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By Monica E. Oss

The term “long-term care” is most often used in context of providing services to aging adults needing assistance with activities of daily living, such as bathing, dressing, preparing meals, and administering medication. Long-term care (or long-term services and supports – LTSS) includes medical and non-medical services in home- and community-based settings (case management, homemaker, home health aide, personal care, adult day health services, habilitation, and respite and institutional settings (nursing facilities, mental institutions, and intermediate care facilities for the developmentally disabled; supported employment; physical health, behavioral health, and pharmacy). LTSS are largely covered by Medicaid (see Defining Assisted Living and Changing Financing Of Long-Term Services & Supports – A New Business Model In Its Wake). The market, however, is changing in some important ways.

First, we are now seeing the use of skilled nursing facility-level (SNF) care decreasing. Between 2009 and 2016, the per capita number of Medicare fee-for-service beneficiaries with a SNF stay dropped by 15%, from 1,808 SNF days per 1,000 beneficiaries, to 1,539 (see Medicare Skilled Nursing Days Down 15% Between 2009 & 2016). The researchers noted that this drop in SNF stays coincided with a 41% rise in outpatient observation stays—a fact they attributed Medicare payment models, such as the Hospital Readmission Reduction Program (HRRP), that penalize readmissions, causing facilities to use observation stays more frequently.

Second, we are seeing the needs of 65+ population changing, with a rise in chronic conditions among the senior population and a predicted increase in Alzheimer’s disease and other dementias. The need for services and supports increases with age. Approximately 21.7% of adults aged 85 and older need assistance with activities of daily living. This is twice as likely as those aged 75 to 84 (8.5%), and more than six times as likely as adults aged 65 to 74 during the same time span (see More Than 20% Of 85+ Adults Need ADL Assistance). And, recent reports put the number of Americans with some sort of dementia at roughly six million, with rapidly ballooning costs—worldwide costs of dementia increased by 35% in just five years, from $604 billion in 2010 to $818 billion in 2015 (see The Incidence Of Dementia On The Rise – Will The Preferred Treatment Be ‘Brain Training’? and Alzheimer’s Disease Prevalence To Double By 2040).

The changing service landscape isn’t limited to the 65+ population—the population under age 65 being served in the long-term care system on also the increase. The percentage of U.S. residents with a disability (defined as any physical, cognitive, or sensory deficit) increased from 11.9% in 2010 to 12.8% in 2016, and among that population, over half (51.0%) were people aged 18 to 64 (see The Percentage Of Those With A Disability In The U.S. Increased From 11.9% In 2010 To 12.8% In 2016). And nursing homes in the United States house more than 200,000 residents under age 65 — about 16% of the entire nursing home population (see Nursing Homes House 200,000+ Residents With Disabilities Under Age 65).

State Medicaid programs are shouldering most of the cost for these populations and are looking for ways to reduce costs through integrated care coordination and value-based reimbursement models. Currently, 68.8% of the U.S. Medicaid population is enrolled in at-risk health plans, and 56% of the SMI population is enrolled in health plans that also cover their physical health (see 69% Of The Medicaid Population Is Enrolled In Managed Care – What About The SMI Population?). In 2017, there were 22 states with a managed long-term services and supports (MLTSS) program and an estimated enrollment of two million. This is an 11% increase in enrollment from 2016, when 21 states had an MLTSS program with an estimated enrollment of 1.8 million (see State Medicaid Programs With MLTSS: The 2017 OPEN MINDS Update).

Along with this increase in managed care, we’re seeing more states experiment with value-based reimbursement models for long-term care services—with some states incorporating value-based reimbursement requirements in their MLTSS contracts (see Delaware Rebidding Diamond State Health Plan Contracts, Planning To Move 80% Of Reimbursement To Value-Based Models and Virginia Medicaid Launches Mandatory MLTSS Enrollment; Specialty Behavioral Health Services Included) and others launching separate programs focused on improving quality and lowering costs (see Six State Medicaid Programs Use Value-Based Reimbursement For Nursing Home Services).

This market evolution presents new opportunities for program innovation in provider organizations that are willing to accept value-based payment. For those provider organizations, that requires not only new services and programs, but also new partnerships with payers, and the ability to manage value-based reimbursement. With the changing market, I think we’ll see a changing landscape in the “long-term care” market—not only new programmatic approaches, but an array of new players.

For more on diversification through program development, and how to build and assess the strength of your new service line ideas, check out these resources from the OPEN MINDS Industry Library:

  1. Expanding Your Organization’s Core Programming: Using Program Feasibility Analysis to Make Service Line Decisions
  2. From Innovation To Action: Why Structured & Rapid Service Line Development Is A Critical New Competency
  3. Jumping The ‘Strategy-To-Execution Gap’?
  4. Considering Future Scenarios: The OPEN MINDS Guide To Scenario-Based Planning
  5. Transforming Ideas To Innovative Gold
  6. Planning For The Digital Reinvention Of Your Market
  7. From Clinician To Manager-Rethinking Best Practice
  8. Jumping The ‘Strategy-To-Execution Gap’?
  9. Sustainability Management = Portfolio Management
  10. Diversifying Your Revenue Streams: How To Successfully Launch A New Service Line

For more on how to build a new service line, join us on June 5 at The 2018 OPEN MINDS Strategy & Innovation Institute for the session, “How To Develop A New Service Line: Building A Diversification Strategy & Conducting A Feasibility Analysis,” featuring OPEN MINDS Senior Associate Joseph P. Naughton-Travers; Eleanor Castillo Sumi, Ph.D., BCBA-D, Vice President of Research and Program Development, Uplift Family Services; and Teri Herrmann, MA, Chief Executive Officer, SPARC Services and Programs.

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