See the on-line article published in the National Association of Social Workers California newsletter (October 2015).

Twisted Logic: Why is designing smart public policy to keep our frail elderly out of nursing homes such a problem for California?

By Jason Bloome

The CCI/ALW Fact Sheet, May 2014, page 2, Question #4: Do Coordinated Care Initiative Managed Care Organizations (CCI MCOs) have to provide Assisted Living Waiver (ALW) services?

"No. CCI MCOs do not have to offer waiver services. The CCI MCOs have the option to offer services similar to waiver services, but are not required to offer these benefits. Plans might choose to offer services similar to waiver services in order to assist the beneficiary in residing in their home or community safely."

The Department of Health Care Services, July 2015: "A CCI MCO may develop their own program(s) to pay for residential care facilities for the elderly (RCFEs) and are not dependent on ALW."

The Department of Health Care Services, July 2015: "The [CCI] criteria does not include residing in an RCFE."


Imagine the following scenarios: Mr. Johnson, age 83, is in the hospital due to numerous falls;  Ms. Adams, 93, is at home with failing sight; and Ms. Davis, age 75, is newly arrived at a skilled nursing facility (SNF) for short-term rehabilitation services due to a broken hip.

All three are dual-eligible (on Medicare and Medi-Cal) and require 24-hour custodial care assistance with dressing, bathing and help out of bed.  Mr. Adams has trouble walking and Ms. Davis requires a wheelchair.  All lack family financial and caregiver support and need too much care to remain at home (e.g. require more than the maximum allowable IHSS hours - 283 hours/month).  A social worker discusses with each of them the care housing options which include residing at a SNF or in a residential care facility for the elderly (RCFE).  

In Olmstead vs. L.C. (2009) the federal government reaffirmed the rights of the low-income elderly and disabled to live in a community based vs. institutional setting whenever possible.  So what is California actually doing to comply with Olmstead for the frail, low-income elderly with custodial care needs who would like to receive their care in RCFEs?    

The only program that currently allows Medi-Cal to pay for RCFEs is the Assisted Living Waiver (ALW) which currently operates in 14 counties.  Since its inception ALW has had many intractable problems. 

Few RCFEs participate with the program (in some counties there are less than 10 ALW providers), it does not allow participation by Medi-Cal recipients with a share of cost and, since the program was not designed with small 4-6 bed RCFEs in mind, more than 90% of all ALW participants reside in large 100+ RCFEs which frequently have one staff providing care to 20-30 residents.  

The ALW waitlist for SNF diversion (e.g. from home or the hospital) is approximately 8-10 months.  Applicants applying for SNF transition must be on long term support and services (LTSS) requiring a minimum 90-day continuous SNF stay.

Mr. Johnson (who is at the point of hospital discharge) and Ms. Adams (struggling with inadequate care at home) cannot wait 8-10 months for an ALW slot to become available.  Ms. Davis, who only requires a few weeks of SNF rehabilitation, does not meet ALW’s 90-day LTSS standard.

Could Medi-Cal funding for RCFEs come via California’s Coordinated Care Initiative (CCI)?  California began CCI in 2014 and has already enrolled tens of thousands of dual-eligibles with state contracted Managed Care Organizations (MCOs) to manage Medi-Cal (Managed Medi-Cal Long Term Support and Services – MLTSS) and in some cases Medicare expenses as well (Cal MediConnect - CMC).

According to the website: CCI MCOs“will be responsible for providing their enrollees all Medicare [CMC] and Medi-Cal benefits [CMC or MLTSS] and services, including medical care, long-term care, behavioral health care and social support.” Also, “strong consumer protections grounded in personal choice and continuity of care are key to the program’s success.”

“Managing long term care”, “providing strong consumer protections”, “personal choice” and “continuity of care” are noble objectives that should encourage CCI MCOs to develop cost efficient SNF Diversion/Transition to RCFE programs that save Medicare and Medi-Cal dollars and allow community based vs. institutional settings whenever possible.

Ideally, CCI MCO care coordinators would work with Mr. Johnson to transfer him directly from the hospital to a RCFE, Ms. Adams could transfer from home to a RCFE and Ms. Davis could transfer to a RCFE once she completes her rehabilitation.  By managing the SNF rehabilitation days (for Ms. Davis) Medicare dollars are saved and, since LTSS in a SNF is avoided (for Mr. Johnson, Ms. Adams and Ms. Davis), Medi-Cal dollars are saved as well.

Integrating RCFEs into the care continuum makes prudent sense for MCOs.  Care expenses for a RCFE (average cost: $2,500/month) is far lower than in a SNF (reimbursed by Medi-Cal: $5,300/month).  For every 100 people that benefit from SNF Diversion/Transition to RCFE the annual Medi-Cal cost savings is approximately $3,360,000.

Designing cost-efficient SNF Diversion/Transition to RCFE programs that encourage a large network of high-quality RCFEs to participate (e.g. by conducting monthly quality-check surveys with patients and their families, paying a fair market rate, streamlining billing and payment) will minimize waitlists, provide adequate bed capacity and allow CCI MCOs to maintain the continuity of care as dual-eligibles transfer from one care setting to another. 

Except, CCI does not allow this to happen.  It was not designed to accommodate RCFEs.  Instead, the emphasis is to avoid institutionalization by allowing low income seniors to stay at home as long as possible by coordinating care through the Multipurpose Senior Services Program (MSSP), Community-Based Adult Services (CBAS) and In-Home Supportive Services (IHSS) programs.   

The four CCI acuity levels are:

Long-Term Care or Skilled Nursing Facility (SNF) – residing in a SNF for 90 consecutive days or longer,

HCBS High – on MSSP, CBAS or IHSS with an indicator of severely impaired,

HCBS Low – on IHSS with an indicator of non-severely impaired and

Healthy  – "community well" or does not meet any of the preceding criteria.

There is no CCI acuity category for seniors who would like to receive their care in RCFEs.  Since they "do not meet any of the preceding criteria" they are unclassified and considered Healthy or "community-well".

CCI is seriously flawed when a senior who is “severely impaired” (HCBS High) while at home becomes "community-well" (Healthy) when he or she resides in a RCFE. The care needs of a senior does not change when he or she changes from one care setting to another.  

The Healthy CCI capitated payment is $124/month.  Paying CCI MCOs too little to pay for RCFE care while fully reimbursing them for SNF expenses is a sure-fire way to force the frail elderly into SNFs when they require too much care to remain at home.

Shouldn’t our policy makers be tearing down the barriers that prevent Olmstead instead of erecting new ones that make it more difficult for our frail low-income elderly to live in the care settings of their choice?  

The 2014 AARP/SCAN LTSS California report card estimates 11,785 new users of LTSS in SNFs could first receive services in the community (SNF diversion) and 10,727 longer term SNF residents on LTSS have low level care needs that could be met by community-based settings (SNF transition).  Many, if given the choice, would choose to reside in RCFEs. 

The only silver lining, if you could call it that, is that by pushing the care for tens of thousands of dual-eligibles into MCOs eventually those organizations will truly be able to “manage the care” and offer their dual-eligibles the choice of receiving care in the least restrictive setting.  Unfortunately, this change will not happen until the state changes the CCI rate tables to include RCFEs as an option for seniors "severely impaired" at home or in SNFs on LTSS.  Only then will CCI MCOs have fiscal incentives to promote SNF Diversion/Transition to RCFEs for seniors who could benefit from this option. 

What happens to patients like Mr. Johnson, Ms. Davis and Ms. Adams in the meantime?  The state cruelly, nonsensically, forces them to live in SNFs even when they do not want to be there.


Jason Bloome is owner of Connections–Care Home Referrals, an information and referral agency for care homes for the elderly in Southern California.  

For more articles about CCI and Medi-Cal funding for RCFEs see:

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