Index of States’ “Generosity” for Long-Term Care Combines Multiple Factors To Improve Understanding of Widely Varying Spending Patterns
Findings may assist states in developing new policies to enhance care for elderly and disabled, while limiting costs, Rockefeller Institute report finds
Albany, N.Y. — States’ wide variation in Medicaid spending on long-term care services for their elderly or disabled residents is best explained through an approach that considers multiple factors, including coverage policies, nursing home reimbursement rates and other variables, according to a new report from the Rockefeller Institute of Government.
In “Medicaid Policy and Long-Term Care Spending: An Interactive View,” authors James W. Fossett and Courtney E. Burke apply a measure dubbed the “Long-Term Care Policy Generosity Index,” which proved better at explaining variations in states’ long-term care spending than individual policy measures analyzed in previous research. The index may assist states in developing new policies to enhance care for the elderly and disabled, while limiting costs. It combines measures such as resident eligibility, nursing home bed capacity, use of waivers to spend Medicaid dollars on home- and community-based care, and nursing home reimbursement rates.
“(I)ndividual state policies governing eligibility, rates, or services do not exist in a policy vacuum, but interact with each other in ways that are frequently not obvious, but exert a considerable influence on spending nonetheless,” the authors explain in the report. “A given change in a nursing home rate, for example, can vary widely in its impact on total spending, depending on the number of clients covered by the change and the number of nursing home beds for which it can be paid. Expanding a home- and community-based waiver program might be expected either to reduce nursing home and total long-term care spending or to increase total spending depending on the clientele and the services covered by the waiver. Traditional approaches to measuring the effects of state policies on spending typically do not test for these interactions.”
The report comes as state officials across the country seek new ways to limit growth in Medicaid costs, a major element in every state budget. Medicaid plays a key role in financing long-term care for the elderly and disabled, supporting care for about two-thirds of nursing home residents. States’ Medicaid long-term care spending varies widely, however. Using the Long-Term Care Policy Generosity Index, Fossett and Burke determined New York’s long-term care policies to be the most generous in the nation, followed by Connecticut, Minnesota, Massachusetts and Louisiana.
Variations in this measure may have important implications for understanding the differences in states’ use of home- and community-based waiver programs, according to the report. These waivers allow states to claim Medicaid reimbursement for services outside institutional settings, some of which may be covered under a state’s conventional Medicaid program and some of which are not. Unlike conventional Medicaid, where coverage of a service makes it available to all Medicaid clients, waivers allow services to be limited to a specified population and limited in duration.
States such as Wisconsin and Minnesota have both large waiver programs and generous policies overall, while others such as Washington, Oregon and Kansas have large waiver programs but less generous policies overall.
“This pattern suggests that Washington, Oregon, and Kansas may have managed their waiver programs with the express intent of using community-based programs as a means of holding down nursing home spending, while Wisconsin and Minnesota may have been more interested in expanding services for elderly residents who are at less risk for institutionalization,” the authors note.
The authors recommend that future research into the effects of state long-term care policy on spending include consolidated measures such as the Generosity Index.
For a full copy of the report, visit www.rockinst.org.