CMS Report Confirms Medicaid Cuts Would Jeopardize Critical Services and Long-Term Program Stability

CMS Report Confirms Medicaid Cuts Would Jeopardize Critical Services and Long-Term Program Stability


The proposed American Health Care Act (AHCA) would make significant changes to the Medicaid program, which serves as a critical safety net for millions of people who deplete their life savings and turn to Medicaid for assistance as their ability to care for themselves declines. The bill would repeal the Medicaid expansion and implement a capped financing model for states. According to the nonpartisan Congressional Budget Office (CBO), the AHCA would cut $834 billion from the Medicaid program through fiscal year (FY) 2026. CBO projects that 23 million people would lose coverage as a result of the AHCA, most of them — 14 million — because of the changes to Medicaid.

The Centers for Medicare & Medicaid Services (CMS), which administers the Medicaid program, has released a new report suggesting, based on different assumptions, that 8 million people would lose Medicaid under the AHCA through FY2026. While the numbers differ between the CMS and the CBO, one thing is clear: The AHCA would cut Medicaid financing to states and millions of people would lose coverage for critical services. In its report, CMS also makes clear the danger of the bill for Medicaid enrollees, particularly for older adults and people with disabilities that rely on Medicaid for home- and community-based services.

Medicaid Home and Community-Based Services in Jeopardy

Zeroing in on the CMS report, an initial read suggests minor implications of capped financing for Medicaid. According to CMS, “There is no estimated impact on Medicaid enrollment because of the presence of the per capita allotments.” Reading between the lines, however, tells a much different story.

To reach this conclusion, CMS assumes that states will “(i) lower provider reimbursement rates; (ii) manage utilization and program efficiency; and (iii) reduce optional services.” When CMS refers to “optional services” it means services that are not required by the federal government and offered at the discretion of states. Home- and community-based services (HCBS) are generally classified as optional, and states have the flexibility to offer this support or to take it away. Notably, while “optional,” HCBS is often a more cost-effective option than nursing home care — not to mention what people tend to prefer.

According to analysis from the Center on Budget and Policy Priorities, most (88 percent) Medicaid spending on optional services went toward older adults and people with disabilities, and of this spending, more than half went toward home- and community-based services.

If, as CMS suggests, states are going to reduce optional services to make up for gaps caused by capped Medicaid financing, HCBS will almost certainly become a target. This is a potential unintended consequence of the bill — that is, states limiting access to Medicaid HCBS to stay within the caps and thereby likely increasing the use of more expensive services like nursing home care, which is required by law.

While HCBS are more in line with consumer choice and has the potential to limit cost growth, they are optional in Medicaid and thus in jeopardy if the bill becomes law. The new CMS report makes this clear, and suggests additional, long-term danger for Medicaid under the AHCA.

Long-Term Implications of the AHCA for Medicaid

In addition to the impacts of the per capita caps on HCBS, the CMS report makes clear that the proposed per capita caps in the AHCA may have long-term impacts that threaten how states run their programs.

The report states, Over a longer time period, it may be more difficult for States to operate their Medicaid programs without making more significant changes to their programs,” although no further explanation is available.

Additional research, however, has given insight toward the long-term impacts of capped Medicaid financing. A recent AARP report, for example, shows that the growing and aging of the 65-plus population will have significant cost implications for Medicaid that the AHCA does not take into account.

If a per capita cap structure is implemented in Medicaid, the impact will be felt for years beyond 2026. The limited growth rates allowed by the caps would lead to shortfalls in how much money states have to serve older adults, people with disabilities and low-income children and adults. As a result, states will be forced to cut services, restrict eligibility, cut provider rates — or a combination of any number of those.

Looking Forward

Whether it’s research from CMS or CBO, it is clear that changes proposed to the Medicaid program under the AHCA pose significant near- and long-term risks to states and to consumers. Reducing access to home- and community-based services — and Medicaid in general — will harm older adults and people with disabilities. Going forward, discussion around health reform should focus not on where to cut Medicaid, but rather on how existing funds could be used more efficiently to meet people’s needs.

 

Brendan Flinn is a policy research senior analyst for the AARP Public Policy Institute. He works on Medicaid, long-term services and supports, and family caregiving issues.



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No Wrong Door: Promising Practices for Accessing Long-Term Services and Supports

No Wrong Door: Promising Practices for Accessing Long-Term Services and Supports


Photo courtesy of Sullivan County New Hampshire ServiceLink

Most of us will need long-term services and supports (LTSS), either for ourselves or our family members. However, most of us do not know about our options and how to pay for these services. That is why the LTSS State Scorecard—created by the AARP Public Policy Institute and funded by The Scan Foundation and The Commonwealth Fund—ranks states on their Aging and Disability Resource Centers. These Centers are an important feature of a high performing LTSS system.

Aging and Disability Resource Centers can serve as the gateway for helping individuals and their families find and access LTSS, including light housekeeping, transportation, and respite care to give family caregivers a break, just to name a few. States have these “one-stop-shopping” models to help people receive public and private services regardless of which organization they contact. Therefore, they are sometimes called “no wrong door.” If people contact an organization within this system, they can be connected with information, referrals, and supports, resulting in “no wrong door” to services irrespective of their age, income, or disability. Area Agencies on Aging, Centers for Independent Living, and state agencies such as Medicaid agencies and state units on aging work together to make up this no wrong door system. While the states have these centers, the operations and functions of each center vary greatly, which is why the Scorecard ranks them.

Although the previous two Scorecards included an indicator on these Centers, the upcoming third edition contains an updated indicator to reflect published guidance on key elements of no wrong door systems from the federal government. AARP, in collaboration with the U.S. Administration for Community Living and The Lewin Group, collected information for this indicator from a survey of state administrators. Then, they followed up by interviewing administrators from states that had scored well or demonstrated innovation to produce a newly released promising practices and toolkit paper on person- and family-centered practices.

This first in a series of promising practices and toolkit papers provides concrete examples of how six states—Connecticut, Michigan, New Hampshire, Virginia, Washington, and Wisconsin—plus the District of Columbia promote person- and family-centered practices in their no wrong door systems. These Centers are using an interactive process directed by individuals and family members to support decision making. They also help to develop a plan of support that reflects an individual’s and family’s strengths, preferences, needs, and values. It affirms the core principle that each person is the expert in his or her own life rather than simply plugging people into programs based on their eligibility.

The promising practices are:

 

  • Ensuring leadership support for these practices (with examples from the District of Columbia’s mayor-led cross-population task force, Michigan’s broad support for change, and Virginia’s state legislation on this practice);
  • Creating standards for these practices (with examples from Washington’s statewide standards of practice, Virginia’s co-employment model between aging and disability organizations, the District of Columbia’s intake to better listen to people and families, and Wisconsin’s follow-up);
  • Training the “no wrong door” workforce (with examples from New Hampshire’s training and certification, the District of Columbia’s training for all, New Hampshire’s peer support model, Virginia’s person-centered advocates, and Connecticut’s essay exam); and
  • Helping people maximize use of private resources (with an example from Wisconsin that has been a leader in serving private pay clients).

 

This promising practices and toolkit paper includes resources and contacts for state and federal administrators, providers, and advocates to learn about—and even replicate—these practices. This paper also provides a checklist of what is needed to move toward more person- and family-centered practices.

NOTE: The third edition of the Scorecard will be released soon … on June 14th. Promising practices and toolkits are a new feature of the Scorecard project. More papers—such as promising practices in preventing long-term nursing home stays—will be forthcoming. For the new Scorecard, the promising practices and toolkit papers, and more, please go to the LTSS State Scorecard interactive website at www.longtermscorecard.org.

 

Wendy Fox-Grage is a Senior Strategic Policy Advisor for the AARP Public Policy Institute. She works on state long-term services and supports issues, including Medicaid and home- and community-based services.

 

 

 

 

 



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The Fierce Urgency of Now: How $880 Billion in Cuts to Medicaid Could Hurt Us All

The Fierce Urgency of Now: How $880 Billion in Cuts to Medicaid Could Hurt Us All


If you have protection against future catastrophic out-of-pocket costs for basic life functions, consider yourself lucky. The vast majority of people in the United States don’t.

Yet the reality is that there’s a 52 percent chance that someone turning 65 today might develop a severe disability requiring long-term services and supports (LTSS)—that is, help with such functions as eating, bathing, dressing, and toileting.

For more extensive care, the cost can surpass $250,000 for those over the age of 65—a figure that could easily decimate even some middle-class families, never mind lower-income earners. As a result, many people deplete their resources, become impoverished, and wind up needing relief from Medicaid as a last resort. Thus, millions of Americans, many of whom you might never have guessed would need Medicaid, find themselves having to turn to the half century-old program for this vital support. But at least that safety net is there.

However, if some in Congress get their way, that safety net may disappear, a position AARP firmly opposes. Provisions in the most recent House health reform proposal threaten to roll back the federal promise of coverage and services for millions of Americans, including at least 17 million children and adults with disabilities and low-income older adults who rely on Medicaid. Meanwhile, the proposal would instead shift more costs to states and their taxpayers. In short, hanging in the balance of a debate raging in Washington is $880 billion in federal funding for crucial health care and LTSS.

Responsive Medicaid Would Turn Rigid

For more than 50 years, Medicaid has served as a critical safety net for millions of people with limited income and resources. Current law guarantees access to health care and LTSS to all eligible individuals. States and the federal government share the risk, responsibility, and cost of financing Medicaid. The federal government guarantees states financial support, based on the relative wealth of the state, of between 50 and 75 percent of the program’s cost, even if cost goes up.

The program responds to changes in the economy, public health outbreaks, natural disasters, and medical cost growth. During the Great Recession when millions lost their jobs—and their employer-based health insurance—Medicaid served as a critical safety net. And as the Zika virus spread throughout the U.S. recently, Medicaid responded with the necessary funding.

In its current form, the House health legislation would fundamentally alter the program by changing the financing structure to a per capita cap. Under such a system, the federal government would set a maximum limit on how much to reimburse states on a per-enrollee basis for children, adults, individuals with disabilities, and seniors. While payments to states would reflect changes in enrollment, the cap would shift the risk to states for higher-than-expected cost growth due to epidemics, blockbuster drugs, and natural disasters. In addition, the cap would not account for the changing mix of an aging population. As we get older the needs for LTSS will go up, but budgets will not. Setting the caps at a time when per-beneficiary spending for low-income seniors is much lower would result in an underfunded safety net for this population.

Just in the event this was not drastic enough, House leaders are now willing to modify the health legislation and provide states with the option to accept Medicaid block grants—which is a fixed amount of Medicaid funding annually, regardless of actual need or program costs. Under a block grant, people are not guaranteed coverage for services, and funding would not necessarily keep up with health care costs, nor would it be adjusted based on the number of persons served.

The Real Face of Any Savings: State Taxpayers and America’s Most Vulnerable

While block grants and per capita caps on the surface appear to be a mere change in how funds are allocated for Medicaid, thereby saving federal dollars, and allowing greater state flexibility in program implementation, such a shift would result in a program that would be in many ways unrecognizable, both philosophically as well as “on the ground,” where Americans rely on the program every day.

Analyses from the Congressional Budget Office estimates federal spending in Medicaid would decrease by $880 billion by 2026. These cuts could have major implications for state budgets and the ability of states to provide adequate health care and LTSS for low-income seniors and people with disabilities. States and their taxpayers will either have to fill this gap themselves, or fewer people will receive less support for services like LTSS.

Faced with some difficult choices, states may limit optional benefits like home- and community-based services (HCBS), which is generally more cost-effective than long-term care facilities.

The bottom line: Members of Congress will vote on the health legislation later this week.

The Medicaid piece of the new health legislation means that access to services for some of the most vulnerable populations in our society, guaranteed for over a half-century, would be in jeopardy. It would also shift costs to taxpayers at the state level, which is one reason some governors feel the need to oppose it, regardless of their political affiliation. Now is the time to act and voice your concerns. There is just too much at stake.

Debra Whitman is AARP’s chief public policy officer and leads policy development, analysis and research, as well as global thought leadership that supports and advances the interests of individuals age 50-plus and their families. Follow Deb on Twitter: @policydeb

Jean Accius is a nationally recognized expert on aging policy, livable communities and long-term services and supports (LTSS).  He currently serves as the vice president of the long-term services & supports and livable communities group within the AARP Public Policy Institute. Follow Jean on Twitter: @JeanAccius 

 



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Preserving Access to Home and Community-Based Services through Community First Choice

Preserving Access to Home and Community-Based Services through Community First Choice


Courtesy of Greg Kahn

An important AARP study shows that an overwhelming majority of people would like to remain in their homes and communities for as long as possible. Personal care services, such as assistance with bathing, eating, and dressing, are critically important to helping older adults and people with disabilities of all ages live independently and avoid costly nursing facility placements.

Medicaid plays a critical role in providing this support. It is the largest payer of long-term services and supports (LTSS), including home and community-based services (HCBS) like personal care. While there has been an increase in funding for HCBS over the years, institutional care still accounts for 59 percent of Medicaid LTSS spending for older adults and people with physical disabilities. Nevertheless, through such programs as Community First Choice (CFC), the trend has continued toward greater availability of HCBS across all populations. And with HCBS being both cost effective and a means of enabling greater independence, it’s a trend that needs to continue.

Yet the recently released American Health Care Act (AHCA), the proposed legislation to replace the Affordable Care Act (ACA), puts the future of CFC in jeopardy. With a provision that repeals the program, if enacted the AHCA could disrupt services for older adults and people with disabilities covered through CFC.

How Does Community First Choice Work?

Community First Choice is a provision of the ACA that offers additional federal funding to states to provide personal care and assist individuals with activities of daily living (ADLs), instrumental activities of daily living (IADLs), and health-related tasks. States may also leverage CFC funds to cover transition services to help people leave nursing facilities and return to their homes and communities.

The CFC option empowers older adults and people with disabilities through its emphasis on self-direction. Unlike some other types of Medicaid programs, individuals enrolled in CFC and their families are guaranteed the right to self-direct their services and oversee the people that provide their personal care.

Community First Choice and the States

As of 2016, eight states offer this option in their respective Medicaid programs. An analysis of just four of the states (California, Oregon, Washington, and Montana) showed that the program has served more than 500,000 people since its inception. States that offer CFC must offer the program to all populations, and the analysis found that 40 percent of CFC enrollees were adults 65+ and 55 percent were people with disabilities under age 65.

While a more recent enrollment count is not available, the current total is likely much higher today due to the increased number of states offering this option.

The Financial Impact of Personal Care and Community First Choice

Numerous studies and analyses reveal that providing people LTSS in their homes and communities is generally less expensive than doing so in a nursing facility. A 2016 analysis from Genworth, for example, shows the median annual cost for a private room in a nursing facility exceeds $92,000, while the cost for 30 hours of personal care is $32,000. AARP research on Medicaid-funded HCBS also found that Medicaid pays nearly three times as much for each person served in institutional settings as it does for each person served in the community. Additional studies found annual cost savings of $11,912 per older adult who transitioned from a nursing facility back to the community through Medicaid’s Money Follows the Person Rebalancing Demonstration. In short, redirecting more resources to provide Medicaid HCBS is cost-effective compared with nursing facilities.

Given the lower expenses associated with personal care and the full spectrum of home and community-based services, increasing the portion of Medicaid LTSS dollars spent on these services could yield significant long-term cost-savings to states and the federal government. We are already moving in that direction. The most recent data on Medicaid LTSS expenditures shows that 53.1% of all Medicaid LTSS dollars go towards HCBS for all populations, up from 51.3% the previous year. Since its inception, Community First Choice has become an important tool to help states continue balancing Medicaid LTSS toward HCBS.

The Future of Community First Choice

The CFC option is an important piece of the puzzle for helping states provide services that enable people to live independently in their homes and communities. It also has the potential to help states and the federal government improve and expand access to LTSS while containing costs.

Including a repeal of Community First Choice through the AHCA, therefore, could hinder the progress made toward balancing long-term services and supports and limit access to home and community-based services for the growing number of states that have embraced the program. Given CFC’s current role in expanding HCBS, and the potential for cost savings to Medicaid through increasing access to HCBS more broadly, it would be wise for policymakers to preserve CFC and allowing state governments to continue offering HCBS through this mechanism.

 

Brendan Flinn is a policy research senior analyst for the AARP Public Policy Institute. He works on Medicaid, long-term services and supports, and family caregiving issues.



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