S. HRG. 108–637

STRATEGIES TO IMPROVE ACCESS TO MEDICAID

HOME- AND COMMUNITY-BASED SERVICES

HEARING

BEFORE THE

COMMITTEE ON FINANCE

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

APRIL 7, 2004

(

Printed for the use of the Committee on Finance

STRATEGIES TO IMPROVE ACCESS TO MEDICAID HOME- AND COMMUNITY-BASED SERVICES

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94–650—PDF 2004

S. HRG. 108–637

STRATEGIES TO IMPROVE ACCESS TO MEDICAID

HOME- AND COMMUNITY-BASED SERVICES

HEARING

BEFORE THE

COMMITTEE ON FINANCE

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

APRIL 7, 2004

(

Printed for the use of the Committee on Finance

COMMITTEE ON FINANCE

CHARLES E. GRASSLEY, Iowa, Chairman

ORRIN G. HATCH, Utah

DON NICKLES, Oklahoma

TRENT LOTT, Mississippi

OLYMPIA J. SNOWE, Maine

JON KYL, Arizona

CRAIG THOMAS, Wyoming

RICK SANTORUM, Pennsylvania

BILL FRIST, Tennessee

GORDON SMITH, Oregon

JIM BUNNING, Kentucky

MAX BAUCUS, Montana

JOHN D. ROCKEFELLER IV, West Virginia

TOM DASCHLE, South Dakota

JOHN BREAUX, Louisiana

KENT CONRAD, North Dakota

BOB GRAHAM, Florida

JAMES M. JEFFORDS (I), Vermont

JEFF BINGAMAN, New Mexico

JOHN F. KERRY, Massachusetts

BLANCHE L. LINCOLN, Arkansas

KOLAN DAVIS, Staff Director and Chief Counsel

RUSSELL SULLIVAN, Democratic Staff Director

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C O N T E N T S

OPENING STATEMENTS

Page

Grassley, Hon. Charles E., a U.S. Senator from Iowa, chairman, Committee

on Finance ............................................................................................................ 1

Baucus, Hon. Max, a U.S. Senator from Montana ................................................ 13

Smith, Hon. Gordon, a U.S. Senator from Oregon ................................................ 3

CONGRESSIONAL WITNESS

Harkin, Hon. Tom, a U.S. Senator from Iowa ....................................................... 4

WITNESSES

Smith, Dennis, Director of the Center for Medicaid and State Operations,

Centers for Medicare and Medicaid Services, Washington, DC ....................... 15

Novak, Hon. Carol, member, National Council on Disability, Washington,

DC .......................................................................................................................... 18

Gerke, Ray, member, Iowa Olmstead Real Choices Consumer Task Force,

Perry, Iowa ........................................................................................................... 28

Darling, Bruce E., executive director, Center for Disability Rights, Rochester,

New York .............................................................................................................. 30

Moss, Jan, mother of two adult children with developmental disabilities,

Oklahoma City, Oklahoma .................................................................................. 32

Findley, Di, executive director, Iowa Caregivers Association, Des Moines,

Iowa ....................................................................................................................... 36

ALPHABETICAL LISTING AND APPENDIX MATERIAL

Baucus, Hon. Max:

Opening statement ........................................................................................... 13

Clinton, Hon. Hillary Rodham:

Prepared statement .......................................................................................... 45

Joint prepared statement with Senator Schumer .......................................... 48

Darling, Bruce E.:

Testimony .......................................................................................................... 30

Prepared statement w/attachments ................................................................ 49

Responses to questions from Senators Baucus, Bunning, Grassley, Kerry,

and Rockefeller .............................................................................................. 149

Daschle, Hon. Tom:

Prepared statement .......................................................................................... 167

Findley, Di:

Testimony .......................................................................................................... 36

Prepared statement .......................................................................................... 168

Responses to questions from Senators Grassley, Bunning, and Lincoln ..... 173

Frist, Hon. Bill:

Prepared statement .......................................................................................... 184

Gerke, Ray:

Testimony .......................................................................................................... 28

Prepared statement .......................................................................................... 185

Responses to questions from Senators Grassley and Bunning ..................... 189

Page

IV

Graham, Hon. Bob:

Letters to Chairman Grassley and Ranking Member Baucus (Jan. 30

and Mar. 26, 2004) ........................................................................................ 191

Grassley, Hon. Charles E.:

Opening statement ........................................................................................... 1

Prepared statement .......................................................................................... 195

Harkin, Hon. Tom:

Testimony .......................................................................................................... 4

Prepared statement .......................................................................................... 197

Kerry, Hon. John F.:

Prepared statement .......................................................................................... 203

Moss, Jan:

Testimony .......................................................................................................... 32

Prepared statement .......................................................................................... 205

Responses to questions from Senators Bunning and Grassley ..................... 209

Novak, Carol:

Testimony .......................................................................................................... 18

Prepared statement .......................................................................................... 214

Responses to questions from Senators Grassley, Bunning, and Baucus ..... 222

Smith, Dennis:

Testimony .......................................................................................................... 15

Prepared statement .......................................................................................... 234

Responses to questions from Senators Grassley, Baucus, Smith, Bunning,

Rockefeller, and Lincoln ............................................................................... 243

Smith, Hon. Gordon:

Opening statement ........................................................................................... 3

COMMUNICATIONS

Association of University Centers on Disabilities (AUCD) .................................. 259

Beaver, Kathleen ..................................................................................................... 262

Boatman, Mark J. .................................................................................................... 264

Bolender, B. Jefferson ............................................................................................. 265

Boston Center for Independent Living ................................................................... 269

Higgins, Cynthia L. ................................................................................................. 276

Caleb, Tameka ......................................................................................................... 277

Buehrer, Jennifer Hill ............................................................................................. 278

Colsey, J.C. ............................................................................................................... 279

Crescendo, Johnny ................................................................................................... 280

Cress, Calvin ............................................................................................................ 282

Cruz, Ruben ............................................................................................................. 283

Dempsey, Arthur G. ................................................................................................ 284

Disabled Rights Action Committee ........................................................................ 287

Engro, Michael ......................................................................................................... 328

Fedewa, Kurt ........................................................................................................... 329

Forgione, Barbara .................................................................................................... 330

Hilderbrant, Chris ................................................................................................... 332

Holcomb, Claude ...................................................................................................... 335

James-Holdsworth, Cassie ...................................................................................... 336

Institute for Disability Access (IDA) ...................................................................... 338

Johnson, Harriet McBryde ...................................................................................... 348

Joseph, Sharon R. .................................................................................................... 355

Kapitanovich, Stephanie ......................................................................................... 356

Kenworthy, Joanne .................................................................................................. 357

Kratzer, Jaclyn Michelle ......................................................................................... 358

Larkins, Herb ........................................................................................................... 359

Last Acts Parntership ............................................................................................. 360

Dee-Dowling, Maggie ............................................................................................... 362

Lifespan Respite Care Program .............................................................................. 366

Martin, Aileen .......................................................................................................... 369

Maynard, Nancy ...................................................................................................... 371

National Council on Independent Living ............................................................... 372

National Mental Health Association ...................................................................... 382

Neyhart, Dick ........................................................................................................... 385

Pinson, Fred Earl, Jr. .............................................................................................. 386

Programs for Accessible Living .............................................................................. 391

Protection and Advocacy for People with Disabilities, Inc. .................................. 397

Page

V

Rayford, Raymond ................................................................................................... 399

Sabel, Eileen ............................................................................................................ 400

Sandata Technologies, Inc. ...................................................................................... 401

Southern Tier Independence Center ...................................................................... 403

Storer, Mary ............................................................................................................. 408

Stubblefield, Carolyn ............................................................................................... 409

Suffety, Sherry A. .................................................................................................... 410

Sylla, Beatrice .......................................................................................................... 411

Thomas, Ken ............................................................................................................ 412

Tomlin, Dennis ......................................................................................................... 413

Trager, Susan ........................................................................................................... 415

Tuague, Darryl ......................................................................................................... 416

Turon, Marlene ........................................................................................................ 417

United Spinal Association ....................................................................................... 418

VanGrol, Teresa ....................................................................................................... 423

Veleba, Shari L. ....................................................................................................... 424

Williams, Alfonso ..................................................................................................... 425

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STRATEGIES TO IMPROVE ACCESS TO MEDICAID HOME- ANDCOMMUNITY-BASED SERVICES

WEDNESDAY, APRIL 7, 2004

U.S. SENATE,

COMMITTEE ON FINANCE,

Washington, DC.

The hearing was convened, pursuant to notice, at10:08 a.m., in

room SD–215, Dirksen Senate OfficeBuilding, Hon. Charles E.

Grassley (chairman of thecommittee) presiding.

Also present: Senators Thomas, Smith, Baucus,Breaux, Graham,

Bingaman, and Lincoln.

OPENING STATEMENT OF HON. CHARLES E. GRASSLEY, A

U.S.SENATOR FROM IOWA, CHAIRMAN, COMMITTEE ON FINANCE

The CHAIRMAN. Good morning, everybody. Thishearing is now

called to order.

I thank everybody for attending. This is a very goodturnout. We

usually have this room always filled up, andwe often have people

in overflow rooms. So, I am alwaysthankful when we have a very

major turnout on any hearingthat we have.

I would start by extending a special thanks towitnesses, because

they go to a lot of extra work toprepare for this particular hearing,

or any hearing. Iwould like to give a special thanks to those who

havetraveled long distances to be here today, including twoIowans,

Diane Findley and Ray Gerke.

The purpose of today’s hearing is to review proposalsto improve

access to Medicaid home and community basedservices. One of

these proposals is the President’s NewFreedom Initiative. Another,

is the Medicaid CommunityBased Attendant Services and Support

Act of 2003, alsoknown as MiCASSA. We will hear today about aspects ofboth of these proposals.

The President first announced the New FreedomInitiative over 2

years ago. Since that time,government agencies have been busily

working together tofind new ways to improve services that we refer

to ashome and community based services.

Today, we will take a close look at the variousprograms laid out

in the initiative. One demonstrationwould allow individuals who

choose to live at home or incommunities to make decisions about

not only where theyare going to live, but also how their care is delivered.This is known in the bill as the principle, money followsthe

person.

2

Another concept in the initiative would allowindividuals who rely

upon family caretakers the chance toreceive respite care. The respite demonstrationrecognizes that individuals who receive care and

theircaretakers occasionally need to step away from theirrespective

roles.

A third demonstration would test a proposal to offercommunitybased services to children residing inpsychiatric residential treatment facilities.

Finally, we will discuss the importance of providingadditional

support to those who choose the career of adirect care worker. Like

nurses, direct care workers arebecoming a scarce resource.

Each of today’s witnesses brings a unique backgroundto the

issue. The collection of their individualexperiences and perspectives

will help us betterunderstand the home- and community-based

service system.

For instance, a community-based servicesdemonstration for children receiving care in psychiatricresidential treatment facilities

draws attention to anissue that I continue to defend. Current law

does notallow States to offer Medicaid home- and communitybasedservices as an alternative to inpatient psychiatric care.

Susan, a single mother from Harlan, Iowa, describedher frustration, trying to keep her family together. Herson, Colton, has been

diagnosed with bi-polar disorderand depression and is developmentally delayed. One ofhis biggest fears is having to leave his

mom. Susanfeels she is willing and able to care for him at home

ifshe gets the support services at her community level.

The lack of covered home- and community-based supportmeans

that some parents face the impossible decision ofrelinquishing custody of a child to a State institutionso that their child can get necessary lifesavingservices.

A provision in the Family Opportunity Act, which islegislation

that I have sponsored for the past threeCongresses, recognizes the

hardship that families face incaring for a child with mental health

illness. Under mybill, families will no longer have to give up

theirchild. These families deserve understanding andcompassionate

public policy that addresses the specialneeds of caring for a child

with mental illness.

As we consider recommendations regarding thedirection of future

policymaking, it is important to keepin mind the legislative history

in this area. LikeMedicare, the Medicaid program was first enacted

in 1965.Our Nation’s service delivery system was vastly differentat

that time than it is today. Thanks to the dedicatedadvocacy of consumers and their family members, our long-term care system has

seen major improvements over theyears.

That is not to say that our work is finished, orotherwise we

would not be having this hearing. Far fromit. Unfortunately, the

demand for home and community-based services exceeds current

capacity. States,providers, and many others have made great

strides inbuilding capacity in consumer demand, but many

challengesremain for us.

It is also important to note that not all consumerswant to be

cared for in their home. For instance, nearlyone million frail elderly citizens are currently caredfor in a nursing home. The elderly

and people withdisabilities and their families deserve choice.

3

Theyshould have the ability to choose whether they prefer tolive in

the community or in a facility.

Home- and community-based services consist of a vastarray of

these services. The system is complicatedwhether you are on the

inside or the outside. Consumersof the system are the best judge

of how well a system isworking, so I welcome their input and suggestions on howto shape current and new policies.

The over-arching goal of our hearing today is tofurther understand the kind of successful, cost-effective, and consumer-friendly

systems of providinghome- and community-based services to

Medicaidbeneficiaries.

Also, let me ask Senator Bingaman. I did not know ifSenator

Baucus was coming. Normally we have one Democratspeak. But if

you were not going to speak for him, thenI was going to wait and

break in when he comes to let himmake his statement.

Senator BINGAMAN. Mr. Chairman, I do not have anopening

statement, so I think, if he does arrive, havinghim give an opening

statement is appropriate.

The CHAIRMAN. All right.

Well, then Senator Bingaman, go ahead, becauseSenator Smith

has an opening statement. I want to makesure that we have got

equal representation from bothsides.

Senator BINGAMAN. Well, Mr. Chairman, I did nothave an opening statement, but I am glad to hear SenatorSmith’s.

The CHAIRMAN. All right.

Senator Smith, go ahead.

OPENING STATEMENT OF HON. GORDON SMITH, A U.S.

SENATORFROM OREGON

Senator SMITH. Good morning, Mr. Chairman. Thankyou.

First, I would like to express to you my appreciationfor your

holding this important hearing on thePresident’s New Freedom Initiative, and for the paneltaking its time today to offer their expertise.

I am grateful not only for the panelists taking time,but also for

your continued dedication and commitment tohelping the disabled

and the elderly.

I particularly want to thank Senator Harkin. He hasbeen a tireless champion on behalf of the disabledcommunity, and I have been

privileged to work with him onThe Money Follows the Person Act,

which would providegreater flexibility to disabled Medicaid patients,clients who want to remain in their homes and in

theircommunities while receiving long-term care.

I have long supported the streamlining of servicesand funding for

the elderly and people with disabilitiesso that they have greater opportunities to keep theirindependence, both in here they choose to

live and towork.

As we have become aware, Medicaid payments tend tofavor funding of long-term care institutions rather thanhome- and community-based care. These institutionsprovide a valuable service to

those who need high levelsof care.

However, our system needs to allow individuals tomake the

choice between home and community care or askilled nursing facility rather than having the systemmake that choice for them.

4

Therefore, I wholeheartedly support the President’seffort to provide a continuum of care for disabledAmericans, and, most importantly, to give them thefreedom to choose.

We can create greater options and opportunities forpeople with

disabilities and help ensure that theyreceive quality care in a costeffective manner byhelping States implement flexible funding systems,dollars follow people to the care setting that best meetstheir

individual needs.

Our legislation, S. 1394, would create ademonstration project to

test the effectiveness of thisapproach. In my home State of Oregon,

we have beensuccessful in providing such a continuum of care for

thedisabled and for seniors.

In fact, over half of Oregon’s Medicaid long-termcare spending for

people with disabilities in community-based care is exactly where

they receive it now. Stateslike Oregon who have implemented a

person-centeredplanning approach are finding that they serve

individualneeds better, while delivering services in a more cost-effective manner.

At the same time, Oregon’s excellent skilled nursingfacilities continue to provide quality services toindividuals who require the level

of care only a nursingfacility can provide. Long-term care institutions have,and will continue to play, an important role in

Oregon’ssystem, and I commend them for the quality services

theyprovide.

I believe that disabled persons in every State shouldshare the

same long-term care choices as Oregonians do,and the freedom to

independently choose where theyreceive their care. We must help

States develop programsthat offer new care choices to the elderly

and thedisabled.

Again, Mr. Chairman, thank you for holding thishearing. I look

forward to working with you and mycolleagues on the President’s

new initiative.

The CHAIRMAN. Thank you.

I want to thank you, Senator Harkin, for taking timeto appear

before the Finance Committee this morning. Ialso want to commend you for working in a bipartisanfashion on this issue, and for

supporting a cornerstoneof President Bush’s legislative agenda on

empoweringindividuals with disabilities.

On February 1, 2001, President Bush announced the

NewFreedom Initiative, a comprehensive program to promotethe

full participation of people with disabilities in allareas of society,

the legislation of which you are anoriginal co-sponsor.

The Money Follows the Person Act of 2003 is one ofthe key

pieces of the New Freedom Initiative. We willhear about it in our

second panel from Dennis Smith, theDirector of the Centers for

Medicaid Services. So, Iwant to thank you for appearing today,

wanting to appear,and for your participation.

To my colleague from Iowa, Senator Harkin.

STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM

IOWA

Senator HARKIN. Well, thank you very much, Mr.Chairman and

members of the committee who are here,especially Senator Smith,

for working so closely with uson this legislation.

5

Before I begin, Mr. Chairman, again, let me thankyour staff, and

also the members of our Capitol Policeforce for helping us get the

tables out of here so wecould accommodate more people. [Applause]. As you cansee, they did a great job. Thank you.

As you can see when you came in, Mr. Chairman, wehave an

overflow group, and some of them are now goingdown to Room 106,

I guess, which is the overflow room. Ithink it is going to take some

time for them to getthere, so they will probably miss a little bit of

this.

But I think you can gather from that that this is anissue of utmost importance, of the highest importance, topeople with disabilities in our country. The questionbefore this committee today is,

really, how do we giveolder Americans and Americans with disabilities greaterchoices by expanding access to home- and communitybasedservices?

Fourteen years ago, when this Congress passed andPresident

Bush signed into law the Americans WithDisabilities Act, we had

four goals regarding people withdisabilities. First, was to give

equal opportunity inour society to people with disabilities.

Second, to make sure that people with disabilitieswere full participants in all aspects of our society:education, transportation,

jobs, everything. The thirdgoal, was to provide independent living

for people withdisabilities. Fourth, was to provide economic selfsufficiency for people with disabilities in our country.Those were

basically the goals of the Americans WithDisabilities Act.

So where we find ourselves today, I say to my friendson this committee, is we have two sets of laws. We havegot one set of laws telling people with disabilities, wewant you to be self-sufficient, we

want you to liveindependently, we want you to be full participants,

wewant to give you equal opportunity.

We have another set of laws that are saying, wait aminute, you

have to live in an institution, you have tolive in a nursing home,

you cannot be a full participant,you cannot have equal opportunity,

you cannot have yourown choices. So you have these two conflicting

laws.

Well, usually when you have two conflicting laws,which one

takes precedence? Well, usually the law thatprovides the money.

That takes precedence. So, Medicaidlaw trumps it because, by Medicaid law, you have to livein a nursing home or an institution. So,

it is hard tobe a full participant when your only choice is to live

ina nursing home or institution.

Mr. Chairman, this situation cries out for quickremediation. It

has been 32 years since we passed theRehabilitation Act, and 30

years since we passed IDEA,the Individuals With Disabilities Education Act, 14 yearssince we passed the Americans With Disabilities Act, andyet the Medicaid laws are still in the Dark Ages.

The Congressional Research Service, right now, saysthat 70 percent of Medicaid funding goes to institutionaland nursing home

care, and only 30 percent goes tocommunity-based services.

Mr. Chairman, in our home State of Iowa it is evenworse.

Eighty-one percent of our Medicaid money goes toinstitutional care,

and only 19 percent to community-based services. This is the law.

It is not by choice,it is the law. Medicaid must provide institutional

6

andnursing home care, but does not have to providecommunitybased care.

So in the conflict of these laws, yes, Medicaidtrumps, because

that is where the money is. Mr.Chairman, this is simply wrong and

we need to rebalancethe system.

There are two bills to address this. The first, isS. 971, called

MiCASSA. Now, if you have not heard ofMiCASSA, well, you have

not been around people withdisabilities.

There is not a person in this country with adisability who does

not know what MiCASSA is. It hasbeen around a long time.

MiCASSA stands for MedicaidCommunity Based Attendant Services and Support Act. Itis a long phrase, but we all know it by

MiCASSA.

It has one aim: to level the playing field, to give achoice to the

person whether that person wants to live inan institution, a nursing home, or whether they want tolive in a community-based setting. Do not leave thatdecision to the government.

I would note for the record, Mr. Chairman, that thisMiCASSA

bill that I am talking about was first introducedin the House of

Representatives in 1997 by then-SpeakerNewt Gingrich. I remember talking to Newt about it atthe time, and I have talked about

it with him since.

He said, Harkin, you may approach it from a liberalstandpoint.

I am paraphrasing his words, but basicallyhe said, I am approaching it from a conservativestandpoint.

This has to do with individual freedom and whether ornot an individual has the freedom of choice of whetherthey want to live in

an institution or live in acommunity. I said, Newt, I do not care

where you arecoming from, you have got the right idea, because

that isreally what it is all about.

The second bill, as Senator Smith said, is our bill,S. 1394, Money

Follows the Person. This is basically theNew Freedom Initiative of

President Bush, which Icompliment him for in introducing. It provides, as youknow, 100 percent Federal funding for 1 year.

It provides 100 percent Federal funding to a Statefor 1 year to

cover expanded community-based servicesand settings for people

with disabilities. So, a Statecould expand their waiver programs,

they could get newwaivers to their Medicaid plans for 1 year. After

that1 year, then the State would then go back and get itsregular

match after that first year.

The bill provides for $350 million a year, $1.75billion for 5 years.

Again, these are the samenumbers that the President had in his

New FreedomInitiative.

Mr. Chairman, I have talked about this at length withSecretary

Thompson. Secretary Thompson has been helpingus get money for

systems change grants to help Statesbegin planning on how they

change their systems.

When Secretary Thompson was Governor of Wisconsin,

heinstituted a program in Wisconsin to expand access and

toexpand community-based services in the State ofWisconsin. The

latest figures I have—and I am gettinginto the issue now of cost.

A lot of people say, well,it is going to cost a lot more money if you

do this.

7

Well, in the one State where we have seen this work,in Wisconsin, the last year that we have the data for it,according to their

Department of Health and HumanServices in Wisconsin, they

spent $64 million less oncommunity-based services than they would

have if thosepeople had been in nursing homes.

But I guess the bottom line is really not money. Ibelieve an argument can be made that when people are outof the nursing homes

and institutions and they are livingin the community and they

have the ability toparticipate, get a job, work, be a full participant,

be ataxpayer, not just a tax consumer, that that is going tooffset

a lot of the costs that we in government spend fornursing home

care and institutional care.

So if you just look at the cost thing, I believethat, in the long

run, it is going to be cost-effectiveto do this. But I guess I would

just hasten to add, Mr.Chairman, that there is much more at stake

here than justmoney. We are talking about lost opportunities,

lostdreams, lost hopes.

I had a young man in Iowa who is in a nursing home,Joel Justin,

uses a wheelchair. He said, I have got totell you what it is like.

They get me up in the morning.I have breakfast at a certain time

that I have got to goto. After breakfast, I go and watch TV. They

put me infront of a TV set and I watch TV for a couple of

hours.Then we have some music for an hour.

Then we have someone that reads something for alittle bit, and

then we have lunch. Then after lunch,they put me in front of a TV

set again for another two orthree hours. He said, I do not want to

live like that.He said, I believe I have more to offer to society

thansitting in front of a TV set all day in a nursing home.And he

is, what, a couple, three hours from his familyand his friends.

So, there is a lot more at stake here than justmoney. It is human

dignity. It is whether or not peoplewith disabilities are going to

have the same rights andfreedoms as everyone else in our society.

That is whatthis is about.

It is time to end this Medicaid system that says youhave got to

live in a nursing home or an institution.Give these people here a

choice. Let them decide whatthey want to do. [Applause]. Thank

you.

The CHAIRMAN. I thank you, Senator Harkin. We callin the order

of people coming to the hearing. So, itwould be Senators Smith,

Bingaman, Thomas, and Baucus. Iam sorry. You go ahead of Senator Breaux.

So, Senator Smith, a question?

Senator SMITH. No questions. I do not have aquestion, but just

another commendation for SenatorHarkin for the passion you bring

to the issue. You knowthe needs of the elderly and the people that

are here,and I think recognize the system is broken and needs tobe

fixed. I think that is the purpose here, and I thankyou, sir, for

doing that.

The CHAIRMAN. All right.

Senator Bingaman?

Senator BINGAMAN. Mr. Chairman, thank you. SenatorHarkin,

thank you for your leadership on this importantissue. We have a

bill that I introduced called Savingour States, the SOS bill, that

tries to do many of thesame things that your legislation envisions.

8

It enhancesthe matching rates for States and provides

someadditional State flexibility which we think is importantin getting to the same kind of a place.

Let me just ask about the funding issue. A concern Ihave had all

along, is that the general push that we haveseen in the administration budget and in the BudgetResolutions in the past, both the

House and Senate, hasbeen to cut back on Medicaid funds that go

to the States.

I understand your testimony that more can be donewith less dollars if we build flexibility into thesystem, but I am wondering if

some of the things that youare advocating for here are not in jeopardy just likeother parts of Medicaid as those Federal dollars

forMedicaid keep getting cut.

Senator HARKIN. Well, Senator, I do not know how torespond to

that question. I think a lot of these thingsare in jeopardy now. But

we are going to continue tofund Medicaid, I think. I mean, I assume that yourcommittee, and Ways and Means on the House side,

has anobligation on Medicaid, I believe, and are going tocontinue

to fund it.

I wish I could respond to your question better, butit just seems

to me that, once it is funded, how do youspend that money? That

is what I am getting to. I amnot arguing a certain level or not.

That is something todebate and do yourselves.

I am just saying, once you decide how much, whateverit is ought

to go for, as we said, the New FreedomInitiative, to give the person

the choice and use some ofthis up-front money.

Now, there may be—and I think I am responsibleenough to recognize this—some transition costs. Iunderstand that. That is why

the Money Follows thePerson will give that 1-year 100 percent

Federalfunding to do that, to help States, give them a littlebit of

a carrot, but also help them kind of get thattransition cost in there.

I think that would work.

But regardless of how much money is in there forMedicaid, whatever it is, whatever that level is, itought to be up to the person how

they have access tothose dollars, whether it is community-based or

nursinghome-based.

Senator BINGAMAN. Well, just as a follow-up, Mr.Chairman, I

think Senator Harkin is exactly right in thethrust of his legislation,

and I hope we can move aheadwith it. Thank you.

The CHAIRMAN. Thank you.

Senator Thomas, do you have a question?

Senator THOMAS. Thank you, Mr. Chairman. Just ageneral question, I think.

You talked about your Medicaid community-basedattendant service bill, and so on. At the same time, weare talking here today

about the New Freedom Initiative.What is the difference? What is

it that you are talkingabout that will not be done under the

President’sproposal?

Senator HARKIN. Well, the MiCASSA bill is a changein the law,

a fundamental change in Medicaid law. Rightnow, as I said, Medicaid law says that you have toprovide institutional care and nursing home care. Itdoes not say that we have to provide communitybasedservices.

9

The New Freedom Initiative is basically to give someup-front

money to States to begin to help them changeover to this kind of

a system. My argument is, unlessthere is a fundamental change in

the law, it is justgoing to be one waiver thing after another.

It is going to be every State trying to get a waiverfor this, and

a waiver for that, and a waiver for this,and a waiver for that. Well,

why not just change theunderlying law? That is sort of the difference. Onechanges the underlying law, the other sort of helps

inthe transition.

Senator THOMAS. But I think in the next testimonyit will say

that $68 billion was spent on home communitywaivers. So, the

waivers have been there and thatprogram has been able to have

been carried out. Is thatnot true?

Senator HARKIN. In some cases, that is true. Therehave been

waivers. In fact, what is happening inWisconsin is operating under

a waiver. But it is alwaysa burden. It is always something that

they have to gothrough. Some States get it, some States do not.

Butfor the law, excuse us. That is sort of what a waiveris. But for

the law, excuse us.

Senator THOMAS. I guess my point is, I do not thinkanyone disagrees, certainly, with making a choice. Thequestion is whether it

is necessary to change the law,what spending is going to be involved that is not alreadyin place, and we will hear more about

that from the otherwitnesses.

Senator HARKIN. You will hear from other witnesses.But the

point being, unless the underlying, fundamentallaw is changed,

there will always be a bias towardsinstitutions, because it says you

have to provide themoney for institutional and nursing home care.

Untilthat is leveled out, there is always going to be thatbias that

way.

Senator THOMAS. I certainly do not disagree withyou. As you

know, you and I both work on rural healthcare a great deal.

Senator HARKIN. Yes, we do.

Senator THOMAS. And we have been successful inthat. We have

also found some instances in Medicaid thathad to be changed because there was no control over thespending, and so on.

Senator HARKIN. That is true.

Senator THOMAS. So, we have to balance thesethings.

Senator HARKIN. I understand.

Senator THOMAS. Thank you, Mr. Chairman.

The CHAIRMAN. Senator Graham?

Senator GRAHAM. Thank you for meeting with us todayand for

holding this important hearing. I might saythat, as a member of

the Florida State Senate in the1970’s, I introduced, and passed, our

first State’sCommunity Care for the Elderly Act, and as Governor,worked for 8 years to see that it was adequatelyincreasing in

its funding.

I would offer my State as a role model of 30 years ofaggressive

use of community-based services, if you arelooking for specific examples of the effectiveness ofthis program.

But, Mr. Chairman, in deference, I want to talk abouta different

subject today which is relevant to thissubject, not only because it

is one I know that SenatorHarkin and all the members of this comVerDate 11-MAY-2000 14:18 May 20, 2005 Jkt 095484 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 94650.TXT SFINANC2 PsN: SFINANC2
10

mittee are veryinterested in, but also suggest a way to pay for

theprogram that you are presenting.

What I want to talk about today is theadministration’s cost estimate of the MedicareModernization and Improvement Act and the

circumstancessurrounding the failure to reveal the analysis of

thecost of this program to the Congress.

Upon learning of the administration’s $534 billioncost estimate,

three members of this committee, includingmyself, wrote requesting a hearing of this committee onthe cost estimates and the reason for its latedisclosure. That letter was sent on January 30.

Eightweeks later, on March 7, now with seven members of

thiscommittee, we requested, again, a hearing to examine thecost

discrepancy.

It has now been almost 10 weeks since we found outthat the

Medicare bill we thought cost $400 billion over10 years actually

cost $534 billion. I want to be clear.It is not the cost, per se, that

is troubling to me. Ivoted for a prescription drug benefit that cost

more than$400 billion.

I voted for a proposal that cost more than $534billion. But at

least we would have provided a reliable,Buick-style benefit to seniors. Now we learn that theYugo benefit that we passed actually

is coming at aCadillac cost.

Even more disturbing than the difference in the costestimates,

we know that different analysts may arrive atexactly the same, or

different, conclusions. But it isthe enormous magnitude of the difference and the effortsapparently taken by the administration to

keep the hugedifference from the American people and from

theCongress.

Mr. Chairman, this committee has an obligation toinvestigate

this deception. We have an obligation to theseniors who are depending upon this drug benefit, many ofwhom I see in this meeting

today, and to the taxpayerswho are paying for it, and, frankly, to

the members ofthe Congress, and particularly to the members of

theFinance Committee who represented the $400 billion numberto

our colleagues and now know the consequences of havingbeen kept

ignorant.

These are some questions that I think we should askin the hearing on this subject. What did the Presidentknow regarding the

much higher cost of the Medicareprescription drug benefit, and

when did he know it?

If the President did not know that one of his statedpriorities was

estimated by his own actuaries to farexceed the figure that was

given to the Congress, whowithin this administration failed to notify the Presidentof this extraordinary cost overrun?

What actions, if any, were taken by the Department ofHealth

and Human Services, the Office of Management andBudget, or the

White House to prevent the timely andaccurate reporting of information to Congress on the costof the Medicare prescription drug

bill?

Mr. Chairman, this is going to be an urgent issue, aswell as an

important issue. The Budget Resolution thatthe Senate recently

passed assumes that the 5-yearcost of the prescription drug benefit

will be $165billion.

11

The comparable figure, as determined by theadministration’s Of- fice of the Actuary, is $231 billion.Senator, that is a difference of

$66 billion, which,coincidentally, happens to be approximately the

5-yearcost of the two programs that Senator Harkin hasadvocated

so eloquently here today.

This committee needs to look closely and examinethese numbers.

One of the major aspects of the costoverrun is the difference estimated to be the cost ofincreasing the number of seniors in managed

care. Thisrepresented 25 percent of the cost differential betweenthe

Congressional Budget Office and the administration.

Managed care through Medicare has been sold to us asa cost

saver. Now, at least in the legislation that wehave recently constructed, it comes at a substantiallyhigher cost than keeping seniors in traditional fee-for-service Medicare.

At the same time, we have recently learned that thetrustees of

the Medicare program are projecting that theplan will be exhausted, it will be insolvent, in 2019,7 years earlier than it was

predicted just last year.

I question the sense of spending more for eachbeneficiary enrolled in managed care when we should belooking for ways to reduce costs and to save the Medicaretrust fund.

As an aside, I believe one of the devices to reducecost we gave

away in this legislation. We prohibitedMedicare from negotiating

for better prescription drugprices.

We should reverse that policy in this legislation andwe should

immediate authorize hospitals, the source ofexpenditures out of the

Medicare trust fund, to commencenegotiation for the prescription

drug costs of thehospitals in the United States in exactly the same

waythat the Veterans Administration negotiates for all ofits hospitals.

Mr. Chairman, I urge you to hold a hearing before theMemorial

Day recess on this critical and urgent issue inorder for us to better

understand the differences betweenthe estimates and, importantly,

the process by which welearn at such a late date of the

administration’sestimate, and what we would recommend be done

to reversethis outrage to Medicare beneficiaries and to

theAmerican taxpayers. Thank you.

Mr. Chairman, I have the two letters to which Ireferred, the letter of January 30 and of March 26, whichelaborate on my comments, and would ask that they beincluded in the record immediately after my comments.

The CHAIRMAN. They will be included.

[The letters appear in the appendix.]

The CHAIRMAN. Senator Breaux?

Senator BREAUX. It is always good to get back toMedicare.

Let me just make a brief comment on my good friendfrom Florida’s comment about the Medicare cost estimates.I think it is important to note that the Congressoperates under the cost estimates

of the CongressionalBudget Office, not what OMB thinks, or says,

or guesses abill will cost. If OMB had come back and said that the bill wouldcost $200 billion, we could not have used that criteria.We could not have used

that recommendation. We are boundby what the Congressional

Budget Office says.

12

So, we cannot go shopping around to find out whichagency recommends how much a program is going to cost andpick the one we

like the most. We are bound by what theCongressional Budget Office says. That is what Congresslegislates on. That is what the

Medicare bill was basedon.

We do not know whether either one of them is correct.CBO may

be off, OMB may be off. But we do not have achoice to pick and

choose which one is more suitable toour particular arguments. And

OMB had a cost estimate ofsubstantially more than the Congressional Budget Office.

We cannot pick that estimate any more than we couldpick it if

it had come in much lower than CBO. We arebound by what the

Congressional Budget Office tells us todo. We cannot pick the Republican administration’s orthe Democratic administration’s estimate of the cost. Weare bound by he rules of the Senate and by

the Congress,and that is what we did.

On the subject on which Senator Harkin is testifying,I am a cosponsor. We had over 13 hearings in the AgingCommittee on the

whole question of long-term care. Ithink it is one of the greatest

challenges we have as theaging population gets larger and larger

and wouldcontinue to grow.

This challenge that we face as Americans is as greatas any challenge that we have. I think that the Senatorhas made a very important point. I am very glad theadministration has come out with,

apparently, support forthis demonstration program, because it will

show Statesthat they should not have the institutional bias

thatthey have.

My State has the fewest number of any State of theUnion of

waivers to look at other means of taking care ofpeople other than

institutions. The lowest in theNation.

We have been trying very hard to try and convincethem, even to

people who run the nursing homes, that theyshould be in the longterm care business. Everybody doesnot need 24-hour-a-day, 7 days

a week, 365 days out ofthe year care. But they need help and assistance that isless expensive, less intrusive.

Many times it can be done in a home setting. Fromthe people

who make money providing these services, theyjust have to fit the

type of services they provide intothe demands of the 21st century.

So, I just congratulateyou. This will be a test. Everybody who says

it is notgoing to work, this would be a test to see if it couldwork.

I commend you for it. I am a co-sponsor of it andI think we should

act on it. Thank you.

The CHAIRMAN. Thank you, Senator Harkin.

Senator HARKIN. Mr. Chairman, thank you.[Applause].

The CHAIRMAN. And I also wanted to announce thatSenator Clinton was not able to be here today, but we aredistributing testimony

that she has submitted and we aregoing to put it in the written

record, obviously. Thisdeals with respite care.

This is a bill that she and Senator Warner haveworked hard to

promote through the Respite Life Spanbill. Her testimony is available if anybody wants ithere in the hearing room.

[The prepared statement of Senator Clinton appears inthe appendix.]

Senator HARKIN. Mr. Chairman?

13

The CHAIRMAN. Yes. Please go ahead.

Senator HARKIN. We all know, to be honest about it,that this is

a political year and there are a lot ofthings going on about Medicare and Medicaid, this kind ofstuff.

The two bills we are talking about, S. 971, MiCASSA,and S.

1394, Money Follows the Person, have broadbipartisan support on

both the House and the Senate side.They are both long overdue.

This is something I believe this committee and thecommittee in

the House could act on this year. I know ofno ‘‘politics’’ on this

whatsoever. I really do not see itanywhere. It is just long overdue.

Mr. Chairman, I would just say that we have got twoIowans

here, Ray Gerke, who is sitting right here, and DiFindley right behind him over here, who are going to betestifying.

I think if all 100 Senators and 435 members of theHouse could

hear their testimony, we would get this billthrough in a hurry and

get it down to the President, andI think he would sign it. So, thank

you all very much.Thank you for having this hearing. Again, my

thanks toyour staff and everyone for helping us get people inhere.

Thanks, Mr. Chairman.

The CHAIRMAN. Thank you, Senator Harkin.[Applause]. Senator

Baucus is the Ranking Democrat, anda person that cooperates very

well in a bipartisan waywith me on this committee, and I call on

him now becausehe was necessarily detained and could not make

an openingstatement.

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR

FROMMONTANA

Senator BAUCUS. Thank you very much, Senator. Ithank you, Mr.

Chairman, for holding this hearing.

I would just like to pause for a moment to reflect onthat term

that we will undoubtedly hear, and have heardover and over today,

that is, home- and community-basedservices. The term sounds clinical. It soundsbureaucratic. It is the kind of term that can become

abuzz word.

But when you step back and consider, without thesehome- and

community-based services, a person may beforced to leave her

home, her family, or her communitysimply to receive care to keep

her alive. Then yourealize just how important these services are

and thatthey affect real people, with real needs, and realfamilies.

I hope that this hearing will remind us of that,remind members

of Congress, remind the administration,State policymakers, and

citizens around the world that wesimply must work harder to make

home, family, communityavailable to people with severe disabilities.[Applause].

To be sure, making progress this year will bechallenging. The

Congressional Budget Office tells usthat providing services in the

community cost money, eventhough it may be less costly than providing services ininstitutions.

Money is tight in the Federal budget. States remainin the worst

fiscal crisis since World War II. In thePresident’s budget, Medicaid

is on the chopping block.As the House and Senate move towards

conference, Medicaidis at risk in our budget.

But, while we most improve Medicaid to expand accessto homeand community-based services, we must alsopreserve the crucial

14

support that Medicaid currentlyprovides to so many people with

disabilities.

We are fortunate to have excellent witnesses todaywith a wide

range of experience and expertise. SenatorHarkin, obviously, has

been a tireless advocate here inthe Senate and across the country

for people withdisabilities, and I applaud him with that.

Together with Senator Specter, he has introduced,

andreintroduced, the MiCASSA legislation to establish thegold

standard for improvements in the availability ofhome- and community-based services under Medicaid.

Under MiCASSA, every individual eligible for Medicaidcould receive services in that setting that is mostappropriate for them,

whether that setting is at home, ina community-based facility, or

in a nursing home.

But Senator Harkin is also pragmatic. He isadvocating bipartisan support for an administrationproposal called Money Follows

the Person. The MoneyFollows proposal will set us on the right

path in theshort term, giving a few States incentives to allowpeople

to return home from nursing homes if they sochoose.

We will also hear from Dennis Smith of the Centersfor Medicare

and Medicaid Services, otherwise known asCMS, which has proposed a number of initiatives toimprove choice and independence

among individuals withdisabilities who are on Medicaid, and I applaud thateffort.

Some of the proposals are well-known to us on thiscommittee, for

example, a similar provision in the FamilyOpportunity Act to allow

community-based services forchildren who reside in psychiatric

treatment facilities.

The need for change in this area of the Medicaid lawis clear.

Under the current law, many families withseriously mentally ill

children must impoverishthemselves or literally give up custody of

their childrenin order to access appropriate mental health services.

Two families in Montana, one in Hamilton and one inLivingston,

shared their heart-breaking stories with mystaff just a few weeks

ago. In both cases, they wereadvised to ‘‘abandon’’ their mentally

ill children in orderto obtain appropriate psychiatric services for

them.

A mother in Hamilton, a nurse with a master’s degreein counseling, recently talked to my staff and sheexplained how her son,

who was bi-polar and had conductdisorders, alleged that she had

abused him, despite alack of evidence.

An attorney suggested that she admit to theallegations, even

though they were untrue. Only bylosing custody of her son, she was

told, could she ensurehis care. And even after qualifying for Medicaid, he wasunable to receive care in the community and he was

placedhundreds of miles away from home.

That story should make us all stop and think: whatchanges can

we make to prevent parents from having togive up custody of their

children in order for them toreceive appropriate health care services?

I also applaud CMS’s efforts to encourage self-directed care that

is appropriate. In some rural areasof Montana, individuals with

disabilities must be able tochoose neighbors or family members to

provide care, sinceother services may simply not be available.

15

Of course, self-directed care should only be donewith appropriate

training, supervision, and oversight. Iam concerned about tradeoffs that might be imposed wherean individual must accept financial risks and servicelimitations in exchange for the freedom to direct theirown care.

These risks must be managed carefully and must bestrictly limited to non-medical services. I alsoappreciate programs that improve our direct care serviceworkforce. Training and support are

crucial torecruiting and retraining direct care workers for

growingnumbers of elderly and disabled individuals.

I am interested in learning more from our consumerwitnesses

about the painful choices that the currentMedicaid system imposes

on individuals with disabilitiesand their families. Each story is

unique, but there arecrucial lessons to be learned from all of them.

Thankyou for sharing your stories and your thoughts with us.

Thank you, Mr. Chairman, for holding this importanthearing.

The CHAIRMAN. Some of what you said reminds me, andI made

mention of this in my opening statement, some ofthese problems

will be taken care of when we get theFamily Opportunity Act

passed that Senator Kennedy and Ihave introduced, and we have

got 62 co-sponsors for it.[Applause.]

Also, it would do, on the psychiatric aspect you weretalking

about, even more than what the President’sprogram would do, although I do not denigrate thePresident’s program because I thank

him for hisinitiative.

Now it is my privilege to call Dennis Smith. He iswith us today

representing the administration from theCenters for Medicare and

Medicaid Services as theDirector.

He has played a critical role in developing the newproposals that

are legislatively before us now that arepart of what we call the

New Freedom Initiative. I thankhim for his leadership and look

forward to hearing histestimony.

Then we also have with us today Hon. CarolNovak, who serves

on the National Council on Disabilityas a presidential nominated

and Senate confirmedappointee.

As a parent of a 26-year-old who has severe cerebralpalsy, I am

sure that she lends a unique perspective tothe policy and personal

aspects of disability issues.

I also want to recognize the important work that theNational

Council on Disability performs in makingrecommendations to the

President and Congress on issuesaffecting Americans with disabilities, and we obviouslylook forward to her testimony.

I am going to start out with you, Mr. Smith.

STATEMENT OF DENNIS SMITH, DIRECTOR OF THE CENTER

FORMEDICAID AND STATE OPERATIONS, CENTERS FOR

MEDICARE ANDMEDICAID SERVICES, WASHINGTON, DC

Mr. SMITH. Thank you, Mr. Chairman, for inviting metoday. I

greatly appreciate your leadership in this areaand appreciate all

the support that you have given theadministration in these areas,

and look forward tocontinuing to work with you.

The New Freedom Initiative was announced by PresidentBush in

February of 2001 and the initiative itself isreally government-wide.

16

It spreads across all thedifferent departments of the Federal Government.

Today, I would like to talk just about the provisionsrelated to the

Medicaid program and the legislativeproposals that we have previously sent to the Congressand the President has re-proposed

again this year, and wehave made what we think are some additional improvementsto the New Freedom Initiative. Those are the

things thatI would like to focus on today.

In New Freedom, the Medicaid provisions are really apackage of

demonstration programs. Money Follows thePerson, the rebalancing initiative, is the largest partof the initiative. Senator Harkin has spoken to this aswell.

It is really very important to focus on bothcomponents of that initiative, the one of the moneyfollowing the individual, but also the

idea that thesystem itself needs to be rebalanced.

As Senator Harkin spoke about and I know SenatorBreaux has

talked about in the Aging Committee about theinstitutional bias in

Medicaid—and we do have aninstitutional-based, provider-driven

system—about one-third of all Medicaid expenditures are for longterm careservices.

Nationally, about 70 percent of those long-term careexpenditures

are for institutional care, though it varieswidely by State. Only six

States spend at least half oftheir long-term care money in community-based services.

We very much believe that the Medicaid program shouldkeep

pace with the people that it serves, and it is notjust about health

care. This is not the delivery ofacute care that we are talking

about.

Home- and community-based services are the supportsystems in

the community. What we are really talkingabout is not just health

care, but the individualfreedom, independence, the ability to live

with one’s ownfamily, and the family life itself.

We believe that to change the system, in manyrespects, we have

to challenge some of the currentperceptions and assumptions about

the program. The heartof the President’s proposal is to put the individual atthe center of decision making, to trust individuals

andfamilies to make decisions for themselves.

The proposals that we have put before you are alsobuilt on experience. We have a number of States thathave taken on cash and

counseling waivers and have beensuccessful and have built on

those successes.

Consumer direction. I believe at least 20 differentStates have

had at least some element of consumerdirection. The idea of control

over decision making issomething that is highly valued and an important measureof quality itself, so we would hope that, as you

view ourproposals, that you view them as enhancing quality.

Two important measures of quality themselves areaccess and

choice, and we have learned a great deal fromFlorida and other

States that have done cash andcounseling that access and choice,

in fact, are increasedin those types of waivers.

I would also like to mention a new feature that wehave added

this year in the President’s budget, andreally is kind of the next

generation of what we see asthe next generation and the logical

progression of thedifferent proposals.

17

That is what we call the LIFE accounts, Living

withIndependence, Freedom, and Equality accounts. Thesebuild on

the successes that we have seen in the Medicaidprogram itself.

Senator Smith was here earlier. Oregon has a programcalled

Independent Choices in which families themselvesare self-directing

and are using their own decision-making off budgets they have negotiated with the States.

Senator Thomas was here earlier. Wyoming has asimilar program as well. We think it should take it evenone step further, that

individuals that control their ownbudgets actually would then be

able to roll over into alife account half of the unspent funds into

the futureyears. We also see the LIFE accounts as individuals

withdisabilities who have gone to work, that the employerswould

be able to contribute to those accounts.

Again, the key to those accounts is that, as assetsgrow and are

built up, that they would not count againstan individual’s Medicaid

eligibility or their eligibilityfor SSI. So we believe, again, that that

is somethingthat would be very helpful.

I do want to also hasten to mention that these areabout giving

choices for individuals. None of theseprovisions have mandates in

them. We think that, in thebroad continuum of care, individuals

should make theirown choices for themselves of what type of

livingarrangement that they want, whether or not they want todo

some or part of consumer direction, et cetera.

But we believe that by expanding these choices forindividuals, in

particular families where the child hasthe disability, LIFE accounts

and consumer direction willreally help them to plan for the lifetime.

I think we have seen experience in a number of Statesof where

moving to home- and community-based services, infact, does increase the quality of care for individuals,and, in the long term,

saves dollars as well.

Maine is one of the examples I brought today in whatthey have

done in terms of increasing the use of home- and community-based

services, but their total long-termcare spending is very much below

the national average.

So, as the title of our proposal suggests, there is abalancing, a

rebalancing, to the system. We dounderstand that that does take

time. We believe thatStates themselves are preparing for the

changes for thefuture.

We are very happy that with the real choice insystem-change

grants, States have accessed over $158million through those grants

to States in the lastseveral years.

I believe nine of those States, in particular, in thepast cycle have

chosen to submit applications onrebalancing the systems. But we

do understand thatrebalancing does take time. It takes work and

effort tomove from the system that we have today into a

morecommunity-based system.

As I mentioned, there are wide variations of Statesin the percentage of expenditures for long-term carebeing in the home- and

community-based setting, so it isgoing to take time.

It is going to take time to recruit the workersthemselves to be

in the communities. It is going to taketime to rebalance that system. We think these grants arevery important to help achieve that.

18

I do not want to overlook the success and progressthat has been

made, and Medicaid has played a verycritical role in helping individuals remain in theircommunity or return home to their community.

So, in no way do I want to overlook the importantcontributions

that the workers have made, the providershave made to support

people in their choices. But wehave made progress. We do want to

make progress and wantto make it a little faster than what we are

doing.

But to just, again, hopefully give you somebackground on Medicaid to help you understand the growthof the programs, we have

had home- and community-basedwaivers for 20 years now. We do

believe there is a lotof experience out there to move the system forward and,as I said, for the program itself to keep pace with

thepeople it served.

In 1990, 985,000 Medicaid beneficiaries were servedin nursing

homes. This is a point in time count. Thisis not all people ever

served in a particular year, but asnapshot of a point in time,

858,000 people in nursinghomes.

In 2001, now there are 877,400 Medicaid beneficiariesserved in

nursing homes. These are either elderly orpeople with physical disabilities.

Almost 119,000 were served by home- and community-based

waivers in 1990. In 2001, 510,000, half a millionpeople, again, elderly and physically disabled, wereserved.

For people served in ICFMRs, the intermediate carefacilities for

the mentally retarded or developmentallydisabled, in 1990, 146,900

individuals served in ICFMRs.Only 62,600 served by home- and

community-based waivers.In 2001, 113,900 people were now in

ICFMRs, 322,200served by home- and community-based waivers.

So, we do want to recognize that progress has beenmade. Our

States are the partners who themselves drivethe decision making

about waivers, et cetera. It is theStates, in many respects.

What we are trying to do is to help them tounderstand that there

are new ways, and better ways ofserving people in the communities, and we believe thatthe President’s New Freedom Initiative

is an importantstep forward. We very much look forward to working withyou, Mr. Chairman, and all the members of the committee,to make that legislation a reality. Thank you.

[The prepared statement of Mr. Smith appears in theappendix.]

The CHAIRMAN. Ms. Novak?

STATEMENT OF HON. CAROL NOVAK, MEMBER, NATIONAL

COUNCILON DISABILITY, WASHINGTON, DC

Ms. NOVAK. Thank you very much. I appreciatedeeply the opportunity to speak at this hearing today.Since you already identified

me as a national councilmember, I will go on and clarify that my

son is going tobe 28 next Wednesday, so my bio, I guess, is dated.

I want you to know that it is Jonathan’s struggle tolive a real

life in the community, and by inference themillions of other Americans who live with disabilitiesthat are as limiting as his, that

shapes my testimony,which I call ‘‘Real Lives for Real People: Seeing the BigPicture.’’

19

In our effort to empower Americans with disabilitiesof all ages to

live lives with choice, opportunity, anddignity, we face real challenges. One challenge involvesthe coordination of funding and services.

Disability programs and policies are so fragmentedamong administrative agencies and Congressionalcommittees, that it is difficult

to achieve thecombination of personal assistant services and

accessiblehousing and transportation that are necessary for

qualitylife in the community. People have to go to all thesedifferent

agencies and try to coordinate services andeligibility criteria.

Another challenge involves the shortage of qualitydirect service

providers, which has been mentionedalready several times. Establishing eligibility forpersonal assistant services under Medicaid is

just thefirst step. Hiring and keeping qualified, capableworkers is

a real challenge and it will continue to beuntil we offer a good

wage and health care benefits tothese employees.

In our effort to empower Americans with disabilities,we also face

significant opposition to change. One typeof opposition comes from

special interests. Those whoprofit from the existing Medicaid longterm carestructure want to maintain the institutional status

quo.They are powerful. They cannot be ignored.

In order to achieve real change, these specialinterest concerns

must be acknowledged and theiropportunities in a new system that

empowers and supportspeople in living the life of their choice must

be madeclear to these institutional interests.

Another type of opposition comes from redundantbureaucracies.

The separate administrative structuresfor each of the States’ Medicaid waivers and forinstitutional long-term care absorb an excessive amountof funding that could be better spent on direct services.These parallel bureaucracies also make it verychallenging and

confusing for beneficiaries and theirfamilies when they try to transition from one model oflong-term care to another.

In our effort to empower Americans with disabilities,we also need

to recognize and act on opportunities forchange that can enhance

people’s lives. Currently,people who rely on Medicaid’s long-term

care services donot have the freedom to move from one State to

anotherbecause there is not portability from one State’sMedicaid

program to another.

There is also tremendous disparity, as has alreadybeen acknowledged here today, among the States’ waiverservices, because each

State designs its own waivers withdifferent target populations and

different service menus.

Consolidating Medicaid long-term care into a

systemadministered by one agency responsible for all models

oflong-term services could give people the freedom to movefrom one

State to another, eliminate the disparity inservices among the

States, make it easier to transitionfrom one model to another, reduce the amount of moneyspent on administration, and make it

easier to establishpersonal assistant services as a viable career.

Also, personal assistant services must be madeavailable to adults

with disabilities in the workplace ifmeaningful employment for disabled adults is to become areality.

In our effort to empower Americans with disabilities,we also need

to take advantage of options for costeffectiveness such as private

20

long-term care insurance,support for family caregivers, utilizing

natural supportsin the community, and early mental health screening andservice delivery.

Most of the people in Medicaid nursing home bedstoday acquired

their disability as a consequence ofaging. Despite being productive

throughout most of theirlives, their assets were quickly exhausted

and theybecame eligible for Medicaid.

Encouraging younger Americans who are not disabled tobuy private long-term care insurance by implementing atax credit for the

premium will ultimately save Medicaidbillions of long-term care

dollars that can then beallocated to support or provide support

services forpersons like my son, who cannot buy private longtermcare insurance.

Family caregivers provide millions of hours of unpaidcare each

year. Without our participation, the long-termcare system would

crumble. Many States provideinadequate respite services to relieve

family caregivers,and this eventually leads to caregiver burnout

andinstitutionalization of the disabled individual.

By supplementing our efforts, costlyinstitutionalization can be

avoided and impairment ofcaregivers’ health can be prevented.

When vulnerablepeople live in the community, they have the

opportunityto build relationships with family, friends, neighbors,church members called natural supports.

These natural supports complement the paid supportand are

what make the difference between living a reallife and just surviving. Far too many children withemotional disturbance cannot

get the mental health carethey need. As a result, they often end

up in fostercare, juvenile justice, or institutions.

If properly implemented, Medicaid’s early periodicscreening, diagnosis and treatment program should assistparents of youth with

emotional disturbance inidentifying their disabilities and providing

the servicesthey need.

So, in conclusion, I would just like to say that whenvulnerable

people require assistance today, the defaultgiven to them through

Medicaid is a nursing home or aninstitution. This is the opposite

of what we should do.We should enable people to live in their community withsupports and institutional placement should be the

lastresort.

People are most productive and have he highestquality of life in

an integrated community with friendsand family nearby. Thank

you for the opportunity tospeak today. [Applause].

[The prepared statement of Ms. Novak appears in theappendix.]

The CHAIRMAN. I thank each of you for yourtestimony.

Now we will take five-minute rounds of questioning.I would ask

my colleagues to stay within the fiveminutes—I will, too—because

we have some people thatare on a tight schedule.

First, to Mr. Smith. There has been some concernabout the

amount of dollars allocated for the MedicaidNew Freedom program.

The question is, this year versuslast year. Has the administration’s

commitmentdecreased? I would like to have you explain if

thataccusation is accurate.

Mr. SMITH. Mr. Chairman, I appreciate the questionbecause

there has been some confusion about that. Ourcommitment has not

decreased. The issue, as everyone onthe committee would be familVerDate 11-MAY-2000 14:18 May 20, 2005 Jkt 095484 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 94650.TXT SFINANC2 PsN: SFINANC2
21

iar with, is one of budgetauthority versus outlays. The budget authority is thesame.

The request is the same as what it was last year.But it all depends on the outlays themselves on a real-time basis, how many

States, how quickly, will adopt thegrants themselves.

So, over the long term, the money would then all bespent out. It

is just a matter of assumptions about howquickly the States will

adopt it. But our commitment hasnot changed and has not diminished.

The CHAIRMAN. All right.

Mr. Smith, I hope you remember a letter that SenatorBreaux

and I sent to the Department of Health and HumanServices, I believe it was last July, regarding theimportance of quality following

the release of theGeneral Accounting Office report that was

entitled‘‘Federal Oversight of Growing Medicaid Home and

CommunityBased Waivers Should be Strengthened.’’

This report identified many systemic failures on thepart of the

Department of Health and Human Services inensuring quality of

care in its waiver program. Failureto provide necessary services,

weakness in plans of care,and inadequate case management are

just a few of theconcerns that were outlined by the General

AccountingOffice. Secretary Thompson has assured us that

numeroussteps have been taken by HHS to ensure quality outcomes.

Can you tell me specifically what the administrationhas done to

promote quality in these settings?

Mr. SMITH. Thank you, Mr. Chairman. I do recallyour letter. We

appreciated the opportunity that yourletter presented because we

took a good, hard look atourselves, our procedures, some of the

gaps that werecognized that we faced.

We set out an action plan that we described. I amhappy to tell

you, we have met 16 out of those 18 actionitems and we have made

substantial progress on the othertwo.

You may be interested, on February 29, we releasedthe final

version of the ‘‘Quality Framework and QualityInventory’’ report.

This was done through collaborationnot only with the Medicaid directors, but also theNational Association of State Units on Aging,

and theNational Association of State Directors of

DevelopmentalDisability Services. So, this was a collaborative

effortof partners across the Nation for promoting qualityassurance.

As I said in my opening remarks, I believe verystrongly that a

very important measure of quality isaccess and choice, in themselves. Again, it is very hardto describe, as we have heard previously, how do youmeasure the quality of someone being able to

select theirown caregiver.

How do you measure the quality of not having turnoverin staff?

Again, caregivers come in and do some of themost personal and intimate things of human nature,bathing someone, cleaning someone,

et cetera.

To have a stranger or a different person come throughthe door

week after week or month after month, someonenew coming into

your house, we believe, again, consumerdirection will be a very,

very important measure of whatquality is, and we are working

hard to promote that.

22

But, in particular, on your request on quality, I ampleased to report, and I believe we have follow-upinformation, of meeting the

milestones that we pledgedthat we would make to you, Mr. Chairman.

The CHAIRMAN. Thank you. A follow-up to that.This is in regard

to the New Freedom Initiative. I seeit as an opportunity to continue to promote theimportance of quality care.

What new policies in this initiative will further thegoals of providing quality care to Medicaid beneficiariesin the home- and community-based settings?

Mr. SMITH. We believe that the LIFE accounts,establishing the

LIFE accounts, again, will have a veryimportant improvement in

quality as people makedecisions, knowing that they would be able

to retainresources without losing them or losing access to them.So,

that is a significant change from our proposal lastyear.

And, again, putting the individual, or the familymember on behalf of that individual, at the heart of thatdecision making, we

think, will improve access andimprove choice. The LIFE accounts

are sort of the nextgeneration of doing that.

The CHAIRMAN. Senator Baucus?

Senator BAUCUS. Thank you very much, Mr. Chairman.

Mr. Smith, I wondered if you could tell us what

theadministration’s medium- and long-term goals are here.Clearly,

the proposal, Money Follows the Person, whichSenator Harkin

talked about, is a doable first step.

We all know it is not comprehensive, and States havevery tight

budgets, and certainly Medicaid budgets. Ifyou could outline for us

the administration’s thoughts onmedium- and long-term vision for

this program.

Mr. SMITH. Senator, as you say, the proposalsreally are to help

us transition more to a community-based system and change what

we have today, which is avery institutional-based, provider-driven

system.

In our discussions last year on Medicaid reform, wereally wanted

to encourage policymakers to start to lookat Medicaid really as two

very different programs servingdifferent populations, the acute care

side, and, again,the traditional moms and kids, where Medicaid

was reallytheir health insurance side, versus the long-term

careside. Much of our proposal really was to focus onhelping to

move the Medicaid program, the long-term careside of the Medicaid

program, to a more community-basedfocus.

Senator BAUCUS. That is just sort of a goal, but doyou have any

proposals, medium and long term?

Mr. SMITH. Our immediate proposal is the NewFreedom Initiative itself.

Senator BAUCUS. Medium. Medium and long term.

23

Mr. SMITH. The long term, we have, again——

Senator BAUCUS. Medium. Let us back up. Medium?

Mr. SMITH. Medium, we did not re-propose anyspecific comprehensive changes to Medicaid this year. Wehave been saying that

the President’s budget did includelanguage that, again, outlines

that we believe long-termchanges to the system do need to be

made, but reallyentering a dialogue.

Senator BAUCUS. I appreciate that. I have justsome questions

about the New Freedom Initiative, the LIFEaccounts, and self-directed care, generally, especiallysince the administration proposed

expanding all this to awider array of services. Here are my questions. One, iscan medical expenses be covered under the capped

grantfor individuals?

Mr. SMITH. Senator, we do not see the medicalexpenses, the

acute care side, being involved, no. Theseare the support services.

Senator BAUCUS. What about leftover LIFE accountfunds? What

can they be used for?

Mr. SMITH. The LIFE account funds? Really, we seethose as the

individuals, under their control, to use asthey desire.

Senator BAUCUS. And with the cap, what happens ifnew technologies become available, new hearing aids, newwheelchairs?

What if something becomes available, yet itis capped?

Mr. SMITH. Well, again, the medical side would notbe included in

that side of home- and community-basedwaivers.

Senator BAUCUS. A wheelchair would not be?

Mr. SMITH. No, Senator.

Senator BAUCUS. That is medical?

Mr. SMITH. That would be medical.

Senator BAUCUS. What if non-medical technologiesbecome available?

Mr. SMITH. Again, non-medical. Just to give you alittle bit more

background, we have identified 70different types of services that

are categorized as home-and community-based services. These are

the supports,respite, as being case management, different things

thatare really to the individual. Through our Medicaiddirectors’ letter, we told the States that they could useMedicaid home- and community-based services fortransitional costs.

Senator BAUCUS. What happens if a person decides toforego services to save money, that is, save money underthe cap? How can we

be certain that that person wouldnot be penalized in future year

budgets?

Mr. SMITH. Well, again, Senator, these are notnecessarily for everyone. These are choices that peoplewould want to make for themselves.

Senator BAUCUS. Well, that is not the question Iasked.

Mr. SMITH. All right.

Senator BAUCUS. The question I asked is, how willthis person not

be penalized after he or she has madethat choice?

Mr. SMITH. I do not see that as being penalized,Senator.

Senator BAUCUS. Well, how can this person beassured that he or

she will not be penalized in thefuture, that is, if a person decides

to forego services?

Mr. SMITH. Well, they are not foregoing services,Senator.

24

Senator BAUCUS. They could. I thought, earlier, aperson might

end up with leftover funds they could putinto a LIFE account.

Mr. SMITH. But if they do, they have made thatchoice not to

spend all the money in that year. So,these are unspent dollars that

go into the account.

Senator BAUCUS. Now, my question is, again, how canwe be sure

that that person is not penalized becausethere were unspent dollars?

Mr. SMITH. Well, Senator, again, I see it as achoice that they

have made for themselves. I do not seethat as a penalty.

Senator BAUCUS. I am not saying that is a penalty.I am talking

about the next year, the next go-around.

Mr. SMITH. Again, the individual budgets are setwithout regard

to how much an individual would have intheir LIFE account, so

they would still go through thesame process that they did in the

previous year based onthat individual’s needs.

Senator BAUCUS. I just wanted to make sure that theperson is

not penalized.

Mr. SMITH. Yes, Senator.

Senator BAUCUS. How do we know that self-directedcare is going

to be entirely optional? Does a personhave to use self-directed care

to access Money Followsthe Person?

Mr. SMITH. No, Senator.

Senator BAUCUS. So it is optional?

Mr. SMITH. It is optional to the State and it isoptional to the individual who wants to leave theinstitution.

Senator BAUCUS. I am more concerned about theindividual right

now.

Mr. SMITH. The individual? It is their choice.Again, Money Follows the Person is for a person alreadyin an institution who says,

I want to leave theinstitution. That is totally optional.

Senator BAUCUS. But is that an entitlement then, ornot?

Mr. SMITH. Still being in the institution——

Senator BAUCUS. Out of the institution. I havedecided I want to

get out of the institution. I do notlike it here. I want to try this

new program, but I likebeing entitled to get my Medicaid dollars.

Mr. SMITH. Again, the way this works, is these aredemonstration

programs, so the States would submitapplications for funding. The

Federal Government wouldprovide 100 percent of the funding in

the first year.The State itself also would then obviously have to

make acommitment to keep that individual in a waiver slot sothey

would be able to continue in the future.

Senator BAUCUS. My time is expiring. But if I wantto get out of

the nursing home and take this MoneyFollows the Person, can I

still accept it as anentitlement?

Mr. SMITH. Again, a home- and community-basedwaiver today,

Senator, the States have the ability tocontrol the number of slots.

For this particularprogram, moving that individual out of the institution,obviously the State would have to make a commitment

tocontinue to support that individual in the community.

Senator BAUCUS. Well, my time has expired. Thankyou very

much.

Mr. SMITH. Thank you.

The CHAIRMAN. Senator Lincoln?

25

Senator LINCOLN. Thank you, Mr. Chairman. Aspecial thanks to

you and Senator Baucus for holding ourhearing today.

I also want to applaud my colleague Senator

Harkin’scommitment to this very important issue. I think

hiscontinued work on behalf of people with disabilities isabsolutely

commendable and an example to all of us.

Certainly, I am devoted to what we can do in terms ofensuring

that people with disabilities do have access toquality health care in

the least restrictive settingspossible. I do think it is a very important issue.

I am very proud of the efforts my State of Arkansashas made to

address the needs of older adults and peoplewith disabilities.

Our State has been very progressive in developingservices that

promote independence and community living.The Arkansas Division of Aging and Adult Services is aleader in the country, and I

am enormously proud of theireffort and the leadership that they

have been providedthrough their director, Herb Sanderson, who

has done anexcellent job.

I also want to compliment Ms. Novak for bringing upthe issues

of dealing with long-term care and providingincentives in the Tax

Code to encourage long-term care,as well as early testing, infant

screening, all of thosemeasures.

We have certainly found they are great investments inbeing able

to not only provide a better quality of life,but also to lower our

costs because we know what we aredealing with early on. So, I certainly applaud yourbringing those issues up, and I think they are

veryimportant.

Mr. Smith, just a couple of questions. And if I donot get to all

of them, I would like to submit them inwriting for your answer.

I have long been a strong proponent of doingeverything possible

to provide the highest quality, mostintegrative, and flexible services for people in theleast restrictive settings.

In our experience in Arkansas with the Cash andCounseling

demonstration project, it has been a greatsuccess. However, I do

want to just add a word ofcaution.

The Arkansas experience has also provided a richexperience of

lessons to be learned, and I hope that wewill not jump into too

many things without looking atthose things that we have learned

in these demonstrationprojects and be able to work through them,

and provideeven greater opportunity to offer a program that

providesa great deal.

What we have learned, is that there are criticalpolicy issues to

be resolved, I think, in order forthese, and other consumer-directed

initiatives to reallysuccessfully meet the needs of the consumers

who wish todirect their own services.

I just caution us before we open the consumer-directed flood

gates that we carefully examine thoselessons learned from our experience.

One of the key elements of the consumer direction isthe ability

to hire, fire, train, and supervise personalassistant attendants, and

you have mentioned some ofthat.

Is there any kind of information in consumerprotections against

the unscrupulous vendors that isavailable for the individual who

seeks a personal careattendant?

26

Mr. SMITH. Senator, I believe, as part of ourtemplate, that the

States have to offer to do criminalbackground checks on the caseworkers. Again, there isstill State oversight of the fiscal intermediaries,people that are handling the money, that sort of thing.

Again, consumer direction does have many differentvariations in

itself. Some people want to handle themoney, some people do not.

This is very critical. Iwould agree, the up-front planning and the

identificationof someone who really wants to do it, who understands allof the obligations, it is not something for everybody,but

we are trying to expand some choices.

Senator LINCOLN. Well, that kind of leads to mynext question. I

would encourage us to make sure that wepoint out that, as individuals are doing more forthemselves, that information and consumer

protections aregoing to be critical.

And one of the other lessons that we have learned inArkansas,

is that shifting the control to the individualdoes not diminish the

need for the State administrativefunctions related to enrollment, financial management,program oversight, you mentioned background checks, andother things like that.

The final report on the Cash and Counseling programfound that

the cost of hiring enrollment staff issubstantial and that the administrative functionsassociated with that financial management

and programoversights are critical to the successful

implementationand to prevent the abuses that might occur.

So my question really is, will there be moniesavailable to States

to implement such programs ofmanagement, oversight, and consumer protections?

Mr. SMITH. All of those things would still beMedicaid expenditures that would be matchable. Inparticular, again, on the Systems

Change grants, theMoney Follows the Person, it really is to help

fund theinfrastructure and the administrative part to help

Statesprepare for doing consumer direction and, as youmentioned,

all the infrastructure to go to support that.

Senator LINCOLN. So you are reassuring me thatthere is adequate funding for the States to be able tohelp provide these types

of services, oversight servicesthat are going to be necessary as people do more and morefor themselves.

Mr. SMITH. Those would continue to be, again. Thisis going on

today in the Medicaid system. What we aretrying to do, again, as

I said, we are just trying tooffer new ways to promote it to move

there faster.

Senator LINCOLN. Well, the Cash and Counselingdemonstration

program in our State was designed really togive people greater control over a defined set ofservices, the need for which is likely to remain fairlyconsistent from month to month.

I guess the problem becomes when it does not. TheKaiser Commission on Medicaid and the Uninsured reportsthat the high level

of beneficiary satisfaction with theCash and Counseling program

appears to result from thefact that the individuals were permitted

to manageservices that have a predictable level of need.

Our concern becomes when the consumer direction in

anindividual budget may not be appropriate for certainservices,

particularly the ones that are less predictableas they move through

the concerns that they may have inthe year. I guess it prompts anVerDate 11-MAY-2000 14:18 May 20, 2005 Jkt 095484 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 94650.TXT SFINANC2 PsN: SFINANC2
27

other basic question. Ifthe beneficiary needs change during the

plan year, whathappens to them? What are their options?

Mr. SMITH. Again, Senator, States have takendifferent approaches. Wyoming, as I had mentionedearlier, created a reserve

account to plan for thosecontingencies, et cetera.

And you are right, it is hard to anticipate. Thedifferent scenarios

are as varied as the peoplethemselves are. We think that is good

planning, is toanticipate there will be a need, at least for

someindividuals.

Senator LINCOLN. Sure.

Mr. SMITH. But I hope that it does not hold us backfor moving

forward and simply say, well, you should bethinking about reserve

accounts or what you do on anemergency basis. A family situation

can change over thatperiod of time, et cetera. But I think that is

whatStates are doing through the grants now, sort of learningthese

things to be able to prepare for those types ofcontingencies.

Senator LINCOLN. Do you feel like there is a needfor HHS to do

more than just encourage? I mean, myconcern is, really, that there

is no mandatory safety netplan.

I am just wondering if you think that that might besomething

that would be encouraged by HHS of all Statesthat are using these

programs in this way so that peopleare not left to fend for themselves in a year where theirneeds may change drastically and they

have not plannedfor that.

Mr. SMITH. Well, again, the responsibilities in ahome- and community-based waiver that you are stillobligated to provide for the

health and safety of anindividual that you are serving, in our Independence Plustemplate, which is our model waiver in this area, we

doprovide certain safeguards in there that we want theStates to

meet.

As I said, it is a fine balance between how much isenough and

how much is too much, especially, again, whenyou are dealing with

someone living in their own home. Ido not think we want to treat

it the way we treat aninstitution, where surveyors come in and

that sort ofthing.

The CHAIRMAN. Thank you.

Senator LINCOLN. Mine would be more to encouragethe agency to

really look towards encouraging States forthose emergency plans

and being prepared for that.

Thank you, Mr. Chairman.

The CHAIRMAN. You bet. Thank you, Senator Lincoln.

Thank you, Mr. Smith and Ms. Novak. Thank you verymuch.

I would call the third panel, now. We have RayGerke, Bruce Darling, Jan Moss, and Di Findley. Wouldyou come while I introduce

you?

We appreciate all of your work in the disabilitycommunity. Ray

Gerke is from Perry, Iowa, a foundingmember of the Olmstead Real

Choices Consumer Task Force.His cerebral palsy has existed since

infancy, and overthe course of his life he has received care in both

thefamily and institutional settings. Mr. Gerke will sharehis experiences from both of these settings, and as anadvocate for the disability community.

Bruce Darling, our second witness, is co-founder andexecutive director of the Center for Disability Rights,Rochester, New York. He

28

is testifying on behalf of ADAPTCommunity, and brings with him

18 years of experienceworking with individuals with disabilities.

Mr. Darlingwill offer testimony on institutional bias and,

mostimportantly, how to remove bias from the Medicaidprogram.

Third, Jan Moss, from Oklahoma City, the parent oftwo adult

children with serious disabilities. She hasbeen caring for these individuals for the past 36 years,not only for them, but also now she

cares for in-laws.She will share her experiences as a family caregiver and,most importantly, the respite need.

Our final witness, Di Findley, is from Mitchellville,Iowa and is

executive director of the Iowa CaregiversAssociation. Ms. Findley

brings to the committee todaythe voices of direct care workers. She

served onnumerous boards, committees, and councils and will

focuson the shortage of direct-care workers and its impact onaccess

to community-based services.

I would like to have you go in the order that Iintroduced you, so

that would be Mr. Gerke, then Bruce,then Jan, then Di.

STATEMENT OF RAY GERKE, MEMBER, IOWA OLMSTEAD

REALCHOICES CONSUMER TASK FORCE, PERRY, IOWA, ACCOMPANIED BYRAMONA EDMISTON, A PERSONAL ATTENDANT FROM IOWA

Mr. GERKE. Thank you for allowing me to speak toyou today. I

am honored to speak to you to share mystory.

I received, as you said earlier, the diagnosis ofcerebral palsy

when I was an infant. At that time, thedoctor gave my parents a

choice.

Ms. EDMISTON. Would you like me to read this forhim?

The CHAIRMAN. Whatever is best for the family.

Ms. EDMISTON. I am Ramona Edmiston and I am Ray’spersonal

attendant. I have been a friend of the familyfor 20-some years. I

will just read you what he has.This is his story.

He received the diagnosis of cerebral palsy when hewas an infant. The doctors gave his parents a choice:either to take him home

and raise him like any otherchild, or place him in an institution.

They chose totake him home.

His early years were filled with family vacations,road trips with

his dad in his truck, games, rivalry andlove between himself and

his siblings, and his cousins.But when he was eight, his parents

were told they neededmore intensive therapy services than what he

could get inthe home community.

They were told the best thing they could do for himwould be to

place him in a facility where he could getphysical, occupational,

and speech therapy. All of asudden, he found himself in a town two

hours from home,alone, without understanding why.

Totally unprepared for this strange setting, insteadof his family

and friends, he found himself sharing hislife with 97 other individuals with disabilities. Someof those strangers became his friends,

but no one couldreplace what he left at home. Because he did

notunderstand, he cried for those first 2 days, and thenmany days

off and on for the 2 years he lived therefull-time.

After those first 2 years, he returned to his homeduring the

school year and spent summers back in thefacility. It took 3 years

29

to learn the system, toknow what to expect, and be able to handle

things withoutthose childhood tears.

For example, he learned independence. ‘‘We were notallowed visitors, as they might upset us.’’ They learnednot to trust people. In

a congregate setting, the youngkids get teased and bullied by the

more experienced.Kids take things from each other, or worse, if

adults seesomething they like, those things often came up missing.

In that same setting, his experience included havingto go along

with the demands of an authority figure whohad the power to

make his life miserable, even when thatauthority figure’s demands

included misusing his body tomeet his personal desires.

He got all of the intense therapy he needed, but atwhat cost?

When the professional therapy had gone as faras it could, he returned to his family home. Thatexperience over four decades ago

has had a lasting impacton his life and his perspectives.

Today, he lives with his wife, who also has cerebralpalsy, in a

home they own. He works full-time. Hedrives himself to and from

work, and wherever else heneeds to go. He does have many friends,

some who havedisabilities, some who do not. He lives a full life,

alife that he can direct himself with these supports.

’’I also carry with me each and every day the burdenof knowing

the burden of knowing that the threat ofinstitutionalization is as

real for me today as it everhas been.’’ If he lost the funding sources

that providefor him the ability to maintain life as it is, his

salarycould not cover the cost of having staff to assist withregularly

getting up for work, preparing his meals, orgetting back into bed

at night.

Without that support, he has few options but toreturn to this setting, much like the facility he knew inthose early years. ‘‘I would

then no longer be able todirect a few select personal assistants to

assist me withthe choices I make on how I like to live. I would

alsono longer have the independence that I know today. Mylife

would lack privacy, and when I lose choice,independence, and privacy, I also lose my dignity and myfreedom.

In order for me to maintain my life in the communityand to provide other people of all ages who live withdisabilities today the

same opportunity, I ask you toeliminate the institutional bias in

Medicaid by requiringStates to include community-based personal

assistantservices in their Medicaid plans.

Individuals who qualify for Medicaid shouldautomatically be eligible for community services, notjust services delivered in institutional settings, as incurrent law.

Provide financial incentives for States to helpindividuals transition from institutions to communitysettings, because community

settings are typically lesscostly. This benefits not only the individual, but alsothe Federal and State treasuries.

Assist States in developing and implementing astrategy to rebalance their long-term care systems sothat there are more cost-effective choices betweeninstitutional and community options.

Provide financial support and create incentives forStates who develop quality community-based supports andservices, including

support to help States find ways torecruit, train, and re-train direct-support workers.

30

Offer respect to the people whose lives are affectedby disability

policy decisions by not just listening tothem, but by having them

be a part of the decision makingitself.

Today, I am an active advocate for all people withdisabilities. I

serve on many boards and communities,two of which strongly apply

to this topic. I am a memberof Iowa’s Olmstead Real Choices Consumer Task Force. Weare working to effective implement the

Olmstead decisionin Iowa.

This includes advocating for the policies I juststated, as well as

working with the Iowa Department ofHuman Services to take advantage of CMS’s new progressivepolicy of self-direction which promotes community livingand affords individuals more choice and

control over theservices they receive.

I also serve as the co-president self-advocaterepresentative for

the National Coalition on Self-Determination, Incorporated, the

only national coalitionthat has both parents and consumers working together onissues.

The work of both of these groups focuses on realchoices: the freedom to live the way you want, to self-direct your life, to be able to

purchase the services youneed to support you in your life, to live

a life withdignity, to have the freedom to make new friends

andparticipate in your community, and to support your rightto

vote.

Again, I urge you to pass legislation that willincorporate the policies I have mentioned today that helppeople like me have all the

right resources that exist inthe community for me to participate

fully as an Americancitizen. Your decisions are important to the

lives ofmany, many people who are like me that live under athreat

that should not be present.

Thank you very much for your time and attention toimproving

access to Medicaid home- and community-basedservices.’’ [Applause].

The CHAIRMAN. Thank you, Mr. Gerke. Also, we willhave some

questions. If he would like to have you helphim answer questions,

that would be appropriate.

[The prepared statement of Mr. Gerke appears in the appendix.]

The CHAIRMAN. I think the next person was Mr.Darling, was it

not?

Mr. DARLING. Yes.

The CHAIRMAN. Yes. Mr. Darling, go ahead.

STATEMENT OF BRUCE DARLING, EXECUTIVE DIRECTOR,

CENTERFOR DISABILITY RIGHTS, ROCHESTER, NEW YORK

Mr. DARLING. Today I am testifying on behalf ofADAPT and

thousands of people like Ray with disabilitieswho want a real

choice in long-term care services.

I am the executive director of the Center forDisability Rights, an

independent living center inRochester, New York. Over the last 4

years, ourcenter has transitioned over 100 people back into

thecommunity. We have also trained people from 37 States inthe

territory of Guam in helping people with disabilitiesreturn to the

community from institutional settings.

31

As I have traveled the country, I have heard the samestories

again and again about people who have had yearsof their lives stolen by a system that supportsinstitutions over individual rights.

The basic problem is that funding for long-term careservices is

tied securely to institutions. According to2002 data, you have heard

that 70 percent of that moneyis used for institutional care rather

than communityservices.

States must provide institutional care like nursinghomes, while

community-based services are entirelyoptional. Because institutional services are mandatory,States cannot cut their funding.

In tough fiscal times, some States have had no otherchoice but

to cut community-based services. States thatwant to provide community-based alternatives areprevented from doing so by a Federal

policy that mandatesinstitutional services.

There is one extremely important reason we mustchange this

system: it is not what people want.According to CMS data collected

by the nursing homesthemselves, nearly 19 percent of individuals

in nursingfacilities have said they want to return to thecommunity.

From my personal experience, this number should bemuch higher. According to a study conducted by AccessLiving, 64.5 percent of

nursing home residents that theyinterviewed said that they wanted

to return to communityliving.

Clearly, we need a new model. No longer shouldcommunity-based

services be the exception to theinstitutional rule, or the waiver, as

it were.Individuals must have real, meaningful choices.

But changing the system is going to take some time.We understand that. But there are things you can doimmediately to address

the institutional bias. First,you muss pass Money Follows the Individual legislation.

Under this legislation, the Federal Government willfully fund the

first year of community services forindividuals who transition out

of institutions. Thislegislation would provide a critical incentive to

Statesto get people back into the community.

Senator Harkin introduced the Money Follows thePerson Act of

2003, S. 1394, and the White House hasdistributed its own draft

legislation, the New FreedomInitiative Medicaid Demonstration Act

of 2003.

We understand that you, Senator Grassley, areconsidering introducing legislation based on theadministration’s proposal that would

authorize a MoneyFollows the Individual demonstration program

and supportother initiatives to promote community-based services.

Thousands of people with disabilities and olderAmericans in

nursing homes and other institutions willbenefit if you fund these

initiatives.

The CMS data shows that at least 267,000 people withdisabilities

and older Americans want to return to thecommunity now. Two

hundred and sixty-seven thousandpeople are telling the nursing

homes that they want to gohome. Two hundred and sixty-seven

thousand people areasking you to help them go home. On behalf of

those267,000 people, I am pleading with you not to make themwait

one more day. [Applause].

Whether you pass S. 1394 or the administration’sproposal, it is

imperative that you take action now.This legislation must be

passed this session. There areother steps that you could take to adVerDate 11-MAY-2000 14:18 May 20, 2005 Jkt 095484 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 94650.TXT SFINANC2 PsN: SFINANC2
32

dress theinstitutional bias. We are looking for mediumrangesolutions earlier.

Create an enhanced Federal Medicaid matching rate forhomeand community-based services. By paying a largerpercentage of the

cost of community-based services, youwill create a strong incentive

for States to promotecommunity living. Such a step will help our

Statesthrough tough fiscal times and send a message that

ourNation values the freedom of all its citizens, includingthose with

disabilities.

Finally, while programs, demonstration programs, andenhanced

Medicaid matches would promote community living,there is still

much more work to be done. The ultimatesolution to ending the institutional bias is clear: passMiCASSA. [Applause].

The Medicaid Community Attendant Services andSupports Act,

S. 971, gives people real choice in long-term care. MiCASSA provides individuals eligible fornursing facility services, or ICFs, with

the opportunityto choose community-based services and supports

ratherthan be forced into institutional placement. Peoplewould get

assistance in their own homes, not nursinghomes.

Every major national disability organization supportsMiCASSA.

In all, 92 national organizations are MiCASSAsupporters; 561

State, regional, and local organizationssupport the bill. The full list

is attached to mytestimony.

Notice that advocates for children and seniorssupport MiCASSA.

Other organizations represent peoplewith all types of disabilities—

cognitive, sensory,mental health, and/or physical—and we are all

askingthat you take action now.

Today, we would not be here without the heroicefforts of hundreds of ADAPT members who put their bodieson the line. On their

behalf, I would like to thank youfor this hearing. But I must point

out that we need morethan hearings, we need action. Take the

steps that Ihave outlined today and pass these important pieces

oflegislation to free our people.

Thank you. [Applause].

The CHAIRMAN. Thank you.

[The prepared statement of Mr. Darling appears in theappendix.]

The CHAIRMAN. Next, is Mrs. Moss.

STATEMENT OF JAN MOSS, MOTHER OF TWO ADULT CHILDREN WITHDEVELOPMENT DISABILITIES, OKLAHOMA CITY,

OKLAHOMA

Ms. MOSS. Mr. Chairman and members of thecommittee, thank

you for the opportunity for me totestify today. I especially want to

thank you, SenatorGrassley, for the invitation.

I am Jan Moss. I am a family caregiver. I have beenproviding

care to both my children, who are adults withdevelopmental disabilities, and my husband’s parents fora total of 36 years.

I am a widow now and continue to have the samecaregiving responsibilities that were shared when myhusband was living.

I am here to support the President’s proposals forMedicaid respite demonstration for adults and children asoutlined in the proposed New Freedom Initiative MedicaidDemonstration Act. Given

the serious funding shortfallsfor respite in most States, and new

resources for respitewill be a godsend.

33

But I am also here to tell you about Oklahoma’sLifespan respite

care program, the Oklahoma RespiteResource Network. It has

helped thousands of familieswho are not eligible for Medicaid, but

in dire need ofrespite.

I want to begin by thanking you and the entire Senatefor its

leadership in passing the Lifespan Respite CareAct, which will

strengthen Oklahoma’s efforts and makesimilar Lifespan programs

in respite available in moreStates.

When my children were young, there were no respiteprograms.

There was not even information about whetheror not respite was

even needed. In recent years, througha home- and communitybased waiver, we actually had theopportunity to receive respite

services and it has made abig difference in the survival of our family.

My husband and I divided our entire lives into piecesof care. Frequently, our time with each other was themissing piece. We reserved our paid leave for hospitalvacations. We prioritized our employment according towho had the best benefits. The unusual care

needs of ourchildren affected every decision in our marriage and

ourfamily life.

Except for the birth of my son, I went 18 yearswithout a full

day’s rest due to illness or injury. Nowonder I have blocks of time

for which I have little orno memory. Those years I called my

‘‘automizedsuspension.’’ I was suspended in a fatigue fugue, if

youwill, that allowed for basic routine and automatedbehavior.

I remember waking on our divan or in one of the kids’rooms, but

did not remember going to sleep there. Iremember the year of

Jennifer’s tendon transfer, the yearof Jason’s heart surgery, eye

surgery, hernia surgery,oral surgeries, the many heart catheterizations, theEEGs, the EKGs, the ultrasounds, the years

ofuncontrolled seizures. But I do not remember some of thebirthday

parties and anniversaries.

Now, family pictures prove I was there, but I thinkit is very, very

sad now that I do not recall many of thebenchmarks of my family.

The most difficult experiencefor me personally has been the sudden

death of my husbandand care mate on Father’s Day of 2000. He

dropped deadfrom an undiagnosed heart problem.

Now I see the importance of those missing pieces,maybe the time

that we should have had some rest. Maybeit is heroic to care for

our children and not to ask forso much assistance and to be brave.

But I will tell you,it is more heroic to live for our family members

so thatwe can supervise their care, so that we can see that theyget

care, and so that we can have real lives in ourcommunities.

Frightening me now is the loss of his income and myability to

maintain my own health responsibilities. Wedo not have a typical

day at my house. Jason may be in astupor from some seizures or

going into seizures from hisanxiety disorder.

We never know what to expect from Jennifer. Sheunderstands.

She is employed. She has tried so hard,and did live independently

in the community until recentcutbacks. But she has been forced to

move home. So shehas lost her father, she has lost her home, and

she hasmoved home.

Jason and Jennifer have disabilities on opposite endsof the spectrum. Their abilities are not complementary,shall we say. I know

34

that it is difficult for them tounderstand that they, also, need respite from each other,as well as, I need respite occasionally to kind

of renewmy batteries.

We have to explain every day to Jennifer, to Jason,and to myself.

It is kind of a sharing thing about, itis all right to be who we are,

and that is great. I wantJennifer and Jason to be in my life. I want

them to behome as long as they want to be there.

But it is true that we do need that kind of naturaldevelopment

in our family that typical families have, andthat is the ability to

be separate for a little while, tohave some privacy occasionally.

Just recently, I guess it may have been Friday beforelast, I was

in a Family Support Committee meeting and Istarted getting these

phone calls. My phone is vibratingand it is making all these little

noises. Finally,someone said, go ahead and answer it. Well, it is

thepolice and they are at my house. Our alarm is going off.

Jason has put his earphones on. Jason would be aperson who is

said to have autism, and Jennifer hasdeafness and cerebral palsy.

Jason puts his earphones onso the alarm does not bother him, and

he lets thepoliceman in the door, but he takes him in the

bathroomwhere Jennifer is taking a shower.

Well, the policeman is on the phone and he is saying,would you

please come home, because he did not know signlanguage, and I

had to go home and quiet Jennifer down.

Well, I tell you what. That evening, Jennifer wasafraid to come

home from work by herself because she wasafraid the alarm would

go off again.

Now, that whole weekend was so intense that the nextMonday

she hardly felt like she could go back to work.But, of course, we

stayed with it. We stayed at it. Wekeep staying at it. But there are

occasions when weabsolutely have to have reprise, both for our

spirits andfor our bodies.

This prolonged kind of fatigue you can get when youare the main

and the constant caregiver can produce kindof secondary, ancillary

issues. Fatigue-related injuriesand illnesses from prolonged stress

can result in, weknow, neglect, and certainly abuse.

Mismanagement of medication. I, myself, suffer fromtypical caregiver issues, serious dental issues. I amtrying to keep, I think, from

screaming sometimes. Iclench my teeth so tight, my teeth are disintegrating.

That is not uncommon. I will be visiting with othermoms and we

will start talking about our TMJ, which isexpensive and painful.

There are other, kind of autoimmune joint disordersthat families

get. Nobody tells families that, withoutproper rest and without

proper equipment, you are goingto lose the use of your thumbs

eventually from the kindof issues from lifting persons, and transferring persons,and lifting equipment. Nobody shares that

informationwith us. Rest is vitally important to kind of preserveour

bodies and our health.

When Jennifer was about 19, she became eligible for ahome- and

community-based waiver and respite was one ofthe services. The

recent budget cutbacks in Oklahomahave forced families to either

give up their respite orto lower the amount of respite they were receiving, or,to keep some services, you give some services up.

35

I am going to have to give up important services andsupports in

order for me to be employed if do notcontinue to receive my respite

services. It is an awfulchoice to make because I am not going to

get any reliefthat way.

I will just go to work. I will have to leave work,go home and

check on Jason, and drive back to work. ThenI work with Jennifer

and Jason in the evenings. We tryto have a family life. Then if we

do not have anyrespite, there is no light at the end of the tunnel.They deserve me to life a long, helpful, and healthylife. They

deserve to have one themselves.

Thank goodness, we have Oklahoma’s Lifespan RespiteProgram.

It is known as the Oklahoma Respite ResourceNetwork, and it is

a collaboration. It is a wonderfulmodel of partnering with DHS, Department of Health,Mental Health, caregivers, advocacy agencies.

We network and redirected, at one point, $8 millionto respite

care in Oklahoma to serve families across thelifespan, aging families, and families who have childrenwith disabilities.

If families need help in finding a respite provideror find out what

programs they might be eligible for,they can turn to our respite

network. The Oklahoma modelhas flexible funding, so the State

can find the mostcost-effective way to deliver services through

vouchersand allow caregivers control over the resources.

Our idea around recipients and beneficiaries ofservices, being

able to look at what dollars areavailable and how those dollars

should be spent, has beenabsolutely 100 percent successful.

The efficacy of allowing families to be a part of howthe dollars

are going to be spent makes far more sense,and really our program

has proved that we aretrustworthy. We know the value of a dollar.

If I had to place my children in out-of-home care, itwould have

cost the State millions. We know respiteallows caregivers to keep

their children at home, and Rayhas addressed that. It reduces the

stress and risk ofabuse and neglect. Respite is really important

tomarriages as well.

Similar Lifespan programs have been mentioned here,the ones in

Oregon, Nebraska, and Wisconsin. I wouldlike to take the liberty,

on behalf of caregiversnationwide, to applaud the administration’s

support forrespite. Respite funds that would be available under

theNew Freedom Initiative are especially critical now.

Many Medicaid waivers, as I have said, in other Stateprograms

are eliminating or cutting back. The NewFreedom Initiative respite

demonstrations are verycomplementary to respite systems that

would beestablished by the Lifespan Respite Care Act.

These would address my concerns that I would haveabout the

issues and the confusion and the fragmentationof services that we

often get. I know that has beenmentioned earlier today.

The way we have run our respite program, we haveprovided an

opportunity for all those agents thatcontributed to the cause of risk

to work together so thatfamilies, whatever age group they are in,

are entitled tothose dollars, however few they may be,

towarddetermining how they want to spend them and their

respitevouchers.

I am concerned about the demands of families andcaregivers who

would not be served under the New FreedomInitiative because they

36

are not Medicaid-eligible, and asa result may not be able to afford

respite.

Even when families have resources to pay, frequentlyfinding

quality respite providers who meet theirpreferences, who are safe,

and who are acceptable to thefamilies may not be accessible.

While the New Freedom Initiative respitedemonstrations are an

important and absolutely necessarypiece of the puzzle, the Lifespan

Respite Carelegislation is the glue that holds the puzzle

piecestogether.

I applaud the Senate for passing the Lifespan RespiteCare Act.

This legislation will allow States to providethe infrastructure for

coordinating and maximizing therespite resources and filling in the

gaps.

The Lifespan Respite Care Act provides a way to savemoney, recruit and train providers, and make it easierfor families to find

quality respite, regardless of theirMedicaid status, their disability,

or age.

I urge you to support the President’s proposed NewFreedom Initiative respite demonstrations. At the sametime, it is my belief that

these benefits will not befully realized without the enactment of

the LifespanRespite Care Act.

I would just ask you to consider the millions offamilies who continue and who are dedicated to care fortheir family members across

the country and remember thatoccasionally they are going to need

that naturalseparation that typical families get when their kids

gospend the night with a friend, or have the friend spendthe night

with them.

Help us to be able to gain a little light at the endof the tunnel.

Help us to maintain our respite. Thankyou so much for allowing

me to participate today.

The CHAIRMAN. Thank you, Ms. Moss.

[The prepared statement of Ms. Moss appears in theappendix.]

The CHAIRMAN. Now, Ms. Findley?

STATEMENT OF DI FINDLEY, EXECUTIVE DIRECTOR,

IOWACAREGIVERS ASSOCIATION, DES MOINES, IOWA

Ms. FINDLEY. Chairman Grassley, members of thecommittee,

thank you for this opportunity. My name is DiFindley and I am the

executive director of the IowaCaregivers Association, founded in

1992 as one of thefirst independent State-wide direct-care

workerassociations in the country.

Our mission is to enhance the quality of care throughdedication

to those direct care workers. One barrier toaccess to Medicaid

home- and community-based services, asidentified in the New Freedom Initiative, is the shortageof workers.

In fact, it is probably one of the most compellingproblems that

we face. While most care in the country isstill delivered by family

members, when the family can nolonger handle that 24-hour

around the clock care and mayseek outside assistance with a home

care agency provider,or, as a last resort, place someone in a nursing home,and in other instances with the expansion of homeandcommunity-based services and with a more

equitabledistribution of resources between institutional-basedcare

and home- and community-based services that wouldallow for more

37

personal assistance, the elderly andpersons with disabilities can remain in their homesindefinitely, it is the family caregivers, the

home careaides, the personal assistants who make remaining in

thehome possible.

Access to, or expansion of, home- and community-basedservices is

impossible without access to a stable,direct-care workforce. We

know that there are at leasttwo aspects to the shortage. One, is

just sheerdemographics, the huge aging population that is beforeus.

While the aspect of just not enough people tends toget the greatest attention from policymakers and themedia, we have focused our

attention on the second aspectof the shortage, that which occurs

when workers tend toleave the field at very alarming rates.

Some direct-care workers enter the field of directcare as a stepping stone to become a licensed nurse or aphysician. But, contrary

to what a lot of people think,this is a career choice for many people.

Others enter the field, but leave within the first3 months of employment because physical, mental andemotional demands of the

work was far more than they hadexpected.

In 1998, we conducted a survey to determine whydirect care

workers leave the field. There were nosurprises in the findings, because we have debated theseissues for decades. But for the first

time, at least inour State, the survey findings actually represented

thevoices of those who were doing the leaving.

They cited the top four reasons for leaving as: shortstaffing, poor

wages and benefits, a lack of respect, anda lack of opportunities for

advancement within the fieldof direct care.

So, strategies to improve access to Medicaid home-and community-based services must include strategies toimprove access to a

good workforce. We are pleased tosee the $2.9 million in additional

funding proposed inthe New Freedom Initiative in the 2005 budget.

However, given the magnitude of the problem, itwarrants a higher level of funding and a longer termcommitment. It is pretty simple, really. Withoutdirect-care workers and caregivers, people’s

needs aregoing to go unmet.

Seniors and persons with disabilities and otherconsumers are

being promised this huge continuum of care,from services in the

home to end-of-life care. However,we do not have a continuum of

caregivers and workers thatis consistent with all of those different

levels of careand services that we are offering and promising.

I would echo what several people have already saidtoday. We

have a very fragmented system when it comes todirect care workers as well. If we want a stable pool ofdirect care workers, it requires an investment and itjust makes more sense to invest in the

people and theworkers rather than continuing to spend millions

andmillions of dollars in the cost of worker turnover, whichis just

a futile strategy.

Direct care workers need health care coverage. Theydeserve a

wage that is reflective of the important workthat they do. With the

push for home- and community-based services, I know it is being

driven by consumerchoice, and that is good. But I also know it is

beingdriven by cost containment. We want to make sure thatthe

cost savings are not at the expense of the direct-care workers and

lower wages.

38

Some States have begun to address these workforceissues by

starting direct-care worker associations. Infact, some of them have

begun with the Real ChoiceSystems Change grants. But States

need the resources tocreate and maintain these great efforts.

Recently, thanks to research that has been done byDr. Robin

Stone here at the Institute for the Future ofAging Services, and

State Dawson with the Para-Professional Health Care Institute,

and many, manyothers, the Robert Wood Johnson Foundation and

theAtlantic Philanthropies earmarked $15 million to developthe

Better Jobs, Better Care grant program to be usedspecifically for

the recruitment and retention of directcare workers.

This recognition by these private foundations isreally a big deal

and a tremendous boost to the direct-care worker movement and

the overall effort, because inthe past there have been funding

streams, both public andprivate, for recruiting and retaining primary physicians,licensed nurses, and other health professionals,

but thedirect-care workers have not even been on the radarscreen.

As the Federal Government places a higher priority ondirect care

worker issues, we hope to see more privatefoundations begin to

fund these types of initiatives,too.

So, in closing, I would say we are very pleased thatdirect-care

worker issues are beginning to get theattention that they deserve,

but we still have a long wayto go. We would urge you to increase

the amount offunding for the direct-care worker recruitment

andretention portion of the New Freedom Initiative and makea

long-term commitment to those who dedicate their livesto the longterm care and support of others. Thank you.[Applause].

The CHAIRMAN. Thank you.

[The prepared statement of Ms. Findley appears in theappendix.]

The CHAIRMAN. Before I ask questions, I would liketo suggest—

and I should have suggested this to the otherpanel, too, but I think

they are with the executivebranch so they know how this works—

even members thatwere here, but particularly because of members

who werenot able to come here, you may get questions in writing.In

2 weeks, if you could have those answered, we wouldappreciate it.

I would ask that the staff of the committees wouldinform their

members that, maybe in 48 hours, have yourquestions submitted so

that they will be timely, and thenwe would submit those to you.

If any of you would haveany problems with the process of answering those, thestaff of the Finance Committee would try to be as

helpfulas they can in that response.

But, other than that, it would not be any differentthan your responding as you would to me or to othermembers orally. Then probably there will not be othermembers coming back, because this is

the day that we havea Republican and Democrat caucuses, and

that will bestarting very shortly. So, I will probably be the onlyone

asking questions now.

I am going to start with Ray. Ramona, if you want toanswer,

that is all right as well, whatever is the case.Also, if you feel that

it is easier to respond inwriting, I will submit the questions for answer inwriting.

You mentioned the drawbacks of living in aninstitution and the

freedoms that living in the communitycan afford, or have afforded

39

you as an individual,including more privacy and more independence.

Could you explain if there is such a thing as atypical day in your

life, and explain a little bit aboutthat and expand upon the ways

that living in thecommunity has enhanced your quality of life?

Mr. GERKE. What is a typical day? That is a goodquestion. I do

not even know what a typical day is. AllI can say is, my typical

day, there are certain thingsthat have to be done, like getting me

out of bed, gettingme out the door so I can go to work. I have an

aide thatcomes to work for a couple of hours to help me there, ifI

need assistance with a meal, and stuff. Then thatnight, they would

come and help me get back to bed.

But the rest of the time, I do all kinds of things,the advocacy

stuff. The work that I do for the otherpeople that I support has a

large priority.

The CHAIRMAN. It would be difficult for me to givean answer for

you, but probably what you said in a day,is difficult to describe a

typical day because you do allsorts of things, I think you just said.

Mr. GERKE. Right.

The CHAIRMAN. So, it is all sorts of things thatare obviously your

quality of life, I assume.

Mr. GERKE. Right.

The CHAIRMAN. A follow-up question. This is inregard to drawing

upon two aspects of your life, theinstitutional part and then the life

that you have now.

How did your experiences in an institution affectyour outlook towards life, other individuals, and yourperspective on communitybased living?

Mr. GERKE. More of not trusting, being suspiciousof people in the

community. That is the only way I cansay that.

The CHAIRMAN. Do you want to help?

Ms. EDMISTON. I know he always is worried thateverything is

going to go all right. I know some of theother caregivers, if anybody

is a little bit late, he ison the phone. ‘‘Where are you? I need help

to get out ofbed. I need help. I have got a meeting I have got toget

to,’’ or whatever it is. In his day, once he is outthe door, he may

go to the office. He has an accessiblevan that he is able to drive

himself.

Other times, he may have to travel to a meeting forOlmstead or

wherever, and that may be some distance andhe may need someone

to come along to drive because it istoo far for him and he would

be fatigued.

But I see him do all kinds of these varied things,helping other

people. He even goes and gets involvedwith charity fundraisers for

clients that live in aninstitution. So, he does a wide variety of

things andyou just never know what he is going to need.

The CHAIRMAN. One of the first things he said, as Idetected—and

correct me if I am wrong—is he said whenhe was in communitybased living he could trust people.Is that what he said?

Ms. EDMISTON. At first he did not, but now he hasgotten to the

point where he is familiar with a lot ofus, especially me.

The CHAIRMAN. But from his testimony that he gavebefore the

question, in the institutional setting, he didnot feel he could trust

people.

40

Ms. EDMISTON. Right.

Mr. GERKE. Right.

Ms. EDMISTON. There was no trust.

The CHAIRMAN. And there was a slow learningprocess, but now

he feels he can trust people.

Ms. EDMISTON. Yes.

The CHAIRMAN. All right.

Bruce, you mentioned in your testimony that one ofthe reasons

for changing the Medicaid program is becausethe individuals involved in the program have the desireto move from the nursing

home to the community.

What are the characteristics of these individualswanting to move

into the community, and if they share acommon characteristic—

and I am not saying they should,but if they do—what would that

be?

Mr. DARLING. I think the common characteristic theyhave is they

are Americans and they want their freedom.Beyond that, we have

assisted so many different people.One gentleman, a young AfricanAmerican man who had beeninjured, used a ventilator. He was the

first person inour community to move into the community who

used aventilator, which was a big deal.

Anthony said, ‘‘Now that I am out, you have to help myfriend

Phyllis.’’ It turned out that Phyllis was a 50-year old woman who

had lived in the suburbs, a nice,white lady who was actually married and had two daughtersat home, and she could not be there because she could notget the assistance in her home to be there.

We assisted another woman named Betty. She was anolder

woman whose son was willing to have her live withhim. They had

a whole plan. But she needed a ventilatoras well. She lived downState, close to New York City inthe nursing facility, in the special

facility, as it was,but her home was several hundred miles away in

UpstateNew York in a small town.

She could not leave because they said the ventilatorwas theirs,

and she could not get assessed for acommunity ventilator until she

was up in the communitywhere she lived. So, she faced an insurmountable barrierthat she could not get authorized for services.

So what we see, is a pattern of people who want toget out, but

we do not have the systems in place. Theyare so complicated and

there are so many hurdles you haveto jump through in order to get

community services, thatpeople are just stuck in those nursing facilities.

So I guess that is another commonality, is that thereare a bunch

of people who are stuck in a system that doesnot understand or assist them in getting their needs met.

Just to give you another example. I was working witha woman

down in New York City who had a friend who had abrain injury,

and she started to call around, looking forservices to help her

friend move out of a nursingfacility. I gave her some phone numbers, to start.

Two days later, she called me back and she said, Ihave made

over 40 phone calls to people all over theState trying to track down

what has to be done to help myfriend go home. This is the system

that was set up forpersons with brain injury. That is ridiculous.

41

What we are looking for is to level the playing fieldand let these

people, who represent all of America, goback home so that they can

make a real choice and returnto their home. And Senator Grassley,

we are reallylooking to you to help us do that. [Applause].

The CHAIRMAN. Thank you.

Ms. Moss, although you say that providing constantcare for family members with disabilities is not heroic,I happen to believe that

all family caregivers should becommended for the love and dedication that they showtheir families. [Applause].

Ms. MOSS. Thank you.

The CHAIRMAN. As you said, however, this dedicationand care

does not come without some health consequencesto the caregiver.

In fact, years ago when I was chairmanof the Aging Committee, I

held a hearing on caregivers.

One of the things that I learned from that hearingwas, when

family members decide to be caregivers, theymight not really understand what they are getting into.Then they end up having

health problems just because theyare being caregivers and they do

not realize that, andpretty soon they have problems that they

would nototherwise have.

Anyway, could you elaborate for me on health problemsthat caregivers face, and what ways respite care couldhelp individuals avoid

these health risks associated withtheir care giving?

Ms. MOSS. All right. First, I want to give you anillustration from

our own family. My father-in-lawdeveloped Parkinson’s Alzheimer’s

disease, and my mother-in-law was his primary caregiver. She fell.

After going through a protracted time with my father-in-law, he

had lost his ability to know day and night.He had time lapse

issues. So, she was really up so manyhours with him and became

so fatigued, she fell. She isnow sometimes at home and sometimes

in more congregatecare because of our abilities to care for her.

She has a spinal cord injury. She has a permanentinjury. She became someone who required care while inthe process of being the

primary caregiver, so it put anextra stress on our family.

Very common kinds of caregiver issues are jointdisorders. You

have third cervical disks, you have fifthlumbar disks. I mean, these

are so common. When we sitaround visiting, as families do, we will

talk about, oh,yes, well, I have got that neck problem. Oh, yes.

Well,so and so had to have a fusion. Well, such and such isgoing

to have to have a hip replacement. Then there areother kinds of

issues you get into.

Sleep disturbances is probably one of the mostcommon. My son

has a lot of seizures in his sleep. Soif I have an issue where I have

not had a lot of sleep,for one reason or another, it is not like I can

take asleeping pill and just say, all right, I am going to getcaught

up. It never happens that way.

Along with sleep disturbances, you get a lot of otherthings. Falls,

burns, twists, sprains, all those kindsof things are so common, and

they are the things that youget treated for by your family physician

or you go to theemergency room for. But collectively, the numbers,

thedollar numbers for ancillary injuries, are huge, inaddition to the

carpal tunnel and the more permanentkinds of things that happen.

Then not ever getting fully rested, if you mis-carefor your son or

your daughter or supervise their care foryour family member,

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whether it is your son, yourdaughter, or your parent, and you become ill with apretty common kind of cold or something like that

andyour rest is impaired enough, then your recuperativepowers

and your immune system really gets tagged.

I also want to talk about living with theanticipation of not being

able to care for them, orgetting hurt or getting sick, and all that

‘‘saving yourleave.’’ You do not take off when you really need to.

Eventually, and certainly it would be true of anyonemy age, your

adrenals just get depleted. I have theyips. I know there are people

who probably think I havedifferent kinds of disabilities than my

children.

My startle reflex is highly accentuated. I jump, Iturn, all these

kinds of things. It is because I havejust stayed on guard for so long.

It is no fun to think,I must be on guard indefinitely.

The CHAIRMAN. Thank you very much.

Nw, Ms. Findley, in your written testimony youdescribe demands

placed upon direct-care workers in Iowa,as well as nationwide. In

the needs assessment survey ofyour association, and I believe that

was conducted in1998 and 1999, you found that short staffing is

the topreason caregivers leave the profession. Over the last5 years

or so, how has this problem been better orworse?

Ms. FINDLEY. I think the problem is still outthere. We survey our

membership on a regular basis. Wehave about 1,500 direct-care

worker members. At the timethe survey was completed, some of

the CNAs—and keep inmind, because of our funding stream, most

of our surveyshave targeted nursing home workers or ones in

aninstitutional care setting.

What they reported at that time is that some of themwere caring

for as many as 30 and 40 clients orresidents, which is just not humanly possible.

I do think, however, that there are some changes,really positive

things going on in Iowa with the BetterJobs, Better Care project

and a few other efforts inchanging the workplace culture in the

institutionalsetting and looking at more reasonable staffing demands.

The CHAIRMAN. Then a follow-up is, your ideas fromyour background of things that can be done to improvedirect-care provisions.

Ms. FINDLEY. Oh, gosh. Where do I start? It justseems like the

issues are so complex. I think one of themost fundamental things

is that our society, for so long,has under-valued the elderly and

persons withdisabilities, and as a result we tend to under-value

thecaregivers and the workers who assist them. So, I thinkwe have

a long way to go in trying to change the socialvalue and how we

view direct-care workers and theimportant role that they play.

In addition to that, I think the issues are socomplex. We have

been working for about 10, 11 years totry to promote professionalism within the field of directcare. Again, it is also integrated.

I mean, it issocial value, it is education and training standards, itis

respect, it is opportunities for advancement, it isall of those things.

All of those are tied to wages andbenefits.

So, I think when we address these issues we have todo it in a

very comprehensive manner. It is not justwages, it is not just lack

of respect. All of thosethings are very integrated and we need to

work harder attrying to take a comprehensive approach to that.

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I would also say, with the push for home- andcommunity-based

services and the use of personalattendants, we need to do more to

foster goodrelationships between the family caregivers, the

personalattendants, personal assistants, and those home careaides

and other direct-care workers.

The CHAIRMAN. I thank you all very much for yourtestimony.

The hearing is adjourned.

[Whereupon, at 12:34 p.m., the hearing was concluded.]

(45)

A P P E N D I X

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF HON. HILLARY RODHAM CLINTON

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[SUBMITTED BY SENATOR GRAHAM]

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PREPARED STATEMENT OF HON. TOM HARKIN

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RESPONSES TO QUESTIONS FROM SENATOR GRASSLEY

Question 1: One of the policies that you mentioned in relation to the ‘‘Money Follows the Person’’ demonstration would allow for one year of 100 percent Federal

match, often referred to as FMAP. This proposed policy seems to counter the Medicaid Federal-State partnership. In Medicaid, a balance is struck between the available contribution of the States and the Federal government’s requirement to match

those dollars. If the State does not want to contribute funds and receives Medicaid

payment, what incentives does the State have to limit costs? Further, what do you

anticipate States will do with the State share of these costs? Will States simply save

money or will they make one-time investments to support the individual to live in

the community?

Answer: The intent of the ‘‘Money Follows the Person’’ (MFP) program is to provide States with some short-term savings to achieve a long-term rebalancing of Medicaid delivery of long-term care services and support. Under the MFP proposal, the

Federal government would pay for a package of home and community-based services

for eligible individuals, furnished for a 12-month period following discharge from an

institutional facility. States are unlikely to excessively use Federal funds for three

reasons. First, since qualified expenditures for this package of services are only

those that a State currently provides under its State Plan, or sections 1915(c), 1115,

1915(d), or 1929 programs, a State would not be able to claim unexpected expenses

under the demonstration. Second, participating States would still be expected to

meet the cost-effectiveness requirements of section 1915(c)(2)(D) of the Social Security Act. Third, participating States must commit to continuing to sustain their effort in provision of services for each participating individual beginning on the first

day of the 13th month following their discharge from the institutional setting and

continuing while the individual remains eligible for Medicaid. Participating States

will only receive regular Medicaid match rate for that continuation of services.

Question 2: How will the Federal government ensure that its investment in community-based living will continue beyond the first year when 100 percent FMAP is

offered? What steps are you taking to ensure that in years when State budgets are

tight that these home and community-based services will not be cut from the State’s

Medicaid program?

Answer: Under the ‘‘Money Follows the Person’’ (MFP) proposal, the Federal government would pay for a package of home community-based services for eligible individuals, furnished for a 12-month period following discharge from an institutional

facility. The package of home and community-based services would be for eligible

individuals who are discharged from an institutional facility, not a State’s entire

Medicaid population. In their proposals, States must commit to continue to fund a

package of home and community-based services for each individual served in the

demonstration. As this requires legislation, we look forward to working with you to

build in appropriate protections. However, the proposal is designed to provide some

short-term savings for States just as the enhanced match in other Medicaid provisions serves as incentive to achieve long-term objectives.

The MFP builds on the success we have seen in the programs provided through

existing Home and Community-Based Service (HCBS) waivers in several States. In

these programs, States have the flexibility to meet the specific long-term care needs

of defined groups of people, but States are required by section 1915(c)(2)(A) of the

Social Security Act to ensure the health and welfare of the individuals served.

States fulfill this requirement by providing services pursuant to a plan of care that

is required in section 1915(c)(1) of the Social Security Act. The plan of care must

be a comprehensive documentation of the total needs of the waiver participant.

While States have the flexibility to reduce a participant’s waiver package, States

must ensure the health and welfare of waiver participants and must make sure that

they receive all the services necessary (as defined and approved in the waiver) as

long as the participant continues to be served in the waiver. If the HCBS waiver

package of services does not meet the person’s needs, participants maintain the ability to receive care in an institutional setting.

We believe States will want to maintain HCBS waiver services even in times of

tight budgets because of the benefits to HCBS participants. Individuals who receive

long-term care services and supports in the community have increased satisfaction,

lower incidence of care neglect, lower incidence of adverse effects and health problems, and lower unmet needs. Individuals and their families have higher levels of

satisfaction with overall care and quality of life.

Question 3: You may remember the letter that Senator Breaux and I sent the Department of Health and Human Services last July regarding the importance of quality following the release of the GAO report, ‘‘Federal Oversight of Growing Medicaid

Home and Community-Based Waivers Should be Strengthened.’’ This report identiVerDate 11-MAY-2000 14:18 May 20, 2005 Jkt 095484 PO 00000 Frm 00253 Fmt 6601 Sfmt 6621 94650.TXT SFINANC2 PsN: SFINANC2
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fied many systemic failures on the part of the Department of Health and Human

Services (HHS) in assuring quality of care in its waiver programs. Failure to provide

necessary services, weakness in plans of care, and inadequate case management are

just a few of the concerns outlined by GAO. Secretary Thompson has assured us

that numerous steps have been taken by HHS to ensure quality outcomes. Can you

tell me specifically what the Administration has done to promote quality in the

home and community-based setting?

Answer: CMS has made significant progress in improving HCBS services. Earlier

this year, Secretary Thompson submitted to Senators Grassley and Breaux an updated report on CMS’s Action Plan for Quality in HCBS. The Action Plan provides

a status report on the quality initiatives that CMS has undertaken in Medicaid

home and community-based services. We are pleased that the majority of the actions

(16 of the 18 promised actions) to which we committed have been completed and

we have made substantial progress on the other two.

On February 29, 2004, CMS released the final version of the Quality Framework

and the Quality Inventory Report. Both of these documents reflect our collaboration

with the National Association of State Medicaid Directors, the National Association

of State Units on Aging and the National Association of State Directors of Developmental Disability Services. The Quality Framework emphasizes the importance of

building quality into the design of the HCBS program and developing a quality

management program that assures on-going discovery, remediation and improvement in services.

The Quality Inventory Report provided information about the significant efforts

States have made to develop systems of self-monitoring. The National Quality Inventory Survey succeeded in providing critical information on HCBS waiver Quality

Assurance/Quality Improvement systems. Based on this knowledge, we issued Interim Procedural Guidance to CMS Regional Offices to re-focus the waiver review

on States’ oversight activities. The guidance establishes several fundamental principles upon which CMS’s approach to quality is built. These are:

1. States have first-line responsibility for assuring waiver quality and improving

it;

2. CMS oversight of waiver quality is:

• Continuous; • Involves on-going dialogue with the States to identify opportunities for quality

improvement and collaboration on a course of action; and • Involves technical assistance, either directly from CMS or in collaboration with

CMS’ National Quality Contractor.

The guidance will continue to evolve as CMS moves to implement changes in the

waiver application process and annual waiver report process, both of which will provide additional information about States’ HCBS quality assurance and improvement.

Question 4: I see the New Freedom Initiative as an opportunity to continue to promote the importance of quality of care. What new policies in this initiative will further the goal of providing quality care to Medicaid beneficiaries in the home and

community-based setting?

Answer: Increased access and individual choice is fundamental to quality home

and community-based services. Through the New Freedom Initiative, CMS is committed to working with States to enhance their ability to develop financing systems

that support individual choice, provide responsive services and supports, and develop comprehensive systems to assure quality of life and services. President Bush

announced the New Freedom Initiative in February 2001 and expanded the initiative through Executive Order 13217 on June 18, 2001. The New Freedom Initiative

is a plan to ensure persons with disabilities who are able and choose to do so to

have the opportunity to live in the community in order to reach their full potential

as outlined by the Supreme Court’s Olmstead decision. The FY 2005 President’s

budget includes several policies that build on the New Freedom Initiative and promote work incentives and long-term care options for people with disabilities. To further enhance the opportunities for people to live meaningful lives in the community,

the budget authorizes approximately $428 million in FY 2005 and approximately

$2.2 billion over 5 years to improve community services, help transition people out

of institutions, and support Americans in the community through a variety of initiatives. Items in the President’s FY 2005 Budget that support the New Freedom Initiative include:

Money Follows the Individual Rebalancing Demonstration: This proposal creates

a five-year demonstration that finances services for individuals who transition from

institutions to the community. Federal grant funds would pay for the home and

community-based waiver services of an individual for a year at an enhanced Federal

match rate of 100 percent. As a condition of receiving the enhanced match, the parVerDate 11-MAY-2000 14:18 May 20, 2005 Jkt 095484 PO 00000 Frm 00254 Fmt 6601 Sfmt 6621 94650.TXT SFINANC2 PsN: SFINANC2
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ticipating State would agree to provide care at the regular Medicaid matching rate

after the first year and to reduce institutional long-term care spending.

Living with Independence, Freedom, and Equality (LIFE) Accounts: Individuals

who are Medicaid eligible and self-direct all of their own community-based longterm care support services will be eligible to establish a LIFE Account. A LIFE Account will allow these individual to accumulate savings and still retain eligibility

for Medicaid and Security Income (SSI). Under current law, beneficiaries are discouraged from accumulating savings because it could jeopardize their eligibility for

Medicaid and SSI.

Spousal Exemption: States would be given the option to continue Medicaid eligibility for the spouse of a disabled individual who returns to work. States may already continue to allow Medicaid eligibility for the disabled worker under current

law despite the income increase. Under current law, individuals with disabilities

might be discouraged from returning to work because income they earn could jeopardize their spouse’s Medicaid eligibility. This proposal would extend to spouses the

same Medicaid coverage protection offered to workers with disabilities.

Presumptive Eligibility for Home and Community Based Care Services: Establishes a State option of allowing Medicaid presumptive eligibility for institutionally

qualified individuals who are discharged from hospitals into the community.

Systems Change Grants: The Budget proposes $40 million to continue the Real

Choice Systems Change grants to provide financial assistance for States to develop

systems that support community-based care alternatives for persons with disabilities who require an institutional level of care. The Real Choice Systems Change

grants are being funded out of CMS’s Research, Demonstration, and Evaluation

budget.

New Freedom Demonstrations: The President’s budget also includes a number of

other investments in the New Freedom Initiative. Three innovative demonstrations

will enhance the ability of individuals with disabilities to live and fully participate

in the community. These demonstrations support respite for caregivers of adults

with disabilities; respite services to caregivers of children with severe disabilities;

and home and community-based services for children residing in psychiatric residential treatment facilities.

Question 5: As you may know, I strongly support proposals to strengthen and elevate the direct care worker profession. Late last year, I was able to secure pledges

from the nursing home community to direct a total of $4 billion over 10 years to

direct, hands-on care for residents. The New Freedom Initiative contains a demonstration that addresses shortages of community direct care workers, and allocates

$2.9 million in 2005. What kinds of activities are you planning to support under this

demonstration?

Answer: CMS will make grants to States and others to develop recruitment and

retention strategies for workers who provide direct services to Medicaid eligible individuals. This program will offer an opportunity to explore ways to improve incentives for people to become direct care professionals, with a focus on health care coverage for the workers, in hope of building a workforce that can meet the needs of

present and future Medicaid participants.

Question 6: Given that the shortage of direct care workers is likely to continue

into the near future, would you consider supporting a longer-term solution?

Answer: Yes. CMS is willing to partner with other Federal agencies, States, consumers, and other stakeholders to address the direct service workforce shortage and

work towards a long-term solution.

RESPONSES TO QUESTIONS FROM SENATOR BAUCUS

Question 1: The Administration has proposed to permit States to require beneficiaries participating in the Money Follows the Person Initiative to self-direct their

own services, but has relied exclusively on the use of individual budgets as the only

model for self-direction.

• What do you see as the role of other models of self-direction that States have

successfully used (other than the Cash and Counseling and Independence Plus

models) in which beneficiaries are permitted to self-direct their services without

using an individual budget?

• If an individual wanted to have greater control over scheduling of the hours of

personal attendant services, would the Money Follows the Person Initiative provide this individual any opportunities to self-direct without having to take on

all of the responsibilities associated with self-direction under the Independence

Plus model?

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• Finally, if a State could make self-direction a prerequisite for an individual to

leave a nursing home under a Money Follows the Person grant, how could you

consider self-direction to be truly ‘‘optional’’ for that individual?

Answer: CMS supports innovations in self-directed service delivery, and recognizes

that there are many models that provide opportunities for self-direction in Medicaid

services. The ‘‘Money Follows the Person’’ proposal does not require participating

States to use individualized budgets, but does require that States provide participants with an individualized package of services from what the State is currently

able to provide under its State Plan, or sections 1915(c), 1115, 1915(d), or 1929 programs. States, in the applications for this demonstration, will be required to address

what opportunities for self-direction will be provided to participants.

Question 2: The ‘‘Money Follows the Person’’ proposal indicates that States must

continue to provide home and community-based services for each individual participating in the demonstration for as long as the individual remains eligible for Medicaid. • For how long after the demonstration would CMS enforce this requirement? • Will home and community-based services be considered an entitlement to any

beneficiary who participates in the demonstration? • What would happen if, after the completion of the demonstration, a State decided to restrict the package of benefits available to persons receiving services

in the community? • After the demonstration, how would CMS prevent States from restricting Medicaid eligibility for ‘‘optional’’ beneficiaries so that a State could more easily

comply with this requirement?

Answer: States must commit to continuing to sustain their effort in provisions of

services for each participating individual beginning on the 13th month following

their discharge from the institutional setting and continuing while the individual remains eligible for Medicaid. States have considerable control over HCBS waiver

services today in terms of restricting the number of people enrolled, defining what

services will be available and the amount of services to be provided. The proposal

does not change any of those dynamics, it merely serves as an incentive to help individuals return to their homes or communities. While the objective is to assist States

in rebalancing their long-term care delivery systems, we certainly would not want

to prevent an individual from returning to a facility if their level of care or preference changed.

Question 3: What could leftover LIFE Accounts be used for?

Answer: ‘‘LIFE Account’’ programs will operate in connection with a State’s home

and community-based services program—a program providing home and community-based services operating under a State Plan, or sections 1915(c), 1115, 1915(d),

or 1929 program. To be eligible for a LIFE Account, individuals must have an approved self-directed service budget that is part of the qualified home and community-based service program. If the individual expends fewer resources than what

was in his/her budget, up to 50 percent of the leftover budgeted amount can be credited to the LIFE account. Credits and other contributions to the account could be

used for services and supplies that promote or maintain the participant’s independence, productivity, and participation in the community, such as the purchase of

equipment, environmental modifications, and supports; educational assistance and

supports; employment or vocational training and supports; and expenses associated

with any subsequent transitioning of the participant from an institution to the community. An Individual will continue to have the opportunity to make disbursements

from the LIFE Account even if they no longer participate in a qualified home and

community-based service program.

Question 4: How would CMS ensure that the existence of a LIFE Account does

not substitute for providing adequate funding for anticipated needs through the individual budget?

Answer: States will continue to establish individual Medicaid community-based

supports budgets based on accurate assessments of participant needs. LIFE Accounts are intended to be a separate account from an individuals’ Medicaid, community-based, long-term supports budget, and CMS will enforce these two programs to

assure that LIFE Accounts do not reduce Medicaid community-based supports budgets. Assets in a LIFE Account will not be considered in determining Medicaid eligibility or allocating an individual’s annual Medicaid community-based supports budget. States that use self-directed budgets have mechanisms in place to review and

adjust the self-directed budgets in response to a variety of changes in circumstances.

Question 5: If a person decided to forego services in order to save money in a LIFE

Account, how could CMS ensure that the reduced spending/reduced service use was

not considered in setting that person’s budget in the following year? I understand

that ‘‘savings’’ would not be taken into account in setting budgets, but can you asVerDate 11-MAY-2000 14:18 May 20, 2005 Jkt 095484 PO 00000 Frm 00256 Fmt 6601 Sfmt 6621 94650.TXT SFINANC2 PsN: SFINANC2
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sure me that past service use under a capped budget would not be taken into account?

Answer: CMS ensures that States with individual budgets have adequate safeguards to make sure that they are calculated fairly. The individual budget is an

amount of money determined to be the equivalent of the cost of specified services

that would otherwise be included in an individual’s plan of care, but it does not constitute the entire plan of care. The individual budget provides the beneficiary with

the additional flexibility to move funds between services, and allows the beneficiary

a greater degree of authority over the planning, design and delivery of services than

would be possible under more traditional arrangements. States must have procedures to ensure that the use of an individual budget does not prevent the beneficiary from gaining access to needed services provided under its HCBS waiver to

ensure health and welfare.

States with LIFE Account programs will have monitoring processes in place to assure that individuals do not unnecessarily limit their services and adversely impact

their health and welfare. Any assets that are built up in a LIFE Account will not

be considered when allocating an annual Medicaid community-based supports budget.

Question 6: Would there be a maximum amount that could be saved in a LIFE

Account?

Answer: No. Although there is no cap on the amount that can be accumulated,

we anticipate that individuals will use this account to save for equipment and supports that would increase their independence, productivity, education, community

services, and housing rather than to simply build assets.

Question 7: How would savings in the LIFE Accounts be treated for tax purposes?

Answer: Income and earnings in the account, except for deposits from unexpended

resources in the individual’s approved Medicaid budget for self-directed services, will

be treated as income to the participant for purposes of applying laws relating to taxation of income.

Question 8: What impact would the existence of a LIFE Account have on eligibility

for SSI or SSDI? Have you consulted with the Social Security Administration to ensure that this initiative does not create unforeseen conflicts for Social Security recipients?

Answer: Assets in a LIFE Account will be excluded from consideration in determining and re-determining eligibility for and amount of benefit level of SSI or SSDI.

CMS has consulted with SSA on design issues of the LIFE Accounts and at this

time we have not identified any conflicts for SSI or SSDI recipients.

Question 9: Why are you proposing to limit participation in the LIFE Accounts

to persons who direct ‘‘all’’ long-term care services? How would you define ‘‘all longterm care services?’’

Answer: To participate in the LIFE Account savings program, individuals must be

participating in a qualified home and community-based services program—a program providing home and community-based services operating under a State Plan,

or under a section 1915(c), 1115, 1915(d), or 1929 program—and the individual must

have an approved plan and approved budget for self-directed services in connection

with such participation and not receive other medical assistance for home and community-based services under the qualified program. Individuals who are currently

self-directing these supports budgets have demonstrated a clear interest and capacity to manage their own care, and the LIFE Account program is most appropriate

for these individuals. Non-institutional LTC services include personal care, certain

home health services and home and community-based services. States are providing

70 types of services under HCBS. Some of the most used are respite, home modifications, personal care, personal transportation, emergency response systems and

homemaker services.

Question 10: What if new expensive technologies became available or if prices

went up after a budget cap was already set? Could budgets be adjusted during that

year to account for changed circumstances in the supply/availability of services, as

opposed to changed circumstances in that individual’s health or support network?

Is there a requirement that States be willing to reconsider budgets under any particular set of circumstances?

Answer: States that use self-directed budgets determine the length of their selfdirected budget periods, which might be quarterly, semi-annually, or annually. In

addition, these States have mechanisms in place to review and adjust the self-directed budgets in response to a variety of changes in circumstances.

Question 11: Regarding the New Freedom Initiative/Independence Plus self-directed care models and proposals, could any durable medical equipment expenses

be covered under the capped grant to individuals under any existing Independence

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Plus waivers or under any of the New Freedom Initiative’s consumer direction proposals? What about assistive technologies such as a voice recognition organizer?

Answer: States have the option to determine what services and supports to include in their individual budget programs. This could include durable medical equipment and assistive technologies if the State determines to include them.

Question 12: Do all States have adequate infrastructure to provide the intensive

counseling that was integral to the Success of the Cash and Counseling demonstrations?

Answer: Under the Independence Plus program requirements, a State must provide self-directed supports and services which will adequately assist participants in

planning, securing, budgeting and managing the services identified in their individual budgets. The extent to which participants use the supports and services will

vary with their abilities and preferences. States may design these supports and

services in a variety of ways, including: 1) combining them with existing services,

2) creating a new service category to include all or some of the activities, or 3) identifying them as an administrative function. With this flexibility, all States are expected to be able to provide as much or as little counseling as a participant may

need.

Question 13: If a beneficiary participating in a self-direction program believes that

his/her individual budget is set at inadequate levels, what recourse is available to

him/her? What standards has CMS established for evaluating a claim of inadequate

financing?

Answer: States must meet certain requirements to establish an Independence Plus

program, including standards for evaluating individual budgets. With respect to the

Individual Budget process, the following is a list of participant protections:

1. Participants must have the flexibility to move money within the approved budget service categories.

2. The program must allow for open disclosure of the methodology used to calculate the individual budget.

3. Participants must be informed of the procedures to follow to request an adjustment to the individual budget.

4. The program must have procedures to re-evaluate the plan of care/person-centered plan if the individual budget is over or under-expended.

5. The program must have a prompt mechanism for adjusting the funding level/

total budget if the participant’s needs or situation changes.

6. The program must describe the State’s methodology for calculating individual

budgets, using actual or reliable service utilization and cost information.

7. The resources available to participants must use a consistent methodology.

8. The methodology must be applied consistently to each participant.

9. Review and monitoring of the individual budget must occur according to a specified method and frequency which is known to the participant.

Participants in Independence Plus programs must have the ability to flexibly

manage their individual budgets so that their resources are spent in a way that preserves their needed and desired services. This provides participants with a lot of

control, but CMS recognizes that participants are not always accustomed to having

that control. CMS, therefore, requires the provision of ‘‘self-directed supports and

services’’ that help participants understand and implement their rights, roles and

responsibilities. Accordingly, States are required to provide Independence Plus participants with assistance in effectively managing their self-directed services. The

self-directed supports and services include regular fiscal review, counseling and education to participants who may not be effectively managing their funds. Each program has to build in a budget review methodology and inform the participants of

that process.

The Independence Plus 1915(c) waivers are designed to meet the needs of particular populations (i.e., developmentally disabled, elderly, physically disabled) and

prevent institutionalization. Under sections 1915(c)(2)(A), States must assure the

necessary safeguards have been taken to protect the health and welfare of individuals provided services under the waiver. Each beneficiary must have a written plan

of care required under section 1915(c)(1). An individual’s budget is a monetary estimate based on this plan of care. Because the plan of care drives the individual budget, it must be sufficient to pay for supports and services to prevent institutionalization. If participants feel their individual budget is inadequate, participants can have

a new needs assessment to review the budget and adjust it accordingly. Then, if still

unsatisfied, the participant could file a grievance and if desired, use the services of

the independent advocate or advocacy organization to file that grievance or complaint. Like other Medicaid recipients, waiver participants have the same right to

a fair hearing and appeals process when their claim for assistance is denied or not

acted upon promptly.

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Question 14: Do you believe that the methods for calculating the individual budgets under the Independence Plus demonstrations have been fair? Are there appropriate safeguards in the Independence Plus demonstration to ensure that individual

budgets are adequate and fair? Why?

Answer: Yes. The Independence Plus demonstrations contain adequate safeguards

to make sure that individual budgets are calculated fairly. In these demonstrations,

an individual budget refers to the monetary value of services and supports under

the control and direction of the beneficiary. Independence Plus features plans of

care that include individual budgets. However, the individual budget, an amount of

money determined to be the equivalent of the cost of specified services that would

otherwise be included in the plan of care, does not constitute the entire plan of care.

The individual budget provides the beneficiary with the additional flexibility to

move funds between services, and allows the beneficiary a greater degree of authority over the planning, design and delivery of services than would be possible under

more traditional arrangements. States must have procedures to ensure that the use

of an individual budget does not prevent the beneficiary from gaining access to all

needed services to ensure health and welfare.

Specific State-level safeguards are required in Independence Plus programs to assure that individual budgets are adequate and fair. Within both the section 1915(c)

programs and the section 1115 demonstrations, States must have the following

mechanisms included in their program design, specifically with regard to the individual budget, in order to have their Independence Plus programs approved: • A mechanism for prompt adjustment of the funding level/total budget if the person’s needs or situation changes; • A budget based on actual or reliable service utilization and cost information; • A budget developed using a consistent methodology to calculate the resources

available to each participant; • A methodology that is consistently applied to each participant; • Assurances that the budget is reviewed according to a specified method and frequency; • Assurances that expenditures are monitored on a regular basis; • A mechanism that provides participants with the opportunity to move money

within the approved budget service categories; and • A description of the methodology used to calculate the individual budgets that

is open to public inspection.

Further, Independence Plus participants are required to receive assistance to help

them effectively manage their self-directed services. Such assistance includes, but

is not limited to, supports brokerage services, financial management services, and

independent advocacy services. In terms of the recourse afforded to participants if

they feel their individual budget is inadequate, if needed, a participant can work

in collaboration with her/his supports broker for a new needs assessment to review

the budget and adjust it accordingly. Then, if still unsatisfied, the participant could

file a grievance and if desired, use the services of the independent advocate or advocacy organization to file that grievance or complaint. Like other Medicaid recipients,

waiver participants have the same right to a fair hearing and appeals process when

their claim for assistance is denied or not acted upon promptly.

In addition, with respect to the Individual Budget process, the following is a list

of participant protections:

1. Participants must have the flexibility to move money within the approved budget service categories.

2. The program must allow for open disclosure of the methodology used to calculate the individual budget.

3. Participants must be informed of the procedures to follow to request an adjustment to the individual budget.

4. The program must have procedures to re-evaluate the plan of care/person-centered plan if the individual budget is over or under-expended.

5. The program must have a prompt mechanism for adjusting the funding level/

total budget if the participant’s needs or situation changes.

6. The program must describe the State’s methodology for calculating individual

budgets, using actual or reliable service utilization and cost information.

7. The resources available to participants must use a consistent methodology.

8. The methodology must be applied consistently to each participant.

9. Review and monitoring of the individual budget must occur according to a specified method and frequency which is known to the participant.

Question 15: In your testimony you indicated that families of children with disabilities often like the flexibility that an individual budget might offer them in directing the long-term care services of their minor son or daughter. To what extent

does a parent’s acceptance of a capped individual budget amount limit or otherwise

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affect their child’s entitlement to receive all medically necessary services—including

long-term care services—under EPSDT?

Answer: Under EPSDT, a State is required to provide medically necessary services

to a child. Participating in a home and community-based waiver or directing these

services does not change the EPSDT requirement.

Question 16: It is my understanding from numerous news reports that CMS is or

has recently been negotiating with New Hampshire, Florida, California, and several

other States regarding Section 1115 waiver applications or concept papers that, if

approved and implemented, would impose a global cap in Federal spending on either

a State’s entire Medicaid program or a substantial portion of the State’s Medicaid

program. I would appreciate an update on any such negotiations, including information about where the public can learn more about the proposals being discussed.

Among other things, please inform the Committee which States CMS is negotiating

with over waiver proposals that would impose any kind of enforceable cap (other

than a per capita cap) on Federal matching payments; what the status of the negotiations are; and what CMS intends to do to ensure that there is meaningful public

participation in the waiver development and negotiation process.

Answer: All States under 1115 waivers operate under a budget cap that is enforceable. Whether designed as a per capita cap, aggregate cap, or global cap, the Federal

government limits its fiscal liability to an amount no greater than what it would

have spent without a waiver. If spending is projected to exceed the 1115 cap, the

State may choose to end the waiver or cover the costs above the cap. The cap is

enforced by the Federal government recovering funds that exceed the limit.

CMS has received calls from a few States, including California, Florida, Montana,

Kentucky and Tennessee, to discuss broad conceptual changes to their programs,

but we have not received any specific proposals. Public participation is one of the

elements we use in evaluating a waiver application, and we have strongly encouraged States to engage in a broad public participation process. We believe States considering reform are incorporating such participation.

Question 17: As you know, the so-called Medicaid IMD exclusion prohibits Federal

matching funds for services provided to residents in facilities with 16 or more beds

serving adults with mental illnesses ages 18 to 64. Over the past decade, CMS has

approved waivers of the IMD exclusion for a number of States. Some of these waivers have been a part of larger efforts to promote access to community-based services

and acute care in inpatient settings. However, in recent months CMS has been denying waivers of this IMD exclusion, including applications by States to extend existing waivers. Has CMS put in place a policy of denying all waivers of the IMD

exclusion? If so, could you explain the rationale for the new policy? And if not, could

you explain whether CMS has developed new criteria for approving waivers of the

IMD exclusion and describe what they are?

Answer: Section 1905(a)(27) of the Social Security Act excludes Federal financial

participation (PPP) for services provided to Medicaid beneficiaries aged 22–64 when

residing in an institution for mental diseases (IMD). Examples of these facilities include State mental hospitals, private psychiatric hospitals, and residential substance abuse treatment facilities.

Under the demonstration authority in §1115 of the Social Security Act, CMS permitted FFP for IMD expenditures for beneficiaries’ aged 22–64 in eight States. Beginning with Tennessee in 2002, the IMD waiver authority has been phased out because such waivers were creating financial imbalances among the States. As a matter of equity, more waivers would be sought by States to a point of rendering the

statutory exclusion meaningless. We have also begun the phase-out of the IMD authority in Rhode Island, Oregon, Delaware, and Vermont. When the remaining

States (Arizona, Hawaii, and Massachusetts) request to have their §1115 authority

extended, we intend to phase it out for them at that time.

RESPONSES TO QUESTIONS FROM SENATOR SMITH

Question 1: The Shortage of Health Care Providers—How Best to Address the

Need: Currently, there is a shortage in the health care field for nurses and home

health care providers. I believe to adequately implement the President’s Initiative

it is imperative that there is sufficient supply of skilled staff to provide quality,

long-term care. What do you think Congress and the Administration can do to address the need for a quality, stable workforce? Do you think this initiative helps to

address this workforce shortage?

Answer: CMS’s Demonstration to Improve the Direct Service Community Workforce is an excellent opportunity to explore ways to improve incentives for people

to become direct care professionals in hope of building a workforce that can meet

the needs of present and future Medicaid recipients. CMS awarded five Direct ServVerDate 11-MAY-2000 14:18 May 20, 2005 Jkt 095484 PO 00000 Frm 00260 Fmt 6601 Sfmt 6621 94650.TXT SFINANC2 PsN: SFINANC2
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ice Community Workforce demonstration grants in FY 2003, and another five in FY

2004. The 10 grantees will test a variety of interventions to recruit and retain direct

service workers. Six grantees will offer some forms of health insurance product such

as employer-sponsored, State-subsidized health insurance, or health reimbursement

accounts. Four of the grantees will focus on ways to enhance professional competencies or refine recruitment methods by developing interventions such as training or mentorship programs, professional assistance associations, web-based registries, and targeted recruitment programs.

There are two evaluation components to this Demonstration. First, each grantee

will conduct a site-specific evaluation of its interventions. Second, CMS plans to conduct a national evaluation of the demonstration grantees to answer key questions

around recruitment and retention that inspired this CMS demonstration project,

such as: • What kinds of interventions had the greatest impact on the direct service workforce? • What other effects did the interventions have on the direct care system (e.g.,

increased consumer satisfaction, increased employee satisfaction, increased interest in the caregiving profession. In 2003, CMS granted $1.4 million to the following entities to offer health insurance to direct service workers during the three-year demonstration: • State of Maine, Governor’s Office of Health Policy and Finance; • New Mexico Department of Health; and • Pathways for the Future, Inc., a private corporation in North Carolina. Grants of $680,000 each will go to the following grantees to develop educational

materials, training of service workers, mentorship programs and other activities: • Volunteers of America, Inc. to pilot training programs in the greater New Orleans area; and • University of Delaware. In 2004, CMS granted $1.4 million to the following entities to offer health insurance to direct service workers during the three-year demonstration: • Virginia Department of Medical Assistance Services; • Home Care Quality Authority, an agency of State government in Washington

State; and • Bridges, Inc., a non-profit service agency in Indiana. Grants of $680,000 each will go to the following grantees to develop educational

materials, training of service workers, mentorship programs and other activities: • Arkansas Department of Human Services; and • Seven Counties Services, Inc., a service provider in Kentucky.

Question 2: Implementing the President’s Initiative—Ensuring Adequate Choices:

As you know, the needs of the elderly and individuals with disabilities are extremely

diverse. Some are able to work and live independently, while others require a great

deal of assistance in their everyday lives. In providing services based on an individual’s particular needs and choices, how do you envision implementing such a proposal? That is, how best can we ensure that these Americans will have the optimal

choice of where to live that best fits their unique needs? In part, I believe this will

require helping people make informed choices. Do you foresee individuals having

professional assistance in making decisions about where they live?

Answer: Medicaid beneficiaries are indeed a diverse group, and CMS recognizes

that community-based care models do not work for all individuals in need of longterm care services. The Aging and Disability Resource Center Grant Program, a cooperative effort of the Administration on Aging (AoA) and the Centers for Medicare

& Medicaid Services (CMS), was developed to assist States in their efforts to create

a single, coordinated system of information and access for all persons seeking longterm support to minimize confusion, enhance individual choice, and support informed decision-making. In FY 2003, HHS announced the award of 12 grants totaling $9.26 million to support State efforts to develop Aging and Disability Resource

Centers. In FY 2004, Secretary Thompson announced the funding of 12 additional

State Resource Center grants totaling nearly $9 million.

Through the New Freedom Initiative, CMS is committed to ensuring that home

and community-based services and supports offered through home and communitybased service programs develop comprehensive systems to assure quality of life and

services. The Independence Plus programs offer assistance that includes, but is not

limited to, supports brokerage services, financial management services, and independent advocacy services, and many waiver programs operated by States provide

case management services to help beneficiaries make informed choices. In total,

these services, in combination with the Aging and Disability Resource Centers, will

help and assist beneficiaries in tapping into community resources, building relationships, exploring choices, supervising staff, and understanding budgets. CMS will

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continue to work with States, consumers, and other stakeholders to utilize effective

strategies to provide the tools necessary for beneficiaries to be able to make informed decisions.

RESPONSES TO QUESTIONS FROM SENATOR BUNNING

Question 1: There is a concern about the lack of access to quality medical, dental,

and other health services for people with mental retardation and developmental disabilities. Would you support using Federal funding for the development of MR/DD

clinics that deliver specialized care to the MR/DD population while also training future health care professionals?

Answer: The President’s FY 2005 Budget does not include any specific proposals

on this idea. We note that Federal funding is currently available for the training

of future health care professionals through the Maternal and Child Health Block

Grant (Title V of the Social Security Act). Currently, Title V funding also supports

36 Leadership Education in Neurodevelopmental and Related Disabilities (LEND)

Programs in 29 States that provide long-term, graduate-level interdisciplinary training to health professionals. The program focuses on health conditions of mental retardation, neurodegenerative and acquired neurological disorders and multiple

handicaps. All LEND Programs operate within a university system and most have

collaborative arrangements with local university hospitals, children’s hospitals, and/

or health care centers. We do see a future in which staff in ICF/MRs act as a potential resource for individuals in the community seeking care from highly specialized

professionals. ICF/MRs often serve as appropriate settings for training health care

professionals.

Question 2: There has been some concern about implementing new and expensive

programs while some people are currently on waiting lists for services. Do you have

any thoughts on addressing the issue of the waiting lists?

Answer: CMS takes a multi-pronged approach to assisting States to best meet the

needs of their Medicaid participants. Although some waiver programs have waiting

lists, others do not. Through technical assistance, grants, waivers, and demonstrations, CMS works with States to build their infrastructure and capacity to provide

home and community-based services and address waiting list issues, as well as develop new innovations in service delivery. We certainly believe the President’s MFP

proposal is a step forward in reducing waiting lists.

Question 3: Receiving community-based care is not an option for everyone. What

type of factors should be considered when determining if home-based care or institutional care is best for a particular individual?

Answer: CMS recognizes that community-based care models do not work for all

individuals in need of long-term care services. Where to seek services is a very personal decision for individuals and families. Our goal is to expand the choices available to them.

States have the flexibility to design programs to meet specific needs of defined

populations. However, any participant in an HCBS waiver must meet an institutional level of care (either hospital, nursing or ICF/MR). States can design programs

that meet the needs of persons with intense medical/support needs or for those who

require minimal assistance to remain in the community.

For those persons served in an HCBS waiver program, States are required to ensure their health and welfare. In keeping with this requirement, services are provided in an HCBS waiver to participants pursuant to a plan of care. The plan of

care must be a comprehensive documentation of the total needs of the waiver participant. While States may modify a participant’s waiver package, States must still ensure the health and welfare of waiver participants—i.e., making sure that they receive all the services necessary (as defined and approved in the waiver) as long as

they continue to be served in the waiver. If the HCBS waiver package is lacking

and the person’s needs cannot be met through the waiver program, participants

maintain the ability to receive institutional care.

RESPONSES TO QUESTIONS FROM SENATOR ROCKEFELLER

Question 1: Senator Baucus and I recently introduced S. 2222, the Medicaid and

CHIP Safety Net Preservation Act. This important legislation will ensure that Section 1115 of the Social Security Act (the so-called ‘‘1115 waiver’’ authority) cannot

erode core objectives of Medicaid and CHIP that Congress has enacted into law. One

provision of our legislation prohibits the elimination of the individual entitlement

to Medicaid. The individual entitlement to Medicaid protects access to all covered

benefits and services. We believe that any attempt to undermine this individual entitlement is a violation of the Federal-State guarantee of Medicaid benefits to those

who are eligible. Yet, HHS has approved numerous 1115 waivers that impose global

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caps and eliminate or limit the guarantee of Medicaid for eligible individuals. A

prime example of this is the Florida Independence Plus Program, which I understand has a global cap. According to a December 2003 Kaiser report, when a person

is given an individual budget, it is difficult to enforce that person’s right to the Medicaid entitlement. How can we be sure that the Money Follows the Individual Initiative won’t morph into one of these Independence Plus waivers and limit the guarantee of Medicaid for eligible individuals? Or is that this Administration’s objective?

Answer: With respect to Florida’s Independence Plus program, I want to correct

the impression that it is funded through a global cap. The program is funded

through CMS’ 1115 demonstration authority and uses a per-member per-month

methodology for demonstration participants.

With regards to the Money Follows the Person demonstration, the objective is to

provide individuals with an opportunity to receive services in a community-based

setting rather than an institution. There is no global cap or mandate that an individual budget be used. Rather, under the MFP demonstration, the Federal government would pay for a package of home community-based services for eligible individuals, furnished for a 12-month period following discharge from an institutional facility.

Under current law, the total amount a State will spend on Medicaid services, including waiver services, cannot exceed the cost of providing services in an institutional setting. Waiver programs are required to be cost-effective, that is, the total

cost cannot be greater than the cost of providing those services in an institutional

setting. MFP does not change the underlying HCBS construction. It is an incentive

for States to provide greater access to them for people currently in institutions.

Question 2: The specifics on the ‘‘LIFE’’ accounts are minimally outlined in the

FY 2005 budget. Can you provide me with more details about this proposal? How

will it impact beneficiaries?

Answer: Beneficiaries will be able to save money without losing their eligibility

for Medicaid and Social Security benefits. These accounts would give individuals an

opportunity to build savings for the future. They will remove barriers to saving for

services and supplies that promote or maintain the participant’s independence, productivity, and participation in the community, such as the purchase of equipment,

environmental modifications, and supports; educational assistance and supports;

employment or vocational training and supports; and expenses associated with any

subsequent transitioning of the participant from an institution to the community.

Individuals will continue to have the opportunity to make disbursements from their

LIFE Account even if they no longer participate in a qualified home and communitybased service program.

Question 3: How many people do you estimate would benefit from this proposal?

Answer: Because of the requirement that individuals must direct all of their Medicaid, community-based, long-term supports, we anticipate that no more than 20

percent of Independence Plus participants would be eligible to establish LIFE Accounts. Currently, approximately 30,400 individuals in seven States are self-directing at least some their services under Independence Plus, and an additional 4,450

self-direct some of their services under Cash and Counseling programs. As a result,

we estimate that approximately 6,970 individuals would be eligible to establish a

LIFE Account at this time.

Question 4: Would family members be able to contribute without jeopardizing an

individual’s eligibility for benefits?

Answer: Yes. Contributions to LIFE Accounts by parents, grandparents, siblings,

spouses, adult children, and/or employer of the account holder may not exceed the

annual gift exclusion under Federal tax law. The annual gift exclusion is currently

$11,000 a year. States may establish lower contribution limits when establishing

their LIFE Account programs.

Question 5: If a person is participating in this program, would his/her individual

entitlement to Medicaid be protected?

Answer: Yes. Medicaid participants are entitled to medically necessary services

under their State Plan. The LIFE Account savings program is proposed to enable

Medicaid-eligible individuals to build savings while retaining their Medicaid eligibility.

Question 6: Have you worked out implementation details with the Social Security

Administration?

Answer: CMS has consulted with SSA on a variety of design issues of the LIFE

Accounts, and we believe there would be no conflict.

Question 7: Medicaid can have different disregards for income, but Supplemental

Security Income (SSI) cannot. There is a $2,000 limit on assets. Will this proposal

compromise an individual’s SSI benefits?

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Answer: No. Funds in a LIFE Account are excluded from consideration in determining and re-determining eligibility for and amount of Medicaid and SSI or SSDI

benefits for the participating individual and their families.

Question 8: I am particularly concerned about the availability of home and community-based services in rural States like West Virginia. As you are aware, rural

States tend to have a significant shortage of health care personnel. As part of the

New Freedom Initiative, you have proposed a demonstration project to address the

shortages of direct care workers. Will demonstration grants for direct care workers

be available in rural States like West Virginia?

Answer: Yes, grantees under the Demonstration to Improve the Direct Service

Community Workforce are selected through a competitive process by which applications are reviewed and scored by a panel of experts based upon the merits of the

proposals. CMS relies heavily on the results of the panel reviews when making decisions on which applicants should be funded. CMS received over 100 proposals to our

FY 2003 grant solicitation. Out of the many meritorious applications we were able

to award 5 grants with the available funding (DE, ME, NC, NM and VA). In FY

2004, CMS awarded $1.4 million each to the Virginia Department of Medical Assistance Services, the Home Care Quality Authority, a Washington State agency, and

Bridges, Inc., a non-profit service agency in Indiana. Each of these grantees will be

offering health insurance to direct service workers during the three-year demonstration. Grants of $680,000 each will go to the Arkansas Department of Human Services and Seven Counties Services, Inc., a service provider in Kentucky, for developing educational materials, training of service workers, mentorship programs and

other activities.

Question 9: I understand that CMS is negotiating with at least six States (including New Hampshire, Florida, and California) to develop 1115 waivers that would

change the financing structure of the Federal-State partnership to include global

caps. Specifically, these waivers would impose a global cap on either a State’s entire

Medicaid program or a substantial portion thereof. I am very concerned about this,

because such caps would have a detrimental effect on the States’ ability to provide

critical health and long-term care services to its most vulnerable citizens. What is

the status of those negotiations and what is CMS’ intent regarding public involvement in this process?

Answer: CMS has received calls from a few States, including California, Florida,

Montana, Kentucky and Tennessee, to discuss broad conceptual changes to their

programs, but we have not received any specific proposals.

Question 10: A number of the States represented on this Committee have not yet

recovered from what the National Governors Association has called the worst State

fiscal crisis since World War II. Last year, over the vehement objections of the Administration, Congress enacted fiscal relief for the States in the form of a 2.95 percentage point increase in the Federal matching rate. This fiscal relief was crucial

to the ability of a number of States to avoid making drastic cuts in Medicaid eligibility, benefits, and provider payments. Unfortunately, this fiscal relief ends on June

30, and many State economies are still not out of the woods. And the Administration’s budget for the fiscal year starting October 1 does not propose to extend this

fiscal relief. Unless we act in the next two months, States will face a loss of $10

billion in Federal resources on July 1. If the States with economies that are not yet

fully rehabilitated are faced with the choice of cutting home and community-based

waiver slots, reducing payments to nursing homes, or raising taxes to make up for

the loss of the enhanced FMAP, what exactly do you believe will happen? Do you

honestly believe States will expand home and community-based services?

Answer: We understand the fiscal challenges facing States in meeting the needs

of their Medicaid beneficiaries, and we believe long-term restructuring of the Medicaid program is needed. I believe States will continue to expand HCBS because that

is in part what they are doing as they try to keep pace with the people they serve.

Question 11: Mr. Smith, as I understand your budget, it includes a cut of $9.6

billion over 5 years, or $23.5 billion over 10 years, to the Medicaid program. The

proposal as outlined on page 65 of the Budget in Brief notes,

‘‘The FY 2005 President’s Budget proposes to further improve the fiscal integrity

of Medicaid by curbing IGTs that are in place solely to undermine the statutorily

determined Federal matching rate. The Budget proposes to cap Medicaid payments

to individual State and local government providers at the cost of providing services

to Medicaid beneficiaries and restrict the use of certain intergovernmental transfers.’’

This language is very vague. This is no specific proposal and it is unclear how

West Virginia will be affected by it. If there are instances of fraud, we in Congress

stand ready to work with the Administration to address the matter as we have in

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the past. But, I would like to understand exactly what you are proposing. So, my

questions on this issue are as follows: • What exactly is your proposal, and how would West Virginia be affected? • Is your proposal based simply on a cut of some portion of your estimate of total

Upper Payment Limit (UPL) spending? How much total UPL spending is

there—excluding the transition period funds? How much of that is going to hospitals? How much of that is going to nursing homes? How much of that stays

with each respective provider? • What is the total dollar value of illegal intergovernmental transfers (IGTs)

today? • What is the dollar value of all legal intergovernmental transfers (IGTs) today? • Which intergovernmental transfers (IGTs) that are allowed now would be allowed to continue under your proposal, and what is the dollar value of those

IGTs? • Does this proposal represent eliminating the existing phase-out of the 2000 law

and immediately taking that money away from States?

Question 12: What exactly is your proposal, and how would West Virginia be affected?

Answer: At this time, I do not know specifically how West Virginia would be affected because I do not know whether the State engages in the practices to be prohibited. The President’s FY 2005 budget proposes to build on past efforts to improve

Federal oversight of Medicaid and ensure that Federal taxpayer dollars for Medicaid

are going to their intended purpose. The Administration proposes to further improve

the integrity of the Medicaid matching rate system through steps to curb funding

arrangements that are in place solely to avoid the legally determined State financing. To be clear, CMS considers IGTs that meet the protections of the Medicaid statute as permissible sources of State funding of Medicaid costs, protections which are

meant to allow units of local governments, including government health care providers, to share in the cost of the State Medicaid program.

In this regard, we are developing a proposal under which the Federal government,

when matching a claimed State expenditure for a service provided by a government

provider, will only provide matching payments on the basis of the State’s true net

expenditure. For a simple illustration, assume that a State with a 50/50 match rate

submits a claim for $100 for a service provided by a government provider. If the

government provider is required to return 5 percent of the claim to the State as an

IGT, we believe the net expenditure is only $95, so the Federal match should be

only $47.50 instead of $50. As noted previously, the Department’s Office of Inspector

General recommended this approach as part of its September 2001 final report. Specifically, the OIG recommended that CMS ‘‘Require that the return of Medicaid payments by a county or local government to the State be declared a refund of those

payments and thus be used to offset the FFP generated by the original payment.’’

The total amount of savings from each State, including West Virginia, would depend on the degree to which they make claims for Federal matching funds associated with certain Medicaid payments that health care providers are not ultimately

allowed to retain. Specifically, each State will be affected by the total amount of

Medicaid payments State and/or local governments require the health care provider

to forgo and/or return.

The estimates for the program integrity proposal were developed by the Office of

the Actuary for the President’s Budget for Fiscal Year 2005. It is intended to restrict

certain State payments from being matched by Federal Medicaid funding. The estimates were developed by examining reimbursements to government providers and

IGTs between State and local governments.

Question 13: Is your proposal based simply on a cut of some portion of your estimate of total Upper Payment Limit (UPL) spending? How much total UPL spending

is there—excluding the transition period funds? How much of that is going to hospitals? How much of that is going to nursing homes? How much of that stays with

each respective provider?

Answer: Regarding the reimbursements to government providers, it is expected

that this proposal would limit some enhanced payments unaffected by previous

rules on upper payment limits (UPL), excluding transitional UPL payments. Based

on the Office of the Inspector General’s Review of Medicaid Enhanced Payments to

Local Public Providers and the Use of Intergovernmental Transfers (September,

2001), it was estimated that Medicaid would save one-third of the unaffected enhanced payments. This would result in savings of $2.0 billion from 2005 to 2009 and

$4.7 billion from 2005 to 2014.

Question 14: What is the total dollar value of illegal intergovernmental transfers

(IGTs) today? What is the dollar value of all legal intergovernmental transfers

(IGTs) today?

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Answer: Regarding the IGTs, the estimates are based on a review of State Medicaid financing by the Center for Medicaid and State Operations and the CMS regional offices. This review of 2002 Medicaid spending showed that 25 States had a

total of $5.7 billion of potential recycled funds from disproportionate share hospital

(DSH) payments and UPL payments. It is important to note that many other States

likely have recycled funds, and thus the actual amount is higher than $5.7 billion;

however, this data is unavailable at this time. The amount of recycled funds was

projected forward using the growth rates of Medicaid services from the President’s

budget. From that amount, transitional UPL payments and the savings from the

cost-based reimbursement requirement were subtracted. The States reviewed by the

Office of the Inspector General in its report had 50 to 100 percent of enhanced payments returned to them from providers during the audit period. As payment systems and conditions vary from State to State, it is difficult to generalize about how

much each State retains from these enhanced payments. Conservatively, it was estimated that 25 percent of these transfers would be disallowed under this proposal.

This would result in savings of $7.7 billion from 2005 to 2009 and $18.8 billion from

2005 to 2014.

The total savings of this proposal are estimated to be $9.6 billion from 2005 to 2009 and $23.5 billion from 2005 to 2014. It is likely that a more extensive review

of each State’s IGTs and financing will impact these estimates.

Some may suggest that the action taken on UPL has addressed the IGT concerns.

Experience shows this is not the case. Since we began our in-depth review of SPAs

that deal with Medicaid reimbursement last summer, 82 have been approved, 4

have been disapproved and 5 have been withdrawn entirely by States. States temporarily withdrew 39 SPAs as a result of our requests for additional information. Another 153 SPAs are under review at CMS.

However, States not engaged in these practices will not be affected by this proposal. Moreover, the proposal would not impact current law permitting the phaseout of UPL transition amounts.

Question 15: Which intergovernmental transfers (IGTs) that are allowed now

would be allowed to continue under your proposal and what is the dollar value of

those IGTs?

Answer: There appears to be a great deal of confusion about the term ‘‘intergovernmental transfer.’’ IGTs that meet the conditions set out in the Medicaid statute

are a permissible source of State funding of Medicaid costs. The statutory provision

governing IGTs is an exception to the otherwise very restrictive requirements governing the use of provider-related donations and taxes. The IGT provision was

meant to continue to allow units of local government, including government health

care providers, to share in the costs of the State Medicaid program. In order for a

health care provider to transfer funds that are protected under the Act, the health

care provider must be a unit of State or local government. Therefore, in order for

a governmental health care provider to make a protected transfer, it must have access to State or local revenues either by having a direct taxing authority or be able

to access funding as an integral part of a governmental unit with taxing authority.

Question 16: Does this proposal represent eliminating the existing phase-out of

the 2000 law and immediately taking that money away from States?

Answer: No, we assume those phase-outs would be protected.

Question 17: The Administration’s FY 2005 budget includes a proposal for LongTerm Care Partnerships and estimates that this proposal will be cost-neutral. What

type of consumer protections would be implemented for individuals purchasing these

policies?

Answer: Partnership policies would be sold under regulations issued and enforced

by individual States.

Question 18: What type of model is your proposal based on: total-asset protection

or dollar-for-dollar?

Answer: The legislative proposal does not specify which of these models States

would use. States would be free to use either model or a hybrid model that combines

both, as in Indiana.

Question 19: Would there be a ceiling on the amount of assets that individuals

would be allowed to protect?

Answer: The legislative proposal does not specify a limit on the amount that can

be protected.

Question 20: How many years of long-term care insurance would insurance companies be required to provide?

Answer: The legislative proposal does not specify a minimum or a maximum duration of coverage. Individual States would be responsible for establishing these limits.

Question 21: What would happen if a person purchased a long-term care insurance policy in one State and then moved to another State? I know that Indiana and

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Connecticut have a portability arrangement, but how would you address portability

in other States?

Answer: The legislative proposal does not specify how States should resolve the

asset protection portability issue. Participating States would be free to work out

agreements similar to that of Indiana and Connecticut.

Question 22: Would Medicaid estate recovery be optional in all States or just in

States with a Long-Term Care Partnership?

Answer: Federal law requires all States to conduct estate recovery, and the existing Partnership States are no exception. Existing partnership States recover from

the estates of partnership participants, however, their ‘‘protected assets’’ are considered unavailable for recovery. Assets in excess of their ‘‘protected assets’’ are available for recovery.

If the law passes, States implementing new partnership programs would also be

required to conduct estate recovery, however, they would be allowed to define ‘‘estate’’ for purposes of recovery, as do all non-partnership States.

RESPONSES TO QUESTIONS FROM SENATOR LINCOLN

Question 1: My understanding is that individuals who chose LIFE Accounts are

ineligible for any other long-term, social services, or community-based care, but are

still entitled to receive health care services. How does that relate to the Medicare

home health benefit, in which supportive services (which could also be referred to

as ‘‘social services’’) are included as part of the benefit?

Answer: LIFE Accounts is a program that would be associated with Medicaid services, and would have no relationship to the Medicare home health benefit. A LIFE

Account is a private account that belongs to an individual who has chosen to direct

his or her Medicaid community-based services. The LIFE Account savings program

does not affect eligibility for any Medicare services and supports.

To participate in the LIFE Account savings program, individuals must self-direct

their Medicaid community-based supports budget for all their ‘‘Medicaid, community-based, long-term supports.’’ Individuals who are Medicaid-eligible and also

Medicare-eligible and receive supports under the Medicare home health benefit are

not precluded from establishing a LIFE Account.

Question 2: The Medicare hospice benefit includes respite care. Does the LIFE account preclude this social service?

Answer: The LIFE Account savings program is designed for individuals who are

Medicaid-eligible and does not have any impact on Medicare benefits, including the

Medicare hospice benefit.

Question 3: States must approve State Medicaid plans; they could argue that a

variety of services designated under the LIFE Account program are in fact under

the purview of home health for those individuals receiving home health care, resulting in limitation of supportive services for that beneficiary due to unrealistic expectations of an already overburdened home health system.

Answer: LIFE Accounts is a savings program that is separate from an individual’s

Medicaid benefits that allow those who self-direct their Medicaid services to save

money while not risking their eligibility. They are intended to enable Medicaid eligible individuals to save for the future and increase their resources while maintaining

eligibility for Medicaid services. These accounts are for individuals who are participating in a qualified home and community-based services program—a program providing home and community-based services operating under a State Plan, or under

a section 1915(c), 1115, 1915(d), or 1929 program—and the individual must have an

approved plan and approved budget for self-directed services in connection with

such participation. LIFE Accounts are intended to be a separate account from an

individuals’ Medicaid, community-based, long-term supports budget, and CMS will

enforce these two programs to assure that LIFE Accounts do not reduce Medicaid

community-based supports budgets. LIFE Accounts are intended to be a separate account from an individuals’ Medicaid, community-based, long-term supports budget,

and CMS will enforce these two programs to assure that LIFE Accounts do not reduce Medicaid community-based supports budgets.

Question 4: Home health agencies already often end up being the de facto overseer

of services provided by personal care aides or other privately-hired assistants in the

home setting; they are often called on to teach or demonstrate procedures. How will

this time and money and liability concern be addressed?

Answer: Individuals who self-direct a Medicaid community-based supports budget

purchase their supportive services from a variety of sources. Service sources (including home care agencies) can be reasonably expected to build in their administrative

expenses into the fees they charge for their services.

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COMMUNICATIONS

STATEMENT OF THE ASSOCIATION OF UNIVERSITY CENTERS ON DISABILITIES

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STATEMENT OF THE NATIONAL MENTAL HEALTH ASSOCIATION

[SUBMITTED BY MICHAEL M. FAENZA, MSSW]

Today’s Senate Finance Committee hearing on strategies to improve access to

Medicaid home and communitybased services presents a valuable opportunity to

highlight the crisis in community-based care for individuals with mental illness. We

commend Senators Grassley and Baucus for holding a forum to address these important issues.

Improving access to community-based services for people with mental illness is a

central goal of the National Mental Health Association (NMHA), the nation’s oldest

and largest advocacy organization addressing all aspects of mental health and mental illness. With more than 340 affiliates nationwide, NMHA works to improve the

mental health of all Americans, especially the 54 million people with mental disorders, through advocacy, education, research, and service. NMHA was actually

founded in 1909 by a former psychiatric patient, Clifford W. Beers, largely in response to the horrible abuse that he witnessed and was subjected to during his own

stays in public and private institutions. The founding of our organization was one

of the major events that started a reform movement to improve the conditions of

individuals in mental institutions and the availability of communitybased services.

However, our mental health service delivery system is ‘‘in shambles,’’ according

to the President’s New Freedom Commission on Mental Health. In fact, the Commission stated in its recent report that ‘‘the nation must replace unnecessary institutional care with efficient, effective community services that people can count on.’’

New Freedom Commission on Mental health, Achieving the Promise: Transforming

Mental Health Care in America. Final Report. DHHS Pub. No. SMA–03–3832. Rockville, MD: 2003 (available at www.mentalhealthcommission.gov), p.4. To achieve the

reforms envisioned in the Commission’s report, Congress must make mental health

a real priority by committing substantial new resources and strengthening coordination among state and federal agencies to improve access to community-based mental

health services.

MEDICAID AND MENTAL HEALTH CARE

As the single largest source of financing for mental health care in this country,

Medicaid plays a crucial role as a safety net for millions of Americans with mental

illnesses. However, fiscal constraints facing most states and certain Medicaid policies have blocked many of those who need assistance from receiving care. As states

continue to struggle with large budget shortfalls for next year, federal assistance

through the Medicaid program to improve access to more integrated, communitybased care for individuals with mental illness is desperately needed.

Today, millions of people with mental illness fall through the cracks of our health

care system largely because community-based care is not accessible or available to

them. As a result, many people with serious mental illnesses wind up homeless or

incarcerated in jails and prisons. Studies have shown that an estimated one-third

of individuals who are homeless and hundreds of thousands of those in our jails and

prisons have serious mental illnesses. In some areas, prisons and jails have become

the de facto mental institutions of our time, inhumanely warehousing people with

mental illnesses.

As the U.S. Supreme Court held in Olmstead v. L.C., for which the plaintiffs were

two women with mental illness and mental retardation, the Americans with Disabilities Act requires states to provide services in the most integrated settings possible.

Beyond just keeping people confined in institutions unnecessarily, leaving people

homeless or locking them up in jails also clearly goes against the spirit, if not the

letter, of this decision.

The state of children’s mental health services, particularly community-based services, is just as bleak, if not worse than that for adults. Many children are placed

in institutional settings—sometimes far from their families—even though they could

be more effectively and efficiently treated in the community while remaining at

home. While the lack of Medicaid coverage for adults between the ages of 21 and

64 in institutions for mental diseases (IMDs) serves as a disincentive for keeping

adults with mental illness unnecessarily institutionalized, this disincentive is less

effective with regard to children since states may opt to receive Medicaid funding

for covering institutional care of children under 21 in psychiatric facilities. Moreover, funding for communitybased services for children through public programs or

private insurance is extremely limited.

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CHILDREN’S MENTAL HEALTH NEEDS GO UNMET

The inaccessibility of children’s mental health services forces thousands of parents

to relinquish custody of children with mental disorders to the state each year so

that these youngsters will become eligible for Medicaid and gain access to services

through the child welfare system. Treatment of serious mental disorders is very expensive and private insurance tends to run out long before these children have received the care they need, but they often are not eligible for Medicaid because their

parents’ incomes are too high. Desperate to secure needed treatment, these parents

have no other viable options. Another tragic indicator of the tremendous dearth of

adequate mental health care for children is the finding, cited by the President’s New

Freedom Commission on Mental Health, that 80 percent of children coming into the

juvenile justice system have mental illnesses.

In fact, the General Accounting Office found that in 2001, 12,700 children in 19

states and 30 counties were placed in child welfare and juvenile justice systems

solely to access mental health services. This shocking finding actually grossly understates the magnitude of the problem since most states did not respond to the GAO’s

survey. A number of states have passed laws prohibiting custody relinquishment,

but the pressures are still there while adequate services and supports are not. Thus,

parents continue to make the heart-wrenching choice to forego custody of their children with the desperate hope that they will be better off somehow.

Behind the statistics, the stories of these families are heart-breaking. With no

other illness is access to treatment made conditional on the removal of a child from

the custody of his or her parents. These children feel abandoned and unwanted, and

their parents are devastated. Although these parents often have nowhere else to

turn in cases where a child has become a danger to him or herself or others, the

act of removing these children from their homes makes the path to recovery from

mental illness much steeper. We have heard from parents all over the nation who

have relinquished or nearly relinquished custody of their children. They consistently

state that if they could access the community-based services available to foster care

families, they could have kept these children at home. These parents need to be able

to access more community-based services and a critical first step would be to make

children in psychiatric residential treatment centers (RTCs) eligible for services

through Medicaid home and communitybased care waivers.

AVENUES FOR PROVIDING NEEDED HOME AND COMMUNITY-BASED SERVICES

Over the last decade, psychiatric residential treatment centers have become the

primary providers of institutional care for children with serious emotional disturbances. Despite the fact that many RTCs are very structured settings that closely resemble psychiatric hospitals, CMS has refused to recognize them as hospitals and

thus they do not qualify as institutions against which states may measure home and

community-based care waiver costs. As a result, states have been unable to use the

home and community-based care waiver authority to provide community-based alternatives for children in RTCs except in a very few cases.

Authorizing states to use home- and community-based care waivers for

children in RTCs would enable states to offer children with mental disorders real community-based alternatives to institutional care. The Family

Opportunity Act (S. 622/ H.R. 1811), tirelessly championed by Senators Grassley

and Kennedy and Representative Pete Sessions, would make this change in Medicaid law. We will continue to work with the sponsors to ensure that this legislation

is enacted in the near future. And, we appreciate the support the President has

shown for this proposal by including a similar provision in the set of New Freedom

Initiative demonstration projects proposed in his FY 2005 budget.

Besides this very important provision, the Family Opportunity Act would also give

more families the flexibility they need to access mental health services for their children by enabling those with incomes up to 250 percent of poverty to buy into the

Medicaid program. To prevent the tragedy of custody relinquishment, in addition to

making more community-based services available, families of children with mental

disorders must be able to obtain Medicaid coverage for these children so that they

can access these services.

Medicaid is a critical lifeline for millions of individuals with mental illness, but

unfortunately it has been stretched very thin by the recent financial difficulties

faced by the states and resulting cuts in Medicaid coverage. Although states continue to face extraordinary budget shortfalls, the fiscal relief Congress provided last

year is set to expire at the end of June. This relief lessened the extent to which

states have cut services for people with mental illnesses who rely on Medicaid.

One of the most important steps Congress should take to improve or at least preserve existing community-based care is to extend state Medicaid relief legislaVerDate 11-MAY-2000 14:18 May 20, 2005 Jkt 095484 PO 00000 Frm 00393 Fmt 6601 Sfmt 6621 94650.TXT SFINANC2 PsN: SFINANC2
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tion and reiect the cut to Medicaid included in the House budget resolution.

Another important step Congress should take to improve access to services for

adults with mental illness is to consolidate the different options states

must choose to provide comprehensive mental health services into one option under Medicaid. Currently, coverage for community-based mental health

care is spread across more than six optional Medicaid service categories which presents a significant barrier preventing states from providing the comprehensive, coordinated services that many Medicaid beneficiaries with mental health disorders

need. To finance many of these services, states must piece together multiple options

which results in a confusing patchwork of programs and fragmentation of services.

The Medicaid statute should be amended to allow states the option of providing a

full continuum of mental health care with one change to their Medicaid program.

This change would lessen the fragmentation in mental health service delivery that

the President’s New Freedom Commission on Mental Health highlighted as one of

the main barriers preventing people from accessing needed mental health care.

Consumer-run services can play a critical role in the process of recovery from

mental illness and research has shown these services to be highly effective. The

President’s New Freedom Commission recommended these services as important

sources of community-based care.

‘‘Consumers who work as providers help expand the range and availability of

services that professionals offer. Studies show that consumer-run services and

consumer-providers can broaden access to peer support, engage more individuals in traditional mental health services, and serve as a resource in the recovery of people with a psychiatric diagnosis. Because of their experiences, consumer-providers bring different attitudes, motivations, insights, and behavioral

qualities to the treatment encounter.’’ Commission Report, p. 37.

Approximately eleven states purport to cover peer-support services in their Medicaid state plans, but in most cases these services are not actually available. Georgia

has a model program for credentialing consumer or ‘‘peer’’ support providers for reimbursement under Medicaid. We urge the Finance Committee to take up legislation to give states an explicit option to follow Georgia’s lead and establish

procedures for credentialing consumer-run services for coverage through

their Medicaid programs.

Finally, in light of the large numbers of individuals with mental illness who are

held in jails and prisons, Congress should require states to suspend, instead of

terminate, Medicaid eligibility of those who are incarcerated. Although Medicaid does not cover health services provided in jails or prisons, while incarcerated,

a beneficiary’s eligibility for Medicaid does not necessarily terminate. Medicaid eligibility for these individuals is generally tied to SSI eligibility that is only suspended,

not terminated, as long as a person is incarcerated for less than 12 months. When

SSI benefits are suspended due to incarceration, states have the option to, and generally do, terminate an inmate’s Medicaid eligibility, but federal law does not require this and these individuals may remain on the Medicaid rolls even though services they receive while in jail are not covered. Unfortunately, most states terminate

Medicaid eligibility automatically anytime someone is incarcerated, even though this

is not required. As a result, when individuals with mental illness leave jail they are

often unable to access the care they need to stay healthy in their communities and

are at risk of cycling back into mental institutions or jail. These individuals need

to be able to access Medicaid coverage, to which they are entitled, as soon as they

leave jail or prison, and the most effective way to ensure that is to call on the states

to simply suspend Medicaid coverage, rather than terminating it, while these individuals are incarcerated.

We urge Senators Grassley and Baucus and the entire Finance Committee to

build upon today’s hearing by swiftly approving legislation that incorporates these

proposals to improve access to community-based mental health services.

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