An Indiana Home Care Task Force White Paper
February 1999

Acknowledgments

This white paper has been written on behalf of the seventy organizations throughout the state of Indiana that voluntarily compose the Indiana Home Care Task Force. The purpose of the paper is to succinctly answer certain basic questions regarding the state’s CHOICE program for home and community based long term care services. The Task Force believes that answering these questions is an important prerequisite for the policy makers in the Indiana General Assembly who have the constitutional charge to appropriate funds for public programs in the state. The Task Force also believes that the answers to these questions will fully justify a biennial appropriation of $120 million for the CHOICE program.

The genesis of this paper originated in a request made by volunteers for the American Association of Retired Persons (AARP) for a concise set of written answers to questions being raised by members of the House Ways and Means Committee regarding the CHOICE program. The response to the AARP request came in a memorandum from John Cardwell, the chairperson of the Task Force, to Charles Fields, a volunteer for AARP’s state legislative committee, that was dated January 27, 1999. The white paper is an elaboration of that memorandum.

The Indiana Home Care Task Force was founded in April 1986 for the purpose of advancing public policies that support the establishment and expansion of programs to provide affordable and quality home health care services for the citizens of Indiana. The charge of the Task Force has not changed since that time.

Consequently, since 1986 the Task Force has been the conduit for cooperative public policy efforts by its voluntary member organizations for all policy initiatives associated with the CHOICE home care program and with Medicaid waivers for home and community based long term care services.

Persons wishing to communicate with the Task Force can do so by writing to the following address: Indiana Home Care Task Force, 5420 N. College Avenue, Room 100, Indianapolis, Indiana 46220, or by calling (317) 205-3535. This is the address and the telephone number for the Citizens Action Coalition which provides communications, record keeping, data base, and research services for the Task Force. E-mail may be sent to: staff@citact.org

Introduction

There are several important questions that must be answered whenever policy makers in the Indiana General Assembly are asked to make an investment of public resources. The purpose of this white paper is to answer such basic questions regarding the CHOICE home health care program. Consequently, this paper will utilize a straightforward question and answer format.

A CHOICE stands for the Community and Home Options to Institutional Care for the Elderly and Disabled Act of 1987, and the program for home care services that was created when the General Assembly unanimously enacted that law.

CHOICE provides home health care services for any citizen found to be at risk of losing his or her independence as a result of disease, injury, aging, or any other ongoing disabling condition. CHOICE services are free for the indigent but a payment system, based on a statutory sliding fee scale, is used to determine charges for persons as their incomes increase.

CHOICE services are not a legal entitlement. Individuals can receive services financed through the CHOICE program for only as long as that program has available funding. All funding for the CHOICE program must be appropriated by the General Assembly.

Q How are services provided through the CHOICE program and who provides those services?

A A person wanting and needing services funded by the CHOICE program must go through a pre-admission screening process conducted by the Area Agency on Aging (AAA) located in that person’s community. Once a person is screened and the person’s home care needs are determined an Area Agency on Aging case manager works with the person, and his or her family, to design a care plan that is tailored to meet the person’s specific home care needs within the bounds of available funding. Care voluntarily provided by family members, friends, neighbors, and local service organizations is incorporated into the care plan in order to maintain their involvement and to control costs.

Professional home care services are provided by private agencies and/or by private individuals qualified to provide the needed care. These providers must go through a screening and bidding procedure conducted by the local AAA. The AAA case manager’s job also includes working as a service broker for the home care consumer and as a quality of care watchdog for the consumer and for the public. This system has worked so well that the CHOICE program has been recommended as a national model by both the Clinton Administration and the Hudson Institute.

However, the CHOICE program can only do so much with limited funding. In some situations the program is not able to provide adequate hours of professional care, and in many instances people are placed on waiting lists for extended periods of time because there are no dollars available for additional services. In these circumstances people are at risk of their health dramatically deteriorating due to the lack of appropriate care. These are also the conditions under which family care breaks down or completely stops due to the ongoing financial, physical and psychological stress. This often leads to the person who is in need of home care being forced into a nursing home because that form of long term care is a legal entitlement under the federal Medicaid program. When this happens people are needlessly institutionalized, their families traumatized, and taxpayers are hit with the greater costs associated with nursing home services.

A First, the member organizations of the Task Force, including the American Association of Retired Persons, United Senior Action, the ARC of Indiana, Citizens Action Coalition, and the Indiana Association of Area Agencies on Aging, are recommending a total increase in the state budget for the CHOICE program of $45 million in the next biennium. The current CHOICE biennial budget is just a few thousand dollars short of $75 million, or over $37.4 million per year for the biennium that ends on June 30, 1999.

If the CHOICE budget is increased by $45 million over the two year period that starts July 1, 1999, the Task Force recommendation is to raise the total expenditure level slightly more than $17.5 million in FY 2000 and slightly more than $27.5 million in FY 2001. This would bring the actual CHOICE appropriation level to $55 million in FY 2000 and to $65 million in FY 2001.

A The recommended increase in CHOICE funding was first proposed by the state’s CHOICE Advisory Board, per the statutory duties assigned to that body by the General Assembly, in a resolution passed in July 1996 and in a second resolution passed in November 1998. These resolutions were based on an ongoing examination of Indiana’s home care and overall long term care needs by that board.

Q How many people are being served at the current appropriation levels of $37.4 million per year and how many can be served by the recommended increases in CHOICE funding?

A Preliminary data from the Division of Disability, Aging and Rehabilitative Services (DDARS), the agency within the Family and Social Services Administration (FSSA) that is in charge of state funded home and community based programs, has identified 9,948 individuals that were served through CHOICE in FY 98. Some of these individuals received services throughout the year while others might have received services for only a few weeks or a few months. Among these individuals the range of services provided and the level of services rendered varied considerably, but when all CHOICE clients have their costs added together and averaged on an annualized basis the cost is still only $7,400 per person.

If the total CHOICE appropriation is increased to $65 million in FY 2001 the total number of individuals that can be served by the program will be just under 18,000.

These estimates are based on the assumption that CHOICE costs will hold nearly constant over the next two years since that has been the budgetary history of the program. The constancy in CHOICE costs has been driven by the provider bidding procedures used by the Area Agencies on Aging, by the intense pressure on the AAAs to provide services to as many consumers as possible, and by the increased cost effectiveness of the program as it has gradually expanded. Growing consumer pressure on the AAAs in terms of the providers used by the program may drive CHOICE costs even lower in the future.

By contrast, FSSA’s Office of Medicaid Policy and Planning (OMPP) projects a dramatic increase in Medicaid’s nursing home costs in Indiana through the year 2001 due to inflation in the cost of nursing home care but not due to increased enrollments. Enrollments are projected by OMPP to stay flat. These costs are projected to increase as follows from a base of $693.1 million in FY 98: $740.3 million in FY 99, $785.7 million in FY 00, and $817.1 million in FY 01.

Q How many people are still waiting for CHOICE services and services through the four Medicaid home and community based long term care waivers?

A In 1997, the General Assembly wisely and generously increased the funding base for the CHOICE program. Legislators wanted to bring services to people on a waiting list that they believed was 2,300 to 2,500 people.

Since 1997 the waiting list for CHOICE services has jumped to 5,551 people (as of January 27, 1999) according to data provided by DDARS. Just a few months ago the waiting list was thought to be near 4,000. This significant increase has been primarily triggered by two factors: one, the waiting list in 1997 did not account for the pent up demand for CHOICE services that had resulted from the lower funding levels of the preceding years, and in 1997 the U.S. Congress passed and the President signed the Balanced Budget Act.

The federal Balance Budget Act resulted in tens of thousands of Hoosiers losing a portion of their Medicare home care benefits. Since these people did not have a Medicaid alternative, and were already maxing out their private pay and private insurance resources, they were forced to seek help through the CHOICE program by the thousands. To give perspective to the effects of the Balanced Budget Act since March of 1998, 70 of Indiana’s 380 licensed home health care agencies have been forced to close.

In addition to CHOICE we have significant waiting lists for the Medicaid home and community based care waivers. According to DDARS these waivers and the number of individuals on their waiting lists are as follows:

Aged and Disabled Waiver:..................................734

ICF/MR Waiver:.................................................3,652

Autism Waiver:.................................................... 474

Medically Fragile Children’s Waiver:................. 490

Q What are the comparative costs of CHOICE services with nursing home care?

A To compare the cost of CHOICE with the cost associated with Medicaid funded nursing home care when per patient care is annualized the following numbers were used in the Statewide IN-Home Services Program Annual Report published by FSSA in 1998.

Skilled Nursing Facility:................................ $37,465

Intermediate Care Facility:............................ $27,540

CHOICE:......................................................... $7,396

Of the above costs, the state’s share of Medicaid SNF charges is $14,407 and its ICF Medicaid share is $10,591. However, from the consumer’s perspective both the federal and state share of Medicaid are still paid for by taxpayers. (These numbers will probably be somewhat different in future reports since Indiana has now gone to a case mix reimbursement system for nursing homes.)

Q What do the mathematics of home care versus nursing home care tell us?

A This is a question that the Indiana Home Care Task Force posed to the state’s administrative agencies as long ago as 1989 regarding the cost benefits of the CHOICE program versus reducing the cost of Medicaid nursing home care by providing consumers with an alternative to institutions. The Task Force believes the CHOICE program has long saved the state significant dollars in its Medicaid budget by reducing or holding flat nursing home enrollments.

For example, in OMPP’s December 16, 1998 Medicaid Forecast the agency stated: "Nursing facility incurred claims growth was virtually flat from FY 1996 to FY 1998 growing from $685 million to only $693 million. This extremely low growth is primarily due to decreases in nursing facility enrollment that occurred in FY 1997 and shifts from skilled care to intermediate care that occurred in FY 1997 and FY 1998. The forecast for FY 1999, FY 2000 and FY 2001 assumes no additional increases or decreases in nursing facility enrollment."

The Task Force believes that the only factor to account for declines in enrollment growth rates in Indiana’s nursing homes over the past few years is the increased utilization of home care caused by the CHOICE program and Medicaid waivers. Battles between the state and the nursing home industry had everything to do with rates and charges but nothing to do with the need Hoosiers had for long term care. Only the availability of more publicly funded home care can adequately explain the nursing home enrollment picture since Medicaid funded nursing home care remains a legal entitlement.

OMPP’s projection of a flat enrollment rate in nursing homes through the upcoming biennium may be based on a belief that Indiana will only marginally expand its public investment in home and community based services during that time. That view could be justified given the extremely modest increases for CHOICE, just $141,300 for each year of the new biennium, that FSSA is recommending to the General Assembly. In other words, the current and proposed funding levels for CHOICE and for Medicaid waivers are enough to keep nursing homes enrollments flat for a few more years, but these levels are not high enough to significantly lower nursing home utilization. However, if the agency were to factor in an increase of $45 million in the CHOICE program and further expansion of Medicaid waivers there is every reason to believe nursing home enrollments, and the overall size of the Medicaid budget, could markedly decline. These are calculations that are long overdue

The FSSA strategy of not factoring in and demonstrating to policy makers the potential of home and community based long term care to reduce the utilization of nursing home care increases the risk that Indiana will not be prepared for the significant increases in the need for long term care that will surely come in the future. After the year 2010 the demographics of the baby boom generation will begin to drive upward the utilization of long term care. To learn to meet the coming challenge in a humane and cost effective way Indiana should be putting in place now a system of long term care that features a full array of affordable and available consumer choices.

In fact, until we bring services to the 10,901 Hoosiers who are currently on waiting lists for CHOICE and Medicaid waiver services it is hard to imagine the state being ready for the challenges that are coming. The failure to fund services for these 10,901 people and their families dramatically demonstrates that the state is not yet prepared to take the steps necessary to eliminate forced and inappropriate nursing home placements with their accompanying waste of public dollars.

If you are reading this paper in February 1999 at least 5,551 Hoosiers are on waiting lists for CHOICE services, and another 5,350 people are on waiting lists for Medicaid waiver services for home and community based long term care. Beyond these people are an unknown number of Hoosiers who have simply not bothered to go through the assessment process because of the long waiting lists.

These numbers represent a growing human tragedy for too many individuals and their families in the land of Hoosier hospitality. So while the CHOICE program may be rated by many measures as the best in the nation by liberals and conservatives alike, those evaluations mean nothing if a person needs home health care and cannot get into the program due to a lack of dollars.

For taxpayers the failure of the state to fully invest in the CHOICE program while maintaining a system that unwittingly forces people to use nursing homes remains a mystery when Medicaid nursing home care costs 4.3 times more than CHOICE when per person costs are annualized and averaged.

In 1997, the General Assembly and Governor O’Bannon enacted a major increase in CHOICE funding. That action nearly doubled the number of persons the program could serve and without that action the state would now be facing a home care crisis of terrible proportions. Because of the actions of two years ago, and the overall increase in the state’s investment in home and community based services over the past decade, Indiana has seen a dramatic flattening in the overall growth curve of nursing home enrollments. Unfortunately, the federal Balanced Budget Act of 1997 and the growing awareness of Hoosiers that the elderly and the non elderly with disabilities need not, and should not, be institutionalized has created a need for home care services that is triggering a long term care crisis in our state at the present time.

The Indiana Home Care Task Force believes the recommendations of the CHOICE Advisory Board contain no extras: the $45 million increase recommended by that board for CHOICE also assumes an expanded utilization of Medicaid waivers for the very poor who manage to meet the state’s very restrictive income eligibility guidelines. Consequently, if the state fails to appropriate $120 million for CHOICE we will also continue to needlessly increase our Medicaid nursing home budget. Such a policy simply fails to make sense to the taxpayers and voters of this state, and fails to net dollars and cents for the state’s budget.

For the many reasons identified in this paper the Indiana Home Care Task Force urges the adoption by the General Assembly of the $120 biennial budget recommended by the CHOICE Advisory Board for the CHOICE home care services program.

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