LTC Bullet: Medicaid Waivers Waver on Quality

Thursday, July 17, 2003


LTC Comment: Federal and state Medicaid officials pushed hard to divert recipients from nursing homes to home and community-based services. But problems abound. Now add laxity on quality to the issues we've raised before, including the woodwork factor, increased Medicaid planning, and decreased LTC insurance. More after the ***news.***

*** WINSTON CHURCHILL said: "You can always count on Americans to do the right thing -- after they've tried everything else." Are we getting close to doing the right thing in long-term care? It sure seems like we've tried everything else. We've tapped out Medicaid. That program can no longer guarantee access to quality care for the poor, much less the middle class, in nursing homes, much less in home and community-based care. Yet private LTC insurance has not filled the void. Sales and profits have disappointed numerous carriers, wholesalers, and producers, leading many to consolidate or exit the market altogether. Now comes word that Citizens for Long-Term Care, a coalition of LTC stakeholders seeking a public/private partnership for LTC, has disbanded. Other rumors indicate that the Robert Wood Johnson Foundation is "pausing" in its support of long-term care research. HELLO! Can't we see the connection here? Excessive utilization of Medicaid LTC benefits by the middle class is overwhelming Medicaid. But too few people buy private LTC insurance because of the "entitlement mentality" created by 38 years of government-financed long-term care. Most people don't realize the consequences of ignoring the risk of long-term care until they're too sick or too old to qualify (medically or financially) for private insurance. The good news is that the solution is simple. Give Medicaid back to the poor and use the savings to fund strong tax incentives for private financing of long-term care through home equity conversion and LTC insurance. For more on this approach to the problem, visit . ***

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Resolved: Medicaid should cover and pay adequately for the full range of long-term care services--home care, adult day care, respite care, assisted living, and nursing home care among others.

Who would disagree? Not us. But here's the problem. Medicaid's generous LTC eligibility rules allow people with substantial income (any amount under the cost of nursing home care) and assets (any amount as long as they're held in exempt form such as a home, business, auto, "inaccessible assets," etc.) to qualify. Consequently, the program cannot afford to pay adequately for nursing home care, much less for home and community-based services, which, because they are more attractive than institutional care, draw extra claimants out of the "woodwork," increase demand for Medicaid estate planning, and impede the market for private LTC insurance.

Despite the difficulty of funding HCBS adequately without controlling the hemorrhage in Medicaid eligibility, the courts, politicians and Medicaid administrators have pushed hard for expanded HCBS through federal waivers and looser controls on state plan amendments. For details on the Bush Administration's multi-million dollar "New Freedom" initiative to encourage HCBS, go to . We've written about these issues in previous LTC Bullets because the more attractive Medicaid becomes without targeting it to the genuinely needy, the less chance we have to encourage personal responsibility for and private financing of long-term care. Here are links to earlier Bullets on the subject: "LTC Bullet: Will Olmstead Help or Hurt Long-Term Care?," August 3, 2000, and "LTC Bullet: Olmstead Languishes," April 8, 2002, .

Well, the chickens are really coming home to roost now. The problems we predicted in the Bullets cited above are worsening. The General Accounting Office (GAO) has found that Medicaid did not provide adequately for quality control as part of the program's heavy push toward home and community-based services. Following is a link to and a summary of GAO's report, plus links to a story and an editorial on the subject in the New York Times. If we are to have any hope of saving Medicaid as a long-term care safety net for the uninsurable, policymakers will have to target the program's benefits to a smaller number of genuinely needy recipients and provide strong positive incentives for healthy, prosperous people to plan early and save or insure for long-term care. To read our plan for that solution, see "LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle" at .

General Accounting Office, "LONG-TERM CARE: Federal Oversight of Growing Medicaid Home and Community-Based Waivers Should Be Strengthened," Washington, D.C., GAO-03-576, June 2003, .


"Feds Lax on Medicaid Waiver Quality Assurance, GAO Says. WASHINGTON, DC -- 07/08/2003 -- (Eli Digital) The federal government needs to do a better job of monitoring the quality of care being provided to elderly Americans through Medicaid waiver programs, which the Bush administration is promoting as an alternative to nursing homes. That's the conclusion of a new General Accounting Office report titled 'Federal Oversight of Growing Medicaid Home- and Community-Based Waivers Should Be Strengthened' (GAO-03-576). Requested by Sens. Charles Grassley (R-IA) and John Breaux (D-LA), the study examined waivers that allow states to cover home- and community-based care for elderly Medicaid beneficiaries. The GAO found one or more quality of care problems in 70 percent of the waivers for the elderly it reviewed. The most common problems were failure to provide necessary services, weaknesses in plans of care and poor case management. The report charged the Centers for Medicare & Medicaid Services with failing to adequately monitor state waivers and the quality of beneficiary care. . . ."

Source: LTC Daily Analysis Briefs, July 8, 2003, prepared by for, .

For the NYT story on the GAO report, see: Robert Pear, "Report Criticizes Federal Oversight of State Medicaid, New York Times, July 7, 2003, . The NYT charges $2.95 each for complete copies of this archived article and the editorial which follows.


"The Bush administration has allowed states to make vast changes in Medicaid but has not held them accountable for the quality of care they provide to poor elderly and disabled people, Congressional investigators said today.

"The administration often boasts that it has approved record numbers of Medicaid waivers, which exempt states from some federal regulations and give them broad discretion to decide who gets what services.

"But the investigators, from the General Accounting Office, said the secretary of health and human services, Tommy G. Thompson, had 'not fully complied with the statutory and regulatory requirements' to monitor the quality of care under such waivers.

"The accounting office examined 15 of the largest waivers, covering services to 266,700 elderly people in 15 states and found problems with the quality of care in 11 of the programs. In many cases, Medicaid beneficiaries simply did not receive the services they were supposed to receive. . . ."

For the NYT editorial, titled "Is Home Care Really Working?," published July 8, 2003,
go to


"The idea sounds great in principle. Instead of confining elderly Medicaid patients in nursing homes when they become infirm, why not give them a broad array of options, everything from home care to adult day care centers and assisted living? That would please many of the elderly, who prefer to stay at home near friends and family as long as possible. It would also please state and federal Medicaid administrators, whose budgets are swamped with the high cost of nursing home care for elderly patients. No wonder the Bush administration has encouraged states to experiment with home- or community-based care under so-called Medicaid waivers, and no wonder many governors have responded enthusiastically. The trouble is, in many cases no one seems to be monitoring the quality of the care provided, or even whether it is provided at all. . . . The lack of oversight raises the frightening possibility that the nation could be headed into another social experiment that starts with great promise and ends with human disasters. . . ."