Essential Elements of a State Rebalancing Effort

Susan Reinhard, RN, PhDSenior Vice President

AARP Public Policy InstituteRhode Island, May 28, 2009

5

A Balancing Act

• Reports on Medicaid LTC spending and participation for older people and adults with physical disabilities for the 1st time

• When the data for all populations are combined, it’s impossible to get an accurate understanding of how well we are “balancing” for older people and adults with physical disabilities

6

Consumer Perspective

Want greater Access to HCBS

• Most people age 50+ want to “age in place” (84%)

• People with disabilities want to live in their own homes (87%)

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Sources: AARP Public Policy Institute calculations based on: Burwell, B., Sredl, K., and Eiken, S. (2008) Medicaid Long-Term Care Expenditures in FY 2007. Cambridge, MA: Thomson Reuters

Bad News: Almost Three-Fourths of Medicaid LTC $$ Go to Nursing Homes

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Medicaid Institutional Bias

• Nursing home an entitlement• HCBS primarily through 1915 (c)

waivers– State plan option under the DRA

• Establishing financial eligibility more difficult in the community

• Medicaid covers housing costs in an institution

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Good News: HCBS Going Up

Sources: AARP Public Policy Institute calculations based on: Burwell, B., Sredl, K., and Eiken, S. (2008) Medicaid Long-Term Care Expenditures in FY 2007. Cambridge, MA: Thomson Reuters; Burwell, B. (2002) Medicaid HCBS Waiver Expenditures, FY1995–2001. Cambridge, MA: Thomson Reuters.

12%

27%17%

39%

30%

63%

0%

15%

30%

45%

60%

75%

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Older People and Adults with Physical Disabilities All Medicaid Beneficiaries MR/DD

Percentage of Medicaid Long-Term Care Spending Going to HCBS, 1995–2007

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HCBS Can Be Cost-Effective

On average, Medicaid dollars can support nearly 3 older people or adults with physical disabilities in HCBS for every person in a nursing home

Sources: HCBS from Ng, T., Harrington, C., and O’Malley, M. (2008). Medicaid Home and Community-Based Service Programs: Data Update. Kaiser Commission on Medicaid and the Uninsured; Nursing Homes from Center for Medicare & Medicaid Services (CMS), Medicare & Medicaid Statistical Supplement, 2008 edition.

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Good News for Some States, Bad News for Other States

Source: AARP Public Policy Institute calculations based on: Burwell, B., Sredl, K., and Eiken, S. (2008). Medicaid Long-Term Care Expenditures in FY 2007. Cambridge, MA: Thomson Reuters.

NOTE: This does not take into account state-funded HCBS programs, which are significant in some states.

27%

5% 11%

1%

61%56%55%

0%

10%

20%

30%

40%

50%

60%

70%

New Mexico OregonWashingtonU.S. AverageRhode IslandUtahTennessee

Pe

rce

nt

go

ing

to

HC

BS

Percentage of Medicaid Long-Term Care Spending for Older People and Adults with Physical Disabilities Going to Home and Community-Based Services, 2007

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We Can Do A Lot Better

Nearly half of all states spend less than 1 in 5 Medicaid LTSS dollars for older people and adults with physical disabilities on HCBS. Only 8 states spend more than 2 in 5 Medicaid dollars.

Sources: AARP Public Policy Institute calculations based on: Burwell, B., Sredl, K., and Eiken, S. (2008) Medicaid Long-Term Care Expenditures in FY 2007. Cambridge, MA: Thomson Reuters

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Balancing is Achievable

MR/DD Success

Sources: AARP Public Policy Institute calculations based on: Burwell, B., Sredl, K., and Eiken, S. (2008) Medicaid Long-Term Care Expenditures in FY 2007. Cambridge, MA: Thomson Reuters

37%

73%

0%

20%

40%

60%

80%

MR/DD Older People andAdults with PD

Per

cent

Ins

titut

iona

lPercentage of Medicaid LTSS Dollars Going

Toward Institutional Care, by Population, 2007

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Pace of Change Matters

Sources: AARP Public Policy Institute calculations based on: Burwell, B., Sredl, K., and Eiken, S. (2008) Medicaid Long-Term Care Expenditures in FY 2007. Cambridge, MA: Thomson Reuters (historical); AARP Public Policy Institute (projections).

Current trends in balancing =

50/50 spending balance achieved in 2019

$0

$20,000

$40,000

$60,000

$80,000

$100,000

1995 2000 2005 2010 2015 2020

Exp

end

itu

res

(Mill

ion

s)

Nursing Homes–Historical Nursing Homes–Projected HCBS–Historical HCBS–Projected

Medicaid Long-Term Care Spending for Older People and Adults with Physical Disabilities, by

Type of Service, 1995–2020: Historical Data and Projections

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Current Economic Climate

• How will the current economic downturn affect the pace of change?

• As a percentage of total Medicaid spending, LTC declined 12% between 1998 and 2007

• LTC is not the major driver of increased Medicaid spending during a recession.

16

Current Economic Climate

• States that invest in HCBS programs experience slower expenditure growth than states with low HCBS spending

• Budget decisions that increase Medicaid’s institutional bias should be avoided

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Rhode IslandMedicaid LTC Spending in is Unbalanced, 2007

18

Change in Rhode Island Medicaid LTC Spending, 2002-2007

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Medicaid LTC Spending in Washington is Balanced, 2007

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Medicaid LTC Spending in Texas is Making Progress, 2007

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Medicaid LTC Spending in Vermont is Making Progress, 2007

25

Vermont Choices for CareParticipants, 2005–2008

0

500

1000

1500

2000

2500

3000

3500

Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09

Year

Nu

mb

er o

f P

arti

cip

an

ts

Total HCBS

Nursing Facilities

Source: J. Senecal, Commissioner, Vermont Department of Disabilities, Aging and Independent Living, presentation at the 2009 Money Follows the Person conference

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Rationale for Medicaid Managed LTC• Burgeoning cost of Medicaid services.• State officials can achieve budget

stability over time through capitation.• Minimize financial risk by passing part

or all of it on to contractors.• States can hold one entity

accountable for both controlling service use and providing quality care.

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Rationale for Medicaid Managed LTC (con’t)• Officials are also interested in MMLTC

ability to address the following:– Waiting lists for LTC services– Families unaware of services or how to

get them because of multiple agencies. – Lack of accountability – Avoidable hospital admissions,

unnecessary use of nursing home care, & medication mismanagement resulting from multiple parallel systems of care.

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Medicaid Managed LTC: Pros

Pros:

Less consumer cost sharing than fee-for-service.

Enhanced benefits.Greater emphasis on home and

community-based services.

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Medicaid Managed LTC: Potential IssuesCons:Limit number of providers members can

see? Is the network adequate?Providers concerned about accepting a

price that may be less than fee-for-service rates. Network adequacy…

In a few areas, MMLTC is the only option for consumers who need Medicaid-funded LTC…choice?

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AARP Policies on Medicaid Managed LTC• Choice: Consumers have choice to enroll and

can disenroll from managed care “for cause”• Enrollment: States conduct enrollment

directly or contract with third-party enrollment brokers

• Plan Standards: Plans need to meet comprehensive set of standards that apply to other health plans– Full range of consumer protections– Fair, rapid appeals process

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Questions: Medicaid Managed LTC• Enrollment: Is enrollment in managed

care optional, or do beneficiaries have the right to opt-out?

• Capitated benefits: What benefits should be included in the capitation? Should contractors be at risk only for long-term care, Medicaid long-term care, and acute care, or for the comprehensive range of Medicaid and Medicare benefits?

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Questions (con’t)

• Contractors: Does the managed care organization have an adequate network of home and community-based service providers?

• Services: Will self-direction of services be allowed? What is the role for family caregivers? Can they be paid as service providers?

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Questions

• Consumer Info: Will consumer information be available for people with visual impairments, limited reading proficiency, and in languages other than English?

• Geographic area: What areas are viable?

• Quality: How should the quality of care be measured?

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Comprehensive System – Selected Features• Philosophy, leadership• Consolidate functions or figure

out how to overcome turf– Policy, eligibility, licensing, oversight, program

management

• Comprehensive entry points/one stop/coordinated entry: uniform assessment, options counseling

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Comprehensive System (con’t)• Financing that supports access and

choice– Unified budgets, flexible funding, consumer choice

– Managed long-term care • Full array of services• Nursing home case management

and relocation assistance• Streamlined access

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Impact of a Comprehensive System

Reduces Medicaid growth trend line

NF reliance

Broad array

Time

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