U.S. Department of Health and Human ServicesU.S. Department of Health and Human Services
This report was prepared under contract #HHS-100-97-0015 between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and George Washington University's Center for Health Policy Research. For additional information about the study, you may visit the DALTCP home page at http://aspe.hhs.gov/daltcp/home.htm or contact the ASPE Project Officer, Gavin Kennedy, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 20201. His e-mail address is: gkennedy@osaspe.dhhs.gov.
Dear Reader,
Medicaid is the major public payer of long-term services and supports for millions of low-income Americans. When Medicaid was first enacted, payment for long-term services was made solely to institutions such as nursing homes. In the following decades, people with disabilities of all ages and their advocates played a significant role in the evolution of the Medicaid program. They asked for the resources they needed to live independently and the government responded. Medicaid now pays for a comprehensive range of home and community services that provide alternatives to unnecessary institutional care.
Many states have led the way in using Medicaid to design innovative and fiscally responsible long-term service programs. These programs enable people with significant disabilities to live in their communities and offer consumers more control over the services they receive. The recent Supreme Court decision in Olmstead v L.C. gives legal weight to this policy direction. In her July 28, 1999, address to the National Conference of State Legislatures, Secretary Shalala stated clearly that “The Olmstead decision defines our mission: To build better systems of supports enabling people with disabilities to live life to the fullest.”
Since then, the Department has received numerous requests from state officials, consumers, and other stakeholders for information on how to use the Medicaid program to increase the availability of home and community services. Medicaid is a flexible program but it is also a complex program. It is no surprise that there are a host of questions about what is allowable under Medicaid law and regulation. We are pleased to offer this Primer on Medicaid Home and Community Services to serve as a reference guide. Its purpose is twofold:
To explain how the Medicaid program can be used to expand access to a broad range of home and community services and supports for people of all ages with disabilities, and to promote consumer satisfaction and control;
To encourage a fundamental approach to the support of persons with disabilities that minimizes reliance on institutions and maximizes community integration in the most cost-effective manner.
I believe this Primer will be a useful tool for all those working to expand home and community services and supports to enable people with disabilities to live in the most integrated settings appropriate to their needs.
This Primer would not have been possible without the commitment and hard work of many people. However, I want to recognize a few individuals whose outstanding efforts and dedication made this Primer a reality:
Janet O’Keeffe, whose extensive knowledge of long-term service policy combined with her energy, her talent for organizing large quantities of complex information, and her ability to work with multiple constituencies, enabled us to complete this project;
Gary Smith, the Primer’s principal author, whose prodigious knowledge of the myriad details of the Medicaid program and whose ability to explain them in layperson’s terms made this document possible;
Ruth Katz, who first suggested that ASPE develop a Primer to clearly explain the many ways in which Medicaid can be used to provide home and community services and supports, has provided invaluable vision and leadership throughout this project;
Thomas Hamilton, Director of HCFA’s Disabled and Elderly Health Program Group, for his interest in and unfailing support of this project. Tom and his staff, particularly Mary Clarkson, generously contributed their expertise and time--reviewing every chapter for technical accuracy, consistency, and readability.
As the Medicaid program evolves to meet the needs of its beneficiaries, new policy and clarifications of existing policy will be made subsequent to the publication of this Primer. These will be disseminated through State Medicaid Directors’ Letters and the State Medicaid Manual, both of which are available on the Health Care Financing Administration’s website.
Bob Williams
Deputy Assistant Secretary
Office of Disability,
Aging, and Long-Term Care Policy
This Primer could not have been completed without the contributions of many individuals who are acknowledged below.
At the Health Care Financing Administration, Mary Clarkson, Thomas Hamilton, Roy Trudel, William Coons, Mary Jean Duckett, Linda Peltz, Tammi Hessen, Terri Pratt, and Barbara Fisher.
Research Assistants Christine Adams and Lizbet Boroughs.
Contract staff from the George Washington University Health Policy Center, including Sara Rosenbaum, Lea Nolan, Lissette Vaquerano, and Jennel Harvey.
Design and editorial staff from the Urban Institute, including Helena Mickle, Scott Forrey, Tina Maguire, Barbara Willis, Lee Lundy, and Jerry Richardson.
Administrative Assistants Joyce Brown-Moore, Marie Belt, Linda Reese-Smith, and Aisha Keys.
Thanks are also due to advisory group members, expert consultants, and reviewers, including the following people:
Mike Auberger, Atlantic Community, Inc.
Julie Beckett,
Family Voices
Allen Bergman, Brain Injury Association, Inc.
Tom Bleeker, World Institute on Disability
Valerie Bradley,
Human Services Research Institute
Martin Cohen, Metro West
Community Healthcare Foundation
Barbara Coleman, AARP
Jeff
Crowley, National Association of People with AIDS
Pamela Doty,
ASPE
John Drabek, ASPE
Sue Flanagan, Engquist, Pelrine
& Powell, Inc.
Marty Ford, The ARC (formerly The Association of
Retarded Citizens)
Andreas Frank, ASPE
Lex Frieden, Texas
Institute of Rehabilitation and Research
Bob Gettings, National
Association of State Directors of Developmental Disabilities Services
Mary Harahan, Former Deputy to the Deputy Assistant Secretary for
Planning and Evaluation, Office of Disability, Aging, and Long-Term Care
Policy
Charlene Harrington, University of California, San
Francisco
Kamal Hijjazi, ASPE
Dara Howe, Family
Voices
Mary Elizabeth Jackson, The MEDSTAT Group
Mary James,
Michigan Department of Health, Long Term Care Health Plan Division
Bob Kafka, ADAPT
Enid Kassner, AARP
Genevieve Kenney,
The Urban Institute
Chris Koyanagi, Bazelon Center for Mental
Health Law
Charles Lakin, Research and Training Center on Community
Living
Simi Litvak, World Institute on Disability
Sarah
Lock, AARP
Kevin Mahoney, Boston College, School of Social
Work
Katie Maslow, Alzheimer’s Association
Hunter McKay,
ASPE
Chas Moseley, University of New Hampshire, Institute on
Disability
Christopher Murtaugh, Visiting Nurses Association
Trish Nemore, National Senior Citizens Law Center
Jan
Nisbet, Institute on Disability
Mike Oxford, Topeka Independent
Living Resource Center
Lee Partridge, National Association of State
Medicaid Directors
Richard Price, Congressional Research Service
Sally Richardson, Former Director of HCFA’s Center for Medicaid
and State Operations
Judy Riggs, Alzheimer’s Association
Matt Salo, National Governors’ Association
Andy Schneider,
Medicaid Policy, LLC
Don Shumway, New Hampshire Department of
Health & Human Services
Dorothy Siemon, AARP
Jane Tilly,
The Urban Institute
Steve Tremblay, Alpha One Independent Living
Center
Special thanks to AARP for loaning Janet O’Keeffe to ASPE to direct this project.
People of all ages with disabilities want the same opportunities every American wants: not just to survive, but to thrive. They want to live in their own homes and make decisions about daily activities, so they can go to school, work, church, recreation, and can participate fully in their communities. Historically, people with disabilities have not always been allowed this birthright. Society has often focused on a person’s disabilities rather than his or her abilities. But changes in philosophy and law have led to a new approach. People with disabilities are now recognized as being able to live in their own homes and other community settings and to lead satisfying and productive lives when provided the range of services and supports they need to do so.
In the service system for elderly persons, these services and supports are referred to as long-term care. In the disability service system, the terms typically used are long-term services and supports or personal attendant services. All these terms are used interchangeably throughout this Primer.
The major source of public funding for long-term services and supports provided in home and community settings is the Medicaid program. Medicaid was first enacted in 1965 as a companion program to Medicare.1 It was designed as a joint Federal-state entitlement providing primarily medical care to low-income Americans.2 When first enacted, Federal Medicaid funding for meeting the long-term service needs of people with disabilities and chronic conditions was available mainly when the person was placed in an institutional setting (e.g., a nursing home), with few avenues for securing Medicaid dollars to support individuals in their homes and communities. State dollars (and, in some cases, Federal dollars) funded “home care” programs, but only on a limited basis.
In the 35 years since its enactment, Medicaid’s “institutional bias” has been progressively reduced through numerous amendments to Federal laws and policy. These amendments have offered new options for states to fund comprehensive home and community long-term services. Beginning in the early 1980s, there has been a steady increase in the options available to states to secure Federal Medicaid dollars to underwrite long-term services and supports in home and other community settings. As a result, states have considerably expanded availability of these services for persons of all ages with physical and mental disabilities. Many states are leading the way in designing innovative and fiscally responsible ways to enable more persons with disabilities to receive necessary services in their communities instead of in institutions.
At one time, only a small portion of Medicaid long-term care spending was directed to home and community services. Today, 28 percent of long-term care spending is for such services, and these outlays are one of the fastest growing components of total Medicaid spending.3
Some benefits may be offered through either the state’s “regular” Medicaid program or through a home and community-based services (HCBS) waiver program. Moreover, a state may operate several HCBS waiver programs at once, each offering a distinct package of services and supports to a different group of individuals. These choices combine to give states considerable latitude in deciding which services and supports will be offered and in customizing benefit packages to meet the needs of particular groups.
Medicaid home and community services are available to beneficiaries of all ages with many different types of physical and mental disabilities and chronic illnesses. Because of the way Medicaid was originally designed and has been amended over time, distinct programs were developed to provide services to certain categorical populations, most notably women with dependent children. In the long-term care context, covered categories include the “aged, blind, and disabled.” These three populations account for the majority of Medicaid long-term care spending on home and community services, primarily through the personal care option, the HCBS waiver program, and the home health benefit. The “aged and disabled” categories taken together include people of all ages who have physical or mental disabilities, including serious mental illness, mental retardation, and other developmental disabilities. The Primer discusses services for all these groups.
Regardless of an individual’s age or condition, all persons with disabilities and their families share common goals--to choose how to live their lives and to have some control over their daily activities in the most integrated settings. The recent Supreme Court decision in Olmstead v. L.C. affirmed the right of persons with disabilities to do just this.4 The Court stated that institutional placement of persons who can handle and benefit from community settings perpetuates unwarranted assumptions that persons so isolated are incapable or unworthy of participating in community life. Further, the Court noted that confinement in an institution severely diminishes the everyday life activities of individuals--including family relations, social contacts, work options, economic independence, educational advancement, and cultural enrichment.5 The Court also noted, however, that nothing in the Americans with Disabilities Act (ADA) condones termination of institutional settings for persons unable to handle or benefit from community settings, and that a state’s responsibility, once it provides community-based treatment to qualified persons with disabilities, is not unlimited.
The Medicaid program can be an important resource to assist states in meeting the principles set out in the Olmstead decision. States may choose to utilize Medicaid funds to provide appropriate services in a range of settings from institutions to fully integrated community support.6
As states work toward the goal of integrating persons with disabilities into the community, they may need to go through a process of fundamentally rethinking how programs serving people with disabilities should be structured and how long-term care resources should be allocated. The Medicaid program as currently structured provides many alternative ways to increase the availability of home and community services and still keep the costs of those services under control.
Subsequent chapters of this Primer stress that states need to consider their own unique needs, resources, and social/political/economic environment as they decide how best to use the Medicaid program to provide home and community services to persons with disabilities. An important context for this decision-making process is the set of demographic factors driving the need for publicly funded assistance by persons with disabilities.7
The first such factor is advances in medical technology, which have enabled increasing numbers of people with extensive congenital and acquired disabilities to both survive and live longer lives. The second is that the nation’s population is aging and will continue to do so as the baby-boom cohort moves into its 60s and beyond. The population over age 85--numbering 4.0 million in 1998--is the group most likely to need assistance performing activities of daily living, and this is the group that is growing the fastest. By 2020, for example, an estimated 7 million people will be 85 and over.8
Finally, most of this assistance is provided by informal caregivers, typically the women in the family. However, high women’s labor force participation rates, smaller families, and geographic mobility may make it very difficult for some families to provide such assistance for their members with disabilities.
Medicaid now offers so many options for providing home and community services that they can be confusing for policymakers, state officials, advocates, and consumers alike. It does not help that the details of these expanded options tend to be buried in the minutiae of Medicaid legislative and regulatory provisions. To add to the confusion, the extensive flexibility states have to combine these options has resulted in 50 different state Medicaid programs. Even people who have spent years working in Medicaid do not always understand its many provisions.
This Primer is designed to encourage use of the Medicaid program in a manner that minimizes reliance on institutions and maximizes community integration in a cost-effective manner. Its intended audience is policymakers and others who wish to understand how Medicaid can be used--and is being used--to expand access to a broad range of home and community services and supports, and to promote consumer choice and control. In addition to comprehensive explanations of program features states can implement to achieve these goals, the Primer presents examples of state programs that have taken advantage of Medicaid’s flexibility to expand home and community services for people of all ages with disabilities.
The service options reviewed in subsequent chapters span the full range of Medicaid choices. They address program modifications states can implement as a state plan option (without special waiver of Federal law), as well as those for which Federal waiver approval must be obtained. Options that do not require waivers offer especially important potential for expanding community services and supports.
The design of this Primer grew out of a series of discussions among Federal officials, state policymakers, service providers, and advocates regarding how to make the document as useful as possible. Each chapter provides an annotated bibliography, with full information on how to obtain each publication.
Chapter One provides a brief overview of the legislative and regulatory history of Medicaid’s coverage of home and community services and information on current home and community expenditures.
The next four chapters lay out and discuss the basic elements involved in Medicaid’s financial and functional eligibility criteria and service coverage alternatives.
Chapter Two provides an explanation of Medicaid’s financial eligibility criteria, one of the most complicated areas of Medicaid law. It first discusses the general eligibility criteria all Medicaid beneficiaries must meet. It then focuses on the financial eligibility provisions most important for receiving services in home and community settings. It also discusses the options states can select to ensure that people with disabilities will be able to support themselves in home and community settings.
Chapter Three focuses on Medicaid provisions related to health and functional criteria used to determine service eligibility for home health services, the personal care option, and the waiver program. It presents examples of states with service criteria that support a social model of long-term services and supports rather than a medical model. And it discusses ways in which states can design service criteria to ensure that they appropriately and adequately measure the need for services and supports among heterogeneous populations.
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The Olmstead Decision9 The Olmstead case was brought by two Georgia women whose disabilities include mental retardation and mental illness. At the time the suit was filed, both plaintiffs lived in State-run institutions, despite the fact that their treatment professionals had determined that they could be appropriately served in a community setting. The plaintiffs asserted that continued institutionalization was a violation of their right under the ADA to live in the most integrated setting appropriate. The Supreme Court ruled that “Unjustified isolation . . . is properly regarded as discrimination based on disability.”10 It observed that (a) “institutional placement of persons who can handle and benefit from community settings perpetuates unwarranted assumptions that persons so isolated are incapable or unworthy of participating in community life,” and (b) “confinement in an institution severely diminishes the everyday life activities of individuals, including family relations, social contacts, work options, economic independence, educational advancement, and cultural enrichment.” Under the Court’s decision, States are required to provide community-based services for persons with disabilities who would otherwise be entitled to institutional services when: (a) the State’s treatment professionals reasonably determine that such placement is appropriate; (b) the affected persons do not oppose such treatment; and (c) the placement can be reasonably accommodated, taking into account the resources available to the State and the needs of others who are receiving State-supported disability services. The Court cautioned however, that nothing in the ADA condones termination of institutional settings for persons unable to handle or benefit from community settings. Moreover, the State’s responsibility, once it provides community-based treatment to qualified persons with disabilities, is not unlimited. Under the ADA, States are obliged to “make reasonable modifications in policies, practices, or procedures when the modifications are necessary to avoid discrimination on the basis of disability, unless the public entity can demonstrate that making the modifications would fundamentally alter the nature of the service, program or activity.” The Supreme Court indicated that the test as to whether a modification entails “fundamental alteration” of a program takes into account three factors: the cost of providing services to the individual in the most integrated setting appropriate; the resources available to the State; and how the provision of services affects the ability of the State to meet the needs of others with disabilities. (See Appendix II for the complete text of HCFA’s guidance on the Olmstead decision.) |
Chapter Four presents the major service options states have to provide home and community services to people with disabilities and discusses the factors states need to consider when choosing among the various options.
Chapter Five provides an in-depth discussion illustrating different coverage alternatives in the context of two specific services: case management and assisted living for elderly persons.
The last four chapters focus on key policy goals in the provision of home and community services and supports.
Chapter Six discusses factors states need to consider when developing initiatives to transition institutional residents back to home and community settings. It also presents ways in which Medicaid can be used to facilitate this transition.
Chapter Seven discusses options under Medicaid to increase consumer choice and control of home and community services.
Chapter Eight discusses ways in which Medicaid can support informal caregiving and family support through various optional services.
Chapter Nine addresses system design issues and discusses how Medicaid can be used to create comprehensive, cost-effective long-term care systems.
The Primer concludes with a series of Appendices that provide additional information about the Medicaid program.
This Primer has been prepared by the Office of the Assistant Secretary for Planning and Evaluation (ASPE), with consultation from the Health Care Financing Administration (HCFA) in the United States Department of Health and Human Services (HHS). Designed to serve as a reference guide, it is written in easily understood language, but with sufficient annotation of source material to fulfill its technical support role. Some issues remain unresolved, because particular provisions of Medicaid regulations and state interpretations thereof are being challenged in the courts. Major unresolved issues are discussed where relevant.
* * *
This Primer describes the many options states have to use the Medicaid program to fund long-term care services and supports. It is up to state policymakers working with the disability and aging communities to identify the unique needs and goals of the state, and then use the information given in the following chapters (a) to choose the options best suited to a particular state and (b) to decide how the options chosen can be best used in that state.
P.L. 89-97, Title XIX of the Social Security Act.
The Federal government provides matching funds on an open-ended basis for every dollar a state chooses to spend on Medicaid services.
Burwell, B. (April, 25, 2000). Memorandum: Medicaid long-term care expenditures in FY 1999. Cambridge: The MEDSTAT Group.
Olmstead v. L. C., 119 S.Ct. 2176 (1999).
Health Care Financing Administration. (February 1, 2000). Fact Sheet: Assuring access to community living for the disabled. (Available from www.hcfa.gov/facts.)
Because the focus of the Primer is on long-term care services and supports, the Primer uses the term persons with disabilities to refer primarily to that group of persons with disabilities who need long-term care services in general, and home and community services in particular.
U.S. Census Bureau (www.census.gov).
Information in this text box is available from the following website: www.hcfa.gov/medicaid/smd1140a.htm, which contains additional information regarding the Olmstead decision.
The Olmstead decision interpreted Title II of the ADA and its implementing regulations, which oblige states to administer their services, programs, and activities “in the most integrated setting appropriate to the needs of qualified individuals with disabilities.” (28 CFR 35.130(d)).
Long-term care includes a broad range of health and health-related services, personal care, social and supportive services, and individual supports. This chapter recounts the legislative, regulatory, and policy history of Medicaid coverage of long-term care services. Both institutional and home and community long-term care services are covered, with the latter described in greater detail. (Medicaid’s coverage of primary and acute care is not included in the discussion.)
Medicaid is an entitlement program, which is designed to help states meet the costs of necessary health care for low-income and medically needy populations. States qualify to receive Federal matching funds to help finance these costs by filing a state Medicaid plan document with the Federal Health Care Financing Administration (HCFA).2 States have substantial flexibility to design their programs within certain broad Federal requirements related to eligibility, services, program administration, and provider compensation.
From its beginnings as a health care financing program primarily for welfare recipients, Medicaid has been amended and expanded in a patchwork fashion to cover a range of populations. Initially, Medicaid was the medical care extension of Federally funded programs providing cash assistance for the poor, with an emphasis on dependent children and their mothers, elderly persons, and persons with disabilities. Legislation in the 1980s extended Medicaid coverage to an expanded group of low-income pregnant women and poor children, and to some low-income Medicare beneficiaries who were not eligible for cash assistance.
When first enacted, Medicaid’s main purpose was to cover primary and acute health care services, such as doctor visits and hospital stays. Mandatory coverage for long-term care was limited to skilled nursing facility (SNF) services for people age 21 and older. States were given the option to cover home health services and private duty nursing services. In response to the high costs of nursing facility care, combined with criticism of Medicaid’s institutional bias, states and the Federal government began to look for ways to provide long-term care services in less restrictive, more cost-effective ways. In 1970, home health services for those entitled to nursing home care became mandatory. Since 1970, Medicaid has evolved into a program that allows states considerable flexibility to cover virtually all long-term care services that people with disabilities need to live independently in home and community settings.
The Federal Medicaid statute requires states to specify the amount, duration, and scope of each service they provide, which must be sufficient to reasonably achieve its purposes. States may not place limits on services or arbitrarily deny or reduce coverage of required services solely because of diagnosis, type of illness, or condition. Generally, a state plan must be in effect throughout an entire state (i.e., amount, duration, and scope of coverage must be the same statewide). There are certain exceptions to these rules. Two major ones: (a) states operating home and community based services (HCBS) waivers need not offer all services covered under the waiver to all beneficiaries in the state; and (b) targeted case management services offered as an optional benefit under the state plan are not subject to the statewideness rule.3
In 1999, every state was providing home and community services under one or more of the available options, and Medicaid had become the nation’s major public financing program for long-term care services for low-income persons of all ages with all types of physical and mental disabilities. Data since 1988 show how Medicaid long-term care service spending has been changing.
In 1988, Medicaid spending for all long-term services totaled $23 billion.4 Nearly 90 percent of those dollars paid for institutional services in nursing facilities and intermediate care facilities for persons with mental retardation (ICFs/MR); only 10 percent went for home and community services. Over the next eleven years, Medicaid spending for all long-term care services grew by 9.8 percent per year, reaching $63.9 billion by 1999. Spending for institutional services increased more slowly (at 7.6 percent per year). Spending for home and community services grew at the rate of 20 percent per year. From a low level of expenditures, home and community spending reached $17.9 billion in 1999.5
HCBS waiver programs accounted for the majority of this growth. In 1999, HCB waiver services accounted for 16.6 percent of all Medicaid long-term care services, compared with 9.4 percent in 1994 and only 4.4 percent in 1990. In 1996, expenditures for HCB waiver services surpassed spending for services provided under the home health benefit and the personal care option combined for the first time. In the eleven years from 1988 to 1999, the proportion of total Medicaid spending that went to all home and community services (waiver, personal care, targeted case management, and home health combined) grew from 10 to 28 percent.6 Following the Supreme Court’s 1999 Olmstead decision, a state may decide to make increased use of the Medicaid program to increase both the amount and share of its resources going to home and community services.
Expansion of home and community services relative to institutional services has been particularly pronounced for individuals with mental retardation and other developmental disabilities. In 1990, 144,000 such individuals were served in ICFs/MR, compared with 45,000 receiving HCB waiver services. By 1999, the number served in ICFs/MR had dropped to 118,000 while the number participating in HCBS waiver programs had increased to almost 262,000.7
It should be noted, however, that the share of Medicaid long-term care spending going to home and community services in most states is much lower than the nationwide figure of 28 percent would lead one to expect. In 1997, for example, that share was less than 8 percent in half the states. In the same year, however, five states spent more than 20 percent of their Medicaid long-term care resources on home and community services, with Oregon and New York heading the list (at 40 to 50 percent). The median annual per capita Medicaid expenditure on home and community services has also increased (rising from $310 to $522 between 1992 and 1997).8 This overall figure again masks considerable state variation--from $1180 per person age 65 or over in New York down to $29 in Mississippi.9
The remainder of this chapter presents a brief overview of the Medicaid law, regulations, and policy that give states the flexibility to create comprehensive home and community service systems for persons of all ages with all types of physical and mental disabilities. To provide context for the discussion, Table 1-1 lists the major relevant provisions of Medicaid law. This chronological summary illustrates the progressive expansion of Medicaid long-term care services away from a primary focus on institutional care. (Chapter 4 and Chapter 5 discuss service options and factors to consider when choosing among them.)
There has been some misunderstanding about the coverage criterion for home health services because it is linked to the coverage criterion for nursing homes. States are mandated to cover nursing home care for categorically eligible persons age 21 and older. This mandate entitles persons age 21 and older to nursing facility care. States have the option to cover nursing home care for other Medicaid beneficiaries as well--e.g., persons under age 21 and the medically needy. In states choosing this option, the medically needy and persons under age 21 would also be entitled to nursing home care. However, being entitled to nursing home care does not mean that one is eligible for nursing home care. In order to receive Medicaid covered nursing home care, entitled persons must also meet nursing home eligibility criteria (called level-of-care criteria).
Since 1970, home health services have been mandatory for persons entitled to nursing facility care.10 Confusion about eligibility for home health services has arisen because the term entitled to nursing facility care has sometimes been erroneously interpreted to mean that people must be eligible for nursing facility care--i.e., that they must meet a state’s nursing facility level-of-care criteria--in order to receive home health benefits. This erroneous interpretation has persisted notwithstanding its conflict with home health regulations prohibiting a state from conditioning eligibility for home health services on the need for or discharge from institutional care.11 The Medicaid Assistance Manual further clarifies that states may not limit home health services to individuals who require a skilled level of health care as defined by Medicare (i.e., needing skilled nursing or therapy services).12 (See Chapter 3 for additional information on the home health benefit.)
Federal regulations require that home health services include nursing, home health aides, medical supplies, medical equipment, and appliances suitable for use in the home. States have the option of providing additional therapeutic services under home health--including physical therapy, occupational therapy, and speech pathology and audiology services.13 States may establish reasonable standards for determining the extent of such coverage based on such criteria as medical necessity or utilization control.14 In doing so, as noted, a state must ensure that the amount, duration, and scope of coverage are reasonably sufficient to achieve the purpose of the service.15
In 1998, following the ruling of the U.S. Court of Appeals for the Second Circuit in DeSario v. Thomas, HCFA sent a letter to state Medicaid Directors clarifying that states may develop a list of pre-approved items of medical equipment as an administrative convenience but must provide a reasonable and meaningful procedure for requesting items that do not appear on such a list.16 (See Appendix II for the complete text of the HCFA letter.) All home health services must be medically necessary and authorized on a physician’s orders as part of a written plan of care.
Home health services are defined in Federal regulation as services provided at an individual’s place of residence. In 1997, however, the Federal Court of Appeals for the Second Circuit ruled that home health nursing services may be provided outside the home, as long as they do not exceed the hours of nursing care that would have been provided in the home.17 The states covered by this ruling are New York, Connecticut, and Vermont. (See Chapter 3 for additional information on this ruling.)
| TABLE 1-1. Medicaid's Legislative Provisions Regarding Long-Term Care Services | |
| 1965 | Establishment of Medicaid18 — Mandatory coverage of SNFs — Optional coverage of home health services and rehabilitation services. |
| 1967 | Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) mandate for children under 21.19 States given the option to provide services under EPSDT that were not covered by their state plans. |
| 1970 | Mandatory coverage of home health services for those entitled to skilled nursing facility services.20 |
| 1971 | Optional coverage of intermediate care facilities (ICFs) and ICFs/MR.21 |
| 1972 | Optional coverage of children under 21 in psychiatric hospitals. (This institutional coverage provides the “institutional alternative” for HCBS waiver services for this group.)22 |
| 1973 | Option to allow people receiving supplemental security income (SSI) to return to work and maintain their Medicaid benefits.23 |
| 1981 | Establishment of home and community based services (HCBS) waiver authority.24 |
| 1982 | Option to allow states to extend Medicaid coverage to certain children with disabilities who live at home but who, until this 1982 provision, were eligible for Medicaid only if they were in a hospital, nursing facility, or ICF/MR. Also known as the Katie Beckett or TEFRA Provision.25 |
| 1986 | Option to cover targeted case management.
States are allowed to cover such services without regard to the statewideness
and comparability requirements.26 Option to offer supported employment services through HCBS waiver programs to individuals who had been institutionalized some time prior to entering the HCBS waiver program.27 |
| 1988 | Establishment of special financial eligibility rules for institutionalized persons whose spouse remains in the community, to prevent spousal impoverishment.28 |
| 1989 | EPSDT mandate amended to require states to cover any service a child needs, even if it is not covered under the state plan.29 |
| 1993 | Removal of requirements for physician authorization and nurse supervision for personal care service provided under the state plan. States were given explicit authorization to provide personal care service outside the individual’s home.30 |
| 1997 | Removal, under the Balanced Budget Act of 1997, of the “prior institutionalization” test as a requirement for receiving supported employment services through an HCBS waiver program. Addition of first opportunity for states to create a Medicaid “buy-in” for people with disabilities. |
| 1999 | Additional options under the Ticket to Work and Work Incentives Act for states to create a buy-in program for people with disabilities and to remove employment barriers.31 |
The Federally mandated EPSDT program for children from birth to 21 years entitles Medicaid eligible children to services found necessary to diagnose, treat, or ameliorate a defect, physical or mental illness, or a condition identified by an EPSDT screen. The original 1967 legislation gave states the option to cover treatment services not covered under the state’s Medicaid plan. In 1989, Congress strengthened the mandate by requiring states to cover all treatment services, regardless of whether or not those services are covered in the state’s Medicaid plan.32
As a result, the EPSDT component now covers the broadest possible array of Medicaid services, including personal care and other services provided in the home. For example, Wisconsin covers up to eight weeks of intensive in-home services for children with serious emotional disturbances, including parental skill training in behavior management techniques.
Options for covering institutional services assumed greater importance after 1981, when the waiver authority was created. This was because HCB waiver services can be provided only insofar as they provide an alternative to institutional care. If a state is not covering a particular type of institu-tional service, it will not be able to offer that type of service in the community under an HCBS waiver program.
The 1971 addition of services provided by ICFs and ICFs/MR as an optional benefit moved the Medicaid program into financing additional nursing home care. Adding optional institutional coverage of ICFs/MR made Federal matching funds available to help finance home and community services for persons with mental retardation (which had previously been supportable only with state funds), thus providing the institutional alternative for MR/DD waivers. Likewise, optional coverage of ICFs made Federal matching funds available for community coverage of a non-skilled level of care through aged/disabled waivers.33
When Medicaid was enacted, states were given the option of covering a wide range of services, several of which can be used in home and community settings. They include rehabilitation services, private duty nursing, physical and occupational therapy, and transportation services. In 2000, every state provided at least one optional service.
The rehabilitation option, in particular, offers states the means to provide a range of supportive services to people in home and community settings. Medicaid defines rehabilitation services as any medical or remedial services recommended by a physician for maximum reduction of physical or mental disability and restoration of a recipient to his or her best possible functional level.34 Rehabilitation services can be provided to people with either physical or mental disabilities.
The rehabilitation service option is a very flexible benefit, because services may be furnished either in the person’s residence or elsewhere in the community. Many states cover psychosocial rehabilitation services, which--when combined with personal care and targeted case management services--can meet a wide range of service and support needs for persons who have a mental illness. In 1996, 31 states used the rehabilitation option for both categorically needy and medically needy populations; 13 additional states used it just for the categorically needy; and 9 states had Medicaid demonstration programs for rehabilitation services.35
The rehabilitation option is not generally used to furnish long-term services and supports to individuals with disabilities other than mental illness. During the 1970s and 1980s, a few states secured HCFA approval to cover daytime services for persons with MR/DD under either the clinic or the rehabilitation option. However, HCFA ultimately ruled that the services being furnished were habilitative rather than rehabilitative and consequently could not be covered under either option.36 (This issue is discussed in more detail in Chapter 4.)
The main basis for HCFA’s ruling was that habilitative services could only be furnished to residents of ICFs/MR under the state Medicaid plan or through an HCBS waiver program for individuals otherwise eligible for ICF/MR services. A few states have maintained their state plan coverage of these services. Other states have terminated those coverages in favor of offering similar services through an HCBS waiver program.37
Since the mid-1970s, states have had the option to offer personal care services under the Medicaid state plan, making these services one of the longest standing Medicaid home and community benefits. This option was first established administratively under the Secretary’s authority to add coverages over and above those spelled out in Section 1905 of the Social Security Act, if such services would further the Act’s purposes. In 1993, Congress took the formal step of adding personal care to the list of services spelled out in the Medicaid statute.38
When the option for states to offer personal care was created, it had a decidedly medical orientation. The services had to be prescribed by a physician, supervised by a registered nurse, and delivered in accordance with a care plan. Moreover, they could be provided only in the person’s place of residence. Generally, the personal care services a state offered were tied mainly to assisting individuals in activities of daily living (ADLs)--bathing, dressing, eating, toileting, and transferring from a bed to a chair. Personal care workers could provide other forms of assistance (e.g., housekeeping and laundry) only on a limited basis and only if they were incidental to delivery of personal care services.
Starting in the late 1980s, some states sought to broaden the scope of personal care services and provide them outside the individual’s home in order to enable beneficiaries to participate in community activities. In 1993, Congress not only formally incorporated personal care into Federal Medicaid law but also gave states explicit authorization to provide personal care outside the individual’s home.39 Congress went even a step further in 1994, allowing states to: (1) use means other than nurse supervision to oversee provision of personal care services, and (2) establish means other than physician prescription for authorizing such services. In November 1997, HCFA issued new regulations concerning optional Medicaid state plan personal care services to reflect these statutory changes.40
In 2000, 27 states covered personal care services under their Medicaid state plans.41 However, Federal-state Medicaid outlays for these services, which totaled roughly $3.5 billion in FY1999, have grown at a relatively slow pace during the 1990s.42 This slow pace is at least in part because some states are electing to cover personal care services through more flexible and easy to target HCBS waiver programs instead of adding the coverage to their state plan or expanding the state plan coverage they already have in place.
In January 1999, HCFA released a State Medicaid Manual Transmittal that thoroughly revised and updated the Agency’s guidelines concerning coverage of personal care services. The new Manual materials made it clear that personal care services may span provision of assistance not only with ADLs but also with Instrumental Activities of Daily Living (IADLs), such as personal hygiene, light housework, laundry, meal preparation, transportation, grocery shopping, using the telephone, medication management, and money management. HCFA also clarified that all relatives except “legally responsible relatives” (i.e., spouses and parents of minor children) could be paid for providing personal care services to beneficiaries.
The Manual further clarified that, for persons with cognitive impairments, personal care may include “cueing along with supervision to ensure the individual performs the task properly.” And it explicitly recognized that provision of such services may be directed by the people receiving them. This consumer direction includes the individuals’ supervision and training of their personal care attendants. [For the complete text see Appendix II.] Consumer direction of personal care services has been a feature of many personal assistance programs for many years (both under Medicaid and in programs funded only with state dollars). For example, consumer-direction was built into the Massachusetts Medicaid personal care program from its inception. The HCFA Manual clearly acknowledges and sanctions this model. (See Chapter 7 for in-depth discussion of consumer direction.)
But neither the statutory provisions nor the revised Federal regulations and HCFA State Medicaid Manual guidelines dictate that a state must change the scope of its pre-1993 personal care coverage. In order to take advantage of these changes, a state must file an amendment to its state plan. Taken together, therefore, these ground-breaking changes in Federal policy can help pave the way for a state to make its coverage of these services much broader than was the case in the past. But the states must act to bring about these changes in their own personal care programs.
In addition to services listed under the “long-term services and supports” rubric, many other Medicaid benefits are relevant in meeting the needs of individuals with disabilities and chronic conditions. For example, states can provide powered wheelchairs and other mobility equipment through their coverage of medical equipment and supplies suitable for use in the home.43 State plans also cover many therapeutic services (e.g., occupational and physical therapy) that enable people with disabilities to achieve and maintain optimal functioning. (See Chapter 4 for further discussion.)
In 1981, Congress authorized the waiver of certain Federal requirements to enable a state to provide home and community services (other than room and board) to individuals who would otherwise require SNF, ICF, or ICF/MR services reimbursable by Medicaid. The waiver programs are called 1915(c) waivers, named after the section of the Social Security Act that authorized them.44
Under 1915(c) waiver authority, states can provide services not usually covered by the Medicaid program, as long as these services are required to keep a person from being institutionalized. Services covered under waiver programs include: case management, homemaker, home health aide, personal care, adult day health, habilitation, respite care, “such other services requested by the state as the Secretary may approve,” and “day treatment or other partial hospitalization services, psychosocial rehabilitation services, and clinic services (whether or not furnished in a facility) for individuals with chronic mental illness.”
All but the last were included when the statute was first enacted in 1981. Services for individuals with a chronic mental illness were added in the late 1980s. Neither the statute itself nor HCFA regulations further specify or define the scope of the listed services. However, the law that created the waiver program expressly permits the Secretary to approve services beyond those specifically spelled out in the law, as long as they are necessary to avoid institutionalization and are cost-effective. In the 19 years of the program’s existence, HCFA has approved a wide variety of additional services.
In the early 1990s, HCFA first issued a standard HCBS waiver application format for states to submit requests to operate an HCBS waiver program. The standard format includes definitions of services states commonly cover in their HCBS waiver programs. The services listed in the standard format appear there because they: (a) are included in the listing contained in the statute, or (b) are additional services frequently offered by states. The standard HCBS waiver application format now contains HCFA-suggested definitions of services states may cover under their HCBS waiver programs. HCFA revises this standard format periodically, occasionally adding new services. (A complete listing of HCFA’s service definitions is in Appendix I.) The services a state may offer are by no means limited to those that appear in the standard format. (See Chapter 4 for a detailed discussion of HCB waiver service coverage possibilities.)
All states have HCBS waiver programs. In June 2000, there were 242 waiver programs approved by HCFA.45 States typically operate three or four, but some states offer more. Colorado, for example, operates ten. Federal-state spending for HCB waiver services totaled $10.6 billion in 1999. Roughly two-thirds of this underwrote HCB waiver services for people with developmental disabilities; the remaining third paid for HCB waiver services for other population groups.46
Nationwide, the number of individuals participating in HCBS waiver programs increased from 240,000 in 1992 to an estimated 622,000 in 1998, reflecting an annual rate of increase of 17.2 percent. Individuals with developmental disabilities accounted for 39.7 percent of all waiver partici-pants in 1998, about the same proportion as in 1992. Waiver programs for individuals with other disabilities (e.g., younger persons with non-developmental disabilities and/or persons over age 65 with disabilities) accounted for an estimated 57.1 percent of all participants in 1998. Highly targeted HCBS waiver programs (e.g., programs serving individuals with HIV/AIDS, persons with mental illness, persons who have had a brain injury or another brain disorder, and children with severe medical disabilities) accounted for the remaining 3.2 percent of program participants.47
Average cost of HCB waiver services
In 1998, the cost of HCB waiver services was about $14,950 per participant. However, there were marked differences in costs among HCBS waiver target populations. The average cost of HCB waiver services for people with developmental disabilities was $29,353 per participant. In contrast, HCBS waiver programs that serve seniors and/or younger persons with non-developmental disabilities incurred an average cost per participant of $5,362.48 The differences in HCBS waiver costs among target population groups stem from a wide variety of factors. Major factors that affect costs include: (a) differences in the intensity of the services particular target populations require; and (b) the extent to which other state plan services can meet the needs of the target population (and thereby reduce the costs of the additional services that are furnished through HCBS waiver programs). Historically, the costs of supporting individuals with developmental disabilities through HCBS waiver programs have been well above costs of supporting other target populations, because a relatively high percentage of waiver participants with developmental disabilities have been receiving residential rather than in-home services.
The Katie Beckett provision is a statute--the Tax Equity and Fiscal Responsibility Act (TEFRA) 134--added to Medicaid in 1982. Katie Beckett is the name of the child whose parents petitioned the Federal government for her to receive Medicaid services at home instead of in a hospital, and whose plight led the Reagan Administration to urge Congress to enact the provision. TEFRA 134 gives states the option to cover noninstitutionalized children with disabilities. Prior to enactment of this provision, if a child with disabilities lived at home, the parents’ income and resources were automatically counted (deemed) as available for medical expenses. However, if the same child was institutionalized for 30 days or more, only the child’s own income and resources were counted in the deeming calculation--substantially increasing the likelihood that a child could qualify for Medicaid. This sharp divergence in methods of counting income often forced families to institutionalize their children simply to get them medical care.
TEFRA 134 amended the Medicaid law to give states the option to waive the deeming of parental income and resources for children under 18 years old who were living at home but would otherwise be eligible for Medicaid-funded institutional care. Not counting parental income enables these children to receive Medicaid services at home or in other community settings. Many states use this option, which requires states to determine that (1) the child requires the level of care provided in an institution; (2) it is appropriate to provide care outside the facility; and (3) the cost of care at home is no more than the cost of institutional care. In states that use this option, parents may choose either institutional or community care for their Medicaid eligible children.
Until 1986, the only practical avenue available for a state to secure Medicaid funding for freestanding case management services (i.e., case management services not delivered as part of some other service or conducted in conjunction with the state’s operation of its Medicaid program) was through an HCBS waiver program. Coverage of case management services in HCBS waiver programs was nearly universal at that time.
In 1986, Congress created the option for states to cover what were termed “targeted case management” services under their Medicaid plan.49 The expressed statutory purpose of targeted case management is to assist Medicaid recipients in “gaining access to needed medical, social, educational and other services.” This option is unique among services afforded under the state plan, in that states are exempt from the comparability requirement to make such services available to all recipients. A state is permitted to amend its state plan to cover case management services for specified groups of Medicaid recipients (hence the term targeted). It may also offer these services on a less-than-statewide basis (again via state plan amendment instead of securing a waiver).50 (See Chapter 4 for further discussion.)
Given the expressed statutory purpose of the benefit--to assist individuals to obtain services from a wide variety of public and private programs--the scope of services a state may furnish through the targeted case management option is relatively broad. Covered activities include assistance in obtaining food stamps, energy assistance, emergency housing, or legal services. Covered activities also include service/support planning (including assessment) and monitoring delivery of the services and supports in order to ensure they are meeting a beneficiary’s needs.
The Medicare Catastrophic Coverage Act of 1988 established special financial eligibility rules for institutionalized persons, to allow a spouse who remained in the community to retain more assets and income than had previously been allowed under Medicaid’s financial eligibility rules. The figures for retainable resources are adjusted annually to reflect increases in the Consumer Price Index.51 The purpose of these rules is to prevent impoverishment of the spouse who is not institutionalized. States have the option to extend these rules to the spouses of beneficiaries receiving home and community services and also to follow the minimum maintenance allowance rules mandated for spouses of nursing home residents. (See Chapter 2 for a detailed discussion of these and other financial eligibility provisions.)
The Balanced Budget Act of 1997 (BBA) established the Program of All-inclusive Care for the Elderly (PACE) model of care as a permanent provider entity within the Medicare/Medicaid programs.52 This provision enables states to provide PACE services to Medicaid beneficiaries as a state option, rather than as a demonstration as was formerly the case. The number of new PACE sites that can be established nationwide is limited to 80. The typical PACE program serves fewer than 300 individuals. PACE programs are funded by both the Medicare and Medicaid programs, and participants are generally eligible for both. PACE programs provide and manage all health, medical, and social services, and arrange other services as needed to provide preventive, rehabilitative, curative, and supportive care.
The PACE approach provides an alternative to institutional care for persons age 55 and over who require a nursing facility level of care. Services are provided in adult day health centers, homes, hospitals, and nursing homes. PACE providers receive payment only through the PACE capitation rate and are responsible for provision of all items and services covered under both Medicare and Medicaid. The individuals enrolled in PACE receive benefits solely through the PACE program.
* * *
This brief overview of Medicaid’s statutory, regulatory, and policy provisions related to home and community services for people with disabilities provides a context for more detailed discussions in the chapters to come. Some of the institutional bias that remains in the program can be changed only by congressional amendment of Medicaid law (e.g., the requirement that a person must meet an institutional level-of-care standard to receive HCBS waiver services). But numerous provisions give state policymakers considerable freedom in designing their home and community service system to fit their state’s particular needs. They have the option, in particular, to eliminate use of more restrictive financial criteria for HCBS waiver services than for institutional care. They also have considerable flexibility to create consumer-responsive systems that facilitate home and community living. (See Chapter 7.)
In the next several decades, as already noted, the U.S. population will age dramatically. Between 1987 and 1996, for example, the proportion of nursing home residents who were 85 and over rose from 49 to 56 percent for women, and from 29 to 33 percent for men. The severity of disability among the nursing home population has also been increasing. Almost 83 percent of nursing home residents in 1996 needed help with three or more ADLs, for example, compared with 72 percent of residents in 1987.53 Even if disability rates among older persons decline, more people will need long-term care services than at any other time in our nation’s history.
Institutional care is costly. Given the projected demand for long-term care services, it is advisable for states to start planning now to create comprehensive long-term care systems that will enable people with disabilities--whatever their age or condition--to live in the community rather than rely on institutional residence and services. The Medicaid program can be the centerpiece of such a system--allowing states numerous options to provide home and community services that keep costs under control at the same time as they enable people with disabilities to retain their independence and their dignity.
The primary contributors to this chapter are Gary Smith and Janet O’Keeffe. In addition to the sources noted in the citations, a major source of information for this chapter is the Medicaid source book: Background data and analysis (1993). Washington, DC: U.S. Government Printing Office.
The Federal government’s share of medical assistance expenditures under each state’s Medicaid program, known as the Federal Medical Assistance Percentage (FMAP), is determined annually by a formula that compares the state’s average per capita income level with the national average. States with higher per capita incomes are reimbursed smaller shares of their costs. By law, FMAP cannot be lower than 50 percent or higher than 83 percent. In 1997, the average FMAP was 57.0 percent. States are also reimbursed for 50 percent of administrative costs. Congressional Research Service. (1993). Medicaid source book: Background data and analysis (a 1993 update) (p.5). Washington, DC: U.S. Government Printing Office.
Congressional Research Service. (1993). Medicaid source book: Background data and analysis (a 1993 update) (p.267). Washington, DC: U.S. Government Printing Office.
Data on long term services are from Burwell, B. (April 25, 2000). Memorandum: Medicaid long-term care expenditures in FY 1999. Cambridge: The MEDSTAT Group.
Prouty, R., and Lakin, K.C. (Eds.). (May 2000). Residential services for persons with developmental disabilities: Status and trends through 1999. Minneapolis: University of Minnesota, Research and Training Center on Community Living, Institute on Community Integration. (Study underwritten by the Administration on Developmental Disabilities and the Health Care Financing Administration).
Data compiled by John Drabek, Office of the Assistant Secretary for Planning and Evaluation from data collected by HCFA’s Office of Financial Management.
Kane, R.L., Kane, R., Ladd, R.C., and Nielsen Vealie, W. (1998). Variation in state spending for long-term care: Factors associated with more balanced systems. Journal of Health Politics, Policy and Law 23(2): 363–390.
Section 1902(a)(10)(d) of the Social Security Act. Because state plan coverage of nursing facility services is mandatory for categorically eligible persons age 21 and older, home health services are mandatory for this population. If a state chooses to cover nursing facility care for younger persons, or for the medically needy, home health services become mandatory for these groups as well.
42CFR 441.15 (c).
Medicaid Assistance Manual. 5.50.1 1977.
42 CFR 440.70 (b).
42 CFR 440.230(d).
42 CFR 440.230(b).
Health Care Financing Administration. (September 4, 1998). Letter to State Medicaid Directors. (Available at www.hcfa.gov/Medicaid.)
Skubel v. Fuoroli. (No. 96-6201). United States Court of Appeals, Second Circuit. Decided May 13, 1997.
Social Security Amendments of 1965 (P.L. 89-97).
Social Security Amendments of 1967 (P.L. 90-248).
P.L. 90-248 effective July, 1970.
Act of December 14, 1971 (P.L. 92-223).
Social Security Amendments of 1972 (P.L. 92-603).
Section 1619 P.L. 96-265 of the Social Security Act .
Omnibus Budget Reconciliation Act of 1981 (OBRA 81, P.L. 97-35).
P.L. 103-66. Section 13601 (a1/5)8. Section 134 of the Tax Equity and Fiscal Responsibility Act (TEFRA) contains the amendment.
Consolidated Omnibus Reconciliation Act of 1985. P.L. 99-272. The provision became effective April 1986.
Consolidated Omnibus Reconciliation Act of 1985. P.L. 99-272. The provision became effective April 1986.
Medicare Catastrophic Coverage Act of 1988 (P.L. 100-360).
Omnibus Reconciliation Act of 1989.
Omnibus Reconciliation Act of 1993. Section 13601 (a1/5)8. P.L. 103-66. The changes took effect on October 1, 1994. In November 1997, HCFA issued new regulations (42 CFR 440.167) concerning optional Medicaid state plan personal care services to reflect these statutory changes.
P.L. 106-170.
Omnibus Reconciliation Act of 1989.
In 1987, Congress abolished the distinction between SNFs and ICFs. Nursing facilities were mandated to provide both a skilled and intermediate level of care.
Section 440.130(d). Other licensed practitioners of the healing arts, within the scope of their practice under state law, may also authorize services under the rehabilitation option. The statutory definition is qualified by other provisions in the law.
Chris Koyanagi, Policy Director, Bazelon Center for Mental Health Law. Personal communication, May 15, 2000.
In 1989, Congress acted to permit states that had secured HCFA approval of these coverages to continue their coverages but other states were effectively barred from adding the coverage. The Omnibus Budget Reconciliation Act of 1989 (P.L. 101-239) Section 6411(g) prohibited the Secretary of Health and Human Services from “. . . withholding, suspending, disallowing or denying federal financial participation . . . for day habilitation and related services under paragraph (9) [clinic services] or (13) [diagnostic, screening, preventive and rehabilitative services] of Section 1905(a) of the Social Security Act on behalf of persons with mental retardation and related conditions, pursuant to a provision of its state plan as approved on or before June 30, 1989.”Section 6411(g) put a moratorium on HCFA’s taking actions against a state that already offered day habilitation under its state plan on or before June 30, 1989. It provided that the moratorium would only be lifted once HCFA issued final regulations that clarified the elements of day habilitation that could be offered under the state Medicaid plan as either clinic or rehabilitative services. Since passage of OBRA-89, HCFA has not issued such regulations.
Smith, G., Director of Special Projects, National Association of State Directors of Developmental Disabilities Services. Personal communication, July 2000.
The Omnibus Budget Reconciliation Act of 1993 (Section 13601(a)(5)); Social Security Act (Section 1905 (a)(24)).
Individuals who reside in certain types of facilities--nursing facilities, ICFs/MR, hospitals, and institutions for mental disease (IMDs)--cannot receive personal care services through the personal care option.
42 CFR 440.167.
Five additional states offer personal care services to children under the EPSDT mandate. LeBlanc, A.J., Tonner, M.C. and Harrington, C. (2000) State Medicaid Programs Offering Personal Care Services. San Francisco: University of California. The report lists 26 states with the Title XIX personal care services optional state plan benefit. Since 1998–1999, when the data were collected, New Mexico has started the benefit, bringing the state total to 27.
Total FY 1999 expenditures for personal care services equalled $3,526,775. Source: Burwell, B. (April 25, 2000). Memorandum: Medicaid long-term care expenditures in FY 1999. Cambridge: The MEDSTAT Group.
Section 440.70(b)(3).
Federal regulations concerning the program are found at 42 CFR 441 Subpart G. These regulations were last modified in 1994. HCFA guidelines concerning the HCBS waiver program are contained in Sections 4440 et seq. of the State Medicaid Manual. These guidelines are updated periodically.
Data obtained from HCFA website: www.hcfa.gov/medicaid.
Burwell, B. (April 25, 2000). Memorandum: Medicaid long-term care expenditures in FY 1999. Cambridge: The MEDSTAT Group.
Figures are based on: Harrington, C., Carrillo, H., Wellin, V., and Norwood, F. (July 2000). 1915(c) Medicaid home and community-based waiver participants, services, and expenditures, 1992-1998. Based on HCFA 372 Form Data. San Francisco CA: University of California San Francisco (UCSF). And Prouty, R. and Lakin, K.C. (eds.) (May 2000). Residential services for persons with developmental disabilities: Status and trends through 1999. Minneapolis: University of Minnesota, Research and Training Center on Community Living, Institute for Community Integration.
For both 1992 and 1998, University of Minnesota figures for individuals with developmental disabilities receiving HCBS services through the Arizona 1115 demonstration waiver were added to the UCSF figures. Where data were missing in the 1998 UCSF figures, 1997 data were used instead, except in the case of HCBS waiver programs for persons with developmental disabilities (for which University of Minnesota figures were used).
Average costs are calculated by dividing total expenditures by the total number of persons who participate during a year, regardless of the length of time they receive waiver services. (See endnote #47 for data source.)
Section 915(g) was added to the Social Security Act.
HCFA guidelines concerning targeted case management services are found in the State Medicaid Manual in Sections 4302 et seq.
P.L.100-360. (1993). Medicaid source book: Background data and analysis (a 1993 update) (p. 224). Washington, DC: U.S. Government Printing Office.
P.L. 105-33.
Rhoades, J.A., and Krauss, N.A. (1987, 1996). Nursing home trends. Rockville: Agency for Health Care Policy and Research; (1999). Medical Expenditure Panel Survey (MEPS) Chartbook No.3. AHCPR Pub. No. 99-0032.
Feder, J. (May/June 2000). Long-term care in the United States: An
overview. Health Affairs 19 (3): 40–56. (16 pages)
This
article describes how long-term care is financed in the United States. It
emphasizes the current inadequacies of the Medicare and Medicaid programs and
encourages changes that will provide affordable services to those in need. The
article describes reasons for beneficiary dissatisfaction with the scope, mix,
quality, and financing of long-term care, which varies among states. The
article also includes an overview of the population that needs long-term care,
mechanisms for financing, policy implications of various proposals to improve
access to long-term care, and issues policymakers should consider when seeking
to improve the system.
Harrington, C., LaPlante, M., Newcomer, R.J., Bedney, B., Shostak,
S., Summers, P., Weinberg, J., and Basnett, I. (January 2000). Review of
federal statutes and regulations for personal care and home and community based
services: A final report. San Francisco: Department of Social and
Behavioral Sciences, University of California. (169 pages)
The paper
identifies provisions of law and regulation that contribute to institutional
bias in the Medicaid program. It provides a comprehensive overview of Medicaid
statutes and regulations related to the provision of long-term care services.
The paper also makes policy recommendations to reduce institutional bias and
thereby increase the availability of home and community-based services through
the Medicaid program. The document may be ordered for $15.00 by e-mail at
sbs@itsa.ucsf.edu or by calling (415) 476-3964.
Harrington, C., Carrillo, H., Wellin, V., Norwood, F., and Miller,
N.A. (March 2000). 1915(c) Medicaid home and community based waiver
participants, services, and expenditures, 1992–1997. San Francisco:
Department of Social and Behavioral Sciences, University of California. (26
pages)
This paper presents historical data on home and community based
waiver participants, services, and expenditures. It describes the number and
type of 1915(c) HCBS waiver programs that states operated between 1992 and
1997. It reports on trends in the number of participants and expenditures by
target group and by service and discusses factors related to expenditure
growth. The document may be ordered for $5.00 by e-mail at sbs@itsa.ucsf.edu
or by calling (415) 476-3964.
Coleman, B., and Tucker, N. (1999). Trends in Medicaid long-term
care spending. Washington, DC: AARP, Public Policy Institute. (6 pages)
This publication briefly discusses Medicaid expenditures for long-term
care. It shows that there has been a steady increase in long-term care
spending, particularly for home and community-based services (HCBS) waiver
programs for people with mental retardation and other developmental
disabilities. It compares allocation of Medicaid long-term care spending for
HCBS waiver programs, personal care services, and home health services. A table
of Medicaid home care expenditures for all states is included. To obtain a
free copy of this document, contact AARP’s Public Policy Institute at
(202) 434-3860 or search their website at
www.research.aarp.org. Publication
ID: DD38 January 1999.
The Kaiser Commission on the Future of Medicaid. (February 1996).
Medicaid and long-term care. Washington, DC: Author. (8 pages)
This policy brief discusses Medicaid’s provision of long-term care
services. It highlights Medicaid spending on long-term care, mandated services,
and eligibility requirements. Particular attention is paid to nursing home care
and the laws that seek to ensure quality of care. It may be obtained free of
charge from the Kaiser Family Foundation website at
www.kff.org or ordered from their publications
line at (800) 656-4533.
Burwell, B., and Crown, W. (1994). Public
financing of long-term care: Federal and state roles. Cambridge: The
MEDSTAT Group. (40 pages)
This paper provides an overview of public
financing of long-term care services for elderly persons through Medicare,
Medicaid, and other public programs. It presents statistics, characteristics of
publicly-financed programs, and the variation in financing across the 50
states. It discusses utilization trends and the allocation of federal and state
monies to pay for services such as home health and personal care. Graphs and
tables enhance the presentation. The paper also discusses cost containment
methods employed by funding sources, quality assurance measures, and access to
care issues. It emphasizes the states’ primary role in shaping the
publicly financed long-term care system and the policy implications of that
role. The paper provides a thorough understanding of the history of public
funding for long-term care, financing options that states have employed, and
considerations that must be taken into account when providing long-term care.
The paper can be obtained free of charge by writing to Pauline Chouinard at
The MEDSTAT Group, 125 Cambridge Park Drive, Cambridge, MA 02140.
The following websites provide some information about Medicaid, long-term care, or home and community services. This list is not inclusive of all the resources available on the internet, but provides a good starting point for finding information.
Federal Government Websites
Administration on Aging: www.aoa.gov
Agency for Healthcare Research
and Quality: www.ahrq.gov
Assistant
Secretary for Planning & Evaluation (ASPE): aspe.hhs.gov
Health Care Financing
Administration (HCFA): www.hcfa.gov
HCFA's
Medicaid information: www.hcfa.gov/medicaid
Medicare/Medicaid
(500 Sites): whatsonthe.net (click on
Medicare/Medicaid under Health)
Murphy's Unofficial Medicaid
Page: www.geocities.com/CapitolHill/5974
National
Association of State Medicaid Directors: www.aphsa.org (click on Links)
State Government Websites
Intergovernmental Health Policy Project: www.ncsl.org
National Academy for State
Health Policy (NASHP): www.nashp.org
National Association of State
Mental Health Directors: www.nasmhpd.org
National Conference of
State Legislatures: www.ncsl.org
State and
Local Governments on the Web: www.piperinfo.com/state
Foundations
Kaiser Family Foundation: www.kff.org
The Robert Wood Johnson
Foundation: www.rwjf.org
Commonwealth
Fund: www.cmwf.org
Associations and Organizations
American Association of Homes & Services for the Aging:
www.aahsa.org
American Association of
Retired Persons (AARP): www.aarp.org
American Public Human Services
Association: www.aphsa.org
Bazelon Center
for Mental Health Law: www.bazelon.org
Consortium for Citizens
with Disabilities: www.c-c-d.
org
Independent Living Research Utilization (ILRU):
www.ilru.org
Liberty Resources:
www.libertyresources.org
National
Senior Citizens Law Center: www.nsclc.org
Medicaid’s flexibility has resulted in wide differences among states that offer them opportunities to learn from and build on one another’s experiences. This chapter explains what Federal rules require, and allow, states to do that affects financial eligibility for Medicaid for persons who need assistance in paying for long-term care needs that can be met by home and community services.
Medicaid today is a far different program from Medicaid as enacted in 1965. As originally conceived, Medicaid was to have served primarily the very poor and near poor who qualified or were close to qualifying for cash welfare. It was to have functioned much like private health insurance, with service coverage focused on acute care needs. Over time, Federal and state actions have expanded Medicaid’s authority, the scope of its coverage of long-term care services, and its eligibility options for beneficiaries who are not “poor” by the traditional welfare-based definition. By the end of its first decade, Medicaid had become a major source of public funding for institutional long-term care. By the end of its third decade, it had become the major public funder of home and community long-term care services as well.
Medicaid is likely to become an even more dominant payer for persons being served in community settings in the future, because of the unique interplay of two program features. First, funding is based on an individual entitlement concept and there are no fixed or predetermined caps on a state’s spending. The amount spent is a function of Federal, state, and sometimes local decisions about who is eligible, what they are eligible for, and what rates Medicaid pays for covered services to eligible beneficiaries. Second, states have enormous flexibility under Medicaid to design and tailor their home and community service systems.
Medicaid’s role in financing long-term care has developed in sporadic increments--often in reaction to problems occupying center stage at a particular time. As a result of incremental policymaking combined with vast variations in how states cover long-term care, the various facets of Medicaid’s financial eligibility provisions may appear to be disjointed. In particular, there are many provisions with major eligibility discontinuities--wherein a slight change in individuals’ personal circumstances can result in huge differences in the kinds (and levels) of benefits they are eligible for. The purpose of this chapter is to put the relevant information together in a way that is most useful to state policymakers and advocates.
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What Services Medicaid-Eligible Persons Receive The highlights of Medicaid service coverage alternatives listed here provide a general context for the financial eligibility discussion of this chapter. (For full detail, see Chapter 4 and Chapter 5.)
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Medicaid financial eligibility is deeply rooted in two Federally financed programs of cash assistance to help support low-income individuals and families: the former Aid to Families with Dependent Children (AFDC) program, which provided income support for low-income families with children, and the Supplemental Security Income (SSI) program for elderly persons, blind persons, and persons with disabilities. (In 1996, welfare reform legislation replaced AFDC with a new program, Temporary Assistance for Needy Families [TANF].)
Like AFDC/TANF and SSI, Medicaid is a means-tested entitlement. That is, anyone qualifies for Medicaid if (a) their income and assets do not exceed the state thresholds specific to their eligibility group, and (b) they meet all other relevant eligibility criteria. Medicaid eligibility rules fall into two basic sets: categorical and financial. The categorical set defines particular categories of persons for whom Federal law permits coverage. Persons needing long-term care services generally fall into one of three Medicaid categories: persons who are age 65 or older, persons who are blind, and persons with disabilities. Medicaid criteria for determining who is blind or has disabilities are generally the same as they are for SSI, as established by the Social Security Administration. To qualify in a disability category, a person must have a long-lasting, severe, medically determinable physical or mental impairment. The person must also be unable to work--defined in 2000 in part as earning less than $700 per month (net of income-related work expenses), a level of earning considered by regulation as evidence of one’s ability to engage in substantial gainful activity (SGA).
Anyone not meeting these criteria cannot receive Medicaid in a disability category of eligibility, even if they have extensive medical needs or high medical bills. (Special exceptions--which allow Medicaid eligibility for certain former child beneficiaries of SSI disability benefits as well as for persons who do not meet one or more of the usual SSI disability criteria because they earn more than $700 per month--are discussed later in the chapter.)
Medicaid’s financial eligibility rules for persons who are elderly or have disabilities are built on a foundation of SSI rules. But many exceptions and variations have been enacted over the years to make them work better for low-income persons needing health care but not cash assistance.
SSI is the Federally administered program that ensures a nationally uniform income floor for persons who are elderly, who are blind, and who have disabilities. To be eligible, both income and assets must be low. Forty states provide Medicaid to all individuals in any month in which they receive an SSI payment. Of these, 33 do so automatically, based on a list of SSI beneficiaries compiled by the Federal Social Security Administration. The other 7 require SSI beneficiaries to file a separate application with the state for Medicaid benefits. The remaining 11 states follow what is known as the 209(b) exception option, described below, which allows them to provide Medicaid to SSI beneficiaries only if they meet the state’s criteria, which may be more restrictive than those for SSI.
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Basic Medicaid Eligibility Rules
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The general income rule for SSI specifies the level of “countable income” at or below which a person is financially eligible for benefits. Countable income includes cash income plus certain in-kind goods or services a person receives in a given month, minus certain amounts that are exempt from the SSI benefit calculation (discussed more fully below). In the year 2000, the maximum monthly SSI benefit paid to persons with no other income is $512 for an individual and $774 for a couple. Persons with income from other sources (e.g., Social Security or a pension) receive a lesser amount--equal to the difference between the full SSI benefit rate and the amount of their countable income from other sources. For example, the SSI benefit for an individual with countable income of $500 would be only $12 per month.
The general rule defines countable resources as cash or other property, including real property, that (a) were acquired some time in the past, (b) the individual has the right to access, and (c) could be converted to cash and used to cover current basic living needs. Individuals with up to $2000 ($3000 for a couple) in countable resources can qualify for SSI. SSI resource limits are often used as the minimum base for resource eligibility for Medicaid.
Exceptions There are two major exceptions to the general rule: the state 209(b) option and protection for certain former SSI beneficiaries. (Mandatory Medicaid protection for certain children with disabilities and certain working persons with disabilities is discussed later in this chapter.)
State 209(b) option
Medicaid for the “Aged, Blind, and Disabled” had historically always been linked to receipt of cash assistance benefits. When SSI replaced state-only programs of aid for elderly persons and persons with disabilities, it was expected to lead to large increases in the numbers of SSI beneficiaries. The 209(b) option was enacted along with SSI in 1972 to enable states to avoid experiencing similarly large increases in Medicaid enrollment and costs.
Many Medicaid eligibility rules in 209(b) follow SSI. But states may choose, instead, to use some or all of the more restrictive Medicaid rules in effect in their state on January 1, 1972, shortly before SSI was enacted. Typically these states have retained at least some of their pre-SSI rules on countable income or resources. Some use more stringent criteria for determining blindness or disability.
To counterbalance the potential negative effects of the 209(b) option on SSI beneficiaries, Federal rules require 209(b) states to allow any residents who are elderly, blind, or have disabilities--including those with too much income for SSI--to spend down to the state’s Medicaid income standard if their expenses for medical and remedial services so erode their income that their “net” remaining income would be less than a standard set by the state. This requirement creates a medically needy-like program for this population, even in states that have not chosen specifically to cover the medically needy as an option, as in Indiana, Missouri, and Ohio. Spend-down rules for 209(b) are virtually identical to spend-down rules for the medically needy (discussed below).
Medicaid protection for certain former SSI beneficiaries
Federal law requires all states, including 209(b) states, to provide Medicaid to former SSI beneficiaries who would, but for increases in their Social Security benefits, continue to be eligible for SSI. Congress passed this provision to ensure that Social Security increases, intended to improve people’s lives, did not harm this group instead by causing them to lose Medicaid as well as SSI. Most of the individuals affected have incomes just marginally above the income levels at which they might qualify for SSI/Medicaid combined benefits. In fact, many persons who could qualify for Medicaid under these provisions do not apply for the program, most likely because they are not aware of them. Improved understanding of these protections may help increase the Medicaid enrollment of this group.
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Former SSI Beneficiary Groups with Medicaid Protection
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The concept of countable income and resources may seem arcane but is important. Neither SSI nor Medicaid determine eligibility by comparing a person’s total income and resources to the dollar thresholds that apply in the person’s eligibility category. Rather, they count only certain types and amounts. (This practice has a close counter-part in income tax rules, which exempt certain types or amounts of income from taxation and allow certain types or amounts to be deducted from otherwise taxable income.) For this reason, an individual can have total income or resources higher than the nominal eligibility limits (i.e., higher than $512 in total income or $2000 in total resources for SSI) and still qualify for benefits.
SSI rules reduce a person’s gross income to get countable income in three important ways. First, SSI disregards the first $20 of every applicant/ recipient’s income. Second--and of great significance to people with disabilities who work--SSI provides a disregard of earnings from work, amounting to the first $65 plus one-half of the remaining earnings amount. Third, spouses or children with disabilities in families with other members who are ineligible can qualify for SSI at higher gross amounts of family income, because SSI counts only the portion of the nondisabled spouse’s or parent’s income that is left after SSI subtracts amounts to cover the basic needs of nondisabled family members. (SSI may apply several other special-purpose reductions also.)
SSI rules reduce gross resources in determining whether resources are below the SSI $2000/$3000 thresholds, by exempting the home (regardless of value) and (within limits) such things as an auto, household goods, surrender value of life insurance, burial funds, and property essential to self-support.
Medicaid Exceptions In general, states use SSI rules in determining what is countable income and resources for Medicaid eligibility.3 But states have the option to liberalize their Medicaid rules of what is countable. Such disregards redefine how income or assets are countable in such a way that the eligibility limits specified in the law, while still theoretically applicable, can be greatly exceeded.
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Examples of Provisions That Can Reduce Countable Income or Resources
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It is important to note that this state flexibility comes with certain restrictions. First, the different counting methods must not disadvantage anyone, even if relatively more people would benefit than would be disadvantaged. Second, although a state may restrict its more liberal counting method to eligibility groups it selects, the group(s) must be specifically defined in Medicaid law--for example, working persons with disabilities, the poverty-related groups, or the 300 percent of SSI groups (all of which are discussed more fully below). Thus, states are not permitted to carve out a subgroup of their own definition (e.g., one based on medical diagnosis or place of residence).
Third, flexibility in counting income is highly limited for medically needy eligibility groups (described below), because Federal law imposes a ceiling on medically needy income levels (133 1/3 percent of the highest amount paid to an AFDC family of the same size). States are not permitted to exceed this ceiling, which limits opportunities for states with medically needy income levels at or close to the ceiling.4
While Federal rules give states broad flexibility to expand eligibility, actual adoption of more generous alternative methods must, of course, conform to a state’s budget considerations and political decisions.
Certain state Medicaid options for across-the-board eligibility expansions capture anyone who meets the criteria, including but not limited to persons needing long-term care services. Because these options cannot be targeted, they involve cost implications for states that make them unlikely candidates for a state looking for narrower home and community service expansions. States may be encouraged to adopt these wider options, however, for other excellent reasons. Persons eligible under any of these options receive the full range of acute and long-term care services covered under the state plan, for example. In addition, if they meet the state’s criteria for HCBS waiver participation (e.g., level of care, diagnosis, or place of residence) they can receive waiver services.
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General Eligibility Expansion Options
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Two Hypothetical Spend-Down Situations Assume the state’s medically needy income level for an individual is $450 per month.
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States have the option to raise the income level at which any elderly person or person with disabilities in the state can qualify for Medicaid as high as 100 percent of the Federal poverty level ($8350 for one person in calendar year 2000, increasing incrementally for additional family members). The state’s eligibility limits on countable resources must be at least as high as SSI levels ($2000 for one, $3000 for a couple).5
It bears repeating here that what is compared to these eligibility levels is countable (not total) income and assets. At the very least, states must disregard the same kinds and amounts of income and resources that SSI disregards.
States can cover people with too much income to qualify in any other eligibility group under the medically needy option. There is no specified ceiling on how much income a person can have and still potentially qualify if their medical bills are high enough. However, a number of caveats limit the attractiveness of the medically needy option for higher income persons needing long-term care, especially home and community services, relative to the more narrowly targeted options discussed in the next section. Caveats include the following:
Individuals must fit into one of the Medicaid-coverable categories--for example, be age 65 or older or meet the Social Security Act criteria for disability. If not, they cannot qualify as medically needy no matter how low their incomes or how extensive their medical need.
At a minimum, states choosing this option must first cover medically needy pregnant women and children. Most states that cover the medically needy also extend it to elderly persons or persons with disabilities.
States may not restrict eligibility based on medical condition, type of services needed, or place of residence.
• Eligibility limits on resources are typically the same as for SSI.6
States must use a single eligibility level for income and resources for all medically needy groups they elect to cover. I