support and endorsement for your legislation, H.R. 76, and to discuss the merits of the family responsibility issue. The National Council of Health Centers is an association based in Washington, D.C., which represents multifacility nursing home corporations. Our member firms own or manage over 2,000 nursing homes in 48 states and they are also engaged in providing other health services to the elderly such as home health, hospice, adult day care, meals on wheels and retirement centers. The National Council believes it is entirely appropriate to allow states to seek contributions from families to share in the support of a close relative in a nursing home. However, the Medicaid eligibility of the patient and his or her admission to the nursing facility must not be contingent upon receipt of these funds. '' 53 It is important to understand that the recent action by the Department of Health and Human Services has not mandated that children pay for a portion of their par- ents’ Medicaid nursing home bill. It merely permits states, if they choose to seek legislation in their own state legislatures. Thus the federal government’s role is one of permitting states to develop a proposal which fits their needs, which would then be debated in state legislative bodies. If the legislation gained passage it would be implemented through regulation with ample opportunity for public review and com- ment. In the 1960’s and early 1970’s family responsibility was an integral part of the Medicaid program, in several states. A number of different approaches were used successfully to provide added funds to the then new Medicaid program. At the time nursing homes received the contributions not only from family members, but from friends, church groups and philanthropic organizations. Since that time states have been forced to rely solely on the Medicaid program financed by federal and state matching funds for all these services. This reliance on a single financing source has led to the difficulties states are experiencing today. Recent reports have shown that patients entering nursing homes today are much older, sicker and have more functional impairments than those of five or ten years ago. Sicker patients need more assistance and more services from the medical and nursing staffs, yet there are fewer Medicaid dollars available to support their needs. As you well know, Mr. Chairman, many states have had to cut back severely on their Medicaid budgets. Last year for the first time in the history of the program, the increase in Medicaid expenditures was held below 10 percent. For the poor who are eligible for Medicaid, this has resulted in reductions in benefits and services; for nursing homes it has meant less dollars to treat an increasingly sicker and older population. Even more frightening, however, is that because of the increase in the elderly population, the financial strain on the states and federal government will only grow. Expenditures for nursing home care are projected to almost quadruple in the ten years between 1980 and 1990 from $20.7 billion to $82 billion The state share of this will increase from $5.3 billion in 1980; $11.7 billion in 1985, to $21.4 billion in 1990. What all of these numbers mean is that in less than seven years, the amount states will be paying for nursing home care will be more than the total of all nurs- ing home expenditures in 1980. In order to meet this impending crisis, new sources of revenue must be found. Taxes will undoubtedly have to go up in some states and this will most likely be the main source of the additional dollars needed, allowing everyone to share in the cost burden of the few. But is it not appropriate for families of Medicaid nursing home patients who have the means to share in that responsibility for their immediate rel- ative? We believe that the answer to that the question is yes. We also believe that there are families of nursing home patients who would like to contribute to the cost of their care, but who have been prohibited from doing so. In fact, families have actually gone to court to do that very thing. In recent years Americans have had only two options: either pay totally for the cost of private care, or rely solely on the Medicaid program. We believe that there should be some middle ground. Certainly the elderly should not have to spend themselves into poverty in order to be eligible for Medicaid nursing home care. Perhaps permitting families to participate in the purchase of the care will help to resolve the problem. Mr. Chairman, I would note that nursing homes are caught in the middle of the family reponsibility issue: they will not gain directly from family contributions but to the extent these contributions will help alleviate state budgetary problems, they can prevent further cuts in service. At least fifteen states are seriously looking at the family responsibility issue and two that we are aware of have already passed legislation. All of the various propos- als considered have a sliding scale of contributions from a few dollars per day to ten dollars per day for those earning 50,000 dollars a year. Any special circumstances such as children in college are also taken into consideration, so as to not place an undue burden on those who are unable to afford it. The one provision which we as an industry would vigorously oppose is requiring nursing homes to collect the contributions. If this were to happen we could foresee states determining the contribution amount from each family and then reducing the Medicaid reimbursement to the nursing home by that amount. This would then leave the nursing homes to collect the funds, a position of being a collection agency which we do not wish to assume. The Administration’s policy avoids that danger and we commend the Department of Health and Human Services for their action in that regard. ''54 Much has been written about families abandoning their relatives when they are placed in a nursing home. Tragic as that may sound whether it is from guilt or shame, this does occur today without supplementation. But we believe for those in- dividuals for whom family contributions do not cause hardships, family responsibili- ty can have a valuable effect in that family members become purchasers of services with all that it implies. They will visit their relative more frequently to assure that he or she is receiving the necessary services and provide valuable feedback for the nursing home staff. In addition to sharing a portion of the financial burden assumed by the states and the federal government, family sharing encourages patients and families to be “‘pru- dent buyers” and to be more selective in choosing a nursing home. Family responsi- bility laws can also result in more serious consideration by families of alternatives to institutionalization and whether the care could appropriately be given in the home. As a corollary to this position we believe that families who do take on the burden should be given special consideration. The fact that new nursing home patients are much older and sicker than those of five years ago would seem to imply that they are being cared for by family members to a much greater extent. By providing a tax credit to these families, such as you are proposing Mr. Chairman, you are offering an incentive for them to continue providing that care and recognizing the enormous efforts of these individuals. We would suggest one addition be added to the proposal; the elderly family member should be eligible for skilled or intermediate facility nursing care or skilled home health care. If this condition were met, one could easily raise the amount of the tax credit much, much higher yet still save the feder- al and state governments enormous amounts of dollars. Clearly these are difficult times and these are emotional, issues to discuss. It is unfortunate that these proposals must even be made but it is also unfortunate that we would need laws to make us do something we should want to do ourselves. Political columnist Mark Shields, wrote recently in the Washington Post, “The thought that it is not the adult child’s responsibility to help his parents is obnox- ious, and that thought should be especially obnoxious to liberals by whom we are regularly reminded of our solemn duty to save our senior citizens from years of fear and insecurity.” Mr. Shields goes on to say, “But, argue that ever-pragmatic liberals, it will be dif- ficult to administer and enforce such a responsibility on adult children. Like the bankers who oppose withholding the tax on dividends, these liberals prefer to dis- cuss mechanics rather than equity. It is true that grown-up sons and daughters, who are not decent, cannot be made decent by the enactment of a law or the promulga- tion of a rule. But society certainly has the right to establish, and to require, mini- mum standards of decency in how adults treat their parents. Financial support is one such standard.” Mr. Shields is right. We are being asked to give very little to those who have helped us a great deal. Can we in all seriousness refuse? ''55 National Council of Nal ier 2600 Virginia Ave. N.W. Suite 1100 Washington, D.C. 20037 (202) 298-7393 II. IIt. SUPPLEMENTATION AND THE MEDICAID PROGRAM: THREE PERSPECTIVES "Discussion Outline of Family Supplementation" By: James S. Dwight, CPA Deloitte, Haskins & Sells "Discussion of Supplementation Under Current Statutory Authority" By: Joseph A. Casson, Esq. Casson, Calligaro and Mutryn "Nursing Home Supplementation: An Issue Which Deserves Careful Examination" By: Jeffrey R. Lewis Legislative Assistant to U.S. Senator Robert Packwood ''56 PART I DISCUSSION OUTLINE OF FAMILY SUPPLEMENTATION I. History of Program A. Family supplementation was a major program in the 1960's and early 1970's It was primarily used in the southern states as an integral part of the Medicaid program. States would set an overall rate that nursing homes could charge patients. The state contribution would be lower than the overall rate. The difference would be made up by a relative of the patient. B. Alabama experience Alabama was one of the primary users of the family supple- mentation plan in the late 1960's. Under Alabama's program the amount of monies to reimburse nursing homes was set at $375 a month. The state paid $250 for each patient... The facility was responsible for getting the rest of the money from patients' relatives. If the facility was unable to “collect from the patient, there was no form of redress. Cc. Other states Other states utilized more sophisticated programs that involved case workers determining the eligibility of the patient for supplementation. Detailed financial statements were required and a hunt for various members of the nuclear family was sometimes undertaken by highly motivated social workers. : : D. Why supplementation was stopped Family supplementation programs were cost effective despite some administrative problems but were ideologically offensive to proponents of a "pure" welfare state. II. Views - Pro and Con on Supplementation A.. Pro Social policy in a period of fiscal constraint needs to take a serious look at the issue of the individual vis a vis public responsibility. ''57 Allow facilities to receive true cost of care without “over burdening" state and federal Medicaid appropriations. Balances the equation of provider and payor by including the recipient in the program. Family responsibility gets the "family" involved which . provides an incentive for the family to take more interest in the patient. In states that have utilized the program before, it is currently the only alternative to severe containment programs to match nursing home costs to reduced appropriations. Well managed facilities benefit from this program more than inefficient nursing homes. Allows enhancement of available services beyond Medicaid package. Encourages families to explore the cost of effective services. Simplify administration by instilling competitiveness. B. Con : : If the program is not simple and clearly defined, without bureaucratic infighting, it would make paperwork a “monumental nightmare for facilities. A complex program would cause administrative problems for states. Current HCFA policy that providers accept Medicaid payments as payment in full for services rendered to Title xIx patients. Needed income information could be difficult to obtain thus increasing administrative costs. The requirement to support could deter some people from accepting needed nursing home care. III. Timeliness To coin an old adage, family supplementation is a program whose time has come. Because of reduced appropriations, states are no longer able to meet the true costs of nursing homes in the Medicaid program. In most states, the only alternative is either family supplementation or severe cost containment measures that would adversely effect quality or limit services through forcing providers out of the program. ''58 Family supplementation offers the opportunity to make cost savings in the program without reducing services. States are continuing to develop many cost containment programs in which the facility takes the brunt of the reductions which will ultimately force some out of providing Title XIX care. States are. actively putting caps on certain costs centers in program to lower their matching caps. Iv. Alternative Program Ideas A. Program design In order to be successful the family supplementation program must be designed with a minimum of regulations and paperwork. Responsibility for payment collection could rest with the government entity with the possibility that the facility might act as the states agent or the facility could be authorized to act independently. The private pay rate is independent of the Medicaid rate. A simple form of cost sharing between state and family could be developed based upon income and resources available. States should agree that patients without families would become the responsibility of the state and they would pay the facilities rate. The elderly who need nursing home care whose families refused to contribute to the family supplementation program would become the responsibility of the state. B. Funding mechanism There are several ways to fund the program States could pay a percentage of the private pay rate. In other words, the state would determine the cost related rate and then pay a certain percentage of that rate and the family supplementation program would pay the rest. Certain costs could be treated as non-standard costs and could be paid separately by either the state or the family supplementation program. This idea has the ability of severely limiting the expansion possibilities of the program. ''59 Integral parts of the costs of patient care could be paid by the supplementation program while the remainder would be paid for with Medicaid funds. C. Billing mechansim If permissible, one optional form of billing would be to have the State Controller issue bills that could be transmitted to the patients family by the facility, thus enhancing collection. Audit would then be accomplished by matching tapes produced by the controllers office and those of the facility. A program could also be developed where the County Tax Collector would issue bills to the family. The facility would give the tax collector a monthly run of the family supplementation patients and he would bill the families. The families would then make their checks Payable to ~ the County Tax Collector who in turn would reimburse the facility. County Tax Collectors in certain states have done this for facilities in order to collection personal services monies due the facilities. The state agency would have the exclusive responsibility : for the collection process.» In this method the securing of contributions from liable relatives would not be a pre-condition of eligibility. The state agency would be responsible for the computation of the liability and notification of the liable relatives. Under these options the collection costs (State Treasurer, County Tax Collector, etc.) would be subject to either direct or indirect cost recovery. V. Competition in the Marketplace A. Makes the consumer a prudent buyer When the consumers are part of the payment process, they are more selective in choosing facilities. The consumer compares price and services as well as quality of care. Currently, these decisions are being made for the consumer. B. Encourages facilities to compete Currently, the only comparison of facilities are those ''60 that pass state regs and those that do not. Virtually all are certified. Facilities will have to offer the best quality for the best price. Competition will flourish between facilities and quality will be upgraded to retain patients. Facilities that do not compete will be forced to close their doors. C. Stimulates competition in the health care sector This program will bring about the Reagan Administration's aims to improve competition in the health care marketplace. i The virtues of this plan can be applied to other Medicaid programs so as to improve competition. Improved competition in the marketplace will result in a reduced escalation of costs. ''61 PART IT DISCUSSION OF SUPPLEMENTATION UNDER CURRENT STATUTORY AUTHORITY “Supplementation” is the popular generic term applied to any payment made to a provider on behalf of a Medicaid beneficiary which is in excess of the established Medicaid reimbursement rate for that recipient. The practice has had a somewhat checkered history and its permissibility has suffered from varying degrees of misinterpretation or misinformation. When the Medicaid Program first began, a number of States were unable to fund their programs to the levels required to pay a provider reasonable cost. In order to attract sufficient participants in the Medical Assistance Programs to deliver the needed care, many States authorized nursing homes to solicit contributions from friends or relatives of Medicaid beneficiaries to."supplement” the Medicaid. rate. This "supplementation" is different from the statutorily authorized con- tributions of "patient resources" whereby a patient's personal financial resources first must be applied to reduce the State's Medicaid reimbursement Payment. See 42 U.S.C. Sec. 1396a(a) (14). ae The amount of supplementation is usually some or all of the differential be- tween the facility's private pay rate and the State's Medicaid reimbursement rate. From 1965 to 1969, State Plans which provided for supplementation were approved by the Secretary of HEW as meeting the conditions of Title XIX. In 1969 HEW pro- mulgated 45 C.F.R. Sec. 250.30(a) (6) which specified that every State Plan must have a requirement that participating providers must accept payment from the State Medicaid Program as "payment in full" for services rendered to Medicaid beneficiaries. States having plans which permitted supplementation were required to phase such practices out by 1971. The general policy of HEW became one of total opposition to any payment from any third party which resulted in the provider receiving any monies in excess of the established Medicaid rate for the services provided. The “payment in full" policy was upheld as a lawful regulation by the Fifth Circuit Court of Appeals in 1974. Johnson's Professional Nursing Home, et al v. Weinberger, CCH Medicare and Medicaid Guide Par. 26,905 (5th Cir. 1974). In 1977, the Medicare-Medicaid Anti-Fraud and Abuse Amendments amended section 1909 of the Social Security Act to make it illegal to knowingly and willfully charge, solicit, accept or receive any gift, money or other consideration in addition to the Medicaid rate as a precondition of admitting a beneficiary or as a requirement of continued stay of a beneficiary. An exception is made where the consideration comes from an unrelated person or organization for a philanthropic or charitable purpose. As a practical matter, in most jurisdictions in the United States today, any payment made to a nursing home on behalf of a Medicaid beneficiary from any source other than the Medicaid program is deemed to be illegal supplementation. This policy becomes significant when evaluated in conjunction with certain other legal developments that have occurred since the adoption of the no supplementation policy, 23-433 O—83——5 ''62 namely, non-discrimination rules and “instant eligibility" policies. Many states have - opted policies which require a participating facility to accept a Medicaid beneficiary so long as the facility has vacant beds. Under such a policy, a facility is unable to reserve any protion of its beds for non~Medicaid patients and conceivably could have its facility converted entirely to Medicaid patients. Where there is a substantial differential between a facility's private pay rate and its Medicaid rate, the application of the non-discrimination rule to a vacant bed can require a facility to forego the higher payment of a private patie due to an earlier applying Medicaid patient. Second, under the "instant-eligibility" policies of several States a person can transfer away all of his or her property and instantly become eligible for Medicaid under that State's minimum asset and income standards. One financial con- sequence of such a policy is to expose the nursing home to the possibility of un- limited conversions of private paying patients to Medicaid beneficiaries without regard to their ability to pay. ANALYSIS The only existing statutory prohibition on supplementation is Sec. "1909 (a) of the Act which prohibits supplementation when it is required by a facility as a “condition” of admission or a "requirement" of continued stay at the facility. (a) Whoever knowingly and willfully- (1) charges, for any service provided to a patient under a State plan approved under this title, money or other consideration at a rate in excess of the rates established by the State, or (2) charges, solicits, accepts, or receives, in addition to any amount otherwise required to be paid under a State plan approved under this title, any gift, money, donation, or other charitable, religious, or philanthropic contribution from an organization or from a person unrelated to the patient) - (A) as a precondition of admitting a patient to a hospital, skilled nursing facility, or intermediate care facility, or (B) as a requirement for the patient's continued stay in such a facility, when the cost of the services provided therein to the patient is paid for (in whole or in part) under the State plan shall be guilty of a felony and upon conviction thereof shall be fined not more than $25,000 or imprisoned for not more than five years or both. While the statute clearly contemplates a coercive circumstance in which a facility, in effect, "“extorts" additional payments from a party under threat of discharge or ''63 ‘refusal of admission, HHS's interpretation has been far broader. Indeed, when HHS issued an Action Transmittal on supplementation in February 1973 it indicated that any solicitation of contributions from beneficiaries or their families would be presumed to be illegal. It further held that even free-will contributions would have to be witnessed by a written confirmation that the delivery of care. was not conditioned on the contribution. when this overly narrow interpre- tation was protested by the industry, Mr. Irv Cohen of HCFA, by letter dated May 17, 1978, conceded that the Action Transmittal incorrectly gave the impression that solicitations were per se improper. He acknowledged that the statutory prohibition pertained only to contributions coerced as a precondition of admission or continued stay... : The offending Action Transmittal was never withdrawn or revised to correct the conceded misimpressions. The Action Transmittal has led States to adopt supplemen- tation restrictions, based on "full payment" regulations, which are far more re- strictive than the statutory prohibition in Sec. 1909(d). For example, Illinois Prohibits a Medicaid provider from accepting any additional payment from the beneficiary or any other person regardless of motive or effect. Ill. Rev. Stat. 1971, ch. 23, par. 11-13. The enforcement of this provision has produced. harsh results. Lowrie v. Department of Public Aid, CCH Medicare & Medicaid Guide Par. 29,225 (S. Ct. Til. 1978) (Parents prohibited from supplementing $100/mo. State payment; required to transfer son from facility at which he had been treated for 18 years). The Lowrie case presents some of the more unique aspects of the supplementation problem. The plaintiff was the patient, not the facility. The facility had refused to sign a . Participation agreement because of the Illinois supplementation rule and thereby was limited to the non-participating $100/month ceiling. ‘The plainfiff's parents offered to pay the difference and were told that. anything they paid would first be applied to reduce the $100/month State payment (i.e., considered a personal re- source). The result was that the patient, after 18 years in one institution, was involuntarily transferred to another facility against his wishes and those of his parents. . Most instances of application of the supplementation rule never reach the courts. The decision to admit a patient is usually not litigated and the effect of the rule is most frequently felt in an admissions bias against Medicaid patients. ‘The Lowrie case is a most unusual, but illuminating example of the real life implications of the rule. Some states have attempted to take a more reasoned approach to the supplementation issue. Maryland has approved supplementation where it was from an unrelated third party and for demonstrably philanthropic purposes, even though it was also unquestion- ably the quid pro quo for acceptance of the patient. Indeed, in one instance the unrelated third party was another agency of the State of Maryland which agreed to supplement the Medicaid rate. In Minnesota, at least one court has ruled that Payment by a daughter to a facility for her mother's care was not an illegal Medicaid supplementation because the payments related to services which were not covered by the Medicaid progran-- namely, a private room. Jane Resident v. Arthur E. Noot, CCH Medicare & Medicaid Guide Par. 31,029 (Minn. S. Ct. 1981). The logic of the Minnesota decision was that supplementation only occurs where a@ person is adding to the payment for Medicaid covered services. If the service is one that Medicaid would not buy, then the payment cannot supplement the Medicaid ''64 rate. The decision was not reached easily -- the court had to first overcome ‘the notion prevalent in many States that all nursing home beds are fungible and Medicaid contracts with a facility for all its beds at the same unit price. Indeed, one State has contended that it can require that a converting Medicaid patient he main- tained in a luxury suite because all the facility's beds are deemed equal under Medicaid. See Manor Care v- Buck, Civ. No. H-81-161 (D.C. Md. 1981). The second hurdle for the Minnesota court, frequently called “deeming,” is a regulatory presumption that funds available to a Medicaid beneficiary are, in fact, resources of that beneficiary which must be exhausted before program eligibility is reached. In the supplementation context, many States will automatically "deem” -the supplemental payment to be a resource attributable to the beneficiary and thereby reduce State Medicaid payments by an equal amount. The court satisfied itsel—E & that the daughter's payments could not be construed as income to the mother and rulea that the daughter could purchase a private room for her mother by paying the differential between the facility's Medicaid rate and its private room rate. As can be seen from this brief review, interpretations of the scope of supplemen~ tation vary widely, but the States are consistent in conforming to the earlier noted regulatory prohibition. In view of the dramatically accelerating Medicaid utilization of long term care services, it becomes increasingly important to reevaluate the ~ government's present regulatory posture on supplementation. Consideration of a aifferent approach would increase the potential for alternative funding sources and allow for maintaining the current level of availability and quality of care. THREE PROPOSALS Three possible modifications could be made to existing HHS policy which could substantially increase the use of supplementation as a viable technique to augment Medicaid funding while at the same time preserving the basis protections intended by the limitations on supplementation. Proposal One The first proposal follows the logic of the Minnesota Supreme Court in the Jane Resident case. This would be to define covered services in a manner which provides a greater range of "optional extras” that could be purchased over and above the basis Medicaid rate. At present, the “payment in full" regulations, when read in conjunction with the extremely broad interpretations given to covered services create a presumption that the Medicaid rate encompasses a comprehensive range of nursing care services for whcih it is payment in full. ‘Thus, 42 C.F.R. Sec. 447.15 establishes the comprehensive requirement that: A State plan must provide that the Medicaid agency must limit participation in the Medicaid program to providers who accept, as payment in full, the amount paid by the agency. Even thought HHS has elected to @efine such services by examples, there is a statutory mandate to specifically define covered services to SNF and ICF patients. Tnis is found in the Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977, Sub Sec. 8 (C) and 21 (b) which states that "the Secretary shall, by regulation, define costs which may be charged to personal funds . . . . and those costs which are to be included in the reasonable cost or reasonable charge for extended care services . .. . or for skilled nursing and intermediate care facility services as determined under the provision of Title XIX... ." In describing this mandate, ''HHS stated: In our view, our current regulations adequately implement the requirements of sections 21(b) and 8(c) that we define what costs can be. charged to patient funds. The medicare regulations specify the items that may not be charged to a SNF patient (42 CFR 405.607-405.612). The medicaid regulations set forth the . items that. are. covered by the medicaid payment to an ICF and ' specifically that the facility must accept the medicaid payment as payment in full (42 CFR 450.30(a) (3) and (8)). ‘Therefore, we are not proposing any regulation on this point. 43 Fed. Reg. 39155 (Sept. 1, 1978) (Published as proposed regulation; never issued in final form). Thus, the Secretary has never implemented this statute by regulation or program directive: Were HHS to authorize a definition of basic covered services, then the “payment in full" regulations would apply only to those services. Modification of the payment in full’ regulations to acknowledge that extra payments for non-covered services are not prohibited would also be appropriate. Both actions are permissible since there is no statutory provision mandating that the Medicaid rate be con- “ sidered payment in full for services rendered to program recipients. Indeed, — the original "payment in full" regulations purported to implement a legislative intent that is reflected only in a Senate Report and not in the law itself. Ss. Rep. No. 744, 90th Cong., lst Sess. 187-188. This approach is also consistent with the Medicare treatment of covered services. Section 1866(a) (2) (B) (i) of the Social Security Act specifically authorizes extra charges to a beneficiary for items or services (both additional and more expensive) that are not covered by the Medicare reimbursement rate. In summary, this proposal is soundly based on statutory authority and legal precedent and avoids the problems of having to obtain a statutory amendment. Proposal Two ’ An alternative. approach involves a more precise interpretation of the actual statutory prohibition on supplementation. The Act only prohibits payments made on condition of admission or as a requirement of continued stay. The clear intent is to prevent the creation of a coercive circumstance in which a resident or near relative is made to believe he or she must make additional payments or suffer non- admission or discharge. There is no implication in the law that a supplemental payment is inherently “ wrong. Indeed, Medicaid has always been viewed as a payor of last resort and has Placed strong emphasis on the use of alternative funding sources. If it is acknowledged that Medicaid responds to an identified category of needy persons, it is also reason- able to assume that the degree of need might vary as well as their ability to attract voluntary contributions. Based on this premise it could be argued that it would be easier to supplement rather than substitute for Medicaid, especially in the absence of a legal support obligation. Such an approach would be structured around a carefully identified area of permissible solicitation of supplemental payments by the facility. ‘The policy focus would be to identify and describe effective methods whereby the facility could seek supplemental funding without running afoul of the law. It would seem that the basic elements of the law could be adeguately satisfied ''66 by disclosure and informed consent. The basic prohibitions and requirements of the statute could be reduced to a standard disclosure statement executed by any person seeking to make supplemental payments. The statement could fully inform the persons of their right to admission or continued stay without the need for supplemental payments and emphasize the voluntary character of the payments. When signed by the party making the payment the disclosure statement would constitute * presumptive compliance with the Act. This procedure is not dissimilar from the substance of the letter from Mr. Irv Cohen dated May 17, 1978. It would adequatel: balance the protections sought to be extended by the Act against the growing need to identify additional sources of revenues to compensate for declining Medicaid appropriations. Proposal Three Under present law, the Medicaid regulations governing the "deeming” of income (42 C.F.R. Sec. 435.723) have been upheld as a valid and reasonable implementation of Sec. 1902(a) (17) (B) of the Act. Schweiker v Gray Panters, CCH Medicare & Medicaid- Guide Par. 31,400 (U.S. Sup..Ct., 80-756 June 25, 1981). Thus, HHS does have authority to look to resources of persons other than the beneficiary to determine the "personal resource” contribution the beneficiary must make to be eligible for Medicaid coverage. At present, all such "deemed" income is applied against the maximum established Medicaid rate applicable to a facility (even if it is a ceiling rate that is less than the facility's actual costs). However, there are no prescribed limits as to what constitutes permissible applications of deemed income. Thus, certain amounts of otherwise deemable income can be excluded if needed by the related party for self-maintenance. Similarly, certain payments of deemed income are permitted eve though not directly made for Medicaid covered services. See 42 C.F.R. Sec. 435.72 (c) (4). It would be permissible, therefore, to permit the e expenditure of deemed income for those portions of a regular room rate not covered by the Medicaid rate. In other words, once deemed income is established it could be applied against the private rate regularly charged by the facility, rather than having the first dollar apply against the Medicaid rate. Under such an approach, deemed income would be used to reduce the amounts payable under Medicaid only after it was applied against the differential between the Medicaid rate and the regular private patient rate charged by the facility for a substantial amount of its business (e.g., the facility must charge the rate to at least 25% of its patients). This modification could be accomplished by adding a third category of —— medical payments to 42 C.F.R. Sec. 435.725(c) (4). ''67 NURSING HOME SUPPLEMENTATION: AN ISSUE WHICH DESERVES CAREFUL EXAMINATION * Jeffrey R. Lewis Legislative Assistant to Senator Bob Packwood The Office of Management and ‘Budget (OMB) of the Reagan Administration apparently intends ‘to again seek reductions in entitlement spending in the next fiscal year budget. At the same time President Reagan has promised he will not cut current, or future, Social Security benefits. If Congress goes along with the Administration, or attempts to.go along, where is it most likely to look for potential areas of reduction? If history is any indication, and I believe in this case it is, one of the primary targets will be to seek cuts in the Medicaid program (Title XIX of the Social Sequeity Act). Significantly, and perhaps more importantly, there is substantial evidence that one of the most likely targets _ within the Medicaid program is the nursing home benefit. Medicaid expenditures for nursing home care have almost doubled between Fiscal Year 1972 and 1979, from 24 cents per Medicaid dollar to 44 cents per Medicaid dollar respectively. (SEE ATTACHED TABLE.) *T0 be published in an upcoming issue of Contemporary Administrator magazine. ''68 This dramatic increase in Federal Medicaid expenditures has caused many in Congress and the Administration, to wonder why this has occured so rapidly, and also to begin to examine whether this huge expenditure could be reduced. It is particularly important for members of Congress to recall that Federal Medicaid costs for Fiscal Year 1972 were anti- cipated to be $1.7 billion, but in fact reached a staggering $4.3 billion. | . If the Administration and/or Congress decides to reduce nursing home care payments, the consequences for many in the industry, but most importantly for their patients, ey be disastrous, or nearly so. Asa result, an issue that Congress long has ignored is certain to re-surface. That issue is the proposal to give flexibility to allow supplemental payments for nursing home care by relatives. NURSING HOME PAYMENT SUPPLEMENTATION: BACKGROUND Many nursing home administrators say they have patients whose families would be willing to pay some portion of the ‘ cost of care for a. relative, or would like their relative to receive additional services for which they would pay. But, little evidence of this has emerged before the Congress. Perhaps that is because Congress never has truly sought out ''69 such information. Nonetheless, it is important to carefully explore the ramifications of implementing a nursing home supplementary payment program. When the Medicaid program first began, several States were unable to finance their programs at the levels required to pay a provider's reasonable cost. To attract sufficient participants in. the Medicaid program who could and would deliver the needed care, many states authorized nursing homes to solicit contributions from friends or relatives of Medicaid .beneficiaries to supplement the Medicaid rate. This supplementation should not be confused with the statutory requirement. that a patient's personal financial resources first must be applied to reduce the state's Medicaid reim- bursement payment. Instead, the amount usually is part, or . all, of the differential between the facility's private pay rate and the state's Medicaid reimbursement. Although state Medicaid plans between 1965 and 1969 _ were permitted by the Secretary of H.E.W. to include supple- mentation, H.E.W. issued new regulations in 1969 which disallowed any form of supplementary payment. This new regulation went into effect in 1971. Then, some six years later, the Medicare-Medicaid Anti-Fraud Abuse Amendments ''70 of 1977 amended the Medicaid statute to make it illegal for any nursing home to: "knowingly and willfully charge, solicit, accept or receive any gift, money or other consideration | in addition to the Medicaid rate as a precondition of admitting a beneficiary, or as a requirement of continued stay of a beneficiary." An exception is made in the case of contributions by unrelated persons or philanthropic organizations. ; With this information in mind, the remaining section will explore the potential impact of payment supplementation on the community-based spouse, as well as examine possible’ alternative approaches that could be utilized to implement a nursing home payment supplement program. PAYMENT. SUPPLEMENTATION AND THE COMMUNITY-BASED SPOUSE: One issue that needs to be examined is what the financial impact would be on what currently is a major problem with the Medicaid program's ability to appropriately meet the needs of the elderly. The principle example of this failure occurs in the case of a spouse whose husband or wife has been placed. in a nursing home. This individual -- most often a woman -- finds that because she has placed her husband in a nursing home she is forced to divide the one income which they once shared into two: one portion is for the ''Pies: 71 payment of his nursing home expenses and the second for her. own living expenses. This not only keeps the spouse from maintaining a maximum social level of independence, but also increases her likely loss of economic optimal independence. When this occurs, the government becomes the primary support of the couple's financial needs with Medicaid assuming the ' responsibility for both the husband and the spouse. This process of requiring the community-based spouse to make © a portion of his or her income available to the institutionalized partner is called "deeming". Current Medicaid law assumes that income of the community-based spouse is deemed to be available to pay a portion of the institutionalized partner's ~ ae nursing home cost. This requirement of "deeming" of the community-based spouse's income often results in forcing both into the Medicaid program. In the above example, the fact that neither private health insurance nor Medicare offers comprehensive health insurance coverage that is responsive to this situation expedites the. process of forcing both individuals into .the Medicaid program. As a result, the non-Medicaid, elderly individual has three options as to how to pay for an institutionalized spouse's nursing home costs: ''72 (1) Depleting her resources until the couple's Medicaid eligibility is triggered; (2) Divorcing her institutionalized spouse, - thereby enabling him, newly destitute, to qualify for Medicaid; or (3) Continuing the difficult, if not impossible, payments for long-term care. If the Medicaid deeming requirement were eliminated, many persons would not be forced onto the Medicaid roles, and the federal government would save a significant amount of money. An alternative to deeming could be to institute ‘a payment supplementation program indexed to an individual's income. Supplementation could, depending upon how it is designed, require a community-based spouse to pay a portion of her institutionalized partner's nursing home costs, based on her income. Tying a supplementation payment program to a commini ty-based spouse's income would eliminate, in most cases, eligibility for Medicaid. PAYMENT SUPPLEMENTATION ALTERNATIVES : A second issue to be considered in analyzing supplemen- tation is the financial ability of other relatives or friends ''/ 73 to contribute to the nursing home care of their elderly relatives. Various approaches could be undertaken to encourage this kind af payment program. First, Congress could encourage payment supplementation through a tax credit or tax deduc- tion program. Such a program could provide: for example, a $1,000 credit or deduction to individuals who made supple- mental payments towards the cost of lotiaemteate services or the purchase of supplemental insurance. This approach .would provide an incentive for families or friends to pursue a supplemental payment program. Second, HHS could work with four or five states to establish a’ supplementation plan on a demonstration and/or waiver paske: This would peveiae the needed data base which is now lacking. More importantly, it would test the merits | ’. o£ the supplementation approach. A third approach would be to Lp Peon another section, 21(b), of the Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977. ‘The provision allows for patients to be charged for costs not defined as a part of the reasonable cost of skilled or intermediate care facilities. This section has never been implemented by the Department of HHS. Perhaps its time has come. ''74 The.fourth and final alternative would be to amend current Medicaid statutes to proscribe supplementation as a basic option for states to meet the cost of long-term care services. This would need to be voluntary for the states in order to allow them to describe effective methods within which facilities could receive supplemental funding appropriate to a state's administration and. payment structure. There are a number of issues that could be offered to illustrate the importance of giving careful consideration to a type of supplementation for the Medicaid program. Some states already have adopted policies which allow a reasoned approach to supplementation for the optional Medicaid services. The state of Maryland, for example, has approved supplementation when it comes from an’ unrelated third party and is for demonstratably philanthropic purposes. More recently, however, the state of Minnesota approved payments to be made by a daughter to her mother hci aengickd not covered by the Medicaid program (Jane. Resident v. Arthur E. Noot, Minnesota S. Ct., 1981). For the preceding reasons it would seem-that the time has come to consider allowing supplementation for mandatory Medicaid services. ''75 TABLE 1.—GROWTH IN MEDICAID NURSING HOME EXPENDITURES Total medicaid SNF 2 ier 2-2 Medicaid SNE/ expenditure expenditures expenditures CF cost Fiscal year (cents) 1972 6.3 LS diicitenta bags 21 1973 8.6 2.0 ll 36 1974 10.0 2.0 16 36 1975 12.3 2.4 2.2 37 1976 14.1 2.5 28 38 1977 16.3 27 3.5 38 1978 18.0 3.1 43 41 1979 20.2 3.5 5.4 44 1 Skilled nursing facility. 2 Intermediate care facility. 3 Mentally retarded. Source: Health Care Financing Administration, Department of Health and Human Services. Mr. Bracci. We will now here from Margaret Teichman. STATEMENT OF MARGARET TEICHMAN Ms. TEICHMAN. My parents are both Italian from Italy and my mother had a stroke about 3 years ago. And we tried to keep her at home, but it was really impossible because she was very frightened and we could not handle her really. And we did not have medicaid at the time because they had some money in the bank, so we were ordered to sort of spend down, and we did. When it became impossible to keep mother at home, we had to put her into a nursing home. That left my father home alone by himself. He lives in Brooklyn and I live on Staten Island. And we put her into a nursing home on Staten Island. My mother has been in a nursing home for 3 years. And my father came down with shingles last year. He is 80 now and he has a heart problem, and he has come down with a very bad case of shingles, and apparently at that age, it is very hard for people to get over the shingles. So for a year now he has been living mainly at my house, al- though we are maintaining his apartment in Brooklyn. Right now what I do is I take care of him, mainly at my house, and for 2 days he goes home to Brooklyn so he can be with his friends because it is very hard for him to live on Staten Island. There are very few people who speak Italian in my area. Mr. Biacct. On Staten Island? Ms. TEICHMAN. I know. It is a very Italian area, but not where I am. So the problem is, they never wanted food stamps. They never wanted anything. They were very proud. And when my father was living in Brooklyn, I had to get food stamps for him, but right now I have taken him off food stamps because I am supplying the food where I am at home and he doesn’t want them. He does not want them unless he is really constricted to have them. So, basically, I teach, and I have been on a leave of absence from teaching, since my mother got ill, and I have not been able to teach now for 4 or 5 years. What I am doing right now is I am keeping ''76 my father out of the nursing home because he cannot really take care of himself. So I am taking care of my father. I am visiting my mother in the nursing home. And I am not pulling in my own salary as a teacher because I am taking care of my parents. So, if I were required to make any kind of contribution, I would really have to go to work, which means putting my father into a nursing home, which would probably kill him, so that I could pay what the State is requiring me to pay. . Mr. Bracci. Then you would be required to pay for your father, too? Ms. TEICHMAN. That is right. I mean it is like a double bind. Mr. Braacet. Catch-22. Ms. TEICHMAN. Yes. That is what it is. ‘Mr. Biacai. And it would cost the taxpayers much more. Ms. TricHMAN. Much more money. Yes. And it would kill him. Mr. Bracci. And it would reduce the quality of care they are giving him. Ms. TEICHMAN. He likes now that he can go home to Brooklyn and play cards with his friends and things like that. Mr. Brace. What does Mr. Teichman do? Ms. TEICHMAN. He is with the New York State Department of Labor. Mr..Biacci. You must handle your money well. Ms. TEICHMAN. I know. Exactly. He said his raises have not been at all commensurate with the cost of living. I mean the State has just: been pulling back on the raises. They cut back. They postpone. They are always pulling things like that with him. Mr. Bracct. It is a classic case. Another illustration. The cost ef- fectiveness of the program is in question. The consequences that flow here, this is argument enough against the proposal. I appreciate that, Ms. Teichman. I want to commend you for your display of affection and respon- sibility and I understand it. Ms. TEICHMAN. Thank you. Mr. Biacci. And I am sure your mother is in a nursing home be- cause it was impossible to be otherwise. Ms. TEICHMAN. We tried it 6 months at home because it was im- possible. I would not put her in as a first choice at all. I would not. Mr. Bracct. I understand that. Ms. Morris. STATEMENT OF ELEANOR MORRIS, CITIZEN’S COMMITTEE ON AGING OF THE COMMUNITY COUNCIL OF GREATER NEW YORK Ms. Morris. My name is Eleanor Morris. I am testifying today for the Citizens Committee on Aging of the Community Council of Greater New York. This committee meets to exchange information and undertake research, monitoring, and advocacy on behalf of the aging population of New York. It is composed of representatives of the major public and voluntary health and welfare agencies con- cerned with the aging, as well as trade unions, church groups, and representatives of the aging themselves. We go on record to state that the right of the elderly indigent to medical care, regardless of the economic condition of their chil- ''77 dren, is and has long been an accepted part of the financial respon- sibility of Federal and State government. The U.S. Government and New York State must not walk away from this responsibility. Our group has for many years argued strongly against mandated filial responsibility of adult children for their parents. We are proud to report that about 15 years ago, we were in the forefront of the legislative activities which eliminated mandated filial responsi- bility in New York State. It should be noted that the 1965 amendments to the Social Secu- rity Act which created medicaid and medicare, prohibited the im- position of family responsibility, except of a spouse for a spouse and a parent for a minor or disabled child. Social Security Act 1902-A, 42 U.S.C. 1396-A, the United States should not repeal that amendment. In our opinion, the present Federal and State laws relating to transfer of assets, already limit the financial abuse of medicaid. In most instances, these effectively prevent aging persons from giving away funds to their children at the time of need for long-term care. We are presently viewing two and three generations of older people. A family may have a grandaughter age 50, a daughter age 70 and a mother age 90. Will the 50- and 70-year-old family mem- bers be mandated to pay for their 90 year old relative? Please listen to the aging themselves, as you have. Many proud and previously self-sufficient older persons say that their relation- ships with their children would be ruined if the children were forced to support. them. Most important, it has been repeatedly shown that—with some exceptions—most young families are strained financially, as Ms. Teichman just told us; and cannot care for their older family mem- bers. They do not desert them. The children often undertake care at a time when college and graduate school tuition for our grand- children must be paid or repaid. Moreover, in the year 1983, the number of persons who are unemployed or underemployed remains high. This leaves adult children unable to assume greater burdens. Medicaid costs for longterm care are increasing rapidly. There is increased utilization of longterm care facilities with the rapid growth of the numbers of the very oldest members of our society. Mandating financial support by children is not the solution to the complex problem of payment for long-term health care in the home or institutions. The Citizens Committee on Aging thanks you, Congressman Biaggi, for holding this hearing and drawing attention to the issue of mandated filial responsibility. We, for our part, through our long-term care committee are studying the organization of and pay- ment for a continuum of health and social services. We will in a few months be glad to share our findings with you. I would like to make just a few personal comments. I remember © in one study, I think done for the Senate Committee on Aging, when it was found that 54 percent of the people in nursing homes have no families. Mr. Braaat. Fifty-four? Ms. Morris. I think that was it, yes. Because they had outlived the children or, like me, they were childless. Mr. Braccat. Do you know what study that was? ''78 Ms. Morris. No. I might be able to look it up upstairs, where I used to work. Mr. Bracci. That is an important number. It sounds a little high, but even if it is half, you are still talking about a very substantial number. Ms. Morris. And on the other band, from Shore’s study of filial responsibility to the DAO’s study in Cleveland, we have learned that families, as testimony here has shown, do take care of their parents, even at great cost, and only let them apply for medicaid when they are absolutely unable to continue. Middle-class families are certainly squeezed from every direction. Tuitions are going up. Aid for children in college is going down. Costs of everything are going up. Unemployment is, too. And still we are asked to do this. I administered a means test long ago, as a medical social worker, in a county hospital, and what was true now was true then, with some exceptions. I remember in the late 1930’s, one of the first people I had to interview was a man whose father had deserted when he was an infant, and never paid for one cent of the chil- dren’s upbringing. The mother had worked and managed to bring up the family. And now I came as a 20-year-old social worker from the city and county health department. I was appalled, asking the son to contribute to the support of the father who deserted him. But most of the people are on the other side. A means test is very expensive to administer. And, as you said earlier, and Ed Duggan repeated, children usually help as much as they can. Thank you again for letting us testify. Mr. Braact. It is a pleasure, Ms. Morris. I want to ask you this question because I recognize your past experience, and I know you were Director of Aging of this region for the Department of Health, Education, and Welfare. You heard my response to Ms. Barnako, at least my query, about the danger of leaving the States to operate independently. Would you agree with what I said, disagree, modify it any way you like? I ask you this because I respect your ability. Ms. Morris. Thank you. I certainly agree with you. If one State does it, then others begin to follow. I found myself thinking as you said this, that much as any bureacracy tries to have a policy, no one can completely control how it is administered. One State policy may apply in certain financial categories and will require specified contributions. However, you cannot know how that policy is going to be written. And you cannot anticipate how it is going to sound to some couple who has gone broke, as many of us have, trying to ae their parents. I think it is a very, very dangerous thing to allow. Mr. Bracer. Thank you very much, Ms. Morris. Ms. Teichman, thank you again for your presence. I know Staten Island is still part of the city, but it is a long ride. Ms. TEICHMAN. Thank you very much for your inquiry. Mr. Biacct. Before I recess the meeting for another meeting per- haps in Washington, I would like to thank a volunteer, an impor- tant volunteer who has done tremendous work for this committee. I am not given to generous comments unless they are deserved, es- pecially of this type. We have volunteers that come and go, and we ''79 do not say too much about them. But Becky Surma, who is on my right, has done tremendous work in connection with this hearing, as well as in connection with other matters concerning the aging. And we would like, at this point, to make official comment about that. On that note, we adjourn, Thank you. [Whereupon, at 12:30 p.m., the hearing was adjourned.] '' ''APPENDIX NATIONAL SENIOR CITIZENS LAW CENTER Suite 300 1424 - 16th Street, N.W. Washington, D.C. 20036 Telephone (202) 232-6570 June 13, 1983 BURTON D. FRETZ NEAL S. DUDOVITZ EXECUTIVE DIRECTOR DIRECTING ATTORNEY LOS ANGELES The Honorable Mario Biaggi Subcommittee on Human Services House Select Committee on Aging 716 House Office Building Annex 1 Washington, D.C. 20515 Dear Congressman Biaggi: Thank you for the invitation to testify before the Select Committee on Aging on the issue "Medicaid and Family Responsi- bility: Who Pays?" Although I was unable to appear before your Subcommittee in person, I appreciate the opportunity to Present this written testimony, for your consideration. The National Senior Citizens Law Center is a national support center, specializing in the legal problems of elderly poor people. We are funded by the Legal Services Corporation and provide support services to legal services attorneys throughout the country with respect to the legal problems of their elderly clients. My area of specialization at NSCLC is long-term care. Introduction In February, 1983, the Department of Health and Human Services published a transmittal in the Medicaid Manual entitled "Treatment of Contributions from Relatives to Medicaid Applicants or Recipients." Part 3 - Eligibility, Transmittal No. 2, §3812. The transmittal was issued without any opportunity for notice and public comment and was effective on publication. The transmittal states that States May require "adult children or other relatives of Medicaid recipients to provide financial support to adult relatives under statutes of general applicability." According to Department staff, the transmittal simply means that if States enact relative responsibility laws of general applicability and if applicants or recipients of Medicaid actually receive money as a result of such laws, States May count this money in determining Medicaid eligibility. Since there is no dispute that States may consider income from any source in making Medicaid eligibility determinations, the trans- mittal is reasonably viewed as an implicit invitation to States (81) ''82 NATIONAL SENIOR CITIZENS LAW CENTER The Honorable Mario Biaggi Page Two to enact relative responsibility laws. The transmittal in fact purports to give direction to the States about the kinds of relative responsibility laws States may enact consistent with the Medicaid statute. While the transmittal advises that States 'may not assume that these funds are available, nor may a State reduce its payment to Medicaid providers in anticipa- tion of the receipt of a relative's payment," it gives States discretion to "determine who is a relative, how much relatives must contribute under the statute of general applicability, and the methods of enforcement." In analyzing the transmittal and the underlying concept of relative responsibility, I make the following five points in my testimony. 1. The February, 1983 transmittal in the Medicaid Manual purporting to authorize use of State relative responsibility laws is invalid. The Medicaid law, now as since its enactment, clearly and absolutely prohibits States from holding children responsible for the medical bills of their parents. 2. The February, 1983 transmittal is based on a number of myths about nursing home residents and their families. Contrary to these myths, the adult children of nursing home residents are not young and rich and they do not abandon their parents in nursing homes. 3. Relative responsibility laws do not result in direct savings for public assistance programs. Whenever such laws have been enforced in the past, costs of collection have almost equalled the amounts collected. 4. .Relative responsibility laws, as promoted in the Medicaid Manual transmittal, are unenforceable within the context of the Medicaid program, as a practical- matter. 5. Savings can be achieved in the Medicaid Program through support and assistance for the families that provide the bulk of long-term care provided in this country. ''83 1s The Medicaid statute prohibits States from using their relative responsibility laws in the Medicaid program. Since its enactment in 1965, the Medicaid program has consistently prohibited States from enforcing State relative responsibility laws as part of their Medicaid programs. The prohibition at the federal level is apparent from the plain language of the law, from the legislative history of the provision, and from the Department's previous -- and consistent -- interpretation of the statute. The Department's new analysis of the Medicaid statute, as explained in the trans- mittal, is invalid and without merit. This view of the Depart- ment's new analysis is supported by a March 31, 1983 memorandum from HHS General Counsel Juan A. del Real to Secretary Margaret Heckler. ‘ A. Medicaid statute. The Medicaid statute states that State plans must (1) include reasonable standards...for determining eligibility for and the extent of medical assistance... {that] (D) do not take into account the financial responsibility of any individual for any applicant or recipient of assistance under the plan unless such applicant or recipient is such individual's spouse or such individual's child who is under age 2X. 42 U.S.C.§1396a(a)(17)(D). Social Security Act, §1902(a)(17)(D). The language is clear and unambiguous and virtually unchanged since the enactment of Medicaid. Whatever the financial responsi- bility of various individuals under State law, that responsibility may not be considered for purposes of Medicaid eligibility or services. B. Legislative history. The plain language of the statute is explained in the legislative history. The Senate Finance Committee voiced strong and forceful disapproval of consideration of any relative responsibility beyond spouses or parents (for children): The committee has heard of hardships on certain individuals requiring them to provide support and to pay for the medical care needed by relatives. The committee believes it is proper to expect spouses to support each other and parents to be held accountable for the support of their minor children and their blind or permanently and totally disabled children even though 21 years of age or older...Beyond such ''84 degree of relationship, however, requirements imposed are often destructive and harmful to the relationships among members of the family group. Thus, states may not include in their plans provisions for requiring contributions from relatives other than a spouse or the parent of a minor child or children over 21 who are blind or permanently and totally disabled. Any contributions actually made by relatives or friends, or from other sources, will be taken into account by the State in determining whether the individual applying for medical assistance is, in fact, in need of such assistance. S.Rep.No. 404, 89th Cong., lst Sess. 77 (1965) as reprinted in [1965] U.S. Code Cong. & Ad. News 1943, 2018. While Congress recognized that money actually received by Medicaid applicants or recipients could be considered by State agencies in making financial eligibility determinations, it explicitly refused to authorize use of State responsibility laws, for eligibility or any other purposes. C. HHS' prior interpretation of the Medicaid statute. While the February, 1983 Medicaid Manual transmittal purports to clarify the Department's analysis of §1396a (a)(17)(D), it is in fact areversal of the Department's prior -- and consistent -- interpretation of the law. The Department, until now, has always maintained that the Medicaid statute does not permit relative responsibility. The new and inconsistent pronouncement by the Department is entitled to no judicial deference. General Electric Co. v. Gilbert, 429 US. 125, 143, 50 L.Ed.2d 343, 358, 97 S.Ct. 401 (1976). ("We have declined to follow administrative guidelines in the past where they conflicted with earlier pronouncements of the agency."[citations omitted] ) 1. The Department's formal publications have prohibited relative responsibility. Federal regulations, and statements in the Federal Register explaining proposed and final regulations, have consistently taken the view that relative responsibility (other than the responsibility of spouses and parents) is proscribed by the Medicaid statute. The language of the regulations remained identical from 1968 to 1977, when the Department clarified its view that all forms of relative responsibility are prohibited. Federal regulations addressed relative responsibility for the first time in 1968. Interim Policy Statement No. 12, which was approved in a policy statement "with binding effect on States" on July 15, 1968 by the Administrator, Social and Rehabilitation Service, stated that a plan must ''85 5. Provide that financial responsibility of any individual for any applicant or recipient of medical assistance will be limited to the responsibility of spouse for spouse and of parents for children under age 21, or blind, permanently and totally disabled; 33 Fed. Reg. 12752 (Sept. 7, 1968). A 30 day comment period was provided. When no objection from any person was received, the regulations were published as a new Part 248 to Chapter II of Title 45. 34 Fed. Reg. 1320 (Jan. 28, 1969). The regu- lation, which became effective upon publication, used language identical to that in the Interim Policy, and stated that a State plan must (5) Provide that financial responsibility of any individual for any applicant or recipient of medical assistance will be limited to the responsi- bility of spouse for spouse and of parents for children under age 21, or blind, or permanently and totally disabled; 45 C.F.R. §248.21(a)(5). This language remained in effect until 1977. Revisions to Part 248 in 1971 included the addition of §248.10, "Coverage and conditions of eligibility for medical assistance," which included the following statement as a condition of plan approval: (5) No person unrelated to the applicant or recipient is held financially responsible for him; nor is any condition of eligibility imposed that holds a relative responsible who is not the spouse of the individual who needs medical care or services, or the parent of such individual, who is under 21,°or is blind, or is permanently and totally disabled. 45 C.F.R. §248.10(c)(5), 36 Fed. Reg. 3871 (Feb. 27, 1971). Section 248.21(a)(5) was transferred to §248.21(a) (2) (ii) with identical language. In 1974, the regulations created separate eligibility requirements for States, restricting §248.21 to Guam, Puerto Rico and the Virgin Islands. The State regulations were codified at 42 C.F.R. §248.3. Again, §248.3(b)(2) contained the identical language as §248.21(a)(2)(ii): 39 Fed. Reg. 9516 (March 11, 1974). In 1975, the Department published proposed regulations clarifying 45 C.F.R. Part 48. 40 Fed. Reg. 60074 (Dec. 31, 1975). Preliminary comments indicated that the Department "reiterat[ed] its limitation on relative responsibility now 23-433 O—83——6 ''86 contained in §248.3(b)(2) in a revised §248.3(b)(3),..-" Id. Final regulations published on January 13, 1977 made the first change in the language in nine years. 42 Fed. Reg. 2684 (Jan. 13, 1977), Medicare and Medicaid Guide (CCH) 428,117. Sections 45 C.F.R. §§248.3(b)(1) (iii) and 248.21(a) (2) (ii) were rewritten to state: The financial responsibility (including later collection for assistance paid) of any individual for any applicant or recipient of medical assistance will be limited to the responsibility of spouse for spouse and of parents for children under age 21 (or blind or disabled). The parenthetical statement is significant. While the Department had previously and consistently stated that relatives were not "responsible" under the Medicaid program, it now explained more fully what this meant and made clear that relatives could not be held responsible for reimbursing the State for Medicaid payments made on a recipient s beha £.. The prohibition on relative responsibility was thus not limited to eligibility determinations, but extended to all methods of holding relatives accountable, and all were equally proscribed. While the language was new, the prohibition against collection did not represent any change in the Department's prior interpretation of the Medicaid statute. The Department viewed all methods of enforcing relative responsibility as prohibited from the outset of the program. Preliminary comments preceding the 1977 final regulations confirm this analysis. One set of comments to the 1975 notice of proposed rulemaking questioned whether ‘'the proposed regulations are contrary to State laws specifying financial responsibility of relatives.'' Medicare and Medicaid Guide (CCH) 428,117 at 10,435. The Department answered: Response: Federal law authorizes the establish- ment of Federal standards with respect to Medicaid eligibility determinations. However, the Medicaid statute does not preclude States from enacting laws of general applicability, specifying the responsi- bility of spouses and parents with respect to retroactive recovery of the costs of medical assist- ance furnished by the State to eligible recipients. Id. The Department made clear (1) that Medicaid sets its own standards for eligibility that are independent of State law and (2) that State relative responsibility laws can be used in the Medicaid program only to recover reimbursement from parents and spouses. Other relatives, whatever their liability under State law, may not be held responsible for Medicaid. In 1977, the regulations were transferred from 45 Cawek. to 42 C.F.R. with no substantive change. 42 Fed. Reg. 52827 (Sept. 30, 1977). 45 C.F.R. §248.3 became 42 C.F.R. §448.3. ''87 The regulations were then rewritten as part of Operation Common Sense, whose purpose was rewriting existing regulations in clearer, simpler language. 43 Fed. Reg. 45176, 45211 (Sept. 29, 1978). The regulations were rewritten into their present form. Limitation on the financial responsibility of relatives (a) Except for a spouse of an individual or a parent for a child who is under age 21 or blind or disabled, the agency must not (1) Consider income and resources of any relative available to an individual; nor (2) Collect reimbursement from any relative for amounts paid by the agency for services provided to an individual. 42 C.F.R. §§435.602, 436.602. 2. The Department's information publications have prohibited relative responsibility. The Department's informal analyses of Medicaid law have also consistently interpreted the federal statute as prohibiting use of State relative responsibility legislation. For example, in an Information Memorandum, MSA-75-15 (April 4, 1975), entitled "Medicaid Eligibility: Basic Questions and Answers," the Department published the following question and answer: 3-7 Can relatives be held responsible for payment of medical care costs of eligible persons? Only the husband or wife of an eligible individual or the parents of an eligible person who is under age 21 or blind or disabled can be held responsible for paying the costs of the medical care provided. Medicare and Medicaid Guide (CCH) 427,404, at 9725. Similarly, and perhaps most clearly, the Department stated its policy in a two-page memorandum issued on April 22, 1977 to the Regional Commissioners entitled "Field Staff Information and Instruction Series FY 77-71, Medicaid- Financial Responsibility of Relatives." The memorandum discussed the relationship of "hew regulations on financial responsibility of relatives of Medicaid applicants (45 CFR 248.3(b)) and regulations on third party liability (45 CFR 250.31)," and concluded with this paragraph: The extent to which spouses and parents are held liable is of course contigent upon provisions in State laws of general applicability and judicial determinations | made in individual cases brought pursuant to those laws. In no case, of course, may any relatives other than the spouse or parents of the recipient be held liable for Medicaid program payments made on his behalf, even if ''88 such other relatives are considered responsible under State law, since this is specifically precluded by Section 1902(a)(17)(D). D. The transmittal's analyses of the Medicaid statute. The 1983 Medicaid Manual transmittal ignores both the plain language of the Medicaid statute and its legislative history and attempts to justify itself through two "legally supportable interpretations" of the law, neither of which is correct. First the transmittal suggests that since a State law of general applicability is not a "State plan requirement applicable only to Medicaid recipients," §1902(a)(17)(D) is not violated. There is no support for this analysis in the law. The relevant issue is not whether State laws requiring relative responsibility violate the Medicaid statute. The Medicaid statute does not dictate what kinds of laws States May enact. States may pass whatever legislation they choose (consistent with federal and State constitutions). The issue is how the Medicaid statute chooses to treat particular State laws. Medicaid sets eligibility standards that are independent of -- and may be inconsistent with -- State law. In two areas, for example, Medicaid requires that State laws be disregarded. First, Medicaid explicitly views as inapplicable State laws that give adult status to children under 21. Since the Medicaid statute makes parents responsible for children under age 21, State laws emancipating children under age 21 have no effect for Medicaid. Similarly, the Medicaid statute prohibits States from using relative responsibility obligations they may have under State law, however such laws are worded. State statutes of general applicability are not exempted from the federal statutory ban on relative responsibility. The transmittal's second "legally supportable interpretation" of the Medicaid statute has even less merit. The transmittal says that §1902(a)(17)(D) prohibits only deeming, not the actual receipt of money pursuant to a law of general applicability. This interpretation takes too limited a view of the statutory language "take into account."' As both the Department's previous analysis and the regulations make clear, "take into account" properly means both deeming and collecting. The statutory language is broad and prohibits all use of State relative responsibility laws. ''89 E. HHS' General Counsel del Real's March 31, I983 memorandum The day after The New York Times reported that HHS reversed its policy on use of relative responsibility in the Medicaid : program, HHS General Counsel Juan A. del Real sent a memorandum to Secretary Margaret Heckler about the new policy. Recognizing that a legal challenge would be brought as soon as a State tried to enforce relative responsibility obligations, he suggested that the Department take steps "to improve the defensibility of our legal position."' (A copy of the memorandum is attached as ‘Appendix A.) Implicit in the memorandum is a recognition that the Department could not legally reverse its interpretation of the law through a transmittal, as it was trying to do. Mr. del Real urged the Department either to publish a proposed rule in the Federal Register authorizing use of relative responsibility or to publish an additional transmittal in the Medicaid Manual. To date, neither action has been taken. ''90 2% The February, 1983 transmittal in the Medicaid Manual 1s based on a number of myths about nursing home residents and their families. The February, 1983 transmittal is based on the myth that there are a lot of rich young children who abandon their elderly parents in nursing homes and turn their backs. This myth is wrong on all counts. A. People do not abandon their elderly relatives in nursing homes. Only 5% of all people over age 65 live in nursing homes <2? This proportion has not changed significantly since the enactment of Medicaid. In 1966, about 4% of the older population was institutionalized in nursing homes. The “difference [between 4% and 5%] can be wholly accounted for by the aging of the aged population."“’ The gh aeret segment of the elderly population is growing most rapidly _3/and the “old-old" are most likely to be institutionalized.—4/ The large number of elderly people living in nursing homes thus reflects an aging population, not a drastic change in the way our society cares for its elderly members. Trends in institutional care for the aged show that the aging of the aged population--that is, the fact that the aged as a group are older with with each passing decade--has led to a compara- tively small proportional increase in the nursing home population. Despite financial incentives to agencies and institutions to admit the aged, no other evidence of an increasing tendency for the aged to be institu- tionalized is noted. The aged struggle against leaving home, and their families invest bgavily in making it possible for them to stay.— Rather than live in institutions, most elderly people continue to live in their own homes or in homes with relatives or friends. Despite the cheer financial incentives that favor institutionalization,—6/ adult children generally choose nursing home care for their parents only as a last resort, not as a first choice. As in the past, families remain the principal cayegivers for elderly people needing long-term care services.—’ Middle aged women in particular play a critical role in caring for their elderly relatives and in preventing their institutional- ization in nursing homes._8/ Many non-institutionalized elderly people are as functionally impaired as those who are ''91 institutionalized. 9/ A striking difference between the two populations is not their health status or level of physical dependency, but, rather, the existence of family members. The institutionalized elderly include three times as high a proportion of persons who have never married as are found in the community, and almost twice as high a proportion of widowed persons. These findings are what one would expect. Persons without close family are more likely to be institutionalized when they are ill. This includes the very old, who are largely widowed women, as well as the never married. * * * * * Old persons with few or limited family relationships are prime candidates for institutionalization when they become sick.10/ The correlation of institutionalization with absence of adult children is particularly strong. Those with no living children (38%) and those with only one or two (27%) had higher rates [of institu- tionalization] than those with several children (22%), which seems to indicate that the presence of several children to care for a person tends to reduce the chance of institutionalization.11/ B. Many residents do not have adult children. The absence of an informal caregiving network is, for many elderly people, the primary cause of institutionalization. Many nursing home residents do not have surviving adult children. While 91% of residents have relatives, only 55.5% have a living son or daughter.12/ C. The adult children of nursing home residents are not young and rich. Popular myth suggests that nursing home residents have wealthy young children who could support them. Again, facts indicate otherwise. In 1977, the median age of nursing home residents was 81.13/. Demographic trends suggest that the median age of residents is likely to rise steeply in the future, since, as noted above, the oldest segment of the elderly population is growing most rapidly and the "old-old" are most likely to be institutionalized.14/ ''92 The adult children of residents in their 80's are them- selves likely to be in their late 50's and early 60's. Approaching retirement and living on fixed incomes, they do not have large amounts of income to contribute to the costs of care for their more elderly institutionalized parents. National data suggest that “Approximately 7-10 percent of all nursing home residents have adult children with incomes over $20,000."15/ Since these statistics include residents who are private-pay, it is likely that fewer than 7-10 percent of Medicaid residents have adult children with incomes exceed- ing $20,000 per year.16/ D. The families of nursing home residents already make significant contributions to tne Cost o1 nursing home care. The families of nursing home residents make significant financial contributions to the cost of that care. These financial contributions are made both before and after Medicaid payments begin and they are made even though the Medicaid program requires Medicaid providers to accept the Medicaid rate as payment in full. 42 C.F.R. §447.15. Many residents and their families pay significant sums to facilities before Medicaid begins paying. Since Medicare and private insurance pay for very little nursing home care,17/ either residents of nursing homes pay privately or Medicaid pays. Private payment occurs first. Nearly half of all Medicaid residents in nursing homes begin their residencies as private- pay residents.18/ Only when they exhaust their own (and often their families’) resources do they qualify financially for Medical Assistance. Paying for nursing home care literally impoverishes residents and often, their families as well. Eligibility for Medicaid does not necessarily mean that a resident will be a Medicaid recipient, however. Nursing home providers have a strong preference for private-pay resi- dents. Since they are able to charge private-pay residents higher rates than Medicaid allows, they can make greater profits from private-pay residents. As a result, many nursing homes engage in practices that serve either to postpone Medicaid status for their residents or to supplement the Medicaid rate. For example, many nursing homes that participate in Medicaid use admission contracts that require the applicant for care to enter the facility as a private-pay resident and to remain a private-pay resident for a specified period of time. While the Maryland Attorney General issued an opinion letter in July, 1982 stating that such private-pay length of stay contracts violate the Medicaid statute, contracts of this nature are pervasive in most parts of the country. The result of these contracts is that families pay private rates for nursing home care even though their institutionalized relatives are eligible for Medical Assistance. ''93 Providers also frequently require residents to have co- signers on their admission contracts. "Responsible party" provisions enable facilities to charge residents' relatives for services that are not covered by the Medicaid rate. As States reduce the services covered by Medicaid, facilities place greater demands on responsible parties for Payment. There can simply be no question that families make significant contributions to the cost of nursing home care for their elderly relatives. ''94 >. Relative responsibility laws do not save money. Previous experience enforcing filial responsibility laws indicates that such laws do not achieve their stated goal of saving tax money. "Available evidence suggests that filial contributions did not in themselves lead to substantial savings for the government."19/ A 1960 HEW study found that the administrative costs of collecting money from responsible relatives outweighed or were nearly as high as income received as a result of the effort.20/ In New York and New Jersey, administrative costs exceeded receipts while per capital savings in Maine were less than one dollar, and in Alabama, less that $.50.21/ The primary savings to the government resulting from filial responsibility laws were indirect savings: elderly people were deterred 22/ from applying for public benefits so that a “substantial decrease in the public assistance rolls" resulted. 23/ Discouraging elderly people from applying for health services to which they are entitled and which they need is poor public policy. This is not an appropriate way of reducing Medicaid nursing home costs. ''95 4. Relative responsibility is unenforceable, as a practical matter. As a practical matter, filial responsibility laws may be unenforceable within the context of the Medicaid program. First, State Medicaid agencies cannot require Medicaid applicants and recipients to name their adult children. The Medicaid statute's prohibition against "taking into account" the financial responsi- bility of children makes the request for such information unlawful. 24/ Second, even if State Medicaid agencies were permitted to collect information about the adult children of applicants and recipients, they would not be able to collect reimbursement from those children. The Medicaid regulations' explicit prohibition against collecting reimbursement from such relatives prevents State agencies from directly enforcing State law filial responsibility obligations. 42 C.F.R. §435.602(a)(2). Finally, State Medicaid agencies could not give information about the adult children of Medicaid applicants and recipients to other State agencies that might be created to enforce filial support obligations. Apparently, at least some States have State statutes prohibiting one State agency from releasing personal data to another State agency.25/ ''96 5. Medicaid dollars spent on nursing home care can be reduced by providing support and assistance to informal familial caregivers. A more constructive and less punitive method of reducing Medicaid nursing home costs is providing assistance to the families that provide the bulk of long-term care services to elderly and disabled people. The enactment of "positive financial incentives" could help reduce reliance on institu- tional services.26/ In 1977, the Department of Health and Human Services suggested to the Massachusetts Department of Public Welfare that instead of implementing a family responsibility plan, it consider “demonstrations employing positive rather than negative financial incentives."27/ The letter continued: Some such suggested incentives could include: financial assistance to families electing home health care, payments to relatives comparable to what is now paid non-relatives for at-home "personal care services"; requiring the protec- tion of income temporarily for institutionalized individuals without family resources for up to six months to enable them to maintain their own homes while institutionalized; allowing Medicaid coverage for ambulatory and “home health" services for persons who live in small public community residences (such as group homes for the aged or shelters for retarded persons) ; allowing income or in-kind contributions of Children to elderly parents to be tax deduct- ible (including more generous dependency exemption where elderly parents live with their children); exploring the use of tax credits or outright grant mechanisms for the addition or conversion of living space to accommodate an elderly parent in the home; employing waiver authority to use Title XVIII and XIX funds to finance optional supplementation programs for those in less-than-ICF domiciliary care, or exploring ways to end current eligibility disparities that permit higher Medicaid eligi- bility levels only for the institutionalized.28/ The encouragement of alternatives to institutional long-term care may be the most effective way of reducing Medicaid expenditures for nursing homes. A 1979 study showed "that demographic variables, such as age, sex, race, etc., have less to do with willingness of families to care for the elderly than situational variables."29/ There is evidence to suggest that providing respite care services to informal caregivers will not ''97 replace the care they give, but rather, will enable them to keep going. 30/ Some States have expressed interest in helping informal caregivers. A 1982 report by the New York State Council on Home Care Services, entitled "State Support Strategies for the Care- givers of Elderly and Disabled Persons," identified as the first of its four recommendations developing a demonstration project "to determine how financial supports assist the caregivers in preventing or delaying institutionalization of frail or disabled persons."31/ The Council considered but rejected various tax relief policies (exemptions, credits, adjustments) ,32/ concluding that "a carefully structured and targeted program of financial and service supports would better meet the important goal of sustaining informal caregivers by relieving a portion of their burden. ''33/ : Providing direct support and assistance to families who provide care for their elderly relatives and creating surrogate families and family settings for elderly people who no longer have families are more effective and positive ways of reducing Medicaid nursing home expenditures. ''98 Conclusion Relative responsibility has been tried in the past. It is difficult to enforce and saves little money, but creates tremen- dous hardships for elderly people and their families. A more positive and more effective public policy is helping families continue to provide long-term care to their relatives. Thank you for this opportunity to submit testimony on this important issue. Sincerely, ae 8 ibrar Toby~S. Edelman Staff Attorney TSE/ama Enclosure ''99 FOOTNOTES _1/ Elaine M. Brody, " 'Women in the Middle' and Family Help to Older People," 21 The Gerontologist 471, 472 (1981). 2/ Alvin Schorr, " 'thy father and thy mother...' A second look at filial responsibility and family policy," U.S. Dep't of Health and Human Services, Social Security Administration, Office of Policy, Office of Research and Statistics, SSA Publication No. 13-11953 (July 1980) 32. _3/ "By the year 2000, the number of those 85 and over is expected to double, while those 75 to 84 will increase by 57% and the 65 to 74 group by about 23%." Brody, supra note l, at 472. _4/ While the chance of institutionalization is 2.1% for people ages 65 to 74, it rises to 7.1% for people ages 75 to 84 and to 19.3% for people over 85. Id. _5/ Schorr, supra note 2, at 5. 6/ Comptroller General, Entering a Nursing Home--Costly Implications for Medicaid and the Elderly, PAD-80-12 (November 26, 1979). See particularly Chapter 2, "Medicaid's Long-Term Care Support Primarily Goes to Institutional Care Rather than In-Home or Community-Based Services," pp.16-63, discussing, for example, how Medicaid support in nursing homes is "open-ended and extends to many who are not eligible for coverage in the community," p. 29; how "many low and moderate income elderly are only eligible for Medicaid benefits if they enter a nursing home," p. 30; and how "Medicaid policies offer minimal support to families who provide long-term care services to elderly relatives." p. 44. _7/ Brody, supra note 1, at 472. 8/ See, for example, Brody, supra note 1;. Linda Crossman, et al, “Older Women Caring for Disabled Spouses: A Model for Supportive Services," 21 The Gerontolgoist 464 (1981); Ethel Shanas, "The Family as a Social Support System in Old Age," 19 The Gerontologist 169 (1979). _9/ Brody, supra note 1, at 472. 10/ Shanas, supra note 8, at 171. 11/ Erdman Palmore, "Total Chance of Institutionalization Among the Aged," 16 The Gerontologist 504, 506 (1976). 12/ Comptroller General, supra note 6, at 50, Table 10, citing the 1976 Survey of Institutionalized Persons (SIP) of the U.S. Bureau of the Census. 13/ National Center for Health Statistics, U.S. Dept. of Health, Education and Welfare, Pub. No. (PHS) 79-1974, The National Nursing Home Survey: 1977 Summary of the United States 29 (1979). ''100 14/ See footnotes 3 and 4, supra, and supporting text. 15/ James J. Callahan, et al., "Responsibility of Families for their Severely Disabled Elders," Health Care Financing Review 29, 34 (Winter 1980). 16/ Many States considering filial responsibility Tegislation are considering setting responsibility for adult children with State taxable incomes in the $30,000 to $40,000 range. National data suggest that there will be at most a handful of adult children meeting these income criteria. 17/ In 1979, Medicare paid 2.1% of all nursing home expenditures and private insurance paid .65%. Peter D. Fox and Seven B. Clauser, "Trends in Nursing Home Expenditures," Health Care Financing Review 65, 66, Table 1 (Fall, 1980). 18/ Congressional Budget Office, Long-Term Care for the Elderly and Disabled 24 (February, 1977). 19/ Schorr, supra note 2, at 28. 20/ Alvin Schorr, "Filial Responsibility in the Modern American Family, U.S. Dept. of HEW, Social Security Division of Program Research 1-4 (1960) as cited in Comment, (Paul R. Ober) "Pennsylvania's Family Responsibility Statute--Corruption of Blood and Denial of Equal Protection," 77 Dickinson Law Review 331, 350 (Winter, 1973). 21/ Id. 22/ The deterrent effect of filial responsibility laws is viewed postively by some, and, in fact, may be a primary purpose of relative responsibility legislation. The Wisconsin Legislative Council in 1953 said that filial responsibility laws serve " ‘one of the most effective means for preventing an assistance program from becoming so large as to place an impossible burden upon the financial resources of the community.' " 1 Wisconsin Legislative Council, Problems of the Aged pt. 2, at 44 (1953), as cited in James L. Lopes, "Filial Support and Family Soldiarity," 6 Pacific Law Journal 508, 527 (July 1975). 23/ Lopes, supra note 22 at 522. For example, the State of Maine, In 1948, revived its responsible relative statutes and required children of public assistance recipients to submit financial data. The result of this policy was that more than 2000 case files were closed. In 40% of those cases, files were closed because financial data were not submitted, not because recipients were financially (or otherwise) ineligible for assistance. Lopes, supra note 22, at 527 24/ The Indiana Attorney General made this argument on April 12, 1983 on the National Public Radio Program "Dateline." ''101 25/ Joanne P. Acford, "Reducing Medicaid Expenditures through Family Responsibility: Critique of a Recent Proposal," 5 American Journal of Law and Medicine 59, 69 (Spring 1979). Acford cites Massachusetts‘ Fair Information Practices Act, Mass. Ann. Laws Ch. 661, §§ 1-3. 26/ Id., at 77. 27/ August 13, 1977 letter from Robert A. Derzon, Administrator, Health Care Financing Administration, to Alexander E. Sharp, Commissioner, Massachusetts Department of Public Welfare. 28/ Id. 29/ Callahan citing Marvin B. Sussman, "The Family Life of OId People," in R. H. Binstock and E. Shanas (eds.), Aging and the Social Sciences (1976). 30/ Linda Crosman, et al., "Older Women Caring for Disabled Spouses: A Model for Supportive Services," 21 The Gerontologist 464 (1981). 31/ New York State Council on Home Care Services, "State Support Strategies for the Caregivers of Elderly and Disabled Persons" (July 1, 1982), p. 3. The plan was developed pursuant to Chapter 979, Laws of 1981. 32/ Id., at 11-14. 33/ Id., at 15. See also U.S. General Accounting Office, Assessment Of The Use Of Tax Credits For Families Who Provide Health Care to Disabled Elderly Relatives" GAO/IPE-82-7 (August 27, 1982). 23-433 O—83——7 ''102 . Z, : SE > 1 DEPARTMENT OF HEALTH & HUMAN SERVICES Office of the Secretary i foal oon s The General Counsel Marc 3) 1983 Washington, D.C. 20201 MEMORANDUM TO THE SECRETARY “THRU: US. panes FROM: Juan A. del Real General Counsel ACS SUBJECT: HCFA Policy on Medicaid Family Responsibility Requirements -- DECISION As you know, HCFA recently issued a revision to the State Medicaid Manual that addressed the legality of state laws requiring contributions from relatives to Medicaid recipients. The Manual revision announced HCFA's view that such state laws would be permissible under the Medicaid statute if they took a particular, specified form. Section 1902(a) (17)(D) of the Social Security Act prohibits a state Medicaid plan from taking into account "the financial responsibility" of any individual other than the applicant, except parents and spouses. Under the HCFA interpretation, this prohibition would not be violated by a state statute of general applicability making adult children financially responsible for the care of their parents. Income received by parents pursuant to such a statute would be treated as any other income received by a Medicaid recipient and could affect Medicaid eligibility and cost-sharing. THiS. <: approach does not conflict with section 1902(a)(17)(D), since the Medicaid plan would not be taking the financial responsibility of other individuals into account, but would simply be considering income actually received. pursuant to an independent legal obligation. c We anticipate that this interpretation will be challenged in court, perhaps immediately, but, more likely, after a state has begun to implement a family responsibility program. The litigation would focus on the issue of whether the state program conflicts with section 1902(a)(17)(D). There are two subsidiary issues that may, however, also be involved. Since we are still in a position to deal with these two issues, this memorandum raises the question whether further action should be taken to improve the defensibility of our legal position. Clarification of existing regulations. The current HCFA regulations on amily responsibility C . and 436.602) provide that a state Medicaid agency may not “[cJollect reimbursement from any relative for amounts paid by the agency for services provided to an individual." We are concerned that parties challenging the HCFA policy may argue that, even if statutory authority exists for the policy, it conflicts with these regulations. We do not believe that these regulations apply, since pay- ments from a child to a parent under a statute of general applicability would, by definition, not be "reimbursement...for services provided...." Moreover, since the regulations apply only to a state's Medicaid agency, '' 103 they do not govern actions by another governmental unit, such as a family responsibility office that might be established to administer a statute of general applicability. Nevertheless, because the existing regulations do “not affirmatively allow the action discussed in the revision to the State. Medicaid Manual, there is a potential for confusion and possible adverse legal ruling. Use of notice-and-comment procedures. Since the revision to the State Medicaid Manual merely announces an interpretation of law and does not _impose any requirements on Medicaid beneficiaries, we believe that the Administrative Procedure Act does not require use of notice-and-comment procedures in this matter. Because many courts strain to conclude that notice and comment must be used, however, our office urged HCFA to use rulemaking procedures, rather than a revision to the State Medicaid Manual, to promulgate the policy. Moreover, some court decisions have suggested that changes in long-standing agency policy should be made through rulemaking, and the HCFA policy on family responsibility might be viewed as a change in policy, although such a conclusion is disputable. In any event, opening the issue to public comment through_initiation of a rulemaking proceeding would have the advantage of eliminating a potential basis for legal challenge. OPTIONS Option 1--Proposed rule - One possible option is to publish for public comment a proposed rule stating the policy on family responsibility. The proposal could also clarify the existing regulations. This approach would have the advantage of eliminating any procedural infirmities in the method by which the policy was announced. It would also create a forum in which parties favoring and opposing the policy could express their views. The revision to the State Medicaid Manual would not have to be withdrawn during a rulemaking proceeding, but any rulemaking proceeding should be undertaken with the intention of concluding it expeditiously, before States implement family responsibility laws. Option 2--Additional transmittal - Another approach would be to issue an additional revision to the State Medicaid Manual clarifying the meaning of the existing regulations. While this approach would not affect any legal difficulties that may exist because rulemaking was not used, it would assist in defending against any argument that the policy is prohibited by current regulations. RECOMMENDATION I recommend that a proposed rule be developed to reflect the policy on family responsibility and that HCFA be directed to conclude the rulemaking proceeding expeditiously, before litigation is instituted. If this option is not selected, I recommend that, at a minimum, an additional revision to the State Medicaid Manual be issued to clarify the existing regulations. ''104 DECISION Option 1 (issue a proposed rule and conclude proceeding expeditiously) Approved Disapproved Date Option 2 (do not issue a proposed rule but instead clarify the exist- ing regulations through an additional revision to the State Medicaid Manual) Approved Disapproved Date ''105 $n ARIO BIAGG!. RY. OLYMPIA 3 SNOWE. MAINE SY AMAN RANKING MINORITY MEMBER waite, HUGHES. MATTHEW J MNALOO. NS CONA,D 208EeH auposTA, MACH, CLAUOINE SCHNEIDER AL 10M LANTOS. CAL MICHAEL BHIRAKIS FLA sere G.S. Bouse of Representatives "~ BULL RICHARDSON. MEX CAROLEEN WILLIAMS, Sauees A0mONd SELECT COMMITTEE ON AGING wmouteaterramecron OE en tre SUBCOMMITTEE ON KUMAN SERVICES BLANCATO 716 House OFFice BUILOING ANNEX 1 ‘STALE DIRECTOR Bashington, D.C. 20515 (202) 226-3348 April 14, 1983 The Honorable Margaret M. Heckler Secretary of Health and Human Services Washington, D.C. 20201 Dear Madame Secretary: I am writing in regard to the recent decision by the Department of Health and Human Services to permit states to require adult children or other relatives of Medicaid recipients to provide financial support to adult relatives under the statutes of general applicability of Medicaid. I am concerned that this policy represents a significant change in the administration of the Medicaid program. 1 am also deeply concerned that presently there are many unanswered questions regarding this new policy and the issues surrounding it and that decisions and opinions are being formulated without benefit of factual information. I am therefore respect- fully requesting that you address the following questions: 1. Is there statistical information available which indicates that there are a significant number of adult children and other relatives who are denying their responsibility in the care and support of their relatives who are Medicaid recipients? How many Medicaid recipients does this represent and what per centage of the Medicare serviced population is involved? 2. Please indicate the dollar amounts and per cent of total expenditure of the various components of the Medicaid program, that is, long-term care, home care,and other community-based programming. 3. What is the approximate dollar amount which may be recovered : by the states and the federal qovernment through the implementa- tion of this program? Please break this fiqure down by state if possible. 4. What is the approximate cost of administering/enforcing the program to the states and to the federal qovernment? What is the estimated cost per beneficiary? Does the cost of administering this program outweigh the revenues received? ''106 5. Is the terminology used in the transmittal "adult children or other relatives" meant to include sisters and brothers, step-children and step-parents, aunts and uncles, arandparents and cousins? 6. At present, three states, Virginia, Indiana, and Georgia, have enabling legislation which would allow them to enforce this program. It is my understanding that each state my develop its own method of administration and enforcement. What kind of uniformity, if any, will the Department seek in the state's plans? 7. Please provide me with a financial profile for a Medicaid nursing home patient for cach state. 8. 1 am gravely concerned about the enforcement and consequent legal problems which surround this issue. What penalities for refusing to contribute to the financial support of a Medicaid recipient as outlined have been considered? 9. It has been claimed that this program will inhibit the utilization of the Medicaid program by those persons it was designed to serve, that is, that individuals will delay or refuse health care because they anticipate that at some future date they will become devoid of all assets and dependent on Medicaid and therefore subject their families to burdensome financial obligations. Does your agency have information which substantiates or refutes this claim? 10. Am I correct in assuming that this program will be applied to all Medicaid recipients, not only those elderly beneficiaries in nursing hones? I thank you in advance for your cooperation in answering my questions and addressing my concerns. Sincerely, MARIO BIAGGI, M.C. Chairman MB:TK:b ''107 DEPARTMENT OF HEALTH & HUMAN SERVICES Health Care Financing Administration The Administrator Washington, D.C. 20201 AS 3 O83 The Honorable Mario Biaggi House of Representatives Washington, D.C. 20515 Dear Mr. Biaggi: This is in further response to your letter of April 14 requesting information regarding the family responsibility policy interpretation. I am enclosing a report which responds to each of your questions. I hope that the answers we have provided will be helpful to you. I am confident that the responses we have provided will demonstrate that this policy interpretation will assist States in targeting program dollars to assist the most needy, without creating undue hardship. Sincerely yours, CC eee s ee ut Carolyne K. Davis, Ph.D. Enclosure ''108 1 Is there statistical information available which indicates that there are a significant number of adult children and other relatives who are denying their responsibility in the care and support of their relatives who are Medicaid recipients? How many Medicaid recipients does this represent and what percentage of the Medicare (sic) serviced population is involved? 1. Data from the 1976 Survey of Institutionalized Persons indicate that 7-8 percent of all nursing home residents had children with incomes exceeding $20,000 in 1976. Inflating incomes of children by the 88 percent growth rate of personal income increases that estimate to 27-32 percent in 1984. This means that roughly 400,000 Medicaid-eligible nursing home residents have children with incomes in excess of $20,000. Our data does not permit an estimate of how many of these families are contributing support to their aged relatives. Please indicate the dollar amounts and percent of total expenditure of the various components of the Medicaid program, that is, long-term care, homecare, and other community-based programming. 2. Our most recent figures, for FY 1982, are as follows: Total Medicaid expenditure: $29,905.9 million Care in skilled nursing facilities: $4,383 million (14.66 percent) Care in intermediate care facilities: (excluding ICF/MR's) $4,978 million (16.65 percent) Care in ICFs/MR: $3,609 million (12.07 percent) Home health care: $496 million (1.7 percent) Outpatient hospital: $1,598 million (5.34 percent) Inpatient hospital: $8,853 million (29.6 percent) Physician's services: $2,107 million (7.05 percent) The balance (12.9 percent) is paid for other services, such as dental, prescription, x-ray, ete. 3. What is the approximate dollar amount which may be recovered by the States and Federal government through the implementation of this program? Please break this figure down by State if possible. 3. The amount of any savings would be determined by States' implementation action. HCFA estimates that if half the States adopted such policies, the family responsibility policy could result in Federal savings as follows: FY 1984 - $116 million; FY 1985 - $128 million; FY 1986 - $143 million; FY 1987 - $157 million; FY 1988 -$171 million. We do not have information regarding projected savings at a State level. ''109 What is the approximate cost of administering/enforcing the program to the states and to the Federal government? What is the estimated cost per beneficiary? Does the cost of administering this program outweigh the revenues received? 4. There will be no enforcement cost for the Federal government since this is not a Federal requirement or program initiative. We have no information at this time about possible costs to States. We assume that each State will consider the cost effect of implementing and enforcing support statutes. We expect the States will administer these activities in a cost effective manner, as they do the child support enforcement program. Is the terminology used in the transmittal "adult children or other relatives" meant to include sisters and brothers, step-children and step-parents, aunts and uncles, grandparents and cousins? 5. Since these are laws which are not part of the Medicaid program or any other Federal program the determination of who constitutes a responsible relative is the prerogative of the State. At present, three States, Virginia, Indiana, and Georgia, have enabling legislation which would allow them to enforce this program. It is my understanding that each State may develop its own method of administration and enforcement. What kind of uniformity, if any, will the Department seek in the State's plans? 6. These activities are not part of the Medicaid program. Therefore, the Federal government will not seek to require uniformity among the States in their establishment or enforcement of support laws of general applicability. Our policy only clarifies that any State law of general applicability requiring support of adult family by adult relatives would not conflict with the Medicaid statute. Please provide me with a financial profile for a Medicaid nursing home patient for each State. 7. Attached are data from the 1976 Survey of Institutionalized Persons conducted by the Bureau of the Census, which provides information on occupations and incomes of persons prior to their institutionalization. In general these income figures should be inflated by 87.6 percent for a 1983 profile. ''110 8. I am gravely concerned about the enforcement and consequent legal problems which surround this issue:~ What penalities for refusing to contribute to ‘the financial support of a Medicaid recipient as outlined have been considered? 8. No penalties have been considered or recommended by the Federal government. Moreover, failure to contribute cannot be used by the State for the purpose of determining eligibility. 9. It has been claimed that this program will inhibit the utilization of the Medicaid program by those persons it was designed to serve, that is, that individuals will delay or refuse health care because they anticipate that at some future date they will become devoid of all assets and dependent on Medicaid and therefore subject their families to burdensome financial obligations. Does your agency have information which substantiates or refutes this claim? 9. We have no specific statistical information that would support or refute the contention that requiring family support would influence individual's decisions to seek medical care. However, in view of the relatively modest support requirements that States have proposed to date, we believe that decisions to seek care will continue to be based on a variety of relevant factors, including medical necessity, alternative modes of care, etc. 10. Am I correct in assuming that this program will be applied to all Medicaid recipients, not only those elderly beneficiaries in nursing homes? 10. We wish to emphasize that any support requirement must be applied to all individuals in the State, not just Medicaid recipients. Once a State has passed a law of general applicability, there is nothing in our policy clarification which restricts the State in limiting support requirements to families of individuals in nursing homes. Attachment ''111 282 Residents’ Next of Kin Table I1!-85. OCCUPATION OF RESID ° Occupation Last full-time jot | Total 7 - ! THtAl.cesseqescacsescecectendcoce “| 93.590 Professional and technical......... spec eaee | 12.080 Manager and administrator, 3.380 Leeeeee | 4.340 soeees i 9,840 Craft and kindred workers. 5.470 Operatives. ......05 Seve see 7 13.810 {! Laborers, except Carm...... bast 10,400 |; Farmers and farm managers... ! 220 ,, fare laborers and foreman.. oa 2,980 |) Service workers... ..... oniditos tude . 22,740 |; Not reperted.. oP es oe Bbw ere ce f 7,730 |: THAD occa gable os epee eds iieas tov 9 [3 ' | . Professtonal and tecnnical.......cceeee eee ’ 13.545 Manager and administrator. except 3.5] SBVOG. cc cccccccccce eesoondar oe f 4.6!) Clerical. ....csccccccscecs eed 10.5 t Craft and «kindred workers. Ge | 5.83 Operatives... : os 14.8 i Laborers, except: famm....... ae oe lL.af Farmers and farm managers. a | 0.2 Farm laboress and foreman. : 3.2 Service workers vievevs 24.3 Not reported.... 8.3 - Represents zero. Table III-86. RESIDENT'S YEARLY. Resident's vearl tacome last job Total Total.c..seee eee seeee 93,590 Less than [590........-.0..005 ‘ es 2,200 2500 to £999... 2,880 “$1,900 to 71,999 870 £2,000 ta !2,999 3,010 3,000 $3,999 1,250 4,000 4,180 £5,099 4,170 $7,590 3.120 719,060 2,850 225,000 230 720,000 2,240 £25,000 400 Working without pay.. 40 Not reported... 646,150 Medtan. cee. eee eee, teeter eee e eee e ween eee 4,834 100.0 fess than 5900.............08 2.3 1500 to 1999.......... . 3.1 21.000 to ? 0.9 £2,000 tx 22 3.2 13,900 t 1.3 &%,000 to | 4.5 35,000 to 4.5 17,500 to . 3.3 210,000 to £14,999 3.1 215.000 ts 719,999 a2 $29,000 to 724,999 . 2.6 225,000 und over. ° 0.4 Working without pay. : 1 0.0 Mot reported........5 x 70.7 ~ Represents zero. ''112 284 Residents’ Next of Kin Table II-90. OCCUPATION OF RESIDENT'S LAST FULL-TIME JOB BY RESIDENT'S AGE Occupation Last tatl= fotat | Mane 18 to 6% years | 65 t 99 veaes | Set reported 1 pet z =p 2a 93.590 | 5,810 33.630 56.140 7 Professimnal and technical 12.680 j “| 970 11.720 | = Manager and administrator, 3. 380 | a 400 zo20| - Sales.... ; 40 280 4.020 - Clerical. : ! 450 1.680 7,550} 5 Craft and kindred workers * TIE 3.010 2.230} - Operatives : 401 8.090 5.680 a Laborers, except farm 1,320 1 4.030 5.060 = Farmers and farm manage ; 1 190 30 - Farm laborers and fore 220 | 2,760 - - vice eorkers ‘ 1.030! 7.200 16.510 - Not reported. . z 490 + 4.870 2.370 i - ! i ! AGERE ties cesar eo ah ts ee ee hase | 100.0 | luu.0 100.0 ; 2 privtestaanal and sechntagte 32. - ee | | 2 20.9! 2 Manager and administrator, except f a i - ‘i 5.3 - EF. -4 ! 10| Oo. 7.2| i Ctericalises te ceeds : i 9! 5 Lk] - Craft and kindred workers 1 bo. 8. 4.9) - Aipattat Pedi gs dooge ve a ! 1.0 24.0} wot zt Laborens: except farm... | 34.5 2 30| . Farmers and farm managers - Res 15: - Farm laborers and foreman 5.8 beet - - Service surkers. 5 27.0 are! 25.8 - Set repneted...- 12.7 MS] 4.2 - = Represents cere. Table 11-91. RESIDENT'S INCOME AT LAST JOB BY RESIDENT'S AGE | i cess . less than | Resident's yearly inewse Last top ' lotal i oa 1B to be vears | 65 to 99 veurs | ' 18 vears Sot reported pe cchpten eae Po a RE a ce a —— 33,030 | 56.140 | : s | 77,500 te 5.000 to 7,500 to 710,000 to | 215,000 & 420,000 ta *2 $25,000 and over. Working «ithout pay. Not C@ported...eeceeeee eee 719,006 ta i = $15,000 to 5 = ?2,000 to i fe 225.000 ana rf . z Working without pay ': ' : a Not repertet ‘ 60.150 1 2.u0 | 5 MEd1an. sce ceeeee colton ee skins ocala athe +1935) jcasnt - Total woo 1ov.o | = less than > -1 é 3500 to ? ‘ty - 71,000 tw 10.5 - 22,000 to 9.0 e 33,000 to Is. - % 000 to r.0! 3 35 Coon ecuurhec cen Neb RREL EEL Ree ' y c= Sere = Represents 2 '' 118 286 Residents’ Next of Kin ‘ Tab‘. 11-95. OCCUPATION OF RESIDENT'S LAST FULL-TIME JOB BY RACE AND SEX . white Other races Gecupation last full-time tod Total wale | Feesle ot Total Male | Female | Total mate | recate |Temorted TEU) 2s ajo onlncp epasescens$ y=? 93.390] 55.890} 37,500 82.990 | 48.060] 34.959] 10,410| 7.850] 2.560 190 Professional aad tecnatcale ccc. eee 12,080 4.450 8.230 12.600 4.390 8.210 60 60 20 - Manager and adetoiatrator, except farm : 3,380] 3.0.0 340 3.380! 5,040 340 - - - - bales .. 44 2.590] 1,750 4.340] 2.590] 1.750 - - - - Clerical 9,850} 2.950} 6.890 9.100] 2.660] 6.440 240 230! 450 - Craft ant k 5.470} 5.470 - 4.950] 4.950 - 520 520 | 2 - Operatives Dees 13.810} 8.090] 4.930 11,870} 6.960] 4.930} 1.750) 1.750 : 190 laborers, except farm. 19,400 | 10.200 140 7.310| *.260 so] 3.090} 3,000 100 - reers and face managers. 220 220 - 190 190, - 30 30 - - ara laborers and foreme 2.980] 2.430 330 2.580; 2.030 350 400 400 - - service sorker 22,760] 13,750) 8.990 19.800} 12.810] 6.990] 2.940 940 | 2,000 - Sot reported. . ! 7,730} 2,030] 5.690 6.800} 1,170] 5.690 860 860 a - Totaleee. 10.0} 100.0} 100.0 100.0; 100.0} 100.0] 100.0! 100.9] 100.0 100.0 Professivnal and tecnnical..... swieeae 13.5 8.0 21.9 15.2 OL 23.5 O.7 0.8 0.6 - Manager and administrator, except farm . | 3.6 5.4 0.9 get 6.3 1.0 - - - - Sales.. 4.6 4.6 4.7 5.2 5.4 5.0 - - - Clerical Te ‘aie 10.5 5.3 18.4 11.0 5.5 18.4 71 3.7 es - Craft and kindred workers. 5.8 9.8 - 60 10.3 - 5.0 6.6 - Operatives... 16.8 15.5 1k 16.3 16.6 ed 16.8 22.3 - 100.0 laborers, except farm... Led 18.4 0.6 8.8 15.1 0.1 29.7 38.2 3.8 - Farmers and ‘arm managers 0.2 0.4 - 0.2 0.6 - 0.3 0.4 - - va laborers and foreman 3.2 4.6 5 2 4.2 1.6 3.8 5.2 - - Service workers... oes 246.3 24.6 24.0 23.9 26.7 20.0 28.2 12.0 78.1 - Sot reported... 8.3 3.6 15.2 8.3 2.4 le.3 8.3 1.9 - - = Represents zero. Table 111-96. RESIDENT'S INCOME AT LAST JOB BY RACE AND SEX Resideat's yearly income last. job | Total Male Femate Bok i Total Male | Female | Total mete | reaste | TePnetet Coane aos app 1 Vitalis cceeeeee eee | 93.590] 55.890] 37,500 82.990 | 48,040] 34.950] 10,410] 7,850] 2.560 190 Less tnan | 2,200 200] 2,000 2,200 200] 2,000] - - - - - #500 tn 1999.. 4 2.880 200} 2,680 2.880 200] 2,680 ~ of us - #1,000 to 11,999. . 870 690 180 800 690 110 70 - 70 - 82,000 tu 12,999. 1.u10 760] 23250 2,860 600! 2.250 160 160 « . £3,000 to 15,999. 1,250 1,030 220 920 800 120 330 230 100 - 4,000 to f,999. | a.tgu! 3,470 710 3.980} 3,320 660 200 150 50 - £5,000 ts 27,499. | 4.170] 3.500 670 3.670] 3,010 670 300 500 - é 437.500 to 19.999... | 3.120] 2.410]> 710 3.050] 2.340 710 69 60 - =; 710,000 to f14,999.. i 2,850 940] 1.910 2.510 600} 1,910 140 340 - £15,000 c> 119,999.. i 230 230 : 230 230, 0 . > = . 120,000 to £24,999. ; 2.240) 2,240 - 2,240] 2.240 - 3 s 7 £25,000 and over. | 400 90 310 400 90 310 *. - - - Working sithout pay ! 40 40 - 40 os) - - ‘ - S Sot reported. 66.1.0 40,090} 25,870 57.210] 33.680} 23.530 8.759 6.410 2.350 190 WODLAD. cece ee ere c esi veconoenecas 4,83) 6,087 2,428 4,806 tle 2,410 9,391 5,918 3,417 om TUtal.cccrccrcccceses oe 100.0 109.0 100. 100.0 100.0 100.0 100.0 100.0 100 0 100.0 tess than 1500 23 0.6 3.3 2.6 0.6 $.7 - - - £500 ta ! yt 0.6 aA 3.5 0.4 7.7 - : : . £1,000 o.9 1.2 0.5 1.0 LG 0.3 0.6 - 2.5 - $2,000 3.2 Le 6.0 3.6 1.3 6.5 Ls 2.0 - $3,000 1.3 1.8 0.6 a 17y 0.3 3.1 2.9 - % 000 6s $.2 1g 6.8 6.9 1.9 1.9 1g - £5,000 - < 4.5 6.3 - 1.8 4.4 6.3 1.9 4.8 64 - $7,500 to $9,999.... 33 4.3 1.9 3.7 4.9 2.0 0.6 0.8 - $10,000 to 514,999.. ° ge a7 5.1 3.6 1.2 3.5 3.3 4s - 115,000 to 119.999..... 0.2 0.6 : 0.3 0.5 - - - - $20,000 to 224,999. 2.4 4.0 ) - 2.) 4.7 - - - - $25,000 and over. - 0.6 0.2 0.8], o.s| ° 0.3 0.9 - - - - Working etthout pay. 0.0 0.1 : 0.0 O.1 - - 2 4 - Not reported...... . 70.2 ae? 69.0 68.9 70.1 67.3 64.1 81.6 91.8 100.0 + Represents rors. ''114 288 Residents’ Next of Kin Table 111-100. OCCUPATION OF RESIDENT'S LAST FULL-TIME JOB BY LENGTH OF STAY Lees than Lte?g Jtos Sted 10 years Not Median EECA SEL OURS CYNE Ee meee L vear years years years or more | reported | months total 93.590 sz.v20} i wo} 19.450 =.139 3.719 3.879 100 Prifehs bal andeerhorcalessy (ose de. oder. tl 12.060 1.v0u yoo}. 11,290 “0 - 40 350 Manager und adainistrater, except fam 3.380 3.240 #9 - - : bu 60 Sules.. one 4,350 1,880 2,070 40 350 - ts 1460 Clericale..eseeee 9.840 3.930 2,000 3.720 - 50 eo 180 Craft und kindred 5.470 2.219 849 40 240 ao - 70 Operatives. .....e+ : 13,810 8.090 2,130 2.130 440 21 100 Laborers, except farm. 10.400 8.199 2.0 89 30 110 70 Farmers und fam managers. 220 30 - 100 - - 220 Farm laborers and 2.980 1,330 . - - - 130 Service workers “ 18.00 1.770 910 900 2594 70 Sot reported. 1.710 v 180 2,260 2,370 1.090 Total: soos vata ios oA Tages 109.0 100.0 § 100.0 100.0 ww Professional and tecnnical....-.-.+ 12.5 1.9 sb.1! 1.0 : a Manager and administrator, except 3.6 6.2 =! - 7 om Sates. Ee tet a Pekas 24 Hiv -« ao | 3.6] 9.2 8.5 -1 om Clerical......0.-6. wees 10.5! 7.61 19.1 - 1.3| co Craft and kindred worker: 5.8 8.1 0.2 8.2 Lol a Operatives. ......00. 16.8 15.6 tet 51.6 11.8} wo Laborers, except LEt 15.7 1.3 2.0 Lat a Farmers and furm managers. 9.2 ot * 2.3 = : ix Farm laborers and foreman.. 3.2 2.5 - - - - m™ Service workers. . 24.3 33.4 vt 22.0 262 78 ) Not reported 8.3 3.3 0.9 4.6 60.3 Io. wo - Represents zero. NX Not applicable. Table IIl-101. RESIDENT'S YEARLY INCOME OF LAST JCB BY LENGTH OF STAY + T te. tae eircbecy Thee Leelee Pitas less than | ito 2 dros Stood | 1W years Not Median 1 years A | siceaes years yearey SOC reported | months 1 Tatas ed 95.590 sz.oru} ib.n20] 19,459 e110) $710 3.170 100 Less than 2.200 1,970 - 170 00 | - - 70 2500 to 2.86)! 2,380 150 250 46 ou - 70 siol : bo - Bu 90 su 3,010 380 2.010 0 - 70° 330 1,250 120 40 130 50 40 60 +, 180 710 310 40 180 80 80 5.170 20 50 a) - 170 60 3.120 - 80 - - 170 00 2.0650 1.900 - - - 30 130 230 . = ere & 60 T2051 - - - - - 60 sur, - - - - 70 70 working #tthout ae - - - 40 - - 790 Not reported. 60,159 ; 32,399 7,89] 16,490 3.659 4.340 2.460 130 Median. ! 4.835. 3.207] 10,005 2.499 3, 209 3.972 6,205 wae THRE. test ede. oS el ee : 10.0! 109.0 130-0 100.0 1v0.0 100.0 100.0 ix) Less than "0.. 2 i 3.8 - 0.9 Le - = Ww 99 3.1) 4.6 1.4 1.3 ha 1.5 : a) v4 ust - v.35 - 2.2 2.8 2 2, 0.9 3S 10.3 a - 253 OG boi 1.7 0 6.2 gL 13 1.2 () a5 | 5.5 a 1.6 IE 5.0 2.4 ww 24 | 7.4 0.3 1.8 - 5.3 am to y.3 519 0.4 - - 5.3 ww 110,000 t> 3.1 1.8 - - - 1.0 wy "15,000 to 0.2 0.4 - - - a 120,000 tr ? 2.4 B35 - - - - 2 o8) 125,990 and over. a.4 . 0-6 = = A ie 2.3 (GS Working eithout pay. 0.0 - - - oO - - “ww Not reported. : 70.7 02.3 10.5 84.8 88.6 90.0 77.4 ow - Represents zero. X Not applicable. O '' '' SUE. ''GENERAL LIBRARY - U.C. BERKELEY © LAA 8000502271 ''