Medicaid & Supporting People with Developmental Disabilities Trends, Challenges, and Opportunities Gary Smith HSRI May 21, 2003

Medicaid is the linchpin Underwrites primary health care for at least 1.4 million individuals with mental retardation and other developmental disabilities EPSDT is very important in supporting children with disabilities in low-income households Adults – Rely on Medicaid for primary health care Underwrites long-term services and supports for about 500,000 people with developmental disabilities

Long-term Services and Supports Medicaid accounts for 75%+ of state expenditures on long-term services and supports for people with developmental disabilities Key benefits: HCBS waiver, ICF/MR, and Targeted Case Management 2002 Spending = $24.1 Billion+ HCBS waiver program: now the primary program in virtually all states

DD LTS Medicaid Beneficiary Growth – 1990 to 2002 Growth Rate = 8.2%/year 1999 – 2002 Increase: 110,000 (29%) 2002: HCBS= 379,000 ICF/MR= 111,000

Expenditure Trends – 1990 to 2002 Annual Total Expenditure Growth: 6.1% (inflation adjusted) 2002 HCBS=$13.3 B ICF/MR= +$10.8 B

Principal trends ICF/MR: Slow fade –Downsizing/closure public institutions –Limited development of non-state facilities HCBS Waiver Program –States’ main vehicle for underwriting community services –Expenditures and number of participants have grown very rapidly –States have leveraged old and new dollars through the waiver program to acquire more federal dollars –Outcome: HCBS waiver program fueled expansion of community services

Shift to waiver program has – Lowered state per capita costs Decoupled funding from location Aided in reducing/containing waiting lists Infused dollars into services for people who live with their families Substantially boosted dollars for integrated employment services Given states an enormously flexible, agile funding stream

Dialing for dollars … Waiverization – Unmatched state dollars Family support – leveraging existing dollars In-home supports Local match Opportunities vary state-to-state

Going Forward

Critical Issue: State Financial Health State budget crash –Cuts in Medicaid: physical health; eligibility –States throwing on the brakes on system expansion –Result: waiting lists are climbing fast –Payment freezes and cuts Prognosis – Little or no growth over the mid- term Problems: –Most states have emptied their unmatched dollars piggy-banks –Going forward, slow growth in state revenues Outgrowth: future funding will hinge on recovery of overall state budget

Critical Issue: Litigation Lawsuits in 23 states over wait listing individuals with developmental disabilities for Medicaid services Other lawsuits concerning payments, including worker wages Aim – put home and community services on equal footing with entitled institutional services Outcome and impact uncertain

Federal Focus Areas Administrative policy changes to address barriers to HCS across full spectrum of people with disabilities System change grants: aid states to strengthen community infrastructure and systems; pave the way for change Consumer-directionQuality

Consumer-direction Movement for individual-direction of services and supports cuts across individuals with all types of disabilities CMS: Independence Plus Initiative Individual/family-directed Medicaid home and community services are the “next big thing” and will lead to substantial changes in public systems (eventually)

Quality CMS: Major focus on HCBS waiver quality management and improvement –Technical assistance/tool development –Oversight –Going forward: requirement for states to spell out full- featured HCBS waiver quality management/ improvement systems States: engaged in high volume of system enhancement/development activities Going forward: appreciably higher quality management expectations

State Management The scale of HCBS waiver programs has increased enormously Waiver = Community System States are revamping program management Revising/rationalizing payments/fund allocation Reconfiguring systems and “business model” around the waiver program

Wrap-up Developmental disabilities services and Medicaid are wedded at the hip Medicaid has fueled system growth HCBS waiver program is a powerful tool to expand community supports Going forward: future hinges on financial health of the states Focus areas: –Consumer-direction –System and quality management

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