Long-Term Care Community Diversion Pilot Project
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1 Long-Term Care Community Diversion Pilot Project Legislative Report December 2007 December 2008 Charlie Crist, Governor E. Douglas Beach, Ph.D., Secretary January 2009
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 Following authorization by the 1997 Legislature, the Long-Term Care Community Diversion Pilot Project (Diversion project) was implemented in December The Diversion project is designed to serve the frailest individuals who would otherwise qualify for Medicaid nursing home placement, through the provision of long-term care services. Services include home and community-based services, Medicaid covered medical services for persons who are dually eligible (e.g., prescription drugs, Medicare coinsurance and deductibles), and nursing home care. The objective is to provide frail elders with community-based alternatives in lieu of nursing home placement at a cost less than Medicaid nursing home care. The Department of Elder Affairs (Department) administers the Long-Term Care Community Diversion Pilot Project in consultation with the Agency for Health Care Administration (AHCA) through a cooperative agreement. The Diversion project, referenced in the Florida Statutes as a pilot, is directed to accomplish the following pursuant to the authorizing statute, section , Florida Statutes: Provide services of sufficient quality, type and duration to prevent or delay nursing facility placement. Integrate acute and long-term care services, and the funding sources for such services. Encourage individuals and families to plan for their long-term care needs. To meet these objectives, the Department must select providers who demonstrate the capacity to maximize placement of participants in the least restrictive, most appropriate care settings. Managed care contractors (see footnote ) are selected through an open application process and those that meet the requirements contract with the Department to provide services. Managed care contractors receive a per-member, per-month capitation payment to provide, manage and/or coordinate the enrollee s full continuum of long-term care and medical care. In making managed care contractors 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. Managed care contractors must also establish networks and subcontract with multiple providers; therefore, they are able to provide enrollees with a choice of care. For the purpose of the Diversion program, managed care contractors 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 Eligibility Project enrollees must be age 65 and older and enrollment is voluntary. Enrollees must also be enrolled in Medicare Parts A & B; Medicaid eligible up to the Institutional Care Program (ICP) income and asset levels; reside in the project service area; be determined by Comprehensive Assessment and Review for Long-Term Care Services (CARES) to be a person who, on the effective date of enrollment, can be safely served with home and community-based services; and be determined by CARES to be at risk of nursing home placement. Finally, enrollees must meet one or more of the following clinical criteria: Require some help with five or more activities of daily living (ADLs); or Require some help with four ADLs plus require supervision or administration of medication; or Require total help with two or more ADLs; or Have a diagnosis of Alzheimer s disease or another type of dementia and require assistance or supervision with three or more ADLs; or Have a diagnosis of a degenerative or chronic condition requiring daily nursing 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 an array of 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. The long-term care services include the following: adult companion, adult day health, assisted living services, case management, chore services, consumable medical supplies, environmental accessibility adaptation, escort, family training, financial assessment/risk reduction, home-delivered meals, homemaker, nutritional assessment/risk reduction, personal care, personal emergency response systems, respite care, occupational, physical and speech therapies, nursing facility services, prescribed drugs, and optional transportation. Case management services contribute to the coordination and integration of care delivery through ongoing monitoring of services as prescribed in each enrollee s care plan. Case management services facilitate enrollees gaining access to needed medical, social and educational services regardless of the funding source for the services. The contractor provides case management directly; however, the Department is considering allowing this service to be subcontracted as a strategy to accomplish expansion into more rural counties. 2
5 Long-Term Care Community Diversion Pilot Project Report The acute care services include community mental health services, dental, hearing, home health, independent lab and x-ray, inpatient hospital services, outpatient hospital services and emergency medical services, physicians services, prescribed drugs, vision and hospice. These services are covered only to the extent they are not covered by Medicare or reimbursed by Medicaid pursuant to Medicaid s cost-sharing polices. The services have changed very minimally since the program s inception. In 2008, the contract was amended to allow Diversion project enrollees to continue to receive hospice care while enrolled in Diversion. Previously, a Diversion program enrollee who enrolled with a hospice program was required to disenroll from the Diversion program. Related to the Diversion project s statutory directive to integrate acute and long-term care services, and the funding sources for such services; the Department is working with the Centers for Medicare and Medicaid Services (CMS), the Center for Health Care Strategies (CHCS) via a grant the Department was awarded, and AHCA to consider program design changes that would allow for even better integration of Medicare and Medicaid funding and services. In recent years, CMS made policy changes that provide more incentives and opportunities for states to better integrate services. CMS is considering a requirement that states must contract with Medicare Advantage and Special Needs Plans to advance integration. CMS is expected to make even more changes in the next few years depending on the direction from the new administration and Congress. Between December 2005 and early 2008, the Center for Health Care Strategies offered the Integrated Care Program (ICP) to promote state programs that integrate the financing, delivery, and administration of primary, acute, behavioral health, and longterm supports and services for those dually eligible for Medicare and Medicaid (as well as Medicaid-only persons with disabilities). Five states Florida, Minnesota, New Mexico, New York, and Washington were competitively selected and received technical assistance and training for the development and implementation of integrated care programs. Efforts specifically focused on planning requirements for state contracts with Medicare Advantage Special Needs Plans as well as on three state-identified priority areas: (1) administrative simplification; (2) rate setting and risk adjustment; and (3) performance measurement. The Department participated in this program until early 2008 and was awarded a second similar grant from CHCS in Technical assistance for grantees (the Department and the Diversion program) is now underway and will continue through Project Funding The Diversion project was implemented in December 1998 with approximately $22 million in funding. In state fiscal year , the project received its first significant funding increase bringing the total funding to approximately $68 million. In state fiscal 3
6 Department of Elder Affairs year , total project funding decreased by approximately $10 million. However, the total number of Diversion project slots increased by approximately 1,000 in January 2006 due to the implementation of Medicare Part D which shifted the payment for prescription drugs from Medicaid to Medicare. Initial funding for was $217 million, until Special Session C, which added approximately $6.8 million for a total of approximately $224 million. For the , the appropriation totaled $306,373,201 million. Table 1 lists the Appropriation History. TABLE 1: APPROPRIATION HISTORY * STATE FISCAL YEAR COMBINED FEDERAL AND STATE FUNDING (DOLLARS ROUNDED IN MILLIONS) $ ** $ $ $ $ $ $ $ $ $ $ $ $306 * Table 1 Funding is contained in the Agency for Health Care Administration s appropriation and presents combined federal and state appropriations. Includes Program of All Inclusive Care for the Elderly (PACE) clients for SFY and subsequent years. ** Project implementation began 12/98. Source: Department program data and CIRTS reports. 4
7 Long-Term Care Community Diversion Pilot Project Report Counties Approved for Diversion Project Diversion project operations began in four counties three counties in the Orlando area and one in Palm Beach County during the State fiscal year. Subsequently, the Centers for Medicare and Medicaid Services (CMS) have approved three expansions to the project s potential service area and a fourth is pending. 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. Approval to expand to each of the remaining counties was requested in October of 2008 and was received mid-december Map 1 highlights the phases and counties approved for the Diversion project. While the Department expected to receive the requested approval from CMS to expand to all 67 counties, only 32 counties currently offer the Diversion program. Difficulty establishing provider networks in rural counties and obstacles to offering a choice of at least two providers are cited as barriers to expansion. The Nursing Home Diversion Work Group, established by the Department in November 2008, is planning to identify all of the barriers and propose solutions to overcome them. 5
8 Department of Elder Affairs Map 1: Counties Approved for Diversion Project Escambia Santa Rosa Okaloosa Walton Holmes Jackson Gadsden Washington Calhoun Leon Bay Wakulla Liberty 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 Pending CMS Approval 6
9 Long-Term Care Community Diversion Pilot Project Report Enrollment Since the fiscal year, Diversion project enrollment has almost doubled. Diversion project enrollment grew from 7,219 enrollees at the beginning of state fiscal year to almost 14,500 enrollees as of December 1, Between December 2007 and July 2008 enrollment hovered around 10,000 each month. Enrollment in this program was frozen between July 1, 2007, and June 30, 2008, to ensure Diversion program spending did not exceed the legislative allocation. After July 1, 2008, following an increase in legislative funding, there was sufficient funding to release all persons from the waitlist. Between August and December 2008, enrollment in the Diversion program increased by almost 1,000 frail elders per month. This increase has contributed enormously to the 41.7 percent diversion rate from institutional care to home and community-based care (HCBS), which the Department recently achieved through CARES across all HCBS programs. Chart 1: Diversion Project Enrollment December Dec-08 Oct-08 Aug-08 Jun-08 Apr-08 Feb-08 Dec 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 ($1,624.33). The result shows $2, per person per month in avoided nursing home costs. 7
10 Department of Elder Affairs During state fiscal year , the Diversion project served 12,382 enrollees for a total of 132,808 case months. Based on a difference of $2, per month, the state avoided approximately $294 million in costs that would have been paid if all eligible enrollees were served in a nursing home instead of the community. Table 2 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. Table 2: Program Cost and Utilization by Program For State Fiscal Year * Medicaid Nursing Home (* data) 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 $243,783,409 $26,311,485 $82,060,217 $48,981,788 Case Months 525, ,808 31, ,107 93,224 Unduplicated Clients 67,123 12,382 3,119 7,219 16,609 Annual Cost Per Client $46, $22, $9, $8, $6, Monthly Cost Per Client $3, $1, $ $ $ *Valid Nursing Home data for data is not available from Medicaid at this time. Comparison of Frailty Levels Diversion project enrollees had similar levels of frailty as nursing home residents. This is the same as last year. 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. 8
11 Long-Term Care Community Diversion Pilot Project Report 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 3 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. Table 3: Frailty Profile of Active Clients by Program, State Fiscal Year *Valid Nursing Home data for data is not available from Medicaid at this time. *Medicaid Nursing Home Diversion Project Assisted Living for the Frail Elderly Waiver Medicaid Aged and Disabled Waiver Community Care for the Elderly 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 % 75% 72% 66% 53% Percentage with Dementia 59% 63% 65% 31% 34% Note: Risk score indicates the client s risk of nursing home placement Rate Methodology After implementing a new Diversion program capitation rate methodology in September 2006, the Department instituted another change in the rate setting and methodology for the contract year beginning September For the September 2008 August 2009 contract year, the change represented the first time Diversion program rates were set using plan utilization data. The actuarial consultant as required by the Centers for Medicare and Medicaid Services recommended this significant change. Rates were set based on a 50 percent weight of encounter data and 50 percent use of the existing methodology. For the contract year beginning in September 2009, the Department intends to utilize 100 percent encounter data for rate setting as certified by the actuary. The Department and AHCA expect some technological barriers in transitioning Diversion program contractors to the submission of 100 percent encounter data. 9
12 Department of Elder Affairs The primary shift in the 2006 methodology was the incorporation of plan-specific rates that reflect the level of risk assumed by each managed care contractor. Consequently, managed care contractors that enroll clients with higher frailty levels are rewarded with higher payments. The Diversion program capitation rates utilize the same methodology implemented in However, the rates were updated to reflect changes in client frailty, program costs and Medicaid policy. 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. Diversion project contractors cited this variability, a product of the previous methodology, as a barrier to expanding operations into rural counties. Finally, in Chapter (Laws of Florida), the Agency for Health Care Administration 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. To date, the disenrollment fee has not been assessed. The Department has requested an actuarial review of the impact of the implementation of this fee in light of the use of 50 percent encounter data. Once the transition is made to the use of 100 percent encounter date for the September contract year, the disenrollment fee will not be applicable. 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 the client is liable for the costs of Diversion project services if he or she is determined not to be financially eligible for Medicaid. There have been operational challenges since implementing the Medicaid-Pending legislation in January While the capacity to provide services to frail elders quickly is a benefit, the existing Medicaid fiscal agent does not have a way to enroll these individuals while they are being served as Medicaid-Pending. Enrollments are processed manually and create a heavy administrative burden that has resulted in payment delays to Diversion project contractors. In some cases, when Medicaid- Pending enrollees have been determined financially ineligible for Medicaid and therefore 10
13 Long-Term Care Community Diversion Pilot Project Report responsible for any bills for services, the enrollees have experienced difficulties paying for the services. Conclusion December 2008 marks the tenth year the Long-Term Care Community Diversion Pilot has provided services to frail elders. For the contract year, which began September 1, 2008, a revised capitation rate setting methodology was implemented and contracts were signed by 15 organizations. The Diversion program represents Florida s most integrated coordinated model of medical and community-based care for frail elders on Medicare and Medicaid. The Department, in tandem with AHCA and the Nursing Home Diversion Work Group, hopes to recommend and accomplish a number of operational improvements next year. The improvements include a departmental review of the contractor compliance processes and monitoring, recommendations for streamlining eligibility and enrollment across three state agencies, improving billing between MCOs and subcontractors, and increasing performance and outcome measures and results for providers and enrollees. Most importantly, the Department hopes to facilitate the successful expansion of the program to rural counties and to improve the delivery and integration of care for elder enrollees within this model pilot program that has proven to generate cost savings for Florida. 11
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