October 2006

Dispelling Medicaid Myths

 I.      Summary of Issues

Intermediate Care Facilities for Persons with Mental Retardation (ICFs/MR) are the least restrictive setting for most people with severe and profound mental retardation, multiple disabilities, extreme functional limitations, chronic medical conditions and behavioral challenges. Studies have shown that lifeline services in ICFs/MR - an optional Medicaid benefit – are provided at costs comparable to the costs of providing such services in the community, and sometimes for even less, due to the extensive and specialized needs of the residents.[i] Furthermore, total community costs include a variety of federal and state funding sources, in addition to Medicaid, in contrast to ICFs/MR funding, which comes solely from Medicaid.[ii]

Since 1995, the number of ICF/MR residents nationwide has declined as higher functioning people have moved, leaving behind the most vulnerable people who are the most expensive to care for in ICFs/MR.  As a result, in 2005, ICF/MR spending comprised about a quarter (25.8%) of total Medicaid long-term care expenditures for people with MR/DD while community spending accounted for nearly three-quarters (74.2%).

While total Medicaid spending over the past decade has increased by 98.28%, and community spending by 267.5%, expenditures for ICFs/MR have increased by only 25.9%. In 2005, ICF/MR spending comprised only 20% of total Medicaid “institutional” (ICF/MR plus nursing home) expenditures.

From 1977 to 2004, overall fiscal commitment (“fiscal effort”) to community programs, as measured by the total amount spent from state and federal sources for MR/DD services per $1,000 of citizens’ personal income, increased by 486%. In contrast, institutional spending declined by 51%.

As Medicaid reform is pursued with an eye toward program effectiveness and cost efficiency, VOR encourages Medicaid Commission Members to view favorably the ICFs/MR program. These facilities are providing highly specialized, cost effective, high quality care for our nation’s most vulnerable citizens.

II. There is no Medicaid “Institutional Bias” for Persons with Mental Retardation and Developmental Disabilities (MR/DD)

The allegation of a Medicaid institutional bias for people with MR/DD is simply not true. The origin of the myth relates to two factors. 

The first is the historical combining of figures for the nursing facility program with the ICFs/MR program to comprise a total figure for “institutional spending.” This co-mingling of people and services throws together people with MR/DD and the services they require with the much larger physically-disabled demographic, including the elderly, and the services they require.  

The second is labeling all “institutional” services as mandatory and all community services as “optional.”  As a matter of fact, nursing facility care is mandatory but ICF/MR care and community care are both optional Medicaid services.

Separating out ICF/MR funding from nursing home care “institutional” figures and comparing just the funding for people with MR/DD leads to dramatically different conclusions:

A) ICFs/MR comprise only 20% of total Medicaid “institutional” spending. Nursing Facilities (NFs) (also called “nursing homes”) account for 80% of total Medicaid “institutional” spending (Figure 1).   

B) Furthermore, when funds for persons receiving MR/DD services are separated out, only 25.8% of total Medicaid dollars goes to ICFs/MR (MR/DD institutions) while 74.2% is spent for community-based services (Figure 2).

C)  From 1977 to 2004, overall fiscal commitment (“fiscal effort”) to community programs, as measured by the total amount spent from state and federal sources for MR/DD services per $1,000 of citizens’ personal income, increased by 486%. In contrast, institutional spending declined by 51% (Figure 3).

Figure 1[iii] Total (state + federal) Medicaid Long Term Care         Figure 2[iv] Total (state + federal) Medicaid Expenditures   

Expenditures for Institutional Settings                                          for MR/DD  in ICFs/MR and HCBS

III. Intermediate Care Facilities for Persons with Mental Retardation (ICFs/MR) are not the cause of Medicaid growth and must be preserved as an option for our most needy, most medically fragile and/or behaviorally complex citizens with severe and profound mental retardation

The ICF/MR program is not the cause of rising Medicaid costs. It is a tiny and falling percentage of all Medicaid funding and a good investment for both the federal government and the states to care for their most needy citizens (see Charts 1 and 2, and Figure 4, below).

From 1995 – 2005, expenditures for -

 ü     Medicaid increased by 98.28%

ü     Community increased by 267.5%

ü     ICF/MR increased by only 25.9%

Chart 1: 1995 – 2005: Medicaid, Nursing Homes, Community, and ICFs/MR expenditures ($ in billions)[i]

Figure 4: 1995-2005:  Community v. ICFs/MR expenditures ($ in billions) [viii]

IV.   Conclusion

 

The myth of an “institutional bias” in Medicaid, coupled with Medicaid “rebalancing” initiatives, as applied to services for persons with MR/DD, can have dangerous consequences for our most fragile citizens.

Federal and State efforts to “rebalance” the system by increasing community supports at the expense of “institutional” (including ICF/MR) options, places at risk the ICF/MR option. ICFs/MR may become uneconomical and extinct, risking the health, safety and very lives of people with severe and profound mental retardation.

While there is an ongoing need to expand community-based options, it is indefensible to do so at the expense of an exceedingly fragile population.

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