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The Future of Disability in America 9 Coverage of Assistive Technologies and Personal Assistive Services After retiring a few years ago, Mr. B led a vigorous independent life until he experienced a major stroke. Paralyzed on his right side, he now needs a wheelchair to move around his house, where he has lived alone since his wife died. The contractor who processes Medicare claims for this kind of medical equipment approved a manual wheelchair, but with his paralyzed right arm, Mr. B cannot self-propel it. He has asked for approval for a power wheelchair, but the contractor—citing Medicare rules—insists on additional documentation that the more expensive equipment is required. All this is time-consuming, complex, and frustrating, even though Mr. B’s rehabilitation team is helping. In the meantime, Mr. B is having difficulty getting around at home, and he and his daughter are worrying about what he will do if his request is not approved. This story—recounted by an airline employee to a committee member who uses a scooter—illustrates the hurdles that individuals often face in trying to obtain coverage from a public or a private health plan for wheelchairs and other mobility assistive devices. Persistence in appealing denials and assistance from professionals in navigating complex policies and procedures are often necessary when someone wishes to have coverage for particular assistive devices and services approved—and even then, success is not assured. This chapter focuses on the second issue in health care financing included in the committee’s charge: health insurance coverage of assistive technologies. Because personal assistance services sometimes serve similar purposes for people with disabilities, this chapter also examines coverage of these services. The discussion begins with a brief, general overview of the types of coverage policies and limitations that may affect access to services important to people with disabilities. The subsequent two sections describe insurance coverage of assistive technologies and services. A short section on access to services or equipment through programs not based on insurance follows. The chapter then considers the challenges of expanding coverage in
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The Future of Disability in America an environment of high and increasing health care costs. The final section presents recommendations. Overall, the committee found that many of the health plan coverage policies identified in the 1991 Institute of Medicine (IOM) report Disability in America continue to be targets of criticism more than 15 years later. The concept and interpretation of medical necessity remain controversial, as do statutory and regulatory limits on coverage for assistive technologies and personal care services. In many areas, health care financing policies have not evolved to support the independence and community participation of people with disabilities. One major exception is the expanded use by states of waivers of certain Medicaid regulations to cover a wider range of “home-and community-based” services as alternatives to institutional care. For the most part, as also described in Chapters 4, 6, and 8, this nation’s system of health care financing and delivery is not well designed to meet the needs of people with chronic health conditions or disabilities. The question of whether a technology or service is covered by a health plan arises only for people who are insured. As described in the preceding chapter, although Medicare covers virtually all older adults, almost 14 percent of younger adults with a physical limitation and 8 percent of those with a limitation in activities of daily living (ADLs) are uninsured, as are almost 5 percent of children with special health care needs. For people who are uninsured or whose health plans do not pay for assistive technologies or personal assistance services, the options include going without; paying for the item personally (often called “out-of-pocket payment” or “self-payment”); or securing assistance from vocational rehabilitation, assistive technology, or other special public or private programs, some of which are described below. Neither this chapter nor the previous one offers a comprehensive examination of health care financing issues relevant to people with disabilities, a task that would demand a report in itself. For example, this chapter does not examine coverage of occupational and physical therapy, including the concerns that have been raised that Medicare payment caps on these services could harm patients with mobility and other impairments.1 It 1 Responding to rising costs and evidence of improper billing, the Balanced Budget Act of 1997 provided for two dollar-amount caps per beneficiary for outpatient therapy services that were not provided in a hospital outpatient setting: one cap for occupational therapy and another cap for physical therapy services and speech language pathology services combined (GAO, 2005). Although the Centers for Medicare and Medicaid Services is supposed to develop an outpatient therapy payment system that recognizes patient needs and justifies individual waivers of the caps, the agency has, according to the Government Accountability Office (GAO, 2005), lacked the data necessary to do so. The U.S. Congress has provided temporary moratoria on the caps for most of the period since they were implemented in 1999. The Deficit Reduction Act of 2005 (which was enacted in February 2006) provided that exceptions to the
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The Future of Disability in America also does not consider controversies over payment rules for specialized inpatient rehabilitation facilities that critics argue will deny many people with disabilities the appropriate intensity of care because the rules rely on an outdated or questionable set of diagnoses to define the patient mix that facilities must have to qualify for payment (see, e.g., Hackbarth  and Thomas ).2 The committee recognizes that inadequate provider payments levels and methods can affect the availability and quality of services and health care. Along with inadequate professional education, they can contribute to the problems that people with disabilities often report in finding health care professionals who understand their medical condition and its nonmedical dimensions, who appreciate their need for routine health promotion and primary care services, and who have accessible facilities and equipment. The committee also recognizes that rising health care costs, particularly costs for Medicare and Medicaid, make some of the changes proposed in this chapter difficult. Decisions to pay for such changes by reducing spending elsewhere or by increasing taxes will present policy makers with hard choices—particularly in the context of pressure to control overall spending growth in federal health care programs. Successful steps to make health care services more efficient and to control fraudulent and abusive practices by providers and suppliers will help reduce spending but, in the committee’s view, are unlikely to suffice. TYPES OF LIMITATIONS ON COVERAGE For an insured individual, coverage of any service or product depends on the answers to several questions. First, is the product or service explic- cap could be granted for medically necessary services under certain circumstances for calendar year 2006 (CMS, 2006i; Vettleson, 2006). For example, certain conditions or diagnoses, such as hip replacement or aphasia, qualify for an automatic exception to the therapy caps when they are supported by a documented need for services exceeding the cap. The act provided for a manual exception process for beneficiaries who have conditions or diagnoses that are not covered by the automatic exception and who also have a documented need for services exceeding the cap amount. 2 Medicare rules require that 75 percent of the admissions of inpatient rehabilitation facilities be concentrated in 1 of 10 diagnoses (the “75 percent rule”). Full implementation of the rules has been delayed, but the rules are set to go into effect fully in 2007. Providers have argued that the 10 diagnoses (which were defined in 1983 as a way of excluding these facilities from application of the rules of the hospital prospective payment system) are no longer sufficient to describe the core patient population needing their services. Advocates for people with disabilities have argued that the rule will force many people into settings where they receive less intensive health care, such as nursing homes (Thomas, 2005). In 2003, the Medicare Payment Advisory Commission (Hackbarth, 2003) reported that more than 85 percent of facilities were estimated to be out of compliance with the requirement.
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The Future of Disability in America itly covered (or excluded), or if it is not, is it covered (or excluded) under a broad category of services or products? Second, what general additional criteria or conditions apply to coverage? Third, does a given individual’s specific situation meet the requirements for coverage? The answers to these questions are not always easy for a patient, family member, or health care provider to determine. The answers may vary depending on the source of insurance and the specific type of assistive service or technology. Medical Necessity and Coverage By statute, Medicare is prohibited (unless it is explicitly authorized) from paying for services and items that are not “reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member” (42 CFR 1395y(a)(1)(A)). The U.S. Congress has made certain statutory exceptions to the diagnosis and treatment restrictions, for example, by authorizing coverage of selected preventive services such as screening mammography. Otherwise, this “medical necessity” provision provides the basis both for decisions about coverage of whole categories of technologies or services (e.g., personal care services) and for decisions about coverage in individual cases. For example, a service or product may be covered for one individual and denied for another because the service or item was judged to be not reasonable and necessary given the latter individual’s diagnosis and condition (e.g., a power wheelchair for someone who can operate a manual wheelchair). (See also the discussion in Appendix D.) Medical necessity criteria have proved particularly troublesome for people with disabilities seeking coverage of assistive technologies and personal care services. They may be invoked to deny payment for nonmedical services, such as assistance with bathing, or products, such as bathroom grab bars, that help people manage daily life or protect their health (e.g., by avoiding falls). Because the rules and procedures are complex, otherwise approvable claims may also be denied because beneficiaries or their providers did not correctly document the case for coverage or because the organizations administering claims for services applied policies inconsistently or incorrectly. Denials of claims for certain assistive technologies and services based on the failure to meet medical necessity criteria are disheartening and confusing and reduce people’s ability to function at home and in the community (Iezzoni and O’Day, 2006). Federal law does not define medical necessity for the Medicaid program, and state definitions vary and may be broader than the Medicare
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The Future of Disability in America definition (Rosenbaum et al., 2002; Perkins et al., 2004).3 Connecticut’s language is particularly broad, covering health care that is provided “to correct or diminish the adverse effects of a medical condition or mental illness; to assist an individual in attaining or maintaining an optimal level of health; [or] to diagnose a condition or prevent a medical condition from occurring” (Connecticut Department of Social Services, 2003, p. 2). A number of states refer to services for conditions that may cause or worsen a disability or that may prevent deterioration of a health condition (Rosenbaum et al., 2005). Definitions of medically necessary care also vary for private health plans. Many use definitions and interpretations similar to those governing Medicare. Medicare administrators have devoted considerable effort to developing guidance for providers and consumers about when a service will or will not be covered (CMS, 2006e). The decision memo on assistive mobility technologies discussed later in this chapter is in an example. Nonetheless, the great range of individual care needs and circumstances makes it difficult to eliminate subjective decision making and variability. Other Coverage Limitations Even if a service or a product is not excluded for lack of medical necessity, various provisions of public or private health plans may limit access. Examples include restrictions that apply temporarily or indefinitely to someone with a preexisting condition (but the federal rules described in Chapter 8 limit the length of such restrictions in group insurance policies); limits on the number of services (e.g., 20 home visits) that will be reimbursed; caps on total reimbursement (e.g., $1,000 for home medical equipment); restrictions on who can provide a service (e.g., excluding coverage for personal care provided by a family member); and widespread requirements that individuals pay part of the cost of a service or product. 3 One exception to the discretion of states to define medical necessity is the legislation that created the Early Periodic Screening, Diagnostic, and Treatment benefit for children. It specifies that children are entitled to “necessary … diagnostic services, treatment and other measures … to correct or ameliorate defects and physical and mental illnesses and conditions discovered by the screening services” (Section 1905(r)(5) of the Social Security Act, cited by Peters ).
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The Future of Disability in America Most such restrictions are intended to control programs costs. The intent may be to discourage spending on services of minimal benefit or to limit fraudulent or abusive practices by health care providers and vendors.4 Some coverage restrictions have quality-of-care objectives. For example, coverage of complex, high-risk procedures may be limited to specifically approved facilities (e.g., a Medicare-approved center for heart or lung transplantation). Likewise, as described in Chapter 7, coverage and marketing of complex medical equipment may require U.S. Food and Drug Administration approval on the basis of evidence of safety and perhaps effectiveness. The rejection of a service or product for coverage on the basis of evidence of harm or ineffectiveness also serves quality-of-care objectives.5 Yet another example of a coverage-related policy that serves quality objectives is the recently issued quality standards for suppliers of durable medical equipment, prosthetics, orthotics, and medical supplies (CMS, 2006c). COVERAGE OF ASSISTIVE TECHNOLOGIES Chapter 7 defined assistive technologies, consistent with the Assistive Technology Act of 1998, as any item, piece of equipment, or product system, whether it is acquired commercially, modified, or customized, that is used to increase, maintain, or improve the functional capabilities of individuals with disabilities. It also noted that the broad legislative language intentionally permitted programs created by the legislation to cover general use products if, for a given individual, such a product worked as well as or better than for a specially designed product. That breadth does not extend to federal or private health insurance plans. As described by Iezzoni and O’Day (2006), assistive technology “re- 4 A recent Government Accountability Office report cited an estimate by the Centers for Medicare and Medicaid services that Medicare made about $700 million in improper payments for durable medical equipment, prostheses, orthotics, and supplies between April 1, 2005, and March 31, 2006 (GAO, 2007). The report defined improper payments as resulting from clerical errors, the misinterpretation of program rules, fraud (“an intentional act or representation to deceive with knowledge that the action or representation could result in gain”), and abuse (which “typically involves actions that are inconsistent with acceptable business and medical practices and result in unnecessary cost”) (p. 1). 5 Consistent with the Medicare statute, those administering Medicare and other health insurance programs have increasingly sought evidence of effectiveness before covering new procedures (e.g., lung volume reduction surgery) or products (e.g., implantable automatic defibrillators) (Strongin, 2001; IOM, 2000a; CMS, 2005c, 2006e). Only limited evidence supporting the effectiveness of existing covered services may be available, but a lack of evidence is typically a more prominent issue for new technologies. In some cases, coverage may be restricted to those participating in a clinical trial that is intended to provide evidence that Medicare can use to make a coverage decision. Coverage approval criteria for Medicare do not include evidence of cost-effectiveness, although the implementation of such a criterion has been proposed (CMS/HCFA, 2000; Garber, 2004; Neumann et al., 2005).
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The Future of Disability in America sides at that fractious border between covered and uncovered benefits” (p. 150). Wolff and colleagues (2005) observed that, although most health plans cover some assistive technology, “its predominant use in daily functioning rather than for therapeutic purposes has contributed to ambiguity in health insurance coverage. Coverage policies are typically stringent, and coverage disputes in this area are among the most common and problematic” (Wolff et al., 2005, p. 1140). A 2001 University of Michigan survey of people with disabilities found that approximately 40 percent of people who obtained assistive technologies paid for them out of pocket (Carlson and Berland, 2002).6 Private health insurance and Medicare were the primary third-party sources of payment, and each was mentioned as a source of payment by between 15 and 20 percent of respondents. Free provision, Medicaid, and the U.S. Department of Veterans Affairs were each mentioned as a source of payment by between 5 and 10 percent of respondents. As reported in Chapter 7, about 40 percent of respondents reported that the use of assistive technologies had reduced their need for help from another person. Nevertheless, the users of assistive technologies cite a lack of funding and a lack of information about appropriate technologies as barriers to access (NCD, 2000b). Freiman and colleagues (2006) recently reviewed public funding for an array of assistive technologies. Table 9-1 summarizes their conclusions about the extent of public insurance coverage of several kinds of technologies. It shows a very mixed pattern of coverage with the U.S. Department of Veterans Affairs most consistently offering coverage (see also PAI ). Medicare Medicare covers certain medically necessary assistive technologies under its statutory benefits for durable medical equipment, prosthetic devices, and orthotic devices (42 U.S.C. 1395(k), (m), and (x)). It specifically excludes coverage of certain assistive items, notably, hearing aids and eyeglasses (except that one pair of glasses is covered following cataract surgery) (42 U.S.C. 1395y). The statutory definition of durable medical equipment includes some items, such as oxygen tents, that are not usually considered assistive technologies. The federal officials and private contractors who administer Medi- 6 The Medical Expenditure Panel Survey, which is used for many purposes, divides spending on assistive technologies in ways that make it difficult to determine the source of payment in any comprehensive way (Freiman et al., 2006). For example, Medicaid spending through home- and community-based service waivers (including payments for assistive technologies) is categorized under “other personal health care,” and other spending may be included in either the durable medical equipment category or the other medical equipment category, both of which include items other than assistive technologies.
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The Future of Disability in America TABLE 9-1 Summary of Public Health Plan Coverage of Assistive Technology Assistive Technology Category Coverage Provided by: Medicarea Medicaid State Plansa,b Medicaid Waiversb VA Personal ATs for ADLs Some Yes Some Yes Personal mobility ATs Yes Yes Some Yes Orthotics and prostheses Yes Yes Some Yes Hearing, vision, and speech ATs and augmentative communication Little Some Some Yes Cognitive ATs No No Some No Transportation ATs No No No Yes Home modifications No No Some Yes NOTE: Medicaid state plans = benefits included in a state’s approved plan, including optional benefits that states choose to provide, must be provided statewide and cannot be capped; a provision of the Deficit Reduction Act of 2005, adopted since the data for this table were collected, makes exceptions for certain home-and community-based services that previously required waivers. Medicaid waivers = benefits approved as part of an approved waiver may be capped, targeted to specific groups (e.g., individuals with brain injuries), and limited to certain geographic areas of a state; some = although some items are covered, a significant portion of the assistive technologies in this category are not covered; ADL = Activities of daily living; AT = assistive technology; VA = U.S. Department of Veterans Affairs. aCoverage needs to meet medical necessity criteria. bDue to state-by-state coverage variations, the information in this column roughly represents the modal coverage by the states. SOURCE: Freiman et al. (2006 [used with permission]). care have developed interpretations of statutes and regulations to guide decisions about coverage in individual cases. Examples of assistive items excluded under such guidance as not meeting the criteria for coverage are bath seats, grab bars, humidifiers, home elevators, and wheelchair ramps (Medicare Carriers Manual, Section 2100.1). They are considered convenience items, not medical items, even though some of this equipment may help prevent falls and otherwise protect an individual’s health. One critical statutory requirement is that durable medical equipment must involve use in the home. Based on the statute, regulations define durable medical equipment as “equipment furnished by a supplier or a home health agency that: (1) can withstand repeated use; (2) is primarily and customarily used to serve a medical purpose; (3) generally is not useful to an individual in the absence of an illness or injury; and (4) is appropriate for use in the home” (42 CFR 414.202) (emphasis added).7 As discussed below, 7 In 2001, approximately 6.5 percent of Medicare beneficiaries living in the community used the durable medical equipment benefit to obtain a mobility-related assistive device: 2.6 percent
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The Future of Disability in America the home use provision has been restrictively interpreted to limit coverage of mobility assistive equipment that helps beneficiaries get around outside the home. Coverage may require a prescription, and repairs to equipment are usually covered only if the equipment is rented (DATI, 2005). A recent example of administrative guidance on coverage determinations involved a 2005 decision memorandum that was intended to clarify the interpretation of the statute and regulations related to mobility assistive devices, including manual and power wheelchairs (CMS, 2005b). It replaced a more restrictive proposal that had been prompted by concerns about rapidly increasing spending for power wheelchairs and specific instances of fraud and abuse (see, e.g., GAO ).8 Although the memorandum liberalized the policy in some respects, it left critical restrictions in place, as described below. The document, which was developed with the involvement of other governmental agencies and outside experts, cited evidence identified through a literature review that the equipment was reasonable and necessary for beneficiaries with mobility limitations. The memorandum stressed that determinations of coverage should include assessment of “the technology that most appropriately addresses the beneficiary’s needs as determined by the coverage criteria” (CMS, 2005b, p. 9). Clearly, such an assessment involves subjective judgments that can lead to variations in individual coverage decisions. Unfortunately, based on the statutory reference to durable medical equipment used in the home, the memorandum focused on individual needs related to ADLs, which are primarily performed in the home, rather than instrumental activities of daily living, which include some activities (e.g., shopping and traveling) that occur outside the home. Thus a power wheelchair would be covered for an individual who needs the device both for personal care activities in the home and for travel outside the home but not for an individual who requires the device only outside the home. A person might also be denied coverage if the device could not actually be used in the home because of the home’s small size or floor plan. Furthermore, on the basis of a particularly restrictive interpretation of the home use criterion, coverage may be limited to a type of wheelchair or other equipment that will not allow people to travel easily or safely outside the home. Thus the statutory and regulatory criteria for coverage of assistive technologies are quite different from those for coverage of surgical and medical interventions. For example, hip replacement surgery would not be challenged for a manual wheelchair, 2.4 percent for a walker, 1.0 percent for a cane, and 0.5 percent for a power wheelchair (Wolff et al., 2005). Beneficiaries obtaining wheelchairs were younger and had more limitations in ADLs than beneficiaries obtaining canes or walkers but were less likely to have been hospitalized. 8 The new policy replaced the past policy that limited coverage to individuals who were “bed or chair confined.”
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The Future of Disability in America for individuals simply because pain limited their activities outside but not inside their home.9 (The necessity of surgery might still be challenged for other reasons.) The “use-in-the-home” language of the statute has become a central issue in efforts to revise Medicare policies on durable medical equipment. Critics of current interpretations argued that the language was intended to distinguish between equipment suitable for home use and equipment that required an institutional setting. As one advocacy group has argued: “[t]he intent of the ‘in the patient’s home’ clause was not to make elderly and disabled persons prisoners in their own homes” (UCP, 2006, unpaged). Clearly, the “use-in-the-home” restriction, especially as it is now interpreted, is inconsistent with the values of independence and community participation that have become widely recognized elsewhere in federal health and social policies since Medicare was enacted. Nonetheless, efforts to change the statute have, to date, not succeeded. Also, although the Centers for Medicare and Medicaid Services (CMS) was to consider the appropriateness of the “in-home” criterion as part of President George W. Bush’s New Freedom Initiative and in light of efforts to promote work and community living, CMS action seems to be limited to congressionally directed demonstration projects (DHHS, 2002).10 The evidence base for many assistive technologies and services important to people with disabilities is limited, which points to the need for more research in this area (Clancy and Andresen, 2002). In a paper that outlines the many financial obstacles to accessible assistive technologies, the American Academy of Physical Medicine and Rehabilitation observed that “to be fair, Medicare is often asked to approve coverage and reimbursement of assistive technology with little clinical data [or] outcomes studies” (AAPM&R/FPM&R, 2003, p. 5). As noted above, CMS judged that the evidence base supported the coverage of much mobility assistive equipment for people with limitations in ADLs. Criticism is often directed at government officials and Medicare contractors for their restrictive coverage decisions, but certain coverage restrictions appear to be so firmly based in the Medicare statute that statutory change is needed to permit easier access to assistive technologies that support independence and productivity. The home use criterion for durable medical equipment is one example, at least as it relates to durable medical 9 Also, as pointed out by the American Academy of Physical Medicine and Rehabilitation (AAPM&R/FPM&R, 2003), the home use criterion is not found in the statutory discussion of prosthetics. 10 CMS was also to consider allowing trial rental periods for expensive equipment that is usually purchased and allowing equipment to be furnished to people in skilled nursing facilities for up to 1 month prior to discharge to provide time for equipment adjustments, training, and practice in using the equipment (DHHS, 2002).
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The Future of Disability in America equipment that cannot actually be used inside the home but that can help people get around in the community. The statutory language related to medically necessary care is another example. Given the statute, more expansive administrative interpretations can only go so far. Medicaid Coverage Medicare is a national program, despite some variability in interpretation of Medicare coverage policies or guidelines by the private contractors who administer the program.11 Medicaid, in contrast, operates under federal standards that give states considerable authority to determine whether individuals should have access to assistive technologies. Under federal law, home health services are a required element of state Medicaid programs, and certain medical equipment and supplies are a required part of home health care coverage (42 CFR 440.70). Even when a Medicaid program covers assistive technologies, it may still impose various restrictions, such as caps on the amount that will be paid for equipment. Some items, such as hearing aids and prosthetic devices, are optional for most adults but are required for children under the Medicaid’s Early Periodic Screening, Detection, and Treatment (EPSDT) benefit. (The State Children’s Health Insurance Program [SCHIP] option, which covers many children with special health care needs, does not include EPSDT benefits as such.) As summarized in Box 9-1, the EPSDT benefit covers an extensive array of services for children, including health care that “must be made available for treatment or other measures to correct or ameliorate defects and physical and mental illnesses or conditions discovered by the screening services” (CMS, 2005e, unpaged; see also the discussion of EPSDT in Chapters 4 and 8). Many of these services are particularly relevant for children with disabilities (see, e.g., Smith et al. ). As described later in this chapter, the passage of the Deficit Reduction Act of 2005 has raised some concerns about children’s continued access to EPSDT services. As discussed further in the section on personal assistance services, the U.S. Congress has authorized waivers of certain Medicaid requirements in a variety of situations. Nearly all states have received waivers for home- and community-based service programs that are intended to facilitate care in the community for people who would otherwise be at high risk of needing institutional care. Most waiver programs for adults age 65 and over include some coverage of home modifications (e.g., installation of grab bars and widening of doors to accommodate wheelchairs) and some products (e.g., 11 Medicare policies do, however, differ in a number of respects for beneficiaries enrolled in the traditional fee-for-service program and those enrolled in Medicare-approved private health plans, in that the latter may choose to cover some services not usually covered.
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The Future of Disability in America RISING COSTS AND THE CHALLENGE OF EXPANDING COVERAGE OF ASSISTIVE SERVICES AND TECHNOLOGIES As discussed in Chapter 8, the future will bring increasing stresses on this country’s system of financing health care services for individuals with and without disabilities. The specter of rising costs is a major constraint on proposals to expand coverage of assistive services and technologies and, indeed, poses the threat of cutbacks in public and private health care programs that may particularly affect people with disabilities. For all the difficulties and problems that have thus far confronted this country’s system of financing health care services, including services for individuals with disabilities, the situation will surely become more challenging in the future. Although some challenges stem from those with philosophical opposition to government- or employer-based health insurance programs, the most widely understood threat relates to health care costs that continue to rise at rates higher than general inflation. Other problems stem from the link between employment and health insurance and from competitive market dynamics that discourage insurers from offering coverage to people with higher-than-average health care costs. Rising Costs For decades, health care costs per capita have grown faster than the gross domestic product (GDP), and these costs have thus consumed an ever larger share of GDP—with an increase from 7.2 percent of GDP in 1979 to 16 percent in 2004 (Smith et al., 2006). By 2015 the share of the GDP accounted for by health care spending is projected to reach 20 percent (Borger et al., 2006). In addition, Medicare and Medicaid account for an increasing share of federal spending, and this shift will accelerate as the baby boom generation becomes eligible for Medicare (CBO, 2005a). Policy makers will eventually have to confront growing deficits that are, among other consequences, projected to exhaust the Medicare Part A Trust Fund by 2018 (CMS, 2006a). Among the states, Medicaid is consuming an increasing share of state budgets, 22 percent in fiscal year 2004, which is an amount that slightly exceeds state spending for elementary and secondary education (NASBO, 2006). Most of the projected growth in Medicaid expenditures is linked to spending for older people and people with disabilities (Ku, 2003). Health care expenditures will continue to rise for several reasons. As described in Chapter 1, the aging of the population will lead to a substantial increase in the number of people who are in the age group that is at the highest risk of disability. Even if rates of disability continue to decline modestly in the future (and this is hardly assured, as discussed in Chapter 3),
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The Future of Disability in America total spending for Medicare beneficiaries is likely to continue to increase (Chernew et al, 2005b; see also Cutler and Meara  and CMS [2006g]). The pace of expensive innovation in medical care is more likely to continue or increase than abate. Although the aging of the population, price inflation, and other factors contribute to increased health care expenditures, advances in medicine are generally viewed as the strongest force behind the growth in health care spending—one that has proved difficult to constrain in the long term through cost control strategies (see, e.g., Newhouse , Cutler , Chernew et al. , and Bodenheimer ). Responses to Rising Costs and Implications for People with Disabilities Since the enactment of Medicare, rising costs have limited policy makers’ willingness to expand Medicare coverage to new groups (e.g., those ages 55 to 64) or a broader range of services (e.g., personal assistance services). The recent extension of Medicare coverage to include prescription drugs is one of the few expansions since the program’s start. (Other expansions include benefits for hospice care and benefits for specified preventive services, such as certain kinds of cancer screening.) Currently, actions or proposals to increase or establish cost sharing for Medicaid beneficiaries are generating controversy, as are a range of other cutbacks in Medicaid programs that may have a disproportionate impact on people with disabilities. Given the number of states, the number of options, the complexity of the policies and proposals (at both the federal and the state levels), and the early stage of implementation, it is very difficult to gauge or even catalog what is happening across the states. One suggestion at the end of this chapter is for more systematic tracking of changes in federal and state Medicaid policies and programs that may affect adults and children with disabilities. Examples of a few worrisome developments in the Medicaid program include provisions in the Deficit Reduction Act of 2005 that removed the general prohibition against the imposition of premiums and cost sharing on Medicaid beneficiaries (Kaiser Commission, 2006a). For families with incomes over 150 percent of the federal poverty level, the total can reach 5 percent of the family’s income in a month or a fiscal quarter. (For a family of four, the poverty level in 2006 was $20,000 [DHHS, 2006b].) Although children (under age 18) who are in mandatory Medicaid categories are exempt, adult beneficiaries with disabilities may be affected. The Deficit Reduction Act also allows the mandatory or voluntary enrollment of beneficiaries in “benchmark” health plans that are not required to offer the benefits traditionally required for Medicaid beneficiaries. In violation of statutory requirements, it appears that some states have been enrolling beneficiaries who are exempt from mandatory Medicaid enroll-
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The Future of Disability in America ment in benchmark plans without offering them a choice or a clear explanation of the differences between the regular Medicaid benefits and those offered by the benchmark plan (Solomon, 2006). A benchmark plan can be “modeled on (or equivalent to) benefit options offered to state and federal employees or the benefits provided by the state’s largest HMO [health maintenance organization]” or simply be approved as “appropriate” by the secretary of the U.S. Department of Health and Human Services (Solomon, 2006, p. 2). The state employee plan could, in principle, be a bare bones option created by the state to provide a minimal benefit benchmark plan for Medicaid beneficiaries (Mann and Guyer, 2005). Given that a significant proportion of Medicaid beneficiaries with disabilities may not be in the categories theoretically exempt from enrollment in benchmark plans (Rosenbaum, 2006) and given concerns about the adequacy of enforcement of protections by CMS, beneficiaries with disabilities may be more vulnerable to benefit reductions than an initial review of the legislation would suggest. Another worrisome action is the implementation by the state of Tennessee of a new, highly restrictive definition of medical necessity that appears to allow managed care plans great leeway in disapproving services on the basis of their costs (see, e.g., Mann  and Cha ). To cite one more example, CMS has approved a West Virginia plan that could reduce or eliminate Medicaid benefits for beneficiaries who fail to keep medical appointments, do not follow treatment regimens, and otherwise fail to take “personal responsibility” for their health (Bishop and Brodkey, 2006; Eckholm, 2006). How transportation difficulties, mental health problems, disagreements between the patient and the physician, and other common complications will be considered is not clear. It also not clear how the program might affect beneficiaries with disabilities, including those who are supposed to be exempt from the requirements. Beyond these public-sector responses, health care cost inflation has also contributed to a decline in the percentage of employers offering health insurance, although employer decisions are also sensitive to the health of the overall U.S. or state economy, labor markets, and other conditions (Kaiser Commission and Health Research and Educational Trust, 2005). The decline has been most significant for smaller employers, which, in any case, have been less likely to offer health insurance than large companies (Gencarelli, 2005; Kaiser Commission and Health Research and Educational Trust, 2005). (In 2005, 98 percent of firms with 200 or more workers offered employee health insurance, whereas 59 percent of smaller firms did so.) A recent analysis suggested that “more than half of the decline in [health insurance] coverage rates experienced over the 1990s is attributable to the increase in [private] health insurance premiums” (Chernew et al., 2005a, p. 1021). As discussed above, employees with chronic health
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The Future of Disability in America conditions or disabilities who must seek individually purchased insurance are very likely to find that coverage is either unaffordable or unavailable. As health insurance coverage costs have grown, employers have also shifted more of the costs to employees.20 Between 2001 and 2005, average premium payments by employees increased from $30 to $51 per month for individual coverage and from $149 to $226 per month for family coverage (Kaiser Commission and Health Research and Educational Trust, 2005). For most health plan options, average annual deductibles more than doubled during this 5-year period, reaching average levels of nearly $325 for preferred provider plans and more than $600 for conventional health plans. The percentage of employers who offered what are termed high-deductible health plans (a deductible of $1,000 or more for an individual plan) grew from 5 percent in 2003 to 20 percent in 2005 The average deductible in these plans was $1,870 for single coverage and nearly $3,700 for family coverage. High-deductible plans—or even an end to employer-based health insurance—have been promoted by some as a way of increasing personal responsibility for one’s health and health care use. For people with moderate to significant health care needs and low or modest incomes, the burden of increased cost sharing can be substantial. For example, one analysis estimated that with a $500 deductible, almost one-quarter of hospitalized patients would have out-of-pocket costs that exceeded 10 percent of their income; a $2,500 deductible would lead to that result for approximately two-thirds of patients (Trude, 2003, as analyzed by Davis ). Beyond simply transferring some costs from the insurer to the insured, increased cost sharing is expected to reduce the amount of health care that people use. Unfortunately, research suggests that cost sharing decreases the use of beneficial as well as nonbeneficial or unnecessary services (see, e.g., Newhouse  and Tamblyn et al. ). For people with chronic conditions who need medications, physician management, and other services, cost sharing may reduce patient adherence to medication regimens and compromise other management of these conditions (see, e.g., Dor and Encinosa  and Federman et al. ). Such a reduction in adherence could lead to worse outcomes for individuals with disabilities and could increase the incidence or severity of disabilities in individuals with chronic diseases. Various strategies have been proposed and, to a limited degree, implemented or tested as alternatives to strategies that simply increase the financial burdens on people with serious chronic conditions or disabilities. 20 Blumenthal (2006, p. 196) has observed that “the ultimate form of cost shifting to employees is to drop health insurance altogether.” As described above, the percentage of employers (especially small employers) offering health insurance coverage has dropped in recent years.
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The Future of Disability in America The promotion of Medicare, Medicaid, and private managed care plans, particularly in the 1980s and 1990s, is an example. These plans often have broader coverage (e.g., including prescription drugs) than other health plans but usually place restrictions on the patient’s choice of health care provider. Analysts and advocates have expressed concerns that health plans restrict access to services important to people with disabilities to control costs and discourage enrollment by higher-risk individuals (see, e.g., DeJong and Sutton  and Beatty et al. ). Some cite a backlash against managed care controls on access to providers and services as one reason for the renewed interest in cost sharing as a cost containment strategy (see, e.g., Robinson ). More recently, the use of disease management programs have been promoted as a way to improve outcomes and reduce costs for people with specific chronic health conditions that collectively account for a significant share of health care costs.21 The programs, which are quite variable, typically emphasize education and other means to increase patient adherence to diet, medication, exercise, or other regimens supported by clinical evidence. To date, evidence of the effectiveness of such disease management programs in improving outcomes or reducing costs is limited and uneven, and observers have expressed concern that the emphasis on limiting costs may undercut the programs’ potential to improve health outcomes (Short et al., 2003; Brown and Chen, 2004; CBO, 2004; Gold et al., 2005). The federal government has a number of disease management demonstration projects under way, and these may provide findings to help guide the design of successful programs (CMS, 2005f).22 Even if the adoption of such programs improves health status and reduces the progression of a chronic condition to a disability, the effects on health status and costs are not likely to offset the demographic trends cited elsewhere in this report. Another proposed approach, under the rubric of “value-based insurance design,” has sought to relate the level of patient cost sharing to the 21 “Disease management is a system of coordinated health care interventions and communications for populations with conditions in which patient self-care efforts are significant. Disease management supports the physician or practitioner/patient relationship and plan of care, emphasizes prevention of exacerbations and complications utilizing evidence-based practice guidelines and patient empowerment strategies, and evaluates clinical, humanistic, and economic outcomes on an going basis with the goal of improving overall health” (CBO, 2004, p. 19). 22 Depending on their structure and incentives, disease management programs may be an example of a so-called pay-for-performance program. This label covers a number of initiatives that provide financial incentives for health care providers to meet patient outcome, efficiency, or other goals (e.g., adoption of electronic patient information systems) (see, e.g., CMS [2005f], MedPAC [2005b], and Rosenthal ). Notwithstanding the considerable enthusiasm for pay-for-performance programs, evidence about their effects on people with disabilities or potentially disabling conditions is still accumulating.
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The Future of Disability in America benefit of a drug or other service for a particular category of patients (see, e.g., Fendrick and Chernew ). For example, the cost sharing required for a particular service would be lower for people with conditions for which research on the condition has documented that the service provides value but would be higher for other people with other conditions. The goal would be to constrain the inappropriate use of services by some people and increase the appropriate of services by others. Discussions of this strategy have focused on people with chronic conditions, but the approach could be extended to people with high-cost disabilities. Rising costs for health care clearly do not preclude expansions in covered services or in covered populations, especially in good economic times. A case in point is SCHIP, as is the extension of Medicare coverage to prescription drug benefits noted earlier in this chapter. Notwithstanding these policy changes, rising health care costs will make it increasingly difficult to expand access to coverage for the services needed by individuals with disabilities and may in fact threaten the existing coverage provided through SCHIP and other programs (see, e.g., Broaddus and Park  and Kenney and Yee ). As health care costs continue to increase and the population grows older, the United States will face several important and difficult trade-offs. First, decisions about the share of societal resources that should be allocated to publicly funded health insurance programs such as Medicare and Medicaid are critical and are intimately related to overall tax and fiscal policies. In addition to the direct taxes that help support Medicare and Medicaid, tax subsidies for private health insurance and health care in general must be considered as part of the total resource allocation picture for governments. Although an increasing share of the country’s resources has been going to health care, this cannot continue without limit. Second, within the health care sector, decisions will have to be made about how to allocate resources among alternative uses or needs. The offsetting of increases in spending for one group (e.g., children) with decreases in spending for other groups (e.g., working-age adults) is hardly new, but the future is likely to bring more difficult trade-offs, often in the face of limited evidence about the potential consequences. Generational stresses are likely to become even more apparent. A recent assessment of the value of the increased medical spending in the United States between 1960 and 2000 concluded that “the money spent has provided good value” but noted that the cost per additional year of life achieved has increased sharply for older age groups compared with that for newborns and children (Cutler et al., 2006, p. 926). Third, in the private sector, continued or accelerated cost escalation could see an unraveling of employer-sponsored private health insurance. As noted in Chapter 8, fewer employers are offering health insurance benefits,
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The Future of Disability in America and the percentage of working-age people without health insurance has been increasing. This is the environment in which people with disabilities and their advocates seek to protect and expand access to important services simultaneously, particularly within Medicare and Medicaid. Certainly, disagreements exist about the role of governments in spreading the cost burdens of chronic illness and disability, but the major constraint on the expansion—and, indeed, the maintenance—of covered services for people with disabilities is anxiety about costs. This anxiety—combined with disappointment at the checkered history of various cost-containment strategies—stands as a barrier to expansive policy changes for public and private insurance programs. Assessing Expansions of Coverage in the Context of Rising Costs Policy makers, advocates for people with disabilities, economists, health care services researchers, and others explicitly or implicitly apply various criteria in proposing what services and products should be covered by Medicare, Medicaid, or other private health care plans. A thorough discussion of principles for assessing (and, more controversially, ranking or setting priorities for) coverage of health care and related services is beyond the scope of this report (see, e.g., Patrick and Erickson  and IOM [2000a]). Box 9-5 lists several commonly cited criteria for evaluating or determining coverage of specific services or products. The list of coverage criteria does not include political acceptability. As a practical matter, however, public officials are sensitive to voter and interest group views. Government officials have proposed making cost-effectiveness a consideration in Medicare decision making but have, so far, put the proposal aside after negative public reaction. Acceptability is, to various degrees, an issue for employers who see health insurance as a recruitment and employee relations asset (as well as a cost). Turning the criteria listed above into a workable decision-making process about coverage is not easy. Particularly for a well-accepted service for which coverage has not traditionally been questioned, a lack of positive evidence of effectiveness is generally not regarded as a barrier to coverage. Indeed, for such services, policy makers may be unresponsive or may even reject evidence of harm or ineffectiveness in response to objections from consumers or providers. In any case, many widely used and accepted services have not been assessed in any rigorous way or have not been assessed for all the conditions and patient populations for which they are used. Testing existing as well as new technologies and services would require extremely large increments in research budgets, assuming that valid, feasible, and ethical evaluations could be constructed for all such services.
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The Future of Disability in America BOX 9-5 Criteria Used to Determine Coverage of Specific Services or Products Evidence of effectiveness in improving health and well-being. Evidence of cost-effectiveness (generally or practically interpreted to mean that the cost associated with an additional year of life or some other desired outcome measure is judged to be reasonable in light of the cost-effectiveness of other well-accepted services). Evidence of cost savings (meaning that the costs of coverage are offset by reduced costs to the payer or society). Sensitivity to patient preferences, including quality-of-life preferences (although services shown to be harmful or of marginal benefit might be excluded or otherwise limited). Social equity, including protection of vulnerable and disadvantaged populations. Contribution to public health (e.g., for services that might otherwise be seen as not appropriate for insurance because they are predictable, low in cost, and recommended for provision to large segments of the population). Finally, although the committee did not examine the principles that should be used to determine the expansion of health insurance coverage more generally, it notes that another recent IOM report set forth such principles (IOM, 2004d). Box 9-6 lists the principles. These principles address a number of concerns identified in this and the preceding chapter—for example, discontinuous coverage and affordability—that are particularly serious for people with serious chronic health conditions or disabilities. The committee recognizes that these principles represent aspirations that may be difficult to fulfill, given the cost pressures discussed above and competing political interests and priorities. RECOMMENDATIONS The 1991 IOM report on disability singled out limited coverage of assistive technologies and personal care services as major shortcomings in the ability of the American health care financing system to meet the needs of people with disabilities. It particularly cited Medicare’s “outmoded” concepts of medical necessity as it applied to these services (IOM, 1991, p. 257). Consistent with the 1991 report’s focus on the primary prevention of disability, its recommendations about health care financing focused on
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The Future of Disability in America BOX 9-6 Key Principles to Guide the Extension of Health Insurance Coverage Health care coverage should be universal. Health care coverage should be continuous. Health care coverage should be affordable to individuals and families. The health insurance strategy should be affordable and sustainable for society. Health insurance should enhance health and well-being by promoting access to high-quality care that is effective, efficient, safe, timely, patient centered, and equitable. SOURCE: IOM (2004d). expanded services for mothers and children and on the development of new models of health promotion appropriate for people with disabilities. For the most part, the problems identified in 1991 continue. Interpretations of medical necessity still do not recognize the special health care needs of many people with disabilities. Likewise, the statutory requirements that durable medical equipment be suitable for “use in the home” and its narrow interpretation by CMS are inconsistent with the emphasis on independence and community integration exemplified in the Americans with Disabilities Act and other policies. At the same time, as described in this chapter and Chapter 8, recent years have brought some progress in expanding health insurance coverage of assistive services and technologies. For example, the expansion of Medicaid home- and community-based services has increased resources for services that support independence and participation and that help people avoid institutional care. SCHIP, a federal-state program, has increased the number of children with public insurance coverage. The committee commends state and federal policy makers and those who have worked to achieve the goals of these policy changes. Many of the restrictions on assistive services and technologies appear to stem in part from concerns about instances of fraud by health care providers and vendors and, to a lesser extent, the abandonment of equipment by consumers. Concerns about fraud in certain areas are legitimate, as are the positive objectives of providing care that is cost-effective and no more costly than necessary. Excessive attention to program integrity can, how-
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The Future of Disability in America ever, lead to barriers to beneficial services and to avoidable suffering, loss of independence, and restricted lives. Efforts to link expanded access to net cost savings (as in some Medicaid waiver programs) have been difficult to construct in ways that actually produce such savings. The broad challenge is to find better ways to remove harsh restrictions on assistive services and technologies without offering the proverbial “blank check.” Although this country’s current health care financing system is not one that policy makers would likely design if they were starting anew, the system as it currently exists is a political and practical reality. Many people with disabilities and their advocates may seek broad reform or radical change (e.g., universal health coverage, the elimination of the employment-insurance link, and the federalization of Medicaid), but they also advocate for more modest or incremental changes, for example, steps to improve access to assistive services and technologies through health insurance and other programs and evaluations to assess the cost-effectiveness of different ways of improving access and outcomes. The innovative wheelchair leasing arrangement described in Chapter 7 is an example of the kinds of innovative approaches that need more systematic attention and evaluation. The committee encourages the U.S. Congress to take a new look at how the statutory provisions on medically necessary care and their interpretation might be updated in light of scientific and technological advances and new understandings of health and disability. It also encourages continuing research to support clinical practice and coverage decisions based on evidence of effectiveness. At the same time that outmoded restrictions are discarded, continued efforts to prevent and detect fraudulent wasteful practices by providers and vendors remain important, but such efforts must be made with care to avoid actions that limit access. This committee’s recommendations are directed primarily at the Medicare and Medicaid programs, but the committee encourages private health plans to make similar adjustments in their policies relating to durable medical equipment. Recommendation 9.1:The U.S. Congress and the U.S. Department of Health and Human Services should begin a process of revising Medicare and Medicaid laws and regulations and other relevant policies to make needed assistive services and technologies more available to people with disabilities and to put more emphasis on beneficiaries’ functional capacities, quality of life, and ability to participate in work, school, and other areas of community life. Priorities include eliminating or modifying Medicare’s “in-home-use” requirement for durable medical equipment and revising coverage criteria to consider the contribution of equipment to an individual’s independence and participation in community life; evaluating new approaches for supplying assistive technologies
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The Future of Disability in America (such as time-limited rentals and recycling of used equipment) and providing timely and appropriate equipment repairs; and continuing research to assess and improve the appropriateness, quality, and cost-effectiveness of the assistive services and technologies provided to people with disabilities. In addition to concerns about Medicare, the committee was concerned about the flood of changes in state Medicaid programs noted earlier in this chapter. Tracking Medicaid policies and practices is difficult, especially given the complexity of the changes directed or permitted under the Balanced Budget Act of 2003 and the Deficit Reduction Act of 2005. Analyzing the potential effects of these and other changes on people with disabilities (including changes that come with intended safeguards for this population) adds further complexity. Nonetheless, systematic tracking and analysis are important, given the particular vulnerability of Medicaid beneficiaries with disabilities—both children and adults—to reductions in coverage and increases in beneficiary (or parent) responsibilities for understanding and following complex rules. Much research on strategies to balance access, quality, and costs has focused on care for people with high-cost chronic illnesses. These strategies include the disease management and value-based insurance strategies described earlier in this chapter and the chronic care programs discussed in Chapter 4. This research and these programs could be refined to consider more explicitly and fully the relevance and consequences of such strategies for people with various degrees of physical, mental, and cognitive impairment. The special needs plans described in Chapter 8 constitute one narrowly targeted approach, but less restrictive approaches also need to be evaluated. This chapter and preceding chapters have suggested a number of specific topics for research. The next chapter considers more generally the organization and financing of disability and rehabilitation research. It reiterates the messages of the 1991 IOM report on disability that research in this area is underfunded and inadequately coordinated.
Representative terms from entire chapter: