Cost-Effectiveness of Home and Community-Based Long-Term Care ...

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BACKGROUND: MEDICAID LONG-TERMCARE SERVICESHow Much Does Medicaid Spend on Long-Term Care? How Much isfor Home and Community-Based Services as Compared toInstitutional Care?Medicaid is the major source of public funding for long-term care services.Medicaid spending on long-term care services in FY 1999 totaled $62.4 billion. Of thisamount, $36.4 billion was spent on nursing home care. Approximately $9.6 billion wasspent on institutional services for people with mental retardation (intermediate carefacilities for the mentally retarded or ICFs/MR). $16.4 billion was spent on servicesprovided in home and community-based settings.Medicaid expenditures for home and community-based services includespending on Medicaid-funded home health services, personal care services, and homeand community-based waiver services.Thus, in FY 1999, expenditures for home and community-based servicesaccounted for 26.2 percent of all Medicaid long-term care expenditures.Although a majority of Medicaid expenditures on long-term care are for nursinghomes and ICFs/MR, the picture is quite different if the focus is shifted to the number ofclients served. The most recent comparative data available on numbers of Medicaidbeneficiaries receiving various types of long-term care are from 1995: Medicaid homeand community-based services programs for the elderly and disabled (Medicaid homehealth, personal care services and home and community-based services waiverprograms) served a total of 1,847,369 recipients--as contrasted with 1,036,833 innursing homes. Thus, 64 percent of Medicaid recipients who are elderly and disabledlong-term care clients received some type of home and community-based services.(Ladd et al., 1999) Similarly, about the same percentage of individuals with mentalretardation/developmental disabilities (MR/DD) receiving Medicaid long-term careservices receive these services in home and community-based settings rather thanICFs/MR. (Lakin, personal communication, 1999).What Options do States Have in Medicaid for Covering Home andCommunity-Based Services?• Coverage of home health services is mandatory. Home health servicesencompass registered nurse, licensed rehabilitation therapist and home healthaide services delivered through certified home health agencies. In FY 1999,Medicaid expenditures for home health services totaled $2.2 billion.1
• In contrast, state coverage of other home and community-based waiver andpersonal care services is at the discretion of the states.• Under home and community-based waivers, states may request Health CareFinancing Administration (HCFA) approval to cover non-professional servicessuch as personal care, homemaker/chore services, home-delivered meals, adultday care, habilitation services, or any other services the state believes arealternatives to institutional care for a specified number of recipients who areconsidered to be "at risk" of requiring institutional care.• Services provided under home and community-based services waivers need notbe offered state-wide and they may be targeted only to certain populations (e.g.,elderly and physically disabled adults, persons with MR/DD, ventilator-dependentchildren, persons with severe mental illness, persons with HIV/AIDs). States mayhave one or more waiver programs targeted at different populations.• Medicaid personal care services may be provided as a optional benefit underthe state plan. This benefit covers only personal care. When personal careservices are provided under the plan as an optional service, as contrasted with awaiver, they must be made available state-wide and they must be provided to allMedicaid eligibles who meet need criteria.• States may elect to use either or both of these coverage options.How Many States Offer Home and Community-Based Care and HowMuch do They Spend?All states have one or more programs that finance home and community-basedservices for individuals with chronic functional disabilities (Ladd et al., 1995; Ladd et al.,1999). The major source of financing for these programs is Medicaid. Other fundingsources include Title III of the Older Americans Act, the Social Services Block Grant,and state appropriations.There are, however, dramatic differences across states and by target population(aged/disabled or mentally retarded/developmentally disabled). For example, Oregonspends 45 percent of its total long-term care expenditures for the elderly and disabledon home and community-based services, whereas Tennessee spends 97 percent of itselderly and disabled long-term care expenditures on nursing homes.Among state Medicaid long-term care programs for persons with MR/DD, 17states spent more than two-thirds of expenditures on individuals residing in ICFs/MR,whereas in eight states more than two-thirds of Medicaid long-term care expendituresare spent on services in home and community-based settings.2
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Page 29 and 30: BIBLIOGRAPHYAlecxih, L.M., S. Lutzk
Page 31 and 32: Schalock, R., and H.D. Federicks (1

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