Welcome to increasing consumer involvement in Medicaid nursing facility reimbursement. The purpose of this online series is to increase consumer participation in the development and implementation of Medicaid nursing facility reimbursement. My name is Eddie Miller. I am an Associate Professor of Gerontology and Public Policy and Fellow, at the Gerontology Institute, at the University Massachusetts Boston, and Adjunct Associate Professor of Health Services, Policy and Practice at Brown University. Cynthia Rudder is director of special projects at the Long Term Care Community Coalition or LTCCC, a citizen advocacy group in New York State. Both of us are experts in how state governments pay nursing homes under Medicaid; Cynthia from the perspective of an advocate active in her state's reimbursement policy making for nearly three decades, and me, from the perspective of a researcher who has conducted numerous studies investigating the determinants and consequences of state reimbursement policy decisions more generally. First, we would like to thank The Commonwealth Fund and, in particular, our Project Officer, Mary Jane Koren, for the funding necessary to make this series of web modules and the research on which it is based possible. In short, the purpose of this web series is twofold. First, we intend to educate you about the basic principles of Medicaid nursing home reimbursement and its relationship to quality, access, costs, and other potential outcomes. Second, we intend to show you how to use this information to successfully influence the direction of nursing home reimbursement to the benefit of residents. Throughout, we will draw insights and examples from our own experiences- in Cynthia's case as a consumer advocate in New York State, and in my case, as an active researcher in this area. We will also draw insights and examples from case studies of Medicaid nursing home reimbursement policy making in Minnesota and New York where advocates have acquired a seat at the table and proven effective in influencing state policy development and implementation in this very important area. We begin by setting the context for the seminar. This involves briefly discussing the significance of Medicaid nursing facility reimbursement, not only for consumers but for state and federal officials and nursing home providers. Next, we review the nuts and bolts of Medicaid nursing home reimbursement, including both basic and supplemental reimbursement system attributes and the goals or objectives they are intended to achieve. This is followed by discussion of how advocates might become involved: What does it take to get a seat at the table? What strategies have proven most effective in influencing the way nursing homes are paid under Medicaid? What might be some supplemental strategies you can take? Now let's turn to the first of five modules in the series. It will provide an overview and establish the importance of the topic explored. Let's begin with the significance of Medicaid nursing home reimbursement. The Medicaid program is jointly funded by the federal and state governments but administered by the states. Although the federal government matches state Medicaid spending at a rate of 50 to 83%, depending on per capita income, states have considerable discretion over Medicaid program characteristics. Medicaid is the largest federal grant-in-aid program, reaching nearly $375 billion in total expenditures in 2009. It is also the largest single fiscal item in state budgets, accounting for 21.8% of total state spending. Long-term care is particularly salient as it accounts for ~1/3 of total Medicaid spending, with 70% being directed toward institutional care for the aged and disabled. Indeed, Medicaid is the main purchaser of nursing home care in the U.S., accounting for 33% of total nursing home spending in 2009, followed by out-of-pocket payments at about 30%, Medicare (20%), private insurance (7.7%), and other sources (10%). By 2020, total Medicaid nursing home spending is expected to reach $65.6 billion, more than 1.5 times what was spent by the program on nursing homes in 2005. Not surprisingly, since the government spends so much on nursing homes, it is a significant area of concern for state and federal officials. To address Medicaid program growth and to help balance their budgets states have adopted a variety of cost control measures. Particularly salient for our purposes is the fact that the majority have adopted freezes or reductions in reimbursement for at least some types of providers in both Fiscal Years 2010 and 2011, more than any other option. Furthermore, the focus on such payment restrictions, particularly in the nursing sector, have become increasingly common, with the number of states implementing freezes or reductions in reimbursement rising from 6 in Fiscal Year 2008 to 15 in FY 2009, 26 in FY 2010, and 29 in FY 2011. Clearly, state policy making this area has considerable implications for nursing home residents and providers, since nearly all nursing home beds- 95%- are Medicaid certified. Moreover, the National Nursing Home Survey indicates that whereas Medicaid served as the primary source of payment for more than 1/3 of nursing home admissions, it paid for all or part of the care received by nearly 60% of residents at the time the Survey was conducted. Overall, the U.S. Government Accountability Office reports that care for two in three nursing home residents are paid for, all or in part, by Medicaid. The dominance of Medicaid where nursing homes are concerned is especially important because research and evalution evidence indicates that the manner in which nursing homes are reimbursed-- the level of payment and type of methodology chosen--has ramifications for achieving desired policy objectives related to facility quality and costs, access to services, equity in provider payment, service capacity, and budgetary control. The connection between rate system attributes and policy objectives such as these will be examined in the next module. Like other third-party payer situations, providers are likely to have interests that are at odds with other interested parties. States that wish to minimize the consequences of misaligned incentives need to find ways to structure Medicaid in such a way so as to encourage providers to act appropriately. One approach has been to establish an extensive set of state and federal regulations that nursing homes must comply with if they are to be reimbursed for patients insured by Medicaid. These regulations govern many aspects of the services offered as well the manner which services or treatments are rendered. They are implemented via national surveys, although the federal government actually contracts with state staff to serve as inspectors, following federally stipulated survey protocols. Consumers exert a lot influence here by focusing on regulations and enforcement of non-compliance. States also seek to align providers' interests with their own through controls and incentives built into state reimbursement systems. Although resident advocates have been successful in influencing major changes in both nursing home rules and regulations and encouraging culture change, few have been influential in the development or modification of state payment systems for reimbursing nursing homes. While modifying the way nursing homes are reimbursed provides a largely untapped means for promoting culture change and other innovations for improving quality, the incorporation of multiple, sometimes conflicting incentives into state reimbursement systems has resulted in enormously complex and demanding methodologies that inhibit consumer participation in state rate-setting decisions. Indeed, it is our experience that consumer advocates do not seem to understand rate setting well enough to knowledgeably participate in state policy making discussions and debates in this area. It is also our experience that few consumer advocates appreciate that the way in which Medicaid nursing payment systems are structured can directly affect the achievement of policy goals such as quality, access, culture change, and other outcomes. How do we know this? Well, one indication of a lack of knowledge is that consumer advocates from around the country have sought help from project staff after being approached by state officials for their input regarding reimbursement system modifications and overhauls. This is especially true of Cynthia Rudder and the Long Term Care Community Coalition. Outside few exceptions, these contacts reveal little understanding about how reimbursement systems can be designed to further desired policy objectives. Another indication of a lack of knowledge is a 2008 survey of state ombudsmen and citizen advocacy groups in states with case-mix reimbursement systems conducted by the Long Term Care Community Coalition. Results suggests that many state ombudsmen and citizen advocates do not understand the intricacies of nursing home reimbursement systems in their states. Thus, while large proportions of both groups reported having general knowledge in this area, just 25% of state ombudsmen and 10.5% of citizen advocates were very familiar with their state's reimbursement systems, while 12% of ombudsmen and 10.5% of advocates reported no familiarity at all. A third indication of a lack of consumer knowledge are studies that I conducted, which suggest that consumer advocates frequently lack the expertise necessary to engage state officials and industry representatives in discussions regarding the arcane intricacies of state payment systems. Here, interviews indicate that elder advocates focus almost exclusively on regulation and workforce issues, and not reimbursement. Thus, while one state official and one industry representative were deemed expert enough to be interviewed about changes in Medicaid nursing home reimbursement methods and rates in each of 26 states studied, only in five states--California, Michigan, Minnesota, New York, and Oregon--were consumer advocates deemed sufficiently expert to be interviewed about this topic as well. Without doubt, the interests of advocates may differ from those of state officials and nursing home industry representatives. Such differences are reflected in the Commonwealth Fund Survey of Long-Term Care Opinion Leaders conducted by myself, as well as my colleagues at Brown University, which identified substantial differences in views between consumer advocates and other constituency groups across a wide range of issue areas, including quality, where, for example, at nearly 75%, consumer advocates were considerably more likely to rank the care provided by the average nursing home as Fair or Poor, than either public officials (at about 50%) or provider representatives at a little more than one-third. Perhaps differences in consumer and provider views are best reflected in varying perspectives about how best to improve and ensure quality, where, for example, at one extreme, close to three quarters of consumer advocates believed both higher staffing and more aggressive enforcement would be effective, as compared to less than one third of providers. By contrast, close to two thirds of providers believed increasing payment rates to be effective for ensuring and improving quality as compared to less than one third of consumer advocates who believed this was the case. Such differences in perspective prevail in the reimbursement area as well. In general, industry representatives prefer to maximize payment and flexibility under state methods for reimbursing nursing homes. This is in contrast to advocates who while also tending to favor maintaining payment levels, prefer that systems be promulgated that incentivize quality by holding providers accountable for performance and outcomes. Perhaps the advocacy position is best illustrated by the 2008 survey of state ombudsmen and citizen advocacy groups conducted by the LTCCC. On the one hand, a majority of both ombudsmen and citizen advocates did not feel that the current reimbursement systems within their states contained incentives that encouraged quality. On the other hand, when asked what state payment systems should be designed to achieve, respondents to the 2008 survey reported feeling that, ideally, they should be designed to improve staffing levels (and time spent with residents), promote culture change innovations, and emphasize positive clinical and quality of life outcomes. Now states typically employ taskforces when making major changes to the way nursing homes are reimbursed under Medicaid. In most cases, membership includes program administrators and industry representatives, and their respective consultants. Legislative staff and union representatives are sometimes included as well; less often included are consumers, perhaps because policy makers believe they have less to offer or do not have the expertise to "be at the table". And, when at the table, consumer participation tends to be less consequential given their lack of interest and knowledge in this area. Prevailing evidence suggests that providers have proven successful in steering state reimbursement toward their interests. No such relationship has been found between the level of influence exhibited by consumer advocates and the characteristics of the state reimbursement systems studied. Together this suggests the importance of including the voice of consumers in state reimbursement policy discussions. Lack of consumer involvement has the potential to result in the adoption of reimbursement systems that favor industry and government interests at the expense of issues important to residents and their families: access, care quality, and quality of life. Lack of consumer involvement also has the potential to result in less creative changes to state reimbursement systems than might otherwise have been possible. All stakeholders, including consumer advocates, must be at the table if truly informed reimbursement policy reform is to take place, not only at the state level with respect Medicaid, but also at the federal level as the Patient Protection and Affordable Care Act is currently being implemented. For additional information on the content reviewed in this module, you may contact Cynthia Rudder at cynthia@ltccc.org and Eddie Miller at edward.miller@umb.edu. Also, please continue on to Module Two: Reimbursement 101, during which we review the nuts and bolts of nursing home reimbursement under Medicaid.

Increasing Consumer Involvement in Medicaid Nursing Facility Reimbursement Edward Alan Miller, Ph.D., M.P.A. University of Massachusetts Boston Cynthia Rudder, Ph.D. Long Term Care Community Coalition Introduction The Commonwealth Fund Grant #20110033 Objectives To Educate Consumer Advocates About the Basic Principles of Medicaid Nursing Home Reimbursement and Its Relationship to Quality, Access, Costs, and Other Outcomes To Demonstrate How Consumer Advocates Can Successfully Influence Medicaid Nursing Home Reimbursement to the Benefit of Residents Roadmap Setting the Context Significance of Medicaid nursing home reimbursement Roadmap Setting the Context Significance of Medicaid nursing home reimbursement Nuts & Bolts of Nursing Home Reimbursement “Basic” &“Supplemental” system attributes Intended goals: quality, access, cost control, etc. Roadmap Setting the Context Significance of Medicaid nursing home reimbursement Nuts & Bolts of Nursing Home Reimbursement “Basic” &“Supplemental” system attributes Intended goals: quality, access, cost control, etc. Influencing Nursing Home Reimbursement How do you gain a seat at the table? What strategies are most effective? Increasing Consumer Involvement in Medicaid Nursing Facility Reimbursement Edward Alan Miller, Ph.D., M.P.A. University of Massachusetts Boston Cynthia Rudder, Ph.D. Long Term Care Community Coalition Module 1: Setting the Context Significance: Medicaid Nursing Home Reimbursement Medicaid Medicaid Program Jointly funded by the federal and state governments State administration within broad federal parameters Largest Federal Grant-in-Aid Program Total expenditures: ~$375 billion in FY 2009 21.8% of total state expenditures Medicaid Long-Term Care ~1/3 of Medicaid program spending 70% directed toward institutional care for aged/disabled National Nursing Home Spending Source: National Health Accounts, Centers for Medicare & Medicaid Services 29.1% 32.8% 20.4% 7.7% 10.0% Out - of - Pocket Medicaid Medicare Private Insurance Other Projected Increase in Medicaid Nursing Home Spending (in billions) Source: National Health Accounts, Centers for Medicare & Medicaid Services # States with Payment Restrictions Source: Kaiser Family Foundation Survey of State Medicaid Officials 39 1 20 18 37 1 14 10 0 5 10 15 20 25 30 35 40 45 Provider Payments Eligibility Benefits LTC Rebalancing FY 2010 (Implemented) FY 2011 (Adopted) # States with Restrictions on Nursing Home Payment Source: Kaiser Family Foundation Survey of State Medicaid Officials 6 14 26 29 0 5 10 15 20 25 30 35 FY 2008 FY 2009 FY 2010 FY 2011 Medicaid Certification Source: National Nursing Home Survey Source of Payment Source: National Nursing Home Survey, U.S. Government Accountability Office Outcomes Evidence That Incentives Associated with Reimbursement May Affect: Facility quality Facility costs Access to services Equity in provider payment Service capacity Budgetary control Two Paths to Aligning Incentives State Licensure and Federal Certifcation (i.e., the Regulatory Regime) Consumer advocates exert substantial influence Two Paths to Aligning Incentives State Licensure and Federal Certifcation (i.e., the Regulatory Regime) Consumer advocates exert substantial influence Controls and Incentives Built into Medicaid Reimbursement (i.e., Financial Incentives) Consumer advocates have exerted little influence Significance: Lack of Consumer Knowledge & Involvement The Crux of the Problem Consumer Advocates Seem to Lack the Knowledge to Participate in Medicaid Nursing Home Rate Setting Discussions and Debates Few Consumer Advocates Appreciate the Connection between Payment System Attributes and the Achievement of Desired Policy Goals Personal Contacts Consumer Advocates from Around the Country Have Sought Help from Project Staff After Being Asked by State Officials for Their Input Contacts reveal little understanding about how reimbursement systems can be designed to further desired policy goals How informed about reimbursement system? Source: 2008 Survey of State Ombudsmen and Citizen Advocacy Groups in Case-Mix States Case Studies & Interviews Elder Advocates Focus Almost Exclusively on Nursing Home Regulation and Workforce Issues, Not Reimbursement At Least One State Official and Nursing Home Industry Representative Deemed Expert Enough to Be Interviewed about Reimbursement Policy Changes in Each of 26 States In only five states—California, Minnesota, New York, and Oregon—were consumer advocates deemed sufficiently expert in this topic area as well How would you rank the quality provided by the average…? 1Response Options: Poor, Fair, Good, Very Good, Excellent, Don’t Know Source: The Commonwealth Fund Long-Term Care Opinion Leader Survey Percent Ranking ‘Fair’/‘Poor’1 Percent Ranking ‘Fair’/‘Poor’1 Percent Ranking ‘Fair’/‘Poor’1 Percent Ranking ‘Fair’/‘Poor’1 Percent Ranking ‘Fair’/‘Poor’1 Consumer Advocates Provider Reps Public Official Policy Expert Other Nursing Home 73.8% 34.0% 48.2% 71.0% 54.8% Assisted Living 51.6% 20.9% 25.2% 33.7% 28.6% Hospital 39.3% 26.3% 27.1% 29.0% 32.1% Home Care 33.6% 14.1% 23.0% 31.5% 28.6% Adult Day Care 17.2% 7.7% 15.3% 17.2% 17.9% Hospice 5.7% 4.4% 8.0% 4.3% 6.0% How effective are the following quality improvement strategies? 1Response Options: Not at all Effective, Slightly Effective, Moderately Effective, Effective, Very Effective Source: The Commonwealth Fund Long-Term Care Opinion Leader Survey Percent ‘Effective’/‘Very Effective’1 Percent ‘Effective’/‘Very Effective’1 Percent ‘Effective’/‘Very Effective’1 Percent ‘Effective’/‘Very Effective’1 Percent ‘Effective’/‘Very Effective’1 Cons-umer Provider Public Official Policy Expert Other Payment incentives (e.g., pay-for-performance) 53.3% 52.5% 60.0% 43.7% 58.3% Establishment of higher staffing requirements 76.2% 32.3% 51.0% 47.3% 47.6% Increased payment rates to providers 32.0% 64.7% 37.5% 41.9% 63.1% More aggressive use of state enforcement against low quality providers 70.5% 29.6% 52.3% 35.8% 40.5% Provision of technical assistance to improve quality through the QIOs 32.0% 49.5% 45.8% 34.4% 58.3% Increased availability of report cards 41.0% 24.2% 44.4% 21.5% 36.9% Differing Views about Reimbursement Nursing Home Industry Representatives Prefers nursing home payment systems that maximize payment while delegating as much freedom and flexibility to providers as possible Consumer Advocates Prefers nursing home payment systems that promulgate and incentivize quality by holding providers accountable for performance and outcomes Does system encourage quality care? Source: 2008 Survey of State Ombudsmen and Citizen Advocacy Groups in Case-Mix States What should reimbursement systems be designed to achieve? Improve Staffing Levels and Time Spent with Residents Promote Culture Change Innovations Emphasize Positive Clinical and Quality of Life Outcomes Source: 2008 Survey of State Ombudsmen and Citizen Advocacy Groups in Case-Mix States Policy Making Impact States Typically Employ Taskforces When Changing Reimbursement System Included: Program administrators, industry representatives, legislative staff, union representatives, Often Excluded: Consumer/residents’ advocates Consumers Involvement Tends to Be Less Prevalent and Consequential Providers steer systems toward their interests Consumers advocates generally have not done so Implications Suggests the Importance of Including the Consumer Voice Lack of Consumer Involvement Potentially Results in Reimbursement Systems That Favor Industry and Government at the Expense of Residents and Their Families All Stakeholders Must Be at the Table for Truly Informed Payment Reform To Occur Contacts Cynthia Rudder, Ph.D., Long Term Care Community Coalition cynthia@ltccc.org http://www.ltccc.org/ Edward Alan Miller, Ph.D., M.P.A., University of Massachusetts Boston edward.miller@umb.edu http://www.umb.edu/academics/mgs/faculty/edward_miller/