Allowing Spouses to Be Paid Personal Care Providers: Spouse Availability and Effects on Medicaid-Funded Service Use and Expenditures

A sea change occurred over the past two decades in the attitudes of policymakers and public officials concerning the use of Medicaid funds to financially compensate family members who are providing “home care” to their adult relatives with long-term functional disabilities. As recently as 1985, the Health Care Financing Administration (now known as the Centers for Medicare and Medicaid Services or CMS) proposed a rule that would have banned all relatives from receiving Medicaid payments for providing personal care services. A number of states protested this proposal, preferring to preserve their discretionary authority to pay other than “legally responsible” relatives. The final CMS rule published in 1997 prohibited payments only to legally responsible relatives, that is, spouses and parents of minor children (For a more technical definition of legally responsible relatives, see the State Medicaid Manual, Section 4480: Personal Care Services. U.S. Department of Health and Human Services, 2000, p. 186. http://aspe.hhs.gov/daltcp/reports/primer.htm). In 2004, CMS officials determined that they had authority to approve state requests to pay legally responsible relatives in the Medicaid home and community-based service (HCBS) waiver programs. Since then, Medicaid financing and service delivery mechanisms for HCBS (enacted in the 2005 Deficit Reduction Act and the 2010 Affordable Care Act) explicitly authorize payments to family caregivers. This includes legally responsible relatives (authorized under the section 1915 [j] “cash and counseling” service delivery option and the section 1915 [k] Community First Choice attendant care benefit). Whether to authorize payments to family caregivers, including spouses, is now almost entirely up to state policymakers. In the 1980s, when Medicaid began to expand home-delivered alternatives to institutional care, agency-employed aides provided most such services. This slowed adoption of programs that employed family members. Even when states allowed program participants to obtain personal assistance services from individuals (“independent providers”) rather than agencies, only a handful of states (e.g., California, Michigan, Oregon, Washington) encouraged large numbers of them to do so and permitted the employment of family members. Even fewer states (e.g., California, Oregon) used state funds to pay spouse providers before Medicaid rules changed. Over the years, state policies have continued to vary (Doty & Flanagan, 2002). This is true both across states and within states by program and target population (elderly, physically disabled adults, adults or minor children with intellectual developmental disabilities), the family caregiver relationship (spouse, parent, adult child, or other relative), and whether or not the relative lived in the same household as the program participant. The willingness of state officials to authorize payments to family caregivers has grown as states incorporated “consumer-directed” modes of service delivery into their Medicaid programs, a key feature of which allows beneficiaries to choose their preferred individual providers of personal assistance services and to schedule, train, and supervise these workers (the history of self-direction is covered nicely in the National Center for Participant-Directed Services’ Participant Direction Handbook (2004). Consumer direction available in Cash and Counseling programs goes beyond allowing program participants to hire/fire and supervise individual providers of their choosing. Cash and counseling program participants are given a budget, which can also be used to purchase other goods and services such as assistive technologies and home modifications. In practice, most program participants use all but a small portion of their funds to pay independent providers). As of 2009, 38 states permitted consumer direction (Ng, Harrington, & Howard, 2011). Consumer-directed programs surveyed in 2001 (Doty & Flanagan, 2002) had few restrictions on payments to family members other than spouses or parents of minor children. A 2004 survey of 50 states found that two thirds prohibited payments to spouses even in non–Medicaid-funded programs (Friss Feinberg, Newman, Grey, & Kolb, 2004). A 2009 survey of state policies on paying relatives found only two states that disallowed any payments to family caregivers: 36 authorized payments to parents of adult service recipients; however, only 6 paid parents of young children and only 10 paid spouses (Cooper, 2010). Deeply rooted cultural values may play some role in state officials’ reluctance to authorize payments to spouses and parents of young children who, by both law and custom, have been under greater obligations than other relatives to provide financial and other support. In Medicaid regulations, spouses and parents of minors are referred to as “legally responsible” relatives because of these support obligations. Medicaid financial eligibility rules, in particular, take into consideration the income and assets of applicants’ spouses and parents (in the case of children under age 18 years). (The CMS website explains basic Medicaid financial eligibility rules http://www.cms.hhs.gov/MedicaidEligibility/. Specific information about Medicaid financial eligibility by state is available from the Kaiser Family Foundation website available at http://www.kff.org/medicaid/8048.cfm). Another state policymaker concern about paying relatives—especially spouses and parents—to provide care is a fear that substitution of paid for unpaid family care would increase public costs. Are substitution concerns warranted? There has been relatively little direct investigation of this policy-relevant issue. Past research on consumer-directed services among California’s In-Home Supportive Services (IHSSs) recipients, for example, focused on satisfaction and outcomes, not substitution explicitly (Benjamin, Matthias, & Franke, 2000). This work found that those who received paid personal assistance services from relatives reported higher satisfaction with paid care and either better or no worse outcomes on all self-reported measures of quality of care and quality of life than did those receiving care from nonrelatives. Similar findings were reported for the Cash and Counseling demonstration (a HCBS program; Simon-Rusinowitz, Loughlin, Ruben, & Mahoney, 2010). This demonstration allowed families the option of receiving cash payments to provide care or to purchase it from others. There was no evidence of either substitution of informal care with paid care or differences in outcomes comparing demonstration participants with a comparison group in usual care. This paper extends the empirical investigation of the service use, expenditure, and quality of care risks to Medicaid when spouses are paid as personal care workers. The analyses use Medicaid claims for personal care recipients in California’s IHSS Program. This personal care program is not a demonstration. It serves more than 330,000 beneficiaries monthly and has been allowing legally responsible relatives to be paid providers since the 1980s. We compare recipients having paid spouse caregivers with those having other relatives or unrelated individuals as caregivers and address four policy questions: What is the availability of spouses to be paid personal assistance providers under current Medicaid eligibility rules and what proportion become paid providers? What factors are associated with having a spouse as a paid provider? Do spouses, as paid providers, perform as well as other providers in enabling IHSS recipients to remain at home, safely as measured by hospital and nursing home use? Are risk adjusted Medicaid reimbursed hospital and nursing home use and total Medicaid expenditures comparable among IHSS recipients having a spouse, other relative, or non-relative as their providers?