Dementia Depletes Life Savings

The financial and non-financial impact of dementia is undeniable, but is most tangibly recognizable in its tragic elimination of life savings. It is vital that everyone involved in planning for seniors recognize and appreciate the limits of Medicare, which only covers health care based on a diagnosis of illness or injury. The San Jose paper, the Mercury News ran an important story describing this phenomenon, aptly titled,"How dementia can drain a family’s life savings."  The subheading to the article offers this stark warning: "Medicare offers no help for the high costs of dementia caregiving."

The article explains:

”Medicare is a lifeline for seniors and the disabled, paying for “medically necessary” costs such as hospitalization, surgery, chemotherapy, transplants, medications, pacemakers and other interventions... A dementia diagnosis demands none of that. What it does require, however, is around-the-clock “custodial care,” such as help with eating and dressing, and constant supervision. That’s not covered by Medicare. And it’s extraordinarily expensive, according to a report released last month by the Alzheimer’s Association...Families’ out-of-pocket costs for a patient with dementia are 80 percent higher than the cost for someone with heart disease or cancer, according to a 2015 study in the Annals of Internal Medicine.

According to a report from the Alzheimer's Association, families can expect to spend sixty billion dollars ($60,000,000,000) caring for those with dementia!  The study apparently does NOT include those who suffer from early onset Alzheimer's.  The number of Americans living with Alzheimer's is growing — and growing fast. An estimated 5.7 million Americans of all ages have Alzheimer's.

An estimated 5.7 million Americans of all ages are living with Alzheimer's dementia in 2018. This number includes an estimated 5.5 million people age 65 and older and approximately 200,000 individuals under age 65 who have younger-onset Alzheimer's.

• One in 10 people age 65 and older (10 percent) has Alzheimer's dementia.
• Almost two-thirds of Americans with Alzheimer's are women.
• Older African-Americans are about twice as likely to have Alzheimer's or other dementias as older whites.
• Hispanics are about one and one-half times as likely to have Alzheimer's or other dementias as older whites.

As the number of older Americans grows rapidly, so too will the numbers of new and existing cases of Alzheimer's. Today, someone in the United States develops Alzheimer's every 65 seconds. By mid-century, someone in the United States will develop the disease every 33 seconds.

Mortality from Alzheimer's is shockingly high, but mortality so often comes with a steep cost for lifetime suffering.  Alzheimer's disease is the only top 10 cause of death in the United States that cannot be prevented, cured or even slowed.

Alzheimer's disease is the sixth-leading cause of death in the United States, and the fifth-leading cause of death among those age 65 and older. It also is a leading cause of disability and poor health.
Although deaths from other major causes have decreased significantly, official records indicate that deaths from Alzheimer's disease have increased significantly. Between 2000 and 2015, deaths from Alzheimer's disease as recorded on death certificates increased 123 percent, while deaths from the number one cause of death (heart disease) decreased 11 percent.  Among people age 70, 61 percent of those with Alzheimer's are expected to die before the age of 80 compared with 30 percent of people without Alzheimer's — a rate twice as high.

There are tragically few options for those suffering from conditions with this diagnosis.  Long Term Care Insurance (LTCI) can help, but paying privately is the option selected by the vast majority of those who will spend down assets in order to qualify for Medicaid.  Medicare does not help unless there is a hospitalization, and the benefit is limited. The article notes that families with dementia can forget home care or memory care because Medicare does not cover these treatments or care. 

The challenge of financial planning with dementia in mind is not new. The challenge is certainly becoming a bigger issue with the significant number of Boomers, and the dwindling options available to consumers. The wise seek early legal and financial counsel. The unwise risk losing everything.

Trump Administration Embraces Aging In Place- 2019 Advantage Plans Permitted to Incorporate Long Term Care

Starting in 2019, Medicare Advantage plans can cover adult day care services, and in-home help with activities such as dressing, bathing and managing medications, a top Trump administration official said Wednesday, according to an article entitled, "Official Gives Hints About Medicare Advantage LTC Benefits," published in ThinkAdvisor.  The move might make Medicare Advantage Plans (hereafter "Plans") more attractive alternatives to Medicare. 

Seema Verma, the administrator of the Centers for Medicare and Medicaid Services (CMS), spoke about the Medicare Advantage program’s new benefits flexibility at a Medicare conference at CMS headquarters, in Baltimore.  CMS announced the changes in April, in a memo sent to potential 2019 Plan issuers. According to the article, while it is not yet clear whether any issuers will add significant supplemental benefits for 2019, "executives from Humana Inc. hinted during their first-quarter earnings call that they might be able to work with partners"  to provide such benefits.

According to the article:

Verma told insurance company executives at the conference that CMS hopes its new “reinterpretation” of the Medicare Advantage program benefits rules will help unleash private-sector innovation and creativity.  She said she has seen the effects of that creativity in her own life.  “Both my parents are enrolled in a Medicare Advantage plan, and they can’t stop talking about them,” Verma said, according to a written version of her remarks distributed by CMS.

A copy of Verma's speech is available here.  

The Old Rules

The Medicare Advantage program lets private insurers use a combination of government money and patient premiums to provide an alternative to traditional Medicare coverage.  In the past, managers of Medicare Advantage have tried to simplify the Plan shopping process, and discouraged Plans from offering benefits that might drive up health care costs, by putting tight restrictions on the kinds of benefits a Plan issuer can offer.  Those restrictions kept Plan issuers from adding benefits such as adult day care benefits, except when the Plans were participating in CMS pilot programs or other special programs.

The New Rules

CMS is employing a new strategy permitting Plans that offer benefits that  compensate for physical impairments, reduce the impact of injuries, or reduce avoidable use of emergency rooms.  Although Verma did not use the terms “long-term care,” or “short-term care,” in her remarks or written speech, the benefits she described are similar to the kinds of benefits many private long-term care insurance policies offer through home health care and community care provisions.  The new approach and resulting rules will also allow Plans to add supplemental benefits tailored to meet the needs of people with specific conditions, including chronic conditions.

The new interpretations are separate from and further expand the chronic care benefits already offered in the Bipartisan Budget Act of 2018 through Medicare. The BBA-2018 provisions expand the range of Medicare supplemental benefits chronically ill enrollees can get starting in 2020.

Requirements for Supplemental Benefits

Of course, the devil is often in the details, and proposed rules were not published. Regardless, the guidance suggests that the additional Plan benefits must ensure the benefits are ”primarily health related,” and "not primarily for a patient’s comfort."  The services covered "must be recommended by a physician or other licensed medical professional as part of a care plan," and the new benefits "must not include items or services used to induce enrollment."  A Plan can choose to help individuals both with basic “activities of daily living,” such as walking, and with the “instrumental activities of daily living,” such as taking medications correctly.

The new interpretation will let a Plan tailor benefits, such as deductibles or wellness options, to fit people with certain medical conditions, such as diabetes.  That interpretation will not, however, allow a Plan to tailor benefits based on an enrollee’s income or poverty level, or any other characteristic other than health status.  Plans must use “objective and measurable” criteria to identify eligible enrollees.

Representative Payee Rules Change

On April 13, President Trump signed the Strengthening Protections for Social Security Beneficiaries Act of 2018. The law directs state Protection & Advocacy (P&A) system organizations to conduct all periodic onsite reviews along with additional discretionary reviews. In addition, the P&As will conduct educational visits and conduct reviews based on allegations they receive of payee misconduct. The new law allows the Commissioner to exempt custodial parents of minor children and disabled individuals, as well as spouses, from annual payee accounting.

Representative Payees can complete a Representative Payee Report form online  to account for the Social Security or SSI benefits received or P&As may select a representative payee for review.

The P&A review includes:

• an interview with the individual or organizational representative payee;
• a review of the representative payee’s financial records for the requested beneficiary or sample of beneficiaries served;
• a home visit and interview for each beneficiary included in the review; and
• an interview with legal guardians and third parties, when applicable.

Financial Records Representative Payees Should Have Available for Review

When the P&A schedules the review, the reviewer will request the records needed for each beneficiary. Some common financial documents that representative payees may be asked to provide are:

• a beneficiary budget;
• a beneficiary ledger;
• individual bank statements;
• Collective account bank statements;
• receipts of income;
• account balances;
• bank reconciliation records;
• cancelled checks;
• expense documentation including receipts, bills, and rental agreements;
• how the payee keeps conserved benefits (e.g., checking, savings, etc.); and
• any other financial documents that pertain to a beneficiary’s Social Security and/or SSI benefits.

New Law Helps Prevent Wandering of Impaired Adults and Children; Provides Aid Locating the Lost

Congress recently passed bipartisan legislation to help families locate missing loved ones with Alzheimer’s disease, autism and related conditions.  Kevin and Avonte’s Law (S. 2070), named in honor of two boys with autism who perished after wandering from safety, also supports training for caregivers to prevent and respond to instances of wandering. In response to the massive search and tragic death of Avonte Oquendo in New York City, Lori McIlwain, co-founder of the National Autism Association, assisted Senator Schumer’s office in drafting legislation that would help to prevent similar cases in the future. 

The following press release was sent from the Senate Judiciary Committee:

“The feeling of dread and helplessness families must experience when a loved one with Alzheimer’s or autism goes missing is unimaginable. But when communities are empowered to lend a hand, these terrifying situations can have positive endings and even be prevented altogether. This bill, named for two boys – one from Jefferson, Iowa, and one from New York City, improves access to technologies that advance the search for missing children.  It also expands specialized training for caregivers and first responders to help prevent wandering by vulnerable individuals. I’m grateful for all of those who worked together to get this important bill on the books to honor Kevin and Avonte and prevent future tragedies,” Grassley said.

“Families and caregivers should have the support they need to keep their loved ones with Alzheimer’s, autism, and other developmental disabilities safe. This legislation will help to educate and train caregivers to prevent wandering and provide our law enforcement officers with the tools they need to help recover missing loved ones,” Klobuchar said.
“I’m pleased Kevin and Avonte’s Law will become law so we can help save lives and give families a greater peace of mind. This legislation has a deep personal meaning for me, as I was a caregiver for my grandmother during her battle with Alzheimer’s disease. I want to thank Chairman Grassley for his tireless efforts to support this law that will help families and caregivers reunite with loved ones who wander and disappear. Kevin and Avonte’s Law will truly make a difference in preventing tragedies,” Tillis said.

“Making voluntary tracking devices available to vulnerable children with autism or adults with Alzheimer’s who are at risk of wandering will help put countless families at ease. After Avonte Oquendo ran away from his school and went missing, I learned just how prevalent wandering is among children with autism and other development disorders. I am proud to have continued to speak up for those who cannot and to have co-authored this important bill, which will help Avonte Oquendo’s memory live on, while helping to prevent other children and teens with autism from going missing,” Schumer said.

Information on the introduction of this legislation is available here, a bill summary can be found here, and full text of the legislation can be found here.

More Adults Now Share Living Space As More Parents Live With Adult Children

The Pew Research Center has posted a new report  indicating that more adults are sharing  a home with other adults with whom they are not romantically involved. This arrangement, which Pew identifies as “doubling up” or shared living, gained notice in the wake of the Great Recession.  Nearly a decade later, the prevalence of shared living has continued to grow.

While the rise in shared living during and immediately after the recession was attributed in large part to a growing number of Millennials moving back in with their parents, the longer-term increase has been partially driven by a different phenomenon: parents moving in with their adult children.

In 2017, nearly 79 million adults (31.9% of the adult population) lived in a shared household – that is, a household with at least one “extra adult” who is not the household head, the spouse or unmarried partner of the head, or an 18- to 24-year-old student. In 1995, the earliest year with comparable data, 55 million adults (28.8%) lived in a shared household. In 2004, at the peak of homeownership and before the onset of the home foreclosure crisis, 27.4% of adults shared a household.

A shared household is defined somewhat differently from a multigenerational household (although the two can overlap), as shared households can include unrelated adults and adult siblings. More adults live in shared households than multigenerational households: In 2014, 61 million Americans (including children) resided in multigenerational households.

The nearly 79 million adults living in a shared household include about 25 million adults who own or rent the household. An additional 10 million adults are the spouse or unmarried partner of the head of the household. Another 40 million, or 16% of all adults, are the “extra adult” in the shared household. This share living in someone else’s household is up from 14% in 1995.

Adults who live in someone else’s household typically live with a relative. Today, 14% of adults living in someone else’s household are a parent of the household head, up from 7% in 1995. Some 47% of extra adults today are adult children living in their mom and/or dad’s home, down from 52% in 1995. Other examples of extra adults are a sibling living in the home of a brother or sister, or a roommate.

In 2017, only 18% of extra adults lived in a household in which the head was unrelated (typically a housemate or roommate). Living with nonrelatives has become less prevalent since 1995, when 22% of extra adults lived with a nonrelative.

Regardless of their relationship to the household head, young adults are more likely than middle-aged or older adults to live in someone else’s household. Among those younger than 35, 30% were the extra adult in someone else’s household in 2017, up from 26% in 1995. Among 35- to 54-year-olds, 12% were living in someone else’s household, an increase from 9% in 1995. Today 10% of 55- to 64-year-olds are an extra adult, up from 6% in 1995. The only adult group that isn’t more likely than before to live in another adult’s household is those ages 75 and older (10% in both years).

The rise in shared living may have implications for the nature of household finances – that is, how income and expenses are shared among members.  The complexity of the interpersonal relationships, together with interrelated financial relationships complicate estate planning  solutions.  Often, these relationships beg for planning to clarify, crystallize, and memorialize expectations arising from the relationships.   

In addition, the increase in “doubling up” is offsetting other social trends bearing on the nature of the nation’s households and demand for housing. While Americans are less likely to be living with a spouse or unmarried partner in their household, the rise in doubling up means more adults are living with nonrelatives and with relatives other than romantic partners. As a result, the average number of adults per household has not declined since 1995, and consequently, the number of households per adult has not increased.

In fact, household formation, or the number of households for every 100 adults, has recently fallen to very modest levels for several age groups. For example, in 2017 there were 31 households headed by an adult younger than 35 for every 100 adults in that age bracket (adjusted for the age bias in head-of-household status), among the lowest rate of household formation for this age group since the early 1970s. Decreased household formation is not confined to young adults. Last year there were 61 households headed by a 65- to 74-year-old for every 100 65- to 74-year-olds. While this marked a slight statistical increase from 2014, the last time household formation rates were that low among this demographic was 1972.

The rise in shared living is likely not simply a response to rising housing costs and weak incomes. Nonwhite adults are much more likely than white adults to be doubled up, mirroring their greater propensity to live in multigenerational households. Nonwhite adults are a growing share of the adult population, and thus some of the rise in shared living arrangements is due to longer-running demographic change.  

Regardless of the causes of these trends, families are well-advised to consider their specific circumstances when designing, drafting and implementing individual financial and estate plans.  Experienced counsel and advisers will ordinarily consider these relationships in the fact-finding portion of planning.  Individuals must, however, fully advise their advisers of such relationships, and their expectations in order to ensure full consideration of goals and objectives.     

Ohio Bill to Remedy Third-party Refusals to Accept Lawful Powers of Attorney

According to a special editorial published in the Akron Legal News, proposed state legislation may make General Durable Powers of Attorney (POAs) more effective, by prohibiting third parties such as banks, insurance companies, and financial institutions from baseless refusals to accept the planning instruments.  A power of attorney document gives authority to an agent to act on behalf of another in legal or financial matters. Elder law and estate planning attorneys commonly use POAs as a tool to plan for the incapacity of their clients.

Ohio has enacted a Uniform Power of Attorney Act, which lays out the mandatory language that must be incorporated into these planning instruments in order to comply with Ohio law. In most cases, a power of attorney specifies that it will continue after the incapacity of its maker; such instruments are known as a durable power of attorney.

Democrat Rep. John Rogers of Mentor-on-the-Lake has championed a bill that addresses the growing problem of third-party institutions rejecting lawful Ohio powers of attorney.  House Bill 446 would prohibit a person from refusing to accept an acknowledged power of attorney for a transaction or requiring an additional or different form for any authority granted in a statutory power of attorney.  The measure would be subject to specified exceptions and provide sanctions for a person who fails to comply with the bill's provisions.  This blog contains several articles discussing how powers of attorney can be rendered impotent as a planning tool.  For example, consider the 2014 article, The Impotent Power of Attorney, available by clicking here. 

Rogers told the Akron News that he has had a number of POAs refused to be honored in recent years in both his personal life, and in his professional capacity:

Reasons that these legal documents have been rejected include the document having been prepared more than six months prior to the presentation date and a successor agent was named on the document.

"Attorneys who draft documents are subject to malpractice if documents they have prepared were done so contrary to law." Rogers said. "Consider the grave consequences that could ensue to a denied client."

*    *    *

Rogers shared with members of the House Civil Justice Committee the circumstances of a now-deceased client.

"This senior was wheelchair bound and scheduled a 'Dial-A-Ride' service through the local public transit authority to take him to his financial institution," Rogers began. "Once there, he presented his POA to a (bank) employee, who after reviewing the document advised my client that his POA was not to be honored in its present form.

"Specifically, my client was told that having named a second adult child as a successor agent was not permitted. The employee proceeded to advise my client that the document needed to be redrafted according to their specifications and offered to refer my client to someone in house to help, if necessary."

Rogers recounted when his client called him after the incident and requested Rogers draft another power of attorney.

"I offered to contact the institution on his behalf, but he asked that I redraft the document in accordance with the bank's instructions," the lawmaker said. "I did so, at no expense, but in my opinion, what had happened was unconscionable."

HB 446 would prohibit a person from refusing to accept an "acknowledged" power of attorney - one defined as verified before a notary public or other individual authorized to take acknowledgments - for a transaction or requiring an additional or different form of power of attorney for any authority granted in a statutory form power of attorney unless any of the following applies:

• The person has actual knowledge of the termination of the agent's authority or of the power of attorney;
• The person in good faith believes that the transaction is outside the scope of the authority granted to the agent in the power of attorney;
• The person in good faith believes that the power of attorney is not valid.

"In keeping with our desire to cut unnecessary and duplicative red tape in business transactions, this bill will eliminate the need for citizens to pay for two POAs when only one is needed," HB 446 joint sponsor Rep. Bill Seitz, R-Cincinnati, said in the press release quoted by The Akron Legal News [the press release was not yet publicly available on Rep. Seitz's archive of press releases.  "Pride of authorship is an insufficient reason to reject a POA that was properly prepared by a different Ohio attorney."

A failure to comply with the law would result in sanctions with liability to the dishonoring institution for reasonable attorney fees and costs to confirm or mandate the acceptance of the properly prepared and executed document, the lawmaker duo said during testimony.  

Eight fellow House members have signed on as cosponsors of the bill, which had not been scheduled a second hearing at time of publication.

Whether this bill becomes law remains to be seen.  There is, of course, a powerful bank lobby that may frustrate the bill's passage.  The bill, at least as presently written, does not appear to contain a release from liability for institutions, such as banks, that accept an instrument  based upon the representations of the presenter and the notary before which the instrument is signed and acknowledged.  That means that institutions like banks might remain liable for damages when accepting forged or fraudulent instruments despite being encouraged to do so by the penalty for refusing to accept the instrument.  One can imagine that this situation might put the institution in a precarious Catch-22 or dillemma.  

Regardless, the bill is a welcome acknowledgment by at least some lawmakers regarding the weakness of the instrument as a planning tool.  Since most people employ a power of attorney for the expressed purpose of avoiding resort to a more cumbersome legal process through the courts, it is unfortunate that third parties so easily frustrate this objective without cause.   

Massachusetts High Court Reminds Reverse Mortgage Holders- Foreclosure IS possible; Rules that Lenders Don't Have to Spell Out Foreclosure Risk to Consumers

The Supreme Judicial Court of Massachusetts ruled in favor of a reverse mortgage lender in a foreclosure case earlier this month, finding that mortgagees don’t have to explicitly spell out their legal right to foreclose in their paperwork.

The case involved James B. Nutter Company and three reverse mortgage borrowers, all of whom secured Home Equity Conversion Mortgages in 2007 and 2008. Within the span of a few years, two had died and the third became too ill to remain in the home; J.B. Nutter then moved to foreclose by bringing actions against the borrowers or their executors in local land court.

But the case was delayed due to an objection over the company’s ability to foreclose on homes under state law. In Massachusetts, the Supreme Judicial Court (SJC) wrote in its opinion, foreclosures can proceed without a judge’s confirmation as long as the mortgage itself gives the lender “the power of sale” in such situations.

The problem stemmed from some imprecise language in J.B. Nutter’s standard reverse mortgage paperwork. The company informed borrowers that it “may invoke the power of sale and other remedies permitted by applicable law … At this sale, Lender or another person may acquire the Property. This is known as ‘foreclosure and sale.’ In any lawsuit for foreclosure and sale, Lender will have the right to collect all costs allowed by law.”

The disclosure, though left unresolved issues.  The form language  fails to directly refer to the “statutory power of sale,” which was insufficient to justify the lender’s power to foreclose after the death of a borrower or his departure from the property.

But despite the lack of legal specificity, the SJC found that “no reasonable borrower” could assume that a reverse mortgage lender did not have the power to sell his or her property in the event of a foreclosure.

“It matters that this is a contract for a reverse mortgage, rather than a traditional mortgage, where the borrower makes no monthly payments of principal or interest, where the lender cannot hold the borrower personally liable for the debt, and where the lender’s only recourse on default is to obtain repayment through a foreclosure sale,” the court wrote in its opinion.

“Without a power of sale, the only way that a lender can recover the principal of the loan, not to mention interest and fees, is through foreclosure by entry — a process that would take three years — or foreclosure by action, ‘a method rarely used’ in Massachusetts.”

The court also noted that J.B. Nutter would still have to abide by all other rules regarding foreclosures in the state.

Interestingly, the court had some words of praise for the reverse mortgage product in general — while also citing a controversial report from the Consumer Financial Protection Bureau that advised consumers against taking out the loans to delay Social Security payments.

“For many retirees, one of the most reliable potential sources of income in later life is the accrued equity in their homes,” the court wrote by means of introduction.

Like many financial products and strategies, a reverse mortgage has a specific purpose, and specific circumstances justify its use.  Unfortunately, like most financial products, consumers do not always understand fully these purposes or circumstances and find themselves suffering disadvantage or harm when they are misused. The consequences can be devastating. 

As discussed preciously on this blog, these financial devises can be particularly troubling for elderly couples that do not plan carefully.  See the articles posted here and here, for example. 

New Budget Deal Reinstates Protections for Personal Injury Awards from State Claims

The budget deal signed into law by President Trump on February 9, 2018 permanently and retroactively restored protection of personal injury recoveries from State claims.  Under the new law, States can only make claims against the medical expense reimbursement portion of personal injury judgments and settlements, protecting the rest of such recoveries, such as the portions representing compensation for pain and suffering from such claims.

The new law represents a permanent and retroactive repeal of the law that overturned the Supreme Court decision in Arkansas Department of Health and Human Services, et al. v. Ahlborn 547 U.S. 268 (2006).  Ahlborn had been overturned by Section 202 of the Bipartisan Budget Act of 2013 (BBA), which expanded states’ access to entire personal injury settlements and awards to recoup Medicaid costs spent on a beneficiary’s behalf.  Originally set to take effect on October 1, 2014, it was twice delayed before finally coming into force late in 2017.  The current bill eliminates the 2013 language that nullified Ahlborn.

In 2006 the Supreme Court issued its Ahlborn decision, finding that under the anti-lien restrictions of the Social Security Act states had a right to recover only from the portion of a settlement or award that was allocated to medical expenses. The remainder of the settlement went to help cover the recipient’s expenses not covered by Medicaid.  Seven years later, in Wos v. E.M.A. 568 U.S. 627 (2013), the Court struck down a state statute imposing a mandatory Medicaid lien on up to one-third of a recovery, reiterating that "[a]n irrebuttable, one-size-fits-all statutory presumption is incompatible with the Medicaid Act's clear mandate that a State may not demand any portion of a beneficiary's tort recovery except the share that is attributable to medical expenses." 

Following Wos, and without warning, Congress used the BBA to erase the protection Ahlborn and Wos afforded personal injury recoveries.  The 2013 budget bill amended the Social Security Act to give states the right to recover from Medicaid beneficiaries' entire settlements.  The BBA also gave states the right to place a lien on those settlements or awards. 

From the beginning, the American Association for Justice (AAJ) has vigorously fought to eliminate the BBA provision.  It managed to twice delay implementation -- first to October 2016, and then again to October 2017.  Ever since last October’s delay expired, the AAJ has worked for repeal.  “We believe this is a great victory that will ensure Medicaid recipients retain access to the courts,” said Linda Lipsen, AAJ’s Chief Executive Officer.  

Federal Court Holds Long-Term Care Insurance Company Breached Policyholder's Contract by Raising Premiums

A U.S. court of appeals has ruled  that a long-term care insurance company breached its contract with a policyholder who purchased a "Reduced-Pay at 65" policy when it raised her premiums after age 65. Newman v. Metropolitan Life Insurance Company (U.S. Ct. App., 7th Cir., No. 17-1844, Feb. 6, 2018).  The case represents a rare holding in favor of policy holders against long term care insurance companies pursuing claims arising from dramatic premium increases. 

The plaintiff, Margery Newman, purchased a long-term care insurance policy from Metropolitan Life Insurance Company when she was age 56. She chose an option called "Reduced-Pay at 65" in which she paid higher premiums until she reached age 65, when the premium would drop to half the original amount. The long-term care insurance contract set out the terms of the reduced-pay option. It also stated that the company could increase premiums on policyholders in the same "class." When Ms. Newman was 67 years old, the company notified her that it was doubling her premium.

Ms. Newman sued MetLife for breach of contract and fraudulent and deceptive business practices, among other claims. The company argued that the increase was imposed on a class-wide basis and applied to all long-term care policyholders over the age of 65, including reduced-pay policyholders. The U.S. district court granted the company's motion to dismiss, ruling that the contract permitted the company to raise Ms. Newman's premium. Ms. Newman appealed.

The U.S. Court of Appeals, 7th Circuit, reversed, holding that the company breached its contract when it raised Ms. Newman's premium. According to the court, "none of the four references in the policy to [the company's] right to change premiums sufficed to disabuse a reasonable person of the understanding that purchasing the Reduced-Pay option took her out of the class of policyholders who were at risk of having their premium increased after their post-age-65 anniversary." The court also allowed Ms. Newman's claims for fraudulent and deceptive business practices to proceed.  The Court ruled that Ms. Newman showed sufficient evidence that the company's marketing of the policy was deceptive and unfair to proceed with those claims.

Although it is possible, an appeal to the United States Supreme Court is unlikely.  

Study Finds that POLST (Physician Ordered Life Support Treatment) Orders Meet Patient Goals

The News section of the National POLST Paradigm posted the following article:

"The Progression of End-of-Life Wishes and Concordance with End-of-Life Care,” a brief report authored by Jennifer Hopping-Winn, LCSW, Juliette Mullin, MPH, MBA, Laurel March, MA, Michelle Caughey, MD, Melissa Stern, MBA, and Jill Jarvie, RN, MSN, was published in the Journal of Palliative Medicine (January 2018, ahead of print). Using in-depth chart reviews from patients who had participated in the Kaiser Permanente Northern California (KPNC) advance care planing program, the study found that 290 out of 293 (99%) patients were found to have received goal-concordant care if a POLST was completed up to 12 months before they died. In 7 of 300 cases, concordance could not be determined.

Since 2013, KPNC has used an advance care planning program to elicit, document and honor the care treatment preferences of patients near the end of life. This study aimed to determine whether patient wishes were actually respected at the end of life, with a hypothesis that patients’ wishes would be their ultimate care preferences if the conversation occurred within 12 months of their death and that the patient would receive care concordant with those POLST-documented care preferences ~95 to 98% of the time, an estimate based on two previous studies on the concordance rate of the Respecting Choices advance care planning program.

In this study, the research focused on patient who had participated in the KPNC’s Life Care Planning (LCP) Advanced Steps (AS) program, modeled on the Respecting Choices’s Last Steps program. Patients are referred to LCP AS if their physicians estimate they are in their last year of life. An AS facilitator helps the patient discuss their preferences in the presence of their designated decision maker (DDM) about the patient’s preferences for end-of-life care.

Three LCP experts at KPNC conducted the in-depth chart review to determine goal concordance per patient. Concordance was defined as documentation that care received in setting before death was either consistent with documented wishes on patient’s POLST form or inconsistent with POLST selections, but consistent with the DDM’s or patient’s verbal guidance. Study authors noted that a particular strength of this study was the researchers’ accessibility to a breadth of information in order to determine care preferences and the final care received, made possible by the Kaiser Permanente integrated health system’s electronic health record that includes records from a wide variety of clinical settings.

The researchers randomly selected 300 of the 3701 patient who had participated in the AS program and died in 2015. How close in time the conversation took place before death varied from one day to more than 2 years, with an average time of about 10 months.  Among the 300, 253 had completed a POLST Form; among the 253 who had completed a POLST Form, 48 (19%) revised their care preferences at some point. Patients were more likely to change their preferences over time if the AS conversation was not recent or if they returned to the hospital for care. Most (85%) of the time, the patient of DDM opted for less intensive care when changing care preferences, and in most of these cases, the DDM made the change on behalf of the patient, generally when the patient’s condition deteriorated significantly and the patient could no longer speak for him or herself.

The study confirmed a very high level of respect for patients’ wishes across care settings. Only in three of the 293 cases were care decisions made by clinicians found to be in conflict with the patient’s wishes; one case occurred in a hospital emergency department, one in a community dialysis clinic, and one in a community skilled nursing facility. In each of these 3 cases, the DDM was not immediately available, leaving the decision to the clinician. The researchers noted that clinicians should not have to depend on the presence of a DDM in order to follow patient wishes; when accessible, the POLST Form should serve to help guide and communicate patient preferences when the patient or DDM is unable to do so.

The conclusion:

“A skillful, facilitated advance care planning conversation is a worthwhile approach for eliciting patients’ wishes, and the POLST form is a valuable tool. When patients’ preferences about medical care are made known in this way, they overwhelmingly receive concordant care. However, our findings highlight the need for comprehensive, continuous conversations across all care settings, even after a POLST is completed. As the U.S. healthcare system continues to improve end-of-life care, more research on the documentation and progression of care preferences is needed to fully understand how healthcare providers can best identify and act on patients’ wishes, especially when a DDM is unavailable.”

GAO Report Warns that Assisted Living Quality Oversight Lacking: "National Scandal"

According to the Long Term Care Community Coalition (LTCCC) and the Center for Medicare Advocacy (CMA), "assisted living is viewed by seniors and their families as a desirable option for residential care when an individual wishes to avoid the institutional environment characteristic of a typical nursing home. While the assisted living industry has grown rapidly to meet this demand, little is known about the quality and safety provided to residents in these facilities." 

A newly released Report by the Government Accountability Office (GAO) warns that the Centers for Medicare & Medicaid Services (CMS) ability to oversee and regulate the quality of care provided to Medicaid beneficiaries in assisted living communities is severely compromised.  McKnights Senior Living reports that some federal lawmakers and consumer advocates are already pushing for changes in assisted living because of the report’s findings.

The GAO, at the request of a bipartisan group of  Senators, surveyed all state Medicaid agencies (including Washington, DC) for the report, titled “Medicaid Assisted Living Services: Improved Federal Oversight of Beneficiary Health and Welfare is Needed.” The Senators sought “to understand federal and state spending and oversight of care, but as the title suggests, the GAO was unable to respond effectively to the Senators' request because facts were difficult to ascertain. 

State Medicaid agencies in 48 states that covered assisted living services reported spending more than $10 billion (federal and state) on assisted living services in 2014. These 48 states reported covering these services for more than 330,000 beneficiaries through more than 130 different programs. Most programs were operated under Medicaid waivers that allow states to target certain populations, limit enrollment, or restrict services to certain geographic areas.

With respect to oversight of their largest assisted living programs, state Medicaid agencies reported varied approaches to overseeing beneficiary health and welfare, particularly in how they monitored critical incidents involving beneficiaries receiving assisted living services. Although state Medicaid agencies are required to protect beneficiary health and welfare and operate systems to monitor for critical incidents—cases of potential or actual harm to beneficiaries such as abuse, neglect, or exploitation, the GAO found a lack of required monitoring and reporting:

• Twenty-six state Medicaid agencies could not report to GAO the number of critical incidents that occurred in assisted living facilities, citing reasons including the inability to track incidents by provider type (9 states), lack of a system to collect critical incidents (9 states), and lack of a system that could identify Medicaid beneficiaries (5 states).
• State Medicaid agencies varied in what types of critical incidents they monitored. All states identified physical, emotional, or sexual abuse as a critical incident. A number of states did not identify other incidents that may indicate potential harm or neglect such as medication errors (7 states) and unexplained death (3 states).
• State Medicaid agencies varied in whether they made information on critical incidents and other key information available to the public. Thirty-four states made critical incident information available to the public by phone, website, or in person, while another 14 states did not have such information available at all.

The report Highlights summarized:

Oversight of state monitoring of assisted living services by... CMS, an agency within the Department of Health and Human Services (HHS), is limited by gaps in state reporting. States are required to annually report to CMS information on deficiencies affecting beneficiary health and welfare for the most common program used to provide assisted living services. However, states have latitude in what they consider a deficiency. States also must describe their systems for monitoring critical incidents, but CMS does not require states to annually report data from their systems. Under federal internal control standards, agencies should have processes to identify information needed to achieve objectives and address risk. Without clear guidance on reportable deficiencies and no requirement to report critical incidents, CMS may be unaware of problems. For example, CMS found, after an in-depth review in one selected state seeking to renew its program, that the state lacked an effective system for assuring beneficiary health and welfare, including reporting insufficient information on the number of unexpected or suspicious beneficiary deaths. The state had not reported any deficiencies in annual reports submitted to CMS in 5 prior years (emphasis added).

The GAO recommended that CMS provide guidance and clarify requirements for states regarding their monitoring and reporting of deficiencies in assisted living communities. Additionally, the GAO recommended that CMS establish standard Medicaid reporting requirements that all states could use to annually report information on critical incidents. Finally, GAO recommended that CMS ensure that all states submit annual reports for Home and Community Based Services (HCBS) waivers on time as required.

HHS agreed with two of the three recommendations, according to the report, but “did not explicitly agree or disagree with [GAO's] third recommendation to require all states to report information on critical incidents to CMS annually.”

“The oversight of the assisted living industry at the state level has failed to protect residents,” the LTCCC and the CMA said in a joint press release.

“This report verifies reports from families over the years indicating that, too often, the “promise” of assisted living is unfulfilled for seniors,” said Richard Mollot, executive director of LTCCC, "Medicare beneficiaries deserve good care and dignity no matter where they access care and services.” 

“State oversight has failed assisted living residents and the taxpayers who help pay for their care,” said Toby S. Edelman, Senior Policy Attorney, CMA; “This national scandal cannot be swept under the rug any longer.”

LTCCC and CMA said their “near-term recommendations” for the federal government include that state and federal websites similar to Nursing Home Compare be developed for assisted living communities, with validated information on staffing, inspection results, complaints and critical incidents. The two organizations also recommend that the federal government “take immediate steps to protect assisted living residents by enacting sensible standards to ensure safety and dignity.”

Assisted Living and other community based care programs must be well administered, and  able to produce and demonstrate positive health outcomes for seniors before they will be reliable Aging in Place strategies.