How Optional Medicaid Services Save Idaho Taxpayers Money.
Medicaid is a state and federal program created in 1965 which provides federal funding for medical care for people who cannot afford it, and a range of services for poor people with disabilities which allow them to live safely in their homes. The State of Idaho provides about 30% of the cost of this care and the federal government provides about 70% of the cost. For the last three fiscal years the federal share was increased to about 80% due to a provision in the American Recovery and Reinvestment Act (ARRA). In FY 2012 the federal share will gradually return to about 70%.
To participate in Medicaid, Idaho must provide certain covered services which are federally mandated. Another set of services are “optional” under the federal statute. These “optional” services were added to the federal program, mostly, as ways to save the states money and to provide federal financial assistance for services which states were providing without federal matching funds. Whenever Idaho has chosen to cover optional Medicaid services, it has been done for the purpose of reducing costs in mandatory services or to obtain federal matching funds for services previously paid for with state dollars.
“Optional Services” include lower cost alternatives to mandatory services.
Many optional services are lower cost services which reduce the use of higher cost, mandatory services. For example nurse practitioner services and licensed professional services such as podiatrists, psychologists, and nurse anesthetists are “optional” but reduce the use of higher cost, mandatory physician services. Similarly, optional Home and Community Based Services (HCBS) replace more expensive mandatory nursing home services.
Community based mental health rehabilitation services, like psychosocial rehabilitation (PSR), have been proven to reduce the frequency of involuntary hospitalization in state hospitals which, for most adults, is paid for with 100% state funds and costs the state about $530.00 per person per day. However two of the units at Idaho State Hospital South (the elderly and adolescent units) are funded by 70% federal matching funds because they come under “optional” Medicaid services.
Intermediate Care Facilities for people with Intellectual Disabilities (ICF/ID, formerly ICF/MR) services are optional, but through this Medicaid service the federal government pays for 70% of the $22,000,000 per year cost of Idaho State School and Hospital (ISSH) including the payments on the bond issued to build the new buildings on campus. In addition to the Federal funding for ISSH, the existence of private ICFs/ID, and Home and Community Based Waiver Services for people with developmental disabilities (HCBS/DD) has allowed Idaho to reduce the average population at the state institution from about 1,000 people in 1960 to about 68 today. The average cost of care at ISSH is now about $700 per person per day while the cost in community ICF/IDs is about $240 per day, and the cost of care in the community with HCBS is about $129 per day. Since the introduction of HCBS/DD, the population at ISSH has decreased significantly and the population in private ICF/IDs has been held steady in spite of a significant increase in the number of people with developmental disabilities who are eligible for institutional care in Idaho. By serving these people in the HCBS/DD waiver, Idaho has saved huge sums of money over the years.
HCBS services for people who would otherwise need mandatory nursing home services (the HCBS/A&D waiver) is an even bigger savings. This waiver saves Idaho taxpayers money in two ways. First it saves millions by providing less expensive home based care. Currently, there are 7,813 adults on the HCBS/ A&D waiver with an average per person, per month cost of $1,561 while the average per person per month cost for nursing facility care was $5,349, saving Idaho about $29,600,000 per month or about $355, 000,000 per year if all eligible people moved to nursing facilities. Of course some people would try to get by as long as possible without entering nursing homes. For some of these people that attempt would end in an illness or injury, an expensive hospitalization, or an earlier admission to a nursing home. HCBS/A&D services prevent these events and keep people out of nursing homes entirely or at least for a much longer period of time. In addition to keeping people in their homes, HCBS/A&D services have saved the state millions in reduced Aid to the Aged Blind and Disabled (AABD) payments. Prior to the HCBS/A&D waiver Idaho paid the cost of residential and assisted living homes for people without the financial resources to support themselves. The AABD program is mandated for states participating in Medicaid. People without income who lived in group residential care facilities, now mostly called assisted living facilities, paid their bill with the state AABD payments they received. These payments come directly from the state general fund without federal match. With the HCBS/A&D waiver, much of the cost of care for these people is now shared by the federal government.
The Americans with Disabilities Act mandates community services.
Even though many community based services for people with disabilities are considered optional under the federal Medicaid statute, compliance with the Americans with Disabilities Act (42 USC §12101-12103) is not optional. Since the U. S. Supreme Court decision in Olmstead v. L.C. and E.W., 527 U.S. 581 (1999),it has been clear that state’s cannot design their Medicaid programs in a manner which unnecessarily forces people with disabilities into institutional settings in order to receive Medicaid services. The Supreme Court specifically mentioned the HCBS waivers as the method for insuring that n the state’s Medicaid system has adequate alternatives to institutional services. While states have considerable flexibility in how they configure their HCBS services, elimination of community based alternatives violates the requirements of the Americans with Disabilities Act. Many states have faced Olmstead based lawsuits when they have tried to cut back their community based services. These states have been forced to maintain the services and pay for the costs of the lawsuits.
Children’s services are mandated by EPSDT.
Although the federal Medicaid statutes label some services “optional” they are not optional for children who have a medical need for the services. Under the federal Medicaid law, “Early and Periodic Screening, Diagnosis and Treatment” for children is a mandatory service. The federal law requires states to cover any “treatments” identified in an EPSDT appointment. Under this provision, any “optional” Medicaid service becomes mandatory for a child when it is considered “medically necessary”. Idaho Medicaid is mandated to provide the whole range of optional services to qualifying children under the age of 21.
Summary
Eliminating “optional” Medicaid services will increase Medicaid costs by driving people to higher cost mandatory services or by losing federal matching funds for services the state would need to provide with general fund dollars.