Minnesota s Long-Term Care Support System 1

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1 Minnesota s Long-Term Care Support System 1 HISTORICAL PERSPECTIVE In the early 1960s and 1970s, Minnesota was heavily invested in facility-based care, and at that time had one of the highest ratios of institutional beds (nursing home and ICF/MR) per population in the country. Over the past 25 years, however, Minnesota has been moving away from facility-based care toward community based services and supports. o A state moratorium on new nursing home construction was enacted, followed by additional state incentives for nursing homes to downsize. o Rebalancing was accelerated in the area of developmental disabilities when litigation (Welsch v Noot, 1980) required the downsizing of state institutions and the use of home and community based services options. o Moratorium on ICF/MR development and incentives to downsize capacity. Minnesota has historically been very deliberate in its efforts to maximize federal financial participation through the Medicaid Program, and to reduce its reliance on state or locally funded long-term care services. This direction was supported by the availability of Medicaid FFP for HCBS, and allowed Minnesota to use Medical Assistance to fund the services and supports needed by adults and children to maintain their residence in the community 2. (Other states continue to fund these types of services using state general revenue dollars.) In 2001 the State Long Term Care Legislative Task Force made significant changes to accelerate the rebalancing process, including additional incentives for the nursing home industry to transition toward community services, and a grant program (CS/SD) to provide incentives for HCBS providers to extend and strengthen their capacity. 1 Source: Minnesota Long-Term Care Profile (2009), Minnesota HCBS Expert Panel (Thomson Reuters, consultants). 2 Examples include:, Moving services for persons with disabilities from Regional Treatment Centers, State Nursing Homes, and/or IMDs to HCBS services. These changes shifted the costs of their long-term supports and medical care Medical Assistance. Providing day training and habilitation and more intensive supporting living services for persons with developmental disabilities through the HCBS waivers as opposed to relying only on county funding. Adding Case management to the waiver programs. Historically, this was funded by counties. Adding payments for foster care and residential treatment to Medical Assistance-- difficulty of care in foster care was refinanced using Medicaid for HCBS recipients, and Rule 5 facilities were refinanced using rehabilitation options available through Medical Assistance. Now most persons that need out-of-home placement are referred to home and community-based services for funding. Adding services available through Individual Education Plans as a Medicaid benefit for school districts. Changing the funding for Crisis Services from state funding to HCBS funding. Allowing Medicaid dollars to fund the Group Residential Housing supplemental rate in 2004 and thereafter. This applied to primarily to corporate foster care settings. Adding surcharges to nursing home rates and Inter-Governmental Transfer (IGT) for county nursing homes to maximize FFP. Increasing caseloads to the disability programs due to the five-year program limits of Welfare Reform This resulted in increased disability caseloads as clients migrated from the TANF to disability programs, including long term care, and accessed social security disability benefits. Using the elderly waiver program to address Alternative Care benefit reductions.

2 In the last five years there have been significant changes in the ways that persons with mental illness are supported. The Regional Treatment Centers and Institutions for Mental Disease (IMDs) are being replaced with Medicaid-funded rehabilitation and HCBS options. The effect of these changes has been to increase caseloads in waiver programs and State Plan Personal Care Assistance (PCA) services. Minnesota has historically provided a broader menu of community based supports for persons with disabilities, for elderly and their families than many other states. This array provides enhanced access, and flexible options for persons with disabilities and their families including persons with different cultural backgrounds and those with the most severe disabilities. Minnesota has also had strong policies to support families of persons with disabilities. As families are changing (e.g., higher rate of divorce for families with disabled children, working caregivers for older parents/spouses) the demand for family-support has grown In order to demonstrate the principle that community-based support is not only preferable, but costeffective, service packages were developed to maximize client and community strengths. As a result, Minnesota s expenditures per person for community supports are very near the national average (Table 1). WHERE ARE WE NOW? Minnesota has made remarkable progress over the last two decades to rebalance the state s system away from a facility- and institution-based system, toward home and community-based services and supports. During this period Minnesota closed nearly 5,000 ICF/MR beds (72% reduction) and 13,000 nursing home beds (27% reduction). (See Charts 1 and 2.) Minnesota now is a national leader directing public funding to support persons in non-institutional, community settings rather than in institutional settings (Table 2). In SFY 2008, the latest year with complete data, federal, state, and local governments spent approximately $3.9 billion to provide long-term support to Minnesotans with disabilities and older Minnesotans. Medicaid is the largest public payer ($3.3 billion) or about 85% of total public spending. Since 1980, Minnesota Medicaid expenditures (including both health care and long-term services and supports) have generally increased at a lower rate than spending in other states (Chart 3). If you account for the annual inflation rate (3.2%) and the state population growth rate (0.7% per year), the adjusted per capita spending for LTC in Minnesota increased only 1.5% per year. Private market forces have had a significant impact on Minnesota s LTC system. There has been a significant increase in housing with services and variations of assisted living all across Minnesota. Today Minnesota has a greater supply of housing with services and/or assisted living than any other state. Federal incidence of federal disability determination has been increasing at a rate of 5% per year, driven significantly by conditions such as autism and mental illness.

3 2009 LEGISLATIVE INITIATIVES Health and Human Services represents nearly 28% of Minnesota s budget (Figure 1), but the annual increase in health and human services expenditure in Minnesota is more than double the forecast increase rate for State revenues of all other public expenditures (Figure 2) Continuing Care began preparations for the 2009 legislative session with the need to reduce hundreds of millions of dollars from programs serving people who are elderly and people with disabilities. While reduction proposals are always difficult to advance, many of the proposals signed into law in 2009 continue the work of redesigning long-term care services to make them sustainable in the longer term The 2009 Legislature created several initiatives to reduce expenditures, focus and improve Minnesota s LTC system: o Change in NF Level of Care criteria for waiver eligibility, and new reduced benefit set for low-need older persons who will not be eligible for Medical Assistance (Essential Community Supports) o Program to assist persons (especially older people who have their own resources) who are in nursing homes but do not need nursing home level of care and wish to return to their homes in the community (Return to the Community) o Moratorium on corporate foster care and development of less expensive supportive living options (Residential Support Services) o Consistent Rate Setting methodologies for reimbursing HCBS service providers across the state. o Statewide Enrollment of long-term care providers to reduce duplication and promote uniform provider standards across the state. o Consolidation of multiple assessment and case monitoring tools/forms into a new, Comprehensive Assessment (COMPASS) o Changes to Personal Care Assistance (PCA) to strengthen and clarify eligibility criteria, improve program integrity, and develop and implement more effective support options for persons with mental illness. o Long-term care provider rate reduction of 2.58% (with additional targeted rate cuts to providers at the high end of the state s reimbursement range) o Miscellaneous cuts in state funds for specific programs.

4 Table 1: Sample of States: Average Waiver Expenditures per Participant, 2008 Ave. Waiver Expenditures per Participant Alaska $19,598 Maryland $18,847 Florida $17,645 Pennsylvania $12,024 New Hampshire $8,410 Minnesota $8,259 Rhode Island $7,941 Kansas $7,174 Delaware $6,415 Arkansas $4,711 S. Dakota $4,659 Massachusetts $3,866 Total U.S. $8,001 Source: Waiver data from Ng, Harrington, O'Malley Medicaid Home and Community- Based Services Programs: Data Update, Kaiser Family Foundation: December 2008 Chart 1: Total Nursing Home Beds in Minnesota, ,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, Source: Minnesota Department of Human Services, Continuing Care Administration summary of data from Minnesota Department of Health

5 Chart 2: Minnesota Residents in ICFs/MR, ,000 7,000 6,899 6,549 6,000 5,000 5,316 4,000 3,826 3,000 2,000 2,456 1,942 1, Sources: 2002 and 2007 data from Minnesota Department of Human Services: Disability Services Division Plan for ICFs/MR in Minnesota January 2009 Data from 1982, 1987, 1991, and 1996 from Prouty, Robert W.; Alba, Kathryn; Lakin, K. Charlie (eds.) Residential Services for Persons with Developmental Disabilities: Status and Trends Through 2007 University of Minnesota Institute for Community Integration: August Data for 1992 and 1997 were not available, so the nearest years with available data were used. Table 2: Percentage of Medicaid Long-Term Care Expenditures Used for Community Services, FFY 2007 Total Programs for Older Adults and People with Disabilities Programs for People with Developmental Disabilities Minnesota 66% 54% 84% Iowa 38% 26% 50% North Dakota 26% 6% 52% South Dakota 39% 11% 80% Wisconsin** 46% 31% 77% United States** 42% 31% 63% Data do not include most Medicaid mental health services. FFS expenditures are based on Federal Fiscal Year. Minnesota Managed Care Expenditures for services for older adults are for calendar year Managed Care Expenditures for MnDHO for people with physical disabilities are for calendar year Managed Care Expenditures for the pilot of MnDHO for people with developmental disabilities are for State Fiscal Year * The national source refers to this as Older Adults and People with Physical Disabilities because the waivers that serve people under age 65 typically serve people with physical disabilities. The authors removed the word physical to reflect that Minnesota s waivers for people who need nursing facility care include people with mental health needs and people with developmental disabilities. ** Data do not include large managed long-term care programs in Wisconsin and a few other states

6 Chart 3: Five-Year Average Annual Rate of Growth, Minnesota and U.S. Medicaid Long-Term Care Expenditures, Federal Fiscal Years % 12% 12.2% 12.0% 10.5% 10.8% 10% 8% 6% 5.8% 8.7% 6.7% 4.5% 8.0% 7.0% United States Minnesota 4% 2% 0% Sources: Centers for Medicare & Medicaid Services, Form 64 Reports. NOTE: These reports from states other than Minnesota do not include long-term care provided through managed care organizations Figure 1: Minnesota General Fund Spending Projections, 2009 Higher Education, 9.1 Property Tax Aides, 9.1 Health & Human Svcs, 27.6 Environment, 1.3 Econ Develop., 1.1 Transportaiton, 0.7 K-12 Education, 40.0 Public Safety, 5.4 Agriculture & Veterans, 0.8 State Gov't., 2.0 Debt Svc & Other, 2.9

7 Figure 2: Implications of Continued Health Care Trends in Minnesota: Percent Growth Rate Revenue Health Care Education All Other Additional information: Nursing Facilities (NFs) Monthly average recipients has decreased by about 27% over the past ten years (from a high of 30,465 in 1993). Between , nursing home use by elders 85+ has reduced by 43% and by elders 65+ by 34%. Caseload decreases occurred during a period when the number of elderly was increasing Medical Assistance caseload growth for NFs has been controlled by the: 1) availability of home and community based services 2) availability of less formal community services 3) moratorium on new nursing facility beds 4) bed lay away and planned closures have encouraged NFs to reduce capacity Over the last 10 years, the median length of stay has been reduced by about 47% (from 106 to 56 days) as NFs provide more Medicare-funded short stays. NFs are increasingly being used for rehabilitation/short stays and to serve people with severe cognitive impairments The annual number of new admissions has increased by 37% (from 24,000 to 33,000) Additional information: ICF/MRs ICF/MR is an entitlement service for eligible MA recipients In 1982, Minnesota had 9,200 ICF/MR beds in RTCs and community facilities In 1984, the Legislature place a moratorium on the development of new ICF/MR beds and offered alternative services through the MR/RC waiver to meet the ICF/MR entitlement obligation. Since then, the MR/RC waiver has been used to close over 7,000 ICF/MR beds ICF/MR use continues to decline by about 200 beds per year by relocating residents to home and community based services. ICF/MR recipients also receive MA funded day training and habilitation services that cost 32.6 million in SFY 2005 Over 375 current ICF/MR residents have chosen to move to home and community based services, and are awaiting placement.

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