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Report to Congress on Identifying Individuals at Risk of Institutionalization

Publication Date


U.S. Department of Health and Human Services

Report to Congress on Identifying Individuals at Risk of Institutionalization

Executive Summary

December 1986

This report was prepared undergrant #88ASPE206A between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and the University of North Carolina. For additional information about this subject, you can visit the DALTCP home page at or contact the office at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W., Washington, D.C. 20201. The e-mail address is: The Project Officer was Floyd Brown.

This report to Congress responds to a mandate of the Orphan Drug Act (P.L.97-414, Jan. 4, 1983), which called for the Secretary of Health and Human Services to conduct demonstration projects to test methods for identifying individuals at risk of institutional placement who could be treated more cost-effectively with home health and other noninstitutional services. This report considers whether it is possible to make community-care programs cost-effective by defining the target groups more rigorously. Evidence is reviewed from a number of demonstrations, but particularly the results of the recently completed National Long Term Care Channeling Demonstration, which provides the most complete data available on a large sample of frail elderly persons.



In recent years, a number of community-based long-term care projects have attempted to show that their approach toward service provision can reduce nursing home use and improve the quality of care provided in the community. Although the programs to date have increased the use of community services and have generated beneficial impacts on the well-being of clients, they have not reduced public expenditures for long-term care. Better targeting has been advanced as a potential solution to the problem of making community-based programs cost-neutral, possibly even cost-saving, or, by some definition, cost-effective.

Cost-effectiveness is variously defined as the ability of a program to save costs, its ability to generate a specified outcome at the least possible cost, or its ability to generate benefits that are worth the costs of producing them. A broader view of targeting takes as the objective ensuring that appropriate care is rendered to all of the elderly in need, whether their needs require institutional or community services. In this sense, a community-care program might be considered as cost-effective (even if not cost-saving) if it creates a better match between needs and services and increases the use of needed services by those who would otherwise have to do without them. This definition of cost-effectiveness is more subjective--depending not only on the size of the impacts generated by the program for those enrolled, but also on the value one places on providing care for the elderly. Whichever definition of cost-effectiveness is chosen, a targeting approach is needed that can successfully identify those persons for whom the program can best achieve its intended impacts.



Community-care programs are intended to generate cost savings primarily by reducing the use of nursing homes; thus, it is important to understand the factors that determine nursing home use and how community-care programs affect that use by elderly persons with various characteristics. Several factors have been shown to be associated directly with nursing home admissions and the number of days of nursing home care. Among them are availability of financial resources or Medicaid coverage to pay for nursing home care, recent use of hospital or nursing home services, and favorable attitudes toward institutionalization. There is also recent evidence to suggest that the attitudes of family members toward nursing homes and the stress and/or burden perceived by caregivers are associated with future admission to nursing homes. Although persons in nursing homes are more impaired in terms of Activities of Daily Living (eating, transferring, dressing, bathing, and toileting) and Instrumental Activities of Daily Living (such as meal preparation, housekeeping, and shopping) than those in the community, these impairment measures alone have not proved to be effective predictors of subsequent nursing home use by persons in the community. Even multiple regression models based on a large number of explanatory variables do not successfully predict who will enter a nursing home.



Of the numerous long-term care demonstrations conducted to date, the only one that has both enrolled a population who proved to be at high risk of nursing home admission and showed significant reductions in nursing home use is the South Carolina Community Long Term Care Project. This project was linked to a preadmission screening process which identified clients who were certified as requiring care at the nursing home level. Even with this extremely selective group of elderly persons, the project showed no significant public (i.e., Medicaid and Medicare) cost savings, although it may have essentially been cost-neutral.

A more extensive subgroup analysis was undertaken for the National Long Term Care Channeling Demonstration, a project that provided case management and community-based long-term care services to impaired elderly persons in need of assistance. The Channeling demonstration showed significant reductions in nursing home use over 12 months only for a few of the groups examined. No significant reductions in public costs were associated with any of the subgroups. The most notable finding from the subgroup analysis pertains to the very small portion of the sample who were not currently eligible for Medicaid and were residing in a nursing home (but certified for discharge) at the time they entered the demonstration. Evidence indicates that, among this group for those with limited financial resources that put them at risk of “spending down” to Medicaid in a nursing home, the basic model of Channeling (which provided case management but only limited additional funding for services) reduced private costs without increasing public costs. However, this finding is based on an extremely small sample, and this group comprised a very small fraction of the elderly who were enrolled in community care programs under the demonstration.

The findings on the issue of targeting from an analysis of Channeling project data can be summarized as follows:

  • Cost savings, where they were observed, appeared to accrue primarily to private payers rather than to Medicare or Medicaid programs.

  • The strongest evidence of a reduction in nursing home use was found for persons who were in a nursing home were certified for discharge. A pattern of reductions was also observed for those wait-listed for nursing home admissions.

  • Only for a few outcomes did any subgroup experience impacts that were statistically different from those experienced by other subgroups; differential impacts among subgroups were the exception rather than the rule.

  • The most promising results were found for those persons in a nursing home at the screen who had an intermediate level of financial resources whereby, although they were not then currently Medicaid-eligible, they would be eligible within three months if they decided to remain in a nursing home. Even for this group, the cost of operating the case management program and providing community-based services was large enough to preclude significant public cost savings.

  • A major impact under channeling was a reduction in private expenditures. However, in most cases, the increase in public expenditures greatly exceeded the private cost savings.



Long-term care expenditures are lower for impaired elderly persons who remain in the community than for those who enter nursing homes. Nonetheless, community-care demonstration programs which expand services beyond those currently available through Medicare, Medicaid, and social service programs have not yet shown significant reductions in rates of nursing home use that are sufficient to offset increased public expenditures for community services. Three primary reasons explain this result:

  • The cost of case management programs have been substantial for clients of all types, requiring sizable reductions in nursing home use to offset such costs.

  • It is difficult to predict (and hence target) who among an impaired elderly population will enter a nursing home.

  • For elderly persons living in the community, nursing home placement decisions appear to be affected little by the provision of case management and additional community services.



Research has shown that community-based long-term care programs for the elderly can improve the well-being of clients and their satisfaction with service arrangements; moreover, the home health care that is currently provided under the Medicare and Medicaid programs forms an important segment of the “continuum of care” necessary to meet the varied long-term care needs of the elderly population. Case-managed community service programs may reduce nursing home use to some degree, but such programs have not yet effectively reduced the cost (either total or public) of care for the elderly. Nor is it currently possible to fully explain nursing home placement decisions, to predict precisely who will enter a nursing home, or to identify persons for whom community-care programs will reduce public costs under Medicare and Medicaid.

Unless predictors of nursing home use are improved, perhaps through further research, any expanded coverage of community-based long-term care services is very unlikely to save public expenditures. Case-managed services cannot yet be relied upon as a cost-effective vehicle for reducing the use of nursing home care. Expanded community-based services can, however, be viewed as valuable to the elderly and their families in terms of meeting their needs in the community and such programs are perhaps best judged by the benefit they provide to those in the community rather than by their small impacts on nursing home use.

In order to minimize the costs while maximizing the benefits of any expanded community service program, Congress may wish to consider the following:

  • Administering case management programs through existing mechanisms (e.g., existing State agencies or health care providers) rather than through separate case management agencies
  • Linking program outreach functions to nursing home preadmission screening programs, nursing home discharge planning programs, or other process-oriented mechanisms, in order to enroll groups who are more likely to enter nursing homes
  • Limiting eligibility to those with long-term care needs who are least able to afford it themselves, and who are thus most likely to incur Medicaid costs.

There are a number of possible directions for the nation's evolving long-term care policy. Among the issues that merit further study and consideration are the following:

  • There is evidence to suggest that the level of burden perceived by caregivers and their willingness to provide care are important factors in nursing home placement decisions. It is possible that the provision of respite or other support services to caregivers could be cost-effective. Strengthening the viability of informal caregivers merits additional attention in examining approaches to avoid nursing home placement.

  • Further analysis of the relationship between supply factors and variations in the use of long-term care services may improve our understanding of the overall long-term care service network. Since many States are controlling growth in the number of nursing home beds, it is important to ensure that adequate community or institutional services be made available to the growing elderly population. More research into the appropriate mix of institutional and community services is warranted.

  • Alternative payment models in which a single provider assumes responsibility for a full range of acute and long-term care services under a prospectively determined fixed budget must be tested more fully. In such models, the provider has strong financial incentives to furnish the most cost-effective array of institutional and noninstitutional services.

  • The findings of the South Carolina project suggest that preadmission screening systems are promising approaches for identifying patients who are at high risk of institutionalization. Additional study should be undertaken to determine whether the South Carolina results are generalizable to other States and populations.

  • Programs that concentrate large amounts of services on persons who are at risk of high cost episodes of care should be analyzed further.

There is no simple solution to the long-term care problem that will enable us simultaneously to cut costs and to greatly improve the services available to the elderly. Research and demonstration projects have, however, provided a wealth of information on the long-term rare needs of the elderly and the effects of programs designed to assist them. This information, if refined by continued research, can provide a basis for making the choices necessary to design a national long-term care policy that will best meet the needs of the elderly within inevitable budgetary constraints.

The Full Report is also available from the DALTCP website ( or directly at
Product Type
Report to Congress