March 14, 2005
Date: March 14,
Indiana Family and Social Services
John Cardwell, Director
The Generations Project
request for a description of an ideal long term care system issues of
cost and quality
you emailed the following request to me: “...imagine you are living in an
alternative universe where all things were the same save the LTC
system. Can you think about cost
and quality in that world and compare it to the one we inhabit?”
This most interesting request
could be answered at many levels of detail and complexity. I’ve opted to play to my strengths by
staying simple. Nonetheless, the
recommendations that follow in this briefing advisory are very serious. With the implementation of 493 pending,
and with significant changes being carried out by Governor Daniels and
his administration, Hoosiers who depend on publicly financed home and
community based services (HCBS) for their survival are very anxious regarding
what the future holds for their lives.
My advisory comments are intended to reflect those concerns while
offering positive suggestions for action.
An item of great significant
since your request, was the announcement by your
agency that it will seek RFPs for a dramatic
change in case management administration across the state. Consequently, note the sections in this
briefing paper that address the unique case management functions
performed by AAAs for HCBS clients.
The duties performed by AAA case managers different substantially
from case management functions that are performed elsewhere in the
state’s human services system. At
the end of this briefing advisory you will find a special addendum
regarding the FSSA case management RFP announcement. Please give that careful attention.
A LTC System Out of Balance
The current long term care
system for senior citizens and persons with physical disabilities is
wildly out of balance. Indiana’s investment in nursing
facilities (a.k.a. NFs, NHs,
and nursing homes) is very substantial with an expenditure of $791.5
million in SFY 2004. That
contrasted with a far smaller SFY 2004 investment in HCBS: $48.7 million in the CHOICE program and
$39.7 million for Medicaid waivers.
(An estimated $7.9 million for the aged and disabled waiver came
from the aforementioned CHOICE budget.)
The above numbers for institutional and non-institutional LTC
services do not include funding for DD, MH and related populations
regardless of the care setting, because those populations are not the
focus of this advisory brief, nor do they include a wide array of AAA
community based services simply because I was unable to get those numbers
in time for this report.
The current system has a
daily Medicaid NF population census of over
30,000 while up to 27,000 people are on waiting lists for HCBS, depending on
the set of numbers that are used to calculate the latter. (The waiting
list number, by some calculations, reaches over 35,000 when the DD
population is included.)
From a consumer perspective
the current system needs to be re-balanced to create a system in which 40
to 60 percent of the combined Medicaid and CHOICE long term care budget
is spent on HCBS. The failure to
make this change will result in continued rapid inflation in the state’s
Medicaid budget while waiting lists remain large or keep growing. The failure to make this change will
also result in Indiana being unprepared to meet the
LTC needs of the baby boom generation in the next several years.
The rest of this paper is
about the alternative LTC system that is needed by the state and its
citizens in order to address the growing Medicaid budget crisis, and the
clear and present crisis facing Hoosiers who need HCBS as reflected in
the growing official waiting lists for that care.
A Better LTC System Is At
Let’s start with two major
First, we already have the answer
for structuring an ideal LTC system and that is Senate Enrolled Act 493
that was passed by the 2003 General Assembly. 493 is a highly versatile law that can
be applied within the context of FSSA’s
structure as it existed through 2004 or in a variety of new state
management regimes including managed care. This is true because the essential
focus of the law is on the services that are ultimately provided to
eligible consumers, the rights of consumers, and on accessing the state’s
total long term care budget for financing services.
Second, the immediate focus of any
LTC system change in Indiana should be “re-balancing” the
spending of dollars and the provision of services. 493 is
designed to facilitate the re-balancing process, and provides the broad
legal authority needed to do that, but it does not contain the full
package of specific mechanisms that can be used in that process. To reduce the state’s gross over
investment and over dependence on nursing homes several other actions can
be taken in addition to the full implementation of SEA 493.
For example, the NF case mix
rate formula can be adjusted to greatly discourage the enrolling of low
need individuals into nursing homes.
At the same time the NF formula can be adjusted to raise the level
of direct care for high need individuals.
The state can also examine the merits of nursing home bed Medicaid
decertification and utilize the bonding provision of 493 to promote facility
conversions to assisted living and adult day care. Concurrently, the state can take
proactive steps to grow the publicly funded assisted living and adult
foster care options through the private sector that are required
components of 493. These
components are found in any successful state re-balancing program in the
nation. (It should be noted there
are significant players in Indiana’s nursing home industry who
are in general agreement with the above ideas. These include NH industry leaders who
believe we should have fewer, but better, facilities in the state.)
Per the discussion in the
above paragraph, I strongly recommend talking to Judith Becherer, a former long term care director for OMPP
and the primary author of the Moving Forward study that was
recently published by The Generations Project. Judith can be reached at her office in Indianapolis (846-9521, extension 343) or
via her cell phone at 445-8593.
During her tenure at OMPP Judith negotiated the details of Indiana’s case mix system with the
nursing home industry. She is
universally respected by providers and consumer advocates for her
abilities and integrity.
It is also clear that a
serious re-examination of all LTC rates and reimbursement standards
should take place for all populations served by FSSA. In a new LTC financing and management
system designed around 493 and the CHOICE program, rates and
reimbursement policies should be designed to produce quality services in
a consumer driven environment.
Achieving this requires a better understanding of what dollars are
being applied to direct care and what constitutes a reasonable return for
providers of all types. In this
regard, state laws that block a complete accounting of the full income of
LTC providers (including private, state and federal dollars), need to be
reviewed if the question of what constitutes a reasonable rate of return
is to be answered.
Money, where it comes from
and how it is used, is another major consideration in the implementation
of an ideal system under 493.
Where does the money come from for re-balancing the system? Once the system is changed, what will
be the fiscal dynamics of the new structure going forward?
An obvious place to start is
the nearly one billion dollars Indiana spends each year on nursing home
care apart from institutional care for DD and MH populations. Can this large expenditure be reduced,
and if so, by how much?
Based on what we know about
LTC re-balancing in other states, Indiana’s NF Medicaid daily census
population, which we believe is between 30,000 and 31,000 people, may be
twice as large as it should be.
(Recently, I discussed the daily census level with staff at Myers
and Stauffer after reviewing a recent report on their website, but was
unable to confirm an exact number.
The range that is used here may be low.) That means serving over 15,000 people
each day of the year in the most expensive LTC venue who
could be served in a lower cost setting.
If these dollars were to be “freed” for other Medicaid LTC
services the impact on the system in terms of addressing the unmet need
for HCBS and for a better but smaller nursing home industry would be
dramatic. This is the essential fiscal
logic of 493 and it has been used by all states that have re-balanced
their LTC systems to address the dual crisis of Medicaid costs and human
Using $900,000,000 in NF
Medicaid expenditures per year as a hypothetical modeling assumption,
with zero inflation, what happens if a state with a daily census
population of 30,000 Medicaid nursing home residents, and a true average
cost of $30,000 per year per person, can reduce that population by 3,000
per year through a program of expanded HCBS? In year one the “freed” dollars could
theoretically be as high as $45,000,000.
In year two the freed dollars could be as high as $135,000, in
year three $225,000,000, in year four $315,000,000, and in year five
$415,000,000. In year six, and
each year thereafter, the freed dollars would be $450,000,000.
The above model could
obviously be applied to a longer period of time, such as seven
years. Using this approach for
re-balancing does have several advantages. First, it forces the state to do
budgetary and programmatic planning beyond the two and four year time
frames used in the past due to our biennial budgeting and gubernatorial
election cycles. Second, it allows
for a rational approach for building out and figuring out the funding,
infrastructure and provider base required by re-balancing.
From a modeling perspective,
could this simple approach save money?
The answer is yes since some states have used LTC restructuring to
actually effect reductions in overall Medicaid expenditures from one year
to the next. However, what
re-balancing should do is make dollars available in the existing Medicaid
budget for the heretofore unmet need for HCBS waivers and upgrading the
care in the nursing homes that remain. Re-balancing is the means for paying
for publicly funded assisted living and adult foster care, the services
with housing that Indiana must absolutely have if we
are to reduce the daily census population in nursing facilities. Re-balancing is also a proven mechanism for
reducing the rate of increase in state Medicaid expenditures for the long
term once the initial process of building out the system and reordering
consumer usage patterns has been
From a fiscal and
programmatic planning perspective it is important for Indiana to make its LTC re-balancing
transition in the next five to seven years. This will take a substantial effort but
it is necessary because after that the Baby Boom phenomenon will begin to
work into our system. We need to
make the 493 related changes now and learn how to do so efficiently
before that wave hits the state.
State Senator Greg Server says it best when he states:
“Implementing SEA 493 is about decreasing the increase in Medicaid costs
while providing the care that people need.”
The above chart
starts with $791.5 million for nursing home care and $80.5 for HCBS based
on the SFY 2004 data presented on page 2 of this advisory report. If the hypothetical model described
above were applied in Indiana it could theoretically
produce aggregate spending patterns like those represented on the
chart. Introducing a wider array
of institutional and HCBS cost categories could change the numbers but
the spending patterns on the chart would probably stay the same. At some point in the future with the
on-set of the Baby Boomer phenomenon both cost lines would probably begin
an ideal LTC system built around 493 and the CHOICE program the service
options identified in 493 would be readily available and there would be
no waiting lists beyond the time it takes to normally enroll a person
into services after eligibility has been established. A re-balanced system, regardless of its
financing mechanisms and administrative structure, can manage the total
volume of people receiving services in extraordinary times, if need be,
by adjusting eligibility standards. However, states with fully
re-balanced systems have rarely had to do that.
cost of HCBS in a re-balanced system can be calculated with reasonable
sureness. Service population and
cost estimates can be made based on the Washington state experience because
that state has gone through the full re-balancing process and its
population demographics are very similar to Indiana’s. The baseline calculation is simple
enough: the number of people to be served per setting times the true
average cost per person per setting including administrative costs of all
this straight forward calculation to the waiting lists for HCBS in
context against Indiana’s population demographics and Washington’s
re-balancing experience and demographics should suggest what the overall
costs will be for re-balancing, what the targets should be for bringing
new HCBS clients into the system each year, and how many years it will
take to get to zero persons on the waiting lists. This approach also identifies the
service infrastructure that must be in place each year as the HCBS
build-out goes forward.
must be noted that managing the flow of clients into HCBS is as important
as reducing the number of people utilizing nursing facilities. First, HCBS options must be available
as needed in order to stop the flow of inappropriate NF placements. If this is not done the fiscal benefit
of moving people out of nursing homes is greatly diminished. Second, the full mix of HCBS must be
available in order to optimize savings.
If assisted living is available, but adult foster care is not,
then people migrating from NFs may be forced to
use AL at a greater cost to the state than AFC, and people
who could be otherwise diverted from a nursing home might be forced to go
there anyway without the AFC alternative.
Third, the distribution of people among the full array of LTC
services must be monitored throughout the year and year-by-year so any
trend toward the disproportionate use of any service can be detected and
addressed. Fourth, a dedicated
multi-discipline team, that could include highly trained volunteers such
as local disability advocates, should be operating with each AAA to go
into NFs and work with the residents with the
expressed purpose of getting them out of the facility and into a HCBS
of today, the state of Washington has the following
enrollments in LTC Medicaid services: 13,000 people in nursing homes,
5,000 in assisted living, 4,300 in adult foster care, and 25,000 in home
care. We believe these numbers are suggestive of the distribution that
could be achieved in Indiana and they represent the
present day results of a re-balancing process started by Washington in 1995 after a legislative
mandate. Three weeks ago the
director of Washington’s HCBS system, Penny Black, wrote me regarding
what that state’s Aging and Disability Services Administration was able
to achieve in the first two years of their re-balancing program: “ADSA
began working aggressively at identifying nursing home residents who
could live in the community and arranging their transfer to community
based settings. Reducing the
nursing facility census has been key to
obtaining funds to expand home and community based services. In the first two years the Adult Family
Home caseload grew by 68 %, the Assisted Living caseload grew by 106%,
the nursing facility caseload declined by 10%, budget targets were
met.” With a concerted effort we
believe FSSA and the state of Indiana could match the Washington performance.
2003 and 2004, when FSSA officials met with representatives of the
Indiana Home Care Task Force every six weeks or so to discuss 493
implementation issues, we repeatedly recommended bringing in proven
talent from Oregon, Washington, Colorado, or other states with
successful records in implementing comprehensive LTC re-balancing. That advice was only followed in a very
failure of FSSA to act on recommendations to implement re-balancing in Indiana is historic. In 1996 and 1998 the CHOICE board made
formal recommendations to expand HCBS options, and renewed those
recommendations with the passages of 493. In the late 1990s until early 2003
FSSA had intermittent communications with Dick Ladd, a consultant for AARP and the
Indiana Home Care Task Force. Dick
directed Oregon’s pioneering re-balancing
efforts in the 1980s. Before his
death in 2003 Dick asked the agency: “Why do you ask me to talk to you if
you never act on my advice?” In
2004 the agency had limited discussions with Dann
Milne, a consultant for AARP who played a major role in Colorado’s LTC re-balancing efforts
in the 1990s, and who is currently assisting AARP Indiana and the Task
Force. No person or team was
ever hired by FSSA specifically for the purpose to lead a 493/re-balancing
process and the agency was never authorized by its former secretary, the
budget agency, and the Governor’s office to do so. Consequently, over time FSSA proved
incapable of acting decisively to implement the significant pieces of
that law. It would be
important for an implementation team to have at its command state level
staff dedicated to the implementation process plus the authority to use
resources as needed from elsewhere within USA. AAAs would also be expected to have
staff dedicated to the implementation process.
very important HCBS issue is quality.
Quality assurance and quality improvement mechanisms are vital in
any publicly funded LTC regime. It
is also important to have the means to measure quality and consumer
satisfaction. The Moving
Forward study contains a good discussion of quality system design,
assurance and improvement issues.
(See pages 67 to 74 of the Moving Forward study.)
assurance, improvement, and measurement also bring us to the issue of
case management and the local administration of publicly funded
HCBS. Indiana has been widely praised at
the national level for its single entry point system for the elderly and
persons with physical disabilities.
CHOICE is a single entry point program and 493 is
structured to be compatible with that approach. The Area Agencies on Aging provide the
single entry point function in our system.
law the Area Agencies on Aging cannot self-deal or provide home and
community based services through the CHOICE program. They must enrolled private providers
for that purpose except in the very rare instances where private
providers are not available for a specified service or contracting
period. However, the case
management/gate keeper work that is performed by the AAAs is probably the
most critical step in the state’s LTC system. AAA case managers conduct the in-take
process for HCBS programs, eligibility assessments, and needs
assessments; develop care plans in cooperation with clients and their families;
broker and arrange consumer services from private providers; act as
advocates for clients enrolled in HCBS; and help insure provider
accountability, reliability, and quality.
When working as designed, which is not always the case, the
conduct of the CHOICE and Medicaid waiver programs through the AAAs
provides a systems that responds to and protects
consumers and the legal and fiduciary interests of the state.
independent case managers, AAA case managers do not receive any personal
financial benefits for the number of clients they serve. Unfortunately, most AAA case managers
have case loads that are much too high.
High case loads compromise a case manager’s ability to broker the
best and most cost effective package of services from providers in the
community. At a community forum
sponsored by the Indiana Home Care Task Force in Anderson in 2004 three AAA case
managers respectively reported their case loads to be 90, 105, and 110
Experienced AAA case managers
typically know in detail the providers in the region they serve. From unlicensed individuals to large
licensed agencies that may be attached to larger institutions, good case
managers are like good street cops: they know who all the good providers
are in their locality and that knowledge helps to insure quality and
an examination of quality measures, consumer satisfaction, and outcomes I
strongly urge you to examine the studies on the CHOICE program conducted
by Indiana University in 1989, 1991, and 1998. Although somewhat dated, in the 1989
and 1991 studies, consumers in the CHOICE program felt their conditions
improved or stabilized as a result of the services they received. In the 1998 study, which was conducted
as the result of a legislative mandate, extensive client satisfaction
data was collected from people receiving CHOICE and A&D waiver
services. The results showed a
very high level of client satisfaction overall. Eleanor Kinney at the IUPUI Law School was involved in all three
the most important data to review is the client satisfaction, medical
health, and service quality data that is gathered on an ongoing basis by
AAA case managers and reported to the state. Each year a QIP survey (Quality
Improvement Protocol) is administered to 10 percent of all clients
receiving HCBS. Clients are asked
about service quality and reliability, which can involve life and death
issues in home care. Information
is also gathered through the surveys regarding the honesty/integrity of
providers in order to identify fraud and corruption. In addition to the QIP, each client
receives a full medical and care re-assessment every year. These are updated on a quarterly
basis. The assessments provide
direct information regarding client ADL impairments and medical
health. Pat Casanova should be
able to tell you how and where to access this information. Duane Etienne would be the person to
contact to gather this information from CICOA.
2004, AARP and The Generations Project discussed HCBS management, fiscal,
and quality issues with FSSA. (Pat
Casanova and Emily Hancock took part in a majority of these
discussions.) In those discussions
we specifically suggested the following.
improve overall AAA performance as related to fiscal management, provider
enrollment and oversight, service quality, consumer satisfaction,
consumer protection, and improved outcomes we recommend developing
performance standards and performance based contracting for the Area
Agencies on Aging. After going through
a process to develop the standards, with the AAAs, consumers, and
providers having the opportunity for direct input, we recommend giving
the sixteen AAAs a year from the point of adoption to reach the
performance levels set in the new standards. After that entertain the possibility of
bidding out those functions in the areas of the state where the AAAs are
under performing. The bidders
could be other AAAs, other qualified entities, or the AAA in the region
in question if it can demonstrate tangible changes in its practices and
a consumer perspective three things are important in the aforementioned
process. (1), continue the neutral
client protection and advocacy function performed by the AAAs; (2)
maintain a single point of entry into the publicly funded LTC system; and
(3) remain in compliance with the statutory provisions of CHOICE and SEA
493. Given these factors we
believe it would be generally wiser to work with the AAAs to improve the
overall quality and efficiency of their operations. Having said that there is no need to
keep under performing entities in the business of local HCBS
administration and oversight.
Hence the need for performance standards and accountability.
please give the Moving Forward report and its conclusions another
review. That study, which received
high praise from long term care administrators in other states, examines
all aspects of SEA 493 and how they can be applied in the real world. It provides an excellent discussion of
the critical and utilitarian features of the law including the 300
percent of SSI eligibility standard for Medicaid HCBS waivers,
self-directed care, and securing needed HCBS capacity through an
additional 20,000 waiver slots.
Without these features 493 will not be able to deliver its
intended fiscal savings and systems change outcomes. (See pages 84
through 87 of the report for its conclusions.)
CHOICE and SEA 493 are the ideal systems for HCBS in Indiana. We know CHOICE works well for consumers
and that it is incredibly cost effective and efficient. The CHOICE program is warmly embraced
by Hoosiers and its quality features are found throughout SEA 493.
Cost out all the forms of LTC that are currently provided by the state
through Medicaid, CHOICE, and other state and federal funds, and cost out
the Medicaid waiver services that are currently not being provided but
which are required by SEA 493, based on demographic extrapolations and
comparisons with the state of Washington (or other states). These numbers will produce working
targets, when combined with implementation time lines, for numbers of
people to be served, when, at what cost, and net dollars saved.
Fully implement 493 and re-balancing steps that are not specified in that
law, but which logically follow from it.
They are the keys to addressing our wasteful use of LTC Medicaid
dollars, for resolving the HCBS waiting list crisis, and for improving
nursing home care. These things
can be done within the confines of Indiana’s LTC Medicaid budget as
required by the 493 statute.
Prioritize building out the system: invest in the state staff, local
administrative infrastructure, and the full array of services that are
needed to make 493/re-balancing work as advertised. The necessary array of services
include, but are not limited to, assisted living, adult foster care,
self-directed care, and adult day care.
Seriously re-examine rate structures for nursing homes and all
institutional services, and the rates and charges for all LTC, to see if
they are moving providers to provide the care consumers want (and which
the state needs) to cost effectively re-balance the LTC system.
Acquire the expertise to implement the ideal system based on CHOICE and
493 by bringing into your administration people with demonstrated track
records for implementing re-balancing programs in states like Oregon, Washington, or Colorado. This step would also enhance FSSA’s ability to address quality and outcome issues.
Upgrade the AAAs by employing clear performance standards, expectations,
and consequences based on meeting the standards. However, this should be done with the
objective of improving the single point of entry system that presently
exists and in retaining the expertise of the AAAs per the brokering of
local services, client advocacy, provider oversight, and overall HCBS
Establish an ongoing team of consumer advocacy leaders, AAAs, and
providers to meet with FSSA and the Division of Aging on an ongoing basis
to facilitate and smooth the re-balancing process, and to troubleshoot
whatever problems that may arise.
Review the conclusions of the Moving Forward report. Those recommendations are fully
compatible with the issues and recommendations that are made in this short
advisory paper. They also address
issues of critical importance, such as implementing the 300 percent of
SSI eligibility standard for HCBS, self-directed care, and needed service
capacity through the law’s provision for an additional 20,000 waiver slots.
are persons with expertise in state long term care systems and
Black, Director of the Division of Home and Community Services, State of Washington, P.O. Box 45600, Olympia, WA 98504-5600. Email: firstname.lastname@example.org. Telephone: (360) 725-2312 to reach Katheryn Plant, her administrative assistant.
Luehrs, National Coordinator of Health and Long
Term Care, AARP, 601 E Street, NW, Washington, D.C. 20049. Email: email@example.com. Telephone: (202) 434-3938.
Dann Milne, Ph.D., Health Policy Consulting, 785 Saint Paul Street, Denver, CO 80206. Email:
firstname.lastname@example.org. Telephone: (303) 399-6736.
Addendum of Critical Importance: The RFP Regarding Case Management
the request for this briefing advisory was made in January, FSSA has
announced it will ask for RFPs to provide case
management services across the state.
In the request the public has been told one to eight case
management service providers will be selected. We believe this request raises several
questions regarding the viability and manageability of the state’s LTC
system and its services going forward.
From a consumer perspective, we believe these questions
potentially have life and death significance.
we believe the effectiveness and ineffectiveness of the current system
needs to be thoroughly vetted before sweeping change is implemented. The current system does have
significant problems but the current system also does a number of things
very well, as indicated above in the briefing advisory. Ultimately, more review and discussion now
could serve the reform interests of the state far better in the days
ahead. We strongly recommend
bringing together a representative cross section of affected Hoosiers to
review this matter.
within the aging and physical disabilities arena there are a number of
things that are done very well by AAAs and there are clearly areas in
which AAA performance is weak.
However, as the above briefing advisory indicates, and as Indiana law requires, the AAAs
perform a number of case management functions that are designed to
protect clients and the legal and fiduciary interests of the state. Those functions should be improved but
not discarded. As the briefing
paper indicates, upgrading AAA performance wherever possible has many
positive benefits because of the unique knowledge and hands on expertise
of their case managers and administrators.
the single point of entry system that is locally administered by the AAAs
is very important. It makes the
system work and viable for consumers who literally cannot afford to go
from point to point without putting their health and their finances at
real risk. The RFP, as described
to the public, would mix aging, DD, physical disability, and children’s
case management functions. Past
experience of this sort has been very problematic for consumers and
providers alike. Consequently,
turning AAA case management over to a yet to be determined entity, or
entities, is highly threatening to the people who depend on it for their
lives. By any measure, putting
vulnerable people at risk is not efficient and is not in the public
would appreciate and expect your most serious consideration regarding
these issues of such life and death importance to Hoosiers. Thank you.