Cash & Counseling’ leads to more home care

Program participants direct own services

An evaluation of Arkansas’ Medicaid Cash & Counseling program, in which enrollees direct their own personal care services, indicates that people in the program are much more likely to receive such services than are those who were eligible for services but had to get them in the usual way.

Because Cash & Counseling enrollees were less likely to use nursing homes, health care costs ultimately were lower, even though better access to care led to higher overall costs for personal care under the consumer-directed program.

Cash & Counseling programs in Arkansas, Florida, and New Jersey have been funded by the Robert Wood Johnson Foundation in Princeton, NJ, as demonstrations of the concept of giving Medicaid enrollees who qualify for personal care an allowance and a high degree of freedom in choosing personal care assistants and managing their personal care needs.

Cash & Counseling national demonstration director Kevin Mahoney, who leads the program from the Boston College Graduate School of Social Work, says those who organized the demonstrations knew consumers would benefit if they could make their own choices about how their personal care needs are met. "But we weren’t so sure what would happen to Medicaid costs," he adds. "We’re thrilled to discover that under Cash & Counseling, consumers can get more personal care services at no more cost to Medicaid."

The latest of the demonstrations to be evaluated compared the level and cost of personal care services provided through consumer- and agency-directed approaches.

An earlier look at the Arkansas program found that it greatly improved quality of life, reduced unmet needs for care, and did not compromise patients’ health or safety.

Not enough agency workers

The current study found that home care agencies in Arkansas delivered only two-thirds of the personal care services to which consumers were entitled, with some consumers receiving no services at all. This was partly because of a shortage of personal care workers, the study found. More consumers who hired their own personal care assistants were able to receive services in the evenings and on weekends.

The differential in the amount of services provided resulted in the consumer-directed care approach costing more than $2,000 more than the agency model in both the first and second years after enrollment. By the second year after enrollment, however, these higher personal care expenditures were offset by reductions in expenditures on nursing home care and other Medicaid services.

The evaluation team was led by Randall Brown, a Mathematica Policy Research senior fellow in Princeton, NJ, and professor at Rutgers University. His report notes that states are increasingly interested in improving the well-being of beneficiaries who are eligible for personal care services by allowing them to plan and direct their own care. Advocates for consumer-directed care contend that individuals, rather than agencies, are best suited to make decisions about the care they receive and the workers they hire.

"However," the report cautions, "critics are concerned that consumers might misuse the funds intended for their care, receive inadequate care, or use a cash benefit to pay family members to provide care once provided by them for free. States are wary that the program might raise total Medicaid costs."

The IndependentChoices program in Arkansas was open to adults at least 18 years old who were otherwise eligible for personal care services under the state’s Medicaid plan. Some 11% of personal care services users (2,008 beneficiaries) enrolled in the demonstration between December 1998 and April 2001. Control group members continued relying on agency services, or, if newly eligible for Medicaid personal care, received a list of home care agencies to contact for first-time services.

Helping patients develop plans

Treatment group members were contacted by a counselor to help them develop written plans for spending their allowance. Such plans could include hiring workers (excluding spouses or representatives) and purchasing other services or goods related to their needs, such as supplies, assistive devices, and home modifications. Counselors also monitored satisfaction, safety, and use of funds.

Brown says the evaluation team found the program greatly increased the likelihood that beneficiaries received paid assistance. Elderly community residents in IndependentChoices were much more likely than those in the control group to receive paid assistance during their two most recent weeks at home before an evaluation interview nine months into the program. The difference for nonelderly beneficiaries was even larger.

"The lack of any paid assistance among control group members was striking," Brown writes in his Health Affairs web-exclusive evaluation report, "particularly among new applicants — those who were not receiving publicly funded home care services when they enrolled in the demonstration (about a quarter of the sample). Fifty-one percent of new applicants in the control group, compared with only 8.1% of new applicants in the treatment group, did not have a paid caregiver nine months after enrollment, despite being eligible for personal care services. Among those receiving publicly funded home care at enrollment, the treatment-control difference in the percentage of consumers without paid assistance at nine months was statistically significant but much smaller (5.1% for treatments vs. 13.7% for controls).

"Among treatment group members, about two-thirds hired family members, and most others hired friends or acquaintances. A minority of those hired lived with the treatment group member," he explains.

IndependentChoices was found to expand the provision of care during hours that agencies didn’t operate and also affected the way that nonelderly people met their personal assistance needs.

Control group received less care

Medicaid expenditures were larger for the treatment group, because the control group received a smaller-than-expected share of the services authorized for them. Control group members received much less care than was authorized, resulting in annual Medicaid personal care services spending per sample member that was almost twice as high for the treatment group as for the control group during the first year after enrollment.

Brown says lower long-term care costs for treatment group members suggest that Cash & Counseling enables consumers to substitute personal care services at home for other, more costly services, particularly those provided in nursing facilities.

While it is not clear how much the Arkansas results can be generalized because other programs have varying features that could affect the outcome, Brown says the findings for IndependentChoices are clear: "The program greatly increased consumers’ access to care and ability to purchase needed equipment and supplies. However, the results raise two issues that could concern policy makers:

  • Paid care could substitute for previously unpaid care.
  • Consumer direction could raise Medicaid spending."

According to Brown, some people question why enrollees should be allowed to pay family members for care they should be expected to provide without compensation.

"It’s a reasonable concern," he says, "but the truth is that families are providing 80% of care, even if a patient gets agency care. These are benefits that patients are entitled to, and I think it is shortsighted to worry too much about whether patients are paying family members for care they should [receive]."

System has failed

The reason Medicaid expenditures for personal care services went up in the demonstration, he adds, is that the traditional system has failed, and patients were unable to get the services they needed and were entitled to — perhaps because agencies are stretched too thin and there are no workers available. Even if they are hiring relatives, he says, they are receiving the services they need under IndependentChoices. And increases in personal care services costs pay off in lower costs elsewhere in the health care system, Brown says.

"You can provide much better care and relieve a burden on families, although costs are up; but that is offset by savings in nursing home costs," he notes. "In 27 years of evaluating public programs, I have almost never seen one this successful. This is a program that seems to benefit everyone. There are no losers. We can’t find a downside, and we looked very hard because we have no ax to grind and are not trying to promote this or any other particular program."

Brown and his colleagues conclude that Arkansas’ experience demonstrates that states can design a Cash & Counseling program that meets recipients’ needs better at no greater cost per month of service than costs historically incurred under the traditional agency approach.

"Even if total costs for personal care services are higher than they would have been as a result of the improved access to care or induced demand, they appear to be offset by reduced need for long-term care services," the report says. "The better the traditional agency model is at meeting authorized needs, the greater the likelihood of immediate savings from a Cash & Counseling alternative. The worse the agency model performs, the greater the likelihood that spending will increase initially under the Cash & Counseling model, but the greater the need for this option to ensure adequate access to home care as an alternative to higher-cost Medicaid services, especially nursing home care."

Program wins award

The Arkansas program won the Council of State Governments 2003 Innovations Award, granted in recognition of innovations in state government.

The U.S. Department of Health and Human Services (HHS) has taken action to help more states develop consumer-directed services along the lines of a Cash & Counseling program. The department’s Independence Plus waiver program, introduced in 2002, established a process for states to obtain authorization to operate such programs. In the fall of 2003, the Centers for Medicare & Medicaid Services awarded $5.4 million in Independence Plus grants to 12 states to support such efforts.

In addition, President Bush has proposed changes to the Medicaid program that the administration says would give states more flexibility to implement programs such as this without obtaining permission from HHS.