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Testimony to
The Commission on Affordable Housing and Health Facility
Needs for Seniors in the 21st Century
November 7, 2001
Teresa Graves
Director, Senior Programs and Services
Sharp HealthCare
8695 Spectrum Center Court
San Diego, CA 92123

Background on Sharp HealthCare:
Sharp HealthCare is one of the top ten integrated health care systems is the country and the leading provider of health care services to Medicare eligible seniors in San Diego. An early adopter of managed care, Sharp and its affiliated medical groups provide care to approximately 50,000 managed care seniors, in addition to the car rendered to seniors with traditional Medicare.

In 1998 Sharp HealthCare provided services to approximately 90,000 Medicare eligibles in outpatient, acute, rehabilitation, home, hospice, skilled nursing, and mental health settings. Over the same period, Medicare eligible inpatient hospital discharges-- both capitated and fee-for-service -- accounted for more than 41.16% of all discharges in the Sharp HealthCare delivery system. Sharp HealthCare's 24,726 inpatient Medicare+Choice and Medicare fee-for-service discharges represented 27.23% of the market share for San Diego County. The remaining Medicare discharges were distributed among 22 other area hospitals.

Approximately 6 years ago Sharp opened what are now three model Senior Health Centers that provide multidisciplinary care, care coordination and free transportation for patients to medical appointments to seniors through one location.

In addition to Medicare-reimbursed services, Sharp HealthCare provides free information, education, screening and referrals as a free community services to seniors from 3 separate Senior Resource Centers in South, East and Central counties (ore than 100,000 seniors utilize this service annually) and free transportation to and from hospital services via 16 vans, with 99% of the ridership being seniors.

Our common goal today is to address housing issues for seniors. As a health care provider, I will offer you insights from the vantage point of a health care provider, that I believe can make a significant difference in fostering and supporting the successful aging in place of tomorrow's seniors.

I thought that it would be helpful to start with what we know, then compare it to the current state, followed by what could be done to improve the situation.

What we know:


-Population age 80+ doubling in sizes every 5 years
-Increased life span without increased quality of life
-Psychosocial services unaffordable for many
Lower 10% get Medicaid assistance
Upper 10% pay their way
Middle 80% are squeezed
-Incomes of most seniors do not match financial need
-The 1998 reported median for older Americans shows a median income of $18,166 for males and $10,054 for females. 78% report an annual income of under $24,000. (Source: A Profile Of Older Americans. AARP. 1999)
-Over a 19-year span beginning in the year 2008, one third of U.S. population will be turning 65 years of age

Society Has Changed Since Medicare & Medicaid Were Created:

-Dual income families=less potential caregivers at home
-Lack of financial resources
-Lack of affordable home care resources
-Lack of preparedness of families to deal with parents this old
-Lack of preparedness of aged to deal with life this long
-Since 1953, the preponderance of health car needs in the U.S. for all ages have shifted from acute to chronic conditions
  • Exercise combined with strength training can have a dramatic improvement on quality of life (hence self-sustainability/aging in place) and on lowering health care costs.

  • Balanced and consistent nutrition and hydration are essential to stable health. In an older body, one day of dehydration can result in a hospital admission. Research shows that elders decline in health with each hospital stay.

  • Complexity of needs increases with age, as ability to self-manage declines Limitations on activity because of chronic conditions increase with age. In 1996 more than one third (36.3%) of older persons reported that they were limited by chronic conditions. (Source: A Profile Of Older Americans. AARP. 1999). The IADLs are:

    Driving Shopping
    Dialing the Telephone Taking Medications
    Handling Finances/Keeping a Checkbook/Paying Bills Doing Housework
    Meal Preparation  

  • Programs have been successful accepting risk for combined Medicare/Medicaid benefit income streams to help seniors with 2-3 Activities of Daily Living (ADL) deficits age in place. This model includes care coordination, socialization, nutrition, medical care, education and exercise. On-Lok is one example.

  • Proper medication and medication dosing are essential to managing a chronic condition.

  • Although the preponderance of conditions in the elderly are acute. Medicare/Medicaid, by in large, reimburse acute care treatment.

  • Managed care is not managing care. Managed care is managing costs. As costs have increased, plans and providers are exiting the managed care market.

  • Disease management is a successful approach to managing chronic conditions.

  • Silo pharmacy, ambulatory and hospital capitation pools provide counter incentives to managed care.

  • As the population ages more rapidly, the problems are growing.

Hidden Influencers of Health Care Costs:
-Depression, anxiety
-Lack of transportation
-Gait and balance
-Constrained financial resources/fixed incomes
- Elder care giving for an elder
-Lack of affordable homebound support
-Need for Care Coordination
-Poor Nutrition
-Toll of care giving for a spouse
-Cost of special care, i.e. Alzheimer's
Cost of Housing In Direct Conflict With
-Cost of prescriptions: up 19% two years in a row with no end in site. Costs are up due to higher utilization. Brand prescription formularies disappearing (hence newer class drugs may require payment by Medicare member)
-Cost of insurance: 2002 will introduce hospital stay deductibles, higher co-pays and premiums for most plans.
-Cost of Food
-Medicare reimbursement has not kept pace with costs.
-Medicare reimbursement incentivizes acute care behaviors vs. chronic care.
-Pharmaceuticals not covered under Medicare
Medicare Managed Care:
PacifiCare's Secure Horizons, the largest plan for Medicare managed care, has a 5-year plan that may include exiting the Medicare managed care market. PacifiCare has announced withdrawal of the Secure Horizons product in 36 counties in 2002; other major plans are exiting the Medicare managed care business.
-75% of California medical groups failing
-Cost of care exceeds reimbursement
-Two-thirds of CA hospitals operating on a negative margin

-In California, by in large, it is the provider, not the plan that is at full-risk for medical care for Medicare eligibles covered under managed care. Yet, providers are not involved in Medicare reform. Dialogue takes place between CMMS and the plans and key decisions are often made without insight to health delivery issues of providers.

Type of Care Required:

Chronic disease management requires an integrated approach to health management, and aligned incentives across pools.

Components of Appropriate Chronic Care Management:
-Periodic integrated health/psychosocial assessment
-Multidisciplinary care: an integrated psychosocial/medical/mental health approach
-Disease state management
-Case management/care coordination
-Self-care instruction and monitoring
-Preventive nutrition and exercise
-ADL & IADL assistance
-Identification and resolution of psychosocial barriers

Potential Solutions

  • Increase the industry's current reimbursement rates based on chronic disease proficiency and outcomes. Reimburse current with cost of living increases.

  • Address its capital needs through creative programs and legislation.

  • Re-evaluate the seismic issues (California).

  • Create appropriate incentives for the academic institutions to address health care workforce needs.

  • Redesign Medicare and Medicaid to incentivize chronic disease management.

  • Develop a Long Term Care program parallel to Medicare/Medicaid.

  • Provide funding to at-risk providers for training in chronic disease management reengineering/training.

  • Provide chronic disease management systems to providers at no cost.

  • Incentivize medical schools to teach chronic disease management/graduate geriatricians.

  • Develop an Institute of Best Practices in Aging and involve leading organizations from various disciplines, i.e. legal, financial, housing, health care, insurance, home maker services, care givers.

  • Provide reimbursement for disease management and case management services to include psychosocial functional factors and care coordination.

  • Actively solicit demonstration projects in chronic care.

  • Involve at-risk providers when considering reimbursement changes.

  • Further diminish the impact of BBA.

  • Establish a viable prescription benefit for all Medicare eligibles.

The page was last modified on November 15, 2001