1. Michigan LTC Conference: People. Partnerships, Possibilities Susan Nedza, M.D., MBA Chief Medical Officer Region V-Centers for Medicare & Medicaid Services US Department of Health & Human Services March 23-24, 2006

2. CMS Accomplishments The Disabled and Elderly Health Programs Group (DEHPG) under the Center for Medicaid and State Operations provides national leadership for the design of financially sound Medicaid programs. DEHPG assists States in developing programs that support individuals of all ages and foster: –long term care and pharmacy services; –full participation in community life and independent living; and –economic self-sufficiency, and recovery.

3. GUIDING PRINCIPLES DEHPG’s guiding principles in delineating strategic plan goals are to ensure: –State flexibility –Accountability (program and personal) –Individual choice

4. 2006 DEHPG Strategic Action Plan Vision: To transform the provision of Medicaid services to support individual choices and preferences.

5. 2006 Strategic Action Plan GOAL 1. ACCESS VIA PARTNERSHIPS Obj. A: Increase the support for and understanding of program changes by engaging stakeholders in developing policy. Obj. B. Increase beneficiaries’ access to the Part D Medicare Prescription Drug benefit through working with States to wrap-around and support efforts to implement the Medicare Modernization Act (MMA).

6. 2006 Strategic Action Plan GOAL 2: INNOVATION & FLEXIBILITY Obj. A: Increase beneficiaries’ access to services and service options through problem solving and solution finding with States which results in program innovations and flexibility. Obj. B: Increase support for State efforts to manage costs while ensuring programs operate in a manner consistent with law and regulations.

7. 2006 Strategic Action Plan Goal #3: CHOICE Assist beneficiaries lead better lives by advancing policies and programs that facilitate individual choice and control, and promote community living.

8. 2006 Strategic Action Plan Goal #4: QUALITY- Improve the quality of services beneficiaries receive by better defining and advancing quality principles for our programs. Obj. A: Build States’ capacity for using quality elements and measures in order to continuously improve each of our programs. Obj. A: Build States’ capacity for using quality elements and measures in order to continuously improve each of our programs. Obj. B: Improve responsiveness to States through increasing administrative efficiency and ensuring consistent program guidance and oversight.

9. CMS Quality and Efficiency Agenda Vision: To transform the healthcare system.

10. CMS Definition of Quality The right care for every person every time. (at the right place?) –This is a move from paying for what is medically necessary to appropriate. –What is “appropriateness?” Includes cost in the equation TimingLocation Who will be paid

11. Medicare Value Based Purchasing The movement to pay for performance in all sectors is accelerating Quality measurement will increasingly be tied to payment Efficient provision of services will be rewarded.

12. Value Based Purchasing Quality- at the patient level Efficiency- at the system level Integration for payment for quality strategies across the continuum of care LTC will be affected both actively and passively by all of these initiatives

13. Nursing Home Pay for Performance Demonstration Hospital-based and freestanding facilities Incentive payments on level of performance and improvement over time Objectives: –Promote quality –Facilitate sharing of best practices –Provide info to guide policy development

14. Potential Performance Measures MDS-based Outcomes from state survey inspections Staffing and stability Rate of Avoidable hospitalizations Others: –Process of care –Quality of life –Resident satisfaction

15. Deficit Reduction Act of 2005

16. DRA By 2030, spending for Medicare, Medicaid, and Social Security alone will be almost 60 percent of the entire Federal budget. The annual growth of entitlement programs needs to be slowed to affordable levels, but these programs do not need to be cut. Reforms that can reduce the annual growth of mandatory spending such as the Deficit Reduction Act can save taxpayers nearly $40 billion over the next five years.

17. DRA The Deficit Reduction Act, together with the Medicare Act of 2003, require wealthier seniors to pay higher premiums for their Medicare coverage.

18. DRA The DRA helps restrain Medicaid spending by reducing Federal overpayment for Rx drugs The bill also gives governors more flexibility to design Medicaid benefits that efficiently and affordably meet their states' needs, tightens loopholes that have allowed individuals to transferring assets to their children so they can qualify for Medicaid benefits.

19. DRA- Chapter 2 – LTC Under Medicaid Subchapter A – Reform of Asset Transfer Rules - changes the start date for the period of ineligibility for Medicaid LTC services, as proposed in the President’s Budget. This chapter curtail abuses in Medicaid LTC by: –lengthening the look-back period to 60 months –disqualifying individuals w/home equity over $500K –Imposing partial months of ineligibility –allowing states to accumulate multiple transfers into one penalty period

20. Sec. 6011. Lengthening look-back period; change in beginning date for period of ineligibility –This provision lengthens the “look-back” period from 36 months to 60 months. –The “look-back” period is the amount of time for which states are required to determine whether an individual transferred or gifted assets for less than fair market value. –Gifting or transferring assets for less than fair market value is one way individuals spend down to become Medicaid eligible for long-term care. DRA- Chapter 2 – LTC Under Medicaid

21. Sec. 6012. Disclosure and treatment of annuities- this provision requires states to make Medicaid LTC services contingent upon applicants disclosing a description of any interest the individual or community spouse has in an annuity regardless of whether the annuity is irrevocable or is treated as an asset. DRA- Chapter 2 – LTC Under Medicaid

22. Sec. 6014. Disqualification for long-term care assistance for individuals with substantial home equity Individuals shall not be eligible for LTC assistance if the individual’s equity interest in the individual’s home exceeds $500K. The State may elect to change the $500K home equity limit to any amount up to $750K. The State may elect to change the $500K home equity limit to any amount up to $750K. The Secretary is to establish a process where this requirement is waived in cases of demonstrated hardship. The Secretary is to establish a process where this requirement is waived in cases of demonstrated hardship. DRA- Chapter 2 – LTC Under Medicaid

23. Sec. 6021. Expansion of State Long-Term Care Partnership Program The LTC Partnership program is currently operational in four states: California, Connecticut, Indiana and New York. More than 180,000 long-term care insurance policies have been purchased in those states, and it is estimated that through these Partnerships, approximately $30 million of assets have been protected. The Partnership benefits consumers, Medicaid and private insurers. DRA- Chapter 2 – LTC Under Medicaid

24. This Chapter includes the Family Opportunity Act, the Money Follows the Person Rebalancing Demonstration and other misc. provisions. The Family Opportunity Act- permits families with disabled children to buy into Medicaid, create demonstration grants for community-based alternatives to psychiatric residential treatment facilities for individuals under the age of 21, and restores Medicaid eligibility for certain SSI beneficiaries. DRA- Chapter 6

25. This Chapter includes the Family Opportunity Act, the Money Follows the Person Rebalancing Demonstration The Money Follows the Person (MFP) rebalancing demonstration provides the Secretary with the authority to award competitive grants to States to pay for a period of 1 year an MFP-enhanced FMAP rate for the provision of HCBS to individuals who transition from institutional long-term settings to home or community-based settings of their choice. DRA- Chapter 6

26. This Chapter includes the Family Opportunity Act, the Money Follows the Person Rebalancing Demonstration and other misc. provisions. Other provisions to assist the disabled in receiving care in the community include a state option for expanded access to home and community-based services for the elderly and disabled and a state option for self-directed personal assistance services (cash and counseling). DRA- Chapter 6

27. Subchapter C – Miscellaneous Sec. 6086. Expanded access to home and community-based services (HCBS) Acting through the Director of the Agency for Healthcare Research and Quality (AHRQ), the Secretary shall develop program performance indicators and measures of client satisfaction for home and community based services offered under State Medicaid programs. The Secretary shall use the indicators to assess the outcomes of such services offered and make best practices publicly available. The provision makes $1 million available for the period of FY06-FY10 for research on HCBS quality. DRA- Chapter 6

28. Conclusion Medicaid Reform will continue to affect the long term care industry Increasingly, value based purchasing will become more prevalent The Deficit Reduction Act will slow the growth in Medicaid expenditures.

29. THANK YOU!