Medicaid Coverage of Nursing Care in Tennessee: Prudent, Rationing or Inevitable Reality?

In an article published yesterday in the Washington Post, Guy Gugliotta writes about a new Medicaid policy in Tennessee, which seeks more efficient alignment between reimbursement and cost settings (my interpretation). 

This is very likely an important bellwether of state Medicaid policy that will be repeated in some fashion or other in other states, and it has unsurprisingly been met with a fair amount of controversy and concern.

Operating under a Section 1115 waiver from CMS, TennCare is the State of Tennessee’s Medicaid program, providing health care for 1.2 million with an annual budget of $8 billion. TennCare utilizes a managed care model that extends coverage to additional populations who would not otherwise be Medicaid eligible, while seeking to maintain a consistent level of quality care.  Tennessee has one of the oldest Medicaid managed care programs in the country, having begun on January 1, 1994. It is the only program in the nation to enroll the entire state Medicaid population in managed care.

On June 20th of this year TennCare released a new Nursing Facility Level of Care Guide outlining programmatic changes to its CHOICES program, which, “are designed to target Nursing Facility services to persons with higher acuity of need, while simultaneously making Home and Community Based Services more broadly available.”  This is the subject of the above-referenced article.

With this initiative TennCare seeks to increase the Nursing Facility Level of Care criteria necessary for Medicaid eligibility to a level it believes to be more in line with criteria used in other states while providing a less costly benefit for those individuals who will no longer qualify under the new criteria.  The new criteria are being applied prospectively, so no one currently qualifying for nursing care will be affected.

Under the new eligibility criteria three groups are established:
Group 1: Individuals eligible to receive care in a nursing
facility (NF) and requesting care in a NF;
Group 2: Individuals eligible to receive care in a NF but
                   requesting home and community-based services
                   (HCBS) in lieu of receiving care in a NF; and
Group 3: Individuals not eligible to receive care in a NF,
                   but “at risk” of NF placement and requesting
                   HCBS in the TennCare CHOICES program.

Group 3 is the population of concern and being debated from a policy perspective.  These are individuals that may have qualified for nursing care coverage under previous criteria and been eligible for HCBS cost coverage at a level commensurate with the cost of coverage in a NF.  Now the annual benefits available to this population will be $15,000.

From a consumer advocacy perspective the concern is that many individuals in Group 3 will not receive adequate services and care because the $15,000 benefit is not sufficient.  From a state policy perspective the concern is trying to allocate finite resources in a fashion where those individuals with the greatest need are afforded the ability to receive care that meets those needs.  In short, pub patrons, welcome to Healthcare Public Policy in the 21st Century.

From a pragmatic vantage, the initiative in Tennessee has very important ramifications for providers of community-based services and post-acute/long-term care.  This is an initiative that is certain to hasten the trend toward HCBS and away from care in institutional settings.  It is a threat to projected demand for long-term care in NF settings – and it is a threat to projected reimbursement levels available to HCBS providers under Medicaid.

It seems to me that any healthcare provider wishing to include the Medicaid population in its targeted market in the future look now at how to integrate BOTH NF-based care AND HCBS in its care continuum if it wishes to be economically viable and sustainable.  What do you think?

~ Sparky

Administration for Community Living

Last week I posted an audio interview with colleague and industry thought leader, Rob Hilton, President & CEO of the A M McGregor Group.  It is my intention (or at least strong hope) that will be the first of many such informative Pub Chats in the future.  My goal is to post two-to-three interviews per month.

As a follow on to the topic Rob discussed with us – Affordable Housing Plus Services – I wanted to make sure patrons of the Policy Pub are aware of the new Administration for Community Living (ACL), as well as provide some general information and background on this new division within the Department of Health and Human Services.

In her April 16, 2012 news release, HHS Secretary Kathleen Sebelius shared the following statement:
The Administration for Community Living will bring together the Administration on Aging, the Office on Disability and the Administration on Developmental Disabilities into a single agency that supports both cross-cutting initiatives and efforts focused on the unique needs of individual groups, such as children with developmental disabilities or seniors with dementia. This new agency will work on increasing access to community supports and achieving full community participation for people with disabilities and seniors.

Key objectives of the ACL include:
1. Reduce the fragmentation that currently exists in
    Federal programs addressing the community living
    service and support needs of both the aging and
    disability populations.
2.  Enhance access to quality health care and long-term
     services and supports for all individuals.
3.  Promote consistency in community living policy across
     other areas of the Federal government.
4.  Complement the community infrastructure, as
      supported by both Medicaid and other Federal
      programs, in order to better respond to the full
      spectrum of needs of seniors and persons with

At a conceptual level, these objectives should be supportive of new public policy efforts designed to integrate affordable housing, community-based services and healthcare: acute, post-acute and long-term.  Taken together, they represent a paradigm shift from a policy perspective that focuses on the “who” to the “what.”  Rather than a top down approach to providing for the variety of needs for distinct populations (e.g., elderly with chronic conditions, adults with behavioral health needs, children with disabilities), the ACL’s purpose is to transcend programmatic assistance across demographic characteristics.

If – and it is quite admittedly a very big if – the ACL can be successful in facilitating greater cooperation and improved communication by, between and among various federal, state and local agencies responsible for providing home and community based services (HCBS), the opportunities for the social integration of the populations served by those organizations is tremendous.  More importantly, the potential to develop local, community-based solutions that reflect a holistic view of individual health and wellness should – at least initially – merit our strong support, rather than a inclination to dismiss, “just another federal agency,” as I believe most of us have been prone to do.

But I will wager this: the ultimate success of the ACL will depend critically upon its ability to build productive knowledge exchanges with private sector organizations.  If successful in its mission, the ACL can help to knock down walls of bureaucratic obstruction that have historically impeded the efficient creation of community-based solutions that provide integrated services and care.  It will be the role of organizations having real world experience in planning, developing and providing HCBS, however, to work with the ACL in crafting public policy that aligns with and supports those solutions.

I think the Administration for Community Living has the potential to be a very positive step forward in addressing the tremendous challenges we face in providing affordable housing, community-based services and healthcare to our seniors.  I think it has the potential to create the type of excitement Rob Hilton shared with us in last week’s Pub Chat.  What do you think?

  ~ Sparky

Can We Afford Home & Community-Based Services?

So who wants to spend their final days in a nursing home? Please raise your hands.

I think we all hope that when our time comes we will be in natural repose – whether that’s flying down the road with a gang of over 75 year-old Harley riders or in our own bed, surrounded by those who have made our life worth the living.  What many of us also hope is that we never be a burden on others; and if that means we require care in a nursing home, we are very grateful that care exists.

The “consumer preference” side of the inertia that has been driving the social and political push toward home & community-based services (HCBS) is plain enough.  The portended cost savings side, however, has yet to be supported with hard evidence.  In fact, as reported by Jenni Bergal in her May 24, 2012 article, States Encounter Obstacles Moving Elderly and Disabled Into Community, published in Kaiser Health News, the 2007 CMS initiative, Money Follows the Person, has been a disappointment to many.

As reported there, the demonstration was initially anticipated to place apx. 35 thousand Medicaid recipients in HCBS settings within the first five years – while the actual amount has been 22.5 thousand (36% below what was targeted).  Although $4 billion has been authorized by Congress to underwrite costs of the program it is estimated there currently exist 900,000 individuals living in institutions that qualify for transfer to HCBS settings under the program.  In addition to falling short of volume and outreach expectations, it is still not clear from available research whether the program is capable of providing an overall aggregate cost savings.

There are two general areas representing obstacles to success: affordable housing and operational support.  Effective HCBS models very often require that individuals transition to a new setting because their current home does not adequately accommodate accessibility and permit in-home supportive assistance.  Affordable housing for the elderly is, of course, one of the greatest social challenges that we are now facing, irrespective of HCBS.

Within the area of operational support there are two distinct categories: lack of what I will call technical support (e.g., timely access to direct caregivers, such as physicians, nurses and therapists; inability to most effectively leverage available remote monitoring and assistance technology; and inadequate management of medication);  and individual support (e.g., both access to community-based service supports and/or availability of informal caregiver support, such as families). 

The Affordable Care Act has a number of specific programmatic initiatives in support of HCBS, including: Community First Choice (Sec. 2401), State Option to Provide Health Homes (Sec. 2703), Money Follows the Person Continuation (Sec. 2403); Independence at Home Program (Sec. 3024); Community Based Care Transitions Program (Sec. 3026); Community Health Teams (Sec. 3502); and Community Based Collaborative Care Networks (Sec. 10333).  Additional support of HCBS initiatives is coming from the Center for Medicare and Medicaid Innovation, as well as numerous state Medicaid programs.

Many senior housing and care providers that have historically provided post-acute and long-term care within the confines of institutional settings have been committing substantial resources to advance strategic HCBS initiatives.   Again, their efforts are reflective of both the perceived preferences of their targeted market, as well as recognition of the trending shift in available public funding.  And I do believe there is merit in having a sense of urgency behind such efforts because of the potential rewards that first mover advantage may bring as integrated delivery models drive markets toward greater consolidation.

Based on the available results of the Money Follows the Person demonstration, however, there is at least anecdotal evidence in support of incorporating additional risk mitigation into those efforts.  It would be prudent to ensure development plans are assessed and modified periodically as additional information becomes available about future HCBS initiatives.  To the extent those initiatives can provide organizational Option Value that can reduce the potential cost of market repositioning in reaction to what is learned over time, the additional up front investment is probably a good idea in this environment.

I know there are some very forward thinking and experienced senior housing and care providers out there who are already well down the road to building the social, community and provider infrastructure that it takes to develop successful HCBS – regardless of what future research shows.  Hopefully, one of those folks will stop by the Pub and share with us what they have already learned!

  ~ Sparky