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Money Follows the Person: Are We Getting Our Money’s Worth?
posted 01.31.2013

By Anna Rahman

Money Follows the Person (MFP) is a well-intentioned, well-funded federal program that either “appears to be achieving its broad goals” or is falling woefully short of expectations. The conclusion depends in part on the answer to this question: Is this the best way to rebalance the long-term-care system?

Launched in 2007, MFP, “the largest demonstration program in the history of Medicaid,” was allocated $1.75 billion over five years to fund state efforts to transition Medicaid beneficiaries from nursing homes to the community. By 2010, 30 states, plus the District of Columbia, had joined the demonstration. In February 2011, Congress increased the program’s allocation to $4 billion, and 13 more states joined.

MFP program goals are twofold: to help eligible nursing home residents return to the community, and to encourage states to expand their home- and community-based services (HCBS). This second goal reflects the importance of rebalancing long-term-care systems: Studies suggest that investments in HCBS can reduce nursing home placement rates, thus reducing long-term-care costs. To achieve this goal, the MFP program emphasizes transition rather than diversion from nursing homes.

Through MFP grants, participating states receive an enhanced federal match for 12 months of services for Medicaid recipients who transition from a nursing home to the community. This extra support provides an incentive for states to invest in HCBS: By transitioning nursing home residents, states collect extra funds to strengthen their HCBS systems. This boost, in turn, may enable them to transition more residents more easily, or prevent institutionalization in the first place. This rebalancing strategy stands in contrast to one that favors diversion; that is, incentive programs that aim to prevent unnecessary institutionalization through direct investments in HCBS, without the need to first transition nursing home residents.

How is the MFP transition program performing?

States in the first wave of MFP funding projected that they would transition 38,023 residents over five years. Most planned for a slow start, but the program quickly fell behind those conservative projections, as service providers encountered barriers to launching MFP programs and transitioning residents. By the end of 2008, participating states had discharged just 37 percent of their initial projection. Since then, they have picked up the pace. By the end of December 2011, nearly 20,000 residents had transitioned back to the community. With experience, states have learned to set more realistic projections. At the same time, their MFP programs are maturing. As a result, the program exceeded its overall projection for 2011 by 13 percent, although transition outcomes vary by state, with one state—Texas—accounting for a third of all MFP transitions.

Evaluations of the MFP program (conducted by the Mathematica Policy Institute under a CMS contract) show clear benefits from it, especially improved quality of life for those who transition to the community. Additionally, MFP states now report “increased availability or accessibility of HCBS, expansions to HCBS waiver programs, and additional HCBS providers contracting with Medicaid.”

Evaluations also show that most MFP beneficiaries (62 percent) are younger than age 65, a somewhat unexpected outcome given that older adults comprise the vast majority of nursing home residents. Disappointingly, recent findings suggest that MFP programs have had no impact on transition rates for older nursing home residents. Rates remain at just three transitions per 1,000 elders who meet MFP eligibility requirements.

Finally, and despite increases in HCBS, evaluations show that states continue to confront significant challenges to achieving MFP goals. Most frequently cited are housing shortages—mentioned by 22 of 25 respondents in a recent evaluation; inadequate HCBS capacity, including shortages of direct-care providers; and state Medicaid policies.

How states have responded to these challenges says something about the efficacy of the program overall. Some states are working to increase the number of suitable housing units and the number of home care providers. For instance, some states have paid for home modifications that make more units accessible to frail or disabled adults.

More commonly, states have employed management strategies that do not actually increase housing supplies or HCBS capacity. These strategies include, for instance, hiring housing specialists or developing registries of available units. Several states have reserved a portion of subsidized housing vouchers for MFP participants.

In Texas, a state often lauded for transitioning record numbers of institutionalized residents each year, the housing authority dedicates a certain number of public housing vouchers to relocate residents of state psychiatric facilities, according to “Money Follows the Whole Person in Texas,” from 2012 Spring Generations. This well-intended strategy deserves evaluation in terms of the impact. If MPF participants receive an increased number of these vouchers, what is the impact on others for whom the vouchers were originally intended?

On balance, it seems fair to conclude that MFP program outcomes are mixed. Progress is being made, but at a rate and cost that begs another important question: Have we gotten—or will we get—our money’s worth from the Money Follows the Person program? From a quality improvement (QI) standpoint, the program’s structure makes scant sense. QI tenets hold that fixing errors (like the institutionalization of individuals capable of living in the community) is less cost-effective than preventing them in the first place. With its convoluted incentives, however, the MFP program may sometimes reward errors, at least initially. Worse, the program’s design may generate new errors: States must first squeeze MFP recipients into already or nearly full HCBS systems—and thereby risk the displacement of other needy individuals—in order to access extra funds to expand that system.

The MFP demonstration extends to 2016, and states have until 2020 to spend all their grant funds. Ideally by then the program will have put itself out of business, as it reverses avoidable institutionalizations and builds capacity to prevent them in the first place. Meantime, one wonders: Is it too late to try diversion?

Anna Rahman, Ph.D., is a postdoctoral fellow at the USC Davis School of Gerontology whose research focuses on translational strategies that promote evidence-based practice in nursing homes. This article is based on background research she conducted with colleagues at USC for a study examining discharge patterns for short- and long-stay nursing home residents. That paper will soon be published in Home Health Quarterly.

This article was brought to you by the editorial committee of ASA’s Healthcare and Aging Network (HAN).


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