1

How Will States Pay for Long How Will States Pay for Long Term Care?Term Care?

SusanSusan C. ReinhardC. Reinhard

Council on Health Care Economics and PolicyPrinceton Conference

May 20, 2005

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Scope Scope

LTC accounts for one-third of states’ Medicaid budgets (that are now 21.9% of total state budgets)15 million older adults and people with disabilities--27% of total Medicaid beneficiaries but more than two-thirds of total spending7 million “Duals”are Medicaid’s most expensive group, and flashpoint for federalism discussions for decades

3

Distribution of Medicaid Spending, 2002Distribution of Medicaid Spending, 2002

Acute Care & DSH($161.4)

66%

Elderly($46.8)

57%Long TermCare

($82.1) 34%

Non-Elderly($35.3)

43%

Total Medicaid Spending = $243.5 billion

Source: Kaiser Commission on Medicaid and the Uninsured, May 2004

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Medicaid Enrollees & Expenditures by Enrollment Group, 2003Medicaid Enrollees & Expenditures by Enrollment Group, 2003

Children19%

Children48%

Adults12%

Adults27% Disabled

43%

Disabled 16%

Elderly26%

Elderly 9%

EnrolleesTotal = 52.4 million

ExpendituresTotal = $235 billion

Source: Kaiser Commission on Medicaid and the Uninsured, October 2004

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States in Action States in Action

In past 2 years, almost twice as many states 17 states focused on LTC Medicaid costs (from 10 to 17)Traditional approaches like rates and eligibilityOld ideas with renewed interest like Managed Care and LTC InsuranceSystem reform and advanced ideasConsumer Direction over-riding

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Resurgence of Managed Care Resurgence of Managed Care

Medicare Modernization ActState examples: Florida, TexasSpecial Needs Plans, new opportunity– few states and plans are talking now but

should; focusing on other MMA issues– California

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Other Resurfacing IdeasOther Resurfacing IdeasDisease Management

LTC Insurance

Asset Transfers

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““Balancing LTC” Balancing LTC” CMS Real Choice Systems Change

Nursing Home Transition Movement

Global Budgeting

Money Follows the Person and Parity

Examples: Washington, Texas, Vermont

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Global BudgetGlobal BudgetSet a total LTC spending budgetbased on– projected LTC needs and

preferences – planned policy and program

initiativesProvide full administrative freedom to manage costs within the spending limit to respond quickly to consumer preferences

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Washington: NHT and Global Washington: NHT and Global BudgetingBudgeting

• 1995-1997 budget reduces NH caseload by 1,600 clients

• NH “bed need” assessment includes availability of home/community care

• Global Budget: Budget structure consolidated with significant management flexibility

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Washington: NF Caseload Washington: NF Caseload TrendsTrends

10000

11000

12000

13000

14000

15000

16000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

NFFigures for July each year

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Washington: HCBS TrendsWashington: HCBS Trends

220002400026000280003000032000340003600038000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

HCBS

Figures for July each year

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Washington LTC Spending trendsWashington LTC Spending trends

0

200

400

600

800

1000

1200

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

NF spending HCBS NF @ 3% growth

Based on data from the Washington Aging and Disability Services Administration

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MFP StrategyMFP StrategyMoney Follows the Person = financing for services and supports moves with the person to the most appropriate and preferred setting

Commonly starts from nursing home to HCBS--State example is Texas

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Planned Parity StrategyPlanned Parity StrategyMandates reductions in nursing home budget and and transfer of those savings to fund HCBS

Aggressive policy and program actions required (universal screening, level of care criteria, pre-admission processes, etc.)

Example--Vermont

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Vermont Act 160Vermont Act 160

Shifted funds from nursing home to the HCBS appropriationGoal 60-40% institution/communityStrategies: NF moratorium, expand residential alternatives, one time investmentsFive percent drop in NF supply

Department of Aging and IndependentLiving Services

Act 160Act 160

“The reductions required … shall be redirected in FY 1997 to fund home and community-based services. For fiscal year 1998 and thereafter, the reductions required ... shall be redirected … to fund both home and community-based services and any programs designed to reduce the number of nursing home beds. Any general funds redirected but not spent during any fiscal year shall be transferred to the long-term care special administration fund...”

Department of Aging and IndependentLiving Services

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Public Expenditures for Long Public Expenditures for Long Term CareTerm Care

FY 1996

88%Nursing Homes

12%Community-Based

Services

FY 2005 est'd

32%Community-Based

Services

68%Nursing Homes

Patrick Flood, VT DAILS

19Patrick Flood, VT DAILS

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Vermont’s Advanced Idea: Vermont’s Advanced Idea: 1115 Proposal1115 Proposal

Provide maximum choice of services and settingsEliminate institutional biasPromote early interventionBreak link between 1915 (c) waivers and NF level of careReduce NF useControl costs

Department of Aging and Independent Living Services

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Susan C. Reinhard, RN, PhDSusan C. Reinhard, RN, PhDCoCo--DirectorDirector

Rutgers Center for State Health PolicyRutgers Center for State Health Policy

DirectorDirectorCommunity Living Exchange at RutgersCommunity Living Exchange at RutgersTechnical Assistance for Real Systems Technical Assistance for Real Systems

ChangeChange

732732--932932--3105, ext. 2303105, ext. 230sreinhard@ifh.rutgers.edusreinhard@ifh.rutgers.edu