One of the hidden changes in Wisconsin’s Estate Recovery law has to do with the formula for how the State will recover the costs of care for people who are able to receive long term care in the community. The new estate recovery law says that if you received Family Care during your life, the state will recover the “capitated rate” when you die. It does not matter what the Family Care program actually paid out to provide care for you. Because of this new formula, people who only need a few services in order to remain at home will end up paying back more than they actually got in care. Here is a short explanation of how it works.
FAMILY CARE and CAPITATED RATES: Family Care is the program in Wisconsin that pays for care that people need in the community, such as their homes or in assisted living facilities. The purpose of the program is to keep people out of nursing homes. It is a “managed care” program. This means that the state contracts with private companies to run the program and arrange for the care. The state pays these companies a fixed rate for each person based on the person’s level of care. For example, the chart here here shows that one company receives $3244 per month per patient who is at the higher level of care, and $572 for patients at a lower rate of care. (This is a bit of a fiction, since most patients on Family Care are screened and meet the higher level of care even if they are in their homes.) Then from these funds, the private agency turns around and pays for your care. Like all managed care programs, the “capitated rate” provides an incentive for these private contractors to make sure the care you receive under the program is less than the rate they are getting (otherwise, why be in business?) However, in some cases the person actually receives care that costs more than this rate. The program is supposed to balance itself with lower cost and higher cost people averaging out.
NEW ESTATE RECOVERY LAW: Under the new estate recovery law, it does not matter what care you actually got in Family Care. The state recovers that capitated amount (for example, the $3244 per month) when you die.
HOW THIS IMPACTS PEOPLE WHO RECEIVE ONLY A FEW SERVICES THROUGH FAMILY CARE: Some people only need a few services, such as homemaking and bathing assistance once a week, because they have family members who help. But those few services are what makes the difference between having to move out of their homes, and being able to stay put. So they enroll in Family Care to get those services. For example, let’s say Bob is living at home, and needs some services to stay there. His daughter comes in four times a week and helps him with things, but she is not able to help him get in and out of the shower and is not able to be there every day due to her work. Bob enrolls in Family Care for help with bathing and homemaking. If the services actually cost $300 per week, we are looking at monthly costs to the program of about $1200. Now, when Bob dies, his estate will be forced to pay the state $3244 (or the applicable rate) for every month he received care. It would have been cheaper for him to pay for it himself!
On the other hand, if Bob’s care needs are high, or if he goes into a nursing home and stays on Family Care, the state may actually recover less than the cost of his care when he dies.
One consequence I see of this policy decision by the state, is that savvy family caregivers will stop providing free care. A fundamental assumption on which Family Care is built is that family members will provide some level of care for free, which reduces costs. This assumption is consistent with findings of the Alzheimer’s Association about the staggering value of uncompensated care provided by family to dementia patients. Please take a look at the report here. An excerpt from the report states:
In 2012, 15.4 million family and friends provided 17.5 billion hours of unpaid care to those with Alzheimer’s and other dementias — care valued at $216.4 billion, which is more than eight times the total sales of McDonald’s in 2011. Eighty percent of care provided in the community is provided by unpaid caregivers.
The private companies that run Family Care build this assumption into the care plan for recipients. However, as families learn that their loved one is going to pay for care through estate recovery, they will stop doing this. Frankly, good consumers want their full value and if Dad is paying $3200 per month through estate recovery, the family will want that care. Instead of daughter agreeing to come in four days a week for free, which impacts her ability to work and take care of her own family, she will insist on paid caregivers. This leaves daughter free to spend her “dad” time doing things they both enjoy. In some cases, the family member providing free care will insist that Family Care pay them like any other caregiver. This is allowed in the program.
If the state simply kept its previous estate recovery law for Family Care, then each person’s estate would be liable for what that person actually received. That alone already makes some people decide not to enroll in the program. But under the new law, even more people, particularly people with fewer needs, might choose not to enroll in Family Care due to the estate recovery law. Which, I anticipate, means that those people will deteriorate sooner because they do not have the care they need to stay out of a long term care facility. So what is the end result? The state’s new law will result in MORE people needing nursing home care, which is exactly the opposite of why the Family Care program was created to begin with.