Money Follows the Person Program and Reduced Medicaid Costs

Arlington, Virginia—Since Money Follows the Person (MFP) began 6 years ago, 42 states and the District of Columbia have participated in the program and received $1.7 billion in funding to develop home- and community-based services (HCBS) for the Medicaid long-term care population.

Originally started as a demonstration project from the Centers for Medicare & Medicaid Services (CMS) under the Deficit Reduction Act of 2005, MFP was scheduled to expire in 2011. However, the program was extended through 2016 as part of the Patient Protection and Affordable Care Act. R.L. Grubbs, MA, MEd, specialist in the Medicaid division of Georgia’s Department of Community Health, discussed MFP at the Medicaid Managed Care Summit. His presentation was titled Using Money Follows the Person and HCBS Waivers to Reduce Per Member Per Month Medicaid Costs for Long-Term Care Beneficiaries. Medicaid accounts for ≥20% of Georgia’s budget and is increasing at a higher rate than any other expense, according to Mr. Grubbs. Of the Medicaid population, 25% are elderly or disabled, and they account for >65% of Medicaid spending.

Medicaid long-term care accounts for 30% of Georgia’s budget, of which 68% is spent on institutional care and 32% on HCBS. Mr. Grubbs said there should be an increased emphasis on HCBS. He cited the 2000 US Census that showed 54 million people had a disability and that people are living longer. The number of people ≥85 years of age is expected to increase >40% by 2020. Although there will be an increased need for long-term care, Mr. Grubbs said there have been problems with HCBS, including limited funding and HCBS options, and a national shortage of home health providers and affordable, accessible, and integrated housing. Mr. Grubbs said states have been reluctant to switch to an HCBS model. They prefer standard institutional care, possibly because of an institutional bias in which Medicaid pays approximately 50% of nursing facility bills and entitles more costly institutional care. With MFP, the CMS wants to develop the policy and structure necessary to grow HCBS.

According to Mr. Grubbs, the program targets 35,000 older adults and disabled people for deinstitutionalization. Thus far, there have been 2 rounds of MFP funding: 29 states received money in the first round and 13 states and the District of Columbia received money in the second round. To gain funding, states were required to develop an operational protocol indicating how MFP participants would have their quality of life improved, how the state would continue patients’ services after discharge from an institution and after the completion of the MFP, and how the state would use the institutional cost savings to rebalance long-term care toward an HCBS model. States receive incentives to participate in MFP, according to Mr. Grubbs, including 100% federal funding for administrative costs.

They also receive an increase in the Federal Medical Assistance Percentages program, with the federal government contributing 90% of the funding to offset the costs associated with the HCBS waiver service. Mr. Grubbs described demonstration projects as one-time services that Medicaid does not typically cover. MFP provides assistance to states to coordinate housing so that they can build relationships with local housing officials, housing providers, and landlords. States are also able to better coordinate applications for the Housing Choice Voucher program that helps low-income families lease or buy privately owned rental housing.

Another feature of MFP is that the program’s paid staff members and community agencies work together to identify health services and local transportation options, obtain supplies and equipment, increase participation in community activities, and improve health outcomes. In 2005, before Georgia received an MFP grant, the state spent 70% of its $1.5 billion on long-term care expenditures on institutional care, according to Mr. Grubbs. By December 2011, Georgia hopes to increase the HCBS spending to ≥40% of long-term care expenditures. Mr. Grubbs said the state set 6 benchmarks to strive for with the MFP funds: transition 618 people to HCBS waivers; increase the long-term care–related HCBS expenditures each year; reduce the developmentally disabled beds in state intermediate care facilities by the end of the project; increase the rate of successful transitions to HCBS each year; establish a trusted, visible, and reliable point-of-entry system; and increase the number of participants who choose personal support services.

During his presentation, Mr. Grubbs provided results from the program’s first 11 months, which included 90 participants. He said there was a $1509 average monthly difference (32% reduction in costs) between patients before and after they transitioned to HCBS. The average Medicaid savings per member on an annualized basis was $18,096. He added that the costs would fluctuate when more data are included, which reflects a variety of needs and services provided to the members.

The leaders of Georgia’s MFP also initiated a quality-of-life survey analysis developed by Mathematica Policy Research. The researchers conducted 30- to 60-minute phone and in-person interviews at baseline and during a follow-up period. Through November 2010, they had completed follow-up interviews with 126 patients. Mr. Grubbs said each of the 126 patients received monetary assistance or help with their activities of daily living. Among the findings was that 77% of the patients reported they needed more help around the house or with their daily activities after joining the MFP program, but 79% of patients said they were satisfied with the treatment and attention they received.

Of the patients receiving follow-up interviews, 65% did not live in a group setting and selected where they lived, 76% liked their living situation, and 88% said they felt safe in their residences. Each patient said they could freely choose and control their sleeping, eating, and some leisure activities, such as the use of televisions and telephones. In addition, 71% said they saw friends and family when they wanted, but the participants said they had a problem with a lack of transportation to places other than their medical appointments.

Furthermore, 56% of the patients said they were satisfied with the help they received in their home and community, and 79% reported happiness with their lives. Although 73% said they had aches or pain, only 41% said they were sad at some point during the past week, and 37% said they were irritated.