Medicare isn’t doing the job for long-term care, so states are turning to Medicaid

With long-term care increasingly a principal driver of higher Medicaid costs for many states, program directors are hoping increased cooperation between states and the federal government will help ease the pressure.

At a session on controlling long-term care (LTC) costs at this summer’s National Academy of State Health Policy (NASHP) conference in Philadelphia, representatives from Maine and Pennsylvania shared some of their strategies. The National Governors Association (NGA) and National Conference of State Legislatures (NCSL), both based in Washington, DC, also are raising the issue.

In testimony last year before the U.S. Senate Special Committee on Aging, Ray Scheppach, NGA executive director, said that growing populations of people older than age 65 and those with physical and other disabilities "are fueling an increasing demand for primary, acute, and long-term health care services. At the same time, demographic and cultural changes are decreasing the availability of informal care. These factors will place a significant strain on our nation’s current long-term care system, on beneficiaries and their families, and on current sources of public and private funding for these services."

Addressing the LTC challenges

Because Medicare does not fully address the nation’s LTC needs, Mr. Scheppach said, states are using Medicaid and other state-funded programs to address an expanding range of LTC challenges.

"There is a growing demand to increase the supply of long-term care providers and to develop new alternatives, services, and settings in long-term care," he said.

"Moreover, there is an increasing need for government to integrate and streamline fragmented programs to be more client-friendly, cost-effective, and to assure quality service delivery. Although these are significant challenges, we are confident that the answers are within our grasp. The governors believe that greater flexibility for states and a new federal-state partnership are keys to developing innovative and improved systems of long-term care," Mr. Scheppach said in his testimony.

Maine works to cut spending

At the NASHP conference, Maine Department of Human Services director of adult and elder services Christine Gianopoulos said the goal of the state’s LTC system is to reduce reliance on institutional care, offer consumers and their families more choices, and reduce per-capita spending.

LTC reform as a result of state budget problems has been under way for a decade, she said, with steps taken each year and being stepped up in the current budget crisis.

Use of home and community care has doubled, according to Ms. Gianopoulos, with 20% of participants in Maine now using consumer-directed programs. From 1995, when 16% of the state’s LTC budget went for home and community care, now 39% of the budget is spent on those services. As a result, the Medicaid nursing home census is down by 17%; discharges to home have tripled; the average length of stay in a nursing home is down from three years to 18 months; and 20% of the state’s nursing home beds have been "banked" or de-licensed.

Ms. Gianopoulos said that total state and Medicaid LTC spending increased an average of 2.5% annually between 1995 and 2001, while per-person LTC spending decreased 10%. Actions that are contributing to cost control, she said, include home care coordination, administrative and care coordination, equity and cost containment, and case-mix reimbursement for Medicaid nursing and assisted-living facilities.

ASO handles home care

Maine contracts with an agency to arrange and pay for home care services statewide, Ms. Gianopoulos said. Elder Independence of Maine acts as an administrative services only (ASO) organization for all state- and Medicaid-funded home care programs, except certain consumer-directed programs.

Administrative and care coordination costs average $1,700 per person annually or 18% of total spending, according to state figures. Ms. Gianopoulos said that before changes were made, the state was committing 25% of its spending to administrative and care coordination.

From the equity and cost-containment perspective, eligibility, covered services, and reimbursement policies have been revised and aligned for all state- and Medicaid-funded home care programs to assure consumers are served by the most appropriate program. Ms. Gianopoulos said the notion is that similarly situated people should have access to similar services wherever they live in the state.

States wanting to actively control long-term costs must, she said, collect and use data; have one department manage many programs; make acuity-based payments for nursing facility, assisted living, and home care programs; hold the line on reimbursements; and do all of these things with clear and active support from the state’s executive and legislative branches.

Challenges they are now facing, she said, include a labor shortage, rising expectations, diverse consumers, and managing people with dementia at home.

Age in place — if you’re able

James Pezzuti, director of the Pennsylvania Department of Public Welfare’s Division of Long-Term Care Client Services, told the NASHP session that his state’s goal for LTC services is to enable residents to age in place when appropriate and desired.

The state’s guiding principles for LTC, he said, are:

  • control the surplus growth of nursing home beds;
  • support consumer choice;
  • encourage expansion of home- and community-based services;
  • reduce barriers to aging in place;
  • have services follow consumers;
  • provide money for services but not for capital construction;
  • assure quality care.

Pennsylvania has instituted a new payment system, Mr. Pezzuti said, undertaken a participation review program, and added slots for home- and community-based services. Under the participation review process, he said, the goal has been to respond to consumers’ desire to age in place by redirecting state resources from higher-cost, less preferable institutional settings to more cost-effective home- and community-based services, through encouraging development of other components of the array of LTC services.

The process applies to any applicant seeking to enroll as a medical assistance nursing facility provider and any existing provider who wants to expand the number of existing Medicaid-certified nursing facility beds, regardless of the size of the proposed expansion.

The review program does not apply to providers of intermediate services for the mentally retarded, inpatient psychiatric services, and inpatient rehabilitation services, or to providers who are not applying for Medicaid enrollment or Medicaid bed certification.

Evaluation guidelines are written generally, Mr. Pezzuti said, to afford flexibility for case-by-case review in terms of Medicaid program need, availability of home- and community-based services, suitability, and economic and financial feasibility.

Since the review program has been in place, the number of Medicaid nursing facility beds has declined significantly to below 1998 levels. Likewise, average overall statewide occupancy has trended downward from 98% to 88% from February 1998 to October 2001. Currently, he said, the agency is forecasting a 2.3% decrease in Medicaid nursing facility utilization, which will be worth some $1.8 billion over 10 years.

In terms of increases to the home- and community-based service slots, Mr. Pezzuti said there is no waiting list for either the expanded slots in the 60+ waiver or the increased slots in the physical disabilities waivers.

One major initiative to expand noninstitutional care involves working with the County Commis-sioners Association of Pennsylvania on an effort to find counties interested in converting unused nursing facility bed capacity into renovated/expanded physical therapy departments, home- and community-based facilities such as independent living units or adult day care centers, and community outreach programs.

Preventing falls by seniors

Mr. Pezzuti also described the SAFE (Stopping Accidental Falls in Elders) program that can produce a saving ratio of 5-to-1 by targeting older people who fall. The goal is to provide intervention services to 1,000 elderly people in the Phila-delphia community identified as being at risk for falls and/or failure to take their medication appropriately. Implementation of the program enables consumers to remain in the community in a less hazardous environment for a longer period of time, he said.

The agency also is involved in renovating and creating new public housing projects because often the lack of safe, affordable, accessible housing is the main barrier to individuals remaining in their community.

Other strategic initiatives he described included community resource centers to improve access to home- and community-based services for the physically disabled; a single point of contact through contracted agents; a home and community services information system, and a home- and community-based service project. Meanwhile, NCSL has surveyed states to look at recent LTC public policy reforms as seen in proposed or recently enacted legislation, task forces, and budgets.

Donna Folkemer, NCSL program manage, tells State Health Watch that in future months, states are likely to:

  1. continue to assess quality of care in nursing homes and assisted-living facilities and endeavor to improve quality through more stringent regulation and inspection and through incentives to facilities to hire more staff and upgrade staff training;
  2. attempt to enable more people who can live in community settings to move out of nursing homes and intermediate care facility/mental retardation facilities, an effort that may force states to consider housing and transportation issues in conjunction with more traditional LTC services;
  3. consider ways to increase the number of direct care workers in LTC and provide incentives to nursing homes, home care agencies, and other LTC providers for recruiting and retaining these workers;
  4. increase the number of publicly funded programs that allow and encourage consumer direction of services;
  5. improve information dissemination to consumers about long-term care options and alternatives.

"Uncertainty about the economy may limit state long-term care initiatives that require greater spending in the near future," Ms. Folkemer says.

"However, states are showing that they can still design innovative programs and services that expand options for the frail elderly and people with disabilities to live independent lives," she adds.

And as determined by NGA, state LTC innovations include home- and community-based waivers, overcoming barriers to care, addressing work force issues, "cash and counseling" and family caregiver support programs; state funded program innovations; state pharmacy assistance programs; single-point-of-entry programs; increasing assisted-living/housing for low- and moderate-income seniors and self-sufficiency efforts.

Raymond Scheppach, NGA executive director, said the governors have a reform policy that calls on Congress and the Office of Management and Budget to relax very stringent "budget-neutrality" requirements that often serve to impede state innovation and development of quality LTC programs.

"We know that early intervention services in Medicaid are responsible for preventing hospitalizations for the elderly, thereby saving the Medicaid program from additional costs," he said.

"Similarly, state-funded respite care can prevent nursing home placements, thereby saving money for the Medicaid program." Mr. Scheppach added.

[Contact Mr. Scheppach at (202) 624-2300, Ms. Gianopoulos at (207) 287-9200, Mr. Pezzuti at (717) 772-2525, and Ms. Folkemer at (202) 624-5400.]