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Seeking Balance

The last issue of Aging Arkansas carried a front page article titled “Home Care Spending Slips.” It said Arkansas, once considered a leader in home and community-based care, now ranks near the bottom -- in terms of spending -- in the programs designed to keep people out of nursing homes.

The article reflected data recently published by a contractor for the federal government. Unfortunately the contractor’s report did not include $50,942,056 in home and community based care paid for and provided in Arkansas.

An examination of the full report would quickly raise eyebrows. For example, the report stated Arkansas Medicaid spending on home and community-based care waivers in 2004 fell by 35.2% from the year before. Cutting spending by over one third would be a front page story. You didn’t see it because it didn’t happen. Actually spending on home and community-based care in Arkansas increased from $107 million in 2003 to $119 million in 2004.

The report also shorts Arkansas in another way—it only reflects certain expenditures. For example, it leaves out the fact Arkansas spent $73.8 million on community care for individuals with developmental disabilities; $8.5 million in private duty nursing and $20.7 million for durable medical equipment.

While home care spending in Arkansas is not slipping, does that mean all is well? No, it does not. Not in Arkansas or in any other state.

There is general consensus that there should be a better balance between the amount of money states spend on institutional care and the amount they spend on home care. For example, the National Governors Association Policy Position on Long Term Care includes the following: “Governors believe Congress and the Administration should take legislative and/or regulatory steps to provide states the flexibility to be able to offer elderly and disabled beneficiaries a more balanced choice between nursing home and community-based services.”

Creating a balanced system will take work. For every two people in the United States receiving Medicaid nursing home services, there is only one person age 65+ or adult with a physical disability receiving home and community-based waiver services. This is because about 64 cents of every dollar spent on long term care is spent on institutional services. Only 36 cents is spent on home and community-based services (HCBS).

The move to create a more balanced system is driven by at least two factors. First, the overwhelming majority of individuals prefer to live in their own homes. Secondly, institutional care is expensive, exceeding $100 dollars a day in Arkansas and over $150 a day in other states.

There are models to examine. States like Oregon, Washington and Maine have made remarkable progress in balancing their long term care systems. Maine saw a 24% reduction in nursing home beds from 1995 to 2002. During the same period persons receiving home care increased by 30%. Oregon has turned the tables on the national trend and now spends 70% of its long term care dollars on home and community-based care and 30% on institutional care.

The proportion of Medicaid long term care dollars Arkansas spends on home and community-based care has decreased from previous years. This is not because spending on home care has slipped. It is because Arkansas spending on institutional care has grown from $426 million in 2000 to over $600 million in 2004. Much of the increase in institutional spending is due to a substantial rate increase for nursing homes so that they may improve the quality of care provided.

At the same time nursing home spending has increased, the number of individuals in nursing homes has fallen. State and federal governments have moved to give individuals a choice in how and where they receive long term care.

More can be done. Congress and federal government could take several steps to create a balanced system. First, they could eliminate the cumbersome, complicated and archaic “waiver” philosophy. Currently states must obtain “waives” to provide Medicaid home and community-based services. Waivers require all recipients to meet nursing home eligibility to qualify for care. Obviously there are people who need home care that don’t rise to the level of nursing home care. States should have greater flexibility to serve these individuals in order to keep them from deteriorating to the point they require institutional care. Or if Congress wanted to take a bold step, they could reverse their rules. They could make home care become the first option and require a “wavier” for anyone seeking institutional care.