1. Avalere Health LLC | The intersection of business strategy and public policy New Data on Residential Care: Trends, Residents, and Rates October 4, 2012 Anne Tumlinson Avalere Health LLC

2. © Avalere Health LLC Page 2 Need for Long-Term Services and Supports Growing Among Residential Care Population Key Findings  Over the past ten years, the portion of seniors with significant need for long-term services and supports living in residential care settings has grown from a quarter to a third  Over this same time period, nurse staffing and medication supervision has dropped  Residents pay, on average, about $40,000 per year to live in these settings, although the charges are higher for private pay residents than for Medicaid beneficiaries and higher at larger facilities; overall, rates appear to be high in the context of seniors’ incomes and growing faster than inflation With funding from The SCAN Foundation, Avalere Health analyzed the 2010 National Survey of Residential Care Facilities (NSRCF).

3. © Avalere Health LLC Page 3 What is Residential Care?  “Residential care” is an umbrella term for facilities that provide apartment-style housing and support services for people who cannot live independently, but generally do not require the skilled level of care provided in nursing homes.  For example, residential care facilities include assisted living facilities and board and care homes. 1  In 2010, there were 656,091 seniors aged 65 and older living in residential care facilities. 3  Large facilities (26 or more beds) made up just 35% of all residential care facilities but represented 81% of residents. 2  About 82% of facilities were privately owned for profit. 2 1. Centers for Disease Control and Prevention. “Residents Living in Residential Care Facilities: United States, 2010.” 2012. http://www.cdc.gov/nchs/data/databriefs/db91.htm#definitions. http://www.cdc.gov/nchs/data/databriefs/db91.htm#definitions 2. Robert Mollica, Ari Houser, and Kathleen Ujvari. “Assisted Living and Residential Care in the States in 2010.” AARP Public Policy Institute. 3. Avalere analysis of the 2010 National Survey of Residential Care Facilities.

4. © Avalere Health LLC Page 4 Who Needs Long-Term Services and Supports and Where Do They Live? 1 Avalere analysis of 2006 Medicare Current Beneficiary Survey, Cost and Use File. Includes Medicare beneficiaries age 65 and older receiving assistance in one or more Activities of Daily Living. *Other = Inpatient Hospitals including Inpatient Psychiatric Facilities, LTACHs, IRFs, or Intermediate Care Facilities for Persons with Mental Retardation. Note: There are other residential care residents who do not require ADL assistance and this data excludes decedents. Seniors with Functional Limitations Require Long-Term Services and Supports  These individual need assistance with: »Activities of daily living (ADLs) such as bathing, dressing, transferring to and from beds and chairs, using the toilet and eating »Instrumental activities of daily living (IADLs) such as taking medications, doing housework and preparing meals  These individuals receive needed assistance in the community through the use of personal or home health care aides, in a residential care facility, or in a nursing home.

5. © Avalere Health LLC Page 5 Long-Term Care Population Represents a “Hot Spot” Care Management Opportunity for Health Systems and ACOs Looking to Bend the Cost Curve Medicare Parts A and B Spending by Level of Functional Limitation, 2006 2 1. Seniors with moderate or severe disability includes community residents and residential care residents with 2 or more Activities of Daily Living (ADL) limitations and all nursing home residents. N= 1,161,759 community residents with 2+ ADLs, 202,161 residential care residents with 2+ ADLs, 817,954 nursing home residents, and 24,553,318 community and residential care residents with no disabilities. Excludes beneficiaries who died in 2006. 2. Includes spending on inpatient hospital, outpatient hospital, physician, emergency department, skilled nursing facility, home health, and hospice. Excludes prescription drugs, DME, and miscellaneous Medicare spending. Medicare Parts A and B Spending by Residence Setting, 2006 2

6. © Avalere Health LLC Page 6 Presence of Functional Impairment and Lack of Spousal Support May Be Tied to Use of Residential Care Characteristics of Residential Care Consumers Compared to Medicare Beneficiaries Living in the Community Age 65 and Over, 2010 Source: Avalere Health LLC analysis of the 2010 National Survey of Residential Care Facilities and the 2010 Medicare Current Beneficiary Survey. 1 N = 656,091 residential care residents age 65 and older. 2 N = 33,030,236 community residents age 65 and older. 3 Low-income individuals are those dually eligible for Medicare and Medicaid.

7. © Avalere Health LLC Page 7 Facilities in 2010 May Offer Fewer Services and Lower Nurse Staffing Than in 1999 Key Characteristics of Residential Care Facilities, 1999 and 2010 Source: Avalere Health LLC analysis of the 2010 National Survey of Residential Care Facilities and the 2010 Medicare Current Beneficiary Survey. 1 1999 Survey by the Office of the Assistant Secretary for Planning and Evaluation. N = 11,459 residential care facilities with 11 beds or more. 2 2010 National Survey of Residential Care Facilities. N = 15,695 RCFs with 11 beds or more; 15,400 RCFs with 4-10 beds are excluded from this analysis.

8. © Avalere Health LLC Page 8 Private Pay Residential Care Costs Vary by Facility Size Source: Avalere Health LLC analysis of the 2010 National Survey of Residential Care Facilities and the 2010 Medicare Current Beneficiary Survey. Note: Charges include the base rate plus any additional services used, which can include transportation, housekeeping, supplies, and other services. 1 N = 656,091 residents age 65 or over in 31,134 facilities. 2 N = 111,161 residents age 65 or over in 20,386 facilities with 25 or fewer beds. 3 N = 544,930 residents age 65 or over in 10,748 facilities with 26 or more beds.

9. © Avalere Health LLC Page 9 Residential Care Costs For Medicaid Enrollees Are Significantly Lower Than Private Pay Source: Avalere Health LLC analysis of the 2010 National Survey of Residential Care Facilities and the 2010 Medicare Current Beneficiary Survey. 1 N = 561,940 private pay residents age 65 or over and 94,151 residents with Medicaid as a payer age 65 or over 2 N = 85,484 private pay residents age 65 or over and 25,677 residents with Medicaid as a payer age 65 or over in facilities with 25 or fewer beds 3 N = 476,456 private pay residents age 65 or over and 68,474 residents with Medicaid as a payer age 65 or over facilities with 26 or more beds

10. © Avalere Health LLC Page 10 About the Residential Care Data and Avalere’s Analysis  The National Survey of Residential Care Facilities (NSRCF) was developed and fielded by National Center for Health Statistics (NCHS) 1 »For demographic analyses, we limited the sample to individuals 65 or older  Avalere compared the NSRCF data with the following sources: »A 1999 survey titled “A National Study Of Assisted Living For The Frail Elderly: Results Of A National Survey Of Facilities” 2 – After determining that the survey was comparable to the NSRCF, data from both surveys were compared to understand industry trends from 1999-2010 »The Medicare Current Beneficiary Survey (MCBS) – The MCBS was used to generate a profile of the average community- dwelling Medicare beneficiary, as comparison group for residential care residents in the NSRCF 1. Moss AJ, Harris-Kojetin LD, Sengupta M, et al. Design and operation of the 2010 National Survey of Residential Care Facilities. National Center for Health Statistics. Vital Health Stat 1(54). 2011. 2. Hawes et al. A National Study Of Assisted Living For The Frail Elderly: Results of a National Survey of Facilities. Office of Disability, Aging and Long-Term Care Policy, Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services (#HHS-100-94-0024 and #HHS-100-98-0013). December 1999.