THE OLMSTEAD DECISION AND SERVICES FOR PEOPLE WITH DISABILITIES

THE OLMSTEAD DECISION AND SERVICES FOR PEOPLE WITH DISABILITIES

By Jo Donlin

This document summarizes a session focusing on the 1999 Olmstead vs. L.C. Supreme Court decision and its implications for state policymakers and people with disabilities. The session was presented at the 2000 National Conference of State Legislatures (NCSL) Annual Meeting. NCSL's Assembly on State Issues (ASI) Children, Families and Health Committee sponsored this session, moderated by Lucy Hadi, senior staff director of the Florida Senate Committee on Fiscal Policy and staff vice-chair of the NCSL Committee. Presenters included:

Thomas E. Perez, director of the Office for Civil Rights (OCR) in the Department of Health and Human Services.
Allan Bergman, president and CEO of the Brain Injury Association of America Inc.
Richard Hemp, associate director of the State of the States in Developmental Disabilities Project of the University of Illinois at Chicago.
Steve Verriden, Independent Living Service coordinator, and ADAPT organizer from Wisconsin.

Background

The Olmstead case involved two women from Georgia who had mental illness and mental retardation and lived in an institution. The women did not want to remain in the institution and the state's own treatment professionals determined that they could indeed live in a community setting with appropriate support. But the state refused to move them because there were no community-based service placements available. The question presented before the court was whether the anti-discrimination requirement of the Americans with Disabilities Act (ADA), the most integrated setting requirement, would require placement of these women in community settings rather than institutions.

In Olmstead vs. L.C., the U.S. Supreme Court ruled against the state of Georgia and determined that the women's continued institutionalization was a violation of their rights under the ADA because the women were not in the most integrated setting possible and did not choose to be institutionalized. The ruling requires states to provide community-based services for people with disabilities who would otherwise be entitled to institutional services, whenever the following three factors are in place:

When the state's treatment professionals have determined this is appropriate;
The transfer from institutional care to a less restrictive setting is not opposed by the affected individual; and
The placement can be reasonably accommodated, taking into account the resources available to the state and the needs of other state citizens with disabilities.

The court suggested two ways by which a state can show compliance with Olmstead.

A state may develop a comprehensive, effective working plan, including timetables and progress reports, for placing qualified people in community-based settings.
A state may maintain a waiting list for community-based services, but the list must move at a reasonable pace and may not be motivated by a desire to fill institutions.

According to Allan Bergman, president and CEO of the Brain Injury Association, the Olmstead case does not aim to close down every institution and empty every nursing home bed. The focus is on giving people with disabilities the right and opportunity to choose their long-term care setting if certain conditions exist. Bergman emphasizes that "the critical piece here is going to be individual choice. Individual choice has been a mantra in the disability community for at least a decade."

Cost Does Matter and All People with Disabilities are Covered

The Olmstead case illustrates the challenges the ADA faces, according to Tom Perez, director of the Office for Civil Rights. The ADA regulations state that a public entity shall administer services and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities. This includes state and local governments. The Supreme Court decision states that "...unnecessary institutionalization of individuals with disabilities constitutes discrimination under the ADA...". But the court qualified its decision by stating that the issue of cost is relevant.

The Olmstead case leaves some flexibility for the states. They may take into account the "available resources to the state and the needs of other state citizens with disabilities." States also do not need to "fundamentally alter" their public programs. With this in mind, policymakers can address the long-term care issues without leading their states into a budget crisis. "The (Supreme Court) said that the issue of cost is indeed relevant," says Perez. "You may be required to put into place certain systems to ensure that people can obtain caring treatment in the most integrated setting, but you're not required to break the bank."

Still, proving what constitutes a "fundamental alteration" or a "reasonable accommodation" will be a challenge for the states. Neither the Olmstead case nor the ADA define these terms. "The reasonable accommodation regulation talks about how to avoid discrimination unless there is a 'fundamental alteration' of the program, and that's where the fun is really going to come in state by state," Mr. Bergman says.

The Olmstead decision applies to all people with disabilities. Although the plaintiffs had mental illness and mental retardation, the case includes everyone who is covered by the ADA. The ADA, however, doesn't define "disability." But its impact on states is serious because many people with disabilities are covered by Medicaid. The case is as inclusive as the ADA. "As you think about Olmstead, you need to be thinking about the full range of people with disabilities across the age span, from children to people in their golden years," Bergman says.

Medicaid and the Institutional Bias

According to the National Center for Health Statistics, almost 150,000, or 8.5 percent, of the people in skilled nursing homes today are under the age of 65. They are people with physical disabilities, mental retardation and developmental disabilities, psychiatric disabilities and traumatic brain injuries, among other conditions. Most of these individuals are in a nursing home because of limited community-based services, and long-term care for the majority of them is paid through Medicaid.

Medicaid long-term care spending accounts for some 35 percent of all federal and state Medicaid money. In 1999, 75 percent of Medicaid long-term care spending went to institutions, rather than community-based settings. These numbers reflect a long standing "institutional bias" that Medicaid has developed over the last four decades. Before 1981, the only long-term care benefit through Medicaid was care in an institutional setting, such as a nursing home, intermediate care facility for the mentally retarded (ICF/MR) or an institution for mental diseases (IMD). In 1981, Congress passed the Omnibus Budget Reconciliation Act (OBRA-81), which authorized home- and community-based services (HCBS) waivers. Under OBRA-81, states can obtain waivers to cover a range of home- and community-based health and support services to Medicaid-eligible people who otherwise would be in an institutional setting.

While these waivers have helped increase home- and community-based services for people with disabilities, the Medicaid entitlement still applies only to the institutional setting. Currently, the 250 Medicaid home- and community-based services waivers operating around the country account for only 25 percent of Medicaid's long-term care spending. The waiver often pays for personal assistance and finances a wide range of in-home, family support and other more individualized services. The Olmstead decision may be the impetus for more states to use these waivers.

Many people with disabilities believe that the entitlement should be reversed-that Medicaid should support personal care, long-term supports and home- and community-based options rather than place people in institutions. Steve Verriden, coordinator of an Independent Living Center and a former resident of a nursing home, emphasizes the need for change: "I'm one of those people who say the entitlement should be the home- and community-based option and if you absolutely need the nursing home or if that's where you choose to go, well that's your business."

Verriden mentioned that one innovative method of providing long-term care services is to give the money to the individual in need of the services, rather than the institution or provider. The person with the disability can then choose where and what type of services he or she needs. The marketplace will support the providers who supply quality services. "What we need to do is insert the person with the disability or the senior between the funder and the provider," Verriden says. "The marketplace will straighten itself out ... So we see Olmstead as a way for states to go ahead and start implementing this model."

Trends Toward Community-Based Care in the Mental Retardation and Developmental Disability Community

The institutional bias is breaking down slowly. This is most evident for people with mental retardation and other developmental disabilities. According to Richard Hemp, associate director of the State of the States in Developmental Disabilities Project of the University of Illinois at Chicago, there are five main trends in service delivery for people with developmental disabilities: community services are expanding, institutional care is decreasing, Medicaid is playing a central role in providing long-term care, a growing number of aging caregivers who provide services for their own family members, and the self-determination on the part of people with disabilities.

Community services in the U.S. have expanded and there has also been growing privatization in the delivery of services. Two decades ago, virtually all the money that went to long-term care for people with developmental disabilities consisted of spending in state-operated institutions. Today, more than 80 percent of the total resources of $25.6 billion nationwide is being managed by privately operated provider organizations, mostly in community-based settings.
Along with privatization and the increase of community programs, there has been a rapid decline in the use of state institutions. More than 100 institutions have closed in the last 20 years. Nearly 200 institutions still exist around the country, but these are vastly smaller than were the 5,000 bed institutions that once were common in a number of states. The institutional population reached its peak back in 1967 at 195,000. The population in institutions has gone down rapidly, between 3 percent and 4 percent per year. In the last six years, the rate of decline has actually increased to 6 percent annually. Today, fewer than 50,000 people with mental retardation or other developmental disabilities live in institutions.
The third major trend is the central role Medicaid plays in providing long-term care. Medicaid is essential to developmental disabilities long-term care. Federal and state Medicaid money constitutes 72 percent of all the spending ($25.6 billion) for developmental disability services. The rest of the spending consists of state funds and some small amounts of other federal funding.
There is a growing number of aging caregivers. As many as 500,000 people with developmental disabilities throughout the states live with caregivers, usually a parent, who are 60 years or older. These are people who are going to need supports. The lifespan of people with developmental disabilities is also increasing, which means an increasing need for services.
There is now increasing self-determination on the part of people with disabilities. A major trend in the past 10 years has been the growing number of people with developmental disabilities who are speaking for themselves. The national association called Self Advocates Becoming Empowered (SABE) has had a major impact on the state and federal policy discussions about long-term care in recent years

These trends have significantly affected the long-term care systems for those with mental retardation or other developmental disabilities. In 1998, 70 percent of the 416,716 people with a developmental disability who lived in a long-term care setting, lived in facilities that serve 15 or fewer people. Today, fewer than 50,000 people with mental retardation or another developmental disability live in institutions with 16 or more beds. In fact, nine states have no state-operated long-term care institutions for mental retardation and developmental disabilities. The nine states include: Alaska, the District of Columbia, Hawaii, Minnesota, New Hampshire, New Mexico, Rhode Island, Vermont and West Virginia.

The home- and community-based waiver and the intermediate care facilities for people with mental retardation (ICF/MR) are the two main Medicaid programs to finance long-term care services for those with developmental disabilities. Most ICF/MR settings serve 16 or more people. Some smaller group home ICFs/MR exist, but many advocates feel they resemble the larger institutions in terms of lack of consumer choice or customized support.

Although almost every state has a home- and community-based waiver, some states finance a larger percentage of their long-term care with a waiver. At least 10 states have 47 percent or more of their long-term care for MR/DD financed through a waiver (See Appendix A). Waiver spending per participant in most of the top states in Appendix A is half or below the nation's average per participant institutional cost of $106,036.

While these numbers show that progress toward serving people in community-based settings has been made, Hemp believes that a great deal of work still needs to be done: "Unlike the larger Medicaid population in need of long-term care services, the majority of resources (for long-term care services for people with mental retardation or otherdevelopmental disabilities) are now committed to community services and individual and family supports nationwide," he says. "However, the majority of the states still place a substantial number of people with mental retardation and developmental disabilities in public and private institutions, including nursing homes."

"Road Map to Compliance"

Although the Olmstead decision encourages states to reevaluate and, in many cases, change their delivery systems for long-term care, the case also provides guidance on how states can begin the implementation process. As mentioned earlier, a state can develop a plan or keep a waiting list that moves at a "reasonable pace." These options are a "road map to compliance," according to Perez.

The state plans must be comprehensive and effective. "The critical challenge to states now is to figure out how to bring people together to develop the five-year comprehensive plan under Olmstead," Bergman says. "It's going to take doing business very differently in terms of the stakeholders coming together: this includes consumers, providers, advocates, family members, state legislators, legislative staff, executive branch, folks in the community and others ... There will be 50 variations on the theme because every state is in a different place ..."

The presenters agreed that stakeholders must account for future needs when they develop the state plans. Several groups will influence the future of long-term care delivery systems.

First, many elderly people want to stay in their homes as long as possible. Often times, when they can't make it on their own and there is no family support, a nursing home is the only option. With Olmstead, these men and women may be able to stay in their own homes or another community-based setting.
Second, an estimated 500,000 people with developmental disabilities currently live with caretakers who are age 60 or older. As the caregivers grow too old to provide the necessary assistance, the people with disabilities will need a new source of support.
Third, the baby boomer generation will increase the need for community-based services dramatically when they begin to retire and need more supports and assistance.
Finally, in general, people with disabilities are living longer and want to live fulfilling, productive lives and will need certain community-based services in order to do so.

All of these groups pose interesting challenges to the long-term care systems around the country. Addressing the future needs of the different consumer groups will help save money and time before the needs become overwhelming. "I think developing your state plan is really very important," says Verriden. "As we start providing less expensive services in the community and we start catching people before they end up in institutions, we'll be able to start saving money and using those savings for future needs as our population ages."

Is There a "Woodwork Effect"?

Some state policymakers have feared the possible "woodwork effect" as they evaluate the costs of expanding community-based services for people with disabilities. People in need of community-based services, who are already living in the community with the help of parents or some other source of support, start "coming out of the woodwork" and want state funded community-based services. But Verriden noted that while the extent of this need may not be fully known, the costs may be contained because of the institutional eligibility requirement. To qualify for home- and community-based services, an individual must first meet the Medicaid criteria for institutional placement.

Many of the underserved people counted toward the "woodwork effect" are already on waiting lists for community-based services in many states, but refuse to be placed in an institution while they wait. "There are a lot of hidden costs out there if you have people out in the community on waiting lists," Verriden says. "You've got lost wages and economic productivity ... The underserved are using emergency rooms, which is a very expensive way of providing long-term care services. It will just pop-up in a different section of your Medicaid sheet."

Also, the process of transferring people out of institutions will take some time because, in many states, the infrastructure must be built: "In terms of getting folks out of our institutions, it's not going to be a flood of people moving on," Verriden says. " It takes a long time and a lot of work ... you need to come up with all the systems to put them in place. We don't want people dumped out there."

Who's Enforcing the Olmstead Decision and How?

The Office for Civil Rights, in the Department of Health and Human Services, enforces the ADA and Section 504 of the Rehabilitation Act, which relates to the Olmstead decision and community-based services. The Office for Civil Rights:

Investigates complaints;
Conducts compliance reviews; and
Provides training and technical assistance to state stakeholders on a variety of issues including but not limited to the issue of ensuring caring treatment in a most integrated setting.

The Office for Civil Rights (OCR) receives numerous complaints from citizens who believe their civil rights have been violated because a state cannot provide community-based, long-term care services and, as a result, they or their family members now live in an institutional setting. By July 2000, the office had received 130 complaints from 25 states.

With the Olmstead decision, the OCR has preferred a collaborative approach over a punitive approach to encourage compliance. It also encourages stakeholders to collaborate and compromise and views litigation as a last resort. It sent letters to all states against which the office received complaints, encouraging them to adopt the "roadmap to compliance" the Supreme Court set out. The Department of Health and Human Services and the Health Care Financing Administration (HCFA) sent out a joint letter to state Medicaid directors encouraging this same process, outlining the decision itself and giving technical assistance guidance. These letters have proven very effective in helping states start the implementation process by developing their state plans. Perez believes "the best model is for all stakeholders, including people with disabilities and their family members, to get together collaboratively to develop comprehensive, effective working plans for moving individuals with disabilities into the most integrated setting, and not go back into court and litigate the many questions that remain unanswered from Olmstead."

Other federal agencies are examining their own programs to make sure every effort is made to help states implement Olmstead. HCFA, renamed the Centers for Medicare and Medicaid Services in July 2001, is taking the lead to identify ways the federal government can become more flexible with funding. States will use the increased flexibility to allocate resources towards people who want to live in community-based settings. Perez emphasized that the federal government wants to help states maximize the number of options for people with disabilities.

States Are Forging Ahead

According to Perez, an exiting process has begun around the country. A number of states have already done remarkable work using the flexibility that already exists in the system and using creativity when they develop community-based systems for individuals with disabilities. States are bringing stakeholders together to assess their current long-term care systems. Governors have issued executive orders that commit the states to the planning process the Supreme Court outlined. Many states have started developing their comprehensive working plans and state legislators and staff serve a variety of roles in that process.

Regardless of where each state stands, the implementation process has begun. This historic case impacts states on many different levels, and Perez emphasized its importance: "It is a fundamental issue of basic human dignity. I think we owe it to the ADA, we owe it to individuals with disabilities who want to, who can and who should be living in the community, to come up with creative solutions so they can indeed live life to the fullest."

For more information, please contact Jo Donlin at NCSL at (303) 364-7700 x130.

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