Medicaid Shifts Care Focus To Community Settings

Federal officials have initiated a highly anticipated program to help states move long-term-care beneficiaries—including those with mental illness—from nursing homes to community-based care.

One of the few positive developments that mental health advocates cited in the 2005 Deficit Reduction Act (DRA), the “Money Follows the Person” initiative will offer $1.75 billion in competitive grants to states from the Centers for Medicare and Medicaid Services (CMS) over five years to help shift Medicaid programs from an overwhelming focus on institutional long-term care to systems that allow choices that include home and community-based care for seniors and those with disabilities.

CMS will accept detailed proposals from states through November 1. States can propose new programs aimed at sustaining people in their homes or communities who would otherwise receive care in a nursing home or other institution. In effect, the federal government will pay for 75 percent to 90 percent of the costs of transitioning individuals out of nursing homes and into community settings and the associated costs of the long-term care in those settings.

The new emphasis on community care is a recommendation of President Bush's New Freedom Commission on Mental Health.

“We've worked with advocates and states for years to end the institutional bias in Medicaid, and now we've got the best opportunity ever to do it,” said CMS Administrator Mark McClellan, M.D., Ph.D. “We need to move as quickly as possible to make that shift across Medicaid. With new federal funding, there is no longer any excuse for the status quo.”

Funds also can be used for home-modification costs, respite services to augment informal or unpaid caregivers, personal care, and assistive devices.

Disability advocates highlight that the program encourages states to work with local and state housing authorities to provide coordinated assistance for community-based housing needs. Although housing for those with disabilities is a major unmet need, many Medicaid programs have never made coordinated efforts in this area previously, according to advocates for people with mental illness.

CMS and the Department of Housing and Urban Development established a new interagency liaison to support housing coordination.

Federal officials said the Money Follows the Person initiative offers“ the promise of significantly lower costs per beneficiary and reductions in overall Medicaid spending,” but acknowledged that the transition may create some short-term costs, which the new federal program aims to help states overcome.

Advocates for people with disabilities said those individuals often end up in a nursing home or other institution because they either do not hear about community-based support services or the waiting lists are too long. But they maintain that people with many kinds and degrees of disabilities live well in the community when “the right services and supports” are provided.

Nonetheless, community care is not appropriate for all beneficiaries who need long-term care. Helen Kyomen, M.D., chair of APA's Committee on Long-Term Care and Treatment of the Elderly, said the patients she refers to nursing homes are unable to function in a residential setting. Program administrators must take care, she said to Psychiatric News, to ensure that only those Medicaid beneficiaries suited to community- and home-based care are moved to those settings.

“The idea seems innovative, and it's good to give people a choice, but you don't want to put someone in the position where they move to a community-based setting and don't have the tools to function there,” Kyomen said. “If they are able to choose the population correctly, it could be a good thing.”

Elizabeth Clemmer, associate director of the AARP's Public Policy Institute, said there is some concern that states may engage in deinstitutionalization on scales similar to those in the 1970s and 1980s of people with psychiatric illnesses, without offering suitable alternatives. She said states need to transition people “decently” and not“ solely because they can save money.”

Federal officials said each state awarded a grant under the program must continue to provide community services after they receive a year of federal matching funds as long as the person needs community services and is Medicaid eligible. They emphasize that the program gives individuals control over how to get their services, rather than requiring them to use institutional care to get long-term care under Medicaid.

“2006 Money Follows the Person Re-balancing Initiative Demonstration Program,” including application forms, is posted at<www.grants.gov/search/search.do?oppId=10432&mode=VIEW>.▪