Connect & Follow Us

Go Back

SB3450: Nursing Homes Versus Managed Care

Sharon Post
May 12, 2014
One of the founding principles of Health & Medicine is the belief that health care is a human right. Over the course of our 30 plus year history, we’ve found that the corporatization of health care often threatens that fundamental value. This issue is particularly relevant to the work of our Center for Long-Term Care which promotes a just system of long-term services and supports that enables people to live according to their own values and goals without exploiting others.

Therefore, we were apprehensive when Illinois began to contract with mostly for-profit insurance companies to provide Medicaid care coordination, including long-term services and supports (LTSS) which help older adults and people with disabilities accomplish the everyday tasks that many of us take for granted. Although the involvement of those private contractors gave us reason to be skeptical, we believe the State’s goals for care coordination are worthy ones, and many of those goals have too often been stymied by powerful political interests.

This is most stark in the case of the State’s goal to ‘rebalance’ the long-term services and supports system. Illinois uses less than 40% of its Medicaid long term services and supports expenditures for home- and community-based services (HCBS). “Rebalancing” refers to efforts to reduce the bias toward institutional care in the LTSS system and increase access to HCBS. Illinois has taken rebalancing seriously in recent years, and has cooperated in settling and implementing three consent decrees to transition people who wish to live in the community out of nursing facilities.  Under the Colbert consent decree, the State has found that many nursing facility residents had experienced an acute episode that required nursing home care, but as their condition improved they needed little or no assistance with activities of daily living. Many who have successfully transitioned out of nursing homes under Colbert are not using community-based long –term care. While it is important to monitor their progress and provide supports as needed, the experience with Colbert indicates that these individuals did not need to stay in the nursing facility; they simply got trapped once they were admitted.

Managed care organizations (MCOs) provide a mechanism to divert people from nursing homes on the front end and also to transition people out of nursing homes when appropriate. The State pays MCOs a per-member-per-month rate called a “capitated rate.” The MCO must use its capitation payments to provide services for all its members. Therefore they have an incentive to provide the most cost-effective services (while still investing enough in necessary services to meet quality metrics). This incentive can help keep more people out of nursing homes and in their communities because nursing homes tend to be costly compared to HCBS. However, if people’s health status declines in the community, MCOs will lose out on quality incentive payments, so they also have an incentive to ensure that people living in the community are thriving. For more on managed care and rebalancing see our factsheet.

Managed care won’t automatically rebalance LTSS. Incentives are complicated, and Illinois is not using a blended capitation rate for nursing homes and HCBS, which some regard as the strongest incentive for rebalancing. States that do use blended rate with quality metrics have still had difficulty facilitating successful community transition, as in the case of Tennessee. Getting incentives and quality metrics right is crucial, and consumer involvement is key to both because no one knows better what’s working and what isn’t than those experiencing the changes on the ground.

As Illinois works to improve care coordination and health outcomes for older adults and those with disabilities, consumers need to keep a careful eye on implementation of managed long-term services and supports. We also need to watch out for the nursing home lobby’s cynical approach of fighting managed care for all the wrong reasons, using the language of consumer control and anti-corporate rhetoric to entrench their own interests.

This is what is happening with SB3450, the nursing home lobby’s so-called “nursing home residents’ managed care bill of rights.” SB3450 would make it more difficult for MCOs to selectively contract with quality nursing homes—a major concern in Illinois, where significant disparities in quality exist—and, more importantly, to re-integrate residents who wish to live in the community.

Health & Medicine has joined in opposition to SB3450. Our position is not that managed care organizations are trustworthy and nursing homes are not, but that both kinds of these private Medicaid contractors need oversight and accountability. The Medicaid care coordination project must not be distorted by vested interests bent on preserving the very worst aspects of the status quo. Nor can we allow managed care organizations free reign to re-design the system without ongoing, sustainable, meaningful public involvement, especially from the people who actually use the services the MCOs are coordinating.

As it implements reforms to the LTSS system, including coordinated care, the State needs guidance to avoid causing harm and to create opportunities for Medicaid enrollees to live healthier, more independent lives. We may even need legislation to ensure consumer protections and quality assurance.

But the State, MCOs, and most of all nursing home residents don’t need SB3450 or any other obstructions from the same self-interested lobbyists who have always put barriers in the way of rebalancing. The State and the MCOs need meaningful involvement in decision-making and implementation from the people who use the services and systems so we can have the best system to serve them on their terms. We’ve heard enough from the nursing homes in Illinois on this issue.