New Jersey is seeking federal approval for major changes to its $11 billion Medicaid program, hoping to rein in what state officials and some non-government stakeholders say is an unsustainable escalation of spending.
But saving money is only one of the goals of the 160-page Comprehensive Medicaid Waiver that New Jersey submitted to the federal Centers for Medicare and Medicaid Services in September. It also aims to keep the aged and people with disabilities out of nursing homes, which is what most patients would prefer and would be cheaper for taxpayers. But the waiver has major ramifications for how the system is managed, what services become available under Medicaid, and how healthcare is delivered.
Those were just a few of the issues on the docket at the most recent NJ Spotlight Roundtable Series: Rebalancing Medicaid Long-Term Care, held this past Friday in Trenton. Also up for discussion: Spending controls the state says are woven into the new measure that expand the role of managed care organizations, which will have financial incentives to deliver essential services quickly.
A Worrying Waiver
The waiver is worrying some Medicaid providers who argue that federal and state budget cuts in recent years already make it difficult for them to operate — and they don’t know if the proposed changes will help or hurt them. Medicaid is 50/50 funded by the state and the federal government.
Valerie Harr, who directs the state’s Medicaid program as head of the Division of Medical Assistance and Health Services in the state Department of Human Services, pointed out that in 2009, New Jersey ranked 49th in the U.S. when it comes to providing home and community care for the elderly and developmentally disabled.
“We can and must do better,” she said.
A number of states are doing just that. They’ve already filed waivers with the federal government that allow them to offer minor modifications like building wheelchair ramps or making houses more wheelchair-friendly, straightforward alterations that would enable the elderly or people with disabilities to live at home longer.
About 95 percent of the state’s 1.3 million Medicaid beneficiaries are already in managed care programs delivered by the four companies that run the Medicaid under contracts with the state: Amerigroup, Healthfirst, Horizon and UnitedHealthcare. On July 1, 2011 certain services for long-term care patients living in their homes were moved into managed care. Assuming CMS approves the waiver in time, DHS hopes to bring long-term care patients now in institutions under managed care by July 1, 2012.
Home and community-based care costs about a third of institutional care, Harr said. She predicted some patients will return to their communities under managed care, “but the big savings will be avoiding placement” in a nursing facility to begin with.
Harr said managed care will improve health because “all of your care—doctors, hospitals, pharmacy, support services at home—will be coordinated with one person responsible.” She said these care coordinators “will make sure the right services are provided at the right time.” She also indicated that the state will monitor the managed care companies through independent quality review, to ensure care is not shortchanged.
Paul R Langevin Jr. is president of the Health Care Association of New Jersey, whose members operate more than 300 nursing facilities. He said Medicaid budget cuts will reduce the per diem reimbursement from $205 a day to $198 a day in 2012. Medicaid pays less than the cost of care, which facilities have to make up from the more generous reimbursement from Medicare, which he said also has imposed a significant rate cut.
Medicare and Medicaid account for 80 percent of the payments to nursing facilities “and we’re reeling from cuts from our two biggest payers,” Langevin said. “When you have cuts from somebody who gives you 80 percent of your business, it’s really tough to think about going to a whole new payment system with four guys [the managed care companies] that are going to tell you how to run your business come July of next year.”
If the state keeps patients at home longer, Langevin commented, “when they get to the nursing home they are going to be a lot sicker. You can’t keep reducing nursing home rates year after year if you want us to take care of sicker people.
Langevin also said that depending on the kinds of contracts the managed care companies negotiate with nursing facilities, some may not be able to stay in business, leading to insufficient capacity.
State Sen. Joseph F. Vitale (D-Woodbridge) said the waiver would give DHS a great deal of latitude in the future on Medicaid program design. “My concern is not with the substance of the waiver; most of the ideas make sense if they are done the right way” and if changes are transparent to the public.
Michael Scarbrough, senior vice president of Amerigroup, said it’s possible to service two-and-a-half to three times more people in the community for what it costs in an institution. The bottom line savings comes from care coordination that keeps long-term care patients out of the hospital, he said. “Often patient admissions are the result of a lack of adequate healthcare being provided preventively. One of the biggest opportunities is to avoid a $30,000 to $40,000 admission to the hospital: that can pay for a lot of care.”
Michael Ogg, 57, a former physics professor whose multiple sclerosis forced him to retire at age 50, said his own story reveals the need to coordinate care.
“About 18 months ago I was hospitalized for pressure sores that required surgery and 10 weeks in four hospitals,” said Ogg, who lives in his own home in West Windsor and retired five years ago a chief technology officer of a start-up software companies. “I could not get a doctor to realize how important this was: I should have been placed on an alternating pressure air mattress until the sores healed.” Instead he estimated his hospital stays cost more than $100,000. He has since purchased his own air mattress for $3,000. He said the state’s Medicaid waiver has the potential to improve things, provided it’s done right: “People in my situation would have a case manager who could pull in services as they are needed.” He said the key is to design a system in which the case manager “is advocating for the patients and not for the managed care company.”
Ken Wessel is president of the Home Care Council of New Jersey, whose members are nonprofits that send home health aides out into the community to provide services such as feeding, bathing and dressing. He said the concept of the waiver is a good one; he said he has spoken to representatives of the four managed care companies who “are committed to keeping people healthy and at home, and the system is being designed with financial incentives to do that.” The managed care companies will have financial incentive to not provide more care than needed “and that is the beauty of it — they will have skin in the game.”
Marilyn Askin, chief legislative advocate for AARP-NJ, said her 1.3 million members overwhelmingly favor home and community options for long term care, and said New Jersey is taking too long to achieve this goal. “We would like an executive level ‘office of care transformation’ and a visionary in that office who would have the commitment, time and focus to transform our fractured system into one that works not only for our members but for all New Jerseysans.”