Medicaid-Financed Institutional Services: Characteristics of Nursing Home and ICF/IID Residents and Their Patterns of Care. A. The Role of Medicaid Institutional Services in Long-Term Care


Many elderly and persons with physical disabilities or ID/DD receive care in institutions. Nursing homes serve the needs of the elderly and people with disabilities who have difficulty performing activities of daily living, such as eating or dressing, and who often have complex medical needs that require continual access to skilled nursing and medical care. ICFs/IID serve individuals with ID/DD who require specialized care and lack the necessary supports to live comfortably in the community. Many nursing home and ICF/IID residents are low-income individuals whose care is financed by state Medicaid programs. Kaye et al. (2010) estimate that Medicaid paid nearly 70 percent of nursing home residents' expenditures in 2004, after excluding three-month periods following a hospitalization. Medicaid ICF/IID expenditures in Fiscal Year (FY) 2009 for approximately 91,000 residents totaled roughly $12.5 billion, or $137,000 per resident (Lakin et al. 2010).

In recent years, states have actively sought to accommodate the desire of many individuals requiring long-term services and supports (LTSS), including those with low-incomes, to live in their communities. They have done this by beginning to "re-balance" their LTC systems by making HCBS more accessible to individuals who would otherwise qualify for institutional care. States have established diversion and transition programsin an effort to make HCBS more readily available to specific individuals who are either at risk of becoming institutionalized or currently living in an institution (O'Connor et al. 2006). Some have begun transitions and re-balancing through participation in the Money Follows the Person program (Irvin et al. 2010; Irvin and Ballou 2010), whereas others have a longer history of promoting HCBS that has continued in recent years (Kaye et al. 2009). This increased emphasis on promoting independent living is part of a larger historical trend that has seen a decline in the utilization of both nursing homes (Wiener et al. 2009) and ICFs/IID (Prouty et al. 2008) with the establishment of Section 1915(c) waivers in the early 1980s and the movement over the past three decades away from larger state-run ICFs/IID toward smaller group homes with a closer connection to the surrounding community. Adding further momentum to this shift was the Supreme Court's Olmstead decision in 1999, which held that persons with disabilities have the right to live and receive services in community settings if they are able and willing to do so.1

Despite the increased emphasis on HCBS, however, many Medicaid enrollees continue to receive services in institutions. Many of these individuals need complex or continual care that can be effectively provided only in an institution. Others would like to return to the community but have been unable to transition because of the lack of resources, such as affordable housing. Some enrollees might benefit from living in the community but are not fully aware of their options outside institutional care, and still others might prefer to continue living in the institution even if their needs could be met by HCBS.

A better understanding of who uses institutional LTC and how they use it is critical to the continued development of effective policy. Although re-balancing LTSS is an important and highly visible component of many states' LTC strategies, advocates believe there is still room for improvement. Further re-balancing, however, requires that states' LTSS programs meet the needs of those who are still institutionalized, recognizing that not all institutionalized participants are necessarily good candidates for community-based services. Furthermore, since states have been re-balancing for different lengths of time, and since the LTC needs of the population vary in their nature and scope from state to state, it is important to understand the characteristics of the institutionalized populations at the state level. More information about issues relating to these individuals, such as how they qualified for Medicaid benefits, might make it easier to identify barriers to care that need to be addressed.

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