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Promising Practices
Issue Brief

Community-Based Long-Term Care
By Wendy Fox-Grage, Donna Folkemer, Brian Burwell and Kevin Horahan

Faced with increasing consumer demands and legal requirements such as the Supreme Court's Olmstead ruling, states are revamping their long-term care systems. Building on their experience with home and community-based care, states are creating innovative service delivery models that enable such services to respond more quickly and flexibly to the needs of older people and people with disabilities. Among these models are consumer directed care, managed long-term care and enhanced respite care. These three emerging models are discussed in this paper and in the accompanying audiotape-also entitled Promising Practices in Community-Based Long-Term Care-that features speakers from each of the three models. Both the tape and this issue brief were drawn from a session at the National Conference of State Legislatures' annual health care meeting in December 2000. The purpose of this brief is to provide background information on the financing and delivery of long-term care services and to give additional information about three emerging and promising practices.

Most Americans in need of long-term care live at home or in community-based care settings.

An estimated 11.5 million individuals of all ages in 1994 had disabilities severe enough to require long-term care services, using a broad definition of disability. Most of these people do not live in nursing homes or other institutions. Of these 11.5 million, roughly 1.5 million resided in nursing homes and roughly 125,000 lived in Intermediate Care Facilities for the Mentally Retarded (ICF-MR). The majority of people living in the community receive most of their long-term care services from family members and friends.

People with long-term care needs have access to a variety of community-based settings, from adult foster homes and board and care homes to continuing care retirement communities and assisted living facilities. These settings combine housing with social supports for people who are unable to remain independent in their own homes but who do not require the around-the-clock skilled nursing provided in nursing homes. (Figure 1 provides a list of home and community-based services.)

Despite the prevalence of community-based services, state Medicaid programs-the largest payer for long-term care services-primarily fund institutional care.

Medicaid is financed jointly by the federal and state governments. Of its 1999 budget of $180 billion, approximately $62 billion went for long-term care services. (See table 1.) This amount represents approximately one-third (36 percent) of total Medicaid expenditures. Medicaid covers roughly two of three residents in nursing homes and funds more than two-thirds of total long-term care spending for mental retardation and developmental disabilities services.

In 1999, about three-fourths (73 percent) of Medicaid spending on long-term care went toward institutional services, with a large percentage (58 percent) going toward nursing home care. (See figure 2.) However, the amount that states spend on institutional and community-based long-term care services varies greatly. (See table 2.) Despite the wide variations, all states except Oregon spend more of their Medicaid long-term care dollars on institutions than on home care. (See table 3.)

Figure 2.

However, the percentage of Medicaid spending on home and community-based care doubled from 1994 to 1999-a much higher growth rate than Medicaid spending on institutional care. (See figure 3.) Medicaid pays for skilled home health care in all states, and more than half the states have elected to cover the optional benefit of personal care in the home under Medicaid. In addition, every state has federal waivers to design programs that provide a wide range of home and community-based services including adult day care, personal services, homemaker services and respite care.

Figure 3.

States will likely continue to feel pressure to shift more resources toward community-based care because of consumer demand, tight Medicaid budgets and a 1999 Supreme Court decision.

The increase in home care and other such services is clearly a direct result of high consumer demand. At the same time, state policymakers are trying to control the growth in Medicaid long-term care expenditures through increased investments in alternatives to institutional care. Unlike the traditional Medicaid optional programs, state policymakers have more flexibility under Medicaid waivers to set higher financial eligibility limits. For example, they can use the higher income levels allowed for applicants for Medicaid nursing home coverage. To receive approval from the Health Care Financing Administration, a state must prove that its waiver program is cost effective. On an average per capita basis, states need to demonstrate that the cost of providing community-based care will not exceed the cost of nursing home care. Except for Arizona, which provides such coverage through a broader Section 1115 waiver, all states have 1915(c) home and community-based waiver programs, and many states plan to expand their waiver programs.

In addition, the June 1999 Supreme Court ruling in L.C. & E.W. vs. Olmstead is causing states to evaluate their long-term care systems and expand community-based supports. The Court ruled that states may not discriminate against people with disabilities by providing services in institutions when the individual could be served in the community and prefers to live there. States are required to provide community-based services for people with disabilities if 1) treatment professionals determine that it is appropriate, 2) the affected individuals do not object to such placement, and 3) the state has resources available to provide community-based services. The Court suggests that states demonstrate that they have a comprehensive, effective working plan for placing qualified people in less restrictive settings. States that maintain waiting lists for community-based services must make a good faith effort to move people on the list to community programs at a reasonable pace.

In light of this ruling, 37 states have task forces or work groups that are attempting to assess the need for-as well as the supply of-services and thus develop plans or white papers. Governors, legislators, state health and Medicaid officials, people with disabilities and their representatives, and the federal government have played strong roles in the planning process in most states. The scope of the work of most commissions is broad and includes all people with disabilities. As these groups meet, they also are attempting to determine what is working (i.e., promising practices) and to build on those practices. (See http://www.ncsl.org/programs/health/forum/olmsreport.htm for more information on state Olmstead planning efforts.)

States are using a variety of strategies to expand their home and community-based services, some of which include managed long-term care, family caregiving resources and consumer-directed care.

1. Expanding services for family caregivers

Family caregivers are the backbone of the long-term care system. Without them, many Americans would enter institutions for care, and the government would pay for larger portions of their care. Many policymakers realize the cost savings that family caregivers provide and, as a result, many states have created public programs to assist them. States have increased their respite care programs, both as state-funded individual programs and as part of a series of benefits provided under Medicaid home and community-based waiver programs. Respite care-such as adult day care, short stay programs in nursing homes and attendant care in private homes-provides a temporary break from caregiving responsibilities. It is perhaps the one service that family caregivers request most often.

Several states also have developed some form of caregiver assistance. Oklahoma, Oregon, Nebraska and Wisconsin, for example, have implemented a program called Lifespan Respite, which could be used by other states as a model for establishing state and local infrastructures to improve access to respite care for people with long-term care needs, regardless of age. The goal of this model is to expand the supply of respite care and to make it more accessible by giving one agency authority to integrate available funds. The purpose of the program is to optimize coordination of care, control costs and identify gaps in services and funds.

Nebraska's Lifespan Respite Program. Implemented on May 1, 2000 by the Nebraska Department of Health and Human Services, the Lifespan Respite Program has coordinated respite care services for people with disabilities. Under this program, individuals with physical or developmental disabilities, special health needs, Alzheimer's disease and chronic illnesses or those with emotional or behavioral disorders are eligible for respite care, regardless of age.

The program is broken into six community-based programs, each serving as a single contact point for consumers who need access to respite care. During the next two years, each program will: 1) assess the specific need of the community it serves and determine if enough providers exist to handle the need; 2) conduct marketing targeted toward families, providers and businesses to increase awareness of the program's existence and the benefits of respite care; 3) recruit more providers, particularly those who accept Medicaid payment; 4) develop and administer comprehensive training programs for caregivers, whether they be professional service providers or families; and 5) conduct self-evaluations to determine its effectiveness in these areas.

State revenues fund the program. State legislation-LB 148-enacted in 1999 secured about $500,000 in both the 1999-2000 and 2000-2001 fiscal years to develop the program. For more information about Lifespan Respite, go to http://www.chtop.com/NRC-Lifespan.htm.

Throughout the 1990s, states moved to enroll Medicaid beneficiaries-mainly women and children-into managed care plans. Today, some states-such as Arizona, Michigan, Minnesota, Texas and Wisconsin-have managed care programs for people with long-term care needs. Concerns about the high cost of Medicaid for people with disabilities as well as the need for more coordinated care spurred these movements.

Michigan's Managed Specialty Services and Supports Program. Since October 1998, Michigan has operated a managed long-term care program for people with mental illness, developmental disabilities and substance abuse disorders. This program is a "carve-out" that provides specialty services and supports for these conditions, while primary care is received through another Medicaid managed care program. The purpose of the program was to slow the growth of Medicaid expenditures, coordinate care more efficiently and improve the quality of services provided to consumers. The program is based upon the principles of choice and person-centered services and supports that address both personal preferences and public and public outcomes.

The state's 49 Community Mental Health Service Programs (CMHSPs) are responsible for managing services and providers for these low-income populations. Some of the 49 are county governmental agencies, though many are independent "authorities" created under statute or through Urban Cooperation Act agreements.

The 49 CMHSPs are paid a monthly capitated rate in advance for each eligible member in their service area. The rate of payment is based on disability and age. The programs assume shared risk, not full risk. This means that if their costs exceed what they receive in capitation payments, the counties are responsible for the first 5 percent above the received funds, the next 2.5 percent is shared with the states and beyond that the state is responsible.

The CMHSPs receive payment from Medicaid funds, state general revenue and county matching funds. Approximately $1.8 billion across the three types of funds go toward managed care services for people with developmental disabilities (DD), severe emotional disorders, mental illness, and substance abuse problems (SED/MI/SA). Of the $1.8 billion, the vast majority-$1.2 billion-comes from Medicaid. State revenues fund eligible recipients who are not covered by Medicaid. This program serves 27,000 people with DD and roughly 180,000 with SED/MI/SA. The state is able to operate this program through 1915(b) and 1915 (c) Medicaid waivers.

For more information, go to www.muskie.usm.maine.edu/rmhmp/Narrative/Michigantxt.htm

There is a growing movement within state public programs to give beneficiaries-who, because of chronic illness or disability, are eligible for long-term care services-more choice and control in arranging for the personal assistance they require. Currently, it is estimated that at least 60 percent of state Medicaid programs offer some "consumer direction." Typically, consumer-directed programs operate within existing Medicaid law and regulations. At a minimum, they permit consumers to have a direct employer-employee relationship with their personal care attendants, instead of requiring that attendant care be provided through professional agencies. However, a handful of experimental programs are pushing the concept of consumer direction even further.

The largest of these experiments is the Cash and Counseling Demonstration, which is co-sponsored by the Robert Wood Johnson Foundation and the U.S. Department of Health and Human Services. It incorporates a scientifically rigorous evaluation in the form of controlled experimental design, i.e., random assignment of volunteer participants to the experimental consumer-directed program or to a "control" group, which receives the standard service package normally available to Medicaid recipients.

Three states-Arkansas, New Jersey and Florida-are participating in the Cash and Counseling Demonstration under Medicaid section 1115 research and demonstration waivers granted by the Health Care Financing Administration. This special authority to suspend certain statutorily based Medicaid rules on an experimental basis is necessary because participants in this experiment may elect to receive some or all of their Medicaid benefits in the form of a cash payment.

Participants in the cash and counseling experiments receive a monthly allowance or budget. The amount of the budget is based on what Medicaid would otherwise have paid to the regular service vendors. They may elect to manage the funds on their own or to have the funds managed for them by an accounting service. Participants develop their own care plans and may spend their allowances as they choose, so long as the goods and services they purchase are related to meeting their disability-related needs. Counselors are available to provide assistance; their primary role is to explain program rules-especially the tax and labor law requirements that must be complied with when consumers employ attendants directly-and to help consumers with the associated paperwork.

Arkansas' Independent Choices Program. In December 1998, Arkansas became the first of three states to enroll participants in the Cash and Counseling Demonstration. The voluntary Arkansas program provides for more than 2,000 participants. About three-quarters of them are age 65 and older, and one-quarter are adults age 19 to 64.

Individuals must be at least 18 years old and current recipients of Arkansas Medicaid benefits. In addition, the potential enrollees must require personal care services such as assistance with the activities of daily living (bathing, dressing, cooking and grooming). Finally, the individuals either must be capable of handling the tasks associated with self-directing and the administrative tasks required or must have someone available to assist with those duties.

Each individual in the program receives a cash allowance based on a calculation of the number of hours of personal services required and the number of hours of service actually delivered. Participation in the Independent Choices Program does not affect other Medicaid services and individuals may, at any time, drop out of the project and return to traditional personal care. While enrolled, the participants are assigned a counselor who offers advice and recommendations about issues involved with self-directing and assists with management functions, particularly payroll and bookkeeping.

Program participants can hire family (excluding spouses and legal guardians), friends, professionals or neighbors. Funds can be used for virtually any facet of personal assistance, services or items; they are not exclusively for salary.

Initial research, conducted by an independent evaluator-Mathematica Policy Research-demonstrates a high level of success and satisfaction with the program. More than 80 percent of participants felt their quality of life was improved, while none claimed it was diminished. Further, 95 percent were satisfied with the time of day they had assistance; 78 percent of the "employees" were family members.

The potential for fraud and abuse that critics of the program feared has not materialized. Indeed, the actual risk of fraud and abuse has turned out to be quite low because all but a handful of participants enrolled to date have chosen to let the accounting service manage their funds by acting as their agent to pay attendants and make large purchases.

Although the Cash and Counseling Demonstration is not accepting new states, Oregon recently received a research and demonstration waiver to implement a smaller experiment along similar lines and two other state applications for small demonstration waivers are pending. Although Arkansas has met its required minimum enrollment of 2,000 participants, the project will continue at least through fall 2003-the life of the approved wavier period. Negotiations with the Health Care Financing Administration have begun to explore the feasibility of turning the cash and counseling concept into a more permanent Medicaid program. For more information, go to http://www.independentchoices.com/ICHome.htm.

Conclusion

To allow people with disabilities to remain at home and in the community when that option is appropriate, state legislators have the option of expanding the availability of home and community-based services through home and community-based waiver programs, optional Medicaid services that include personal care services, and the authorization of state general revenues for home and community-based services for people who are ineligible for Medicaid.

As state legislatures and agencies explore how to strengthen home and community-based options for people with disabilities, they will continue to look for promising practices-not only in other states but also within their own state boundaries-that they can then expand.

Tables

Table 1

Table 2

Table 3

Acknowledgements

This report was prepared with funding from generous grants from The Robert Wood Johnson Foundation and the Home and Community-Based Services Resource Network. The authors appreciate the guidance of Pam Doty with the Office of the Assistant Secretary for Planning and Evaluation, Becky Veak with the Nebraska Department of Health and Human Services, and Suzanne Crisp with the Arkansas Division of Aging and Adult Services. Thanks also to Leann Stelzer and Greg Martín at the National Conference of State Legislatures for their editing and formatting assistance. The authors also wish to note the assistance of the MedStat Group.