The ongoing repeal and replace debate has brought to light something that most Americans are not aware of—the fact that nursing home and other long term services and supports are financed almost entirely by the Medicaid program and about half of Americans will need Medicaid at some point in their lives. At the same time, the U.S. population is aging. By 2040, more than one in five of us will be over age 65. Most seniors want to live independently in their own homes for as long as possible and age in place.
More than 13 million Americans, many of them seniors, use assistance with basic daily tasks like eating, dressing and bathing, as well as activities such as preparing meals, money management, house cleaning and transportation—long term supports and services or LTSS. LTSS services can be provided in a home- or community-based setting and can extend the amount of time a person can remain independent. The Department of Health and Human Services estimates that for people who are age 65, more than half (52%) will have LTSS needs for up to two years. Medicaid is the primary payer of LTSS in the U.S. and spent over $150 billion for LTSS in 2014, the latest year for which data are available.
In recent years, more and more states have begun to incorporate LTSS into Medicaid managed care programs. Today 22 states have Medicaid managed LTSS (MLTSS) programs and more are implementing or exploring MLTSS. Managed care plans have greater flexibility to pay for a range of covered and non-covered services that can help keep people in their home.
Medicaid Managed LTSS
In Medicaid MLTSS programs, states pay a set amount per enrollee to a managed care plan, and the managed care plan is responsible for providing a designated package of healthcare and related supportive services to that enrollee. MLTSS plans may choose to provide additional services for enrollees. Plans often receive a mix of enrollees who are in institutional and community-based settings, and are paid based on the expected number who will stay in each setting. In order for managed care plans to provide care coordination and LTSS to enrollees, it is crucial for Medicaid programs to predict the costs for enrollees and pay the managed care plans adequate, actuarially-sound capitation rates. That is, the rates that are paid are reasonable projections of expected costs to the managed care company.
But predicting LTSS needs and related costs can be challenging! As states move to Medicaid MLTSS, states, plans and other stakeholders have recognized the need to improve models to predict costs among the enrolled MLTSS population. States use risk adjustment and other risk mitigation strategies, paying higher rates for individuals who are expected to have higher care needs, to reduce the incentive for managed care plans to “cherry pick” healthier enrollees or withhold care for those with higher needs. In traditional managed care programs, states and plans use age, gender or diagnoses to predict future costs. However, for those who need community-based MLTSS services, information about functional status is a stronger predictor of costs than age, gender or medical conditions. Functional status information, however, is not routinely or consistently available for those with LTSS needs. This lack of information stands in the way of efforts to reliably predict costs. Although some models exist to take functional status into account, the development of reliable risk adjustment strategies for this population is in its infancy.
At this time only a small number of states have had the opportunity to invest the time and resources into risk adjustment methods for Medicaid MLTSS that use functional assessment data, because of a number of important challenges. First, the heterogeneity of the population makes risk adjustment for Medicaid MLTSS population difficult. States enroll frail seniors, younger adults and children with a range of physical disabilities, and individuals with intellectual and developmental disabilities—sometimes within the same MLTSS program. The needs of these individuals may vary widely, making predictions of their expected costs very complicated. In addition, states vary in the level of need that is required for MLTSS enrollment (e.g., some states require an institutional level of care). Second is the lack of a consistent approach to collecting functional assessment information for those enrolled. A functional assessment seeks to gather information on a person’s ability to conduct everyday tasks. However, the tools used to collect functional assessment information differ among the states, and even across programs or target populations within the same state. A 2015 analysis by the Medicaid and Children’s Health Insurance Program Payment Advisory Commission (MACPAC) found that there are 124 different functional assessment tools in use across the country. Although there are benefits to having unique tools for different populations and geographic areas, this makes it extremely difficult to make comparisons across programs or states.
MLTSS Rate Setting Opportunities
Managed LTSS with the opportunity for coordination of care that comes with it can be immensely helpful to participants with complex medical and social support needs, especially for those with cognitive decline. In order to attract payers to keep and expand these programs, it is important that state Medicaid programs continue to develop models that can accurately predict costs, and for managed care plans that attract a more complex population with higher associated costs to be paid accordingly. Managed care plans can also be given incentivizes to keep individuals in community-based settings, or even move them from institutions to community-based settings. States can, for example, use a blended rate for individuals in both home and community-based settings and institutional settings, encouraging the plan to keep people in lower cost community-based care as long as possible.
The Gary and Mary West Health Policy Center recently funded a project with eight states (Arizona, Kansas, Massachusetts, Minnesota, Tennessee, Texas, Virginia and Wisconsin) to test new rate-setting, risk adjustment, and data collection approaches with a focus on using functional assessment and other relevant data to inform reimbursement strategies. Coordinated through the Center for Health Care Strategies and partners at Mathematica Policy Research and Airam Actuarial Consulting, this engagement provided a forum for selected states and key stakeholders to examine in detail current state opportunities and challenges in setting and risk adjusting managed long-term services and supports (LTSS) rates. These approaches can help better protect states and managed care plans from adverse risk and uncertainty, and support managed care plans’ ability to provide high-quality LTSS in the most integrated and cost-effective care setting. The project resulted in a toolbox of practical resources for states interested in developing their own risk adjustment methodologies.
After we identify how to better predict costs based on functional data, the next step will be adjusting payment rates for LTSS services based on value. Starting in 2017, the Gary and Mary West Health Policy Center will bring together states with MLTSS programs to identify strategies and tools they may be using to advance value-based purchasing (VBP) within their programs to promote the use of home and community-based services and successful aging in place. Our Value-Based Payment Learning Collaborative will (a) identify and promote the spread of best practices in MLTSS rate setting and risk adjustment and adoption of alternative payment models in LTSS; and (b) further refine and promote the spread of VBP approaches in MLTSS and other LTSS delivery system strategies, as appropriate. The overarching goal is to advance the adaption of operational strategies that promote cost-effective home and community-based LTSS services for successful aging in place.
The Gary and Mary West Health Policy Center’s philanthropy funded research is working to advance policies which support and enable aging-in-place. Increasing philanthropic dollars in this area would accelerate efforts to improve, develop, and test innovative models in risk adjustment and value-based purchasing to improve the supportive services available to help seniors age in place.
Source: www.asaging.org/blog by Amy Herr