October 17, 2011

By Debra J. Lipson

Since the early 1980s, federal and state governments have been striving to reform the long-term care system to give older adults and people with disabilities more choice about where they live and receive services and support. Progress toward this goal accelerated after the U.S. Supreme Court’s 1999 Olmstead ruling, establishing the right of people with disabilities to live in the "most integrated setting," which in most cases means home or another community residence.

The federal government’s Money Follows the Person (MFP) demonstration, authorized in 2005,represents a major step along those lines. MFP was designed along these lines forto support states’ efforts to assist Medicaid beneficiaries to relocate from nursing homes and other long-term care facilities to community residences, if they so wished.

The Affordable Care Act of 2010 increased total MFP funding to $4 billion and extended the program to 2016. To date, 43 states and the District of Columbia have received MFP grants to be spent by 2020 for the purposes of identifying Medicaid beneficiaries in facilities who wish to live in the community, helping them do so, and restructuring state systems so that more Medicaid long-term care spending flows to community services and supports, and less goes to institutional care.

The Transition Program

Federal law defines people eligible to participate in MFP as Medicaid beneficiaries institutionalized in nursing homes, hospitals, intermediate care facilities for the mentally retarded, or institutions for mental diseases.

When MFP was authorized, federal law stipulated that individuals had to reside in an institution for at least 6 months before becoming eligible. However, the Affordable Care Act – the federal health reform legislation – reduced the minimum length of institutional stay for eligibility to 90 days, excluding rehabilitative-care days covered by Medicare.

On the day an eligible MFP participant transitions to the community, he or she begins receiving a package of home and community-based services (HCBS) financed by the state’s MFP grant funds. MFP-covered services continue for up to 1 year after the date of transition.

After that, MFP participants become regular Medicaid beneficiaries and receive services in any of three categories:

--Qualified HCBS, which are Medicaid services the beneficiary would have received regardless of his or her status as an MFP participant, such as personal assistance.

--Demonstration HCBS, which are Medicaid benefits not available to regular Medicaid beneficiaries, such as certain assistive technologies, or are above the amount available to regular Medicaid beneficiaries, such as 24-hour personal care.

--Supplemental services, which are not typically covered by the state Medicaid program but can ease the transition, such as deposits for utilities.

States receive an enhanced federal match of state Medicaid spending, drawn from the state’s MFP grant, for qualified or demonstration HCBS provided to MFP participants.

At a minimum by law, every state MFP program must:

--Establish processes to identify eligible Medicaid beneficiaries who wish to move to the community.

--Deploy or contract with individuals to work one-on-one with beneficiaries in setting up community-living arrangements and services.

--Develop strategies for locating affordable and accessible housing.

--Implement systems to monitor service quality and to assess, mitigate, and manage risks associated with community living.

--Improve or expand systems that decrease the state’s reliance on institutional long-term care.

Federal rules designate the types of residences that qualify for MFP, which include homes, apartments, group homes of four or fewer unrelated individuals, and assisted living facilities under certain conditions – notably that residents whose need for assistance increases are not expelled.

State by State Variations

As Medicaid programs are in general, eachEach MFP program is unique in design and administration and tailored to state needs. Each state sets its owntransition goals, which specifying the number of people expected to return to the community each year in five target groups: people over age 65 years, adults under 65 with physical disabilities, adults under 65 with intellectual disabilities, people with serious mental illness, and others with dual diagnoses.

This flexibility means, for example, thatthat the number and types of individuals who enroll in MFP vary considerably across states. Iowa and the District of Columbia, for example, initially served only individuals with intellectual disabilities living in intermediate care facilities for the mentally retarded. Indiana, Michigan, and New York target individuals in nursing homes.

Experience from the first 3 years of MFP indicates variation in states’ ability to implement transition programs. Among the 31 states that received grants in 2007, 7 began operations before June 2008, 16 began in the second half of 2008, and 7 were up and running in 2009 (and 1 state chose not to implement its grant but it may still do so).

States that began the program with more transition experience and capacity were able to quickly begin operations and offer MFP services statewide. Those with less experience took longer to begin operations and to offer services everywhere. As a result of these differences and population-size disparities, states varied in the number of MFP participants they had enrolled by December 2010, from nearly 3,000 in Texas to fewer than 50 in Delaware.

States also vary in the degree to which Medicaid policies support continuing coverage of HCBS costs after MFP participants finish 1 year of community living. Some state agencies can transfer funds from institutional to HCBS budgets without seeking legislative approval – allowing money to follow the person. In other states, continued funding for long-term services and supports provided to Medicaid beneficiaries living in the community depends on budget approval by the legislature.

Progress to Date

By December 2010, the number of people who had enrolled in MFP stood at nearly 12,000 nationwide. This was more than double the figure from 1 year earlier.

Early results on how MFP participants fared once they moved to the community are encouraging. About 85% of a sample of MFP participants who transitioned by March 2010 remained living in the community for a full year, 9% had been reinstitutionalized for at least 30 days, and 6% died before the 1-year anniversary of their move to the community.

Compared with institutionalized individuals who would have been eligible for MFP and transitioned to home and community-based care in 2006 – before the program began – MFP participants were less likely to be reinstitutionalized for 30 days or more, less likely to die, and more likely to remain in the community for a full year.

These results suggest that MFP has led to more successful transitions than those experienced by people who left institutions without MFP assistance. But they only "suggest" because the data have not yet been adjusted for age, health status, or other characteristics that could explain the differences in outcomes.

Initial findings from surveys of MFP participants on their quality of life are positive as well. After 1 year of living in the community, MFP participants rated their quality of life as significantly higher than when they lived in an institution, with the largest jump coming in how many said their living situation was satisfactory – 54% said they were satisfied before their transitions, but 94% expressed satisfaction after 1 year of community living. MFP participants also reported fewer unmet personal care needs – 15% said one or more such needs were unmet within an institution, while just 4% said the same after living 1 year in the community.

Future Directions

Through 2011, MFP enrollment is expected to increase considerably for several reasons. More individuals are eligible for MFP transition assistance after the Affordable Care Act decreased the minimum institutional stay requirement from 180 to 90 days. Some states, such as Connecticut, are planning large increases in conjunction with efforts to downsize institutional capacity. All states are expecting a surge in referrals to MFP due to recent changes to Minimum Data Set Section Q questions, which require all nursing home residents to be asked directly if they want to speak with someone about returning to the community.

The number of people transitioning to the community with the help of MFP should also increase once the 13 states awarded new MFP grants in February 2011 begin program implementation in 2011 and 2012.

As the number of MFP participants grows and states provide more HCBS to them, states will generate more revenue from the extra federal Medicaid match for first-year services to MFP participants. States are required to invest these extra revenues into broader initiatives to balance spending for long-term care in favor of community living, which also should increase the availability of HCBS in the long run.

One of most important questions about the impact of MFP is whether the program saves money. The answer awaits further analysis by Mathematica Policy Research, which is conducting the national program evaluation for the federal government. Preliminary figures indicate that HCBS expenditures for MFP participants are about a third lower than institutional care costs.

In the future, evaluators will examine costs for all medical care, including hospitalizations, physician visits, and emergency room use by MFP participants and institutional residents. These data will be adjusted by case mix and level of care, to make a fair comparison of total spending.

For more information and reports on MFP and the national program evaluation, visit www.mathematica-mpr.com/health/moneyfollowsperson.asp.CfA

Ms. Lipson is a senior researcher at Mathematica Policy Research, which is conducting the national evaluation of the Money Follows the Person Demonstration for the Centers for Medicare and Medicaid Services. Bill Kubat, LNHA, director of mission integration for the Evangelical Lutheran Good Samaritan Society, coordinates this column.

<- Back to: Community LTC