Medicaid & Supporting People with Developmental Disabilities

1. Medicaid & Supporting People with Developmental Disabilities Trends, Challenges, and Opportunities Gary Smith HSRI May 21, 2003

2. Medicaid is the linchpin • Underwrites primary health care for at least 1.4 million individuals with mental retardation and other developmental disabilities • EPSDT is very important in supporting children with disabilities in low-income households • Adults – Rely on Medicaid for primary health care • Underwrites long-term services and supports for about 500,000 people with developmental disabilities

3. Long-term Services and Supports • Medicaid accounts for 75%+ of state expenditures on long-term services and supports for people with developmental disabilities • Key benefits: HCBS waiver, ICF/MR, and Targeted Case Management • 2002 Spending = $24.1 Billion+ • HCBS waiver program: now the primary program in virtually all states

4. DD LTS Medicaid Beneficiary Growth – 1990 to 2002 Growth Rate = 8.2%/year 1999 – 2002 Increase: 110,000 (29%) 2002: HCBS= 379,000 ICF/MR= 111,000

5. Expenditure Trends – 1990 to 2002 Annual Total Expenditure Growth: 6.1% (inflation adjusted) 2002 HCBS=$13.3 B ICF/MR= +$10.8 B

6. Principal trends • ICF/MR: Slow fade • Downsizing/closure public institutions • Limited development of non-state facilities • HCBS Waiver Program • States’ main vehicle for underwriting community services • Expenditures and number of participants have grown very rapidly • States have leveraged old and new dollars through the waiver program to acquire more federal dollars • Outcome: HCBS waiver program fueled expansion of community services

7. Shift to waiver program has – • Lowered state per capita costs • Decoupled funding from location • Aided in reducing/containing waiting lists • Infused dollars into services for people who live with their families • Substantially boosted dollars for integrated employment services • Given states an enormously flexible, agile funding stream

8. Dialing for dollars … • Waiverization – Unmatched state dollars • Family support – leveraging existing dollars • In-home supports • Local match • Opportunities vary state-to-state

9. Going Forward

10. Critical Issue: State Financial Health • State budget crash • Cuts in Medicaid: physical health; eligibility • States throwing on the brakes on system expansion • Result: waiting lists are climbing fast • Payment freezes and cuts • Prognosis – Little or no growth over the mid-term • Problems: • Most states have emptied their unmatched dollars piggy-banks • Going forward, slow growth in state revenues • Outgrowth: future funding will hinge on recovery of overall state budget

11. Critical Issue: Litigation • Lawsuits in 23 states over wait listing individuals with developmental disabilities for Medicaid services • Other lawsuits concerning payments, including worker wages • Aim – put home and community services on equal footing with entitled institutional services • Outcome and impact uncertain

12. Federal Focus Areas • Administrative policy changes to address barriers to HCS across full spectrum of people with disabilities • System change grants: aid states to strengthen community infrastructure and systems; pave the way for change • Consumer-direction • Quality

13. Consumer-direction • Movement for individual-direction of services and supports cuts across individuals with all types of disabilities • CMS: Independence Plus Initiative • Individual/family-directed Medicaid home and community services are the “next big thing” and will lead to substantial changes in public systems (eventually)

14. Quality • CMS: Major focus on HCBS waiver quality management and improvement • Technical assistance/tool development • Oversight • Going forward: requirement for states to spell out full-featured HCBS waiver quality management/ improvement systems • States: engaged in high volume of system enhancement/development activities • Going forward: appreciably higher quality management expectations

15. State Management • The scale of HCBS waiver programs has increased enormously • Waiver = Community System • States are revamping program management • Revising/rationalizing payments/fund allocation • Reconfiguring systems and “business model” around the waiver program

16. Wrap-up • Developmental disabilities services and Medicaid are wedded at the hip • Medicaid has fueled system growth • HCBS waiver program is a powerful tool to expand community supports • Going forward: future hinges on financial health of the states • Focus areas: • Consumer-direction • System and quality management

17. For more information about Medicaid Home and Community Services • Understanding Medicaid Home and Community Services: A Primer – available at: http://aspe.hhs.gov/daltcp/reports-u.shtml#Smith1 • Also go to: http://www.hcbs.org/index.htm for information about a wide variety of topics