Medicare Spends More on Seniors With Highest Needs

Medicare spends roughly three times more on the 13% of beneficiaries who need help with two or more activities of daily living (ADLs) due to physical or cognitive impairments than those that don’t, according to a new study from the Long-Term Quality Alliance (LTQA).

The alliance, which represents more than two dozen private and government entities with the goal of improving outcomes, examined data from the 2011 National Health and Aging Trends Study (NHATS), a nationally-representative panel study of Medicare beneficiaries age 65 and older.

Average annual spending for older adults who needed help with two or more ADLs—defined as long-term support services (LTSS)— and lived at home or in a skilled nursing facility was about $20,200, compared to roughly $7,100 for seniors who didn’t need that kind of care, the researchers found.


In fact, needing LTSS was specifically associated with higher Medicare spending even when factoring in other high-cost characteristics, such as multiple chronic conditions and dual Medicare-Medicaid eligibility.

Older adults living at home with four or more chronic conditions who also needed LTSS cost Medicare about twice as much ($26,621 vs. $13,123) per year, the study noted. And Medicare spent about twice as much annually ($20,729 vs. $10,384) on older adults who were dually eligible but also needed LTSS.

The findings are important because policymakers often focus on improving care for seniors with chronic conditions or dual eligibility as a way to reduce health care spending and increase value. But addressing long-term personal care assistance, which isn’t covered by Medicare, could also help reduce health care spending—a topic the researchers plan to probe in the future.


“If that’s true, as evaluations of innovative integrated programs suggest that it is, then Medicare’s strict limitation on covering only ‘health-related’ services and prohibition of reimbursement for LTSS may be counterproductive,” the researchers said. “On the contrary, integrating LTSS may be critical to ensuring Medicare’s long-term financial sustainability.”

Written by Tim Regan

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