Interstate Variation and Progress Toward Balance in Use of and Expenditure for Long-Term Services and Supports in 2009 - Executive Summary

State long-term care (LTC) financing and delivery systems and, in particular, Medicaid-funded LTC have long been criticized for being "institutionally biased." Shifting the balance in publicly-funded LTC provision away from institutional care (nursing homes, long-term hospitals, intermediate care facilities for people with intellectual disabilities [ICFs/IID]) toward greater reliance on home and community-based services (HCBS) has been a federal goal for the past three decades -- a goal often referred to as "re-balancing" state LTC systems.

This report explores interstate variations in LTC expenditure and service use patterns, not only in terms of institutional and non-institutional services, but also by Medicaid LTC users' age and type of disability such as intellectual and/or developmental disabilities (ID/DD) compared to other adult onset disabilities. Some states have re-oriented more toward HCBS than others. It also well known that greater progress has been made in serving certain subgroups within the LTC population in the community; for example, those with ID/DD compared to adults whose physical and/or cognitive disabilities began after reach age 18 but before turning 65. Moreover, reliance on institutional care remains greatest among the elderly, although here again there are interstate variations. This report seeks to quantify the magnitude of such differences.

Interstate variations in reliance on HCBS compared to institutional care are partly a function of some states having committed more strongly to the goal than others, and having accordingly made greater efforts to "re-balance." However, states also experience differential advantages or handicaps that make re-balancing easier or more difficult for some compared to others. The factors that make re-balancing easier or more difficult vary in malleability; that is, the extent to which state policymakers can exercise control over them. For example, states with colder, snowier climates, states with large areas classified as "rural" or "frontier" because of population density, as well as states with disproportionately high low-income aging populations may find it more difficult to "re-balance" because of the logistical challenges of providing primarily home-delivered services under these circumstances. These particular factors are largely outside a state government's ability to change. In contrast, other factors hypothesized to influence re-balancing toward greater reliance on HCBS are at least somewhat under state control. For example, states can use licensing and Certificate of Need legislation to limit nursing home bed supply and enable expansion of alternative services such as assisted living, other forms of residential care, and home health/home care agencies. States can also choose to offer consumer-directed alternatives to "traditional" modes of service delivery such as agency-delivered personal care services.

In this study, we use data from the Medicaid Analytic eXtract, the American Community Survey, and a variety of data sources describing state characteristics and policies to quantify interstate variations in Medicaid LTC systems performance and to explore and begin to test hypotheses about the factors that explain greater or lesser use of HCBS across states and subpopulations. Our findings are based on data from 37 states and the District of Columbia and represent Medicaid service use and expenditures in calendar year 2009.

Key Findings on Variation in Medicaid Long-Term Care System Performance in 2006

• Across the 38 study states in 2009, about 45 percent of Medicaid LTC spending was for HCBS in 2009, while almost 67 percent of Medicaid LTC users used HCBS. Medicaid spent about $19,500 per user for HCBS, or 48 cents per user of HCBS for every dollar on people in institutional care. However, there is considerable variation, across states and population subgroups.

• Most states reported modest progress on re-balancing toward HCBS from 2006 to 2009.

• Taken together, two measures (the percentage of long-term services and supports (LTSS) expenditures for HCBS and the percentage of LTSS users receiving HCBS) identify a few states that appear to have the highest levels of balance in the breadth and depth of their LTSS. These states, which include Alaska, California, Colorado, Vermont, and Washington, ranked highly on both measures for most or all subpopulations of enrollees.

• Throughout the rankings, however, a number of states achieved a notably higher ranking on one measure than on the other. For these states, alternative measures of the LTSS system provide different perspectives on LTSS utilization and expenditures. For example, for two states with the same percentage of expenditures allocated to HCBS, one may provide limited HCBS to a broad range of users, and the other may provide more expansive services to a small number of HCBS recipients. Thus, assessing multiple measures continues to provide a more complete picture of the role of HCBS in state Medicaid programs than any single measure alone.

• Subgroup analyses by state suggest that differences in HCBS use and expenditures between aged enrollees and those eligible on the basis of disability remained widespread across the states. As we found in the previous study, several states achieved overall balance by serving a relatively large number of aged people (e.g., the District of Columbia and New York), but most did so by providing more HCBS to younger enrollees with disabilities (e.g., New Hampshire, Vermont, and Wyoming), particularly people with ID/DD, and ranked relatively low for the aged. This suggests that, even in states that rank near the top on overall balance toward HCBS, there may be room for further re-balancing for some services or subpopulations.

• Subgroup analyses also suggest that HCBS use continues to be most common within the Medicaid ID/DD service system, compared to systems designed for the aged or people with physical disabilities. This differential emphasizes the importance of measuring system performance on multiple dimensions and within different service systems.

• Looking at population subgroups, about 65 percent of their HCBS LTC spending went for those with ID/DD, compared with 49 percent adults under age 65 with other disabilities, and 30 percent for LTC recipients over 65. About 86 percent of Medicaid enrollees using LTC services for ID/DD received HCBS, compared with 78 percent of those with other disabilities under age 65, and 55 percent for users over 65.

• Several states that have achieved much better than average HCBS coverage for one or more population groups deserve further study so that other states may learn from their experience. Specifically:

  • Overall, Washington, Alaska, Vermont, California, and Colorado had the highest percent of Medicaid LTSS expenditures going for HCBS (75 percent to 58 percent, in declining order). Alaska, California, Washington, Idaho and Iowa had the highest percent of Medicaid LTSS users receiving HCBS (90 percent to 75 percent). New Hampshire, Washington, Indiana, Utah, and Wyoming had the highest per-user spending for HCBS, relative to per-user spending for institutional care (102 percent to 74 percent).
  • In terms of serving the aged, Washington, Alaska, California, New York and the District of Columbia had the highest percent of Medicaid LTSS expenditures going for HCBS (59 percent to 38 percent, in declining order). Alaska, California, Washington, Idaho and Iowa had the highest percent of Medicaid LTSS users receiving HCBS (86 percent to 63 percent). Louisiana, New York, Washington, Indiana, and New Hampshire had the highest per-user spending for HCBS, relative to per-user spending for institutional care (77 percent to 56 percent).
  • In terms of serving those under age 65 with disabilities other than ID/DD, Kansas, Alaska, Colorado, North Carolina, and California had the highest percent of Medicaid LTSS expenditures going for HCBS (75 percent to 63 percent, in declining order). California, North Carolina, Virginia, and Alabama had the highest percent of Medicaid LTSS users receiving HCBS (90 percent to 88 percent). Kansas, Indiana, Ohio, and Texas had the highest per-user spending for HCBS, relative to per-user spending for institutional care (64 percent to 58 percent).
  • In terms of serving those under age 65 with ID/DD, New Hampshire, Alaska, Maryland, Colorado, and Wyoming had the highest percent of Medicaid LTSS expenditures going for HCBS (99 percent to 91 percent, in declining order). New Hampshire, Alaska, Colorado, Maryland, and Kansas had the highest percent of Medicaid LTSS users receiving HCBS (100 percent to 98 percent). New Hampshire, Alaska, Oklahoma, Indiana, and Utah had the highest per-user spending for HCBS, relative to per-user spending for institutional care (144 percent to 57 percent).

     

• If small ICFs/IID (having fewer than six beds) were considered to provide HCBS rather than institutional services, then the percent of Medicaid LTSS expenditures for ID/DD that went towards HCBS would increase from 65 percent to 68 percent, the percent of users would increase from 86 percent to 89 percent, and the per-user expenditure of HCBS relative to institutional care would increase from 33 percent to 36 percent.

• States with relatively high rates of HCBS spending overall did not always have consistently high rates of HCBS spending for all subgroups of enrollees. For example, the relatively high overall rankings for New Hampshire, Vermont, and Wyoming on the expenditure share measure appear to be driven primarily by higher rates of expenditures on enrollees under age 65 with disabilities and lower spending on aged enrollees. In comparison, the high ranks of the District of Columbia and New York appear driven by high rates of HCBS use and per-user spending among the aged.

Key Findings on Associations between State Constraints, Policies, and Long-Term Care System Performance

We examined the correlations between LTSS balance measures and state characteristics and policy variables. The associations found indicate several relationships that appear relevant for understanding variations in HCBS use and expenditures across states.

• Of the several measures selected to capture exogenous state characteristics, only two were significantly correlated with measures reflecting HCBS penetration in state LTSS systems overall: (1) personal and home care aides per 1,000 elderly and younger persons reporting disability, which was positively associated with HCBS spending and use; and (2) percentage of potential Medicaid eligibles age 75 or older, which was negatively associated with HCBS spending and use.

• We hypothesize that the relationship between home care workers and HCBS may be the result of several factors. HCBS may expand when there are home care workers available to serve more people in residential settings. Conversely, communities with very high levels of demand for these services may find that there are insufficient community resources, including care workers, available to serve everyone in the community, or the increased demand for these workers may drive an increase in their supply.

• The three policy variables most consistently related to LTSS systems with higher rates of HCBS use were consumer-direction, percentage of out-of-home placements in facilities with six or fewer residents, and availability of assisted living and residential care units. These factors may be important contextual variables to consider when assessing LTSS balance.

• Some of the relationships were only significant for some subpopulations of enrollees. Three factors -- total taxable resources, percentage of potential aged Medicaid eligibles, and size of the waiver waiting list for ID/DD HCBS waivers -- were only associated with increased HCBS use for individuals with ID/DD. Other factors -- availability of home health aides, rates of consumer-direction, and availability of assisted living and residential care units -- were only significantly related to HCBS use for individuals who were aged or had physical disabilities. These findings underscore the importance of assessing drivers of variation in HCBS use and expenditures for subpopulations separately, as different factors appear to be relevant for each group.

Given the complex and dynamic environment across and within states for LTSS delivery, it is not feasible to isolate and determine the precise nature of the relationship between a single state policy constraint or factor and HCBS balance in a descriptive analysis. Further analysis is needed to understand the interaction of different factors underlying the relationships identified in this analysis.

Our exploratory analysis of the associations between system performance, state policies, and other factors that might facilitate or hinder Medicaid HCBS expansions suggests that:

• Two factors over which states have little control -- poor weather conditions and size of the workforce needed to provide adequate HCBS -- are associated with systems less balanced toward HCBS.

• Three factors that states could alter -- availability of Medicaid consumer-directed services, state plan personal care coverage, and availability of state Supplemental Security Income supplements for people living in the community -- are positively associated with systems more balanced toward HCBS. Note that consumer-direction may promote HCBS use because it has the potential to enlarge the workforce insofar as self-directing program participants are not limited to receiving services from workers recruited into home care agency employment but are permitted to choose to hire other individuals who may be motivated to become paid helpers because of pre-existing personal relationships, as relatives, friends, and neighbors.

• State policies and constraints are likely to function differently for different subgroups of Medicaid enrollees. Consumer-direction, for example, was significantly associated with HCBS spending for the aged and people with physical disabilities, but not for enrollees with ID/DD. Other factors appear to be related to progress in re-balancing LTC for people with ID/DD, most notably financial resources.

We cannot infer causal relationships from these findings, but rather note that they point the way to possibly fruitful work in the future.

Directions for Future Research

Our findings indicate that alternative system performance indicators provide a more nuanced understanding of LTC system transformation and potentially could lead to different conclusions about program effectiveness and re-balancing efforts across states and subgroups than those based on one or two aggregate measures, such as total Medicaid spending on non-institutional compared to institutional LTC or total numbers of Medicaid beneficiaries receiving HCBS compared to those residing in nursing homes, long-term hospitals, or ICFs/IID. It will be important for future studies to assess state LTC systems on multiple dimensions for distinct target populations. As Medicaid continues to serve more enrollees in the community, it also will be important to monitor the breadth and type of LTC services low-income people need and receive.

Several promising policy options -- including Medicaid and non-Medicaid policies -- are associated with LTC system performance, but longitudinal studies will be needed to assess impacts. Of particular interest are which approaches are most cost effective and their applicability to different Medicaid subgroups. As state budgets change over time, also of interest is the extent to which fiscal constraints will limit states' ability to support or maintain HCBS expansions into the future.