An Issue Paper Prepared by the National Rural Health Association-May 2001


Policy-makers, practitioners and researchers are becoming increasingly aware of the gaps in and challenges of meeting the complex health and social needs of rural older Americans. An increase in prevalence of disease and greater use of health care resources comes with advancing age. As the population continues to age, those coming behind will fall short both in numbers and cash resources to care for the elderly. Many older people remain on waiting lists for essential services or need services currently not available because of budgetary cutbacks in entitlement programs. To meet the challenge, both the health care and social services systems must not only be accessible but also affordable. Changes in policy and consumer preferences are reflected in an increased reliance on private funds for needed services and an expansion of residential care alternatives and in-home care options (Coburn, Beddow, & Ladd, 2000).

This paper provides background information on the status of long-term care in rural America. Long-term care for purposes of this paper is defined as a comprehensive range of health, personal and social services delivered over time to meet the needs and increase the quality of life of older adults, especially those with chronic illnesses and disabilities. Guiding principles for the National Rural Health Association to employ regarding long-term care policies and regulations of older adults are delineated. Finally, four priority areas for action are identified to address the challenges for long-term care in rural America and the implications for rural health care providers and the older adults they serve.


Thirty-five million Americans are 65 years of age or older, accounting for 13 percent of the total population. Of these, about 19 million are 65 to 74 years old and 16 million are 75 years or older. It is predicted that by 2020, there will be 52 million older adults, representing about 16 percent of the population. About one-fourth of the total elderly population resides in nonmetropolitan areas and comprise about 15 percent of this rural population (Pfizer Facts, 1999). Overall, nonmetropolitan elderly are poorer and less educated than their metropolitan counterparts.

Health Status
Nonmetropolitan elders more often assess their health as fair or poor than the metropolitan elderly (Coburn & Bolda, 1999). More than one-half of the older population reported having at least one disability, and the percentages increase sharply with age. Forti and Koerber (2001) reported that 78 percent of older adults enrolled in a rural minority care management program had two or more disabilities. The American Housing Survey (Harvard, 1998) related that an estimated one-third of people over age 65 who live alone and need help with a disability receive no home care.

Health Insurance
Older Americans are one of the only groups to have health care insured as an entitlement. The primary source of health care financing for older adults is Medicare. Medicare covers many of the costs of acute care, but less than one-half of the total health expenditure for those 65 and older. The Social Security Old Age, Survivors and Disability Insurance Program (Title II of the Social Security Act) provides about 50 percent of the total income for three out of five older Americans with rural elders receiving lower Social Security payments than urban elders (Krout, 1994). On average, metropolitan elders have a higher percent use of Medicare than nonmetropolitan elders (36 percent vs. 30 percent). However, in many cases, Medicare pays less for the same services in rural settings as compared with urban settings.

Most publicly funded long-term care is provided in the nursing home setting. However, most older adults who require services prefer to remain in their own homes (Krout, 1998). Medicaid covers long-term care, but only for those who are poor or become poor after paying for long-term care (Feder, Komisar, & Niefeld, 2000). About 73 percent of nonmetropolitan elders had a combination of Medicare and private insurance coverage compared with 78 percent of metropolitan elderly. Long-term care is the single largest line item in the Medicaid budget. About $2 billion to $5 billion per year could be saved in Medicaid costs by moving older people from nursing homes to assisted living facilities (Clark, 1998).

Nursing Home Trends
The supply of nursing home beds is nearly 43 percent higher in non-metropolitan than metropolitan areas (Rhoades & Krauss, 1999). According to the 1990 census, rates of institutionalization are higher among rural elders (6 percent compared with 5.1 percent of urban elders). A high percentage of rural nursing homes are located in hospitals due to the Medicare swing-bed program (16.4 percent as compared with 8.3 percent in metropolitan areas) (Coburn et al., 2000).

The role of nursing homes is changing because a more sick and disabled population is being served. Changes in nursing home patients’ functional dependency status and the concurrent changes in resources used by these patients are important issues for policy-makers who determine reimbursement rates (Phillips, Wesley, Kruse, & Gail, 2000). Nursing homes in rural areas are less likely to have non-nursing beds, such as personal care or independent living beds (Rhoades, Potter, Krauss, 1998).


Significant challenges to the provision of long-term care services in rural America include the following priority areas: federal and state reimbursement policies, home and community-based long-term care services, the rural long-term care infrastructure, and long-term care research.

Federal and State Reimbursement Policies
With a more limited infrastructure that provides rural older adults with fewer long-term care options than urban adults, rural areas are disproportionately affected by changes in Medicare and Medicaid policies. Lower reimbursement rates for Medicare in rural hospitals result in many of these providers being financially at risk and forced to make hard choices about what services they can afford to offer their patients. According to the Government Accounting Office, the Balanced Budget Act of 1997 (Public Law 105-133) slashed $58 billion more than was anticipated or intended by Congress from virtually every facet of the Medicare program. Payment reductions associated with the Balanced Budget Act of 1997 placed an additional burden on rural providers given their smaller size, lower volumes and fewer opportunities to shift costs onto private paying patients.

As a result of pressure exerted by older adults themselves and the health service industry, Congress enacted the Balanced Budget Refinement Act of 1999 (Public Law 106-113) in the final weeks of that year. While the Balanced Budget Refinement Act restored more than $2 billion to the long-term care industry, in some cases it has been too little and arrived too late to save fragile facilities that tend to be common to rural areas.

The Medicare, Medicaid and State Children’s Health Insurance Program Benefits Improvement and Protection Act of 2000 (Public Law106-554) went a step further in providing fiscal relief to many long-term care providers by increasing reimbursement rates for the nursing component in nursing homes by 16.67 percent. In addition, this act adjusted the annual inflationary increase allowed to nursing homes from 0.5 percent below market rates to the full market rate in fiscal year 2001. It should be noted, however, that these "fixes" are temporary. Without further legislative intervention the resources restored to provide long-term care for the elderly under both the Balanced Budget Refinement Act and the Benefits Improvement and Protection Act will revert to the levels originally specified in the Balanced Budget Act of 1997. Much of the present health services delivery system for the elderly in rural areas may be unable to survive in such a reimbursement climate. Major reformation in the way long-term care is reimbursed in rural areas is needed to significantly impact the problem of access to care.

Home and Community-based Services
Medicaid finances home and community-based services waiver programs (Section 2176) to states. These types of programs, which target community-based alternatives to nursing facility settings, are limited in scope and are often targeted to urban areas, leaving rural residents behind. State Medicaid and long-term care policy developments have significant implications for providing a more balanced and accessible long-term care system in rural communities. Efforts by states to eliminate the waiver status of Medicaid home and community-based programs could have beneficial effects by enabling states to strengthen or extend access and availability of these services in rural communities (Coburn et al., 2000).

Rural Long-term Care Infrastructure
The aging process, coupled with hurdles such as geographic barriers, higher unemployment, lower literacy and lack of medical treatment, challenge the usually resilient older people of rural America. Access and utilization barriers to services in rural areas include: fewer types of services, traveling long distances to access services, lack of public transportation systems, "red tape" involved in applying and receiving services, and a lower level of service awareness among elders and service providers (Krout, 1994). For example, in one study 54 percent of older clients enrolled in a rural care management project were not receiving benefits from public programs such as Supplemental Security Income disability for which they were eligible (Forti & Koerber, 2001).

Rural communities are diverse and require varied approaches to service development and delivery. Krout (1998) reports that gaps exist in the "continuum of care" with fewer options for those who can no longer live independently. Others contend that a "substitution effect" operates in rural communities whereby the greater availability of nursing home and inpatient hospital care depresses the utilization of community-based services such as home health (Coburn & Bolda, 1999).
In addition to experiencing problems in recruitment and retention, the long-term care work force also is plagued by problems with licensure and adequacy of training. The availability of trained health professionals in rural areas—especially physical therapists, social workers and nurse aides is extremely limited (Beaulieu, 1994). Turnover among the most poorly paid staff is high. To the extent that rural providers cannot adequately pay for therapy services, drugs and other needed services, quality will suffer and costs will be higher (Coburn & Bolda, 1999).

Patients in skilled nursing facilities in rural areas are increasingly sick and frail. Rural nursing home patients are more likely to experience multiple nursing facility-to-hospital transfers, signaling the difficulties rural facilities may have in managing medically complex patients (Coburn & Bolda, 1999). This might suggest a need for training changes to more adequately prepare staff to care for these patients.

Integration of long-term care and other needed non-medical social services is often lacking in rural areas. Accessing coordinated and affordable help is challenged by obscure funding streams, varying eligibility levels and disparate service providers. Integrated models of service delivery are assumed to produce better efficiency, shared resources and cost savings. Given the lack of social services in rural areas, there is a demand to enhance collaboration and integration among government, private corporations and local community organizations to meet the health care needs of rural elders. Access to long-term care services continues to be a problem and financially fragile facilities continue to struggle. Too little attention has been given to designing strategies and service models for elders because programs and policies are often "scaled down" urban models that have not been found to be effective. Advocacy efforts by organizations, associations and other interested constituencies must be continued and strengthened to improve the health status and quality of life of our rural elderly (Coburn, 2000).

Rural Long-term Care Research Priorities
There is a paucity of research on long-term care in rural areas, and what exists is mostly outdated. There is a crucial need to understand current trends and how post-acute and long-term care services may affect the health quality and outcomes of rural elders. Little is known about the effect of changing trends that place emphasis on non-medical long-term care options in rural settings. Research shows that nursing homes are caring for sicker patients, but it is not known if the staff is adequately prepared to care for these elders. It is also critical to track the impact of changes in federal and state reimbursement policies. There also is conflicting evidence regarding residential differences in the use of formal long-term care services.

Another research priority involves the aging rural veteran population. A significant number of combat veterans live in rural areas. While the Department of Veterans’ Affairs supports systems of health care for these veterans, consideration of their long-term care needs is critical as this population ages. The average age for a Vietnam veteran is 53. According to testimony before the Senate Aging Committee in 2001, two states do not have long-term care facilities for their veterans (Heady, 2001). This issue compounds long-term care issues in general for the rural population: Is there an adequate number of long-term nursing beds and services for the rural aging population, let alone adequate numbers for older rural veterans?


As a nation, we have been content to let Medicaid be the public funder and nursing homes the provider of long-term care services. This has certainly been the case for rural elderly. However, as the baby boomer generation moves into their 60s and 70s, the extraordinary demands and the costs of that system will not go unnoticed or untouched by Congress or by the states. Budgetary cuts in long-term care, such as those experienced on the acute care side of the health care equation, will decimate rural providers and leave rural elderly without options.

Rural advocates must begin today to support and promote research; policy development and analysis; regulatory reform; and program development, implementation, research and evaluation that will provide for the future financing and delivery of long-term care services.

The following principles are proposed as a guide for rural advocacy to achieve integrated systems of long-term care and as a list of criteria against which programs and policies must be compared.

While Medicare and Medicaid will pay for medical services in a provider’s office or in a hospital, and Medicaid will reimburse for extended nursing home care, care at home—especially non-medical care—is frequently non-reimbursable and is often problematic to find in rural areas (Rural Health News, 2000). In reality, many rural elders must choose between eating and paying for their prescription medications. Current financing of long-term care for rural elders who have limited community-based services and limited capacity to pay out-of-pocket expenditures makes them more dependent on
Medicare and Medicaid and is an immediate challenge that must be addressed by federal and state governments, researchers and organizations.

The National Rural Health Association will advocate for an accessible, acceptable and financially viable long-term care delivery system to meet the needs of our rural elders if we are to avoid a long-term care crisis accompanying an aging baby boomer population. This can be accomplished by collaborating with long-term care associations concerning the pressing issues of long-term care in rural America.


To more effectively delineate issues and recommend policy for rural long-term care, a series of future issue papers focusing on the following priority areas are recommended.

State and federal reimbursement policies in rural long-term care

Home and community-based services in rural long-term care

Long-term care infrastructure in rural America

Research priorities for rural long-term care

Note: A report on research priorities including long-term care and cross-cutting issues has been prepared by the NRHA National Rural Health Research Agenda Setting Conference Committee, August 2000.


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This paper was prepared for the National Rural Health Association’s Rural Health Policy Board by:

Esther M. Forti, Ph.D., R.N., Assistant Professor, College of Health Professions Research Office, Medical University of South Carolina, 19 Hagood Ave., PO Box 250822, Charleston, S.C., 29403-5120; for[email protected]

Michael J. Funk, M.S. (HCA), President/CEO, North Ottawa Community Health System, Grand Haven, Mich.; [email protected]

Gail Bellamy, Ph.D., Associate Professor, Department of Health Policy and Management, School of Rural Public Health, Texas A&M University, College Station, Texas; [email protected]

Janet F. Ivory, M.S.P.A., Harvest of Hope Foundation for Migrant Farmworkers, Stephentown, N.Y.; [email protected]

Hilda Heady, M.S.W., Associate Vice President for Rural Health, Robert C. Byrd Health Sciences Center of West Virginia University, and Executive Director, West Virginia Rural Health Education Partnership, Morgantown, W.Va.; [email protected]