Nearly three months after the arrival of long-awaited health care reform, many people are not sure how things will change. In May 2010, 44 percent of Americans reported being confused about it, and more than a third of the public do not understand how the new law will affect them and their families.1
The Patient Protection and Affordable Care Act (PPACA), signed into law March 23, will both expand and improve coverage. Beginning in 2014, most U.S. citizens and legal residents will be required to carry health insurance. Those not covered under an employer plan or under Medicaid, Medicare or another government program must buy their own health insurance, but the new law will make it much easier to do so.
Health insurers can no longer deny coverage, charge excessive premiums or offer less coverage to people with preexisting conditions. They cannot impose annual or lifetime caps on benefits. By 2014, individuals and some employers will be able to buy coverage from state-based health benefit exchanges, and premium and cost-sharing credits will be available to those who can’t afford the coverage on their own.2
The PPACA encourages home and community-based services (HCBS), which will serve people with disabilities well. In addition to making Medicaid available to more people with disabilities, the new law expands Medicaid home and community-based benefit options, makes more people eligible for HCBS services, and rewards states that turn to non-institutional venues.
Reforms also include more focus on preventive care for people with disabilities and These reforms should enable people with disabilities and chronic conditions to obtain better and more comfortable long-term care under Medicaid.
States must establish health insurance exchanges by 2014, so people without employer-sponsored or government-provided health insurance can purchase a policy. Until then, some people with preexisting conditions can buy coverage through a high-risk pool. To be eligible, the person must have gone without health insurance for at least six months. While the high-risk pool will help some people obtain coverage, insurers can charge older people four times as much as they charge younger applicants. Out-of-pocket expenses for participants may not exceed the limits for high-deductible health savings accounts, which are currently $5,950 for individuals and $11,900 for families. Other details of the high-risk pools have yet to be worked out.
Except for grandfathered individual and employer-sponsored health plans, health plans must offer certain essential benefits, which include ambulatory patient services,, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse benefits, prescription drugs, rehabilitative and habilitation services, preventive and wellness services, chronic disease management, and pediatric services, including oral and vision care.
HHS will further define benefits. If HHS adds more benefits, it must consider the needs of people with disabilities and other groups. It will be important for people with disabilities to speak up as HHS finalizes essential benefits.
Including rehabilitative and habilitation services will significantly improve coverage for many people with disabilities, who frequently rely on these services. Rehabilitative and habilitation devices appears to include durable medical equipment (including wheelchairs), prosthetics, orthotics and supplies.
New Flexibility for States, More Community-Based Care for People with Disabilities
To obtain federal matching funds, states must comply with the federal Medicaid law, which defines program requirements, options, and rules. However, states can request a waiver from the law, such as an HCBS waiver to provide services to people with disabilities in a community setting rather than an institutional setting. The 2005 Deficit Reduction Act created the Medicaid HCBS state plan option, which allowed states to offer HCBS through a Medicaid state plan amendment rather than a waiver.
Medicaid dollars can support nearly three adults with physical disabilities in home and community-based settings for every person in a nursing facility, according to AARP’s Public Policy Institute. And according to a study by Stephen Kaye published in 2009 in Health Affairs, expanding HCBS appears to cause a short-term hike in spending, followed by long-term cost savings.3
Health care reform increases access to HCBS. The PPACA adds new services (to be specified byHHS) to the original eight under the HCBS option: case management, homemaker services, home health aide services, personal care services, adult day health services, psychosocial rehabilitation services and clinic services for people with chronic mental illnesses. Under reforms, states can no longer cap enrollment. They must make the coverage available statewide and may target the option to those with greater need, such as people with specific disabilities. The law also makes Medicaid benefits available to people with incomes up to 150 percent of the poverty level who meet states’ HCBS needs-based criteria. These changes took effect April 1, 2010.
Community First Choice Option
To further reduce the bias in Medicaid toward institutional care, the new law establishes the Community First Choice (CFC) option under Medicaid. The purpose is to expand home and community-based services and supports under Medicaid and — supporters hope — to lay the foundation for the Community Choice Act.
The CFC option provides more funding to states that use it — a 6% increase in the federal medical assistance percentage (FMAP) for home and community based services. States that choose the CFC option must adhere to its higher standards, which means no caps on services, no waiting lists, and no geographic restrictions. It allows states to provide home and communityâ€based attendant supports and services to individuals with incomes up to 150% of the poverty level ($1,354 per month in 2010) who require an institutional level of care.
Services under this option would include assistance with:
- Activities of daily living (ADLs), such as eating, toileting, grooming, dressing, bathing, and transferring
- Instrumental activities of daily living (IADLs), such as meal planning and preparation; managing finances; shopping for food, clothing, and other essential items; performing essential household chores; communicating by phone and other media; and traveling around and participating in the community
- Health-related tasks, meaning those that can be delegated or assigned by licensed health care professionals under state law.
Among Other provisions, the law stipulates:
- Services may be performed by an attendant through hands-on assistance, supervision, or cueing.
- Services may also include assistance in learning the skills necessary for the person to accomplish these tasks him/herself, as well as backup systems and voluntary training on selection and management of attendants.
- Transition costs may be covered, such as rent and utility deposits, first month’s rent and utilities, bedding, basic kitchen supplies, and other necessities for moving from an institutional setting to a community setting.
- Certain expenditures are not allowed, including room and board, services provided underIDEA and the Rehabilitation Act, assistive technology devices and services, durable medical equipment, and home modifications.
- Services must be provided in the most integrated setting appropriate for the individual.
- Services must be provided regardless of age, disability, or type of services needed.
- States must establish and maintain a comprehensive, continuous quality assurance system.
- Service delivery models must include consumer directed, agency-based, and other models, and states must comply with all federal and state labor laws.
- States must establish a Development and Implementation Council, and a majority of its members must have disabilities or be elderly (or must represent such individuals).
Money Follows the Person
Health care reform extends the Money Follows the Person (MFP, also referred to as Cash and Counseling) demonstration project through 2016. Under this program, states receive grants to defray the cost of moving eligible Medicaid recipients from inpatient facilities to community-based settings. The program enables more people with disabilities (and the elderly) to receive the services they need in the community. Thirty states currently participate in this demonstration. Eligible participants must reside in an institution for at least 90 days, and short-term rehabilitation days under Medicare do not count toward the 90-day eligibility period.) These changes took effect April 22, 2010.
State Balancing Incentive Program
The new State Balancing Incentive Program provides enhanced federal matching payments to states that direct a greater proportion of Medicaid longâ€term services and supports dollars toHCBS. States that currently spend less than half their total Medicaid longâ€term services and supports funding on HCBS programs qualify for the enhanced match, which they may apply to all Medicaid HCBS programs, including HCBS waivers, the mandatory home health benefit, the optional personal care benefit, selfâ€directed personal assistance services and Program of All-Inclusive Care for the Elderly (PACE) programs.
To qualify for the balancing incentive program, a state must submit an application to HHSdescribing its plans for expanding Medicaid HCBS and changing its delivery system. These changes must be made within six months of the application date and could include establishing a single entry point system, optional presumptive eligibility, case management services, and a statewide standardized assessment instrument for determining eligibility for HCBS. Participating states must also collect data on service utilization, quality measures and beneficiary outcomes measures.
The government will make up to $3 billion in federal matching funds available between October 1, 2011 and September 30, 2015. Recipients must use the match to expand or enhance HCBSand may not adopt more restrictive eligibility standards than were in place as of December 31, 2010.
The amount of enhanced federal support will depend on the percentage of dollars being spent on Medicaid HCBS. States that spent less than 25 percent of their Medicaid longâ€term services and supports funding on HCBS in fiscal year 2009 will receive a five percent FMAPincrease and must target 25 percent of their Medicaid longâ€term services and supports spending on HCBS by October 1, 2015. All other states that spent less than 50 percent of their Medicaid longâ€term care dollars on HCBS will receive a two percent FMAP increase and must target 50 percent of spending on HCBS by October 1, 2015. Only five states (Org., N.M., Wash., Alaska and Cal.) currently spend at least 50 percent of their total Medicaid longâ€term services and supports budgets on communityâ€based services.
Spousal Impoverishment Protections in Medicaid HCBS Settings
Under current law, Medicaid eligibility rules are more generous for nursing home residents whose spouses reside in the community, allowing the state to disregard the income of the community spouse and allowing the spouse to retain half the couples joint assets (subject to minimum and maximum thresholds). Under health care reform, states must now extend the same protections to spouses of individuals enrolled in Medicaid HCBS programs, including spouses of HCBS waiver participants. This change is scheduled to take effect on January 1, 2014, and will expire on December 31, 2019.
The law establishes a national, voluntary long-term care insurance program for purchasing community living services and supports. Called Community Living Assistance Services and Supports (CLASS), the new program would be offered to all workers through HHS. Participating employers will enroll workers automatically, although with an opt-out option, and premiums will be paid through payroll deductions.
CLASS works in conjunction with other longâ€term services and supports programs such as Medicaid and provides long-term care options for people who become functionally disabled. To be eligible for benefits, participants must have paid monthly premiums for at least five years and have been employed during three of those five years. The cash benefit can be used for nonmedical services and supports necessary to maintain community residence, as well as institutional care. The benefit amount will average at least $50/day, varying with the degree of impairment or disability. The effective date of the CLASS program is January 1, 2011. The HHSSecretary is expected to define the CLASS benefit by October 2012 with enrollment to begin soon after.
The new law will also increase funding for Aging and Disability Resource Centers and establish a dedicated office within the Centers for Medicare & Medicaid Services (CMS) to coordinate coverage and services for people eligible for both Medicare and Medicaid.
Over the next several years, the U.S. health care environment — treatment practices, patterns, options and services — will be reshaped by this year’s reforms. If all goes as planned, Americans will receive better and more cost-effective health care in the future. There will be better, more accessible preventive care for people with disabilities and more investment in public health. Medical insecurity — the fear of being unable to afford necessary treatment and/or bankruptcy triggered by illness — could become a worry of the past. People will no longer go without health coverage if they lose their jobs, and insurance shopping should become easier as health insurance practices and coverages are made more transparent and easier to understand.
But the devil is in the details, and it will require reams of regulations to put the new reforms into practice. People with disabilities and those who care about them would be wise to be watchful and make sure their voices are heard during implementation.
1Kaiser Health Tracking Poll, May 2010. The Henry J. Kaiser Family Foundation.www.kff.org/kaiserpolls/upload/8075-F.pdf .
2Individuals/families whose incomes fall between 133%-400% of the federal poverty level, which is $18,310 for a family of three in 2009.
3Health Affairs, 28, no. 1 (2009): 262-272.