HCA 410 Pima Medical Institute Tucson Medicaid Programs Discussion

Current Reimbursement Options and Challenges in Long-Term Care The financing of long-term care services has not changed as radically as the financing in acute care, but still long-term care has transitioned from the retrospective (reimbursement of providers for whatever expenses they incurred) to the prospective payment model (set reimbursement for a given amount of care/services). Prospective payment forces providers to optimize efficiency and be more cost-effective than previously. Providers of long-term care look to design services which provide the best rate of return. This can put quality of care at risk. Access to care, the availability of services and the quality of care are all influenced by reimbursements. All services in the continuum of care are reimbursed differently which is difficult for long-term care leaders, but even more difficult for consumers to understand. Consumer-Friendly Medicare Videos Gradual Rebalancing of Medicaid Long-term Services and Supports Saves Money and Serves More People Historically, long-term care was provided by family members and religious organizations. After the Great Depression and the passage of Social Security, there were some public funds for those who were disabled and to help families with dependent children. This followed with the development of private health insurance and Medicare/Medicaid in the 1960s. However, only Medicaid provided any long-term care coverage and only for the “medically indigent”. There were no options for private long-term care insurance and Medicare did not and does not cover long-term care. As the older population continues to grow, continued discussion of long-term financing continues. Options Medicare was passed in 1965 to provide health coverage for those over 65 years of age and was amended to include those who were permanently disabled or had kidney disease in 1972. There are four parts to Medicare: • Part A provides hospital coverage and includes some short term skilled care, home health and hospice. • Part B provides physician care. • Part C, called “Medicare Advantage Plans” provides managed care. • Part D covers medications. Part A is provided for all those eligible and Part B may be purchased for a small monthly premium. These two parts are the ones most encountered in long-term care. Medicare is an entitlement program and not dependent upon income. For long-term care, Medicare will pay for skilled nursing services, subacute care, home health care and hospice care. Medicaid was also passed in 1965 and was created to provide health care for the poor. Medicaid has income restrictions and no age limitations. Medicaid pays for all services and for about 40% of the long term care in our nation. Medicaid is the back up for low income elders for services their Medicare benefit does not pay. Medicaid will pay for nursing care facilities, assisted living, home health, hospice and adult day care. One of the continual sources of discussion about Medicaid is the “spend down” policy which requires individuals to use up all other resources before qualifying for Medicaid. Private reimbursement for long-term care comes from self pay from individuals and their families along with private long-term care insurance. Long-term care insurance has not been popular and to be cost effective for underwriters, younger populations need to purchase these policies. They are less expensive the younger you are when purchased, but many don’t prioritize this as an investment in their current budget. Some evolving programs for funding long-term care services include public-private partnerships. The Robert Wood Johnson Foundation initiated a program called “Partnership for Long-Term Care” and offered states grant funds to build initiatives that would encourage individuals to purchase long-term care insurance to reduce the drain on the Medicaid program. This was successful and many states passed legislation that if a person purchased long-term care insurance, they were guaranteed that Medicaid would kick in once the benefits of their insurance policy were exhausted. Managed care in long-term care is another financing option. Some of the evolving models are a per diem contract, a case rate contract, preferred placement, bed-lease and joint ventures. The various partnerships have different degrees of risk for both the managed care company and the long-term care provider. The need to understand the real expenses/cost of providing quality care is essential for longterm care managers and administrators. Many states are working to develop community-based and home long-term care services, while recognizing this as the least expensive model and most desirable to the consumer. Rebalancing of resources refers to shifting the spending on long-term care services away from institutional settings. Kaye (2012) describes the moral responsibility to rebalance in the context of the Medicaid long-term care program. Current community-based options do include home care, personal care and waivers which are the least costly and again, more requested by patients. As states struggle with their budgets, these community-based programs may be at risk; therefore, necessitating the awareness of the cost and quality perspectives. In summary, there are many different financing models available for long-term care and are various across the continuum of care. Today’s areas of research and policy development are investigating the rebalancing of resources to ensure access to care, while optimizing quality long-term care. Financing and Governance of the Long-Term Care System The present long-term care system in the United States and its structure is dependent upon how it is financed. Access to care, the availability of needed services, and the quality of the care is all dependent upon the amount and type of reimbursement. It remains a frustrating challenge for leaders and administrators in long-term care to manage budgets, develop their employees, comply with regulations, and provide the highest quality of care to their patients and clients. The long-term care system is reimbursed differently across the care continuum and is a complex combination of public and private sources. In addition, there are also public-private partnerships developing which may help provide positive incentives to improve the consistent reimbursement of care. Aspects of the long-term care continuum also are financed through managed care (both public and private systems). Consumers have not traditionally purchased long-term care insurance which may present an opportunity to improve reimbursement in the future. The need for financial reform in long-term care is critical but it remains on a back burner at the national level. This is due to the lack of urgency compared to acute health care and the cost. In addition, long-term care consists of many different venues, service and forms, which makes discussion of reform confusing for legislators and policy makers. However, you will see some local and statewide reform beginning with consumer education. Also covered in this lesson is the governance of the long-term care system. There are external mandatory controls which are the result of legislation. Private controls are provided by nongovernmental agencies and organizations with compliance being voluntary. All these controls focus on cost containment and quality of care. Two sources of accreditation for long-term care organizations are the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) and the Commission on Accreditation of Rehabilitation Facilities(CARF). Since long-term care is so diverse and is comprised of ongoing care for many years in most cases, the need for strong financial management and quality governance and regulation is essential. Stronger and more innovative coordinated methods and models for both are needed. Home & Community-Based Services By H. Stephen Kaye 10.1377/hlthaff.2011.1237 HEALTH AFFAIRS 31, NO. 6 (2012): 1195–1203 ©2012 Project HOPE— The People-to-People Health Foundation, Inc. doi: Gradual Rebalancing Of Medicaid Long-Term Services And Supports Saves Money And Serves More People, Statistical Model Shows H. Stephen Kaye (steve .kaye@ucsf.edu) is an adjunct professor at the Institute for Health and Aging and the Department of Social and Behavioral Sciences, both at the University of California, San Francisco. States are shifting Medicaid spending on long-term services and supports from institutional to home and community-based services, a process known as rebalancing. Using fifteen years of state expenditure data, a statistical model was developed to assess the effect of rebalancing on overall spending for long-term services and supports. The model indicates that spending is affected by the way rebalancing is implemented: Gradual rebalancing, by roughly two percentage points annually, can reduce spending by about 15 percent over ten years. More rapid rebalancing can save money, break even, or increase spending, depending on the pace and program specifics. Cuts to home and community-based services that hinder rebalancing are likely to increase, not decrease, overall spending on long-term services and supports as people who were receiving these services shift into nursing homes. Because many states continue to experience budget crises, policy makers must think carefully before altering spending patterns for long-term services and supports and adopt strategies that particular states have used to successfully reduce overall spending, such as gradually shifting expenditures toward home and community-based waiver programs. ABSTRACT T he term rebalancing refers to a shift of spending on long-term services and supports away from institutional settings such as nursing homes—originally the only option provided under Medicaid—to services provided in people’s homes and communities. Pressure to rebalance Medicaid long-term services and supports comes from many sources. Disability and senior advocacy groups have exerted political pressure on state and federal policy makers to increase home and community-based services,1–3 based on a strong preference among consumers to remain in their homes and communities rather than become institutionalized.4 Federal law, as enacted in the Americans with Disabilities Act of 1990 and interpreted by the Supreme Court in the Olmstead decision,5 mandates that long-term services be provided “in the most integrated setting appropriate to the needs of the individual.”6 Settlements of numerous Olmstead-related lawsuits filed against the states7 and increased enforcement of the Americans with Disabilities Act by the Department of Justice8 have motivated many states to launch new programs for home and community-based services. Rebalancing is also promoted by federal policies, such as the Community Living Initiative of the Department of Health and Human Services,9 and various incentives contained in the Affordable Care Act of 2010. A moral—if not legal— imperative for offering home and communitybased services is contained in the UN Convention on the Rights of Persons with Disabilities10— which the United States has signed, and which JUNE 2012 31:6 Downloaded from content.healthaffairs.org by Health Affairs on June 4, 2012 by Rachel McCartney H e a lt h A f fai r s 1195 Home & Community-Based Services establishes living in the community with access to long-term services as a human right. For some populations and in some states, much rebalancing for long-term services and supports has already occurred. During the past two decades, Medicaid-financed long-term services and supports for people with intellectual and developmental disabilities have mostly moved away from institutional and toward community-based services.11 But for people with other types of disabilities, including those with aging-related physical and cognitive impairments, only six states spent more on home and community-based than institutional long-term services and supports in 2009, and some states spent only a token proportion of the money for long-term services and supports on home and community-based services.11 Medicaid’s Three Main Programs Noninstitutional long-term services and supports are provided primarily through Medicaid’s three main home and community-based services programs: waivers, personal care, and home health. Waivers Home and community-based waivers, also known as 1915(c) waivers, provide an array of medical and nonmedical services, including personal assistance with daily activities, to selected populations identified by each state, generally based on age and type of disability. Recipients must meet their state’s eligibility requirement for institutional services. The home and community-based services received may be extensive. Personal Care Personal care services programs, an optional Medicaid benefit offered by a majority of states, provide personal assistance with daily activities to people meeting the state’s functional criteria for such need. The eligible population is generally much broader than that covered under the waivers. However, the services provided are often limited to a relatively small number of hours of help per week. Home Health The home health benefit, available in all states to a broad Medicaid population needing such services, offers medically based services provided by nurses, home health aides, and other providers in the home, as well as certain medical supplies and equipment. Although the focus is medical, assistance with daily activities can be one component of these services.12 Rebalancing And Cost Resistance to rebalancing often arises out of a perception that offering home and communitybased services adds to the overall cost of Medic1196 Health A ffairs JUNE 2012 31 : 6 aid long-term services and supports. Having effectively rationed publicly financed services by offering them only in a setting that few people voluntarily enter, policy makers in states that have only minimally rebalanced their Medicaid programs fear that people not currently receiving services will “come out of the woodwork” in droves to demand services offered at home or in other community settings.13 Although it seems clear that Medicaid home and community-based services programs serve many more people than would be served if institutional services were the only option, spending on services for each participant is less.14 The real issue of the so-called woodwork effect15 is whether the extra participants, whose needs might have gone unmet in an institutional-only system but are now presumably met by home and community-based services, cause aggregate program costs to exceed those for an unrebalanced long-term services and supports system. One study found that during a decade of expanding noninstitutional long-term services in many states, those states with a high proportion of spending on home and community-based services spent no more on long-term services and supports than other states. Furthermore, states with well-established home and communitybased services programs saved money on longterm services and supports over time compared to states spending a low proportion on home and community-based services.16 The study reported here extends that work with the construction of a statistical model, based on historical spending data, to predict the effect of rebalancing on spending for longterm services and supports. The analysis addresses the question of how a gradual or rapid shift of dollars from institutional long-term services and supports to home and communitybased services—or, conversely, a shift of dollars away from such services—affects overall spending on long-term services and supports. Study Data And Methods Data State and District of Columbia data on Medicaid spending for long-term services and supports for 1995 through 2009 were obtained from reports submitted by state Medicaid agencies to the Centers for Medicare and Medicaid Services.17,18 The analysis included data on spending for waiver programs, personal care services programs, and the home health benefit, as well as for services received in nursing homes. Money spent on waiver programs and institutions for people with intellectual or other developmental disabilities was excluded from the analysis. Arizona was omitted from the entire Downloaded from content.healthaffairs.org by Health Affairs on June 4, 2012 by Rachel McCartney analysis and four other states were omitted in selected years because data on their expenditures for long-term services and supports were not available separately by setting and disability type. Adjustments to and exclusion of certain data points, including exclusions because states overreported expenditures, are explained in the online Appendix.19 For use in the statistical model, reported spending data were converted to per capita, inflation-adjusted amounts. Per capita spending was first obtained by dividing each state’s reported expenditure by the population of the state in the given year. This calculation removes the effect of population size, as well as changes in the population over time. Then the per capita expenditures were adjusted by a yearly factor, obtained from the Bureau of Labor Statistics,20 to account for inflation. As indicated above, long-term services and supports include both medical services, such as home health and much of waiver and nursing home services, and nonmedical services such as personal assistance provided via personal care services or waivers. The mixture of expenditures makes the choice of an inflation-adjustment factor somewhat arbitrary, but the choice does not affect the main predictions of the model. The inflation adjustment for medical care services was used, for consistency with prior analyses. Methods Using per capita, inflation-adjusted spending on overall long-term services and supports—institutional plus home and communitybased services—the percentage change from one year to the next was calculated and used as the outcome (or dependent) variable in the model. Also calculated for each year was the percentage of spending for long-term services and supports devoted to each of the home and communitybased services programs (waivers, personal care services, and home health). The year-to-year change in each percentage was used in the model as a predictor (or independent) variable. Thus, the model used the yearly change in the proportion of dollars for long-term services and supports going to home and community-based services in each state to predict the change in overall spending for long-term services and supports in that state, with data from all states pooled together into the same model (known as a pooled cross-sectional time series). The model is estimated in the form of a fixed-effects linear regression, meaning that the focus is primarily on the trend over time within each state, rather than differences among states. Prior research suggests that the relationship between rebalancing and spending for long-term services and supports might be nonlinear. In other words, modest increases in spending for home and community-based services might save money, but larger, sudden shifts to these services might instead increase spending.16 This hypothesis was confirmed in the initial phase of the analysis, using a standard method of including multiple variables measuring the amount of change in each type of spending (for example, the percentage-point change in waiver spending, along with the square of that change and the square root of that change) in the model. The final model included two variables for each of the three home and community-based services programs: the year-to-year percentage-point change and the square root of the percentage-point change.21 All six of the principal predictors in the model were highly significant, and the same pattern was observed in al…

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