Medicaid Home and Community Based Long Term Care – Trends in the U.S. and Maryland

1. Medicaid Home and Community Based Long Term Care – Trends in the U.S. and Maryland Nancy A. Miller Department of Public Policy, UMBC nanmille@umbc.edu, 410-455-3889 Briefing, MD Senate Finance Committee January 15, 2004 Funded by: National Institute of Disability and Rehabilitation Research, Department of Education Information Brokering for Long Term Care, The Robert Wood Johnson Foundation

2. Purpose • Provide overview of Medicaid home and community based care services (HCBS) • Compare Maryland to national trends with regard to HCBS • Describe strategies states can pursue to support community based long term care and summarize effectiveness

3. Levit, et al. Health Affairs 2003

4. US Medicaid Long Term Care Expenditures, 2002 ($82 billion) Source: Burwell, 2003. CMS Form 64 Expenditure Data. Cambridge, MA: MedStat

5. Forces Fueling HCBS Growth • Consumer demand for alternatives to nursing homes especially by people with disabilities • 1999 Supreme Court Olmstead decision • Concerns with quality of nursing home care • Costs of institutional care

6. Three Types of Medicaid Home and Community Based Services • Home health care – • Only required for those who would be in an institution • Mandatory state plan • More restrictive financial eligibility • Personal care state plan option • available in only 28 states (including MD) • More restrictive financial eligibility • HCBS waiver programs • Must be nursing home eligible • Can and do limit slots & expenditures

7. Medicaid Home and Community Based Service Waivers • Waiver of: • Statewide requirements • Comparability of services for different population groups • Income and resource requirements – up to 300% SSI, as with NH eligibility • Wide range of services

8. Medicaid Home Health, Personal Care and Waiver Participants, 2001(2,117,948 participants) Kitchener, Ng, & Harrington, 2003, Medicaid HCBS Program Data. San Francisco, CA: UCSF

9. Medicaid HCBS Expenditures by Program, 2001: Total, $22 billion Kitchener, Ng, & Harrington, 2003. Medicaid HCBS Program Data 92-01. San Francisco, CA: UCSF

10. Allocation of Medicaid Community Based Care Dollars 1990-2001

11. Allocation of Medicaid Community Based Care Dollars 2001 -- Maryland

12. 1915c Waivers • Since Congressional authorization in 1981, 1915c waivers for home and community based care have been an important, and growing Medicaid program • Six states participated in 1982; by 1997, all states provided waiver services to at least 1 of 7 target groups • Participants have grown from 235,580 in 1992 to 832,915 in 2001 • Expenditures have grown from $3.8 million in 1982 to $2.16 billion in 1992 and $14.22 billion by 2001

13. Number of States With Waivers For Target Groups, 2001

14. 1915c Waivers -- MD • Model waiver for children with disabilities – 1985 (funds expended) • MR/DD waiver – 1986 (funds expended) • Waiver for Older Adults – 2001 • Living at Home: MD Community Choice Care (working age adults) – 2001 • Waiver for children with autism – 2001 • Traumatic Brain Injury waiver -- 2003 • Subsequent waiver numbers for MD in the charts underestimate MD activity, as most national numbers are available only through 2000 or 2001

15. Participants by Recipient Type: 2001Total Number: 832,915 Kitchener, Ng, and Harrington, 2003. Medicaid HCBS Program Data. SF:UCSF.

16. MD Participants by Recipient Type: 2002; approximately 9,795 Kitchener, Ng, and Harrington, 2003. Personal communication, CHPDM, 2004

17. Medicaid Waiver Expenditures by Recipient Group, 2001Total Expenditure: $14,218,236,802 Kitchener, Ng & Harrington. 2003. Medicaid HCBS Program Data. SF: UCSF

18. Waiver Expenditures by Service Category, 2001Total: $14 billion Kitchener, Ng, & Harrington, 2003. Medicaid Home Care. SF: UCSF

19. 1915c Waiver Participants per 1000, 2001 (all target groups)

20. 1915c Waiver Expenditures per 1000, 2001 (all target groups)

21. State Variation in Medicaid Per Capita HCBS Expenditures for Aged and Disabled, 2000

22. State Variation in Share of Medicaid LTC Dollars Supporting HCBS for Aged and Disabled, 2000

23. State Variation in Medicaid Per Capita 1915c Waiver Participants for Aged and Disabled, 2000

24. State Variation in Access to HCBS – What Contributes? • Differences in demand for long term care • Variation in state resources to meet demand • State LTC system goals and effectiveness of strategies to attain those goals

25. Three Broad Strategies:I. Increase HCBS Capacity • Expand public and private sources and revenues – waivers, private LTC insurance • Use payment and regulatory policies – cost-based HHA payment, incentives for residential care beds • Cover services in alternative residential settings • Expand functional and financial eligibility for HCBS

26. Three Broad Strategies:II. Constrain Institutional Growth • Regulatory approaches • Certificate of Need • Moratoria • Payment policies • Prospective payment for nursing facilities • Incentives for bed closure

27. Three Broad Strategies:III. Managed/Capitated LTC • Combine payment mechanisms and systems reform to • increase access to a wide array of HCBS • constrain overall LTC spending PACE, Social HMO Statewide approaches – e.g., Arizona Dual eligible programs: MN, NY, TX, WI

28. Which Strategies Appear Most Effective? • Increase capacity • Increase access through Medicaid funding • States have used 1915c waivers, home health & personal care to increase access. The number of participants, rates of use, and expenditures have each increased. • States with the highest per capita HCBS spending across all public sources rely almost exclusively on Medicaid. States with the lowest per capita HCBS spending underutilize Medicaid, relative to other states. • Suggests states should continue to increase capacity through Medicaid funding.

29. Which Strategies Appear Most Effective? • Explore additional public funding sources • Increased use of Medicare funding is related to: • Greater per capita waiver participation • Greater per capita waiver expenditures • A larger share of long term care dollars supporting waiver services • Greater per capita HCBS expenditures • A larger share of long term care dollars supporting HCBS • Medicare and state funds are important sources of HCBS funds in certain states. • Suggests states should continue to explore additional public funds such as Medicare.

30. Which Strategies Appear Most Effective? • Encourage purchase of private long term care insurance • Knowledge and information issues are important. However, the effectiveness of informational campaigns is unclear. • Affordability is key. A study of Maryland residents found that employer offering of private long term care insurance at an employer sponsored group rate more than doubled the probability of purchase. • Suggests states should pursue methods to make private LTC insurance more affordable (e.g., use of employer group rates, incentives to purchase). This is, however, a long term strategy.

31. Which Strategies Appear Most Effective? • Expand HCBS capacity through payment and supply • Using a fee-for-service HHA payment is related to higher per capita 1915c expenditures and personal care expenditures • Increased supply of HHAs is related to: • Greater number of 1915c participants • Greater 1915c expenditures and HCBS expenditures • Regulation of HHAs has reduced the share of LTC dollars supporting both 1915c waivers and HCBS • Suggests states should continue to use payment and/or other incentives to expand supply.

32. Which Strategies Appear Most Effective? • Expand HCBS capacity through payment and supply • MD CHHA per capita was 0.01 in 2000, (50 of 51) • Average CHHA per capita in U.S. was .032 • MD CHHA per capita declined from 0.02 in 1990 (39 of 51) • MD has a certificate of need for HHAs, as do 19 other states • Access specifically to home health is a concern emerging from evaluations of the CMS Nursing Home Transition studies, state Olmstead activity, ADA complaints

33. Which Strategies Appear Most Effective? • Increased availability of residential alternatives to nursing homes is related to: • Greater number of 1915c participants • Larger share of dollars supporting HCBS • Suggests states should continue to support services in residential alternatives to nursing home care. • MD -- 3.79 beds per capita in 2000 (18 of 51); U.S. average was 3.35 beds per capita in 2000 • MD was 0.77 beds per capita in 1990 (40 of 51) • MD uses a 1915c waiver to provide services

34. Which Strategies Appear Most Effective? • Constrain institutional growth • The more institutional beds in a state: • The lower a state’s per capita HCBS expenditures • The smaller a state’s share of long term care dollars supporting HCBS • The fewer 1915c waiver participants • The lower a state’s per capita 1915c expenditures • The smaller a state’s share of dollars supporting 1915c waiver • Effects of supply regulation less robust. • Suggests moderation of supply is important but that additional strategies, such as conversions should be explored.

35. Which Strategies Appear Most Effective? • Constrain institutional growth • MD had 5.72 NH beds per capita in 2000 (19 of 51, with 1 being best) • U.S. average was 7.06 beds per capita in 2000 • MD had 5.63 NH beds per capita in 1990 (17 of 51) • MD has a certificate of need program in place, but not a bed moratorium; 21 states had a bed moratorium in 2000

36. Addressing State Fiscal Resources is Key • Grants to states for infrastructure (CMS Systems Change Grants) • Change Federal Matching Assistance Percentage (FMAP) • Recent precedent –Jobs Growth and Tax Relief Reconciliation Act of 2003 • Tie FMAP increase to Olmstead activities • Adjust FMAP formula to account for state level differences in demand (e.g., percent 85+)

37. CMS Money Follows the Person Initiatives • President’s Legislative Proposal - $1.75 billion Money Follows the Person Rebalancing Initiative to pay for HCBS for people leaving institutions to the community • 2003 $7 million Systems Change Demonstration Grants for Community Living to develop strategies to reform financing so funding can follow people from institutions to the community