The Generation Project - Helping Hoosiers

Funding home health care a good investment for Indiana

March 13, 2005

Most of the budget options facing the state of Indiana this year involve difficult choices of which programs to cut or eliminate. However, in one instance, legislators can look to a rare, but enviable, win-win options which will provide great savings to the state while providing more popular health care choices and options for Hoosiers.

The prompt implementation of Public Law 274, the Home and Community Based Care Act of 2003, will save the state millions of dollars while at the same time providing home- and community-based health care options for older adults and persons with disabilities. Two recent studies have provided some valuable data that demonstrate how great the savings can be.

As recently as 2002, the state of Indiana spent almost 84 percent of its long-term care Medicaid dollars on institutional care and only 16 percent on home health care options. Other states have moved more toward parity in this spending allocation and nationally the split is 70 percent to 30 percent. Other adults and persons with disabilities have expressed their strong desire for greater health care choices that would allow them to remain in their homes or in a neighborhood group home setting rather than be placed in a nursing home or other institutional setting.

Public Law 274, passed by the Indiana General Assembly in 2003 with broad bipartisan support, mandates the state of Indiana to provide older adults and the disabled with more health care options.

The Area 2 Agency on Aging/Real Services is implementing what is called a Diversion Waiver for the state of Indiana, which allows Medicaid dollars to be used for home health care on persons who meet the waiver’s eligibility criteria. Without the waiver, these people would have been placed in an institutional setting at a cost of $37,000 per year to the state.

Instead, these people, who have been in a nursing home or hospital less than 60 days and who need assistance with at least three activities of daily living, were allowed to use Medicaid dollars as part of this diversion waiver on home health care services and avoid placement in an institutional setting. The savings documented as a result of this Diversion Waiver has been dramatic. Currently, there are 98 clients utilizing the waiver in our area and the cumulative savings to the state on an annual basis is $1.5 million, or an average of over $1,300 per client per month. Only five of the 98 clients had monthly home health care expenses that exceeded the monthly amount for institutional care. In total, 170 clients in this area have received care under the Diversion Waiver from May 2003 through December 2004.

Further, the Generations Project, a non-profit organization whose mission is to implement a balanced and responsible long-term care system, recently released its report on the urgency of the prompt implementation of Public Law 274. The report noted some important demographic facts. Presently, just over 600,000 Hoosier residents are over the age of 65, which is about 13 percent of the state’s population. By 2025, this figure is expected to grow to over 1.2 million.

The report pointed out the average costs incurred by each person on the CHOICE (Community and Home Options to Institutional Care for the Elderly) program was $3,300 per year and for each person on the Aged and Disabled Waiver the average cost was $13,000 per year. The CHOICE program is a state-funded program designed to keep people out of nursing homes by providing home-based care services. The state receives no federal matching dollars for the CHOICE program and because the program is so popular, applicants often are on waiting lists for longer than two years.

Both of these figures are far below the $37,000 average cost of caring for those in an institutional setting. This is consistent with the results of the state of Colorado where the reported savings were on the order of 3-1 when the costs of home- and community-based services were compared with the costs of institutional care.

These studies demonstrate the opportunity for significant savings while meeting the stated preferences of Hoosier health care consumers. As Republican Gov. Dirk Kempthorne of Idaho stated in his address to the National Governor’s Association in 2004, “We should make investments now in community-based programs. In-home care is simply less expensive than a long-term care facility, and, more importantly, it is a far more dignified way of live.”

Indiana has some catching up to do in terms of long-term care options, but we already have the legislation to move forward and this budget year is a great time to do it.

John Broden is a South Bend resident and state senator from District 10, South bend and Mishawaka.

It’s a “motherhood and apple pie” issue to state officials and a win-win in the eyes of advocates for the elderly and disabled.

It’s also the law, and has been for two years. The legislation signed by Gov. Frank O’Bannon in 2003, passed without a single dissenting vote by the Indiana General Assembly, mandates a “rebalancing” of long-term care toward home- and community-based services and away from nursing homes.

It is time for the state, cautiously but nonetheless decisively, to get moving. A burgeoning population of seniors demands and deserves options to institutionalization, and recent history says it’s good for society and good for the bottom line.

Other states have done it. They’re assisting more people at lower cost, enabling thousands to postpone or outright avoid the move to the most expensive and least popular setting for nursing care. They have the support of the Bush administration, which is boosting in-home care funding even while many social services are facing cuts. They have the expressed support of the Daniels administration as well.

So why isn’t it happening here? Why does this state continue to rank near the bottom of the nation in the percentage of Medicaid dollars (source of more than half of Indiana’s long-term care funding) going to alternatives to nursing homes?

One factor is the changing of the guard. The O’Bannon-Kernan administration had barely over a year to work with Public Law 493 before plunging into an election. The winners of that election have been in charge less than four months. They have gone so far as to create a separate Bureau of Aging and In-Home Services; but its director, Jackie Bouyea, says “We’re still in the thinking-about-it stage” as far as rebalancing is concerned.

“It’s motherhood and apple pie,” she observes. “Our preference would be for care to be delivered at home or in the community versus institutions.”

John Cardwell, director of the Generations Project, the multi-agency advocacy group that crafted the legislation, says fare more interest has been shown already by Bouyea and her boss, Family and Social Services Administration Secretary Mitch Roob, than ever was evident from the previous regime.

Still Cardwell and his allies with AARP Indiana, United Senior Action of Indiana and other groups feel the same impatience as last year with a state government that frets about taking a financial hit from the transition.

They are meeting with Bouyea and Roob to find ways to obey a law that prescribes, among other things, these specifics:

Raising the income eligibility threshold for non-institutional care to the same level as that for nursing home care. Now, someone taking in more than $545 per month is not poor enough for Medicaid for in-home care; he can earn three times that and get Medicaid to move into a nursing home, which will probably cost more and eventually mean loss of his house.

Developing a system of non-nursing home services, including assisted living, adult foster care, adult day care and self-directed care.

Seeking from the federal government 20,000 new Medicaid “waiver slots” to fund alternatives for persons who would otherwise enter nursing homes or remain in nursing homes out of financial rather than medical necessity.

Roob warns that a large-scale shift from brick-and-mortar institutions to widely scattered service delivery might cause a business disruption that would leave some needy people unserved unless taxpayers filled the gap left by the market. Quality assessment fees, or “bed taxes,” now being paid by nursing homes might cover some of that transition, Roob says; but questions remain as to who would get the home- and community-based services and which investors and workers would provide them.

Fair enough, say the advocates; but states such as Vermont, Oregon, Colorado, Washington and Texas have more than managed. The nursing industry already has demonstrated its adaptability to the market for individual house calls and assisted-living apartment developments; in fact, that’s a healthier sector of the business than nursing homes at present.

Indiana has its own model and mechanism to work with as well. For nearly two decades, with only state funding, the nationally respected CHOICE program has been serving seniors at home as an alternative nursing homes; it has a three-year waiting list that Public Law 493’s Medicaid changes could whittle down. Meanwhile, the state’s Area Councils on Aging already are performing the job of matching recipients and services.

Roob and Cardwell agree that implementation of Public Law 493 is roughly a four-to-five-year proposition. Cardwell submits the nursing home population receiving Medicaid, now about 27,000, could be cut nearly in half by then. Roob ventures no number.

Both men note that the state must brace for a spike in the over-65 population. Those people will not be inclined to settle for an outmoded system of late-life care that divests them of their homes and independence before they’ve lost the capacity to participate in society at large. The government cannot give all of them all they want, but it is demonstrating growing recognition that their assertiveness makes economic and social sense. Indiana stamped its recognition with Public Law 493, and now must send clear signals it intends to obey.