Chapter One

Background

When an individual becomes ill and needs 24-hour nursing care, or lacks family support and has substantial needs based on limitations in his or her capacity to perform certain activities of daily living (ADLs)1, it often becomes necessary for that person to enter a nursing facility. The person's level of cognitive functioning and behavioral status are also important in determining if nursing home care is needed. Nursing facilities provide personal and skilled nursing care 24 hours per day. Residents are provided rooms, meals, assistance with daily living, and medical and other therapeutic treatments.

Although nursing home care is used by individuals of all ages, the risk of nursing home placement is greater for the elderly. Furthermore, individuals aged 85 and older are the most likely to need care provided in this setting. Factors influencing a greater demand for this type of care include:

• an ever-increasing elderly population;
• a declining average length of inpatient hospital stays for elderly patients who then receive sub-acute care in nursing facilities;
• social trends, with care no longer being provided by family members; and
• advanced technologies that increase life expectancy rates.

The potential demand for care provided by nursing facilities has important fiscal consequences for states. While the elderly in nursing homes comprise a small percentage of the population, the Health Care Financing Administration (HCFA) projects federal, state, and local governments will spend $58.1 billion on nursing home care in 2000, of which $44.9 billion will come from Medicaid and $11.2 billion from Medicare. In Connecticut, combined federal and state Medicaid expenditures for nursing home care in FY 00 are expected to reach $985.5 million.

State Organization for Oversight of Nursing Facilities

The Department of Public Health and the Department of Social Services (DSS) are the two agencies in Connecticut overseeing nursing facilities. The Department of Public Health is responsible for regulating nursing facilities. The department ensures compliance with federal and state laws by conducting licensure inspections and investigating complaints.

The Department of Social Services establishes eligibility for Medicaid benefits. Within the department, the Certificate of Need and Rate Setting Division establishes the daily payment rates for individual nursing facilities and audits the cost reports submitted by homes. It issues new rates annually based on the costs incurred by nursing homes, subject to inflationary limits, holds hearings, and processes rate appeals. In addition, the Office of the Nursing Home Ombudsmen, required under federal law to advocate for nursing home residents, is also located within the Department of Social Services.

Facility and Resident Characteristics

A nursing facility provides a comprehensive range of services from rehabilitation to custodial care for people of all ages with chronic medical conditions and/or functional impairments. Federal and state law and regulation establish mandatory minimum operating standards. To receive Medicare or Medicaid reimbursement for care provided to beneficiaries of these programs, nursing homes must undergo an inspection (called a survey under federal law) and become federally certified (described in Chapter Two). In addition, all facilities, regardless of payer source, must undergo a state licensure inspection in order to operate.

Number of nursing facilities. As of March 31, 2000, there were 262 licensed nursing facilities with a total of 32,080 beds. The Department of Public Health licenses two categories of nursing facilities in Connecticut:

• chronic and convalescent nursing homes (CCNH) for skilled or rehabilitative care; and
• rest homes with nursing supervision (RHNS), which provide personal care and nursing supervision under a medical director 24 hours a day.

The actual number of nursing staff required under Connecticut's regulations depends on the licensure category of the nursing facility. There were 253 CCNH facilities accounting for 93 percent (29,758) of all nursing home beds. A higher level of nursing-staff-per-resident is provided to occupants of these beds because they need more care than occupants of RHNS homes. There are nine free-standing RHNS facilities and 57 RHNS units attached to CCNH facilities. The average occupancy rate for all homes statewide was 95.2 percent.

Ownership. The nursing home marketplace is largely proprietary. In Connecticut, 77 percent of the facilities are operated by for-profit organizations; 23 percent are nonprofit; and a local government operates one facility. In addition, half are independently owned and half are under multi-facility ownership.

Resident demographics. Although other long-term care alternatives exist, nursing homes continue to provide care to many frail elderly. Connecticut regulations require nursing home administrators to submit an annual patient roster and census report to the Office of Policy and Management (OPM) each year. The roster, a list of patients who resided in a nursing facility between October 1 and September 30 of a given reporting year, contains demographic and health status information about each resident. The analysis below is based on demographic data provided by OPM. Information on admissions is based on 1996 nursing home submissions.

• Admissions. The majority (73 percent) of 1996 residents had been admitted to a nursing home from a hospital. The next most common admission origin, accounting for 12 percent of all nursing home admissions, was directly from home. Other sources included rest homes with nursing supervision, mental health hospitals, and residential care homes.
• Age. There were 30,591 individuals residing in nursing homes on September 30, 1996. Table I-1 compares the age of residents between two periods -- 1987 and 1996. The number of residents grew 14 percent, while the number of residents aged 85 or older grew 25 percent between the two periods examined. Residents in the 85 and older age group accounted for 48 percent of the nursing home population in 1996.

• Gender. The state's elderly population as a whole, and especially those in nursing homes, is predominantly female. Female residents far outnumber males, representing 74 percent of all nursing home patients.
• Race. In 1996, the majority of nursing home residents were white (almost 95 percent). African-American and Hispanic or Latino residents comprised only 5.4 percent, and 1.5 percent, respectively.
• Activities of daily living dependencies. The majority of nursing home residents had three or more limitations in performing activities of daily living. Information on the ADL status of nursing home residents was limited to five measures -- ambulating, continence, dressing, feeding, and transferring. The number of ADL limitations each resident has is shown in Figure I-1. In 1996, nearly 8,000 residents needed assistance with all five ADLs, and 6,100 with four. Approximately 3,000 had only one ADL deficiency. Although 5,000 of the residents had no limitations, 200 of these residents exhibited disruptive behavior; 300 wandered or had other passive behaviors; and 800 displayed other inappropriate behavior that may have contributed to the need for institutionalization.

• Continence. In terms of continence, 48 percent of residents had difficulty controlling bladder function, while 41 percent of the residents had difficulty controlling bowel function.
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• Discharges. Information has also been compiled on all discharges that occurred during 1996. There were 46,336 residents discharged. Thirty-six percent of the residents went to a hospital, 35 percent went home, and 19 percent died. The remaining 10 percent were discharged to veterans', mental health, or chronic disease hospitals, residential care homes, or other nursing homes.

Revenues and Expenditures

Payment Source. The Medicaid program, jointly funded by federal and state government, is the major public program providing coverage for nursing home care. Limited coverage is available under the Medicare program and through private insurance. The average client mix is shown in Table I-2.

Expenditures. Figure I-2 shows Medicaid expenditures for nursing facilities over the last nine fiscal years. The overall increase in expenditures from FY 92 to FY 00 was 52 percent. The greatest annual percentage increase occurred between FY 92 and FY 93 when expenditures grew 10 percent; followed by FY 99 to FY 00 when they grew 9 percent (including the 8 percent allocated for the Wage, Benefit and Staffing Enhancement Program described in Section IV). There was a slight decline in expenditures from FY 96 to FY 97, with the decrease less than 1 percent.

Another way to examine long-term care expenditures is in relation to total Medicaid expenditures for long-term care (i.e., long-term care provided in settings other than nursing homes). Table I-3 shows that care provided in CCNHs and RHNSs accounts for 83 percent of all Medicaid dollars expended for long-term care and 42 percent of total Medicaid expenditures.

Summary

This introduction provides an overview of the nursing home market in Connecticut, including a snapshot of characteristics of nursing home residents, as well as information on the growth in Medicaid expenditures to pay for resident's care. The remainder of this report focuses on nursing staff - what the requirements are, how they are monitored and enforced, and what efforts are underway to increase nursing staff.

¹ Need assistance with eating, transferring from bed to chair, bathing, walking, dressing and grooming, and toileting.

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