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Testimony on Medicaid Community-Based Care by Margaret P. Hamburg, M.D. Assistant Secretary for Planning and Evaluation and Sally K. Richardson Director, Center for Medicaid and State Operations
Health Care Financing Administration
U.S. Department of Health and Human Services

Before the House Commerce Committee, Subcommittee Health & Environment
March 12, 1998


We are pleased to be here today to talk about the President's commitment to expanding and promoting consumer-directed home and community-based services so people with disabilities can live their lives to the fullest potential. It is consistent with our views about the basic rights of all Americans to control and direct their own lives. It is consistent with our strong and rigorous support for equal rights for people with disabilities, as articulated in the Americans with Disabilities Act.

Like everyone here today, the Administration feels strongly about empowering people with disabilities -- including children, working age adults, and older people who need help with basic daily activities -- and their families, by increasing their independence and quality of life. One of the best ways to do this is to provide opportunities for individuals to choose to decrease their reliance on nursing homes, by increasing their options to choose self-directed personal assistance in home and community-based settings.

We will use our time today to discuss our multi-faceted approach to achieving these goals, recognizing that while we won't achieve our goals all at once, we can be aggressive about making real progress toward them. We would like to explain the Administration's commitment to this issue and the activities currently taking place with an HHS work group on home and community-based services. And we would like to discuss our broader strategy, which includes legislative, regulatory, research/demonstration, and other activities.


In May of 1995, after a series of meetings with individuals from the disability community, Secretary Shalala issued a set of principles supporting home and community-based care. She reaffirmed her support for emphasizing home and community-based care services and offering consumers the maximum amount of choice, control and flexibility in how these services are organized and delivered. Since that time, HCFA has increased its technical assistance to States to assist them in developing home and community-based waiver programs and other options to foster care in the community. We continue to be guided by these principles.

This past September, the President and Vice President met with a group of disability community representatives and Federal officials, including Bruce Vladeck, then Administrator of HCFA and Bob Williams, Deputy Assistant Secretary for Planning and Evaluation, to discuss how to move forward on the community's highest priorities. The President has a longstanding interest in addressing the challenges facing people with disabilities who need long term care services and this Administration has a continuing commitment to increase the availability of home and community based personal assistance services. At that meeting, the President expressed appreciation that the Community Attendant Services Act (CASA) bill had been introduced by the Speaker, noting that it will help focus attention on the expansion of home and community based care. He was particularly pleased that it would enable us to have a discussion about how to move more toward a system where "the money can follow the person," no matter in what setting he or she chooses to receive the services needed. Finally, he noted that a lot of the activity and decision-making regarding home and community-based care and personal assistance services (PAS) is happening in the States. He stressed the importance of enlisting the help of those States that are moving in the right direction, to provide leadership in educating and helping others who are not so far along.


As a result of the meeting with the President, and in an effort to pull together all our activities in this area, Bob Williams, HHS's Deputy Assistant Secretary for Disability, Aging, and Long-Term Care Policy, and Sally Richardson were asked to co-chair a work group on home and community based services. The goals of that work group, which began meeting in September, are to review all available information and make recommendations about how to reduce the institutional bias in Medicaid long-term care services and spending and promote home and community-based care. Specifically, we are working to:

  • Identify and address the "institutional bias" in the Medicaid program -- so fewer people are forced to move into nursing homes because it is the only way they can get long term care services;

  • Provide more program opportunities for consumers and their families to choose the setting in which long term care services are received, with increased flexibility for the "money to follow the person," as opposed to the payment determining the setting in which a person receives services; and,

  • Promote consumer direction of home and community based/personal assistance services.

Our work group members include HHS and other Administration officials interested in the issue, as well as an expanded group of "constituency partners" -- representatives of consumer groups, providers, and State agencies -- with whom we consult to ensure that the work group's activities and products take a variety of perspectives into account. The work group is moving ahead on a number of fronts.

Overcoming Institutional Bias

We are exploring a range of demonstration strategies, including opportunities we can offer States to modify their Medicaid programs and try some new ways of helping people who want to and are able to live in the community. We are happy to announce that we will soon be asking States to submit proposals to begin to develop a research design to identify individuals who could successfully move out of nursing homes into the community and to develop the services that would be needed to support these individuals in the community. This solicitation is in response to the commitment made by President Clinton to this issue and the Congressional directive in the FY 1998 Labor/HHS Appropriations Bill. We believe that we will be able to fund research in 3 to 5 States.

Another component of this work involves using HCFA data to improve our understanding of the numbers and characteristics of nursing home residents who may be good candidates for moving back to the community and what they would need in the way of supports. We will then be better able to help the States design strategies that succeed when these individuals attempt to move into the community.

We are also developing strategies to address the President's charge that States should learn from each other how to support and promote home and community based services under 1915 Medicaid waivers. Some States are much further along than others in developing innovative and cost-effective service delivery models for home and community-based services. Staff have been talking to a wide range of experts in the aging, disability, and long-term care fields in order to hear what they have learned. We have gotten positive feedback from a growing number of States about the value of developing a "State to State" technical assistance strategy.

We learned from our constituency partners that some States are not fully aware of the flexibility available to them under current regulations. Therefore, we want to clarify some of the things that States can do right now to reduce the institutional bias. We are planning to produce a primer on Medicaid that explains to State officials and consumers what is already available under Medicaid's personal care option, home and community-based waivers, as well as other Medicaid services. This primer will be clearly Stated, so readers can understand what is allowable within the existing framework of Medicaid. The primer will also include some examples of States that have used the flexibility of Medicaid to do some excellent work in reducing nursing home use and increasing community supports.

Finally, last year's CASA bill required a study of the "institutional bias" in the Medicaid program. HHS commissioned an independent contractor -- the University of California at San Francisco -- to conduct such a study. A few weeks ago we received the contractor's draft report. Let me note that this report has already been reviewed by a Blue Ribbon Panel on Personal Assistance Services that includes many consumers with disabilities and other Medicaid and personal assistance services experts.

The report reviews the Medicaid statute and regulations, as well as policy guidance from HCFA, and offers a series of policy options to address the "institutional bias" in Medicaid. The majority of the recommendations would involve statutory changes and many of these changes would involve significant new costs. We are now developing a list of potential regulatory and policy changes on which we can take some more immediate action, while we continue to review long-term legislative options.


We understand that a high priority for individuals with disabilities is to ensure that consumer protections are in place that assure access to specialists, continuity of care, and internal and external appeal rights when health plans make decisions that are disputed by its enrollees.

As you know, the President endorsed the Consumer Bill of Rights and Responsibilities, recommended by his Advisory Commission on Consumer Protection and Quality in the Health Care Industry, and challenged Congress to make these important rights apply to consumers of all health plans. The Bill of Rights included important protections such as access to specialists for individuals with chronic care needs, for example: (1) traditional care for consumers who are undergoing a course of treatment for a chronic or disabling condition (or who are in the second or third trimester of pregnancy) at the time they involuntarily change health plans or at a time when a provider is terminated by a plan, and (2) a fair and efficient internal and external appeals process for resolving differences with their health plans and health care providers.

On February 20th, the President directed HHS, as well as other Executive Branch agencies, to bring their programs into compliance with the Consumer Bill of Rights. This Department reviewed the Medicare and Medicaid programs for compliance with the Consumer Bill of Rights. Based on our review, the President praised the Department for how far along these two programs were in complying with the Consumer Bill of Rights and he directed us to bring the two programs into virtual compliance as quickly as possible. The President is extremely committed to making the Consumer Bill of Rights real for all Americans.


On the legislative front, we were pleased that Congress included in the BBA our proposal for a new State option to allow certain workers with disabilities the ability to purchase Medicaid. Losing health coverage can devastate anyone. Losing health care and personal assistance services is even more devastating for some people with disabilities -- to the point where they are afraid to even try to work, because if they lose SSI or SSDI eligibility, and thus health care, they lose their life line. The new BBA provision should enable many individuals to make a real transition to work. Two days ago, we mailed to State Medicaid Directors a letter that revised the definition of income for the purpose of calculating the eligibility standard under this provision. Under our revised definition, States will determine eligibility based on income net of income disregards.

Also included in the BBA was our proposal to allow States to include prevocational, supported employment, and educational services for all home and community-based services waiver recipients with developmental disabilities. Before this provision was enacted, only those who were formerly institutionalized could receive these services through a home and community-based services waiver.

Finally, the BBA establishes a new type of service provider called Program of All-Inclusive Care For the Elderly (PACE). States may elect to provide PACE program services to individuals who are Medicare and Medicaid eligible and are enrolled in a PACE program agreement. PACE provides for a coordinated set of services to frail elderly individuals living in the community.


On the regulatory and policy fronts, this Administration has been very supportive of expansions in home and community based services under the Medicaid 1915 waivers. All States are now operating at least one and sometimes several home and community based waivers. Many provide additional supports with other Medicaid services as well. Thirteen States provide attendant care under their home and community-based waiver programs, while thirty-nine States provide personal care under their home and community-based waiver programs. The waiver program has flourished and grown under President Clinton's leadership, and currently there are 226 approved home and community-based waiver programs. We expect the program to continue to expand at an even greater pace as we work with States to find new ways to promote the use of existing services in States that have not provided them yet. In July of 1997, the State Medicaid Directors a letter that promoted the use of Medicaid home and community-based waivers.

We also recently issued revised regulations to increase the responsiveness of the Medicaid personal care option to better meet the needs of people with disabilities. There are currently 31 States providing personal services under their State plans. Individuals are now permitted to receive services both in the home, and outside the home. The new regulation eliminates the requirement that a registered nurse must supervise personal care services, thus reducing cost and making the service more consumer responsive and less "medicalized."

Consumer-Directed Purchasing

Our home and community based care and PAS research agenda is a key part of efforts to help ourselves, and help States and consumers, to find out what works, for whom, how well, and at what cost.

We are promoting our home and community based services agenda by working with States to develop and implement Medicaid demonstrations under the 1115 authority of the Social Security Act. Some focus on the integration of acute and long term care, such as the projects underway in Minnesota and the District of Columbia. Others, such as the newly-approved Colorado home health demonstration address different aspects. Colorado's demonstration will permit home health services to be provided in settings other than the home, such as schools, work sites, or day treatment centers. Wisconsin and Rhode Island have applied for 1115 waivers to serve beneficiaries under age 65 with physical disabilities and adults with developmental disabilities respectively. Four States working with the Robert Wood Johnson Foundation have applied for 1115 waivers to offer consumers cash allowances and counseling to purchase their own attendant services. We are currently reviewing these waivers and expect to complete our review shortly. We are very interested in finding new ways of doing business in Medicaid and encourage States to bring us their ideas and proposals.


We believe it is critically important to continue to develop models both at the State and Federal level that support and encourage the move from reliance on institutional care to a broader array of consumer-directed home and community-based services.

We embrace these goals and will continue to work toward them. The challenge, of course, is to balance our goal of providing more flexibility and choice for people with disabilities, with the need to ensure that any legislation is affordable. Preliminary cost estimates raise the very real questions about whether the balance has yet been achieved. However, we remain committed to working together with you and other interested parties to craft an affordable, consumer-responsive system, that takes advantage of and promotes flexibility in our current programs, to help people obtain and keep the help they need to live as independently as possible.

In conclusion, we would like for all of us to remember that people with disabilities are a very diverse group of individuals. They are children, working-age adults, and the elderly. They have developmental disabilities, emotional or cognitive disabilities, and physical disabilities. This is not a group of people for which a "one solution fits all" answer is appropriate. These individuals need more opportunities, more choices on where and how they are to receive services. Nursing homes, intermediate care facilities for the mentally retarded should be available, but home and community based services must also be available. We cannot afford to have any bias in service delivery.

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