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COST-SHARING

FOR OLDER AMERICANS

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OFFICE OF INSPECTOR GENERAL 
OFFICE OF EVALUATION AND INSPECTIONS 
OCTOBER 1990  COST-SHARING

FOR OLDER AMERICANS

Richard P. Kusserow 
INSPECTOR GENERAL 
OEI-02-90-01 01 0  OCTOBER 1990  EXECUTIVE SUMMARY 
PURPOSE 
To assess the experience of State programs for the elderly which provide in-home and adult 
day care services on a cost-sharng basis. 
BACKGROUND 
The Commissioner on Aging requested this study as a source of information on State 
experiences with cost-sharng progrms. The Older Americans Act (OAA) of 1965 created the 
Administration on Aging and provides financial assistace to States for social service and 
nutrtion programs for the 60-plus population. For FY 1990, appropriations were $709 
milion, down 20 percent from 1981 when adjusted for inflation. 
State and area agencies on aging cannot charge fees for title lIT services, although the law 
permts soliciting recipients for voluntar contrbutions. States, however, are free to charge 
for services provided though State funding rather than Federal title ITI funding. About 40 
States have cost-sharng for some State-funded programs, and income-related sliding fee 
scales are generally used to set cost-sharng amounts. 
METHODOLOGY 
The study team sampled eight States with cost-sharng programs and interviewed recipients 
who are required to cost-share; assessed charact ristics of cost-sharng programs; and 
interviewed State and local offcials, including local service providers, involved in 
cost-sharng activities. The team also sampled four States without cost-sharng programs and 
obtained State and local offcials' views on cost-sharng. 
MAJOR FINDINGS 
Recipients Are Responding Positively To Sharing Costs 
Cost-Sharng Is Considered Fai and Appropriate 
Nearly 90 percent of recipients interviewed say paying is fair; over 80 percent say their share 
was figured fairly. Few say it is ever a hardship to pay. Nearly all say all States should 
require seniors to pay something for adult day care and in-home services, if they can afford it. 
What They Pay For Them 
Recipients Report Services W Qrth 
Over 90 percent of recipients report satisfaction with their services and find them worth what 
they pay for them.  Cost-Sharing Seen As Effective And Efficient 
State Cost-Sharng Programs are Considered Effective Despite Limited Funding 
State and local officials in all eight States say money from recipients of adult day care and 
in-home services actually helps expand programs and serve more recipients. Two-thirds from 
all eight States consider the cost-sharng programs in their States to be cost-effective. 
Cost-Sharng Programs Appear to Operate Efficiently 
Recipients usually declare their income and are not investigated. Income-related sliding fee 
scales are used to determne the recipients' shares. State and local offcials in all eight States 
say their programs bil by mail, usually monthly. Almost all recipients pay by check. All 
programs have appeals mechanisms for recipients. Two-thirds of the State and local 
the State 
offcials from all eight States say that they maintain services to recipients while they 
tr to 
resolve payment issues. 
Extending Cost- Has Strong Support, But Careful Planning Is 
Sharing To Title  III 
Recommended 
Officials in States with Cost-sharng Programs Are Strongly Supportive 
More than three-quarers of State and local offcials interviewed say they feel positively about 
the cost-sharng feature of programs funded by their States. Over 70 percent say it helps to 
insure that adult day care and in-home services wil continue. Ninety percent support cost 
sharng for adult day care and in-home services under title ITI of the OAA, with over 75 
sharng for other title lIT 
percent being fully supportive. Seventy-three percent support cost 
serVIces. 
Support for title ITI Cost-Sharng Also Exists in States Without This Feature 
Nearly 75 percent of the noncost-sharng State and local officials interviewed support cost
sharng for adult day care and in-home services under title lIT. Almost 80 percent support 
cost-sharng for other title lIT services. 
Careful Planning and Flexibility Recommended by State Officials 
State offcials recommend educating the public on the need for and nature of this feature, and 
exempting those who cannot afford to pay. They want broad guidelines and maximum 
flexibility in implementing cost-sharng, and prefer self-declared disposable income, tied to 
sliding fee scales, as the method for establishing recipient charges.  AGENCY COMMENTS 
The Commissioner on Aging reviewed the draft of this report and supports the study 
findings.  . . . . ..  ...   ....    ....    ....    ....    ....    ....    ....    ....    ....    ....
..  ..  ..  ..  ...   ....    .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     ...   ...   ...   ...   ..  . 
-__n  TABLE OF CONTENTS 
EXECUTIVE SUMMARY 
INTRODUCTION 
Purpose 
. . . . . . . . . . . . . . . . 1 
. Background. . . 
Methodology 
FINDINGS 
APPENDIX: Commissioner on Aging s comments  . . . . . . . . . . . . . . A - INTRODUCTION

PURPOSE 
To assess the experience of State programs for the elderly which provide in-home and adult 
day care services on a cost-sharng basis. 
BACKGROUND 
This study was requested by the Commissioner on Aging as a source of information on State 
experiences with cost-sharg prQgrams. The Older Americans Act (OAA) of 1965 created the 
Administration on Aging and provides financial assistace to States to develop new or 
improved social service and nutrtion programs for older persons. Grants are allotted to each 
State based on the size of the 60-plus population. Appropriations for these programs are $709 
milion for FY 1990, a decline of 20 percent from 1981 when adjusted for inflation. 
The 1978 amendments to the OAA consolidated under title lIT the social services, nutrtion 
services and multipurose senior center programs formerly authorized under titles ITI, V and 
VII. The $709 milion in title il funding for FY 1990 is broken down as follows. Par B 
which provides funding for a varety of supportve services, including health, transportation 
and legal assistance, has appropriations of nearly $273 milion. Par C, which funds nutrtion 
services, including both congregate and home-delivered meal programs, has appropriations of 
over $430 millon. Par D (created by the 1987 amendments), which provides for 
non-medical in-home and adult day care services for frail older individuals, has nearly $6 
milion. 
State and area agencies on aging are not permitted to charge fees for title ITI services provided 
to recipients under present law and regulations, although the law permts solicitation of 
voluntar contrbutions from recipients. While title lIT mandates that these services be 
provided "to older individuals with the greatest economic or social needs, with parcular 
attention to low-income minority individuals," recipient income has no bearng on eligibility 
for these services. In fact, income information may be collected from recipients on a 
voluntar 
basis only. 
States, however, are free to charge recipients for services provided through State rather than 
Federal title lIT fundig. Cost sharng by recipients is a concept currently gaining popularty 
in State and area agencies on aging as a means of maintaining and expanding community 
programs amidst declining Federal support. About 40 States have already instituted 
. elder care 
cost-sharng arangements for some State-funded programs, although not usually on a 
statewide basis. Cost-sharng is not I1 ndatory in all these States and is usually strctured 
around income-related sliding fee sc;;les which suggest the amount of charges or expected 
voluntar contrbutions. These programs cover a range of services, including personal care 
respite care, homemaker, home health aide and adult day care services. Congress has 
consistently resisted amending the OAA to permit charges for title III services under a 
cost-sharng program.  ---
. .
METHODOLOGY 
Telephone and personal discussions were held with a purposive sample of 107 State and local 
aging program offcials and other State respondents in eight States which have cost-sharng 
programs and in four States which do not. Included are 44 State and area agency offcials; 39 
11 elder advocacy group representatives; 10 officials of area 
local provider agency offcials; 
agency and provider agency State associations; and 3 State and local elected officials. All 
these respondents are referred to as "State and local offcials" in the report, unless otherwise 
noted. In addition, a purposive sample of 162 cost-sharng recipients in the eight cost-sharng 
States (12 to 25 per State) were interviewed by telephone. 
Because many of these recipients are in poor health, recipient responses were provided by a 
responsible person acting as a surrogate, usually a spouse or child of the recipient, in 77 cases. 
As this situation is common in programs which serve the needy and frail elderly, the attitudes 
and perspectives of those who handle the finances of this population are important in 
understanding the impact of charges for services. 
The State programs were selected pased on the number of persons over age 60 within the State 
and the State s geographic location. States with cost-sharng programs were selected based 
Within cost-sharng States, recipients were selected 
years of experience with cost-sharng. 
from area and provider agency cost-sharng programs which provided adult day care and 
in-home services. For this study, in-home services included: a) homemaker and home health 
aide; b) visiting and telephone reassurance; c) chore maintenance; and d) in-home respite care 
and adult day care outside the home as respite for famlies. 
Offcials administering cost-sharng were asked how they view cost sharng, how cost sharng 
has been implemented, whether cost-sharng is cost-effective, how eligibilty is determined 
and how collections are made. Recipients were asked how they view cost-sharng and the 
mechanisms by which eligibility levels are determned and collections are made. Offcials in 
States without cost-sharng were asked how they view cost-sharng and how they might want 
to see cost-sharng implemented in their States.  FINDINGS 
RECIPIENTS ARE RESPONDING POSITIVELY TO SHARING COSTS 
Cost-Sharing Is Considered Fair and Appropriate 
Nearly 90 percent of recipients interviewed consider it fair that they have to pay something for 
the adult day care and in-home services they receive. A tyical comment was: "I just don 
expect something for nothing. I feel if we can, we should pay. 
Almost all who gave an opinion are satisfied with the way their share of the cost was figured. 
One said: "I feel it was fai and they understood my financial limitations. 
The great majority of recipients are biled on a monthly basis and pay for their services by 
personal check. 
Few recipients find it is ever a hardship to pay for the services. Many indicate that providers 
have taen their financial circumstances into account and have made every effort to provide 
needed services at charges they could afford. 
Nearly all recipients think all States should require seniors to pay something for adult day care 
and in-home services, if they can afford it. They expressed their strong feelings, typicaly, in 
the following ways: "It is a matter of pride and conscience. If you can pay it, you should, 
and "I feel that it is no more than right. If a person is able to pay, then the program would 
benefit and be able to provide services for more people. 
Recipients Report Services Worth What They Pay for Them 
ar 
Over 90 percent of the recipients report they  satisfied with their services and consider the 
services worth what they pay for them. One said: "It' s exactly what I need. The help I get is 
wonderful and it is very much appreciated." A recipient s daughter said: "It has been such a 
big help. If she didn t have it, she d be in a nursing home." Another recipient said: "When 
you need help and you receive good service, you re happy. I feel it is wort what I pay. 
COST SHARING SEEN AS EFFECTIVE AND EFFICIENT 
State Cost-Sharing Programs are Considered Effective Despite Limited Funding 
Over 70 percent of cost-sharng State and local offcials from all eight States expressing an 
opinion say that money collected from cost-sharng recipients in adult day care and in-home 
service programs actually helps expand these programs and serve more recipients. 
Those who believe otherwise cite obstacles to expanding programs and serving more 
recipients, and are unanimous that the lack of sufficient Federal, State and local funding is a 
major obstacle. Other major obstacles include insuffcient revenues from cost-sharng  ---.
recipients (according to a substantial majority) and limited outreach (according to nearly half 
of them). More than half rate administrative costs as a minor obstacle. 
More than 70 percent of respondents from all eight States expressing an opinion believe that 
cost-sharng programs in their States are cost-effective. Some feel that their programs are 
cheaper to administer than nursing home services, which they consider a less desirable and 
more costly alternative. In their minds, adult day care and in-home services are among the 
most important ways to maintain recipients in their homes and provide needed respite for 
those who live with them. 
Cost-Sharing Programs Appear to Operate Efficiently 
Recipients in most cost-sharng States declare their income and are not subjected to 
investigation and verification. Most State and local offcials prefer this method since it 
maintains the recipient s dignity, encourages their parcipation and keeps the process simple 
and cost-effective. States var as to the inclusion of liquid and non-liquid assets and the 
exclusion of medical and other extraordinar expenses. 
Income-related sliding fee scales are used in all eight cost-sharng States to determne the 
recipients ' shares. Nearly two-thirds of State and local official respondents from al eight 
States refer to their State s methods as means testing. However, many of them, as well as 
many respondents who cite other methods, oppose using the term. They dislike its welfare 
eligibilty connotations. Since the services they fund and provide are available regardless of 
seniors' income levels, they find a term such as " income-related sliding fee scales" preferable. 
Each cost-sharng State, however, uses similar but distinct criteria for determning those 
exempt from charges because of their income levels. In some States income at or below 100 
percent of the "Federal poverty level is the measure; elsewhere, 125 to 250 percent of poverty 
is used. Varations in the cost of living generally account for these differences. The 
percentage of recipients currently required to pay something for their services in the sample 
States ranges from 2 percent to 56 percent, averaging about 30 percent. In the sample of 162 
recipients, the average cost share per recipient was about 33 percent. 
According to interviews with State and local officials, all programs bil recipients by mail 
(usually monthly) for their share of the costs. About four of five sample recipients receive 
bils by mail. Almost all pay for these services by check. 
All of the programs in the sample States have an appeals mechanism for recipients. 
Two-thirds of the State and local offcials from all eight States say that most of their programs 
maintan services to recipients while they  payment issues; most write off the 
tr to resolve 
recipients ' charges if the recipient is ultimately deemed capable but unwiling to pay.  EXTENDING COST-SHARING TO TITLE II HAS STRONG SUPPORT, BUT 
CAREFUL PLANNING IS RECOMMENDED 
Officials in States with Cost-Sharing Programs Are Strongly Supportve 
More than thee-quarters of State and local offcials interviewed in cost-sharng States feel 
positively about the cost-sharng feature of community service programs funded by their 
States. One State agency offcial offered a consensus in saying it is an "idea whose time has 
come," because all other sources of funding for these programs are dring up. 
Respondents also view cost-sharng as necessar for the continuation of these services. Over 
70 percent of those interviewed in cost-sharng States say it helps to insure that adult day care 
and in-home services wil continue to be provided in their States. Several State agency and 
elected officials report that while charges actually collected from small numbers of 
cost-sharng recipients do not always allow program expansion, the cost-sharng feature is 
politically necessar to assure continued legislative and private sector support. In one sample 
State, cost-sharng was adopted in order to secure an initial funding commitment from the 
governor and the legislature. 
Ninety percent of all these respondents say they support cost-sharng for adult day care and 
in-home services under title lIT, with over 75 percent saying they are fully supportve. 
Seventy-three percent support cost-sharng for other title ITI services, including transportation 
legal services and home-delivered meals, based, in par, on the positive experience of 
cost-sharng States. 
Cost-Sharing Also Exists in States Without This Feature
Supportfor Title  III 
Nearly three-quarers of the noncost-sharng State and local offcials interviewed support cost
sharng for adult day care and in-home services under title il. Most point to a critical need 
for additional funding for these services which cost-sharng wil help meet. Cost-sharng, in 
their view, would also help serve more recipients, expand programs and initiate new services. 
One area agency association representative said: "The demand for these services is growing 
and needs the most resources. 
Almost 80 percent of these respondents support cost-sharng for other title lIT services, 
including transportation, legal services and home-delivered meals. A provider representative 
predicts a significant benefit in expanding cost-sharng: 
The long-range benefit would be the reorientation of the aging population, which 
is growing so rapidly, to a cost-sharing mode of operation for all services made 
available to them. We have to start some time, and the sooner the better.  Careful Planning and Flexibility Recommended by State Offcials 
State and local officials interviewed recommend a strong effort to make the public aware of 
the need for and nature of cost-sharng, assuring the public that only those who can afford to 
pay wil be required to pay. They also recommend extensive use of statewide task forces, 
made up of representatives from agencies, communities and legislatures. 
Respondents from several State and area agencies in noncost-sharng States would like 
title ITI 
cost-sharng demonstration projects conducted in several States, before a national program 
goes into effect. 
Some respondents in cost-sharng States caution that a long-term State fundig commtment is 
needed. This is because the cost-sharng feature may need several years to reach a level of 
effcient operation and significant revenues. In one State, described as "fiscally conservative 
by a representative of a seniors ' advocacy group, an experimental cost-sharng program 
currently limited to a few counties, wil not be expanded because of rising costs. The program 
has become very popular and people from every county want access to it. 
Supporters of cost-sharng under title lIT want flexibilty at the State and local level when 
implementing the program and as much discretion as possible. For example, they want to be 
able to alow recipients to temporarly reduce or forego payments when unexpected or 
extraordinar expenses afect their abilty to pay. All the State and local respondents want a 
cost-sharng program under title lIT to have broad guidelines, giving State, area and provider 
agencies suffcient discretion. In determning whether recipients must pay and how much 
State and local officials prefer to have recipients declare their income and not be subjected to 
investigation and income verification. Most would like to use a simple method for 
determining disposable income. 
Non-cost-sharng State area and provider agency respondents war against the possibilty of 
two standards of service emerging: one for those who can pay something and another for 
those who cannot pay. Representatives of several cost-sharng State area and provider 
agencies report they assess the needs of potential recipients fIrst, then their financial status. 
This insures that those most in need of services are served first, regardless of income. 
Non-cost-sharng State provider agency respondents also express some concern about the 
costs of additional personnel needed for assessments and for biling and collection. 
Cost-sharng States ' experience with administrative expenses vares, as does the agency (State 
area or provider) which has to absorb the expenses. One area agency offcial said: "Local 
providers absorb any added costs for administering these programs - they re not immediately 
passed on to us." Conversely, a provider agency official said: "All administrative work is 
s very cost-effective for us. 
done by the area agency. We provide services and bil them. It  AGENCY COMMENTS 
The Commissioner on Aging reviewed the draft of this report and supports the study 
findings. The full text of the Commissioner s comments are included in appendix A.  APPENDIX
 ., ~....,.. 
,.,'VICtJ' L1 . 
DEPARTMENT OF HEALTH II HUMAN SERVICES	
Ofice of the Secretary 
Administration on Aging	 Washington. D.C. 20201 
SEP  6 190 
TO:	 Michael Mangano

Deputy Inspector General for

Evaluation and Inspections 
FROM:	 u. S. Commissioner on Aging 
SUBJECT:	 OIG Working Draft, .Cost-Shar ing for Older Americans 
We have reviewed the OIG Working Draft, .Cost-Sharing for Older
Americans  We are pleased with the findings of the study and 
Resources needed to 
your presentation of these findings. 
maintain and expand services to the rapidly growing elderly 
population are difficult to find in the public and private
sector. 
Therefore, client participation in the cost of services 
is one of the very few alternatives for addressing the 
increasing service needs of the elderly. 
The OIG study directly supports the findings of the General

Accounting Office on the same subject. However, the OIG study

is particularly persuasive because it includes interviews with

elderly service recipients and their families and documents

their willingness to share in the cost of the services.

The Administration on Aging has recommended that the Department

propose to the Congress that the Older Americans Act be amended

to permit States to use cost-sharing for Title III services,

with particular attention to Part B Services, provided to older 
persons with an income of at least 200% above the poverty
level. I 
am certain that this study will help the Department 
convince the Congress that such amendments are viable and
desirable. 
report. 
We have no suggestions for changing this  Thank  you for 
your assistance in irnprOVi  t e elderly" 
Joyce T" Berry, Pti"