Final Outcome Evaluation of the Balancing Incentive Program

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ABSTRACT

This is the final report of the Balancing Incentive Program evaluation. Five earlier progress reports on the Balancing Incentive Program (BIP) have already been published. The BIP, legislated in the 2010 Affordable Care Act, offered states temporary enhanced federal financial participation for Medicaid home and community-based services (HCBS). Participation was limited to states that, as of 2009, were allocating less than 50% of Medicaid spending on long-term services and supports (LTSS) toward HCBS. Of the 18 states that participated in the Balancing Incentive Program, most met their HCBS spending and infrastructure implementation goals. Even the states that fell somewhat short of spending 50 percent or more of their Medicaid LTSS dollars on home and community-based services succeeded in greatly increasing the percentage of their LTCSS spending going toward HCBS.

DISCLAIMER: The opinions and views expressed in this report are those of the authors. They do not reflect the views of the Department of Health and Human Services, the contractor or any other funding organization. This report was completed and submitted on September 2017.

TABLE OF CONTENTS

ACRONYMS

EXECUTIVE SUMMARY

1. INTRODUCTION

2. METHODS

• Data and Methods

3. FINDINGS

• Balancing Incentive Program Extension

4. DISCUSSION

REFERENCES

APPENDICES

• APPENDIX A: Services Eligible for the Balancing Incentive Program Enhanced Federal Medical Assistance Percentage
• APPENDIX B: Balancing Incentive Program Experience in Indiana, Louisiana, and Nebraska
• APPENDIX C: Expenditures for Eligible, but Non-participating States

NOTES

LIST OF EXHIBITS

• EXHIBIT 1: Research Questions and Data Sources
• EXHIBIT 2: States by their BIP Participation
• EXHIBIT 3: Medicaid LTSS Expenditures and the Percentage for HCBS by States Participating in the BIP, FY2009 and FY2015
• EXHIBIT 4: Average Compound Growth Rate of Medicaid HCBS Expenditures by States Participating in the BIP, FY2004-FY2009 and FY2009-FY2015
• EXHIBIT 5: HCBS as a Proportion of Total LTSS Spending, Overall and by Population Group, States Participating in the BIP, FY2009 and FY2015
• EXHIBIT 6: Achievement of Infrastructure Requirements by States Participating in the BIP
• EXHIBIT 7: Achievement of State Discretionary Goals by States Participating in the BIP
• EXHIBIT 8: Status of BIP States after Receiving Extensions, as of June 2017
• EXHIBIT A-1: Services Eligible for the BIP Enhanced FMAP on the CMS-64 Form
• EXHIBIT B-1: Medicaid LTSS Expenditures and the Percentage for HCBS, FY2009 and FY2015
• EXHIBIT B-2: Achievement of Infrastructure Requirements: Indiana and Louisiana
• EXHIBIT C-1: Medicaid LTSS Expenditures and the Percentage for HCBS by States Eligible but Non-participating in the BIP, FY2009 and FY2015
• EXHIBIT C-2: Average Compound Growth Rate of Medicaid HCBS Expenditures by States by States Eligible but Non-participating in the BIP, FY2004-FY2009 and FY2009-FY2015
• EXHIBIT C-3: HCBS as Proportion of Total LTSS Spending, Overall and by Population Group, States Eligible but Non-participating in the BIP, FY2009 and FY2015

ACRONYMS

The following acronyms are mentioned in this report and appendices.

EXECUTIVE SUMMARY

Long-term services and supports (LTSS) are used by people with disabilities or chronic health conditions who need help with activities of daily living (e.g., bathing, dressing, eating) or instrumental activities of daily living (e.g., preparing meals, managing money). Historically, the financing and delivery mechanisms of Medicaid LTSS have been more conducive to institutional care over home and community-based services (HCBS). However, research shows people with disabilities generally prefer to live in their communities. (Binette et al., 2018)

The Balancing Incentive Program, created as part of the Affordable Care Act (ACA), was designed to increase use of Medicaid HCBS and improve infrastructure for the provision of these services. States that in Fiscal Year (FY) 2009 were spending less than 50% of total Medicaid LTSS expenditures on HCBS were eligible to participate in the Balancing Incentive Program. Participating states were expected to increase the share of LTSS dollars spent on HCBS and to improve the LTSS infrastructure to create a more consumer-friendly system, in exchange for which they received an enhanced federal match rate for HCBS. The law did not include any penalty for failure to achieve either expenditure or infrastructure goals.

The Balancing Incentive Program legislative provisions stipulate that the rate of the enhanced federal match and the targeted rate of HCBS expenditures were dependent on the baseline spending of the state. States spending less than 25% of LTSS dollars on HCBS at baseline received a 5 percentage point enhanced rate of Federal Medical Assistance Percentage (FMAP) and were required to increase HCBS spending to at least 25% of total LTSS dollars. States spending between 25% and 50% of LTSS on HCBS at baseline received a 2 percentage point enhanced FMAP and were required to spend at least 50% of LTSS dollars on HCBS. States were required to meet these expenditure targets by September 30, 2015.

In addition to increasing spending on HCBS, the Balancing Incentive Program legislation also required participating states to implement three infrastructure improvements: create a no wrong door/single entry point (NWD/SEP) system for people seeking LTSS, develop a core standardized assessment (CSA) to be used with all populations, and ensure a conflict-free case management (CFCM) process. Although all states were required to address the same goals, they were afforded great flexibility in the means they used to accomplish those goals.

A total of 21 states initially participated in the program, although three did not continue with the initiative to its completion. The Centers for Medicare & Medicaid Services (CMS) granted states additional time to spend the enhanced FMAP and to achieve the required infrastructure goals of the program. Sixteen states received extensions of up to 2 years to complete the work. Iowa and Missouri did not receive extensions because they had completed all goals by the planned end date. This report describes the outcomes in the participating states in achieving these infrastructure goals by March 2017, using the most recent data available. It also presents outcome results for the achievement of expenditure targets through FY2015.

This report examined state participation in the Balancing Incentive Program and tracked LTSS infrastructure changes made after implementation. Information from those three states is provided in Appendix B. Detailed expenditure data on states eligible but not participating in the Balancing Incentive Program are found in Appendix C.

The Balancing Incentive Program was scheduled to end on September 30, 2015. As that date approached, CMS determined that most participating states could benefit from additional time either to complete required infrastructure changes or to make full use of the enhanced FMAP. Sixteen states received extensions past the original end date of September 30, 2015, to complete their Balancing Incentive Program activities. This report describes the outcomes in the participating states in achieving these infrastructure goals by March 2017 and data on the achievement of expenditure targets, as of FY2015, the most recent data available.

Data for this report are drawn from a variety of sources. Data from the states' Balancing Incentive Program Quarterly Reports (through March 2017) were used to determine whether the state had completed all of the components required for each Balancing Incentive Program infrastructure reform. Expenditure data were compiled from Truven Health Analytics reports on Medicaid LTSS expenditures for FY2009, FY2012, and FY2015 (Eiken et al., 2010, 2014, 2017). These data capture the achievements in rebalancing expenditures through September 30, 2015, the original end of the Balancing Incentive Program.

States achieved the following results related to the goals of the Balancing Incentive Program:

• Total HCBS expenditures as a percentage of total Medicaid LTSS expenditures for states participating in the Balancing Incentive Program rose from 40.1% of LTSS in FY2009 to 53.9% of LTSS in FY2015. Two-thirds of the participating states had exceeded the target threshold by this date, and all had increased the share of LTSS spending for HCBS.

• Among states taking part in the Balancing Incentive Program, the average compound growth rate increase in LTSS expenditures spent on HCBS was greater during the 6 years following baseline than during the 5 years preceding the baseline, suggesting that the program enhanced states' efforts to shift LTSS spending toward the community.

• States taking part in the Balancing Incentive Program had a greater increase in HCBS spending as a share of total LTSS expenditures than did states that were eligible but not participating in the program.

• Among states taking part in the Balancing Incentive Program, the share of LTSS spending on HCBS was much greater for people with intellectual or developmental disabilities (I/DD) than it was among older people and people with physical disabilities in all states except Mississippi and Texas, where spending on HCBS was low in both groups. This pattern was true both at baseline and 6 years later and was observed for states not taking part in the Balancing Incentive Program, whether or not they were eligible to do so, and those taking part in the Balancing Incentive Program.

• The share of LTSS spending for HCBS was also typically higher among states taking part in the Balancing Incentive Program for people with I/DD than for people with serious mental illness (SMI) or severe emotional disturbance (SED) or older people and younger persons with physical disabilities in 2015. This was also true for states not participating in the Balancing Incentive Program.

• Among states participating in the Balancing Incentive Program, the share of Medicaid LTSS for HCBS increased roughly the same number of percentage points for people with I/DD as for older people and younger persons with physical disabilities, but this represented a proportionally larger increase for older people and younger persons with physical disabilities. For older people and younger people with physical disabilities, the proportion of Medicaid LTSS spent on HCBS increased from 27.4% in 2009 to 34.6% in 2015; in contrast, the proportion of Medicaid LTSS spent on LTSS for people with I/DD increased from 68% in 2009 to 75% in 2015.

• By March 2017, 14 of the 18 participating states had achieved all of the required infrastructure changes. The main area of difficulty for four states was NWD/SEP. All 18 states implemented requirements for developing plans for sustainability and coordination of the NWD/SEP systems with the states' health information exchange information technology systems. All 18 states had implemented the CSA to be used with all populations and a CFCM process.

• Several states identified discretionary goals at the time of application to the program. Among the six states that had indicated a goal to expand Medicaid State Plan HCBS options, five indicated progress in achieving this goal (Connecticut, Maryland, Mississippi, New York, and Texas). Among the five states that had indicated a plan to expand mental health services, four showed progress in achieving this goal (Arkansas, Georgia, New York, and Ohio).

• A challenge score was calculated to indicate the amount of time (months) from enrollment through the end of the Balancing Incentive Program relative to the amount of work states needed to do to achieve the required goals (infrastructure and expenditures). The challenge score was only weakly correlated with the states' abilities to meet the required goals.

After receiving extensions and additional funding, almost all states were able to achieve the required infrastructure improvement goals. States' participation in the Balancing Incentive Program did not affect the historical pattern of greater HCBS spending for people with I/DD and less spending on HCBS for older adults and people with physical disabilities. Data for people with SMI/SED were not reported for the earlier years, and so it is not possible to observe trends in expenditure patterns for that population.

1. INTRODUCTION

Long-term services and supports (LTSS) are used by people with disabilities or chronic health conditions who need help with activities of daily living (e.g., bathing, dressing, eating) or instrumental activities of daily living (e.g., preparing meals, managing money). Historically, the financing and delivery mechanisms of Medicaid LTSS have been more conducive to institutional care over home and community-based services (HCBS). However, research shows people with disabilities generally prefer to live in their communities. (Binette et al., 2018)

The Balancing Incentive Program, created as part of the Affordable Care Act (ACA), was designed to increase use of Medicaid HCBS and improve infrastructure for the provision of these services. States that in Fiscal Year (FY) 2009 were spending less than 50% of total Medicaid LTSS expenditures on HCBS were eligible to participate in the Balancing Incentive Program. Participating states were expected to increase the share of LTSS dollars spent on HCBS and to improve the LTSS infrastructure to create a more consumer-friendly system, in exchange for which they received an enhanced federal match rate for HCBS. The law did not include any penalty for failure to achieve either expenditure or infrastructure goals.

The Balancing Incentive Program legislative provisions stipulate that the rate of the enhanced federal match and the targeted rate of HCBS expenditures were dependent on the baseline spending of the state. States spending less than 25% of LTSS dollars on HCBS at baseline received a 5 percentage point enhanced rate of Federal Medical Assistance Percentage (FMAP) and were required to increase HCBS spending to at least 25% of total LTSS dollars. States spending between 25% and 50% of LTSS on HCBS at baseline received a 2 percentage point enhanced FMAP and were required to spend at least 50% of LTSS dollars on HCBS. States were required to meet these expenditure targets by September 30, 2015.

In addition to increasing spending on HCBS, the Balancing Incentive Program legislation also required participating states to implement three infrastructure improvements: create a no wrong door/single entry point (NWD/SEP) system for people seeking LTSS, develop a core standardized assessment (CSA) to be used with all populations, and ensure a conflict-free case management (CFCM) process. Although all states were required to address the same goals, they were afforded great flexibility in the means they used to accomplish those goals.

A total of 21 states initially participated in the program, although three did not continue with the initiative to its completion. The Centers for Medicare & Medicaid Services (CMS) granted states additional time to spend the enhanced FMAP and to achieve the required infrastructure goals of the program. Sixteen states received extensions of up to 2 years to complete the work. Iowa and Missouri did not receive extensions because they had completed all goals by the planned end date. This report describes the outcomes in the participating states in achieving these infrastructure goals by March 2017, using the most recent data available. It also presents outcome results for the achievement of expenditure targets through FY2015.

This report examined state participation in the Balancing Incentive Program and tracked LTSS infrastructure changes made after implementation.

2. METHODS

Data and Methods

Data for this report are drawn from a variety of sources to describe state infrastructure changes through March 2017 and state expenditures as of September 2015. Exhibit 1 shows the specific research questions we addressed and the data sources used for each.

Exhibit 2 presents the states participating in the Balancing Incentive Program, states participating in the Balancing Incentive Program but terminating their participation early, states eligible for the Balancing Incentive Program but not participating, and ineligible states. Three states ended their participation early. Nebraska began participation in October 2014 but ended participation by March 2015 and did not submit any quarterly reports describing its activities and outcomes. Two additional states, Indiana (started September 2012) and Louisiana (started August 2013) also ended their participation early. This report includes expenditure information for these three states in Appendix B but excludes them from the infrastructure discussion.

Because states began participating in the Balancing Incentive Program at various points, the "baseline" period varies. For expenditures, baseline for all states is defined as FY2009. This reflects the legislative requirement that eligibility for the Balancing Incentive Program be determined based on having spent less than 50% of state Medicaid LTSS expenditures for HCBS in FY2009. Therefore, although states began participating in the Balancing Incentive Program at different times, FY2009 is treated as the baseline year for assessing progress toward rebalancing of expenditures. The amount of enhanced FMAP available to states also was determined based on HCBS expenditures in FY2009. For purposes other than assessing expenditures, the baseline point is defined as the date of application to participate in the Balancing Incentive Program.

Share of LTSS Expenditures Spent on HCBS

Expenditure data were compiled from Truven Health Analytics' reports on Medicaid LTSS expenditures for FY2009, FY2012, and FY2015 (Eiken et al., 2010, 2014, 2017). These sources primarily use data from CMS-64 Quarterly Expense Reports, which are audited state claims data detailing aggregate spending. CMS-64 reports are submitted to CMS to determine federal matching reimbursement for each state. CMS-64 expenditure data are from the CMS Medicaid and Children's Health Insurance Program Budget and Expenditure System.

Expenditures are reported by service category, allowing the data to be identified as HCBS or institutional LTSS expenditures. Expenditures for institutional LTSS include spending for nursing facilities, intermediate care facilities for individuals with intellectual disabilities (ICFs/IID), institution for mental disease services for individuals age 65 or older or under age 21, disproportionate share hospital payments to mental health facilities, or unspecified, institutional managed LTSS. HCBS expenditures include spending for personal care, home health, Program of All-inclusive Care for the Elderly (PACE), rehabilitative services, private duty nursing, health homes, case management, Community First Choice (1915(k) State Plan option), 1915(c) waivers, 1915(i) HCBS, 1915(j) self-directed personal assistance services, Money Follows the Person (MFP) demonstration,[1] and HCBS delivered through managed care authorities. The Truven Health Analytics service categories are very similar but do not exactly align with the CMS service categories eligible for enhanced FMAP included in Appendix A. Although data from CMS-64 reports are considered reliable, there are some limitations. Prior to FY2010, expenditures for rehabilitative services, private duty nursing, managed LTSS, and HCBS under Section 1915(i) could not be separately identified from CMS-64 data. These services, therefore, are omitted in data from years prior to 2010.[2] RTI used these data to calculate trends in expenditures for the 5-year period prior to the baseline (2004-2009) and for the 6-year period from baseline to through 2015, the most recent year for which expenditure data are available. Data are presented overall and by population subgroups.

State Infrastructure Changes

The baseline period for issues other than expenditures is defined on a state-specific basis. The baseline for the infrastructure components refers to the situation existing in the state at the time of application. Depending on the state, this baseline period ranged from 2012 to 2014. Information for these aspects of the state infrastructure is drawn from a variety of sources, including the Balancing Incentive Program State Quarterly Reports, Balancing Incentive Program Technical Assistance profiles of each state program, and State Balancing Incentive Program Applications and Work Plans.

Data from the states' Balancing Incentive Program Quarterly Reports were used to determine whether the state had completed all of the components required for each Balancing Incentive Program infrastructure reform by March 31, 2017, to account for additional state activities during the extension period. The quarterly reports provided information on a series of subtasks used to demonstrate state progress and implementation of the infrastructure reforms. We extracted data for each subtask to identify whether the task was completed by March 31, 2017. We also compared the extent to which states completed all of their infrastructure requirements to the actual work and time they had to achieve these required infrastructure goals, as reported by the state's individual challenge score (Wiener et al., 2015).

No Wrong Door/Single Entry Point. The establishment of an NWD/SEP system is designed to make it easier for beneficiaries to access the LTSS system. To fulfill this requirement, the NWD/SEP staff coordinatecompletion of the functional assessment, completion of the financial eligibility assessment, final eligibility determinations, enrollment in services, and setup of supports for individuals with LTSS needs (Mission Analytics, 2013). Data from the states' Balancing Incentive Program Quarterly Reports indicated the status of 17 specific subtasks required to demonstrate achievement of this infrastructure goal.

These subtasks included the following:

1. Develop standardized informational materials that NWD/SEP systems provide to individuals.

2. Train all participating staff on eligibility determination and enrollment processes.

3. Develop a detailed system design for the process to guide a person through assessment and eligibility determination (i.e., single eligibility coordinator, case management system, or otherwise coordinated process).

4. Select a vendor to develop the automated system for the process to guide a person through assessment and eligibility determination (i.e., single eligibility coordinator, case management system, or otherwise coordinated process). The state may choose to develop the system internally.

5. Pilot implementation and testing of the process to guide a person through assessment and eligibility determination (i.e., single eligibility coordinator, case management system, or otherwise coordinated process).

6. Create process to guide a person through assessment and eligibility determination (i.e., single eligibility coordinator, case management system, or otherwise coordinated process) is implemented statewide.

7. Provide system updates for the process to guide a person through assessment and eligibility determination (i.e., single eligibility coordinator, case management system, or otherwise coordinated process).

8. Develop and implement a memorandum of understanding across the Medicaid Agency, operating agencies, and the NWD/SEPs.

9. Identify service shed coverage (i.e., the percentage of the state's population that can travel to a NWD/SEP physical location and home again in a day) of all NWD/SEPs.

10. Ensure that NWD/SEPs are accessible to older adults and individuals with disabilities.

11. Register a domain name for a community LTSS informational website, which provides the right to link content to a Uniform Resource Locator.

12. Develop and incorporate content for the informational website.

13. Incorporate the Level I screen into the informational website (recommended, not required).[3]

14. Contract for a toll-free number service.

15. Train staff on answering phones, providing information, and conducting the Level I screen.

16. Develop an advertising plan.

17. Implement an advertising plan to inform individuals of the NWD/SEP.

We reviewed each state's quarterly reports to determine whether all 17 of the required NWD/SEP subtasks were completed by March 31, 2017.

Core Standardized Assessment. The second required component of the Balancing Incentive Program was the development of a CSA to ensure that a consistent set of information is collected for all populations receiving LTSS. Although states were required to collect a core set of domains and items for all populations, the assessment instruments and process could vary across populations. However, the assessment for any given population was required to be consistent across the state--it could not vary by region or program. Successful development of a CSA included the following subtasks:

1. Develop questions for the Level I screen, a preliminary determination of likely functional and financial eligibility for the program.

2. Incorporate additional domains and topics into assessments, if necessary.

3. Train staff members at NWD/SEP systems to coordinate the CSA to ensure that the CSA is used in a uniform manner throughout the state.

4. Identify qualified personnel to conduct the CSA.

After reviewing the status of each CSA subtask in the state quarterly reports, we reported whether the state had completed all the required CSA components by March 31, 2017.

Conflict-Free Case Management. The third key required infrastructure improvement in the Balancing Incentive Program was the establishment of protocols to ensure CFCM by removing or mitigating potential conflicts of interest by providers regarding conducting assessments and developing care plans and the provision of services. Requirements for CFCM are not unique to the Balancing Incentive Program. Similar, but not identical, requirements are included as part of the Community First Choice (Section 1915(k)) provisions of the ACA and in the Medicaid Program Final Rule on State Plan HCBS (CMS, 2014). States were required to report on one subtask to indicate whether they had achieved the CFCM infrastructure requirement: establishment of a protocol for removing or mitigating conflict of interest. As with the other infrastructure goals, we identified whether each state had completed this subtask by March 31, 2017.

Other Outcomes. In addition to the required expenditure and infrastructure goals, states were required to develop plans for sustainability and for coordination of their NWD/SEP systems with the states' health information exchange (HIE) information technology (IT) systems. States included information about their progress toward these goals as part of their quarterly progress reports.

State Discretionary Goals

In addition to the required goals, states had the opportunity to set goals of their own choosing at the time of their application. These typically were goals the states planned to achieve with the use of the enhanced FMAP funds. Discretionary state goals were identified from state Balancing Incentive Program applications and from a report on states' planned use of enhanced FMAP (Mission Analytics Group/Balancing Incentive Program Technical Assistance Center, 2014). These goals included eliminating waiting lists for HCBS waivers, expanding State Plan HCBS programs to serve new populations or more individuals, expanding mental health services, increasing payment rates for HCBS, supporting transitions from institutions to the community, and improving quality measurement (Wiener et al., 2015).

States varied in the ways that they reported progress toward their discretionary goals. We identified several potential indicators and data sources that might be used to determine the extent to which states achieved these goals and barriers to use of these data (Karon et al., 2015). At this time, data for most of these potential measures are not available for the period of interest. Measures and data sources were available to address two of the discretionary outcomes: increasing access to HCBS and expanding mental health services.

Data from the National Association of States United for Aging and Disabilities (NASUAD) Medicaid Integration Tracker, Medicaid.gov, and Truven Health Analytics' LTSS expenditure reports were used to assess whether states had increased access to HCBS options by adopting certain Medicaid HCBS State Plan options. Data from Truven Health Analytics Medicaid LTSS expenditure reports also were used to determine whether states had expanded access to mental health services by increasing LTSS expenditures for individuals with mental health disabilities. For each measure, we compared the information available in 2012--when most states had started to implement the Balancing Incentive Program--to the most recent data available for the particular outcome. Depending on the data source, the comparison data year was either 2015 or 2017.

3. FINDINGS

Research Question 1: How successful were states in meeting the required target for the share of LTSS expenditures attributed to HCBS?

As described previously, states were eligible for the Balancing Incentive Program if, in FY2009, they spent less than 50% of LTSS dollars on HCBS. Within that requirement, there was significant variation in the amount of spending increases needed by states to reach the desired benchmarks. Exhibit 3 provides information on the baseline (FY2009) expenditures and on expenditures in FY2015. Data include the total amounts spent on LTSS in each year and the percentage of those expenditures that were for HCBS in each of those years.

Total HCBS expenditures for states participating in the Balancing Incentive Program were 40.1% of total LTSS expenditures in the baseline year (FY2009). This represented a state average of 38.2% of LTSS expenditures for HCBS, ranging from 26.0% of LTSS spending for HCBS in New Jersey to 49.1% in Maine. By the end of FY2015, total HCBS expenditures accounted for 53.9% of total LTSS expenditures in participating states and the average spending rate across these states was 52.1%. However, five participating states had not met their required spending threshold by the end of FY2015 (the original end date of the Balancing Incentive Program). Mississippi is excluded from the state averages because they had a lower threshold, which they exceeded. Among Balancing Incentive Program states that ended their participation early, the total share of LTSS expenditures for HCBS increased in 2015 to 37.2%, and the average state rate of HCBS spending increased to 40.7%.

States not participating in the Balancing Incentive Program can be split into two distinct groups: (1) those that were eligible (i.e., spent less than 50% of LTSS on HCBS in FY2009) but did not participate in the program (see Appendix C for more expenditure information on the eligible but non-participating states); and (2) those that were ineligible (i.e., spent more than 50% of LTSS dollars on HCBS in FY2009). At baseline, the rate of spending on HCBS was comparable for states taking part in the program (40.1% of total expenditures, or 38.2% state average) and those that were eligible but not participating (38.6% of total expenditures, 39.7% state average).

Although both sets of states increased their rate of spending on HCBS, there was a greater increase among states participating in the Balancing Incentive Program (13.8 percentage point increase to 53.9% of total expenditures, or 13.9 percentage point increase in state average spending) than in those states that were eligible but did not participate in the program (6.8 percentage point increase to 45.4% of total expenditures, 7.8 percentage point increase to 47.5% state average spending rate). States varied substantially in how much they increased their HCBS spending. For example, while Arkansas increased its proportion of LTSS spending for HCBS by 22.2 percentage points, Connecticut increased its rate by 6.6 percentage points. Twelve of the 18 participating Balancing Incentive Program states spent more than half of their LTSS expenditures on HCBS by FY2015. Mississippi, which had a lower statutory goal of 25%, exceeded that level at 30.6%.

The rate of spending on HCBS also increased among those states that were ineligible because they already had met the expenditure threshold at the baseline period. Among those states, the total share of LTSS spending that went toward HCBS increased by 9.5 percentage points to 69.1%, and the average state rate of HCBS spending increased to 66.1%.

Many factors may contribute to the growth in HCBS as a share of LTSS expenditures. Over the 5-year period prior to the baseline year (FY2004-FY2009), states were already shifting LTSS expenditures toward HCBS. The Balancing Incentive Program was designed to encourage that movement. Exhibit 4 compares the growth in HCBS as a share of LTSS expenditures during that 5-year pre-baseline period with the 6-year period from baseline through the most recent period for which data are available. We calculated the average compound growth rate over the two time periods to analyze the growth in HCBS expenditures as a share of LTSS expenditures.

The average compound growth rate was greater among states taking part in the Balancing Incentive Program during the 6 years following baseline than during the 5 years preceding the baseline, suggesting that the Balancing Incentive Program further spurred states' efforts to shift LTSS spending toward the community. Most states participating in the program (14 of 18 states) had a larger average growth rate in HCBS expenditures as a proportion of LTSS spending from the period from 2009-2015 than they did in the pre-baseline period of 2004-2009. The largest average growth rate increases from 2009 to 2015 were in Mississippi (13.5), Arkansas (9.7), and New Jersey (9.3). On the other hand, Pennsylvania had a 5.9 average growth rate in HCBS expenditures as proportion of LTSS spending from 2009 to 2015, whereas it had an 8.0 average growth rate increase from 2004 to 2009.

The average growth rate was greater for states participating in the Balancing Incentive Program than for other states in the period after the implementation of the Balancing Incentive Program but not before. There was a 5.3 average percentage point increase in the years between 2009 and 2015 for states participating in the Balancing Incentive Program compared with only a 3.0 average percentage point increase for states that were eligible but not participating, and only a 1.1 percentage point average increase among states that were ineligible. Balancing Incentive Program states that ended their participation early had a 2.5 percentage point increase between 2009 and 2015.

Although the percentage of Medicaid LTSS spent on HCBS has been increasing overall, various population groups have had different experiences. A key outcome of interest is how the Balancing Incentive Program affected different population groups. Exhibit 5 presents the share of all LTSS spent on HCBS in total and for three key population groups: (1) a combined group of older adults and people with physical disabilities; (2) the group of people with intellectual or developmental disabilities (I/DD); and (3) people with serious mental illness (SMI) or severe emotional disturbance (SED). Data for this latter group are available only for 2015.

Among states taking part in the Balancing Incentive Program, the share of LTSS spending on HCBS was much greater for people with I/DD than for older people and people with physical disabilities in all states except Mississippi, where spending on HCBS was low in both groups. This pattern was true both at baseline and 6 years later for states that took part in the Balancing Incentive Program and those that did not. Only among states that were ineligible for the program did the share of LTSS spending on HCBS for older adults and people with physical disabilities exceed 50% in 2015. By contrast, the share of LTSS spending on HCBS for people with I/DD was 60% or greater for all groups of states in both time periods. Spending was also typically higher among states taking part in the Balancing Incentive Program for people with I/DD than for people with SMI or SED, but to a lesser degree. In two states (Georgia and Illinois), the share of spending on the I/DD and SMI/SED populations was nearly equal, and in four states (Arkansas, Iowa, Mississippi, and Ohio), it was greater for the SMI/SED population.

There was a sizeable range among states in the share of LTSS spent on HCBS for the different populations by FY2015. Among older people and adults with physical disabilities, the share of spending on HCBS ranged from 12.5% (Kentucky) to 58.0% (Massachusetts). For people with I/DD, spending on HCBS ranged from 23.9% (Mississippi) to 97.7% (Maryland). This pattern of greater spending on HCBS for people with I/DD than for older adults and people with physical disabilities is consistent with previous practices in Medicaid and was largely unchanged by participation in the Balancing Incentive Program. For people with SMI/SED, spending on HCBS ranged from 0.5% (Pennsylvania) to 89.6% (Georgia).

Among states participating in the Balancing Incentive Program, the share of Medicaid LTSS for HCBS increased roughly the same number of percentage points for people with I/DD as for older people and younger persons with disabilities, but this represented a proportionally larger increase for older people and younger persons with disabilities. For older people and younger people with disabilities, the proportion of Medicaid LTSS spent on HCBS increased from 27.4% in 2009 to 34.6% in 2015; in contrast, the proportion of Medicaid LTSS spent on LTSS for people with I/DD increased from 68% in 2009 to 75% in 2015.

Research Question 2: How successful were states in achieving the required infrastructure changes?

As of March 2017, 14 of the 18 participating states had implemented all of the required infrastructure changes. Exhibit 6 includes the achievement of each infrastructure requirement by states participating in the Balancing Incentive Program.

All states were successful in developing protocols to ensure CFCM and developing and implementing a CSA. Fourteen of the 18 states were able to complete development of an NWD/SEP system as of March 2017. Illinois, Nevada, Ohio, and Pennsylvania were not able to complete all tasks associated with the NWD/SEP goal by this date. The 2014 Medicaid HCBS regulation included CFCM requirements which are not exactly the same as the Balancing Incentive Program standards, so Balancing Incentive Program compliance does not equate with compliance with the HCBS regulation (CMS, 2014).

Full completion of the goals of the Balancing Incentive Program included both achieving the required infrastructure goals and the required level of spending for HCBS. As or this report, ten states had completed all of those goals. The states that were unable to meet all requirements were Arkansas, Georgia, Illinois, Kentucky, Nevada, New Jersey, Ohio, and Pennsylvania.

In addition to the specific structural requirements, states were required to develop plans for sustainability and coordination of their NWD/SEP systems with the states' HIE IT systems. All 18 states were able to achieve both planning requirements. Nevada requested CMS approval for an extension through the end of 2015 to complete its coordination plans and completed the requirement in June 2016. New Jersey completed all of the required NWD/SEP system changes, although it was unable to coordinate with its HIE IT system because it was undergoing redesign; CMS considered New Jersey's changes adequate without the HIE IT coordination.

Research Question 3: How successful were states in achieving other goals that they set for themselves?

In addition to the required goals of the Balancing Incentive Program, several states identified discretionary goals. Exhibit 7 shows that the discretionary goals included: (1) expanding State Plan HCBS options to serve more people or new populations; and (2) expanding mental health services.

Among the six states that had indicated at baseline that they had a goal to expand State Plan HCBS options, five indicated progress in achieving this goal. Connecticut, Maryland, Mississippi, and Texas expanded State Plan HCBS options by adopting 1915(i) State Plan programs. Two states (Maryland and New York) adopted health homes, and three states (Maryland, New York, and Texas) also adopted 1915(k) State Plan programs to expand access to State Plan HCBS options. Arkansas was the only state indicating plans to expand State Plan HCBS options that did not show progress toward that goal. The state was engaged with planning its 1915(i) State Plan and health home programs, but has since ended its progress in implementing the two programs (CMS correspondence).

Among the five states that had a plan at baseline to expand mental health services, four showed progress in achieving this goal. Comparing the HCBS spending as a share of total LTSS spending for individuals with mental health disabilities in 2012 and 2015, Illinois was the only state that had decreased HCBS spending as a share of LTSS spending for this population. However, LTSS spending for individuals with mental health disabilities is a limited indicator that a state has expanded mental health services because it gives no insight into the number of individuals served or the scope of services received.

Balancing Incentive Program Extension

As previously noted, 16 of the Balancing Incentive Program states applied for and received additional time by CMS to complete their Balancing Incentive Program activities, including achieving infrastructure goals and spending the enhanced FMAP. Iowa and Missouri had accomplished all goals by September 30, 2015, and did not request extensions. Depending on their needs, states received extensions of various time periods, with the latest ending September 30, 2017. States requested extensions for various purposes. For example, Nevada requested more time to hire and train additional care managers to achieve their CFCM requirements. Pennsylvania sought an extension from CMS that would allow the state to complete the task of incorporating additional domains and topics into the assessments to meet the CSA requirements. Ohio experienced delays in fully implementing the NWD/SEP tasks by the original September 30, 2015, deadline, including the development and incorporation of content into a website. Pennsylvania also requested an extension to complete many of the tasks associated with its NWD/SEP goal.

Exhibit 8 indicates the status of states as of the most recent data available (June 2017). As of that date, eight states (including the two that did not require extensions) had completed all their deliverables and used all their funding. The remaining ten states either have funds remaining, infrastructure deliverables remaining, or both, with a deadline of September 30, 2017. Two states, Ohio and Pennsylvania, have spent all of their funds, but have deliverables remaining. Six states have funds remaining and have spent between 70% and 94% of their funds. Only two states, Illinois and Nevada, have both funds and deliverables remaining, with 22% and 32% of funds remaining, respectively.

States enrolled in the program at different points in time, so they varied in how much time they had to complete the required work. Exhibit 8 also includes challenge scores that were calculated to indicate the amount of time (months) from enrollment through the original end date of the Balancing Incentive Program (September 30, 2015) relative to the amount of work states needed to do to achieve the required goals (infrastructure and expenditures) (Wiener et al., 2015). A lower challenge score indicates a greater challenge (i.e., less time available to complete more work by September 2015).

After the states were given extensions to complete the program requirements, the challenge score was weakly correlated with the states' abilities to meet the required goals and finish their deliverables. Four (Georgia, Iowa, Kentucky and New Jersey) of the eight states with challenge scores below the median value of 10.5 (i.e., with less time to accomplish more) had met all of their required goals and spent all of their funds by June 2017. Four (Arkansas, Connecticut, Missouri, and Texas) of the ten states with higher challenge scores that were above the median (i.e., having more time to accomplish what they needed) had completed their deliverables and spent all of their funding. However, three (Illinois, Ohio, and Pennsylvania) of the four states with deliverables remaining also had lower challenge scores. Nevada was a notable exception--it had one of the most favorable challenge scores (i.e., showing considerable time to complete few tasks) but still had deliverables to be completed and funding remaining as of June 2017.

4. DISCUSSION

The Balancing Incentive Program was designed to help states provide a greater share of LTSS through HCBS while improving the LTSS infrastructure. This report describes the outcomes of the work done by the participating states to achieve these goals. Findings from this outcomes evaluation are summarized below.

States increased the share of LTSS spending on HCBS. Total HCBS expenditures as a percentage of total LTSS expenditures for states participating in the Balancing Incentive Program rose from 40.1% of LTSS in FY2009 to 53.9% of LTSS in FY2015. Thirteen of the participating states had exceeded the target threshold by this date, and all had increased the share of LTSS spending for HCBS.

States that participated in the Balancing Incentive Program had a greater increase in HCBS spending than did other states. Compared with states that were eligible for the Balancing Incentive Program but did not participate, participating states had a higher percentage point increase in HCBS spending. In total, these states also showed a greater increase in HCBS spending over time than did other states when comparing the 5 years before the baseline year to the 5 years after. Most states participating in the Balancing Incentive Program (14 of 18 states) had a larger average compound growth rate in HCBS expenditures as proportion of LTSS spending from the period of 2009-2015 than they did in the 5 years prior to the baseline period (2004-2009). This suggests that the Balancing Incentive Program successfully supported states to increase the share of LTSS spending for HCBS.

The extent to which states achieved the HCBS expenditure target varied by state. On average, the participating states met their HCBS expenditure target and had greater increases in HCBS spending compared to states that did not participate. However, there were considerable interstate variations among the Balancing Incentive Program states in how well they did overall and with respect to their increase in share of LTSS expenditures going toward HCBS. In some cases, states that met the expenditure target had less of an increase in the share of LTSS expenditures going toward HCBS than some states that failed to meet the overall target.

The share of LTSS expenditures spent on HCBS varied by population. In nearly all states, HCBS spending was a greater share of LTSS expenditures for people with I/DDthan for older adults or people with physical disabilities. Mississippi and Texas are the exceptions, with higher HCBS spending as share of LTSS expenditures for older adults and people with disabilities than people with I/DD. This is true across time and regardless of participation in the Balancing Incentive Program. Spending was also typically higher among states taking part in the Balancing Incentive Program for people with I/DD than for people with SMI or SED, but to a lesser degree and with several exceptions. For example, both Arkansas and Iowa had a higher share of spending on the SMI/SED population than on the I/DD population.

Most states achieved the required infrastructure changes. Fourteen of the 18 participating states achieved all of the required infrastructure changes, with the one area of difficulty being NWD/SEP. All states were able to develop plans for sustainability and coordination of their NWD/SEP systems. States were required to develop plans for sustainability and coordination of their NWD/SEP systems with the states' HIE IT systems. All states achieved both requirements and completed their sustainability plans.

Most states made progress in completing discretionary goals. Five of the six states that had set discretionary goals to expand State Plan HCBS options made progress in achieving this goal (Connecticut, Maryland, Mississippi, New York, and Texas). Four of the five states that planned to expand mental health services made progress in doing so (Arkansas, Georgia, New York, and Ohio).

States' abilities to achieve the required goals seemed to have little to do with their status at baseline. A challenge score was calculated to indicate how much work states had to do to achieve the required goals, taking into account the amount of time from enrollment through the end of the Balancing Incentive Program and baseline status on each of the required goals. The challenge score was only weakly correlated with the states' abilities to meet the required goals.

States made significant efforts to achieve the goals of the Balancing Incentive Program, but were not always able to achieve these goals by the end of the demonstration period. CMS granted several states extensions of time to achieve the required goals or to continue spending enhanced FMAP funds received.

The findings reported here were primarily obtained from review of Truven Health Analytics reports on Medicaid LTSS expenditures for FY2009, FY2012, and FY2015 and states' quarterly reports. Data from state quarterly reports were somewhat limited, and it is possible that states completed more of the infrastructure requirements than those described here. Nonetheless, these outcome results indicate that participating states were generally successful in achieving the goal to increase the share of LTSS expenditures for HCBS, and made progress in developing infrastructure reforms to support the increased community-based spending. The extensions and additional funding granted by CMS reflect support for states as they continued to achieve their infrastructure goals. The additional support needed may indicate the challenges states faced as they shifted their priorities toward HCBS for individuals with LTSS needs.

REFERENCES

Binette, J., & Vasold, K. (2018). 2018 Home and community preferences: A national survey of adults age 18-plus. AARP Research. Available at https://www.aarp.org/research/topics/community/info-2018/2018-home-community-preference.html.

Centers for Medicare & Medicaid Services. (2012). Patient Protection and Affordable Care Act Section 10202 State Balancing Incentive Payments Program: Initial Announcement. CFDA 93.778. Available at https://www.medicaid.gov/medicaid/ltss/downloads/balancing/bip-application.pdf.

Centers for Medicare & Medicaid Services. (2014). Medicaid program; State Plan home and community-based services, 5-year period for waivers, provider payment reassignment, and home and community-based setting requirements for community first choice and home and community-based services (HCBS) waivers. Final rule. Federal Register, 79(11), 2947-3039. Available at http://www.gpo.gov/fdsys/pkg/FR-2014-01-16/pdf/2014-00487.pdf.

Eiken, S., Sredl, K., Burwell, B., & Gold, L. (2010). Medicaid long-term care expenditures in FY 2009.Thomson Reuters. Retrieved from http://nasuad.org/hcbs/article/medicaid-long-term-care-expenditures-fy-2009.

Eiken, S., Sredl, K, Burwell, B., & Saucier, P. (2016). Medicaid expenditures for long-term services and supports (LTSS) in FY 2014: Managed LTSS reached 15 percent of LTSS spending. Truven Health Analytics.

Eiken, S., Sredl, K, Burwell, B., & Woodward, R. (2017). Medicaid expenditures for long-term services and supports (LTSS) in FY 2015. Truven Health Analytics. Retrieved from https://www.medicaid.gov/medicaid/ltss/downloads/reports-and-evaluations/ltssexpendituresffy2015final.pdf.

Eiken, S., Sredl, K., Gold, L., Kasten, J., Burwell, B., & Saucier, P. (2014). Medicaid expenditures for long-term services and supports in FFY 2012. Report submitted to Centers for Medicare & Medicaid Services. Truven Health Analytics.Retrieved from https://www.medicaid.gov/medicaid/ltss/downloads/ltss-expenditures-2012.pdf.

George, E. (2016). Personal communication [Centers for Medicare & Medicaid Services representative].

Karon, S., McGinn-Shapiro, M., Lyda-McDonald, B., Thach, T., & Wiener, J. (2015). Task 3 of the evaluation of the Balancing Incentive Program: Assess feasibility and identify/propose potential indicators and data resources. RTI International, report submitted to U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation.

Wenzlow, A., Eiken, S., Sredl, K. (2016). Improving the balance: The evolution of Medicaid expenditures for long-term services and supports (LTSS), FY 1981-2014. Truven Health Analytics. Available at https://www.medicaid.gov/medicaid/ltss/downloads/ltss-expenditures-data-tables-1981-2014.zip.

Wiener, J., Karon, S., McGinn-Shapiro, M., Lyda-McDonald, B., Thach, T., Justice, D., et al. (2015). Descriptive overview and summary of Balancing Incentive Program participating states at baseline. RTI International. Retrieved from https://aspe.hhs.gov/basic-report/descriptive-overview-and-summary-balancing-incentive-program-participating-states-baseline.

APPENDIX A. SERVICES ELIGIBLE FOR THE BALANCING INCENTIVE PROGRAM ENHANCED FEDERAL MEDICAL ASSISTANCE PERCENTAGE

Exhibit A-1 lists the HCBS that were eligible for the Balancing Incentive Program enhanced FMAP. States reported their service utilization through the CMS-64 Form.

APPENDIX B. BALANCING INCENTIVE PROGRAM EXPERIENCE IN INDIANA, LOUISIANA, AND NEBRASKA

Indiana, Louisiana, and Nebraska ended their participation in the Balancing Incentive Program early (by December 2014); as result, we have generally excluded data for those states from this outcomes report and instead present the information here. Indiana began participation in September 2012, Louisiana began August 2013, and Nebraska began October 2014. Exhibit B-1 shows that all three states increased HCBS as a share of total LTSS expenditures from FY2009 to FY2015, Indiana increased HCBS expenditures as share of LTSS expenditures from 30.6% in 2009 to 33.7% in 2015, Louisiana increased from 36.4% to 37.7%, and Nebraska increased from 38.4% to 50.8%. In most cases, similarly small increases also were seen in the share of LTSS spent on HCBS for two key populations: older people and those with physical disabilities, and people with I/DD. In Louisiana, the share of LTSS expenditures for people older people and those with physical disabilities decreased slightly from 32.4% in 2009 to 27.4% in 2015. As was seen in other states, the share of LTSS expenditures used for HCBS was greater for people with I/DD. In all three states, that figure exceeded 50% by 2014.

By the end of their participation in the Balancing Incentive Program, neither Indiana nor Louisiana had completed work toward the required structural change goals (see Exhibit B-2). Nebraska dropped out very early before it submitted any data on its progress toward achieving their infrastructure goals. Although Indiana did not complete any of the requirements, Louisiana successfully implemented a CSA tool and process and CFCM. Because they ended participation early, neither state completed a sustainability plan, but they both completed a coordination plan for the NWD/SEP and (HIE IT systems.

In addition to the required goals of the Balancing Incentive Program, some states identified discretionary goals. Indiana and Louisiana both included expansion of mental health services as a discretionary goal. Indiana made progress toward this goal during its time in the Balancing Incentive Program. Louisiana decreased LTSS spending for individuals with mental health disabilities from 2012 to 2014; however, spending on mental health disabilities is a limited indicator that a state has expanded mental health services because it gives no insight into the number of individuals served or the scope of services received.

APPENDIX C. EXPENDITURES FOR ELIGIBLE, BUT NON-PARTICIPATING STATES

NOTES

1. Note that the Balancing Incentive Program enhanced FMAP provided for HCBS does not apply to the services provided under the MFP demonstrations. They do, however, count as HCBS for purposes of calculating whether states met their expenditure goals.

2. The CMS-64 data as reported by Truven Health Analytics and used in this report do not capture a few of the types of LTSS identified as HCBS for which states participating in the Balancing Incentive Program receive enhanced FMAP. This is particularly true in states using managed LTSS programs. The Balancing Incentive Program states offering managed LTSS were required to specify in the CMS-64 Form the expenditures spent on non-institutional services that were included in the payments to managed care organizations, prepaid ambulatory health plans, and prepaid inpatient health plans (see Appendix A). Instead, the managed LTSS data collected and reported by Truven Health Analytics include PACE and managed care expenditures for nursing facilities, ICF/IID, personal care, home health, Section 1915(c) waivers, and HCBS provided through managed care authorities such as Section 1115 demonstrations, Section 1915(b) waivers, Section 1915(a) contracts, and Section 1932(a) State Plan amendments. Additionally, depending on the state, expenditures for rehabilitative services may include mental health services. Expenditures for substance use disorders are not separately reported. For a detailed discussion of CMS-64 limitations, see Eiken et al., 2014.

3. A Level I screen collects preliminary financial and functional data and points to potential needs and program eligibility.

EVALUATION OF THE BALANCING INCENTIVES PROGRAM

This report was prepared under contract #HHSP23320100021WI between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and the Research Triangle Institute. For additional information about this subject, you can visit the DALTCP home page at http://aspe.hhs.gov/office-disability-aging-and-long-term-care-policy-daltcp or contact the ASPE Project Officers, Pamela Doty and Jhamirah Howard, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W., Washington, D.C. 20201; Pamela.Doty@hhs.gov and Jhamirah.Howard@hhs.gov.

Reports Available

CASE STUDIES OF BALANCING INCENTIVE PROGRAM IMPLEMENTATION PROCESS

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DESCRIPTIVE OVERVIEW AND SUMMARY OF BALANCING INCENTIVE PROGRAM PARTICIPATING STATES AT BASELINE

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FINAL OUTCOME EVALUATION OF THE BALANCING INCENTIVE PROGRAM

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FINAL PROCESS EVALUATION OF THE BALANCING INCENTIVE PROGRAM

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PRELIMINARY OUTCOME EVALUATION OF THE BALANCING INCENTIVE PROGRAM

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PRELIMINARY PROCESS EVALUATION OF THE BALANCING INCENTIVE PROGRAM

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