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Expanding the availability and quality of long-term services and supports will continue to be a focus for policymakers as individual preferences and state requirements shift from institutional settings to home- and community-based providers, according to a Kaiser Family Foundation issue brief.

According to the authors of a brief on the LTSS challenges, HCBS providers will face more serious challenges than skilled nursing facilities in providing care in the future due to growing demand and workforce shortages.

KFF reports that the population of adults aged 65 or more years will grow from 17% in 2020 to 23% in 2060, whereas the share of adults aged 75 or more years will grow from 7% to 12%, and the share of adults aged 85 or more years will grow from 2% to 5%.

Those populations also are living longer while dealing with increased chronic illnesses. Last week, NORC at the University of Chicago released a new analysis at the 2022 National Investment Center for Seniors Housing & Care Conference showing that US senior living residents average more than a dozen chronic conditions each, and many residents use high-cost healthcare services.

And a US Department of Health and Human Services report found that 57% of older adults will need help with at least two activities of daily living, 56% would use paid LTSS and 39% would use nursing home care. 

Growing demand

As the demand for LTSS grows, so do the costs.

In 2021, the median annual costs of care in the nation was $54,000 for assisted living communities — compared with $108,405 for a private nursing home room and $61,776 for a home health aide, according to the report.

The nation spent more than $400 billion on LTSS in 2020 — almost 10% of all national healthcare expenditures. Of that amount, $245 billion was spent on HCBS. Assisted living communities are considered home-based settings, with LTSS services including home health and personal care covered under Medicaid HCBS rules, KFF noted. 

Shifting preferences

Although federal Medicaid statutes require states to cover institution LTSS in nursing homes and intermediate care facilities for people with intellectual disabilities, the remainder of HCBS are optional. 

Even so, the KFF report showed LTSS spending shifting from institutional to non-institutional settings, reflecting beneficiary preferences and state requirements to provide services in the least restrictive setting available.

In 2020, approximately 734,500 people received mandatory home health services, accounting for 4.4% of Medicaid HCBS spending. Almost 2 million people used other optional state plan services, and almost 3 million used services through optional HCBS waiver programs, which are used by assisted living communities.  

The report showed that 1.9 million people across 47 states were enrolled in 255 Medicaid 1915(c) HCBS waiver programs in 2020. Most of those waivers provide services to older adults or individuals with disabilities and are commonly used by assisted living communities.

In most states, at least half of LTSS spending in 2019 was on HCBS. But KFF found “substantial state variation” in HCBS spending, ranging from 33% in Mississippi to 83% in Oregon. In four states — Arizona, Minnesota, New Mexico and Oregon — HCBS spending accounted for more than 75% of total Medicaid LTSS spending, whereas it accounted for less than 50% in 18 states.

Workforce shortages

All of this is occurring against a backdrop of continuing workforce shortages, which were exacerbated by the pandemic.

Most healthcare sectors saw employment rebound as early as spring 2020, but the LTSS sector continued to see employment levels fall well into 2021, according to the authors. An analysis on the Peterson-KFF Health System Tracker showed that the number of workers dropped by 9% in residential care facilities between February 2020 and June 2022. 

The road ahead

Looking forward, policymakers will continue to face challenges in providing LTSS as the aging population grows dramatically, the authors said.

Among the policies under consideration are permanently increasing the federal matching rate for spending on Medicaid HCBS, making HCBS a mandatory benefit, and expanding Medicare coverage for older adults who choose home over a skilled nursing facility following a hospital stay.

“It will be important to watch whether and how lessons from the pandemic are integrated into new policies to improve access to quality of LTSS in the US,” the authors noted.