The Myth of an “Institutional Bias” in Medicaid

for Persons with Mental Retardation and Developmental Disabilities

Often it is alleged that 70% of all Medicaid long-term care dollars pay for institutional care. Globally, this is true. Specifically, related to the mental retardation and developmental disabilities (MR/DD) population, it is not true. The Medicaid program for long-term care spends more dollars and supports more people with MR/DD in the community, including in the Home and Community Based Services (HCBS) waiver program, than for those in Intermediate Care Facilities for Persons with Mental Retardation (ICFs/MR).

What then, is the basis for the 70% myth? The answer lies in the fact that the Medicaid program covers more than people with MR/DD; it also covers people who reside in nursing facilities (NF), most of whom are elderly[1]. The so-called institutional bias in the numbers occurs because Medicaid defines “institutional care” to include all Medicaid-eligible populations, the vast majority of whom reside in NFs. The facts are far different when one separates the MR/DD and elderly populations. 

The “institutional bias” of Medicaid myth as applied to services for persons with MR/DD can have dangerous consequences for our most fragile citizens. For example, proposals such as Money Follows the Person (MFP) and the Medicaid Attendant Services and Supports Act (MiCASSA) are motivated by a desire to “rebalance” the system by increasing community supports at the expense of “institutional” (including ICF/MR) options. In this process, ICF/MR care may become uneconomical and extinct, risking the health, safety and very lives of people with severe and profound mental retardation if these facilities close. While there is a great need to expand community-based options, it should not be done at the expense of another Medicaid population. Focus on expansion must address the areas of greatest need for people with MR/DD – the provision of quality community options, including ready access to health care services, and helping those on waiting lists for services.

Here are the facts about the Medicaid program:

·         Nearly 70% of the Medicaid funds for long-term care (for both people with MR/DD and the elderly) are spent for services provided in “institutional” settings. However, only 20% of this funding is for people with MR/DD who reside in ICFs/MR (Table 1).

·         When one looks at only Medicaid expenditures for persons with MR/DD who reside in ICFs/MR and in HCBS, it turns out that Medicaid spends more for community services (55%) than for institutional care (45%). (Table 2). Note: NF expenditures for MR/DD residents, who are only 2.4% of the NF population, are excluded from Table 2 because reliable data could not be located.

Table 1            [2]                                                                       Table 2[3]

·         HCBS recipients comprise 74% of MR/DD residents in Medicaid-funded long-term care settings. ICFs/MR recipients make up just 20% and the remaining 6% reside in nursing facilities (Table 3). 

·         Medicaid-funded HCBS and other community residences, as compared to ICFs/MR, comprise 95% of the residential placement options for persons with MR/DD (Table 4). These figures exclude individuals with MR/DD receiving services in the family home or their own home, which represents an additional 500,004[4] people receiving non-residential community-based services, although it is unclear what percentage of this amount is Medicaid-supported.  

Table 3[5]                                                                       Table 4[6]

·         79.7% of individuals who reside in ICFs/MR have severe and profound mental retardation and require 24-hour around-the-clock care for their safety.  Nearly half (47%) of these same residents have two or more additional conditions, and nearly all need help walking, toileting, eating, dressing and/or communicating verbally.  By sharp contrast, the vast majority of people with MR/DD who reside in the community are far higher functioning individuals with little or no need for intensive care services.

·         A 2003 peer-reviewed study by Kevin Walsh, Ph.D., concluded that “From the studies reviewed here, it is clear that large savings are not possible within the field of developmental disabilities by shifting from institutional to community placements.”  Thus, if more funds were spent to move people from ICFs/MR, little or no money would be saved, unless the quality of the lives of the clients were reduced through lesser quality care and services.

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