In California, Adult Day Care Program is Threatened With Extinction

When Melba Fritts was discharged from the hospital after a bout of bronchitis three years ago, doctors wanted her to go directly to a nursing home. Confined to a wheel chair and plagued by swelling limbs and skin sores, the 88-year-old Fritts suffers from congestive heart disease and diabetes. She needs full-time care.

Her son Sid Bunch and his wife Kay live nearby, but they both work. Fritts told them she would rather die than go to a nursing home. So they worked out an intricate plan. Kay found a local institution, the Yolo Adult Day Health Center, that offers the same kind of medical services nursing homes provide — eight hours a day, five days a week. By combining the weekday program with home health care in the evenings and bringing Sid’s mother over to stay with them on weekends, the couple has been able to keep her out of a nursing home.

But all that may unravel in a few months. And Fritts’ worst fear may become a reality.

The state of California chose earlier this year to cut Medicaid funding for Fritts’ health center and more than 300 like it to save money in the current budget. Assuming that doesn’t change, there’s an equally depressing reality that health officials will eventually have to confront: Defunding the centers won’t save any money in the long-run; it will cost more money.

Without Medicaid funding — $170 million from the state, plus an equal amount from the federal government — most of the centers will find it difficult to stay open. The 39,000 elders and adults with disabilities who spend their days at the centers — receiving medical treatment for chronic diseases, as well as mental health counseling and physical therapy — will have to find somewhere else to go.

The state says it will find other Medicaid services for the patients, but elder advocates say there are no other facilities that provide the same kind of care. Many patients will end up calling emergency medical services, going to emergency rooms and getting admitted and re-admitted to hospitals. Some will go directly to nursing homes. Instead of paying $76 per day for adult health care, the state will have to reimburse nursing homes at a rate of $200 per day.

The Yolo center, in Woodland, California, is like most adult day centers in the state. It is small, privately run and depends on Medicaid for most of its funding. The program manager, Dawn Myers Purkey, says the center will have to close its doors within 60 days if Medicaid funding is cut off. That means 17 employees will be let go and 80 patients will have to find care somewhere else.

Cost shifting

For the state, even with some Medicaid services added to compensate for the closings, the cut would mean an immediate budget gain of about $145 million. But that may be about all California gets out of the deal. In 2010, when former Governor Arnold Schwarzenegger proposed similar cuts, a study commissioned by health care advocates documented that California would end up spending $51 million more than it saved in the first year alone.

The reason is that alternative care from other Medicaid supported services typically costs more than adult day health care. In addition, some costs would be shifted to Medicare, the federal health insurance plan for the elderly that pays for doctor’s visits, emergency medical service, hospitalization and prescription drugs. These are federal costs. But from hospitals, many will enter nursing homes, where most costs are borne by the states.

“The quickest way to a nursing home is through the emergency room,” says Lydia Missaelides, executive director of the California Association of Adult Day Services, which is lobbying to preserve the program.

State health officials say their goal is to keep people out of institutionalized care and in the communities by providing other Medicaid-funded services, including home health care, occupational therapy, physical therapy, and clinical services, for the adult day health centers’ sickest patients. Also, as part of the May budget revision, Governor Jerry Brown added $25 million to the budget to help transition patients to appropriate community-based services.

“The state’s top priority is to help ADHC recipients live independently within the community and avoid placement in a nursing home or other institutional setting,” said Norman Williams, spokesman for the Department of Health Care Services, which runs the state’s Medicaid program. “We are now developing a comprehensive transition plan to assist them in finding and accessing other appropriate services in alternative settings.”

A national model

Still, as the state’s June 15 budget deadline approaches, Brown maintains that the adult day health care program that keeps Fritts and others out of nursing homes has to be defunded.
There is some irony in this, because the program not only was started during Brown’s first term as governor, in 1977, but has often been cited as a model for the rest of the country. Today, 49 states have Medicaid-funded centers similar to California’s and they serve 260,000 people, according to a 2010 study by Ohio State University.

In much of the country, adult day services are growing. Last year, there were more than 4,600 centers across the United States, a 35 percent increase since 2002. West Virginia, the only state without Medicaid-funded adult day centers, plans to open some next year. The federal government is also supporting a shift in Medicaid spending away from nursing home care toward more community-based programs such as adult day centers.

For the past two years, other states with fiscal problems have cut funding for adult day services and a few are slated for Medicaid cuts in the year ahead. But none has gone as far as California seems about to do.

There are proposals on the table in Sacramento that would protect some of the adult day care network. One of them would set aside about half of last year’s adult day funding for a new program called “Keeping Adults Free from Institutions.” The proposed new program would use the existing network of day centers but serve only the medically neediest. So far, Brown has refused to support the bill.
“It is a real mystery,” says AARP lobbyist Casey Young. “Every time I hear the question asked bluntly, what you get back is that it’s an optional service under federal law and the state has run out of other options.”

There is some truth to this. Under the provisions of Medicaid, adult day health care is an optional benefit. California is expected to spend about $43 billion on its Medicaid program in the coming budget year. Much of that money legally cannot be withdrawn. From the non-mandatory parts of the program, budget writers have agreed on $1.4 billion in spending cuts, including adult day care.

Fragile infrastructure

Supporters of adult day care centers point out that in addition to saving California millions in reimbursements for nursing home stays, these largely private, low profit-margin centers help reduce federal Medicare costs by keeping elders out of hospitals and doctor’s offices. But none of those savings are shared with the centers.

California and 14 other states recently got $1 million each from the Obama administration to design programs that would combine Medicare and Medicaid funding to provide coordinated medical and long-term care services for so-called “dual eligibles,” who qualify for both programs. But adult day advocates say most of the California centers likely won’t be around long enough to benefit.
“If the infrastructure goes away, it’s not going to be built back up quickly,” says AARP’s Casey. “People aren’t going to be jumping back into an industry that has been destroyed.”

To weather the storm, Missaelides and other advocates are working to find new revenues. One possibility is to get managed care organizations to include adult day care in their portfolios. But California also is cutting provider rates by 10 percent this year, which limits the services managed care can offer. In addition, contracting with low-cost day centers as a substitute for more costly long-term care services would mean the companies would have to accept a lower fee from the state.

A blessing and a curse

When you walk into an adult day care center, you’re likely to see smiling seniors talking to friendly social workers or even playing bingo. This leads to the frequent misperception that they are social centers. “What most people don’t understand is that it’s built on a medical platform,” says Missaelides. “It’s meant to be a substitute for nursing home care.”

There is little doubt that some adult day centers have suffered from their feel-good image. But Bruce Chernof, president of the SCAN Foundation, which promotes quality long-term care for seniors, says “combining medical and social services in a community setting is the best way to improve health outcomes and bend the cost curve.”

Lamenting the apparent end of California’s 30-year investment in the adult day program, Chernof worries there will be a hole in the community health care network that can’t be filled.

“It’s a myth to believe that when you eliminate a program, the costs will just disappear,” he says. People will have to get care somewhere else and there’s nothing else available that fulfills the same needs. For those who end up in nursing homes, Chernof says, “the likelihood they will ever return to the community is very small.”