Nursing Homes and the Congress: A Brief History of Developments and Issues

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® HD 7106 D 72-224 ED |

NURSING HOMES AND THE CONGRESS: A BRIEF

HISTORY OF DEVELOPMENTS AND ISSUES

10.

1}.

362A |

Un d5n WRAL. DEE. STUDIES

Table of Contents

Page

INTRODUCTION

Origins of the Nursing Home and Early Legislative

Developments.....,ccesevescscsces eee cere wae e rece eees 2

Early Problems Relating to the Financing of Nursing

Home Care... cere svcccsscsacscsoccscnvanercsenesesesess 7

The Need for More Nursing Homes......e.cceccccceeece .. 15

Legislative Developments Between 1956-1959......... eee = 22

Medicare and Medicaid Legislation: 1960-1965......... 36

Implementation of Medicare and Medicaids.........6006. 60

The Social Security Amendments of 1967........0cceeees 69

The ‘Level of Care" Controversy in Medicare....... weoee 79

Skilled Nursing Homes under Medicaid--Implementation

of the Moss Amendment..... eee cece cece ees eeneces eeecees 88

Intermediate Care Facilities (ICF's)~-Implementation

of the Miller Amendment....... sec e cece soc ese weeeecee 106

The Social Security Amendments of 1972..........00022- 144

NURSING HOMES AND THE CONGRESS: A BRIEF HISTORY OF DEVELOPMENTS AND ISSUES

Introduction

It is the purpose of this report to briefly examine some of the

historical and current legislative developments and issues which have

confronted and still face the Congress regarding the provision of

and payment for health and related institutional services provided to

older Americans by the Nation's public and private nursing home industry.

Prior to 1965, some Congressional study of problems in the nursing

home field had been made, but legislation affecting nursing homes

was only infrequently adopted. Federal matching funds were available

to the States to enable them to purchase nursing home care for certain

aged welfare recipients. Other laws provided some capital and other

forms of financial assistance for the construction and modernization of

public and private facilities. Except for this financial involvement,

however, only limited attention was devoted by Congress to problems

in the long-term health care field.

In 1965, Congress added the Medicare and Medicaid titles to the Social X

Security Act. This legislation greatly expanded the Government's

previous role and importance as a purchaser of nursing home care for

CRS-2

the aged and the poor in the United States. With the expanding Federal

financial responsibility in the nursing home field has come a new concern on the part of Congress in such non-financial matters as the

standards established for homes, the quality and levels of skilled-care

provided in them, and the utilization of nursing facilities as an

alternative to more costly forms of institutional health care. This

report examines some of these developments.

1. Origins of the Nursing Home and Early Legislative Developments

At the turn of the 20th Century, nursing homes as such were virtually

unknown in the United States. There was little demand for a specialized

type of institufion designed solely to serve the particular needs of

"as a social problem in

older people. As a matter of fact, "aging,'

America, had not yet even appeared on the scene. Only about one out

of every 25 Americans in 1900 was reaching or passing a 65th birthday.

Reaching 65 didn't mean a great deal in those days either. Few older

people experienced any important changes in life styles or living

arrangements merely because another birthday had passed by. Most workers

continued to pursue their previous occupations without interruption

regardless of age until disability or death halted their usual activities.

Concepts such as retirement from the work force at 65 and expanded

leisure in old age were still undeveloped ideas in American history at

this juncture in time.

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Sick or disabled older Americans in 1900 usually could count on the

family or close friends to provide them with personal needs and assistance.

It was customary for most aged persons to live out their lives amid the

same surroundings and among the same people with whom they had always

done so. Numerous religious and charitable organizations also stood

ready to aid the family in helping the older person meet many of his

personal assistance requirements. Only the most destitute older American

created a demand for institutional care as a public ward. This person

usually became the resident of the almshouse or county poorfarm.

Events over the next 30 years, however, radically altered many of

these conditions. To begin with, the number of persons reaching old age

began to increase dramatically. More and more families faced the prospects

of caring for and supporting a dependent older relative or friend in

their homes. During this period, however, other influences were at

wrk that began to make it increasingly difficult for some families to

meet all of the traditional responsibilities for the care of dependent

older members. Industrialization, growing mobility in the population, and

other economic and social changes were combining in such a way as to

impair the ability of many sons and daughters to help and assist their

aged relatives. As a result, the numbers of dependent older Americans

without any private means of assistance also began to rise.

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Critics argued that the 19th Century poorhouse system represented a

totally unworkable and undesirable solution to the growing problems of

aged dependency in the United States. Charges were made that the almshouse and other similar types of public institutions were inhumane,

inadequate, and unnecessarily costly for society to maintain! Other

answers to the problems of dependency had to be formulated.

One of the new approaches adopted by some of the States during this

time was the creation of programs to provide cash assistance payments

for needy older people who had no personal means of support and no

financially competent relatives to help out. By the middle of 1931, 18

of the States had established various programs of "old-age assistance,"

"old-age pensions," “old-age relief," or "old-age security" for the

increasing numbers of dependent aged population within their boundaries .2/

The growth of these State-financed and administered public assistance

(welfare) programs for the elderly proceeded rather slowly until the

Depression when their expansion stopped altogether. With the collapse

of the economy, the numbers of older people seeking public aid suddenly

increased. State funds needed to support the assistance programs, on

1/ ‘ ‘ fees ° ‘ "

~ See, for example, The American Poorfarm and Its Inmates, Harry C. Evans, 1926.

2/ : a ;

~ Social Security in America: The Factual Background of the Social Security

Act, as summarized from Staff Reports to the Committee on Economic Security,

1937.

coe

oS

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the other hand, began to diminish as the sources of State tax revenue

dried up. The States turned to the Federal Government for financial

relief.

In 1935, Congress responded by enacting the Social Security Act.

Among other things, the legislation made it possible for the States to

receive Federal matching funds for the purpose of making non~institutional

cash assistance grants to various categories of needy people. Title I

of the Act established a program of Old-Age Assistance (or OAA) which

authorized the Government to match (up to certain limits) funds raised

by States to help the needy elderly population.

Included in the Title I program was one provision of some importance

in determining the future course of the nursing home system in the United

States. The provision prohibited the Federal Government from making

any matching funds available to the States for assistance payments to

persons residing in "public institutions." The purpose of the prohibition

was to discourage the States from using the poorhouse system as a means

for dealing with the problems of aged dependency :3/

The Social Security Act of 1935, which made public

assistance payments to those aged 65 and over and living

in their own homes or in private homes, but not in

public homes, expressed our distaste for the poorhouse

as a means of caring for the needy aged, and resulted in

part in the present complexion of nursing homes and homes

for the aged.

3/

The Aged and Aging in the United States: A National Problem, Summary and

Recommendations, Senate Committee on Labor and Public Welfare, 86th

Congress, 2d Session, p. 145.

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Undoubtedly, some privately-owned residential facilities and boarding homes

existed before passage of the Social Security Act. But the prohibition

against payments to persons in public institutions gave a new impetus to

the idea of using private facilities as special institutions for the

elderly:4/

Expediency led to the widespread use of existing family

structures, not otherwise fully occupied, with the homeowner or lessee. often having an applicable interest such

as nursing and an interest in such activity as a source of

income. Here then was an opportunity for small proprietary

ventures.

Even homes that had begun only as boarding houses soon underwent changes

in their purpose, as residents continued to advance in age and as the

5/

incidence of chroni¢e illness and disease rose as well:—

Some actually started as nursing homes. Some started as

boarding homes for elderly people. But in historical background, even as in contemporary operations, the line between

homes which offered nursing care and those which provided

domiciliary services was not sharply drawn. With the passage of time, homes which had begun as room-and~-board

enterprises gradually, and sometimes imperceptibly, assumed

responsibility for meeting the personal and nursing needs

as.these areas arose among their aging residents. Thus,

many of today's nursing homes are yesterday's small private

boarding homes for older people...

CRS-7

2. Early Problems Relating to the Financing of Nursing Home Care

One, if not the principal, purpose of the cash assistance programs

for the needy aged was to make it possible for the older person to care

for himself. The assistance payments, along with whatever resources the

recipient might have, would enable the otherwise dependent person to purchase such necessities as food, shelter, clothing and medical care. It

was suggested that if the standards of need and the assistant payments were

adequate, there would be no need for the poorhouse system of the past.

The 1935 Social Security legislation assigned to each State the

responsibility for establishing its own needs standards and for basing

its assistance payments on these standards, Almost immediately controversy arose as to whether the standards and payment levels adopted by

the States were adequate or not to meet the needs of the aged poor and

the other categories of recipients provided for in the new Federal law.

Some of the States were accused of establishing wholly inadequate standards

of need, resulting in payments far too small to be of much help. Other

States were credited with setting realistic need standards, but were |

criticized for failing to make payment levels consistent with such

standards.

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To some extent, the levels of assistance payments actually made by

the States depended on a limitation imposed in the Federal legislation.

Under the law, the Government would not match any portion of a monthly

assistance grant to a recipient that exceeded $30. Individual States

ey

were free to go beyond this monthly dollar amount, but only if they

assumed all of the financial burden for the additional costs involved.

During the Depression years in particular, few of the States seemed able

or willing to finance monthly grants much in excess of the dollar limits

contained in the Federal matching formula.

Because of the prohibition against payments to persons living in

public institutions, most of the placements of aged recipients who required

a sheltered or institutional environment, other than hospitalization, were

made in the numerous proprietary homes that were now beginning to appear

throughout the United States. In turn, the level of old-age assistance

payments of ten determined where these placements would be made. Welfare

officials would subsequently indicate to the Congress. that the choices

frequently involved less than desirable homes.

Nevertheless, the demand for the services provided bythe homes not

only persisted, it intensified. During the Thirties, the number of elderly

persons living in institutions primarily for the aged had declined by

about 10 percent, due largely to the emptying of public almshouses. During

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the Forties, however, the size of the older population in the United States

rose appreciably and the number of elderly people in nursing homes and

6/

homes for the aged rose by about 38 percent.—

Inadequacies in the quality ofcare being provided in many of the

small proprietary homes was first brought to the attention of Congress

_ in 1945, when welfare officials appeared to testify on proposed hospital

construction legislation’

There is a growing conviction among public welfare and

public health officials that the level of medical and

nursing care provided by most private boarding homes is

wholly inadequate either from a health or welfare point

of view. Moreover, despite mushroom growth of such commercial homes, there are still large numbers of chronically

ill persons requiring institutional care for whom there is

no available facility...

The witnesses recommended that the proposed construction grant program be

ys

8/

amended to include assistance for hospital-affiliated nursing homes :—

It seems to us that there is an essential need for hospital-affiliated nursing homes and other facilities for

the chronic sick which are something less than hospitals

and something more than custodial care institutions.

6/

Ibid., pp. 134-135.

7/

"The Hospital Construction Act," Hearings before the Senate Committee

on Education and Labor, 79th Congress, Ist Session; testimony by

spokesman for the American Public Welfare Association; p. 364.

8/

Ibid., pp. 364-365. In 1946, Congress enacted hospital construction

legislation, popularly known as the Hill-Burton program. The APWA's

nursing home recommendations were not included in the law.

CRS-10

In 1946, Congress was asked to examine certain changes in the oldage assistance program and their potential impact on the capacity of the

needy aged to obtain adequate long-term care. One recommendation involved

raising or eliminating altogether the dollar maximums imposed by law on

the amount of monthly assistance payments to individuals for which

9/

Federal matching funds were available:

A maximum payment of $40 per month will not meet the

minimum needs of all aged persons. Such a payment is

too low far recipients who live in large cities where

rents are high, unless they have other income. It is

difficult anywhere to get care in boarding or nursing

homes for $40 a month, and in many communities it is

impossible.

Welfare officials testifying in Congress also again urged reconsideration of the ban on payments to persons living in public institutions.

They recommended modification of the prohibition to permit payments to

individuals in public medical institutions. The ban would continue

for persons residing in facilities that were largely domiciliary in

10

character:

This would allow us to utilize our present county homes

as infirmaries, convalescent homes, or institutions for

the chronically ill.... Care provided in county homes

could,-with the addition of a few medical and nursing

facilities, be vastly superior to most care that is now

available...

9/

~ "Igsues in Social Security," Report to the Committee on Ways and Means

by the Committee's Social Security Technical Staff; January 17, 1946;

p. 276.

10/ |

“Amendments to the Social Security Act," Hearings before the House Com-

mittee on Wavs and Means: Part 7: 79th Congress. 2d Session. 1946: pv. 1131.

CRS-11

Repeal or modification of the ban on payments to persons in public institutions was also sought on grounds that. such action would expand existing

long-term care bed capacity and, thereby, meet part of the intensifying

11/

demand for more institutional facilities:——

...such public institutions may represent the only

available facility for the type of care needed and

provide care at standards comparable to, if not better

than, facilities which do not classify as "public

institutions."

1946 Amendments to the Social Security. Act liberalized somewhat the Federal

matching formula with respect to OAA payments though an overall monthly

12

maximum ceiling of $45 was retained in the act 22! However, no action was

taken to revise the ban on payments to persons in public institutions.

In 1948, the Advisory Council on Social Security reported to

Congress that private nursing facilities charging rates within the reach

of assistance recipients were becoming much too crowded to meet the

increasing demand for institutional care. The Council agreed that the

prohibition on payments to persons in public institutions should be

changed: 43/

In some communities, public medical institutions could

care for these aged persons, if the Federal Government

were to bear a share of the cost. Moreover, if Federal

funds were available for this purpose, communities would

be stimulated to improve the quality of care in such

facilities.

ii/

Ibid., p. 1107.

12/

Liberalizations in the Federal matching formula for °ld-age assistance

were again made in 1948 and in 1950.

13/

~~ "Recommendations for Social Security Legislation," Senate Document No. 208,

80th Congress, 2d Session; June 19, 1948.

t

I

|

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The Council also expressed concern about the quality of care in nursing

facilities generally and recommended that matching be made available to

persons in any medical institutions, public or private, only if States

14/

established standards for their medical facilities and nursing homes :—

At present the Social Security Act does not require

States giving assistance to persons living in private

institutions or nursing homes to establish any standards

for the operation of such facilities. Some of the private institutions and nursing homes in which recipients

are living offer a very poor quality of care and do not

properly protect the health and safety of recipients. We

believe that, as a condition of eligibility for Federal

funds, a State aiding needy aged persons in public and

private medical institutions and commercial nursing homes

should be required to have an authority or authorities

that would establish and maintain adequate minimum standards for institutional facilities, and for the care of

aged persons living in such facilities.

The, Truman Administration agreed with both of these recommendations

of the Advisory Council and in 1949 sent to Congress legislation to change

the public institution prohibition contained in the law and to require

States to establish standard-setting agencies 22/ Both provisions were

included by the Congress in the 1950 Amendments to the Social Security

ee

16

Act :28/

Under present law, the Federal Government participates

in the cost of assistance payments to persons residing

in private, but not in public institutions. Under the

bill, the Federal Government would share in the costs of

payments to old-age assistance recipients living in

ia

Ibid., p. 116.

15/

~~ "Social Security Amendments of 1949," Hearings before the House Committee on

Ways and Means on H.R. 2892: Part 1; 81st Congress, ist Session.

16/

~~ “Social Security Amendments of 1949," House Report No. 1300; 81st Congress

lst Session; August 22, 1949; p. 42.

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public medical institutions other than those for

mental disease and tuberculosis.... Private institutions with charges within the financial reach of these

recipients do not have sufficient capacity to provide

this care. Your committee is of the opinion that aged

persons should be able to receive State-Federal assistance payments while voluntarily residing in public

medical institutions, including nursing and convalescent

homes. In some communities, existing public facilities

would then be enabled to admit old-age assistance

recipients in need of long-term care who are now denied

_ admission because of the financial burden that would be

imposed on the local unit of government. Moreover, if

State-Federal old-age assistance is payable to aged

persons residing in public medical institutions, it is

possible that many communities will develop additional

facilities for chronically i11 persons, and thereby

assist in meeting the increasing need for such facilities by the aged population.

The Committee rationale for the standards requirement revealed some of the

growing Congressional concern for the well-being and safety of patients in

long-term care facilities:~—

Tragic instances of failure to maintain adequate protection against hazards threatening the health and safety

of residents in institutions emphasize the importance of

this [standard-setting] function of State government....

Persons who live in institutions, including nursing and

convalescent homes, should be assured a reasonable

standard of care and be protected against fire hazards,

unsanitary conditions, and overcrowding.

. -

Zo, Sot

ae

ASO Fabfe

1A OS

17/

~~ Tbid., p. 43.

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Two other recommendations of the 1948 Advisory Council were also

considered by Congress at this time. Under the original Social Security

Act, the public assistance titles (including the OAA title) limited

Federal financial participation in State assistance programs only to

help provided to recipients in the form of cash money payments. This

meant that, if the costs of medical care furnished to recipients

were met by a State or local welfare agency directly through payments

to the providers of medical services, such expenditures had to be

borne entirely by State or local government. No Federal matching funds

were available for direct payments of this sort. The Advisory Council

proposed that the law be changed to permit States to make vendor

payments to providers on behalf of the recipients in need of health

18/

care.

The Council also noted in its report that the medical needs of

recipients created special financial problems for the States under the

limitations contained in the Federal matching formula. The Council

proposed that the Federal Government make additional matching money

available (within certain limits) to pay for one-half of the medical

care costs incurred by the States for the needy over and above the

19/

regular cash assistance maximums contained in existing law.

i8/ :

See pp. 112-114 of source cited in Footnote #13.

19/

Ibid.

CRS~15

In 1950, Congress agreed to the idea of making vendor payments on

behalf of the needy, but at that time the Council did not adopt recom-

mendations for additional matching funds for medical assistance pur-

20/

poses :——

Certain provisions of the Social Security Act have

limited the effectiveness of the public assistance

programs in assisting needy individuals to meet

their medical needs. One of these provisions is

the definition of assistance which limits Federal

participation to money payments made to the needy

individual. Some assistance agencies consider it

preferable to pay the medical practitioner or institution that supplies the medical care directly....

The bill provides that Federal funds under old-age

assistance may be used to match payments directly to

medical practitioners and other suppliers of medical

services in behalf of needy aged individuals which,

when added to any money paid to the individual,

does not exceed a monthly amount of $50.

3. The Need for More Nursing Homes

A number of those who testified before legislative committees during

the 1940's warned Congress that the gyowing demand for the services of

long-term care institutions, including nursing homes, was rapidly outstripping the available supply of qualified facilities. There was already

some evidence that the private homes were becoming overcrowded and unable

to meet demand requirements. The public institutions were often underutilized due to such factors as the ban in the Social Security Act

against payments to or on behalf of residents living in public facilities.

20/

See pp. 41~42 of source cited in Footnote #16. A separate matching program

for medical care was enacted in 1956; see Section 4 of this report.

CRS-16

Private and public sources of capital for new construction or for

the expansion of existing institutions were at this time virtually nonexistent. Private lending institutions were usually unwilling or, at

best, reluctant to make available financing for the construction of

“single-purpose" type facilities, such as nursing homes. Only the small

proprietors were venturing risk capital in the nursing home field and

their resources were, of course, very limited. No public program to

expand nursing home capacity existed either. Congress had been asked

during the deliberations on the Hill-Burton legislation to include construction grant assistance for nursing homes and other long-term care

facilities, but no such action was taken.

One of the first major studies to document the need for more skilled

nursing homes was undertaken in 1953-54 in a joint project sponsored by

the U,S. Public Health Service and the Commission on Chronic Tliness 22!

The project involved a survey of the long-term care facility situation

in slightly more. than a dozen States. For the purpose of the survey,

nursing homes were defined as those establishments which provided "skilled

nursing home.care" as their: primary function. Using this definition,

the project surveyors discovered that 72 percent of the homes studied

could not fit such a classification. Obviously, there was a serious shoft- .

age in the number of truly skilled care facilities in the country.

21/

"Nursing Homes, Their Patients and Their Care," Public Health Service

Publication No. 503, Government Printing Office, Washington, D.C., 1957.

CRS-17

Welfare officials, who had testified in 1945 in favor of a construction

grant program for nursing homes, recommended that such assistance be limited

to institutions which were "hospital-affiliated."” It was suggested that

such affiliation could promote better coordination and closer cooperation

between the acute and long-term care segments of the health community. An

even stronger proposal regarding the relationship of hospitals and nursing

homes was made in 1952 by President Truman's Commission on the Health

Needs of the Nation. This Commission recommended that the existing small,

independent (and largely proprietary) nursing homes in the country be

replaced by “larger homes" located near hospitals and supervised and operated by these hospitals .22/ Control over the future course of nursing home

care in America thus began to emerge as a new issue for legislators to

consider.

In 1954, the Eisenhower Administration proposed to amend the Hill-

Burton program to provide construction assistance for long-term care institutions, including nursing homes. The legislative package submitted to

Congress, however, included aid to.only public and non-profit facilities

and not proprietary institutions. In presenting its case before Congress,

the Administration noted that a construction program in the long-term care

field was needed in order to alleviate some of the growing pressure on the

country's short-term general hospitals to accept and care for the chronically

ill. As part of a program to relieve this pressure, the Administration re-

quested $10 million annually to help in the construction of skilled homes.

22/

"Building America's Health," A Report to the President by the Commission

on The Health Needs of the Nation, December 18, 1952.

CRS-18

Anticipating opposition to the legislation from the proprietary elements in the industry, the Secretary of HEW explained why the Administra-

tion's proposal limited aid only to public and non-profit institutions :=2/

That the bill is confined to nonprofit nursing homes

does not mean that nursing homes of this type are the

only necessary or desirable ones. We are well aware

that there are over 9,000 proprietary nursing homes now

in existence. Nor can there be any doubt as to the

need for additional high quality nursing homes of this

type. But here, as in the case of all other facilities

covered by the provisions of H.R. 7341, it seems appropriate to limit eligibility for Federal construction

grants to those which are sponsored by public or other

non-profit agencies or associations.

In cross examination, the Secretary was asked whether the Government shouldn't

also establish a program to aid proprietary facilities. A program only for

public and non-profit institutions, it was suggested, could have @ serious

adverse effect in an industry so overwhelmingly proprietary in its

character. The Secretary responded by indicating that no Administration

position had yet been developed regarding assistance to private nursing

homes. As for the matter of competition from Federally-subsidized nonprofit

2u/

homes, she commented:

-..8s you know, the need for nursing homes and nursing

home beds is so great that I cannot conceive that if this

program were authorized, it would be competition with the

present proprietary homes....

23/

“Public Health Service Act, Hospital Survey and Construction Amendments

of 1954," Hearings before the Committee on Interstate and Foreign Com=

merce on H.R. 7341, 83rd Congress, 2d Session, 1954; p. 19.

24 /

Ibid., p. 45-46.

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As expected, witnesses for the nursing home industry did not agree

with the Secretary on this point and flatly rejected the Administration's

proposed program of assistance to non-profit homes:~~

The American Nursing Home Association is opposed to

H.R. 7341 principally for the reason that the administration seems to be attempting to place federally

sponsored nursing homes in competition with the estimated 20,000 nursing homes that for years have cared

for the indigent, the aged and the chronically ill

without aid or favor from either county, State or

Federal Governments.

Instead of the Administration's plan, the industry witnesses suggested

that Congress earmark some of the loan money allocated to the Federal

Housing Administration (FHA) and the Small Business Administration (SBA)

for the construction of nursing facilities. The witnesses observed that

private capital resources for construction or improvement purposes simply

were inadequate and that the granting of Government money to non-profit

institutions in light of this consideration would be grossly unfair :20/

.+-With the FHA type of guaranteed lo:.:

homes, we could make available faciliti=:

treatment of chronic illness heretofere ir.

in these United States, and we could piedge this to

the American people, that we would keep abreast of the

growing needs of our aging population, rendering to

them services in small units at a community level...

25/

Ibid., pp. 97.

26/

Tbid., pp. 101.

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The private operators also addressed themselves to some of the questions

regarding the quality of care available in existing homes. The problems

that existed were directly tied to the inadequate mechanisms used to pay

2T/

for the costs of nursing home care:

There are many things we do not know, but of this we are

certain, that if we are to operate better, more efficient

nursing homes and give more extensive treatments in our

nursing homes, we must have made available to us the encouragement of private financing and the establishment of

higher rates from the Departments of Public Welfare and

Old-Age Assistance.... Be assured that our statistics show

that the old-age assistance grants paid do not provide sufficient funds for 24-hour care in our nursing homes. The

burden falls squarely on the private patients. The acid test

is to examine your own conscience and ask yourself, "Would

I expect for $25 a week to have one dear to me, who is

senile, confused, and in need of bed care 24 hours a day,

in need of 3 substantial meals and clean linen, sanitary conditions, professional nursing cawe day and night, could I

really expect these things for less than $4 a day.... Yet

our medical social workers expect miracles from the nursing

homes.

Despite the industry's strong opposition to the Administration's

plan, Congress later in the year adopted amendments to the Hill-Burton

law to provide Federal financial support for the construction of non-

pa

profit nursing homes and other types of non-propriet long-term care

institutions 20! | Only those facilities capable of providing "skilled

—

nursing care" were to be eligible for Federal financial assistance under

the new program. Such care was defined to include "nursing services and

procedures employed in caring for the sick which require technical skill

beyond that which an untrained persons possesses.’ The law also required

277

Ibid., pp. 99.

28/

68 Stat. 461.

CRS-21

that any Federally-aided home be operated "in connection with a hospital"

and that the nursing care and other medical services be "prescribed by,

or... performed under the general direction of, persons licensed to practice

medicine or surgery in the State." The term "nursing home" was defined as

a “facility for the accommodation of convalescents or other persons who

are not acutely ill] and not in need of hospital care, but who require

" These represent

skilled nursing care and related medical services....

one of the first attempts on the part of Congress to define the institutions and the "level of care" provided in such facilities for which Federal

financial aid would be available.

The 1954 Hill-Burton legislation also contained a requirement directing

the Government to conduct a truly Nationwide survey of the country's

chronic care institutions, including nursing home facilities. Instead of

inventorying homes in accordance with some of the more traditional designations used in the field -- nursing home, home for the aged, convalescent

home, etc. -- institutions were classified according to the primary "level

of care" offered by the facility 2! The survey indicated that there

were about 25,000 homes of various kinds in the United States, nearly 83

percent of which were proprietary in their ownership. About 7,000 of

these homes (accounting for 180,000 beds) could be classified as "skilled

nursing homes." An additional 2,000 facilities were designated as personal

care homes that offered some skilled nursing care. Of the remaining number

of homes, 7,000 were classified as personal care homes without skilled

ope care and 9,000 as sheltered care institutions.

"Inventory of Nursing Homes and Related Facilities," Public Health Reports,

Vol. 69, December 1954; pp. 1121-1132.

CRS-22

4, Legislative Developments between 1936-1959

In 1956, the Senate's Committee on Labor and Public Welfare pub~

lished several reports on problems of the aged and of aging in the

United States. One of the reports, prepared by the Commission on

Chronic Illness, observed that the quality of care afforded older

people in many of the Nation's nursing homes was continuing to

deteriorate. The cause of such deterioration, the report noted,

was inadequate financing. The Commission found a reluctance on the

part of the public, public agencies, and insuring organizations to

make adequate payments for nursing home care, since much of the care

provided was either substandard in quality or custodial in character.

This reluctance posed a serious dilemna for policymakers attempting

to resolve problems in the nursing home field. On the one hand, it

seemed that adequate financing for nursing home care would not

materialize unless and until considerable improvement in the level

and. quality of such care occurred. On the other hand, much of the

needed improvement sought after could occur only if adequate financing was forthcoming. The Commission urged Congress to strengthen

the programs available to pay for nursing care, particularly the

31/-

public assistance programs:

30/ "Recommendations of the Commission on Chronic Illness on the

Care of the Long-Term Patient," Studies of the Aged and Aging,

compiled by the Senate Committee on Labor and Public Welfare;

November 1956.

31/ Ibid.

CRS~23

Financing is probably the most neglected and unresolved

area in improving care in the bulk of the nonhospital

institutions. The efforts of licensing authorities and

nursing home operators to apply new knowledge and otherwise raise standards can succeed only if better financial

support is forthcoming for these institutions, particularly the ones that are financed through public assistance.

As noted elsewhere, Congress had already made several changes

in the public assistance programs which were important for the indigent person in need of long-term institutional care. [In the

original Old~Age Assistance program, for example, the Government

matched monthly cash assistance payments on a dollar-for-dollar

basis up to a maximum of $30. Amendments to the Social Security Act

in 1939, 1946, 1948 and 1952 produced changes both in the matching

formula itself and in the maximum monthly payment. ceiling. Changes

in the formula increased the Federal. share of assistance costs from

the original 50% to slightly more than 60%. The monthly payment

ceiling had been raised from $30 to $55. The original Act had also

prohibited the use of matching funds for making payments to persons

living in public institutions. The Government was also barred from

sharing in any assistance costs: made in the form of direct. payments

to vendors of medical care. Both of these restrictions were modified

by the Amendments of 1950.

- In 1956, Congress again legislated in the public assistance

32/

area. The Old-Age Assistance formula (and the formulas in the

327-70 Stat. 807.

CRS~24

other assistance titles) was revised to permit the Government to

match four-fifths of the first $30 of cash assistance, plus onehalf of the balance up to a monthly maximum of $60. More important,

however, the 1956 Amendments created a new matching arrangement to

help States meet the assistance costs of medical care provided to

recipients, including the costs of nursing home care. The States

were now authorized to average medical assistance expenses and to

receive Federal matching on a 50-50 basis within certain maximums,

The Government's share of medical expenditures in the adult assistance categories was to be determined by multiplying $6 a month by

the number of recipients. In other words, the matching funds available

for medical assistance no longer would be limited by the monthly

dollar ceiling amounts per individual recipient applicable in the

matching formula for cash assistance payments to recipients.

In 1957, the financing of nursing home care was discussed in an

entirely new legislative context. Representative Aime Forand of

Rhode Island, second-ranking Member of the House Committee on Ways

and Means, introduced legislation to create a new program of hospitalization and surgical insurance for the aged under social security.

Among other things, the Forand bill provided for payments for up to

120 days of nursing home services. Nursing home services were

34

defined in the bill as: _

33/ H.R. 9467, 85th Congress.

34/ Ibid.

CRS~25

.--.skilled nursing care, related to medical and

personal services and accompanying bed and board

furnished by a facility which is equipped to pro-

vide such services, and (A) which is operated in

connection with a hospital, or (B) in which such

skilled nursing care and medical services are

prescribed by, or are performed under the general

direction of, persons licensed to practice medicine

or surgery in the State.

Such a definition was virtually identical with the definition of

skilled care provided by facilities deemed eligible for construction

grant assistance under the Hill-Burton amendments enacted by the

Congress in 1954. The Forand bill prescribed no Federal standards

for nursing homes that would participate in the program. Instead,

any institution could enter into an agreement with the Government to

receive payments for nursing home services, if the facility were

licensed as a nursing home "pursuant to the law of the State in which

it is located."

Hearings on the Forand bill and other proposed amendments to the

35/

Social Security Act were held in 1958. In testimony before the

Committee on Ways and Means, the Eisenhower Administration and most

health care provider groups expressed strong opposition to

Congressman Forand's proposal for a health insurance plan for the

aged. Witnesses for the American Nursing Home Association, who also

33/ "Social Security Legislation," Hearings before the Committee

on Ways and Means on All Titles of the Social Security Act;

85th Congress, 2d Session, June 1958.

CRS-26

opposed the bill, recommended that the Federal Government limit its

36/

‘medically indigent." The

role to assisting the poor and the '

proper legislative course for Congress to follow, Association offi-

cials suggested, would be to strengthen the existing State-

; 37/

administered medical assistance programs:

...our Association supports the principle of increasing

Federal participation in providing funds for medical

care through a percentage ratio of participation on the

part of State governments. We are opposed to the Federal Government contracting directly for the medical,

hospital, and nursing home care of OASI beneficiaries...

We do believe that the economic status of the individual

should be the basis of determining need. That free

choice of facility within the framework of our licensing

laws and within the category of need should be assured,

that determination of care should be on the State rather

than national level, that the manner in which such funds

are dispersed should be left to the discretion of the

States, and that some sort of participation on the part

of States would be desirable for the proper administration of such a program for the medically indigent.

Amendments to the Social Security Act were enacted by Congress

in 1958, though the amendments did not include a program of hospital

; 38/

or health insurance for the aged. One of the Committee reports

on the legislation, however, directed the Government to study the

39/

need for and implications of such a program:

36/ Persons whose incomes and resources are large enough to cover daily

living expenses, but not large enough to pay for needed medical care.

37/ See p. 177 of source cited in Footnote #35.

38/ P.L. 85-840, August 28; 1958. Among other things, the amendments

- further liberalized the Federal matching formula with regard to

cash ‘and medical assistance payments.

39/ “Social Security Amendments of 1958," House Report No. 2288;

85th Congress, 2nd Session; July 28, 1958; pp. 6-7.

CRS~27

Your committee is very much aware of the problems

faced by the aged in paying for hospital services

and nursing home services. A number of bills introduced in the 85th Congress would broaden the old-age,

survivors, and disability insurance program to provide for payment of the cost of hospitalization and

nursing home services for beneficiaries under this

program... Your committee believes, however, that

more information on the practicability and the costs

of providing this kind of protection through various

methods should be made available before it entertains

any recommendation for legislation on the subject...

Your committee has asked the Secretary of Health,

Education and Welfare to conduct such a.study and

report the results on or before February 1, 1959.

With the results of such a study available, the Congress will be in a better position to decide what

legislative measures, if any, should be taken to

Meet the problem.

In April 1959, the Government study on hospitalization insurance for

the aged was published. The comments in the report on nursing home

care revealed a lack of information about conditions in such

40/

facilities:

There is much less information with regard to the

extent of utilization of nursing homes and other

types of medical facilities by aged persons. Most

population surveys relate primarily, if not exclusively, to persons who are not living in institutions.

Surveys of the institutional population have been infrequent and have provided little information as to rates

of admission, length of stay, or similar factors.

The report noted that there were a wide-range of services and many

different levels of care provided by the many and various institu-

tions known as “nursing homes." This diversity made it virtually

40/ “Hospitalization Insurance for OASDI Beneficiaries," Report to

the Committee on Ways and Means by the Secretary of Health,

Education. and Welfare; April 3, 1959.

CRS-28

impossible to assess either the costs or the consequences of including

a nursing home benefit in a program of health insurance for the aged.

If such a benefit were to be included, the report recommended, a

single set of program participation standards for nursing homes

should be oreseribed:

There is no national accrediting agency [for nursing

homes]. If nursing home benefits were provided,

therefore, the insurance system might, at least at

the outset, have to establish its own standards as to

the care for which it would pay.

Three months after this report was published, the Committee

on Ways and Means held public hearings on the new Forand bill

(H.R. 4700), which had been introduced during the lst Session of the

86th congress. Once again, the Administration and most of the

health care provider groups, including the nursing home association,

opposed the legislation. There were, however, also those who favored

enactment of some sort of program and who commented on the nursing

home benefit provisions of the Forand bill. Witnesses from the

-Physicians Forum, for example, were concerned about the single

facility participation requirement contained in the proposal. The

requirement only that participating institutions be licensed by the

43/

State in which they were located was thought to be much too broad:

41/ Ibid., p. 71.

42/ “Hospital, Nursing Home and Surgical benefits for OASI Beneficiaries," Hearings before the Committee on Ways and Means on

H.R. 4700; 86th Congress, lst Session.

43/ Ibid., p. 177.

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