Pilot Programs for SNF Diversion and Transition to Licensed Residential Facilities

LEGISLATIVE COUNSEL'S DIGEST

In 1999, the United States Supreme Court ruled in the case of Olmstead v. L.C. (1999) 527 U.S. 581, finding that the unnecessary institutionalization of people with disabilities is a violation of the Americans with Disabilities Act of 1990 (ADA), thereby establishing the right of individuals with disabilities to receive services in the most integrated setting. 

To meet the intent of the Olmstead decision, it is the state’s obligation to ensure that individuals have access to an array of necessary services and supports that meet each person’s needs and preferences, regardless of age or degree of disability. 

To meet the intent of the Olmstead decision, the state must offer Medi-Cal beneficiaries reasonable community-based alternatives to institutionalization in a skilled nursing facility. 

Existing law establishes a system of community-based licensed residential facilities for seniors and people with disabilities that provide care and services including medication management, protective supervision, and help with Activities of Daily Living (ADLs)(e.g., bathing, dressing, eating).  

Existing law (Senate Bill No. 1008 CHAPTER 33) establishes the California Coordinated Care Initiative and its three components: 1) launch a demonstration with federal partners to enroll dual eligible Medi-Cal and Medicare beneficiaries into managed care health plans; 2) enroll all Medi-Cal beneficiaries into Medi-Cal managed care plans in order to receive Medi-Cal benefits, including long-term care in skilled nursing facilities; 3) shift the fiscal and operational responsibility for certain Medi-Cal benefits considered “Long Term Services and Supports” (LTSS) from fee-for-service Medi-Cal to Medi-Cal managed care plans. 

With the launch of the Coordinated Care Initiative, Medi-Cal health plans in seven counties assumed responsibility for the care provided to low-income seniors and people with disabilities (both dual eligibles and Medi-Cal only SPDs) institutionalized in skilled nursing facilities. 

Two of the CCI’s stated legislative goals are 1) Maximize the ability of dual eligible beneficiaries to remain in their homes and communities with appropriate services and supports in lieu of institutional care and 2) Increase the availability of and access to home- and community-based services. 

Existing law establishes four CCI and SPD rate categories: 1) Institutional, for members receiving long-term care in a Skilled Nursing Facility; 2) HCBS High, for members receiving CBAS, MSSP, or are considered severely impaired based on a high number of authorized IHSS hours; 3) HCBS Low, for all members receiving IHSS hours under the “severely impaired” threshold; and 4) Community Well, for all members not receiving the abovementioned services. The rates do not allow reimbursement for payments made to licensed residential facilities.  (Note: IHSS is no longer part of CCI but the 2018-2019 rate structure has not been released yet). 

The current Medi-Cal rate structure does not incentivize Medi-Cal managed care plans to provide Care Plan Option services or “In Lieu of Services.” The current rate structure penalizes Medi-Cal health plans that choose to purchase non-benefit, medically appropriate, cost-effective care in a licensed residential facility in lieu of more costly care in a skilled nursing facility. 

This bill would direct the Department of Health Care Services to establish a rate structure that incentivizes Medi-Cal health plans to move members out of institutional settings and into licensed, community based facilities. This bill would also direct the Department of Health Care Services to establish a rate structure that incentivizes Medi-Cal health plans to offer care in licensed, community based facilities to members at high risk of institutionalization in a skilled nursing facility. 

This bill would test the efficacy of a SNF transition pilot program serving up to 100 Medi-Cal managed care members via adding a new rate cell to the Medi-Cal rate structure. 

This bill would also test the efficacy of a SNF diversion pilot program serving up to 100 managed care members via adding a new rate cell to the Medi-Cal rate structure. 

This bill satisfies Olmstead mandates allowing eligible low-income participants at risk of premature institutionalization to self-direct their care to community-based vs. institutional care settings. 

This bill satisfies CCI mandates by improving health outcomes and containing health care costs by shifting service delivery to more-affordable community-based care vs. more-expensive institutional care settings. 

This bill is budget neutral for Medi-Cal beneficiaries transitioning from a long-term SNF placement to a community-based licensed residential facility. There is potential to generate significant savings to the state. 

This bill is budget neutral for the targeted subset of Medi-Cal beneficiaries living in the community who transition to a community-based licensed residential facility. These beneficiaries must meet clear and consistent SNF level-of-care eligibility criteria and must be currently authorized to receive between 195 and 283 hours per month of In Home Supportive Services (IHSS). 

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: 

A.  For purposes of this bill, all of the following definitions and acronyms shall apply: 

  1. Dual-eligibles: a beneficiary who receives Medi-Cal and Medicare services. 

  2. California Coordinated Care Initiative (CCI): a demonstration program in seven counties in which dual-eligibles must enroll in Medi-Cal managed care plans, dual eligibles may choose to enroll in a Medicare-Medi-Cal plan, and Medi-Cal Long Term Services and Supports are part of the Medi-Cal managed care plan’s benefit package. 

  3. Licensed Residential Facility: Adult Residential Facility (ARF) or Residential Care Facility for the Elderly (RCFE) that is licensed by the State Department of Social Services Community Care Licensing Division 

  4. Adult Residential Facility (ARF) (ages 18-59): licensed community-based care home; includes large, 80+bed settings or small four- to six-bed home-like care settings which provide care and services (e.g., help with incontinence, dementia care, medication management, and Activities of Daily Living such as dressing, bathing, and help getting out of bed). 

  5. 5.     Residential Care Facility for the Elderly (RCFE) (ages 60+): licensed community-based care home; includes large, 80+bed assisted living settings or small four- to six-bed home-like care settings which provide care and services (e.g., help with incontinence, dementia care, medication management, and Activities of Daily Living such as dressing, bathing, and help getting out of bed).

  6. Skilled Nursing Facility (SNF): institutional healthcare setting which has at least one full-time registered nurse. Medi-Cal managed care plans participating in the CCI as well as County Organized Health System (COHS) plans are financially and operationally responsible for long-term care provided in SNFs. 

  7. SNF NF level of care: a designation for an individual who, without interventions and supports, would otherwise require long-term institutionalization in a skilled nursing facility. Several evidence-based assessment tools exist to determine who meets these eligibility criteria. 

  8. HCBS (Home and Community Based Services): state term for three waiver programs designed to support people living in the community instead of in institutional settings: HCBA (Home and Community Based Alternatives) waiver, formerly known as the Nursing Facility/ Acute Hospital (NF/AH) waiver; Assisted Living Waiver (ALW); and the In-Home Operations waiver (IHO). These are all federal 1915(c) waivers that allow the provision of long term care services in home and community based settings under the Medicaid Program.

 

  1. HCBS (Home and Community Based Services): state term for three waiver programs designed to support people living in the community instead of in institutional settings: HCBA (Home and Community Based Alternatives) waiver, formerly known as the Nursing Facility/ Acute Hospital (NF/AH) waiver; Assisted Living Waiver (ALW); and the In-Home Operations waiver (IHO). These are all federal 1915(c) waivers that allow the provision of long term care services in home and community based settings under the Medicaid Program.

 

  1. Managed Long Term Services and Supports (MLTSS): long term care services covered by Medi-Cal managed care plans in CCI and County Organized Health System (COHS) ealth System (COHS) Health System (COHS)counties: MSSP, CBAS and long-term institutional-level care in SNFs. Medi-Cal managed care plan members who are receiving these services are put into specific rate categories that reflect their utilization of Long Term Services and Supports.

 

  1. CBAS (Community Based Adult Services): formerly known as Adult Day Health Care, CBAS provides a combination of medical and social services to eligible older adults with disabilities to restore or maintain their optimal capacity for self-care and delay or prevent inappropriate or personally undesirable institutionalization.

 

  1. MSSP (Multipurpose Senior Services Program): provides Home and Community-Based Services (HCBS) to Medi-Cal eligible individuals who are 65 years or older and disabled as an alternative to nursing facility placement.  The MSSP waiver allows the individuals to remain safely in their homes instead of being institutionalized. 

 

  1. In Home Supportive Services (IHSS): Medi-Cal program that pays for personal care attendant services and assistance with Activities of Daily Living for seniors, blind individuals, or disabled individuals, including children, so that they can remain safely in their own home. IHSS is considered an alternative to institutional care. IHSS is not part of the Medi-Cal managed care plans’ benefit package.

 

  1. Activities of Daily Living (ADLs): the basic tasks of everyday life, such as eating, bathing dressing, toileting and transferring.[1]

 

  1. PACE (Program of All-Inclusive Care for the Elderly): provides comprehensive medical and social services to certain frail, community-dwelling elderly individuals, most of whom are dually eligible for Medicare and Medicaid benefits. For most participants, the comprehensive service package enables them to remain in the community rather than receive care in a nursing home.

 

  1. Supplemental Security Income (SSI): federal program that provides monthly cash payments to low-income seniors and people with disabilities who can’t work due to their disability.

 

  1. State Supplemental Payment (SSP): state program that supplements SSI by providing additional cash support to SSI-eligible individuals

 

  1. Non-Medical Out of Home Care (NMOHC) Payment Standard: state-determined rate that individuals receiving SSI/SSP pay to receive care in licensed residential facilities. The facility agrees to accept the SSI/SSP/NMOHC payment standard as payment in full. The 2019 SSI rate for RCFEs is $1,039.37 . : (https://caassistedliving.org/provider-resources/and-more/ssissp-rates/)

 

B.    The California Coordinated Care Initiative (CCI)

 

  1. CCI mandates that Medi-Cal beneficiaries who are seniors and people with disabilities must enroll in Medi-Cal managed care plans. Under the authority of California's Section 1115 Medicaid Waiver, Bridge to Reform, California transitioned its Seniors and Persons with Disabilities (SPDs) population from the Medi-Cal fee-for-service (FFS) delivery system into the managed care delivery system (i.e., enrolled into Medi-Cal managed care health plans) between June 2011 and May 2012.The transition occurred in 16 counties located across California. Mandatory enrollment of SPDs in managed care and the aforementioned requirements were continued under the State's Section l115 Medicaid Waiver renewal, Medi-Cal 2020.

 

  1. The federal law allows state Medicaid programs to purchase non-Medicaid benefits in lieu of more costly Medicaid benefits. Section 438.3(e)(2) of the Medicaid Managed Care Final Rule addresses “Delivery System Reform In Lieu of Services” and states that In Lieu Of Services are allowed as a “medically appropriate and cost effective substitute” for a covered benefit or service. The rule also allows for state Medicaid programs to include ILOS in their rate development processes.

 

  1. Existing CCI policy (Policy for Cal MediConnect: Care Plan Option services (CPO services) June 3, 2013) allows for managed care plans to purchase non-benefit services known as Care Plan Option services “that are aligned with the goals of the Olmstead Act by keeping the beneficiary safely in their own community, rather than a costly institution or hospitalization.”

 

  1. Existing CCI policy (Policy for Cal MediConnect: Care Plan Option services (CPO services) June 3, 2013) defines Care Plan Option services as “optional services that the plan may provide above and beyond LTSS and HCBS in order to enhance a member’s care, allowing them to stay in their own homes safely and preventing institutionalization. These services could vary based on the needs of the beneficiary and the care plan developed for that beneficiary. Because these optional services are not part of covered Medi-Cal benefits, they are not subject to the Medi-Cal appeals process. These optional services are identified in WIC 14186.1(c), and may include,,, Care in licensed residential care facilities.” (emphasis added)

 

  1. Existing law establishes four CCI and SPD rate categories: 1) Institutional, for members receiving long-term care in a Skilled Nursing Facility; 2) HCBS High, for members receiving CBAS, MSSP, or are considered severely impaired based on a high number of authorized IHSS hours; 3) HCBS Low, for all members receiving IHSS hours under the “severely impaired” threshold; and 4) Community Well, for all members not receiving the abovementioned services.[L1]  The rates do not allow reimbursement for payments made to licensed residential facilities.

 

  1. Existing federal law allows state Medicaid programs to purchase non-Medicaid benefits in lieu of more costly Medicaid benefits. Section 438.3(e)(2) of the Medicaid Managed Care Final Rule addresses “Delivery System Reform In Lieu of Services” and states that In Lieu Of Services are allowed as a “medically appropriate and cost effective substitute” for a covered benefit or service. The rule also allows for state Medicaid programs to include ILOS in their rate development processes.

 

  1. Existing CCI policy (Policy for Cal MediConnect: Care Plan Option services (CPO services) June 3, 2013) allows for managed care plans to purchase non-benefit services known as Care Plan Option services “that are aligned with the goals of the Olmstead Act by keeping the beneficiary safely in their own community, rather than a costly institution or hospitalization.”

 

  1. Existing CCI policy (Policy for Cal MediConnect: Care Plan Option services (CPO services) June 3, 2013) defines Care Plan Option services as “optional services that the plan may provide above and beyond LTSS and HCBS in order to enhance a member’s care, allowing them to stay in their own homes safely and preventing institutionalization. These services could vary based on the needs of the beneficiary and the care plan developed for that beneficiary. Because these optional services are not part of covered Medi-Cal benefits, they are not subject to the Medi-Cal appeals process. These optional services are identified in WIC 14186.1(c), and may include, Care in licensed residential care facilities.” (emphasis added)

 

C.  The Legislature finds and declares all of the following:

 

  1. Goals of Medi-Cal and the Coordinated Care Initiative include saving general funds, creating a seamless service delivery experience, improving the quality of care, providing a more efficient care delivery system and promoting community based vs. institutional care whenever possible.

  2.  

  3. Presently, there is no appropriate rate category for Medi-Cal beneficiaries who choose to receive their care in community-based licensed residential facilities.  Beneficiaries who choose to reside in licensed residential facilities  are misclassified as “Community Well/Healthy” even when they require too much care to remain at home. 

  4.  

  5. The rate structure is flawed when a beneficiary who requires too much care to remain at home or is institutionalized in a SNF is designated as "healthy" when he/she chooses to receive care in a licensed residential facility.  The current rate structure does not provide a financial incentive for managed care plans to offer their members care in a licensed residential facility.

  6.  

  7. The current rate structure is not aligned with the CCI policy goals of spending Medi-Cal dollars wisely and promoting community-based vs. institutional care whenever possible

  8.  

  9. Instead of promoting Olmstead, the current CCI and SPD-MLTSS rate structures create perverse fiscal incentives that force beneficiaries into SNFs instead of allowing them to receive care in community-based licensed residential facilities. 

  10.  

  11. SNF Transition to Licensed Residential Facility:

  12.  

  13. 6.     According to the SCAN Foundation/AARP 2017 Long-Term Services and Supports Scorecard[2], nearly 11% of nursing home residents in California have low level care needs which implies they could thrive in less-restrictive, more-integrated settings. This number represents 11,000 individuals receiving long-term care in nursing facilities.

  14.  

  15. The CCI Medi-Cal managed care plan rate for individuals considered “institutional” – receiving long-term care in a SNF - is approximately $5,300/month.  (This is from 2014 rate tables, the new rate tables for 2018 have not been generated yet). https://static1.squarespace.com/static/5513063be4b069b54e721157/t/56db4a832b8dde6053576d6d/1457212035228/mltssrates.pdf

  16.  

  17. The SPD Medi-Cal managed care plan rate for individuals considered “institutional” – receiving long-term care in a SNF - is approximately ? month.

  18.  

  19. If the Medi-Cal program paid the plans a rate that was 75% of the institutional rate (e.g., $3,750) for CCI members transitioning from SNFs to licensed residential facilities, the savings per 100 members would be $1.5 million. For 500 members, the savings would be $7.5 million.

  20.  

  21. SNF Diversion to RCFE:

  22.  

  23. IHSS limits monthly service hours to 195 hours per month for non–severely impaired applicants and 283 hours per month for the severely impaired.

  24.  

  25. Many beneficiaries with significant disabilities or cognitive impairments require too much care to remain at home (e.g., people with Alzheimer’s who require 24-hour protective supervision).

  26.  

  27. Beneficiaries who live at home and have high levels of unmet care needs can be at high risk for avoidable emergency room visits, avoidable hospitalizations, hospital readmissions, adverse health outcomes, and premature or avoidable institutionalization.

  28.  

  29. According to Kaiser Health News nearly one in five Medicare patients, including dual-eligibles, are readmitted to the hospital for the same condition within one month of discharge. In the 2019 fiscal year that begins Oct. 1, 215 of 292 hospitals evaluated across California will be hit by readmission penalties that can involve as much as three percent of Medicare fee-for-service reimbursements. Therefore, programs that reduce readmissions are critical.

  30.  

  31. 14.  Eligible SNF diversion participants will meet SNF level of care criteria using tools similar to how MSSP and PACE determine who is SNF-eligible.

  32.  

  33. 15.  Eligible SNF diversion participants must be authorized to receieve a minimum of 195 hours of IHSS per month (which in L.A. County as of January 2019 is a cost of 195 x $12/hour rate =  $2,340/month). IHSS hourly wages are different in each county.

  34.  

  35. 16.  Facilities participating in the pilot will receive reimbursement from a combination of sources: from the beneficiary’s SSI/SSP, to cover room and board, and from the health plan, to cover care coordination, medication management, and support with activities of daily living (ADLs). Medi-Cal dollars will not be used for housing.

  36.  

  37. Medi-Cal managed care plans will develop SNF diversion/transition programs which include quality control and quality improvement measures for licensed residential facilities in their contracted provider networks and person-centered planning that includes Medi-Cal beneficiaries and their families or caregivers.

  38.  

  39. SNF Diversion/Transition pilot programs will be budget neutral.

  40.  

  41. SNF Diversion/Transition pilot programs will be evaluated on a yearly basis by DHCS.

  42.  

  43. Information about CCI SNF Diversion/Transition pilot programs will be publically accessible via the internet for stakeholder and consumer advocacy groups.


[1] Measuring the Activities of Daily Living: Comparisons Across National Surveys” https://aspe.hhs.gov/basic-report/measuring-activities-daily-living-comparisons-across-national-surveys

[2] http://www.longtermscorecard.org/~/media/Microsite/State%20Fact%20Sheets/California%20Fact%20Sheet.pdf

 [L1]We’ll have to re-do this once the 2018 rates are released, but fir now, let’s keep this as a placeholder