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bold leap in care for the aged and disabled
By Christine Vestal, Stateline Staff Writer
October 2010--After lagging behind the rest
of the country for years, Tennessee is
catching up fast when it comes to changes in
its health care system aimed at elderly and
disabled residents. More of them are getting
the assistance they need in their homes — at
a much lower cost than at a nursing home. A
lot of this change is the direct result of
efforts by Governor Phil Bredesen.
Nearing the end of his eight years in office
(he is required to leave due to term limits
this year), Bredesen decided to focus on
getting Tennessee off the bottom rung in
rankings of states that offer consumers
choices in long-term care. Just a few years
earlier, only a few hundred Tennesseans were
able to get Medicaid funding for anything
but a nursing home. Now, it is one of a
handful of bellwether states that offer a
broad range of alternatives to nursing home
“It’s a good thing to do and it probably can
save some costs, but more importantly it
really is an easy way to keep an awful lot
of people in their homes, which is what I
would want. I know it’s what my mother
wants,” Bredesen said in an interview with Stateline.
Like every other state, Tennessee is bracing
for an avalanche in demand for long-term
care as the biggest generation in American
history — 77
million so-called Baby Boomers born between
1946 and 1964 — begins
to hit retirement age next year.
Occupying more than 30 percent of states'
Medicaid bills, which in turn occupy more
than 20 percent of overall state budgets,
long-term care costs are growing faster than
any other state expense.
That’s partly because Americans are living
longer. By 2020, the number of people aged
85 years and older — those
most likely to need long-term care — will
increase by more than 40 percent, according
to U.S. Census Bureau estimates.
Even without those demographic pressures,
states’ long-term care costs are daunting.
The elderly and disabled represent about 25
percent of the total Medicaid population,
but they account for more than 65 percent of
the spending, according to the most recent
federal data available.
It is well known that the vast majority of
people with long-term care needs want to
remain in their homes. And research shows
that the cost of providing care in the
community can be as little as one-third the
amount of a comparable nursing home stay.
But the road to reforming state Medicaid
plans is long and arduous. That’s in large
part because Medicaid — which
pays nearly 50 percent of all nursing home
bills in the country and 45 percent of all
long-term care — is
biased in favor of institutional care. When
seniors qualify financially and are deemed
to need care, Medicaid funding for a nursing
home bed is guaranteed.
For those who want to remain at home,
funding is often only a possibility and a
national shortage of home health providers
can mean long delays.
Bredesen knows all this inside and out — he
was once in the health insurance business
himself — and he had no illusions about the
difficulties of reforming the system. Before
he tackled long-term care, though, he first
had to stanch the state’s hemorrhaging
Medicaid program, TennCare — a
move that made him a pariah in some parts of
Tennessee and even brought him death threats
as nearly 200,000 people were cut from the
rolls in 2005. But he accomplished that.
Next, he needed an ally in the Legislature
to make wide-ranging statutory changes in
the way Medicaid finances long-term care.
Democratic Sen. Lowe Finney became the
champion Bredesen was looking for. Together
they criss-crossed the state in 2007,
talking to the elderly and disabled and
their advocates. They negotiated with the
state’s powerful nursing home industry to
ensure major private players would support
But the state’s painful history of runaway
costs that resulted from its bold Medicaid
expansions in the mid-1990s and its
worsening current fiscal condition meant
Bredesen had to radically change long-term
care financing without adding to the state
Betting on managed care
In 2008, the Legislature unanimously
approved a bill that would make Tennessee
one of just a few states to contract out its
long-term care program to managed health
care organizations. The federal government
took a full year to approve it.
Like laws in Arizona and New Mexico,
Tennessee’s new law counts on private
companies to ensure that a broad array of
services — from
so-called personal services such as meal
preparation, bathing and dressing to home
improvements, including wheel chair ramps
and even pest control — are
provided without additional cost.
Two months ago, TennCare
CHOICES, opened its doors
statewide with the goal of helping 11,000
people remain at home or return to their
homes in the first year — all
for the same amount the state paid in 2009.
“The change is like night and day,” says
Wilo Clarke, a caseworker for a managed care
company in central Tennessee where the
program started as a pilot earlier this
year. “More and more, people in the nursing
facilities are hearing about this program.
They want to do whatever it takes to go
Under the plan, low-income frail elders and
adults with disabilities who are medically
eligible for nursing home care may opt to
receive the services they need in their
homes, as long as the total cost is equal to
or lower than the cost of a nursing home
It’s too early to tell whether CHOICES will
accomplish its goals. But so far, more than
40 percent of some 3,300 new enrollees are
opting either to move out of a nursing home
or avoid going to one in the first place.
In addition to allowing Medicaid to pay for
alternative services, Tennessee’s CHOICES
makes it easier for people to sign up for
the program by providing a single point of
caseworker with a local managed care
For the managed care organizations, the
financing structure is straightforward. The
state gives them a flat monthly fee for each
eligible long-term care recipient — whether
in a nursing facility or living at home.
Some patients will cost more and others will
cost less. It’s the company’s job to ensure
that the average cost for all enrollees does
not exceed a specified level.
The risks of change
There are many success stories. A
56-year-old Nashville resident named Larry
is a good example. He suffered a stroke two
years ago and had an amputation. Because his
wife could not care for him at home, he
reluctantly entered a nursing facility. When
the new program began providing training and
support services for his wife, Larry was
able to go home and spend time with his
children and grandchildren.
Critics have argued that the managed care
companies’ financial incentives to keep
people out of nursing homes could result in
unsafe home care for people who really need
round-the-clock nursing. But others say the
companies have just as much incentive to
avoid dangerous situations that could lead
to expensive emergency care.
The AARP, which advocates for the elderly,
says that three people can receive long-term
care services in the community for the cost
of serving just one person in a nursing
facility. Still, the big fear in offering
more home-based services is that people who
never would consider entering a nursing home
“will come out of the woodwork” and apply
for Medicaid. Surveys have shown that for
each patient in a nursing facility, two more
with the same level of disability are making
do at home.
Bredesen acknowledges the state’s new
program will result in Medicaid serving more
people. But he says it’s a good thing, as
long as overall costs do not climb.
Although the social and fiscal benefits of
public funding for home- and community-based
services are clear, states have been slow to
take the steps required to bring about
change. In the mid-1990s, a few states began
recognizing the value of serving more
long-term care patients in their homes.
Alaska, California, Minnesota, New Mexico,
Oregon and Washington State now spend more
than half of their long-term care dollars on
alternatives to nursing
facilities. Colorado, Idaho, North Carolina,
Texas and Vermont are moving in the same
direction. But Tennessee and 23 other states
have made less progress, spending less than
one-quarter of their long-term care budget
on non-institutional care.
The new federal health care law — the Patient
Protection and Affordable Care Act — has
a chance of changing that. It includes
financial incentives for states to spend at
least 50 percent of their long-term care
dollars on non-institutional services and
offers a grant for every person who leaves a
nursing home to receive services in the
community. Still, experts say the federal
dollars may not be enough to persuade some
states to make the changes.
In Tennessee, both supporters and critics of
the CHOICES program say only time will tell
whether the managed care organizations will
be able to keep a lid on costs. Bredesen
says his greatest worry is keeping
“fly-by-night” operators out of the
system. “A lot of people can play. You don't
have to be a doctor or build a hospital.”
But for those directly affected, Tennessee’s
experiment is already offering hope.