Long-Term Care Community Diversion Pilot Project

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1 Long-Term Care Community Diversion Pilot Project Legislative Report July 2006-December 2007 January 2008 Charlie Crist, Governor E. Douglas Beach, Ph.D., Secretary

2 Department of Elder Affairs Section (1), Florida Statutes REPORTS AND EVALUATIONS Beginning January 1, 1998, and continuing each January 1 while the community diversion pilot projects are operating, the department shall report to the Legislature regarding the implementation and operation of community diversion pilot projects.

3 Long-Term Care Community Diversion Pilot Project Report Project Background In 1997, the Legislature authorized the Department of Elder Affairs (department), in consultation with the Agency for Health Care Administration (agency), to implement the Long-Term Care Community Diversion Pilot Project (diversion project) as a means of addressing the rapid increase in state expenditures for long-term care services and to meet the long-term care needs of the public. To accomplish this, the diversion project was designed to target individuals who would otherwise require Medicaid nursing home placement and provide them with a comprehensive array of home and communitybased services at a cost less than nursing home care. Through contracts with the state, managed care organizations receive a capitated payment to provide, manage and coordinate an enrollee s full continuum of long-term care services. In making managed care organizations liable for all long-term care services, especially nursing facility care, the diversion project establishes the maximum financial incentive for these organizations to provide high quality home and community-based services. Services The diversion project coordinates medical and long-term care and provides a full continuum of long-term care services for individuals who are dually eligible for Medicaid and Medicare. These services include all home and community-based care services, coordination of acute care services, assisted living facility care, prescription drugs (the Medicaid formulary not covered by Medicare Part D), Medicare coinsurance and deductibles, and nursing home care when needed. Project Funding Diversion Project 2007 The diversion project was implemented in December 1998 with approximately $22 million in funding. In state fiscal year , the project received its first significant Total funding of $224 million Enrollment increase from 7,219 funding increase of approximately $40 in July 2006 to 10,984 in million. Increases of approximately $60 December 2007 million and $80 million followed in state fiscal years and , respectively. In state fiscal year , total project funding decreased by approximately $10 Fifteen project contractors with one additional pending application approval million. However, the total number of diversion project slots increased by Diversion project expanded into approximately 1,000 in January 2006 due to two additional counties the implementation of Medicare Part D which shifted the payment for prescription drugs from Medicaid to Medicare. Initial funding for For the purpose of the diversion program, managed care organizations are not limited to health maintenance organizations. Other qualified providers (OQP) as defined in are also eligible to become a diversion provider. Examples of potential OQPs are nursing homes, home health agencies, hospices, adult day care centers, and assisted living facilities. 1

4 Department of Elder Affairs was $217 million, until Special Session C, which added approximately $6.8 million for a total of approximately $224 million. Counties Approved for Diversion Project Diversion project operations began in four counties - three counties in the Orlando area and one in Palm Beach County. Subsequently, the Centers for Medicare and Medicaid Services (CMS) have approved three expansions to the project s potential service area. In July 2003, a significant expansion effort was initiated and by mid-2004, the diversion project was operational in the majority of the 26 approved counties throughout the state. In November 2005, a second expansion was approved by CMS and an additional 23 counties were added to the project s potential service area. In April 2007, a third expansion amended the project service area to include Clay and Nassau counties. Map 1 highlights the counties approved for the diversion project. Map 1: Counties Approved for Diversion Project Escambia Santa Rosa Okaloosa Walton Holmes Washington Bay Jackson Calhoun Gadsden Liberty Leon Wakulla Jefferson Hamilton Madison Taylor Suwannee Lafayette Gulf Franklin Gilchrist Dixie Columbia Baker Union Bradford Alachua Nassau Clay Duval Putnam St. Johns Flagler Levy Marion Volusia Citrus Hernando Sumter Lake Seminole Orange Original Counties ( 1998) First Expansion ( July 2003) Second Expansion ( November 2005) Third Expansion ( July 2007) Pinellas Pasco Hillsborough Manatee Polk Hardee Sarasota DeSoto Charlotte Lee Osceola Highlands Glades Brevard Okeechobee Hendry Collier Monroe Indian River St. Lucie Martin Palm Beach Broward Miami-Dade Not Currently Approved 2

5 Long-Term Care Community Diversion Pilot Project Report Enrollment Diversion project enrollment grew from 7,219 enrollees at the beginning of state fiscal year to over 10,000 enrollees by December Chart 1 shows diversion project enrollment from January 2006 through December Chart 1: Diversion Project Enrollment 12,000 10,000 8,788 11,134 10,984 8,000 6,000 6,263 7,219 4,000 2,000 0 JAN 2006 JUL 2006 JAN 2007 JUL 2007 DEC 2007 Enrollment Management System In July 2007, the department implemented an enrollment management system to ensure diversion project enrollment would not exceed its legislative funding authority. Specifically, the system allocates new enrollments based on available funding and prioritizes those enrollments based on the need for services rather than allocating slots to specific providers or areas. Furthermore, the system is consistent with the enrollment prioritization methods used in the Aged and Disabled Adult Services and the Assisted Living for the Frail Elderly Medicaid Waivers and is administered on a statewide basis by the department headquarters staff. This system of enrollment management can be initiated, as needed, based on budgets and enrollment for the program. As of November 2007, there were approximately 3,000 individuals in the enrollment management system awaiting available funding. 3

6 Department of Elder Affairs OPPAGA Report In May 2006, The Florida Office of Program Policy Analysis and Government Accountability (OPPAGA), a special research staff unit of the Legislature, issued a report on the diversion project. In summary, the report found: The diversion project has successfully delayed frail elders entry into nursing homes. Frail elders participating in the diversion project were more likely to delay entry into a nursing home than similar frail elders who were not enrolled in any Medicaid community-based waiver programs. When compared to other waiver programs, the diversion project has higher costs but is more successful in delaying nursing home placements. Although the state could potentially serve diversion project participants in other programs, doing so could compromise their quality of life and strain the capacity of these other programs. The complete report can be found at Program Savings The diversion project targets individuals who would otherwise be eligible for Medicaid nursing home placement. As a result, the state avoids potential nursing home costs for each individual enrolled in the diversion project, assuming that individual would enter a nursing home. For state fiscal year , nursing home cost savings are calculated as the difference between the monthly cost to serve a person in a nursing home under Medicaid ($3,839.50) and the average diversion project capitation payment ($1,777.51). The result shows $2, per person per month in avoided nursing home costs. During state fiscal year , the diversion project served 13,661 enrollees for a total of 105,574 case months. Based on a difference of $2, per month, the state avoided approximately $218 million in costs that would have been paid if all eligible enrollees were served in a nursing home instead of the community. Table 1 shows a comparison of cost and utilization information for individuals in the nursing home, the diversion project, the Assisted Living for the Frail Elderly Medicaid Waiver, the Medicaid Aged and Disabled Waiver and the Community Care for the Elderly program (a statefunded program, i.e., not a Medicaid waiver). It should be noted that none of the other waiver programs provide the exact same bundle of services to the same high-risk population as the diversion project. 4

7 Long-Term Care Community Diversion Pilot Project Report Table 1: Program Cost and Utilization by Program For State Fiscal Year Medicaid Nursing Home Diversion Project Assisted Living for the Frail Elderly Waiver Medicaid Aged and Disabled Waiver Community Care for the Elderly Amount Paid $2,016,621,993 $187,659,023 $38,786,156 $91,751,980 $47,106,823 Case Months 525, ,574 46, , ,713 Unduplicated Clients 67,123 13,661 4,699 13,759 28,481 Annual Cost Per Client Monthly Cost Per Client $46, $21, $10, $7, $4, $3, $1, $ $ $ Comparison of Frailty Levels Diversion project enrollees had similar levels of frailty as nursing home residents. The minimum frailty criteria for enrollment of individuals in the diversion project are the highest of any waiver program that serves elders and disabled adults in Florida. Diversion project participants had the highest risk scores aside from those individuals already in nursing homes. The average number of Activities of Daily Living (ADLs) and Instrumental Activities of Daily Living (IADLs) requiring assistance were also similar among diversion project enrollees and nursing home residents. The percentage of individuals with incontinence and dementia were the highest among diversion project enrollees and Assisted Living for the Frail Elderly Medicaid Waiver participants. The average risk score (the probability of nursing home placement) of diversion project clients was lower than nursing home residents, but higher than the individuals in the Assisted Living for the Frail Elderly Medicaid Waiver, the Medicaid Aged and Disabled Waiver and the Community Care for the Elderly program (CCE). Table 2 shows a comparison of frailty profiles of active clients in nursing homes, the diversion project, the Assisted Living for the Frail Elderly Medicaid Waiver, the Medicaid Aged and Disabled Waiver, and the Community Care for the Elderly program. 5

8 Department of Elder Affairs Table 2: Frailty Profile of Active Clients by Program For State Fiscal Year Average Nursing Home Risk Score* (range 0-100) Average Number of ADLs Requiring Assistance (range 0-5) Average Number of IADLs Requiring Assistance (range 0-8) Percentage with Incontinence Medicaid Nursing Home Diversion Project Assisted Living for the Frail Elderly Waiver Medicaid Aged and Disabled Waiver Community Care for the Elderly % 74% 69% 64% 51% Percentage with Dementia 59% 63% 65% 31% 33% *Risk score indicates the client s risk of nursing home placement Rate Methodology On September 1, 2006, a new capitation rate methodology was implemented incorporating recommendations made by the department s consulting actuary. This methodology incorporates plan-specific rates that reflect the level of risk assumed by each managed care organization. Consequently, managed care organizations that enroll clients with higher frailty levels are rewarded with higher payments. Additionally, to foster expansion of the project, especially in rural counties, the methodology incorporates a statewide base rate. The use of a statewide base rate greatly reduces the variability in payment rates among different regions of the state. This variability, a product of the previous methodology, was cited by diversion project contractors as a barrier to expanding operations into rural counties. The diversion program capitation rates utilize the same methodology described above. However, they have been updated to reflect changes in client frailty, program costs, and Medicaid policy. 6

9 Long-Term Care Community Diversion Pilot Project Report In Chapter (Laws of Florida), the agency was granted the authority to assess a disenrollment fee to a nursing home diversion provider when a plan member disenrolls from the program and enrolls in a Medicaid fee-for-service nursing home facility within two months of initial enrollment. The department and agency are developing a methodology to implement this provision. Medicaid Pending In 2006, the legislature amended Section (5), F.S., to create an option for diversion project applicants to choose to receive services prior to the conclusion of the Medicaid eligibility process, which is performed by the Department of Children and Family Services. Under the new legislation, diversion project applicants can be designated as Medicaid-Pending after they have been determined medically eligible by the department s Comprehensive Assessment and Review for Long-Term Care Services (CARES) staff but not yet determined financially eligible for Medicaid. However, the new legislation also places an element of risk in the hands of the client as they are liable for the costs of diversion project services if the client is determined not to be financially eligible for Medicaid. Since implementing the Medicaid Pending legislation in January 2007, 2,188 applicants have chosen the Medicaid Pending option. As of November 2007, 1,546 individuals who have chosen the Medicaid Pending option have ultimately enrolled in the diversion program. 7

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