Stateline Story

States Seek Nursing Home Alternatives

As Congress contemplates deep cuts in Medicaid, many states have come up with innovative ways to help elders remain at home during their twilight years, saving millions that otherwise would be spent on costly nursing home stays.  

Medicaid -- the federal program that provides medical assistance for poor and handicapped citizens -- is biased in favor of institutional care. When seniors qualify financially and are deemed to require care, Medicaid funding for a nursing home bed is guaranteed. But if qualifying seniors want to receive care at home, they must request funding and wait for services to become available.

Institutional care is an entitlement under Medicaid; community-based care is optional. But it's an option that experts say most people prefer. And it's much cheaper. On average, community-based long-term care is about one-third the cost of comparable nursing home care.

Vermont is a leader in a nationwide effort to give elderly consumers the kind of care they want by balancing Medicaid spending between nursing homes and community services, based on consumer demand.
  
Joan Senecal, Vermont's deputy commissioner for aging and independent living, says the state already is helping more than three times the number of seniors it was able to serve before federal officials agreed to remove onerous barriers to providing home-care options.

Two-thirds of nursing home patients are fully supported by Medicaid, with the remainder using personal money, private insurance and other funds to pay their bills.  The federal Medicare program for those over age 65 can be used to pay for drugs, doctor and hospital visits and some home medical services, but not nursing home stays. 

In the mid-1970s, the federal government began loosening Medicaid rules to make it easier for states to shift spending to community services for the elderly. But many states were stymied by federal requirements that nursing home expenditures be cut before investments could be made in community services, such as assisted-living facilities, special transportation, home-health care and food services. 
  
Oregon and Washington received special permission to invest Medicaid dollars in community-based long-term care in the late 1980s, and today their community programs are among the most developed in the country, with more than half of Medicaid expenditures going to community and home services.
  
Several other states have received community-care waivers since then, and many have made legislative commitments to developing alternatives to nursing home care.
  
But it's not easy to make the transition, says Donna Folkemer, long-term-care policy expert with the National Conference of State Legislatures. "States have been working on the problem for a long time. What states have to do is reduce the institutional bed supply at the same time they create new home-care slots," she explained.
  
Once community facilities are set up, states must work with elderly patients to coordinate their services and fill out reams of Medicaid forms to apply for funding. If home care isn't arranged quickly enough, patients discharged from hospitals are immediately admitted to nursing homes, where Medicaid payment is guaranteed. More than half of nursing home patients come directly from hospitals.
  
Vermont received a first-of-a-kind exemption -- or waiver -- from Medicaid rules this year, allowing the aging department to pool funds for nursing home and community care, effectively eliminating the federal program's bias toward nursing home care. It is the first program to allow elders, families and state caseworkers -- not Medicaid regulations -- to determine where a patient will receive care. 
  
"Vermont has been able to say only those with the highest level of need are entitled to a nursing home and those with more moderate needs can opt for community care," explained Susan Reinhard of Rutgers Center for State Health Policy.  The program allows the state to reach out to more seniors and provide preventative care that will keep them out of nursing homes, she said  "Lots of states are waiting in line to see if they can do the same thing," according to Reinhard.

Through its program -- Choice for Care  -- Vermont has established a team of 12 nurses across the state to work with candidates for long-term Medicaid assistance. When elderly people become too frail to live on their own or are admitted to a hospital, nurses visit to determine the level of care needed and the preferences of the patients. Once a decision is made, patients either enter nursing homes or work with state caseworkers to arrange needed home services.
  
Sometimes it's as simple as building a ramp and purchasing a wheelchair. Often it means providing funds so patients can hire caregivers, usually friends or family members, to help them maintain their daily lives.
  
"We knew we couldn't make the waiver program work unless we had the staff in the field. We needed to know what their needs were so we wouldn't overspend [on nursing homes]," Senecal said.  Vermont's waiver requires the state to spend no more on its new program than it was spending under the old rules. The total long-term-care budget must follow the same trajectory -- about 7.28 percent increase per year -- that it followed over the last five years.
  
Other states want to move in the same direction. Kentucky's aging authority has filed for a waiver similar to Vermont's, and Georgia is expected to file for one soon.  Pennsylvania -- with one of the biggest elder populations in the country and a large, established nursing home industry -- also is considering a Vermont-style waiver.
  
Medicaid is the largest source of financing for long-term care for the elderly, accounting for about 30 percent of the nation's spending on nursing homes. State Medicaid agencies allocate one-third of their budgets for long-term-care services, according to research by the federal Centers for Medicare & Medicaid Services (CMS).
  
Medicaid payments for nursing homes totaled $46.5 billion in 2004, and payments for home and community-based services totaled $15.9 billion in 2003, according to the most recent data available from the CMS.  Nursing homes receive more than 65 percent of their revenue from government sources.
  
With Medicaid expenditures amounting to some 20 percent of state budgets, solutions to expanding long-term care costs remain a top priority.
  
Pennsylvania's aging department secretary, Nora Dowd Eisenhower, says consumer demand and budget realities are propelling the states' shift to community-based long-term care.
  
"The boomers are aging. They're sophisticated consumers that want to change the way long-term care is delivered. Governors across the country are challenged to come up with strategies for controlling the mounting fiscal burden of long-term care.  It's going to happen," Eisenhower said. 

Contact Christine Vestal at cvestal@stateline.org.