Long-Term Services and Supports: Balancing Incentive Program
Introduction | Evidence of Quality Improvements | Evidence of Savings | Key Considerations | Further Resources | State-by-State Ratings
The Policy
The state implements the Balancing Incentive Program (BIP) in Medicaid to increase community based long-term services and supports (LTSS).
Introduction
Medicaid is the primary payer for long-term services and supports (LTSS), spending about $127 billion nationally on these services in 2009. Many state Medicaid programs continue to rely on expensive institutional care, such as nursing homes, for seniors and people with physical and developmental disabilities, rather than shift to community-based care, such as personal care and homemaker services, and home modifications, that can be less expensive and provide better quality of life for most consumers. In fact, 37 states still spend more than 50 percent of Medicaid LTSS dollars on institutional care. These states are eligible for millions of dollars in federal funding through BIP to help them enhance community-based services.
The continued reliance on nursing home care results from several factors. First, federal law requires states to provide institutional LTSS but allows states to choose whether to cover community-based LTSS at all, which services they will offer and how many people they will serve. Another factor is the upfront investment in community and home-based services needed before states can make the shift. Finally, states are concerned that people currently eligible but who haven't signed up for Medicaid would enroll in large numbers to obtain community services and drive up Medicaid costs. However, states making the switch have generally been able to manage increases in demand.
In addition, states have a legal obligation to expand community based services since the 1999 Olmstead decision of the Supreme Court interpreted the Americans with Disabilities Act to require the provision of services in the least restrictive environment possible, which is often a person's home.
BIP (Section 10202 of the ACA) provides states that spent less than 50 percent of Medicaid LTSS dollars on community-based care as of 2009 with a financial incentive to rebalance. From October 2011 to September 2015, $3 billion in federal funds is available to increase the match rate for state spending on home and community based services (HCBS) LTSS. The federal match must be used for new or expanded HCBS, which can help offset needed upfront investments.
If a state is spending less than 25 percent of its Medicaid LTSS budget on non-institutional care, it is eligible for a 5 percent increase in federal medical assistance percentages (FMAP). In exchange, the state must raise its HCBS Medicaid spending to the 25 percent threshold by September 30, 2015. (Only one state - Mississippi - is eligible for this rate.) A state spending less than 50 percent of its Medicaid LTSS budget on HCBS is eligible for a 2 percent FMAP increase. These states must raise their HCBS Medicaid spending to 50 percent by September 30, 2015. (Thirty-six states are eligible for this rate.)
States must apply by August 1, 2014, to the federal government and must implement three changes: setting up a "no wrong door" system for consumers to apply for Medicaid LTSS; using a standardized assessment of eligibility and needs; and providing individualized case management from someone without a financial stake in care decisions. In addition, states may not restrict eligibility for LTSS beyond what was in place on December 31, 2010.
Evidence of Quality Improvement
BIP is too new to show any concrete evidence of quality improvements. But there are indications of better quality of life and higher consumer satisfaction from other efforts that have shifted LTSS from institutional to community-based care.
Vermont used a federal waiver to provide more Vermont residents the choice of receiving care in a community setting. The number of Medicaid beneficiaries living in nursing facilities declined while the number receiving community-based care rose. In 2011, 94 percent of HCBS recipients responding to a state survey said the services had improved their lives, and most said the care enabled them to stay in their homes.
Public surveys consistently show consumers prefer care in their homes and communities to institutional care. A 2010 survey commissioned by AARP found 86 percent of people 45 and older wanted to stay in their own home as long as possible.
A comprehensive study of people with intellectual and development disabilities found that those who moved from institutions to community settings in 1977 to 2010 were better able to care for themselves, socialize and adapt to new situations.
A review of 42 studies for the federal Agency for Healthcare Research and Quality, published in November 2012, found better physical and mental functioning and less depression among older adults getting home and community based services than those in nursing homes. But few of the studies tracked the seniors over time, leading the authors to conclude there is insufficient evidence of whether the care setting affected the outcomes or whether other factors were at play.
Evidence of Savings
BIP is just beginning, so there is not yet evidence from the program itself. However, the increased federal match will bring in millions of dollars to each participating state. For example, Texas stands to get $277 million and Maryland $106 million if they meet all the program requirements. This money helps states pay for upfront costs of rebalancing, and can replace some current state spending if that spending is switched from institutional to community services.
In addition, some states that rebalanced previously have saved money in the long run. Savings largely result from reducing nursing home use, controlling access to home care and integrating LTSS with primary and acute care.
Oregon, Colorado and Washington rebalanced decades ago, saving between 9 and 23 percent of projected LTSS spending in 1994, according to a study by Lewin Group and AARP Public Policy Institute. Other data counts Oregon's savings at $27 million from 1981-1996, while it extended services to thousands of residents. Kansas expanded consumer-directed services in the 1990s and officials testified to Congress about saving $24 million in 1997 alone.
More recently, Rhode Island saved nearly $36 million over three years by expanding community housing and services and helping people stay out of nursing homes, according to a Lewin Group evaluation.
Finally, a recent study in Health Affairs used changes in states spending on LTSS over 15 years to model the financial impact of rebalancing. The study suggests states that rebalanced gradually with a focus on diverting people from nursing home care saved about 15 percent in per capita LTSS spending over 10 years.
Key Considerations
States need to move fast since the federal funding boost is limited to $3 billion and the program ends in September 2015.
States need to have enough community providers to support the growing community based LTSS population. This includes a range of providers from primary care doctors to transportation services and Aging and Disability Resource Centers (ADRCs) that can reach people in urban and rural settings.
There also needs to be enough affordable housing to accommodate beneficiaries who want to live in the community. States may need to facilitate growth of affordable housing.
Making the change within managed care poses benefits and challenges. Managed LTSS programs have helped some states rebalance and decrease avoidable hospitalizations, but these results are inconsistent. On the issue of cost, studies of just two states have shown overall savings from managed Medicaid LTSS. The array of services for which managed care companies are responsible may affect their ability to coordinate services or achieve diversions or transitions from institutions to the community.
Collaboration with consumer organizations and stakeholders is essential in making BIP successful. Consumer organizations can help promote beneficiary awareness of their options and can provide guidance on beneficiary-friendly policies. The state should create a stakeholder advisory committee that includes a majority of Medicaid beneficiaries and consumer advocates to advise it on all aspects of the planning, implementation, operation and evaluation of the community-based LTSS.
Further Resources
Balancing Incentive Program. Centers for Medicare & Medicaid Services.
Technical Assistance for BIP. CMS-commissioned resource center and manual for state officials.
Balancing Incentive Program: Strengthening Medicaid Community-Based Long-Term Services and Support. Center for Health Care Strategies
Gradual Rebalancing Of Medicaid Long-Term Services And Supports Saves Money And Serves More People, Statistical Model Shows. Health Affairs. June 2012
State-by-State Ratings
 Made the Grade
|
 Room to Improve (?)
|
 Miss the Mark
|
|---|---|---|