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Care Calculations

Home-based care can keep the elderly out of nursing homes. But that isn't stopping some states from making cuts in the program.


Penelope Lemov

Penelope Lemov is a GOVERNING correspondent. She was GOVERNING's health columnist and was senior editor for several award-winning features.

In these days of dizzying revenue shortfalls, it's especially tough to be old, frail and dependent on public largess -- or the head of the agency that provides services for that vulnerable population. States are slashing budgets, and Medicaid is a big target. This time around, though, what's going on is not just the usual tightening of eligibility criteria for beneficiaries or ratcheting down of payments for providers. Some important services are being de-funded.

One set of services that is taking a hit is community- and home-based care, intended to help the elderly stay out of nursing homes. At least 15 states are cutting into these programs. Most of the affected beneficiaries are "dual eligibles" who get their acute care and prescription drugs through Medicare and their long-term care through Medicaid. Just 7 million of the 59 million Medicaid enrollees are dual eligibles, but they account for roughly 40 percent of total Medicaid spending. And that makes them a very visible target.

Home-based care would seem a counter-intuitive choice for cuts. An elderly patient receiving home-based care -- and that would include personal services such as cooking, cleaning and personal-care assistance -- can cost the Medicaid program roughly one-third of what care in a nursing home costs. Some states, however, believe that what they save on a patient-by-patient basis doesn't necessarily translate into savings for the program overall. They argue that home-based care may actually increase the Medicaid rolls. That's because it attracts beneficiaries who, though eligible for Medicaid, had avoided the program out of fear of being moved into a nursing home. That is one rationale for taking money away from home-care efforts.

But a handful of states are going in the opposite direction. Rather than making cuts in personal-care services, Arkansas is giving its personal-care workers a rate increase. Arkansas wants to ensure that the state has a stable source of home-care services. "We've covered personal care here for years," says Roy Jeffus, who heads up the state's Medicaid program. "It has reduced the growth of our nursing home budget."

Vermont is another state that is opting to continue its investment in these services. Vermont has spent 15 years moving toward a long-term care program that emphasizes non-institutional care. Joshua Slen, who heads up Medicaid in Vermont, notes that the state built up its network of care providers and adjusted reimbursement structures to rebalance the program. By 2005, when it applied for and won a waiver from the federal Centers for Medicare and Medicaid Services, Vermont was in a position to provide a wide range of services that can keep many of its elderly beneficiaries in their own homes. Spending on Choices for Care, as the program is known, has been coming in below budgeted projections -- just 53 percent of expected spending in 2007. As to add-ons to the rolls, Slen notes that the program hasn't experienced a dramatic increase. "People are not clamoring for someone to come to their house to feed them or bathe them," he says. "When they ask for the service, they do it because they absolutely need that help."

Rhode Island is taking a similar tack. This year, Rhode Island applied for a waiver that would let it reduce its reliance on nursing homes by using Medicaid money to fund adult day care, home-delivered meals, transportation and personal-assistance services. The core of the approach calls for closer management of the dual-eligible population. That is something that has eluded most Medicaid programs.

One reason is that states have had access to only a sliver of the information about the health history of their dual eligibles. Since Medicare pays the medical tab, it keeps the data on each person's hospital, physician and pharmacy bill. If states had that data, too, they could use disease management and other tools to coordinate the best and most efficient type of care for their elderly patients. That could help keep patients out of institutional care and prevent duplication of services.

This fall, the feds threw the states a bone in this regard. A letter from CMS to Medicaid directors announced that Medicare would share data on dual eligibles with its Medicaid partners.

Medicaid directors I talked to aren't overjoyed just yet. "An announcement about anything in the Medicaid world has to be followed up with substantive details," says Slen. "Until we actually see a data feed, I would be ill-advised to conclude that it will lead to a breakthrough."

But that could change, and soon. A new CMS team will take over on January 20. It may take actions that are more favorable -- and helpful -- to the states.

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