June 12, 2006
FEDERAL MONEY FOLLOWS THE PERSON DEMONSTRATION
By: Helga Niesz, Principal Analyst
You asked for details on the new federal Money Follows the Person Demonstration Grant legislation (PL 109-171, § 6071), which recent Connecticut legislation has allowed the Department of Social Services to apply for (PA 06-188, § 44). You particularly want to know whether the grants will pay the difference if a person's care at home costs more than it would in the nursing home.
The new federal Money Follows the Person (MFP) Rebalancing Demonstration Grant program is intended to help remove barriers so states can provide more home-and community-based long-term care (LTC) services instead of institutional care. The demonstration begins January 1, 2007 and will give competitive grants to selected states for up to five years to move people from institutions to community-based settings.
To be eligible, individuals must have lived in a nursing home or other institution for at least six months and, if it were not for the community-based services provided under the demonstration, would have to remain in the institution. For the first 12 months the participant lives in the community, the demonstration will pay an enhanced federal match (FMAP) compared to the usual Medicaid match (ours in Connecticut is 50% and for the demonstration the match could be up to 75% for the state). The total federal funds for the demonstration for the five years will be $1.75 billion.
While the grants will not specifically pay the difference if a person's care at home costs more than it would in the nursing home, the enhanced FMAP should help for such situations. CMS is also considering, but has not yet made a final decision on, providing extra funding for one-time transitional expenses, such as assistive technology or other things needed to make the transition possible, according to Melissa Hurlburt, director, Division of Advocacy and Special Initiatives/ Centers for Medicaid and State Operations at the federal Center for Medicare and Medicaid Services in the Department of Health and Human Services (HHS).
According to Hurlbert, there will be no federal requirement to keep the cost of each individual in the community below what a nursing home costs, only a requirement that the overall cost for the total number of participants in the demonstration be, on average, less than it would cost for them to be in an institution. States will have a fair amount of flexibility in their target population, the services provided, and be allowed to waive some of the usual Medicaid rules. So a state could choose to require the cost to be less than in an institution either on average or for each individual.
CMS plans to issue a request for proposals (RFP) late this summer, which should also contain more details and guidance; it is considering issuing a second RFP next summer also. They do not plan to issue regulations for the demonstration. Around 10 states might receive grants, according to Hurlbert.
MONEY FOLLOWS THE PERSON REBALANCING DEMONSTRATION - § 6071 OF THE FEDERAL DEFICIT REDUCTION ACT OF 2005 PL 109-171
Program Purpose and Authority - Subdivision (a)
The legislation authorizes the HHS secretary to award competitive grants to states for demonstration projects designed to achieve the following objectives:
1. increasing use of home-and community-based, rather than institutional, LTC services;
2. eliminating barriers or mechanisms in a state's law, Medicaid plan, or budget that prevent or restrict the flexible use of Medicaid funds to enable Medicaid-eligible people to receive needed LTC services in the setting they choose;
3. increasing the ability of a state's Medicaid program to assure continued home- and community-based LTC services for people moving from an institution to the community; and
4. ensuring that procedures are in place to provide quality assurance to participants and to provide for continuous quality improvement in the services.
Definitions - Subdivision (b)
The new law defines “home and community-based LTC services” with respect to a state Medicaid program as home and community based services, including home care and personal care services, that are provided under the state's qualified home and community-based care (HCB) program” (defined in subdivision (b) below).
To be eligible for the demonstration, an individual must be someone living in the state who:
1. immediately before participating in the demonstration (a) resides and has resided for at least six months in an inpatient facility (states can set a longer minimum period up to two years); (b) receives Medicaid benefits for inpatient services at the facility; and (c) has been determined to continue to need inpatient facility care if HCB services were not provided (or in any case where the state applies a more stringent level of care standard as a result of implementing a newly permitted HCB state plan option under another section of this law (§ 6086) the person must continue to need at least the level of care which resulted in admission to the institution) and
2. lives in a qualified residence (see below) beginning on the initial date of his participation in the demonstration project.
An “inpatient facility” is a hospital, nursing facility, or intermediate care facility for the mentally retarded. The term includes an institution for mental diseases, but only to the extent medical assistance is available under the state Medicaid plan for services provided by the institution.
“Medicaid” includes the regular state Medicaid program and any waivers or demonstration projects the state has received.
The term” qualified HCB program” means a program providing home and community-based LTC services operating under Medicaid, whether or not it is operating under a waiver.
A “qualified residence” for an eligible individual is a home owned or leased by the individual or a family member; an apartment with an individual lease, with lockable exits, which includes living, sleeping, bathing, and cooking areas over which the individual or his family has control; and a residence in a community-based residential setting where no more than four unrelated people live.
“Qualified expenditures” means the state's expenditures under the project for home and community-based LTC services for an eligible individual, but only for services for the first 12 months after the person is discharged from an inpatient facility.
“Self-directed services” means home and community-based LTC services planned and purchased under the recipient's or his authorized representative's direction, including the amount, duration, scope, provider, and location of such services under the state Medicaid program, consistent with the following requirements:
1. There must be an assessment of the individual's needs, capabilities, and preferences with regard to the services.
2. Based on the assessment, there must be developed jointly with the individual a plan for the services that is approved by the state and that (a) specifies those services, if any, which the individual or his representative will self-direct and the methods the individual or an agency he designates will use to select, manage, and dismiss service providers; (c) specifies the role of family members and others whose participation the individual seeks; and (d) is developed through a “person-centered” process directed by the individual, builds on his or her capacity to engage in activities that promote community life, and respects the individual's preferences, choices, and abilities, and involves families, friends, and professionals as desired or required by the individual; (e) includes appropriate risk management techniques that recognize the roles and sharing of responsibilities in obtaining services in a self-directed manner and assure the plan's appropriateness based on the individual's resources and capabilities; and (f) may include an individualized budget for the services and supports under the individual's control and direction.
3. The state's application must describe the method for calculating the dollar values in the individualized self-direction budgets based on reliable costs and service utilization, define a process to adjust for changes in individual assessments and service plans, and provide a procedure to evaluate the budgets' expenditures.
State Application - Subdivision (c)
A state seeking approval of an MFP demonstration project must submit an application to the HHS secretary that meets the following requirements and contains whatever additional information, provisions, and assurances the secretary requires. Specifically, the application must:
1. contain an assurance that the state has engaged and will continue to engage in a public design, development, and evaluation process for the project that allows for input from eligible individuals, their families, their authorized representatives, and other interested parties;
2. contain an assurance that the state will conduct the project in conjunction with a qualified HCB program that is in operation or approved in the state in a way that assures continuity of Medicaid coverage for particpants so long as they continue to be eligible for medical assistance;
3. specify the project's duration, which must include at least two consecutive fiscal years in the five-fiscal year period beginning with FY 07;
4. specify the MFP project's service area or areas, which may be all or part of the state;
5. specify the target groups and the projected number of eligible individuals in each target group to be assisted in transitioning from an inpatient facility to a qualified residence during each fiscal year, as well as the estimated total annual qualified expenditures for each fiscal year;
6. contain assurances that each individual will be able to make an informed choice about whether to participate in the project and will choose the qualified residence where he will live and the setting in which he will receive the services and that the state will continue to make HCB services available to each individual who completes the demonstration project for as long as he remains eligible for medical assistance under the qualified HCB program;
7. provide whatever information the secretary requires concerning amounts of state Medicaid expenditures for LTC services for the fiscal year immediately before the project begins and the percentage of such expenditures for institutional care versus HCB care, specify the methods the state will use to increase the dollar amount and percentage of the HCB services expenditures for each fiscal year during the project, and describe how the project will contribute to accomplishing the federal law's objectives;
8. describe methods the state will use to eliminate any legal, budgetary, or other barriers to flexibility in using Medicaid funds to pay for LTC services for project participants in the appropriate settings they choose, including costs to transition from an institution to a qualified residence;
9. contain or be accompanied by assurances that (a) total expenditures under the state Medicaid program for HCB services will not be less for any fiscal year during the project than for the greater of such expenditures for FY 05 or any succeeding fiscal year before the project begins and (b), for a qualified HCB waiver program, the state program would continue to meet the cost-effectiveness under the waiver laws, except for the amount of the demonstration grant;
10. contain or be accompanied by requests for waiver modifications or adjustments the state needs for the demonstration, including adjustments to the maximum number of waiver participants and package of benefits, including one-time transitional benefits;
11. include a plan for quality assurance and improvement in HCB services, including a plan to ensure the health and welfare of project participants and an assurance that the state will cooperate in carrying out activities to develop and implement continuous quality assurance and improvement systems for these services;
12. if the state elects to provide “self-directed” HCB services as defined above for the demonstration, provide (a) descriptions of how the project will meet this law's requirements for providing such services and how eligible individuals will be given the opportunity to make an informed choice about receiving self-directed services during and after the end of the project, (b) satisfactory assurances that the state will provide support to participants who self-direct in developing and implementing their service plans and oversight of their receipt of services, including steps to assure service quality and consistency with the service plan (the MFP law does not require a state to choose to offer self-directed services under the demonstration project nor does it require any participants to choose to receive self-directed services); and
13. provide that the state will (a) furnish reports on the project on whatever timetable, format, and containing whatever information the secretary requires, so as to allow for reliable comparisons of the projects among the participating states and (b) participate in and cooperate with evaluation of the project.
HHS Secretary's Award of Competitive Grants - Subdivision (d)
The law requires the HHS secretary to award the grants on a competitive basis to states selected from among those who apply. In making the selection, the secretary must (1) take into consideration how and to what extent the state proposes to achieve the law's objectives; (2) try to achieve an appropriate national balance in the numbers of eligible individuals within different target groups who participate in the projects and in the geographic distribution of states operating the projects; (3) give preference to states proposing to provide transition assistance to people within multiple target groups and to provide the opportunity for self-directed services; and (4) take these objectives into consideration in setting the annual grant award amounts for each state.
The law authorizes the secretary to waive the usual Medicaid principles of statewideness (to permit a project to take place only in a selected area or areas of the state), comparability (to permit a project to assist only a selected category or categories of individuals), income and resource eligibility (to permit a state to apply institutional eligibility rules to people transitioning to HCB care, and certain provider agreement rules (so a state can implement self-directed services in a cost-effective manner). To receive a grant for the second and following years, a state must demonstrate that it is (1) meeting numerical benchmarks specified in the grant agreement for increasing state medical support for HCB services and the numbers of people assisted to transition to a qualified residence and (2) assuring project participants' health and welfare.
Payments to States and Carryovers - Subdivision (e)
For each calendar quarter, the secretary must pay the selected states the lesser of (1) the MFP-enhanced FMAP of the amount of qualified expenses for the quarter or (2) the total amount remaining in the grant award for the fiscal year. Amounts remaining in the grant award at the end of the fiscal year can be carried over for the next four fiscal years. If a state fails to meet the conditions for continuation, the secretary can rescind the grants for the succeeding years, as well as any unspent portions of awards for prior years. The law prevents duplication of payments to a state. The MFP funding replaces the usual Medicaid funding, but once it is exhausted in a fiscal year, the state can use regular Medicaid funding for the services.
The new law defines the “MFP-enhanced FMAP” for a state for a fiscal year as equal to the federal medical assistance percentage, as defined in existing law, for the state increased by a number of percentage points equal to half of the percentage points by which the FMAP for the state is less than 100%. But in no case can the FMAP for a state be more than 90%. (For Connecticut the usual FMAP is 50% for Medicaid, so it appears that the enhanced FMAP would be 75%.)
Quality Assurance and Improvement, Technical Assistance, and Oversight - Subdivision (f)
The new law requires the secretary to provide states with technical assistance and oversight for purposes of upgrading Medicaid HCB waiver quality assurance and improvement systems. The purposes can include disseminating information on promising practices; guidance on system design elements addressing participating individuals' unique needs; ongoing consultation on quality, including assistance in developing necessary tools, resources, and monitoring systems; and guidance on remedying programmatic and systemic problems. The legislation designates up to $2.4 million of the appropriations for this purpose.
Research and Evaluation - Subdivision (g)
The secretary must provide for research on, and a national evaluation of, the program. The evaluation must include an analysis of projected and actual savings related to people's transitions to qualified residences in the communities. The secretary must make a final report to the president and Congress by September 30, 2011 on the evaluation and providing findings and conclusions on the MFP demonstration projects' conduct and effectiveness. $1.1 million per year out of the total appropriations can be used to carry out these functions.
Appropriations - Subdivision (h)
The act appropriates $250 million for FY 07 from January 1 to September 30, $300 million for FY 08, $350 million for FY 09, $400 million for FY 10 and $450 million for FY 11. Unspent amounts can be carried over at the end of each fiscal year.