Connections Newsletter (Fall 2003)

LATE TO THE PARTY:

California should immediate adopt "money follows the person" legislation which other states are using to adhere to the Olmstead Decision.

by Jason Bloome

There is tremendous potential to serve people who meet nursing facility level of care in private homes or in community residential settings that would be more acceptable to the beneficiary, without increasing costs to the states.

Many states have engaged in activities and developed programs that serve persons in the most appropriate community setting rather than in an institution. These programs and activities, developed under existing authority, have included diversion programs to maintain people in the community, transition programs to actively move individuals from institutional settings to alternative community placements, and program models in which the "money follow the person" to assure stability of community living. - Letter to State Medicaid Directors from the Center for Medicare and Medicaid Services¹

Perhaps there are no easy fixes to California's budget crisis but coming up with solutions to tackle this issue might not mean reinventing the wheel. One of the biggest fiscal nightmares California is facing is how to deal with the spiraling costs of millions of dollars spent on Medicaid each year, especially when it comes to paying for low income residents residing in Skilled Nursing Facilities (SNFs). Our legislative officials would do well by examine innovative measures other States are utilizing to cut medi-cal costs by allowing patients with custodial care needs the option to transfer to more affordable lower level care settings, such as assisted living homes (also known as residential care homes for the elderly or RCFEs). Not only is this consistent with the Olmstead decision:

In Olmstead v. L.C., 527 U.S. 581 (1999) (the "Olmstead decision"), the Supreme Court construed Title II of the ADA to require States to place qualified individuals in community settings, rather than in institutions, whenever treatment professionals determine that such placement is appropriate, the affected persons do not oppose such placement, and the State can reasonably accommodate the placement, taking into account the resources available to the State and the needs of others with disabilities.

But it also could potentially save the state millions of medi-cal dollars each year.

There are many patients in SNFs not because they need to be there but because they need care, have no money and because medi-cal will not pay for any other 24-hour care setting. Many of these residents have only custodial care needs (help with medicine, dressing, bathing, help out of bed, incontinence issues, etc.) and could in 24-hour custodial care facilities, such as RCFEs. Most RCFEs are small 4-6 bed facilities that have 2 full time staff who provide 24-hour custodial care to their residents. Care in RCFEs (average cost $1,500-$2,000/month) is far more affordable to the state than care provided in SNFs (medi-cal reimbursed at $3,000/month). In California, there is no medi-cal funding for RCFEs and most facilities cannot afford to take residents at the SSI rate. According to the California Association for Nursing Home Reform (CANHR),"public funding for RCFEs in 2002 (i.e. SSI/SSP) is an embarrassment at $26.70 per day with a declining percentage of RCFEs willing to accept or retain residents on SSI."²

In California, medi-cal pays for about 64% of the approximately 230,000 SNF patients that are cared for annually.³ Most do not have skilled nursing facility needs (help with tracheostomies, g-tubes, i.v.'s, ventilators, etc.). The California Little Hoover Commission has estimated at least 30% of the residents in SNFs have only custodial care needs.⁴ But the number is probably far higher.

According to SNF medi-cal admission records from 1998-2001, of the 13,000 disabled people receiving In Home Supportive Services (IHSS) who transferred to SNFs, 80% had only custodial care needs.⁶ Even this small subset of the total number of low income patients who do not need to be in SNFs represents millions of Medi-cal dollars the state is paying unnecessarily for pricey overcare facilities.

Having expensive medi-cal SNFs beds filled by residents who do not need to be there is a problem every state faces. The federal government encourages states to consider nursing home transition initiatives as part of their Olmstead plans⁷ and has been awarding nursing facility transition grants since 1998. In the past two years, awards were made to 23 states totaling $15.8 million as part of the Systems Change Grants for Community Living.⁸ President Bush proposes in his 2004 budget to spend $1.75 billion over the next five years to help transfer disabled people from institutions into the community (see attached DHSS press release).

One common nursing home transition method that many states adopt is called "money follows the person" (in other words, the Medicaid money that the state pays to a SNF can be available to pay for the services the person needs to live at home or in a RCFE). One state that uses this method to good affect is Texas. Their legislature did this by adding an appropriations rider (called Rider 37) to the Texas Department of Human Services budget for 2002-2003 with the intent that funds would be transferred from SNFs to community care services to cover the cost of shift in services. Use of Rider 37 has allowed Texas to transfer 1,400 patients from SNFs either back to home or into RCFEs.

Rider 37 was easy for Texas to adopt because it was "budget neutral" (it is the same medicaid dollars already being spent for a person in a SNF) and did not cost any new monies to implement. According to the Center for Medicare and Medical Services,

Implementation of Rider 37 was undertaken relatively quickly and efficiently, since 1) it did not require major restructuring of Texas' long term care system, and 2) the legislature approved no additional funds for Rider 37. Case managers that assist people during transition are the same case managers who support Community Care Program participants already in the community. Training expenses were minor because no new people were hired; TDHS made case managers and Medicaid eligibility workers aware of the new option for people leaving nursing homes. ⁹

Texas sent a letter to their 60,000 SNF residents receiving Medicaid informing them about the nursing home transition initiative.x Those who applied for Rider 37 status were approved (custodial care needs only) or denied (skilled nursing needs) by existing state social workers and medicaid eligibility specialists. Approved patients usually transferred to RCFEs that are contracted to receive pre-determined Medicaid reimbursement rates based on care needs. (Receiving 24-hour care at home was usually not an option because this cost more than the allowable medicaid reimbursement rate).

States adopt nursing home transition initiatives usually in tandem with what are called Home and Community Based Service waivers (HCBS) that allow Medicaid funds to be applied to home or assisted living settings.¹¹ Most states with these waivers cap the number of people who can be served as a way of limiting overall costs, often resulting in large waiting lists and difficulties in access to home and community-based care settings. Using a Rider 37 is a way that many eligible participants can avoid the wait list and be relocated directly back to home or into the community.

California is a bit late to the party when it comes to waivers for RCFEs and associated wait list problems. Currently, about 40 states have such waivers: California is not among them. Fortunately, with the passage of AB 499 California has been given the green light to develop a 3-5 year pilot program to test this type of waiver for up to 1000 applicants.¹² This is far too little and far too late for the thousands of low income patients currently residing in SNFs who could be in RCFEs nor does it in any way significantly address the fiscal nightmare of runaway medi-cal costs associated with expensive overcare facilities.

California could easily adopt the infrastructure used in Texas to implement Rider 37. First, interested governmental parties and disability/advocate groups assembled to determine what would be the tiered Medicaid reimbursement rates to pay RCFEs based on level of care needs. Second, DSS/Community Care Licensing sent letters and arranged a meeting of all licensed RCFEs owners interested in becoming contracted providers. Third, DHS attached a Rider 37 to their appropriations budget and sent letters to current SNFs residents informing them about their community care options.

Rider 37 also does not mean opening up Pandora's box and evoking risky draconian measures that threaten to completely alter the long term care landscape. Shifting people from SNFs is a slow gradual process that takes a long term commitment by the state. In Texas only 1,400 patients have taken advantage of Rider 37 since it was implemented in 2002.

"Money follows the person" is not about increased regulation and reinventing existing long term care systems. It is about realigning the delivery of medi-cal dollars to allow choice for disabled people with custodial care needs who choose to live in the community. In their letter to state governors, the Center for Medicare and Medical Services says Rider 37 "represents a good example of an initiative that can be undertaken relatively quickly, without requiring major restructuring of the long-term care system."xiii RCFEs do not become SNFs by accepting residents with custodial care needs who transfer from those settings. The fact is those residents should never have been in SNFs in the first place.

The federal government encourages states to adopt nursing home transition initiatives because they are easy to implement and do not involve new laws, federal waivers, new regulations, liability, or cost issues. Best practice models provided by governmental agencies makes "money follows the person" very easy for states to adopt.¹⁴

California, progressive is so many ways, should not be one of the last states in the nation when it comes to changing antiquated medi-cal reimbursement policies. Disabled people unnecessarily in SNFs should not continue to suffer as victims of the bureaucracy, institutional bias and the lack of coordination between aging related services that plagues our state.

Rider 37 could be implemented in California in a few months and with relatively little fuss. Because it is annually approved, it is a low risk proposition that promises the state big dividends: saving money and treating disabled people with the respect and dignity they deserve. Not developing a rational nursing home transition policy is wrong and an expensive mistake for California.

¹ Center for Medicare and Medicaid Services (CMS) at http://www.cms.hhs.gov/states/letters/smd81302.pdf
² California Association for Nursing Home Reform at: http://www.canhr.org/RCFE/rcfe_what.htm
³ California Association for Health Facilities at: http://www.cahf.org/public/consumer/factstat.php
⁴ See the CLHC Report report at: http://www.lhc.ca.gov/lhcdir/140/140rpt.html
⁵ IHSS clients are low income and "skilled nursing home eligible" who receive medi-cal funding to pay for care hours at home.
⁶ Page 16 of 2002 California Department of Social Services, Research and Devolopment Branch's publication titled IHSS: Keeping the Quality of Life at Home, see: http://www.dss.cahwnet.gov/research/res/pdf/IHSSrecipient.pdf . Speak with Jon Sommna (916) 654-1917 co-author of report, for data analysis for determination of custodial care needs.
⁷ See CMS: Promising Transitions at Center for Medicare and Medical Services at http://www.cms.hhs.gov/promisingpractices/Transitions.asp
⁸ See CMS: Letter to State Governors at http://www.cms.hhs.gov/states/letters/smd81302.pdf
⁹See CMS: Promising Practices at: http://www.cms.hhs.gov/promisingpractices/tx-rider37.pdf
¹⁰ Of course, many states use more aggressive approaches to informing SNF residents of rider 37 community choice options, see http://www.cms.hhs.gov/promisingpractices/Transitions.asp
¹¹ See CMS: Home and Community Based Service at: http://cms.hhs.gov/medicaid/services/1915chcbw.asp
¹² See California Department of Health Services at: http://www.dhs.cahwnet.gov/mcs/omcp/html/Assisted%20Living.htm.
¹³ See the CMS August 2002 letter to state governors at http://www.cms.hhs.gov/states/letters/smd81302.pdf
¹⁴See CMS: Promising Practices: http://www.cms.hhs.gov/promisingpractices/Transitions.asp