Long Term Care Financing Strategies and Trends

Robert MollicaSeptember 2004

Overview

• Spending trends• Systems focus• Federal policy directions• State budgeting framework• Broad rebalancing strategies• State examples

– Washington– Wisconsin– Vermont– Maine

System focus

• One state agency manages the entire system • Flexible money (state agency, local SEP, consumer)• Multiple sources of funding• Eligibility process doesn’t hinder access• Seamless entry (single entry point)• Multiple populations• Full array of services• Available funding/slots• Consumer preferences and control• Care management for nursing home residents

Medicaid spending (billions)2003 1997 Change

Total $243 $160 51.9%

LTC $83.8 $56.1 49.3%

NF $44.8 $32.5 37.8%

ICF-MR $11.3 $10.0 13.0%

HCBS $18.6 $8.2 126.8%

Personal care $6.3 $3.2 96.9%

Home health $2.9 $2.2 31.8%

Eiken, Burwell, Medstat, May 2004

Medicaid spending (billions)

$10.0

$3.2 $2.2$6.3

$2.9

$8.2

$32.5

$18.6

$11.3

$44.8

$0

$10

$20

$30

$40

$50

NF ICF-MR HCBS PC HH

1997 2003

Eiken, Burwell, Medstat, May 2004

Spending balance (billions)

$42.5

$56.1

$27.8

$13.6

$0

$10

$20

$30

$40

$50

$60

1997 2003

Institutional Community

Institutions – drop from 77.1% to 66.9%

Spending Balance – Region

20%24%

53%

20%

32%38%

0%

10%

20%

30%

40%

50%

60%

IL IN MI MN OH WI

Percent home careAll populations

Spending Balance – Region

14%

10%

33%

15%

21%23%

0%

5%

10%

15%

20%

25%

30%

35%

IL IN MI MN OH WI

Percent home careElders and adults

Large states

38%

20%

39%

21%

50%

26%

0%

10%

20%

30%

40%

50%

60%

CA FL IL NY PA WA

Spending balanceAll populations

Large states

36%

14%

32%

6%

45%

12%

0%5%

10%15%20%25%30%35%40%45%50%

CA FL IL NY PA WA

Spending balanceElders and adults

Selected states

23% 25%20%

26%

36% 38%43%

24%

68%

32%

56%

0%

10%

20%

30%

40%

50%

60%

70%

80%

AL AR IL FL MA MI NH NJ OR TX VT

Spending balanceAll populations

Selected states

11%

19%14% 12%

21% 23%

17% 18%

53%

33% 32%

0%

10%

20%

30%

40%

50%

60%

AL AR IL FL MA MI NH NJ OR TX VT

Spending balanceElders and adults

Nursing home supply 65+ Region

71 72.979.3

65.260.2

39.9

0102030405060708090

IL IN MI MN OH WI

NH supply

NF supply selected states

72

44.8

78.6

35.828.9

60.2

5145.1

28.835

0

10

20

30

40

50

60

70

80

90

IL AL AR CA FL MA NH NJ OR WA

NF supply

Federal directions

• New Freedom initiative• Legislation

– Money follows the person– Presumptive eligibility

• Policy guidance– Transition expenses– Modifications– Medical equipment– Eligibility dates

Promoting balance: CMS Grants

• Three rounds of funding – Nursing home transition

– System Change

– CPASS

– Independence Plus

– Quality Assurance/Quality Improvement

– Money Follows the Person

– Aging & Disability Resource Centers

• Round 4 – Awards end of September

Aging and Disability Resource Center Grant Program

• Create a single, coordinated system of information and access for all persons seeking long term support to minimize confusion, enhance individual choice, and support informed decision-making

Greg Case, AoA, 3/3/04

ADRC grantees

Alaska Louisiana New Mexico

Arkansas Maine North Carolina

California Maine No. Marianna

Florida Maryland Pennsylvania

Georgia Minnesota Rhode Island

Illinois Montana South Carolina

Indiana New Hampshire West Virginia

Iowa New Jersey Wisconsin

SEP functions

• I&R 39• Web based I&A 18• Initial screening 37• NF PAS 23• Assessment 40• Financial elig 16

• Functional elig 37

• Develop care plan 42• Authorize service 40• Monitor services

42• Reassess

40• Protective services 8

NASHP 2003

Populations served

2220

13

7 7 63

24

0

5

10

15

20

25

30

Population NASHP 2003

Funding sources

35

26

1513

9

4

42

0

5

10

15

20

25

30

35

40

45

HCBS GR Stateplan

SSBG OAA County Other

Sources NASHP 2003

Organizations

16

13 13

810

31

02468

1012141618

Stateoffices

CBOs AAAs County Other CILs HHA

SEPs NASHP 2003

Financing strategies

• Single long term care budget – Oregon– Washington– Massachusetts reorganization

• Money Follows the Person (Texas, Maryland, Indiana)

• Global budget – Vermont proposal• Managed long term care – AZ, MA, MN, TX, WI• Shifting capacity, special fund (Vermont)

Texas – Rider 37, 28

• NF residents call state DHS hotline• Verify Medicaid eligibility, coded• Case manager prepares care plan• Funds moved to waiver budget periodically

– Allow up to $2,500 for transition services

– Average $1,962

• 2,200 moved 9/2001-8/2003• 1,169 since 8/2003

Living arrangements

37.2%32.2%

2.6% 1.2% 0.8%

26.0%

0%

10%

20%

30%

40%

50%

Family Asistedliving

Ownhome

Otherclients

Adultfostercare

Unknown

Community Source: Texas DHS

Length of stay before transition

12%

26%

16%

4%

14%

18%16%

25%

4% 4%3%

17%

23%20%

0%

5%

10%

15%

20%

25%

30%

<1month

1-3months

4-6months

7-12months

1-3years

3-5years

5+ years

Texas NationalSource: Texas DHS

The Washington delivery system

Hospital

SeniorInformation

andAssistance

ADSAHome & Community

Services Office

Financial Eligibility Comp.

Assessment Service

Authorization

Nursing Facilities

Assisted Living

Adult Residential Care

Adult Family Homes

Alternative Residential Settings

Home Care

ADSA Case Management & NH Relocation

AAA Case Management & Reassessment

Legislative direction…

• Consolidate state LTC policy, management and financing functions

• Consolidated budget structure gives management flexibility

• 95-97 budget reduces NH caseload by 1,600 clients

• NH “bed need” assessment includes availability of home/community care

• Caseload Forecasting Council projects NH, PC & HCBS trends

• NH caseload falling; HCBS absorbs growth in service demand

Aging and Disability Services Administration

Nursing home relocation

• Assign case managers to each nursing facilities

• Priority clients: new admits, 180 day conversions & others expressing interest

• Provide assistive technology and individualized community support services

• Use civil penalty fund and nursing facility discharge allowance

• Promote NH capacity reduction and bed conversion strategies

Aging and Disability Services Administration

Nursing Home Caseload Trend

Aging and Disability Services Administration

Home & community caseload trend0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Ju

l-97

Jan

-98

Ju

l-98

Jan

-99

Ju

l-99

Jan

-00

Ju

l-00

Jan

-01

Ju

l-01

Jan

-02

Ju

l-02

Jan

-03

Ju

l-03

Jan

-04

Ju

l-04

Jan

-05

Home and Community Services-Detail

24,000

26,000

28,000

30,000

32,000

34,000

36,000

38,000

40,000

Ju

l-97

Jan

-98

Ju

l-98

Jan

-99

Ju

l-99

Jan

-00

Ju

l-00

Jan

-01

Ju

l-01

Jan

-02

Ju

l-02

Jan

-03

Ju

l-03

Jan

-04

Ju

l-04

Jan

-05

June 2003 Forecast

February 2003 Forecast

Aging and Disability Services Administration

Washington LTC CaseloadCaseload Trends

10,000

15,000

20,000

25,000

30,000

35,000

7-87 7-88 7-89 7-90 7-91 7-92 7-93 7-94 7-95 7-96 7-97 7-98 7-99 7-2000 7-2001

Medicaid Nursing Home Caseload

Home & Community Caseload

Vermont Act 160

“The reductions required … shall be redirected in FY 1997 to fund home and community-based services. For fiscal year 1998 and thereafter, the reductions required ... shall be redirected … to fund both home and community-based services and any programs designed to reduce the number of nursing home beds. Any general funds redirected but not spent during any fiscal year shall be transferred to the long-term care special administration fund...”

Department of Aging and Disabilities

Vermont Act 160

• Shifted funds from nursing home to the HCBS appropriation

• Goal 60-40% institution/community• Strategies: NF moratorium, expand

residential alternatives, one time investments• Five percent drop in NF supply• Budget crisis may shift funds back to

entitlement services

Department of Aging and Disabilities

Shifting the spending balance

88%

69%

12%31%

0%10%20%30%40%50%60%70%80%90%

100%

Nursing home Community

1996 2003Department of Aging and Disabilities

Vermont spending trends (millions)

$0$10$20$30$40$50$60$70$80$90

$100

1996 1997 1998 1999 2000 2001 2002 2003

NF CommunityDepartment of Aging and Disabilities

VT caseload trends

Use of NFs alone would raise spending by $40 million

2200

415

1100

2800

0

500

1000

1500

2000

2500

3000

1996 2003

NF

HCBS

Department of Aging and Disabilities

Vermont global budget (1115 proposal)

• Provide maximum choice of services and settings• Eliminate institutional bias• Promote early intervention• Improve satisfaction• Break link between 1915 (c) waivers

and NF level of care• Reduce NF use• Control costs

Department of Aging and Disabilities

Levels of intervention

• Highest need: Entitlement to NF or HCBS

• High need: Served as funds available

• Moderate need: At risk, as funds available

Department of Aging and Disabilities

Long term care reformin Maine

Goals for ReformControl SpendingRespond to Consumer

Demand for ChoicesAddress Unmet NeedsReduce Reliance on

Institutional Care

Bureau of Elderly and Adult Services

Maine: deficit creates opening for reform

1993 • Soaring nursing home

costs• Loose eligibility criteria• Waiting lists for home

care• Few residential

alternatives to institutional care.

1994 • Legislature tightens

nursing home admission criteria

• Diverts savings to home care and the deficit

• Amends criteria for CON requiring cost neutrality for new projects.

Bureau of Elderly and Adult Services

System restructuring

• Consolidated assessment and case management– reduce overhead costs – address disparities in service allocation

• Electronic long-term care eligibility determination system (MECARE)

• Increased management tools

Bureau of Elderly and Adult Services

What’s working

• Home and community care increased from 16% to 39% of total budget – Per capita spending declined 12%

• Medicaid NF census dropped 17%, discharges to home tripled, and length of stay reduced

• 2000+ nursing home beds (20% of total) banked, delicensed, or converted to residential care

• Data system able to respond to questions and challenges, and predict result of policy changes

Bureau of Elderly and Adult Services

MECARE

• Provides real time program eligibility• Enhances communication between departments,

bureaus and organizations• Statewide data on consumer characteristics,

service plans and costs across settings/programs• Integrates data sets (assessment and claims)• Promotes maximization of Medicaid funding

Bureau of Elderly and Adult Services

149.7

185.7

210.1

220.7217.3

228.8

203.7 202.3

185.6 184.1

200.5 202.7 201.5201.1

140150160170180190200210220230240

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Maine NF

Maine NF spending trends

110.6

133.5

29.5

77.3

92.8107.3104.3

0102030405060708090

100110120130140150

1997 1998 1999 2000 2001 2002 2003

Maine HCBS

Maine HCBS trends

Medicaid only

Maine caseload: state and Medicaid

50%

11%

39%

31%

18%

51%

0%

10%

20%

30%

40%

50%

60%

NF Assisted living Home Care

1995 2003

1995: served 19,742 2003: served 25,667

Maine spending

84%

6% 10%

64%

19% 17%

0%10%20%30%40%50%60%70%80%90%

NF Assisted living Home Care

1995 2003

Common themes among states

• Restructure during a budget crisis • Seven point plan• Leadership• Comprehensive entry point system• Financing strategy (pool, MFP, capitation)• Expand in home and residential options• Reduce NF supply

– Occupancy penalty, bank, convert• Nursing home relocation

– Cover transition costs, Dedicated staff