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Tennessee's experiment with Medicaid home and community-based services (HCBS)

Health & Medicine Policy Research Group (HMPRG)
July 30, 2012

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Tennessee is looking to Medicaid home- and community-based services (HCBS) to save the state money by making it easier for individuals to become eligible for HCBS than to be admitted into a nursing home. During an ongoing economically difficult time, the state will essentially be taking money from nursing homes and using it to provide home- and community-based care.

Tennessee is the first state to change long-term services and supports (LTSS) eligibility between nursing home and HCBS. Now, individuals who are not nursing home eligible will be eligible to receive HCBS. Previously, all LTSS eligibility was based on a nursing home level-of-need.

What does this mean? More individuals with a need for LTSS will be eligible to receive care in the community. As Tennessee implements this new policy, the country will watch to see if money is saved and individual LTSS needs are met. The article below was published in the Kaiser Health news in collaboration with The Washington Post.

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Tennessee Cuts Medicaid Benefit Funding For Some Long-Term Care Patients

By Guy Gugliotta

Jul 29, 2012

This story was produced in collaboration with wapo

In a unique experiment being watched nationally, Tennessee is revising its Medicaid long-term care options to make it harder for certain low-income elderly people to qualify for state-paid nursing home care.

The state is focusing on seniors who officials say need assistance but not in a nursing home and not with an equivalent level of treatment in home or community-based services. The state TennCare Medicaid program will pay up to $15,000 a year to help these participants stay in their homes or receive meals and other services in adult day care facilities or other less restrictive community settings. Under its old program, all participants qualifying for long-term care under TennCare—whether they were in a nursing home or other care—were entitled to benefits equal to the cost of a nursing home.

The program, which has received federal approval and began this month, is the first of its kind in the nation because it creates this new category of patients who don’t qualify for nursing home care. Up to now, under federal law, everyone who receives long-term care under Medicaid first had to qualify to be admitted to a nursing home.

"Federal law requires that program eligibility be tied to eligibility for nursing homes," said Matt Salo, executive director of the National Association of Medicaid Directors. "Tennessee is stepping ahead to create this new category of at-risk individuals whose benefits are not linked to nursing homes."

But consumer advocates worry that the $15,000 annual limit will fall short of meeting the needs of some seniors, who could end up going without services or relying on funds from family or friends. Gordon Bonnyman, executive director of the Tennessee Justice Center, said he feared that "a lot of frail people are not going to make it on the reduced package."

State officials say the money should be sufficient and that seniors whose need for care increases may qualify for more extensive TennCare benefits: nursing home or community-based care up to $55,000 a year.

TennCare hopes to save $47 million from the new program this year. In the longer run, the state expects by retooling the system it will be better prepared to accommodate an expected spike in enrollees as baby boomers grow older.

TennCare's long-term care system serves 23,705 elderly. TennCare, like Medicaid in other states, is financed with federal and state funds. In addition to low-income seniors, it covers children, pregnant women and the disabled. Tennessee’s financial share for long-term elderly care is $1.1 billion per year.

Nationally, Medicaid plays a key role in long-term care, covering more than two-thirds of all nursing home residents and footing more than 40 percent of the industry's costs. The average cost per year for nursing home care nationally is about $80,000.

The new program is the second time in three years TennCare has moved to reduce use of nursing homes. In 2009, the state obtained permission from the federal government to offer nursing home patients—and new long-term care enrollees—the option of receiving care in a family- or community-based setting. Under that program, nursing home care would only be required if the alternative setting could not meet the patient’s needs or if the cost of those needs exceeded the $55,000 per year.

That change has been successful. In 2010, around 83 percent of Tennessee’s long-term Medicaid patients were in nursing homes, with 17 percent in home and community settings under a prior waiver. Today, 66 percent of patients are in nursing homes and 34 percent are receiving home- and community-based services.

Dr. Melinda Henderson, executive director at the UnitedHealthcare Community Plan, one of three managed care organizations that administer Tennessee’s Medicaid system, said patients overwhelmingly choose not to be in nursing homes.

"You kind of lose your independence at a nursing home," said Sarah Stewart, who lives in Bolivar in rural southwest Tennessee. "I just prefer to be at home and be independent."

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