Options to Expand Access to Home and Community-Based Services: HB 594 Analysis

1. Options to Expand Access toHome and Community-BasedServices: HB 594 Analysis January 28, 2008

2. Purposes of HB 594 • Analyze options to increase access to home and community-based services • Review practices of other states • Determine the costs associated with different options to alter the level of care in Medicaid long-term care services • Study whether savings in the long run offset higher costs in the short term

3. Process in the HB 594 Study • Met with stakeholder groups on August 17 and August 24 • Devised the scope of the HB 594 study based on stakeholder input • Retained UMBC to conduct the study • Submitted an Interim Report on October 1 • Submitted the Final Report on December 31

4. Other States Studied • Seven other states, and the District of Columbia, were studied • States were selected based on various criteria • Six jurisdictions were selected because they altered their level of care criteria or process (DC, Michigan, New Jersey, Oregon, Vermont, Washington) • Two states were selected at the specific request of stakeholders (Florida, New York)

5. Among the nine states, Maryland Medicaid ranks third in fewest adults in nursing facilities State Medicaid NF Residents Per 1000 Adult Population, 2004 Vermont 8.2 Washington 4.9 Oregon 3.9 New Jersey 7.4 Washington D.C. 13.9 Michigan 6.6 Florida 8.5 New York 13.8 Maryland 6.5

6. Among the nine states, Maryland Medicaid ranks next-to-last in adults served in home and community-based waivers State Home and community-based waivers Adult Recipients/1000 Population, 2003 Vermont 3.3 Washington 6.5 Oregon 11.7 New Jersey 1.4 Washington D.C. 0.6 Michigan 1.2 Florida 1.6 New York 1.5 Maryland 0.8 Note: Maryland provides medical day care services through its State Plan. These numbers are not reflected in the estimates above.

7. Financial Analysis Was Done onThree Options • Option 1: Liberalize the nursing facility level of care criteria (which also would apply to home and community-based waivers and medical day care) • Option 2: Offer a slot to everyone on the registry for the Older Adults Waiver and the Living at Home Waiver as of October 2007 • Option 3: Adopt new option under federal Deficit Reduction Act

8. General Methodology toGenerate Estimates • Collect all denials under the existing assessment instrument, and re-compute whether the individuals would become eligible under new level of care criteria • Also, use the results from a survey performed by UMBC in 2006 of certain individuals on Medicaid who live in the community and reported their deficits in activities of daily living

9. Estimated Costs and People Served under Various Options Option 1: Liberalize nursing facility level of care criteria Version A: Liberalize the standard to deficits in two or more activities of daily living (ADL), could serve approximately 3,300 more people at an estimated cost of $64.7 million (in FY 2006 total fund dollars). Version B: Reducing the qualifying score under Maryland’s current assessment instrument could serve approximately 730 more people at an estimated cost of $15.3 million (in FY 2006 total fund dollars). Version C: Reducing the score by giving more weight to a cognitive test known as the Folstein Mini-Mental test could serve approximately 270 more people at a cost of about $4.1 million (in FY 2006 total fund dollars).

10. Estimated Costs and People Served under Various Options Option 2: Offer a Slot to Everyone on the Older Adult and Living at Home Waiver Registries as of October 2007 Older Adult Waiver: 2,551 new recipients, at a total cost of $68.8 million (in total FY 2006 dollars) Living at Home Waiver: 542 new recipients, at a total cost of $18.1 million (in total FY 2006 dollars) Grand total: $ 86.9 million, to serve 3,093 people

11. Estimated Costs and People Served under Various Options Option 3: Adopt new option under federal Deficit Reduction Act (DRA) Description: This option allows a state to provide home and community-based services to existing Medicaid eligibles without requiring these people to meet the nursing facility level of care Adopting an assessment criteria for the DRA option of either 2 ADL deficits, or meeting a behavioral test of cognitive deficits, is estimated to serve 3,314 more people, at an added cost per person of $10,446 (in FY 2006 dollars), for a total estimated cost of $ 34.6 million (total funds)

12. Important Caveats • These estimates do not take into account two types of “woodwork effect”: • Some people currently on Medicaid, such as people with disabilities in the SSI program, also might qualify under a lower level of care criteria, and we could not estimate the magnitude of this (no data exist) • Some people might apply for Medicaid for the first time if the criteria are easier to meet • The outlays in the first year of any change would be lower, due to ramp-up

13. Washington State Is A Leader In Transforming Its Long-Term Care System • Washington State altered its nursing facility level of care in 1992 • Washington now serves a significantly increased number of individuals in the community • On a per person basis, it is less expensive to serve individuals in the community. • HB 594 asked the Department to study the overall cost impact, however, not the per person cost impact

14. Assuming Prior Nursing Home Growth Rates, Washington State Saved Money • Prior to 1992, Washington State was experiencing growth in nursing facility use at the rate of 3% per year • From 1992-2006, Washington State experienced a reduction in its nursing facility use • Assuming that the growth rate of nursing facility use continued to grow at 3%, the estimated savings in 2006 is $182 million: • Had it continued to grow at 3% per year, the growth in NF spending would have been $615 million • The increased expense in home and community-based services was $433 million • The net savings was $182 million in total dollars in 2006

15. Assuming National and Maryland Nursing Home Trends, Washington State Incurred A Net Increase In Expenditures • On a national basis, Medicaid-paid nursing facility days only grew at a rate of .8 % per year from 1992-2006, not 3% per year • Using this figure, Washington State spent an estimated $111 million in extra funds in 2006, because the added $433 in the community only resulted in a reduction (from this estimated baseline) of $322 million in nursing facilities • In Maryland, Medicaid-paid nursing facility days actually fell at a rate of .93% per year from 1992-2006 • Using this figure, Washington State spent an estimated $290 million in extra funds in 2006, because the added $433 in the community only resulted in a reduction (from this estimated baseline) of $143 million in nursing facilities

16. Conclusion • The HB 594 report and analysis discussed several options for expanding home and community-based services, with participation of key stakeholders and through the independent analysis of UMBC • The Department continues to evaluate variations on the options outlined in the HB 594 report • This work will enable the Legislature and others to evaluate options for expanding community-based services