Strategies to Balance LongTerm Care Spending

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Strategies to Balance Long-Term Care Spending

• August 9, 2005
• Charles Milligan
• NASHP

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Mission Statement

• Our Centers mission is to work with public and
  non-profit community-based agencies, in Maryland
  and elsewhere, to improve the health and social
  outcomes of vulnerable populations in a manner
  that maximizes the impact of available resources.

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Preview of Presentation

• Brief Background on Medicaid
• Philosophical Underpinnings of State Systems
  Change
  
• State Budget Concern the Woodwork Effect
• Selected State Efforts Reducing Nursing Facility
  Utilization and Expenditures to Expand Home and
  Community-Based Services

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Brief Backgroundon Medicaid

• Federal law State Medicaid plans are based on
  setting nursing facilities and home health are
  entitlements, home and community-based service
  (HCBS) waivers are not
• Federal law absent a freedom of choice waiver,
  all qualified providers may participate in
  Medicaid
  
• Federal law absent a waiver, the nursing
  facility (NF) entitlement must directly link to a
  given states NF level of care criteria

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Brief Backgroundon Medicaid (cont)

• States may set their own NF level of care
  criteria
  
• In general, states may set their own payment
  rates
  
• A word about waivers
• HCBS authorized under Section 1915(c)
• Managed care (freedom of choice) authorized
  under Section 1915(b)
  
• Demonstration authorized under Section 1115

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Philosophical Underpinningsof State Systems
Change

• Eligible individuals should have the right to
  choose the setting in which they are served
  
• Money should follow the person across settings
• The policy bias for nursing facilities, related
  to the entitlement status under federal law,
  should be removed

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State Budget Concern the Woodwork Effect

• Developing new community-based services may cause
  eligible but unenrolled individuals to seek
  services (Woodwork Effect I)
  
• Creating policies to allow funding to follow a
  person from a NF to the community may result in
  backfilling of NF beds (Woodwork Effect II)

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• Selected State Efforts Reducing Nursing Facility
  Utilization and Expenditures to Expand Home and
  Community-Based Services

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Continuum of SelectedState Efforts
Rate setting
Assisted living conversion
Selective contracting
Incremental
Tested new business models
Major untested reforms
Voluntary bed closure
Managed LTC
Remove entitlement To nursing facility
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Alter NF Reimbursement andPlace Savings in a
Transition Fund

• Many NF reimbursement changes are possible
• Allowable direct and indirect costs
• Occupancy Rates
• New fees and taxes
• Bed hold policy
• Require Medicare certification
• Rate for crossover claims
• Use savings and new revenue for dedicated NF
  Closure/Conversion Fund

Reference State Indiana
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2. Voluntary Conversion of Nursing Facility Beds
to Assisted Living

• Identify source of venture capital
• Tobacco Fund
• Closure/Conversion Fund
• Other
• Use fund for voluntary conversion to AL
• Develop program specs (AL room requirements AL
  service requirements geographic location of NF)
  
• Provider matching requirement
• Identify state breakeven point

Reference States Nebraska and Iowa
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Voluntary Planned Closure ofNursing Facility Beds

• NFs may apply to AAA to voluntarily close beds
• Permanently
• Layaway
• Incentives
• Remaining beds receive higher per diem (per
  formula)
  
• Avoidance of licensure fees, loss of revenue due
  to minimum occupancy standards or bed-hold rules
  

Reference State Minnesota
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4. Managed Long Term Care

• State pays capitation to managed care
  organization
  
• That organization then has an incentive to serve
  enrollees in the least expensive appropriate
  setting
  
• Medicare Modernization Act may provide momentum
  to state Medicaid planning
  
• Special needs plans for dual eligibles and NF
  residents

Reference States Arizona, Florida, Wisconsin,
Minnesota, Massachusetts and Maryland
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5. Selective Contracting of Nursing Facility Beds

• States may pursue Medicaid freedom of choice
  waiver
  
• This waiver, used in managed care, allows for
  selective contracting (bidding process)
  
• Selective contracting could
• Limit the number of NFs
• Limit the number of beds
• Include price competition

Reference State South Carolina
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Major Structural ReformThrough a Demonstration
Waiver

• A Medicaid demonstration waiver could be used to
  delink the entitlement from the NF level of care,
  and place NF and HCBS on equal footing
  
• One version (Vermont)
• Highest Need Establish entitlement at a
  threshold above NF level of care and provide
  that people who meet the higher threshold would
  be entitled to be served in any setting
• High Need People who meet the NF level of
  care but not the higher threshold would be served
  only to the extent of available funding (i.e., no
  entitlement) the people who receive a slot get
  to choose the setting in which theyll be served
• Moderate Need People at-risk for NF level of
  care. Eligible for narrow services only if
  funding exists.
  

Reference State Vermont
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Conclusion

• States continue to pursue Systems Change
• States continue to worry about the woodwork
  effect
  
• In the current budget climate, states will
  continue to look for ways to avoid net new
  expenditures, in part by reducing dollars to and
  utilization of NF

The complete paper may be found on our website
www.chpdm.org
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Questions
Charles Milligan 410.455.6274 cmilligan_at_chpdm.um
bc.edu