Medicaid Managed Care - U.S. Senate Special Committee on Aging

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states have begun to shift the focus of their waiver programs to serve more
people at home-their own home, their family's home, or an adult foster
care home-and to provide a broader range of services tailored to
indmiduals' needs and preferences.
From 1990 to 1 995, <strong>Medicaid</strong> costs for long-term care services for persons
with developmental disabilities nationwide rose at an average annual rate
of 9 percent Although most of the increase reflected increased costs for
waiver program services, increased costs for IcF/NR program services also
were a factor. Waiver program costs grew primarily because more people
were served as per capita costs for the program increased slightly less
than inflation. icFlm program costs increased even though the number of
ICFlM residents declined 7 percent The program's cost increases resulted
solely from per capita cost growth for the icF/mR program, which was
somewhat higher than inflation.
If not for a cap on the number of waiver program recipients in each state
and state management practices, cost growth would likely have been
higher. HcFA requires each state to set limits on the number of persons to
be served in the waiver program subject to federal approval. Therefore,
HCFA allows states to deny services to otherwise eligible individuals once
the cap is reached. In contrast, the regular <strong>Medicaid</strong> program requires that
states serve all those who meet eligibility requirements. In addition, states
use their own management practices to control costs. In the three states
we visited, these management practices include fixed agency budgets for
waiver program services and linking of the management of the care plan
and use of non-<strong>Medicaid</strong> services to individual budgets for each person
served.
A 1994 change in federal rules could result in higher caps and costs. In this
change, HCFA eased the process by which waiver program caps were
established, giving states more discretion in determining the number of
waiver program recipients. In doing so, HCFA recognized the risk of cost
increases if states increased the number of people served, but it expected
that state budget pressures would likely inhibit the size of the increase. If
states elect to use this discretion, as two states we visited said they
planned to do, a risk exists that the number of waiver program recipients
and costs could increase more rapidiy.
Some states are changing their quality assurance approaches to improve
quality as services offered by the waiver program continue to evolve, but
more development is needed to reduce risks. States continue to use
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