Editor’s Note: Low-income adults who need and use long-term services and supports (LTSS) are among the most complex and fast-growing populations covered by Medicaid. Organizing and paying for this much-needed assistance in ways that allow older adults and adults with disabilities to live full and satisfying lives are among the greatest challenges that state officials face.

To help address these challenges, Manatt Health and the Center for Health Care Strategies, Inc., supported by The SCAN Foundation and the Milbank Memorial Fund, have created a new toolkit for states, “Strengthening Medicaid Long-Term Services and Supports in an Evolving Policy Environment.” Based on interviews with experts and implementers in innovator states, the toolkit provides an overview for state Medicaid officials and other stakeholders interested in understanding or developing state strategies for this increasingly important issue and seeking to identify tested approaches for their states or communities. Below is a summary of key points. Click here to download the full report.

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Long-term services and supports (LTSS) enable more than 12 million people—including older adults, as well as adults and children with intellectual and developmental disabilities (I/DD) and mental health issues, among other conditions—to meet their personal care needs and live independently in a variety of community and institutional settings. With LTSS expenditures of more than $140 billion annually, Medicaid is the single largest payer of these critical services.

The aging population’s projected growth—18% by 2020 and doubling by 2060—will only increase demand for LTSS and, in turn, put more pressure on Medicaid at both federal and state levels. As a result of these demographic and fiscal challenges, as well as federal policy and funding priorities, states are seeking to reform their Medicaid LTSS systems both to improve the quality of care for beneficiaries and to contain program costs.

There is no one way to implement LTSS, and the Medicaid program offers multiple approaches for designing person-centered services and opportunities for states to shape their strategies to address local needs and state-specific constraints. For states at an earlier stage of reform, the LTSS reform strategies adopted by state innovators offer important lessons. The new state toolkit presents several reform strategies for delivering high-quality, high-value LTSS—including case studies illustrating how states are implementing each strategy—in two key areas:

  • Rebalancing LTSS to increase the proportion of LTSS provided in community-based settings
  • Integrating LTSS with physical and behavioral health services through managed care

The strategies can be mixed and matched, sequenced in different ways and modified to accommodate state preferences. Reforming LTSS is a journey, with tangible and meaningful gains along the way.

Rebalancing LTSS

Since the beginning of the Medicaid program, states were required to provide nursing facility services to eligible individuals, but most home- and community-based services (HCBS)—such as case management and personal care services—were optional, and for many years, the federal authorities and level of federal funding for HCBS were limited. Though HCBS continues to be optional, changes in federal laws and state-initiated actions—driven by individual and family preferences, state interest, legal obligations, and the relative cost-effectiveness of providing care in the community—have led to a dramatic increase in the proportion of LTSS provided in community settings.

Today, 55% of Medicaid LTSS spending supports HCBS compared with just 18% in 1995. Yet these proportions vary significantly across states, as well as across populations who use LTSS. The toolkit highlights three strategies that states are relying on to increase the proportion of LTSS spending for services provided in community settings:

Strategy 1: Develop LTSS infrastructure to promote greater access to HCBS, focusing on ways states are enhancing their LTSS system infrastructures, access points and direct care workforce, as well as supporting information caregivers. Examples of states successfully executing this strategy include:

  • Massachusetts’ creation of a one-stop information and referral network and expansion of HCBS access;
  • California’s implementation of paid family leave to support family LTSS caregivers;
  • New York’s development of a uniform system to standardize HCBS needs assessment;
  • New York’s use of 1115 waiver funds to recruit and retain its long-term care direct care workers;
  • New Jersey’s nurse delegation pilot—the process by which a registered nurse delegates some tasks, such as medication administration, to another individual (such as a certified home health aide)—to increase access to HCBS; and
  • Tennessee’s workforce development program, aligning opportunities for direct service worker training and degree attainment with LTSS quality measures, and rewarding providers who employ a well-trained workforce.

Strategy 2: Invest in programs and services that help nursing facility residents return to and remain in their communities, focusing on investments in transition services and tenancy-sustaining services, in particular, affordable housing options. Examples of states successfully executing this strategy include:

  • New York’s 1915(c) waiver to divert and transition Medicaid enrollees from nursing facilities;
  • Texas’ “Money Follows the Person” behavioral health pilot to enhance benefits for people with serious mental illness to support their community transitions;
  • Arizona’s and Texas’ decisions to leverage federal and state funding and private sector development to provide housing support to individuals with disabilities exiting institutions; and
  • Tennessee’s transition of individuals from nursing facilities to the community.

Strategy 3: Expand access to HCBS for “pre-Medicaid” individuals to prevent or delay nursing facility use, focusing on expanding access to a limited set of HCBS for people who would not otherwise qualify for Medicaid to slow their likely future need for expensive Medicaid LTSS, including institutional services. Examples of states successfully executing this strategy include:

  • Washington’s use of an 1115 waiver to expand access to services for individuals at risk of needing LTSS; and
  • Vermont’s use of an 1115 waiver to expand HCBS to people at risk of needing intensive LTSS.

Integrating LTSS Through Managed Care

While the majority of Medicaid beneficiaries nationwide are now enrolled in managed care, the same does not hold true for Medicaid beneficiaries who use LTSS, including those eligible for both Medicare and Medicaid (known as dually eligible beneficiaries) and those with I/DD. Instead, many states have kept LTSS beneficiaries in fee-for-service arrangements, in part due to beneficiary and family concerns about ensuring continued access to critical nonmedical services and supports, as well as to health plans’ limited experience with LTSS in general and HCBS in particular.

More recently, however, the benefits of managed care—namely, reducing care fragmentation, delivering person-centered and community-based care, improving health outcomes and reducing overall program costs—have been recognized. As a result, states increasingly have added LTSS to their managed care delivery strategies. These efforts—often undertaken cautiously to address beneficiary and stakeholder concerns—offer best practices and lessons learned about program design and implementation, stakeholder engagement, internal capacity, and program evaluation. The toolkit highlights three strategies for integrating LTSS with physical and behavioral health services through managed care:

Strategy 1: Integrate Medicare-Medicaid benefits for dually eligible beneficiaries, focusing on aligning Medicare and Medicaid financing and care delivery. States effectively implementing this strategy include:

  • Arizona’s and New Jersey’s path toward alignment, which both utilize specialized Medicare Advantage managed care plans that offer tailored benefits and coordination for their dually eligible beneficiaries; and
  • Minnesota’s alignment of its administrative processes to support Minnesota Senior Health Options (MSHO) program beneficiaries.

Strategy 2: Integrate comprehensive care for Medicaid-only beneficiaries under capitated managed care, focusing on providing a comprehensive benefits package, including physical and behavioral health services and LTSS under a single capitated rate and coordinated delivery system. One example of a state successfully implementing this strategy is:

  • Virginia’s Commonwealth Coordinated Care program, which integrates all LTSS, medical and behavioral health services under one program for Medicaid-only beneficiaries.

Strategy 3: Enroll individuals with I/DD in managed care, focusing on the different ways states are approaching the transition of individuals with I/DD to managed care. One example of a state effectively implementing this strategy is:

  • New York’s 1115 waiver that creates care coordination organizations to integrate primary care, behavioral health and social support services with LTSS for the I/DD population.

Conclusion

There is no one-size-fits-all approach to the challenge of LTSS system reform. A useful starting point for all states is to assess their current LTSS landscape and reflect on the challenges and successes, as well as the reasons behind them. Based on that assessment, states can set a strategic vision and course of action.

States embarking on LTSS reform will be at different starting points and move at varying paces. Regardless of the starting point and strategies, efforts to improve efficiency and access to service and to modernize care delivery for vulnerable populations is a commendable and visionary action.

It is both possible and preferable to approach the challenge of reforming statewide LTSS with an overall strategy, while understanding that the progress made will be incremental for most states. States will need to creatively leverage funding sources and new flexibilities to support their reforms. For the majority of states that use managed care, it can play a central role in facilitating and shaping care delivery, but states themselves must continue to drive the policy agenda and the broad vision for change beyond the existing service delivery system.

Regardless of their specific direction, states can apply these key lessons learned from other states to inform their approaches:

  • Build and sustain beneficiary engagement and buy-in. These stakeholders are the most important allies and the heart of any LTSS program.
  • Invest in administrative capacity—both people and data.
  • Invest in federal partnerships. Know what is needed from the Centers for Medicare & Medicaid Services (CMS) and why—and work to get it.
  • Cultivate executive and legislative leadership. These champions will always be necessary for system-level change.
  • Think long-term. Create and drive a vision that transcends administration and policy priorities.