This chapter describes and critiques the “system” that provides health care for older Americans. The system comprises many elements, including providers of health care, providers of supportive services, “alternative” healers, patients, families, insurers, regulators, and liaisons among these elements. The health care system is addressed primarily from the perspectives of health care professionals and their older patients, particularly patients with multiple chronic conditions and complex health care needs. Strategies for optimizing care within the system and examples of recent innovations designed to improve the system are described.

Strictly speaking, a system (from the Latin noun systema) is a set of procedures or structures that direct or coordinate the orderly flow of other processes. In the case of complex health care for chronically ill older Americans, however, the fragmentation, lack of coordination, and disorderly flow of information and interactions is not a true system of health care. Nevertheless, this chapter uses the term “health care system” to refer to the aggregate of the many elements involved in providing health care to older patients.

The chapter begins with brief introductory descriptions of individual elements of the current system, many of which are described in greater detail in the chapters that follow, e.g., care in hospitals, emergency departments, subacute facilities, rehabilitation units, and nursing homes; complementary and alternative care; and care during transitions between providers. The next section describes the present system’s performance in addressing the multifaceted needs of chronically ill older patients, followed by a section on the roles of primary care clinicians in caring for this population. Later sections examine opportunities for creating a more effective, efficient, and patient-centered system and summarize some recent initiatives designed to improve the system’s quality and outcomes.

The pluralistic U.S. health care system consists of five interacting elements: providers, patients and caregivers, insurers, liaisons, and regulators.

Providers

Providers include health care professionals, health care organizations, and supportive community services. Among health care professionals are primary care and specialty physicians, nurses, social workers, rehabilitative therapists, pharmacists, dentists, mental health professionals, health care aides, and complementary and alternative medicine (CAM) practitioners. In the past, primary care physicians (PCPs) managed their patients across settings of care, providing valuable continuity and advocacy as their patients moved through emergency departments, hospitals, and rehabilitation facilities. Today, increased specialization by site of care has constrained primary physicians mostly to providing ambulatory care. Hospitalists, emergency physicians, and skilled nursing facility specialists (SNFists) provide much of the care in institutions. Although such specialization may have improved some aspects of care within hospitals, emergency departments, and SNFs, it has also eroded continuity of care and contributed to the further fragmentation of an already fragmented system (see Chapter 16). Unfortunately, no one clinician may know the patient well.

The system’s health care organizations include acute care hospitals, long-term care hospitals (LTCHs), emergency departments, rehabilitation units, home care agencies, house call practices, skilled nursing facilities (SNFs), hospice programs, long-term care facilities, personal care providers, and disease management companies. Some hospitals operate multidisciplinary Acute Care for Elders (ACE) units to meet the complex needs of older adults who become acutely ill or injured.

A variety of organizations sponsor Programs of All-inclusive Care for the Elderly (PACE) that provide comprehensive community-based long-term care for older persons with significant disabilities. A few physician house call practices, often affiliated with medical schools, provide primary care at home to homebound patients. Although satisfying to patients and physicians, house call practices are challenged by low reimbursement.

Commercial disease management programs focusing on patients with congestive heart failure, diabetes, emphysema, or depression have proliferated in recent years as a new strategy for containing the high costs of these chronic illnesses. Disease managers, many of whom are nurses, follow standard protocols in communicating with patients by telephone to encourage them to see their physicians, use their medication appropriately, and adopt healthy behaviors. Most disease management programs work under contract with insurers; many use sophisticated health information technology (HIT) to remind patients to obtain appropriate preventive services and to track their use of health resources.

Community-based providers of supportive services include Area Agencies on Aging (AAA), Meals-on-Wheels, senior centers, transportation services, adult day care centers, condition-specific resources (e.g., the Alzheimer’s Association), home modification programs, chore services, support groups, exercise programs, and congregate housing.

Patients and Caregivers

Most of the work of caring for chronic conditions is done (for better or for worse) by the patients who have the conditions and by their informal (i.e., unpaid) caregivers, such as family or friends. The degree to which patients are able adhere to medication regimens, healthy diets, physical activity programs, professional follow-up, and regular self-monitoring is a powerful determinant of the quality, cost, and clinical outcomes of their care. Out-of-pocket spending for health care by older patients and their families includes insurance premiums, deductibles, copayments, and the costs of products and services not covered by their health insurance, such as long-term care, eyeglasses, hearing aids, dental care, and medications. Such expenses can be significant. In 2000, older Americans’ out-of-pocket spending for health care averaged 21.7% of their incomes. For low-income women in poor health, the figure was 51.6%.

Insurers

Both public and private organizations provide health insurance for older people. (Figure 15-1) Public health insurance programs include Medicare, Medicaid, the Veterans Health Administration, and Tricare (for military retirees). Private health insurance coverage for older Americans is provided by managed care organizations (MCOs), private indemnity insurers, and Medicare Part D providers.

Public Health Insurance

The Medicare program, which is administered by the federal Centers for Medicare and Medicaid Services (CMS), reimburses health care organizations and health care professionals for providing health care for Americans who are 65 years and older, disabled, or suffering from end-stage renal disease. As originally enacted, Medicare comprises two separate fee-for-service (FFS) plans (Part A and Part B), each of which pays predetermined amounts for specified health-related goods and services that are needed by its beneficiaries (Table 15-1). More than 80% of older Americans are covered by both plans.

Medicare Part A contracts with regional insurance companies (“intermediaries”) to pay hospitals, nursing homes, home-care agencies, and hospice programs for the acute and subacute Medicare-covered services they provide. Older Americans (and their spouses) who have had Medicare taxes deducted from their paychecks for at least 10 years are entitled to coverage through Part A without paying premiums. Others may be able to purchase Part A coverage (for up to $423 per month, depending on how long Medicare taxes were deducted from their paychecks).

Medicare Part B contracts with other regional insurance companies (“carriers”) to pay physicians, nurse practitioners, social workers, psychologists, rehabilitation therapists, home-care agencies, ambulances, outpatient facilities, laboratory and imaging facilities, and suppliers of durable medical equipment for the Medicare-covered goods and services they provide. At age 65 years, people become eligible for Part B coverage if they are entitled to Part A coverage or if they are citizens or permanent residents of the United States. To obtain this coverage, eligible persons must enroll in Part B and pay monthly premiums ($96 to $238 in 2008), usually by agreeing to have them deducted from their monthly Social Security checks.

Physicians must choose whether to participate in the FFS Medicare program. For each Medicare-covered service provided, a participating physician submits a claim to the Part B carrier, accepts Medicare’s fee for the service (80% of a preestablished “allowed” amount), and collects a 20% coinsurance payment from the patient or her secondary insurer. For services not covered by Medicare, the physician may bill the patient, if the patient agrees in advance in writing.

Physicians who choose to be “nonparticipants” in Medicare are permitted to bill patients directly for up to 15% more than 95% of Medicare’s allowed amounts. Such patients pay their physicians and then submit requests for partial reimbursement (i.e., for 80% of 95% of the allowed amounts) to the carrier. A few physicians choose to opt out of Medicare altogether; instead, they enter into “private contracts” with their older patients. Under these contracts, Medicare (and private “medigap” insurance plans) pay nothing, and patients pay physicians the full amount of the fees specified by the contracts.

Neither Part A nor Part B of the Medicare program covers periodic physical examinations, dental care, hearing aids, eyeglasses, orthopedic shoes, cosmetic surgery, care in foreign countries, or custodial long-term care at home or in nursing homes. Part B covers some preventive services (see Table 15-1). In 2008, beneficiaries paid out-of-pocket:

• Monthly payments for Part B ($96 to $238)
  
• Annual deductible for Part B ($135)
  
• The deductible for Part A ($1024 per benefit period, i.e., the first 60 days following a hospital admission)
  
• Coinsurance payments (usually 20%) for goods and services for which Medicare or other insurance pays a portion
  
• The full cost of those goods and services that are not covered by Medicare or other insurance.

CMS receives its mandates directly from Congress, with input from scientists and policymakers in the Congressional Budget Office. As such, CMS is subject to current Congressional law and, therefore, has limited authority to modify Medicare benefits or reimbursements beyond these provisions.

Medicaid is a joint federal-state health insurance program for some Americans—young and old—with low incomes and limited assets. With supervision and matching funds from CMS, each state operates its own unique Medicaid program that provides supplemental health insurance to low-income Medicare beneficiaries and primary health insurance to younger people of limited means. Most states’ Medicaid programs pay the Part B premiums for Medicare beneficiaries who are also eligible for Medicaid (“dual eligibles”); some also pay their Medicare deductibles and coinsurance costs. The criteria for Medicaid eligibility and the additional benefits covered by Medicaid plans, such as eyeglasses, hearing aids, and dental services, vary considerably from state to state. Most important, Medicaid covers room and board in nursing homes for Medicaid-eligible, disabled people, many of whom have become eligible by liquidating their assets (i.e., by “spending down”) to pay their medical and long-term care expenses. In many states, a limited number of disabled Medicaid recipients qualify (under “waiver” programs) for some long-term care services at home. Recently, several states have begun contracting with managed-care organizations to integrate Medicaid and Medicare benefits for “dual eligibles.”

The Veteran’s Health Administration (VHA) is a large, complex, integrated system that insures and provides comprehensive health care for “honorably discharged” military veterans. The VHA Medical Benefits Package covers preventive services, outpatient diagnostic and treatment services, inpatient medical and surgical care, medications (prescription and over-the-counter), and medical supplies. The VHA stratifies veterans into eight priority groups based on income, area of residence, and history of illness or injury during military service. The highest-priority patients, who are not required to make copayments, have service-connected health problems that are rated at least 50% disabling or that have caused them to be unemployable. Veterans receiving VHA benefits may simultaneously enroll in Medicare or Medicaid, giving them access to non-VA physicians and drugs that are not on the VA formulary. Unlike CMS, the VHA is authorized to bargain with pharmaceutical companies to limit the costs of prescription drugs through mass purchasing contracts.

The VHA underwent a major overhaul in the 1990s, driven by the aging of the veteran population, the growing burden of chronic health care needs, and Congressional concerns over poor quality and value of VHA services. The leadership of the VHA began to emphasize primary care, centralized goal-setting and resource management, standardized data reporting, information technology, and accountability for the quality of care. The VHA electronic health record system replaced paper charts throughout the network, making highly detailed patient records available at the point of clinical encounter. As a result of these changes, and of improvements in various quality indicators, the VHA is now considered by some to be a model of integrated health care.

Private Health Insurance

For older Americans who choose private health insurance, coverage is provided by MCOs, private indemnity insurers (e.g., “medigap” and long-term care insurance plans), and Medicare Part D providers. MCOs include Medicare health maintenance organizations (HMOs), which offer “Medicare Advantage” plans, as well as preferred provider organizations (PPOs) and point of service (POS) plans (Table 15-2).