2003 Update
by
Barbara Coleman (Independent Consultant)
Wendy Fox-Grage (NCSL DC)
Donna Folkemer (NCSL DC)
Contents
Introduction
During the boom years of the 1990s, most states experienced unprecedented revenue growth, enabling many states to increase spending on social programs and initiate new programs, such as prescription drug benefits for senior citizens. The national economy began faltering in late 2001, however, with the result that state revenue collections failed to meet budget forecasts. Spending began to exceed budgeted levels.
By fiscal year (FY) 2002, the record budget shortfalls facing most states threatened to overwhelm all other issues of state governance, including long-term care programs and services. As state budget gaps grew, budget planners, legislators and governors struggled to cut programs and search for new revenue sources.
In addition to the shortfalls resulting from declining revenues, states experienced escalating Medicaid costs. Medicaid, which accounts for about 20 percent of all state spending, is the single largest source of public funding for long-term care. According to the National Association of State Budget Officers (NASBO), Medicaid spending grew by more than 13 percent between 2001 and 2002, the fastest rate of growth since 1992. This reality forced state legislatures and state officials to look for ways to contain Medicaid costs rather than expand services.
Although state policymakers concentrated largely on curbing expanding pharmaceutical programs and optional medical services under Medicaid, long-term care services did not escape the budget axe. States cut, froze or provided only small increases for nursing home reimbursement rates. Other actions involved freezing new admissions to home care programs or restructuring state agency organizations.
Still, despite the gloomy fiscal situation, a number of states moved forward with long-term care planning, implemented pilot programs, and sought creative ways to restructure long-term care services, using federal systems change grants or existing state agency budgets. States used grant funds in particular to move eligible individuals from nursing facilities into the community and to support consumer direction for personal assistance services.
In this report, the National Conference of State Legislatures (NCSL) traces the budget issues that states confronted in 2002 and examines how they addressed those issues. The report also describes long-term care legislation enacted in 2002 and long-term care planning work that is under way in many states.
Every state constitution, except Vermont, requires a balanced budget. As noted in NCSL's February 2003 state budget update, 36 states reported budget gaps midway through FY 2003. Thirteen states and the District of Columbia reported no gaps, and Tennessee did not provide FY 2003 budget information. As of late January 2003, the cumulative budget gap was about $25.7 billion for FY 2003. NASBO estimated the FY 2004 budget deficit gap at $90 billion.
The states' response took many forms. Tapping "rainy day" funds and tobacco settlement money were among the most prevalent strategies. State policymakers also took the budget axe to the Medicaid program. In January 2003, the Kaiser Commission on Medicaid and the Uninsured reported that, since July 1, 2002, 49 states had made or announced plans to make cuts in their Medicaid programs by limiting eligibility, cutting benefits, or restructuring prescription drug payment and coverage. Another tactic was delaying, cutting or freezing inflation adjustments for Medicaid providers such as nursing homes or home health agencies.
One of the major long-term care targets of state budget-cutters has been nursing home reimbursement rates. For example, Illinois implemented a 5.9 percent reduction in its nursing home reimbursement rates, effective July 1, 2002. The 2002 Kansas Legislature reduced the Medicaid nursing home budget by $8.9 million. An annual cost-of-living rate adjustment for nursing homes in Oklahoma was delayed. The Rhode Island legislature in 2002 revoked the $3.71 per resident per day increase in Medicaid reimbursement for nursing facilities that had been enacted in 2001. North Dakota legislators appropriated funds to provide incentives to nursing facilities to reduce licensed bed capacity.
Massachusetts enacted a nursing home user fee levied on private-pay nursing home residents, which was expected to generate about $145 million. Although state officials had said the state planned to use $130 million from the tax to increase Medicaid reimbursements to nursing homes, Governor Mitt Romney said he wanted to use those funds for other medical expenses and also wanted to cut $14 million from nursing home rates starting in March 2003. Examples of other budget-tightening actions by states for FY 2003 include the following,
- Colorado
froze admissions to its state-funded Home Care program.
- Kansas
capped eligibility for health and homemaking services in its Senior Care program and imposed a freeze on new applicants to its Medicaid home and community-based waiver programs for Frail Elders.
- Montana
delayed wage increases for direct care workers who provide personal assistance services and for providers of home and community-based waiver and home health services.
Yet, the worsening budget crisis in the states did not totally stymie the ability of some states to improve or expand long-term care options for people with disabilities. In New York, media and other reports of widespread problems in adult homes for people with mental illness led to the creation of a special administration task force to review the existing system. The result was a recommendation from Governor George Pataki and the state health commissioner for increased spending on housing and services for the mentally ill, improved case management, and increased advocacy and legal support.
In Ohio, a budget plan enacted in mid-2002 that reduced FY 2003 spending by $375 million exempted the Medicaid home and community-based waiver program, PASSPORT, and the Alzheimer's respite program. Although Tennessee Governor Phil Bredesen imposed 7.5 percent budget cuts on most state operations, he spared the state's mental retardation agency.
Lawmakers were forced in 2002 to pursue long-term care reforms within the confines of tight budgets and growing concern about health-related expenditures. Despite these constraints, lawmakers enacted a number of measures during 2002 that expanded home and community-based options for senior citizens and people with disabilities and expanded protections against abuse and neglect.
Consumer Direction. The Colorado legislature created a consumer-directed care program for elderly Medicaid beneficiaries that allows participants to obtain a direct care payment for services. Florida lawmakers created a consumer-directed design for a Medicaid home and community-based waiver program under which participants receive a monthly budget allowance to pay for a range of services.
Assisted Living. In several states, lawmakers defined types of assisted housing and required criminal background checks for staff in assisted living facilities. Colorado changed the licensing category for personal care boarding homes to assisted living residences and spelled out the kinds of services that must be provided in this type of residence. The Maine Legislature established and defined three categories of assisted housing programs: independent housing with services, assisted living services, and residential care facilities. Rhode Island amended its existing licensing law for assisted living to specify the level of care appropriate for residents and to require criminal background checks for owners, operators and administrators.
Nursing Homes. Lawmakers continued to focus in 2002 on measures to improve the quality of life in nursing homes. The Colorado legislature created a pilot program to survey quality of care and living in nursing homes through the use of a consumer satisfaction survey. Illinois lawmakers created the Innovations in Long-Term Care Quality Grants Act for programs that demonstrate creativity in providing services. The grants are to be funded by fines set by previous legislation on nursing homes that provide poor quality care. In Michigan, lawmakers required the state to develop criteria to assess the ability of a provider to maintain individuals at the most appropriate level of care and to improve the total quality of care. A bipartisan group of legislators in Missouri introduced a package of nursing home reforms in 2003 that includes expanded disclosure and reporting requirements, background checks on some employees, and greater authority for regulators. New York lawmakers created the Nursing Home Quality Improvement Demonstration Program to improve the quality of care for residents through an increase of direct care staff in nursing homes.
Staffing issues in nursing homes were also addressed in the Florida, New Mexico, and Oklahoma legislatures. Florida legislators prohibited union organizing activities by a nursing home employee during any time that employee is counted in staffing calculations to meet minimum staffing standards. New Mexico legislators called for a study of acuity-based staffing in nursing homes, and Oklahoma lawmakers allowed nursing homes to alter their shift ratios and schedules, provided the ratios do not fall below certain minimum standards.
Elder Abuse. Protecting vulnerable individuals against abuse, neglect or financial exploitation was a concern of many lawmakers in 2002. Twenty-two elder abuse laws were passed in 14 states during the 2002 legislative sessions. Although the bills addressed the issue in different ways, increasing or creating new penalties for the crime of elder abuse was a prevalent trend, as was expanding the definition or categories associated with elder abuse.
The California Legislature increased the penalties for elder abuse, added clergy to the list of mandated reporters, and expanded the list of people who may receive and disclose information of suspected abuse. Maryland legislators enacted the Financial Crimes Against Vulnerable Adults Act, which allows for penalties of up to 15 years in prison or a $10,000 fine, or both, for such crimes. New Hampshire lawmakers defined penalties for neglect of elderly, disabled or impaired adults and added financial exploitation to the offenses for which protective services will be provided. Utah modified and strengthened mandatory reporting requirements, and Vermont expanded the definitions of "abuse" and "neglect."
End of Life. Legislation on end-of-life issues ranged from a bill of rights for hospice participants to pain management. California lawmakers passed a measure allowing individuals who receive hospice services to enter residential care facilities without having to disenroll from hospice. The Maryland legislature established the State Advisory Council on Quality Care at the End of Life to study the effects of public policies on the provision of care at the end of life and to advise the legislature on these issues. The Michigan Legislature enacted 13 pain management, end-of-life and hospice care bills in 2002. One of the bills creates an advisory committee on pain management that would develop and encourage the implementation of model core curricula on pain and symptom management. In Minnesota, legislative activity centered on a hospice bill of rights that spells out 22 rights, ranging from the right to be free of physical or verbal abuse to the right to refuse treatment.
Work Force. Several legislatures addressed work force issues with a view to expanding the pool of direct care workers or upgrading their training. The Indiana legislature permitted certain unlicensed workers, to be known as "personal services attendants," to provide health-related services to recipients of home care services. The Kentucky legislature required facilities that care for Alzheimer's patients to offer specialized training to their staffs. Lawmakers in Maine requested that state agencies review rules regarding the training and certification of unlicensed direct-care staff. The Massachusetts legislature funded a rate add-on for wages and benefits of direct care staff of nursing homes or to improve a facility's recruitment and retention of nursing staff. The Nebraska Legislature expanded the competency course requirements for medication aides in assisted living facilities.
Many states initiated or continued planning efforts in 2002 to assess and evaluate their current long-term care systems. These planning activities stemmed in large part from the 1999 Supreme Court ruling in L. C. & E. W. vs. Olmstead, in which the court ruled that states must provide services in the most integrated setting appropriate to the needs and wishes of qualified individuals with disabilities. Before and subsequent to that ruling, many states faced lawsuits from advocacy groups and people with disabilities, who contended that a state's failure to provide them with community rather than institutional services constituted discrimination under the Americans with Disabilities Act. Many states maintained long waiting lists for community services for people with disabilities because of limited funding and slots in their home and community-based programs.
By 2002, 42 states and the District of Columbia had formed task forces, commissions or state agency work groups to review their long-term care programs and, in some states, to develop plans and recommend future actions for expanded community services. Most commissions are broad-based, and their scope of work includes all people with disabilities. Eleven states (Arkansas, Connecticut, Delaware, Hawaii, Illinois, Kentucky, Massachusetts, Utah, Washington, Wisconsin, Wyoming) released plans and reports in 2002.
For an example, a 23-member Governor's Integrated Services Taskforce in Arkansas released a comprehensive draft plan for long-term care reforms in October 2002. The report recommended providing additional funds for the Medicaid HCBS developmental disabilities waiver program, allowing funds for nursing home residents to be transferred to community care services if a resident relocates to a community setting, and instituting major changes to the state's mental health care system.
In Washington, work to develop a five-year plan for people with developmental disabilities began in 1997. The third phase of that planning process culminated in a report Developmental Disabilities Strategies for the Future, that was released in December 2002. The report made recommendations on implementation of self-directed services and on the respective roles of residential habilitation centers (institutional centers) and community support services. Examples of other state long-term care plans include the following.
- Recommendations by the Georgia Olmstead Planning Committee in January 2002 led to action in the legislature providing funding in the FY 2003 budget for reducing the waiting list for the Community Care Services Program and for the Mental Retardation Waiver Services Program.
- Hawaii
issued a long-term care plan that sets five goals, including informing and educating consumers about long-term care choices; supporting individuals in finding appropriate places to live; and assuring adequate housing, transportation and employment for people with disabilities.
- The long-term care plan released by Utah outlines a course of action in three categories: home and community-based initiatives, cross-agency planning, and individual department and division plans. The recommendations call for identification of problem areas and effective approaches.
However, current budget problems have delayed Olmstead plan implementation in many states.
Another impetus for state expansion of home and community-based care has been the Systems Change Grants for Community Living program, launched in 2001 by the Centers for Medicare and Medicaid Services (CMS) of the U.S. Department of Health and Human Services. Since 2001, CMS has awarded grants totaling about $125 million to 48 states, two territories and the District of Columbia.
Many states began testing innovative ways to deliver community services to people with disabilities. Of particular interest to a number of states was the concept of consumer direction, which these states saw as a way of increasing consumer control over the services they received. Alaska, for example, planned to develop a consumer-driven care coordination system. The project would establish a pilot program to develop individual budgets for program participants, and then would place those budgets under their control.
In North Carolina, the Department of Health and Human Services planned to use a $725,000 grant to identify provider practices that interfere with consumer direction. Then, the state planned to develop and conduct training and technical assistance with providers to encourage consumer-directed practices. Another part of the project involves creating local demonstration models of consumer leadership that will help build community support for options such as consumer-directed services.
States also were using Systems Change grants and other revenue sources to design programs for moving qualified individuals from nursing homes to community settings. Rhode Island was using its System Change grant, for example, to build on its "Date Certain" Nursing Home Transition Program. Grant money is being used to employ service coordinators to help with transition activities and for referrals and communications support. Nebraska planned to develop a communication and marketing campaign to help make the public more aware of community alternatives to nursing home placement. The project is using Area Agencies on Aging and specially trained ombudsmen volunteers to help identify and support people in nursing homes who can move to community settings.
Another emerging trend in state long-term care systems in 2002 and 2003 has been reorganization of state human and social services departments and the creation of new offices to deal with long-term care policy. The Florida legislature created a new Office of Long-Term Care Policy in the Department of Elder Affairs, for example, to evaluate, improve and coordinate the state's long-term care delivery system. Other state actions included the following.
- The Alabama Department of Mental Health and Mental Retardation created a new Office of Consumer Empowerment in December 2002 to encourage greater participation in policymaking for people with mental retardation and developmental disabilities.
- A major reorganization of the Alaska Department of Health and Social Services (DHSS) included a transfer of senior services from the Department of Administration to DHSS in a new Senior and Disabilities Services Division.
- The Iowa governor transferred authority for inspecting and regulating assisted living facilities from the Department of Elder Affairs to the Department of Inspections and Appeals and appointed a task force to review the mission and responsibilities of the Department of Elder Affairs.
- The South Carolina Legislative Audit Council recommended in January 2003 that the legislature authorize a single cabinet secretary appointed by the governor to oversee the eight current health and human services agencies. The Council also proposed placing all senior and long-term care programs (that currently are in three different departments in a newly created agency specializing in senior and long-term care services.
- In December 2002, the secretary of the Washington Department of Social and Health Services created the Aging and Disabilities Services Administration by merging the Aging and Adult Services Administration and the Division of Developmental Disabilities.
- The Wisconsin Department of Health and Family Services combined two divisions and a department agency that oversees the new Family Care demonstration home and community-based program in February 2003 to create a new Division of Disability and Elder Services.
Twenty-four new governors took office in 2003. Nearly 1,750 new lawmakers took office in 2003 as well, representing the highest turnover in at least 30 years. What they and their colleagues faced was an unprecedented fiscal crisis. After several years of declining revenues and rising Medicaid costs, almost every state was forced to tighten budgets and trim agency programs and services in FY 2002. Fiscal prospects seem even worse for FY 2003 and FY 2004.
Cost-containment options included many measures that affect long-term care services. Slowing the rate of growth of nursing home reimbursement rates or freezing or cutting those rates had been among the most prevalent belt-tightening tactics in recent years, but in 2002 and 2003 home and community-based services came under the scrutiny of many state policymakers as well.
Nevertheless, many states redoubled their efforts to provide a range of community services for people with disabilities. One of the most successful efforts, spurred in part by federal Systems Change grants, was relocating people from nursing homes to community settings if those people sought the move and were assessed as being appropriate candidates for the transition. This movement appeared to be a trend that will continue into the future and that will include providing for Medicaid funding to follow an individual who make the transition from a nursing facility to the community (as has been done in Texas).
Another theme that emerges from a review of state long-term activity in 2002 is the increasing use of consumer direction in many HCBS programs. A number of states have been considering ways to more directly involve program participants in the planning and delivery of their services. These efforts also have been facilitated by Systems Change grants. Nebraska, for example, involved people all over the state in town hall meetings to obtain their input on consumer-directed services to implement a model that would apply to all populations of people with disabilities.
Long-term care planning is another important trend in the states that is likely to continue in the future. Some state planning groups engaged in a broad review of their long-term care programs and outlined what they thought should be the guiding principles and strategies for a reformed long-term care system. Other state task forces or commissions made detailed recommendations for change in the immediate and long-range future. In either event, states appear likely to maintain the planning momentum until more favorable economic conditions allow for expansion of long-term care services.
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