New reports explore long-term care issues in the Deficit Reduction Act

The Deficit Reduction Act (DRA) of 2005, which became law this February, includes several significant changes to Medicaid long-term care policies. The Kaiser Family Foundation’s Commission on Medicaid and the Uninsured is releasing five new reports on long-term care issues  that were addressed by the DRA changes.

Long-term care accounts for 36 percent of Medicaid spending (over $100 billion annually) and is utilized by many of Medicaid’s most costly beneficiaries, the low-income elderly and individuals with disabilities. The new report, Medicaid Long-Term Services Reforms in the Deficit Reduction Act, provides an overview of the changes to the rules and direction of Medicaid long-term care services as enacted in the DRA.

Due to concern that wealthy elderly Americans were transferring assets to gain Medicaid coverage for nursing home care, the DRA tightened Medicaid eligibility rules related to asset transfers. About 43 percent of all nursing home residents eventually become Medicaid eligible. Asset Transfer and Nursing Home Use: Empirical Evidence and Policy Significance concludes that for people becoming Medicaid eligible at the time of nursing home admission, 50 percent had asset (cash and deed) transfers of less than $5,000. Conversely, only 13 percent of people who became Medicaid eligible at admission transferred more than $50,000. Asset transfer patterns were most common among nursing home residents who did not receive Medicaid assistance, with over 50 percent of the group making a transfer. Over the six-year period examined, the authors estimate that, when applying the DRA asset transfer rules, federal savings to Medicaid could amount to $1.87 billion.

Three other reports released today focus on the challenges and efforts of moving towards more home and community based Medicaid long-term care services.

Beyond Cash and Counseling: An Inventory of Individual Budget-based Community Long Term Care Programs describes the evolution of beneficiary-managed home- and community-based services since the original demonstration and provides an overview of state activity as of January 2006. The DRA gives states the option to use this model for an expanded range of home and community based services in their state Medicaid plans without having to obtain a waiver.

Nursing Home Transition Programs: Perspectives of State Medicaid Officials and Nursing Home Transition Programs: Perspectives of Medicaid Care Planners draw on interviews with state Medicaid program officials and Medicaid care planners for insight into the issues that arise in establishing programs to move individuals with significant long-term care needs from institutional to community settings. The five states that participated in this study—Florida, Louisiana, New Jersey, Ohio and Washington—each received federal grants for nursing home transition activities and had varied experiences.

These five new reports are now available online.