LTC Bullet:  How CMS Bought a Half-Billion-Dollar Double-Edged LTC Sword 

Wednesday, May 23, 2007 

Santa Fe, NM-- 

LTC Comment:  Will the huge grants to state Medicaid programs authorized in the DRA make matters better or worse for long-term care financing?  After the ***news.*** 

*** REFERRALS.  Thank you for reading the Center for Long-Term Care Reform's latest "LTC Bullets" newsletter.  If you know someone who would be interested in this publication, please recommend us by clicking here   If you have received this edition as a forward, and would like your own subscription, you may subscribe here  Thank you. ***   

*** LTC CONFERENCE.  IIR's Long Term Care Business Improvement Conference, July 10-12, 2007, Baltimore, MD is an independent long-term care event bringing together providers, payers, associations and policy leaders to enhance the quality and reduce financial stress for the long-term care industry.  Stephen Moses, President, Center for Long Term Care Reform will be presenting a session titled "What Can We Expect the Economics for LTC to Look Like in 1,5,10 & 20 Years? Are We Prepared?"  Mention priority code P1258MOSES and receive 15% off the current registration price.  For more information visit the event website at *** 

*** NEW BOOK.  Phyllis Shelton has released her new book:  "Long-Term Care:  Your Financial Planning Guide," LTCi Publishing - $18.  Contents include:  Long-term care - the latest demographic info; How to prioritize LTCI benefits to get the best coverage; Combo Plans - the most important features to make them work; Worksite LTCI - The New Employee Benefit; The latest LTCI tax incentives; The Partnership for Long-Term Care - the national expansion; Medicaid - the full impact of the Deficit Reduction Act on LTC benefits; Medicaid eligibility guidelines for all 50 states; Alternatives for financing long-term care (reverse mortgages, life settlements, critical illness policies, etc.);  Medicare Benefits, Medicare Supplement Policies; Medicare Advantage (Part C),  Medicare Prescription Drug Benefits (Part D); Complete Directory of State Insurance Departments, Medicaid and Aging Agencies  Order a copy here: or call 888-400-1118 for bulk orders: 5-24 copies, $14. each; 25-49 copies, $12. each; 50 + copies, $11. each. *** 



LTC Comment:  The facts in the following press release from the Centers for Medicare and Medicaid Services speak for themselves.  But the unintended consequences of the grants described therein require some explanation. 

The goal of long-term care public policy is rightly to encourage a broad spectrum of LTC services, support home and community-based care, discourage institutional bias, and empower consumers to pick and choose the kind and quality of long-term care they prefer. 

The other side of the sword, however, is that when government makes Medicaid-financed long-term care services more attractive than ever before without targeting those benefits effectively to the poor, it invites more Medicaid planning and discourages private LTC financing through insurance and reverse mortgages. 

Before itís done, the U.S. government will spend $1.75 billion with these grants to make Medicaid LTC irresistible to the middle class while neglecting to (1) close gaping Medicaid eligibility loopholes, (2) enforce mandatory Medicaid estate recovery laws, or (3) spend a few measly millions to provide real tax incentives for the purchase of private long-term care insurance or the use of reverse mortgages. 

So, guess who's getting whacked by the sharper side of this sword! 



May 14, 2007 (202) 690-6145  



Thirteen states and the District of Columbia will get more than $547 million in grants over five years to build Medicaid long-term care programs that will help keep people at home and out of institutions, Leslie V. Norwalk, Acting Administrator of the Centers for Medicare and Medicaid Services (CMS) announced today.  

Today's awards are the second round of grants that will total $1.75 billion over five years (2007-2011) to help shift Medicaid's traditional emphasis on institutional care to a system offering greater choices that include home and community-based services.  

This "Money Follows the Person" initiative was included in the Deficit Reduction Act of 2005 (DRA), currently being implemented by CMS. It is a component of the administration's New Freedom Initiative, a nationwide effort to remove barriers to community living for people of all ages with disabilities or chronic illnesses.  

"There is more evidence than ever that people who need long-term care prefer to remain in their own homes and communities whenever possible," said Ms. Norwalk. "This new program will help states shift Medicaid's traditional emphasis on institutional care to a system offering greater choices that include home-based services.  

"States will also benefit by giving the elderly and people with disabilities more control over how and where they receive the Medicaid services they need."  

States expect to be able to move more than 14,000 people into community settings using these grant awards.  

The Medicaid program traditionally pays for care for elderly and disabled individuals living in institutions who need help with activities of daily living. To fund home and community-based services, states must obtain waivers of normal program rules designed to pay for care in institutions.  

"The concept of money following the person to the most appropriate setting improves beneficiary satisfaction while reducing Medicaid costs," Ms. Norwalk said. "We intend to keep taking steps to remove barriers and rebalance the options for Medicaid-funded long-term care."  

States receiving grants today (see list below) will design programs with four major objectives:  

 o Increase the use of home and community-based, rather than institutional, long-term care services;  

 o Eliminate barriers or mechanisms that prevent Medicaid-eligible individuals from receiving support for appropriate and necessary long-term services in the settings of their choice;  

 o Increase the ability of the state Medicaid program to assure continued provision of home and community based long-term care services to eligible individuals who choose to move from an institutional to a community setting; and  

 o Ensure that procedures are in place to provide quality assurance for individuals receiving Medicaid home and community-based long-term care services and to provide for continuous quality improvement in such services.  

All states were eligible to participate in the five-year demonstration program and had to commit to provide demonstration services for at least two years.  

States receiving grant funds will qualify for a higher percentage of federal matching dollars to help cover the costs of moving people out of nursing homes and into community settings. The higher matching rate will be paid for one year after an individual moves out of an institution and into the community. The state must continue to provide community services after that period as long as the person needs community services and is Medicaid eligible.  

"These demonstration grants are a clear sign of our continued commitment to expand choice to all Medicaid beneficiaries as well as allowing them the independence to live at home and contribute to their communities," said Ms. Norwalk.  

For more details about the New Freedom Initiative, of which this demonstration is part, visit the CMS web site at: