Rebalancing Long-Term Care Spending for Institutional and Community-Based Needs

This document presents a summary of "Rebalancing Long-Term Care Spending for Institutional and Community-Based Needs: The Experience in Pennsylvania and Nationally," a seminar sponsored by the Pew Fund for Health and Human Services in Philadelphia (Pew Fund). Held on December 10, 2004, the seminar was part of the Pew Fund's information series called Programs Adjusting to a Changing Environment (PACE), created to improve nonprofits' ability to succeed by providing them with critical information, tools and resources.

Pennsylvania policymakers are rethinking the commonwealth's system of publicly funded long-term care to make it more cost-effective and responsive to consumers, including both the elderly and people with serious disabilities. The commonwealth historically has had a strong institutional bias in its long-term care spending, resulting in very high nursing home utilization. However, under the auspices of the newly created Governor's Office of Health Care Reform (GOHCR), the state is beginning to allocate resources in a way that increases consumers' prospects for staying in their homes and communities. This session offered an opportunity for agencies to learn about Pennsylvania's strategy for reforming its long-term care system, examine the experiences of other states, and consider the implications for their own services.

The session included three speakers: Susan Reinhard, codirector of the Rutgers Center for State Health Policy and senior policy advisor to the commissioner of the New Jersey Department of Health and Senior Services; Rosemarie Greco, director of the GOHCR, and Ann Torregrossa, GOHCR's senior policy manager and codirector of its Long-Term Care Reform Project. A question-and-answer period followed the presentations.

The Changing Face of Long-Term Care

In her opening presentation, "The Changing Face of Long-Term Care: Will You Be Ready?" Susan Reinhard framed the discussion by outlining the forces driving reform of long-term care around the country. While, in most states, funding for long-term care is still going heavily towards institutional care, there is movement towards a rebalancing of the spending so that increasing amounts are beginning to support home- and community-based services. In fact, Reinhard emphasized that what has traditionally been called long-term care should now be called long-term living. The change reflects a new way of thinking-away from institutionalizing people and towards providing them with options that allow them to have a life in their community. These were among the major points she made about the rebalancing:

• A number of factors have converged to spur reform of long-term care. They include demographic shifts; fiscal constraints; a Supreme Court decision; and a push by the consumers themselves, both the elderly and people with disabilities who require long-term care. First, it is clear both that the nation is aging and that people with disabilities are living longer, thus increasing the need for long-term care. At the same time, states must find ways to control the ever-increasing costs of Medicaid, the federal/state program that funds health care services-including long-term care-for the poor and disabled. Because institutionalization, often in nursing homes, is a particularly expensive form of long-term care, it is in states' interests to move towards home- and community-based services. Adding to the imperative for reform is the 1999 Supreme Court decision Olmstead v. L.C., which found that Title II of the Americans with Disabilities Act prohibits the unnecessary institutionalization of people with disabilities. In response to the Olmstead decision, President Bush issued an executive order, known as the New Freedom Initiative, calling on the federal government to assist states and localities in providing increased opportunities for people to access home- and community-based services. Finally, consumers are making it increasingly clear that they want to be able to make choices about their care, and many are choosing to remain in their homes rather than enter nursing homes.
• The focus is shifting towards consumer-driven care. Consumer-driven care recognizes that people should have an array of choices for long-term living and control over decisions about their care. It means they are able to select the services they need and have them fit their own schedule; purchase equipment and make home modifications; and hire the people they want-including friends, neighbors, and relatives-to provide personal care such as bathing and dressing. In this approach, funding is centered on the individual, who works with the provider to decide how the funding would best be spent. Does the person need chore services? Someone early in the morning and again in the evening to provide help getting in and out of bed? Physical therapy for an hour a week at a specific time? While consumer-driven care does not necessarily mean that people are literally given the cash that Medicaid would spend on their care, they do control how those dollars are spent. They might hire their own workers, supervise them, and handle the payroll taxes, or use a fiscal agent to handle the bookkeeping, or select an agency for some or all services.
• States are developing innovative approaches. While consumer-driven care is not new as a concept-California has used this approach for more than 30 years, and a national inventory conducted in 2001 found 139 consumer-directed service programs around the country-the approach has not been embedded in most states' systems of long-term care. Now, however, with federal policy helping to drive change, states are developing innovative approaches that provide consumer choice and increased access to home- and community-based services. Real Choice Systems Change grants from the Centers for Medicare and Medicaid Services (CMS) have helped provide funding to states to strengthen their home- and community-based services. Using Independence Plus waivers within the Medicaid system, a number of states are implementing programs that allow consumers to self-direct their long-term care. States are also developing "single point of entry, no wrong door" resource centers, which provide comprehensive information and assessments, and a quick determination of consumers' financial eligibility for services. Other innovations include nursing home transition programs for people who have to be institutionalized temporarily but then are able to return to their homes; improved options for assisted living; and adult foster care, in which the consumer lives with the care provider.
• Cash & Counseling is one promising model of consumer-driven long-term care. Launched in 1995 by the Robert Wood Johnson Foundation (RWJ), the U.S. Department of Health and Human Services and the Administration on Aging, the Cash & Counseling program gives Medicaid beneficiaries choice and control over their personal care needs. It provides an individualized budget to consumers, who use the money to hire their own caregivers or purchase items, such as chair lifts, that help them live independently. Each person's budget is comparable to the value of services that he or she would have received from an agency. An "independent support broker" helps people navigate the options for care, and bookkeeping services are available to handle the financial paperwork. The project began in three pilot states-Arkansas, Florida, and New Jersey-and is being rigorously evaluated by Mathematica Policy Research, Inc. and the University of Maryland. Because of the positive findings thus far, the program is being replicated in eleven other states, including Pennsylvania. (See www.cashandcounseling.org for more information about the initiative and its evaluation findings.)
• While there has been progress, there is far to go. Despite the innovations under way, most Medicaid funds for long-term support services are still spent on institutional care: nationally, 70 percent of long-term care money is spent on nursing facilities or on intermediate care facilities for the mentally retarded. But individual states like Washington and Oregon-where about half of long-term care funding goes for home- and community-based services-are leading the way in the drive to rebalance spending so there is less institutionalization and more opportunities for consumers to access home- and community-based care.

Creating a New Paradigm for Long-Term Care in Pennsylvania

Rosemarie Greco and Ann Torregrossa, who spoke about "Long-Term Care Reform in Pennsylvania," described the changes being spearheaded by GOHCR, which is focusing on long-term care as its first priority. Several principles are guiding the reform process. They include enabling people to remain independent in their homes for as long as possible; supporting consumer choice and self-determination; allowing easy access to services that meet consumers' needs; providing high-quality services; ensuring efficiency and affordability; and supporting a qualified, stable workforce. These were among their major points about the reform efforts:

• There are critical reasons for long-term care reform in Pennsylvania. The commonwealth is facing the same imperatives for reform as other states; but in some cases, those forces are even more acute here. Pennsylvania has the second highest percentage of elderly population in the nation, behind only Florida. At $13.3 billion, Medicaid is more than 25 percent of the state budget, and over $4 billion of that money is spent on long-term care. Among people needing those services, 73 percent receive them in a nursing facility-the most expensive setting. These fiscal challenges are increasing rapidly. Retirees' pension and health care plans are collapsing, thus putting even more strain on services, while health care costs are simultaneously rising. With dramatically increasing costs and inadequate additional revenue, either provider fees or the number of enrollees must be cut unless other solutions can be found. Rebalancing long-term care spending to increase the percentage that goes for home- and community-based services is an important part of any solution. For example, under the Pennsylvania Department of Aging Medicaid waiver that provides home- and community-based services to people age 60 or older who are clinically eligible for nursing home care, the state is able to serve 2.5 people for the cost of serving one person in an institution.
• The centerpiece of the state's new approach is called Community Choice. A cross-department effort coordinated by GOHCR, Community Choice is a demonstration project operating in ten counties, including Philadelphia, Delaware, Chester, and Montgomery, that was designed to give consumers real choice in the services they receive. To get the project under way, GOHCR worked with the heads of all the relevant state departments to craft more than 20 policy changes intended to make home- and community-based services as readily accessible as nursing facility care. In Community Choice, many of the steps in determining eligibility have been simplified or eliminated. The financial disclosure application is now much simpler, and the functional assessment, which used to be so long that some of the frail elderly had to take a nap during it, has been significantly shortened. The face-to-face interview to determine service needs, the financial eligibility process, and the necessary paperwork are all completed at the same time. As a result, the process of accessing home- and community-based services, which used to take as long as six to nine months, now can take as little as 24 hours.
• The commonwealth is implementing a number of pilot projects. This is a period of intense reform activity as the state examines strategies for shifting an increasing number of services away from nursing homes and towards home- and community-based care. To assist with this effort, GOHCR, in collaboration with the state Department of Aging, Department of Public Welfare, and Department of Health, has received grants from CMS to conduct a variety of pilot projects. They include two Aging and Disability Resource Centers that will provide access to services for everyone needing long-term care, regardless of age or disability, by serving as one-stop centers for information, counseling, and application. A related pilot focuses on consumer-driven services at three Area Agencies on Aging, three county mental retardation sites, and three agencies that serve younger people with disabilities. In addition, Pennsylvania is becoming part of the Cash & Counseling expansion initiative, with a goal of serving 1,500 people through this program by the end of the three-year grant. These pilots make it possible to examine approaches in a controlled setting to learn about what works before going to a larger scale. Ultimately, these projects will inform the design of a more comprehensive long-term care reform plan and help build the consensus needed for that reform to occur.
• Other reform activities are also under way. The state is taking a number of other steps to promote home- and community-based services. These include a "money follows the person" initiative in which people transitioning out of nursing homes have funding move with them to pay for home- and community-based services. Other efforts include expanding the number of affordable, accessible housing units available to people needing long-term care; developing a system to help link people needing accessible housing to available vacant units; and taking steps to coordinate the 15 publicly funded home-modification programs, all of which currently have different eligibility requirements and different allowable modifications. In addition, the state is examining quality management systems; improved support for direct care workers; and the issue of Estate Recovery, a federal requirement that allows the state ultimately to recover some of its Medicaid costs but which also sometimes leads people to turn down needed services because they are worried they will lose their homes.

Preparing for the Future: Implications for Agencies

The rebalancing of spending for long-term care clearly has implications for agencies that serve people who receive Medicaid-funded care. Both Reinhard and Torregrossa spoke about these implications. They asked participants several key questions:

• Where do you stand? Reinhard noted that these policy changes are gathering strength, state by state. "How do you feel about this?" she asked. "Everyone talks about resistance to change, but we are all resistant to change." Do you share the underlying values of this rebalancing? What do you see as your role? Can you adapt to consumers' preferences? Can you compete in this private and public marketplace? Can you develop and support staff members for changing roles? She recommended that agencies approach consumers' desire to remain at home and states' desire to minimize expensive institutional programs as complementary, albeit formidable, forces for change.
• What do these changes mean for advocates and providers in Pennsylvania? Torregrossa emphasized that as the state rebalances its funding, more people will be served in the community and fewer in institutions. "We will need to build the community-based capacity to serve their long-term care and other needs," she said. The commonwealth and agencies serving those in need of long-term care have to find ways to ensure the quality of services that consumers receive and to advocate for supports to help those consumers be active and involved members of their communities.
• How can agencies have input into the state's reform efforts? Torregrossa emphasized that all the pilot projects will have local advisory councils that will work closely on the programs, and that there are a number of other work groups open to anyone. She urged participants to e-mail Jen Burnett, at [email protected], if they want to get on a listserve for a work group or a pilot project being conducted in the Philadelphia region.

Questions and Answers

Following the presentations, participants had the opportunity to ask questions. They focused on the following areas of concern:

• Compensation for home health care workers. A participant whose organization provides home care under a waiver provision noted that compensation for workers is so low that it is hard to find reliable employees. They earn what they could make at McDonald's, but home health care is a much more difficult job with a lot more responsibility. While the presenters talked about consumer choice and having aides available to meet consumers' schedules, there often are not enough workers to be able to do that. Torregrossa replied that GOHCR is examining workforce issues. They know that "paradigm change will not succeed unless we address and put a lot more resources into issues like worker compensation and respect." Reinhard added that one of the advantages of programs like Cash & Counseling is that it allows people to hire friends, family, and neighbors for personal care, and they are finding, for example, that people are able to hire their next-door-neighbor to come in at 6 a.m. and thus avoid having to draw on the scarce resources of an agency.
• Assisted living legislation in Pennsylvania. Bills aimed at regulating and strengthening assisted living facilities in the state were introduced in the legislature this year but did not pass. (The bills were HB 420 and SB136.) Participants expressed concern about this issue and its effect on reform efforts aimed at allowing people to remain in their communities. While consumers want to be able to transition from their home to assisted living and be able to remain there and get longer-term care, that is currently difficult in the state. Torregrossa agreed that this is a key challenge. There are still only very minimal requirements, including extremely limited training, for people who want to run or work in an assisted living facility in the state. Reinhard noted that it is not ultimately possible to significantly rebalance long-term care between nursing homes and home- and community-based services if there are not good opportunities for assisted living.
• The implications of programs like Cash & Counseling for direct care agencies. Several participants had questions about the Cash & Counseling initiative: Who will the clients be in Pennsylvania? How can agencies adapt? What is the effect on cost structure when consumers can hire family and friends as personal caregivers, and how are they trained to become providers? Torregrossa noted that Pennsylvania will be carrying out its pilot program in Area Agencies on Aging across the state and, thus, focusing on attracting older adults. Reinhard said that in New Jersey and the other two states in the original pilot, agencies have been starting to retool to more effectively market their services, and that is something that agencies in the Philadelphia region should prepare for. She also noted that hiring friends and family results in large administrative savings-with agencies, there is about a 15 percent administrative cost because of expenses for office space and supplies, but in hiring friends and family, there is only a one percent administrative cost. Finally, Torregrossa said that the state does have a separate RWJ grant for training family and friends hired through Cash & Counseling, focusing on such skills as lifting someone safely. Because consumers want to be able to participate in training their aides, the state will also conduct some training of consumers for that purpose.
• Dealing with the issue of Estate Recovery. One participant was particularly concerned about Estate Recovery and its impact in Philadelphia. She noted that when people who have been using Medicaid services die, the titles to their homes are tangled because of the Estate Recovery requirement, and it is hard for the heirs-who are often also low-income-to take control of the house. As a result, the houses frequently become badly deteriorated and ultimately abandoned, creating a negative impact on entire blocks and neighborhoods. Both Greco and Torregrossa said there is no way to eliminate Estate Recovery as a whole, but that its contribution to abandoned houses in Philadelphia is an issue that should and can be addressed, particularly because it is in direct opposition to Mayor Street's Neighborhood Transformation Initiative, which is intended, in part, to lessen the number of abandoned houses in Philadelphia. Because the state is not going to make any money from taking ownership of badly deteriorated houses, eliminating the problem is not going to cost it money-and it could make a big difference in poor neighborhoods. They suggested getting the city involved in crafting a workable solution and then approaching Harrisburg.
• Marketing plans. Several participants asked if the state was going to create marketing plans so people would know about their options for home- and community-based services. When people are discharged from hospitals, for example, they are often not aware of available home- and community-based services. Similarly, people are often not aware of adult day care programs, which are generally run by grassroots organizations with very limited marketing budgets. Torregrossa said that GOHCR is aware of the need for marketing. She encouraged people who were concerned about this to get involved by e-mailing jenburnett "at" state.pa.us to get on the listserve for the group that is going to be making decisions about what kinds of marketing materials to produce.

Resources: Rebalancing Long-Term Care Spending for Institutional and Community-Based Needs: The Experience in Pennsylvania and Nationally.