U.S. Department of Health and Human Services

Enabling Personal Preference: The Implementation of the Cash and Counseling Demonstration in New Jersey

Executive Summary

Barbara Phillips and Barbara Schneider

Mathematica Policy Research, Inc.

March 2003

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This report was prepared under contract #HHS-100-95-0046 between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and the University of Maryland. For additional information about the study, you may visit the DALTCP home page at http://aspe.hhs.gov/daltcp/home.shtml or contact the ASPE Project Officer, Pamela Doty, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 20201. Her e-mail address is: Pamela.Doty@hhs.gov.

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ACKNOWLEDGMENTS

Many people have contributed to this report, and several deserve special mention. Dr. Kevin Mahoney, National Project Director, Cash and Counseling, now at Boston College, has guided the demonstration and evaluation from its inception and has been unfailingly helpful. In addition, Dr. Mahoney's comments on an earlier report in this series helped us sharpen the lessons presented here. The thoughtful, thorough comments of Dr. Lori Simon-Rusinowitz, Deputy National Project Director for Cash and Counseling, Center on Aging, University of Maryland, on an earlier report also helped us improve this report. Dr. Pamela Doty, Senior Policy Analyst, Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, has been a devoted supporter of the demonstration and evaluation. Her comments on an earlier report challenged us to think more broadly about the lessons we can draw from New Jersey's experience with the Cash and Counseling model.

Dr. Randall Brown, Project Director, Evaluation of the Cash and Counseling Demonstration, Mathematica Policy Research, Inc. (MPR) and Ms. Jennifer Schore, Deputy Project Director for the evaluation, provided careful, thorough comments that helped us improve this report.

Special thanks also are due to members of the Personal Preference staff. They include William Ditto, Project Director, Carolyn Selick, Project Manager, and Renee Davidson, Coordinator of Consultants, who cheerfully and insightfully answered our seemingly endless questions. We also thank the state enrollment specialist whom we interviewed.

We are also indebted to the others we interviewed during our visit to New Jersey, all of whom gave generously of their time. They include senior officials of the New Jersey government, members of the staff of the enrollment contractor, staff of several consulting agencies, staff of the fiscal agent, and representatives of the home care industry in New Jersey.

At MPR, we would like to thank Patricia Ciaccio, who carefully edited the report, and Marjorie Mitchell, who skillfully produced it.

Finally, we are deeply grateful to the people of New Jersey who participated in the demonstration, in either the treatment or the control group. Without their willingness to join in this endeavor, none of this would have been possible. We have learned much from them.

EXECUTIVE SUMMARY

About 1.2 million people receive disability-related supportive services in their homes through state Medicaid plans or home- and community-based waiver services programs. Under state plans, services are restricted largely to human assistance with personal care and homemaking and must be provided by licensed agencies. Additional services (such as adult day care and home modifications) and goods (such as assistive devices) may be offered under waiver programs. However, coverage of these additional services is often limited, and a case manager decides whether they are needed.

In contrast to these traditional service models, states are increasingly offering Medicaid beneficiaries and their families the opportunity to obtain personal care from individual providers--an alternative known as "consumer-directed" care.

Cash and Counseling is an expanded model of consumer-directed supportive services that provides a flexible monthly allowance for consumers to use to hire their choice of workers, including family members, and to purchase other services and goods. Cash and Counseling requires consumers to develop plans that show how they would use the allowance to meet their personal care needs and provides counseling and fiscal assistance to help them plan and manage their responsibilities. Consumers who are unable or unwilling to manage their care themselves may designate a representative, such as a family member, to help them or do it for them. These features make Cash and Counseling adaptable to consumers of all ages and with all types of impairments.

The Robert Wood Johnson Foundation (RWJF) and the Office of the Assistant Secretary for Planning and Evaluation (ASPE) of the U.S. Department of Health and Human Services are sponsoring a demonstration and evaluation of Cash and Counseling. A National Program Office operates from the University of Maryland, Center on Aging. The Centers for Medicare & Medicaid Services (CMS) is helping with the demonstration, primarily with technical assistance and obtaining waivers of federal Medicaid regulations. Mathematica Policy Research, Inc. (MPR) is evaluating the demonstration, which has been implemented in three states: Arkansas, Florida, and New Jersey. The evaluation uses a randomized design--half the enrollees are assigned to a treatment group to receive the cash allowance, half to a control group to continue in traditional supportive services.

This report describes the design and implementation of Personal Preference, New Jersey's model of Cash and Counseling. It also draws lessons from the state's experience. The report is based primarily on in-person interviews conducted in April 2001, about 18 months after the program began enrolling beneficiaries (November 1999). Interviews were conducted with New Jersey state officials, Personal Preference program staff members, officials of organizations representing the personal care industry in New Jersey, and staff members of organizations providing outreach, enrollment, consulting, and fiscal services under Personal Preference. (New Jersey used the term "consulting" rather than "counseling" in its demonstration.)

The Personal Preference Program

Program "Cashed Out" and Eligibility. New Jersey chose to "cash out" Personal Care Assistance (PCA) under its state Medicaid plan. It did not cash out any of its seven Medicaid home- and community-based waiver programs, which provide a variety of services to special populations, such as medically fragile children and frail elderly people with incomes above the usual Medicaid threshold. Only PCA clients were to be eligible for Personal Preference (including current recipients of PCA and those accessed by traditional personal care agencies and found eligible for PCA).

PCA clients who wished to participate in Personal Preference but were unable to manage their own services were eligible to enroll. They could name a family member or friend as a representative to act on their behalf if they were selected for the cash allowance.

Outreach and Enrollment. To identify eligible beneficiaries, New Jersey required that a personal care agency send the Personal Preference program a form with contact information for each beneficiary assessed or reassessed for PCA. The form also included information on care plan hours, which was used in determining the amount of the cash allowance for demonstration participants assigned to the treatment group.

The state did not work through personal care agencies to conduct outreach for Personal Preference; instead, it contracted with other organizations and hired state employees. Some agency staff members were concerned that the quality of care would suffer under Personal Preference, others that it would affect agency revenue and their employment. Therefore, New Jersey avoided working through agencies, out of concern that some agency staff might discourage PCA clients from participating in Personal Preference.

Although some agency staff members reportedly did discourage participation in the demonstration, personal care agencies were cooperative overall. The industry believed that the program was appropriate for some people with disabilities, and it had a long history with and professional respect for the director of Personal Preference. Moreover, Personal Preference responded to an important industry concern by discouraging consumers from hiring their agency aides.

During the demonstration, New Jersey both contracted with other organizations and hired state employees to conduct outreach and enrollment for Personal Preference. Concerned about possible delay in hiring state employees, New Jersey initially amended the contract of an organization that was helping the state market Medicaid managed care, adding responsibility for outreach and enrollment under Personal Preference. State Personal Preference staff mailed materials on the program to PCA recipients. Staff of the enrollment contractor telephoned and visited those who received materials to explain the program and enroll them if they wished to participate. Despite revisions to outreach and enrollment procedures, however, the pace of enrollment consistently fell below the contract target, and costs were higher than anticipated. Therefore, Personal Preference decided to hire state employees to conduct outreach and enrollment and was able to do so after substantial delay. (Because of attrition of state-employed enrollment staff later--after spring 2001--New Jersey again obtained a contractor for outreach and enrollment. It did so this time by amending the contract of the organization providing fiscal services under Personal Preference.)

The day-to-day outreach and enrollment activities of the enrollment contractor and the Personal Preference program were coordinated using a common database. This database was initiated with the contact and care plan information that personal care agencies provided and combined with information from New Jersey's Medicaid program. It was updated weekly as outreach and enrollment continued.

Ultimately, about 1,750 people participated in the Personal Preference Demonstration in New Jersey (in the treatment and control groups combined). They enrolled between December 1999 and June 2002.

Determining the Amount of Allowance. New Jersey based the amount of the cash allowance on the current PCA care plan. Hours planned were cashed out at the hourly rates the state paid for weekday and weekend PCA services (in New Jersey, care plans differentiate between weekday and weekend hours). At about the time of our visit, the amount of the allowance ranged from about $300 to about $2,800 a month. The average was about $1,300.

No discounting was applied in determining the amount of the allowance under Personal Preference. (Discounting is intended to ensure the budget neutrality of the cash program when the cost of services received is less, on average, than the cost of services planned--a result, for example, of hospital admission of consumers or an insufficient supply of aides). While planning the demonstration, New Jersey had determined that the historical cost of PCA services received was approximately equal to the cost of services planned--an indication that discounting was unnecessary.

Reassessment. PCA recipients are reassessed in New Jersey at six-month intervals. Nurses employed by personal care agencies do the reassessments, using a structured form that the state developed. To mimic this process, Personal Preference arranged for nurses employed by the Medicaid program to conduct reassessments of cash recipients, using the same form as that used for agency service recipients. This procedure eliminated the possibility that consultants--acting as advocates for consumers--might increase care plan hours (and, thus, the amount of the allowance).

Cash Planning and Uses of Cash Allowance. Before receiving a cash allowance, Personal Preference required that consumers develop a plan for its use. A member of the state Personal Preference program staff had to approve all cash management plans and all revisions to those plans.

Nearly all consumers who received a cash allowance hired a worker--usually a family member or friend--with the funds. New Jersey exercised its option under demonstration waivers to allow consumers to hire legally liable relatives. Thus, consumers in Personal Preference could hire their spouses. (Under federal regulations, spouses are the only legally liable relatives of adults.) Some consumers also purchased assistive equipment and personal care supplies (not covered by Medicaid) with the allowance, and a few modified their homes (for example, by adding a ramp).

Consulting Agencies. Initially, New Jersey recruited a large number of human service agencies across the state to provide consulting under Personal Preference. It did this to best serve New Jersey's culturally diverse population and to provide consumers with a choice of consulting agencies. To help in recruiting these agencies, New Jersey made agency participation administratively straightforward by signing memoranda of agreement (rather than contracts) with agencies providing consulting. Ultimately, 34 agencies signed such agreements. Some were public (for example, county departments of social services); some were private, nonprofit (for example, an Independent Living Center); and some were private, for-profit (for example, an agency that provided case management services).

Over time, the number of consulting agencies dropped dramatically (there were 12 in spring 2001). Some agencies withdrew from the cash program (partly because of competing demands on staff time), and Personal Preference dropped agencies not performing satisfactorily. It was possible to have fewer consulting agencies, partly because consumers did not have experience or information to help them choose an agency and did not particularly value having a choice. Therefore, the program began assigning consumers to agencies.

Personal Preference paid the consulting agency a lump sum to complete the cash management plan (initially $53, later increased to $75) and thereafter an hourly fee for consulting (initially $18, increased to $26). Rates were increased in part because agencies reported that the initial rates covered the cost of salaries, but not the cost of fringe benefits and other overhead.

The approach that Personal Preference adopted for payment for consulting services limited the state's costs for consulting. In addition to the single, lump-sum payment for development of the initial cash management plan (no matter how much consultant time was required to complete it), the cost of hourly consulting services was capped by limiting payment to 19 hours (later, 20 hours) annually per consumer.

New Jersey did not require Personal Preference consultants to have professional credentials, but most were human services professionals. Given the number of consulting agencies and the overall Personal Preference caseload, the caseload of most agencies was not large. At the time of our visit, most agencies had small caseloads and only one or two consultants, who also had other agency responsibilities.

Consultants had many responsibilities under Personal Preference. They visited treatment group members to help them prepare their initial cash management plans and revisions to plans. They then submitted the plans to the state Personal Preference office for approval. Consultants also advised consumers about the nonfiscal responsibilities of an employer, including recruiting, hiring, training, supervising, and (if necessary) firing workers. In addition, consultants monitored the condition of the consumer, speaking to consumers by telephone at least monthly (for the first six months after enrollment) and visiting them quarterly. Consultants were not responsible for monitoring the uses of the cash allowance.

Fiscal Services. Personal Preference issued a solicitation for a single organization to provide fiscal services for consumers across the state. After a long process, including a legal dispute contesting the organization chosen initially, the state signed a contract with a New Jersey organization that provided a variety of human services. (Later, this organization provided consulting, outreach, and enrollment services in addition to fiscal services.)

The major fiscal services provided to Personal Preference consumers were assistance with preparation and submission of payroll tax returns and other documents (including those pertaining to federal and state payroll taxes and state unemployment insurance) and check-writing services. The fiscal agent implemented strict procedures for comparing timesheets and check requests with the cash management plan before checks were cut.

Personal Preference allowed consumers to receive the allowance in cash and accept full responsibility for its management (including payroll taxes), but they had to pass a skills examination before doing so. At the time of our visit, no consumers were managing the allowance themselves. Rather, the fiscal agent was holding the allowance on behalf of each consumer and disbursing funds in accordance with his or her cash management plan.

The fiscal agent earned fees from consumers for fiscal services that they used, and it earned fees from the state for the other services it provided to consumers. A schedule of charges was developed. Consumers were charged for such tasks as cutting a check (75 cents per check) stopping payment on a check ($28 per stop-payment order), and arranging for a criminal background check ($15 to $60, depending on the extent of the search). The fiscal agent charged the state for other tasks, such as processing W-4 forms and other forms in worker employment packets ($90 per packet).

New Jersey also provided the fiscal agent with start-up funds. Before there was a substantial caseload of cash recipients, the fiscal agent had a serious cash flow problem and obtained an internal loan from its host organization. New Jersey had intended that the up-front payment of start-up funds would limit cash flow problems; however, the fiscal agent used these funds mainly to purchase office equipment for its Personal Preference operation.

Lessons from Personal Preference

New Jersey's experience provides many lessons about operating a consumer-directed cash allowance program under Medicaid. The state was willing to learn from its experience and to try a different approach if problems arose.

Outreach and Enrollment

• Self-screening of personal assistance recipients for appropriateness is workable. It would have been difficult (if not impossible) to develop a formal process to identify in advance consumers who would be unable to manage the cash benefit, either by themselves or with the help of representatives. Instead, Personal Preference relied on consumers and representatives to screen themselves, and this approach worked.

• Providing for language diversity is important and possible in a consumer-directed program. Non-English-speaking consumers may be able to benefit greatly from hiring workers who speak their languages and are familiar with their cultures. Personal Preference hired staff members who spoke the languages most common in New Jersey. It also translated program materials into these languages, prepared a notice in 14 languages asking consumers to have materials translated, asked family members and friends to translate, and used the AT&T language line.

• Information should be available in multiple media to accommodate those with vision and hearing impairments and those who are not competent readers in any language.

• To keep program costs down, efficiency in arranging home visits to describe the program and enroll beneficiaries is important. Travel time can be reduced by scheduling visits on the same day to several beneficiaries in the same area. Repeat visits can be avoided by having family members present during the initial enrollment visit, even if that visit has to be scheduled outside of business hours.

• To conduct outreach and enrollment, external contracting is not necessarily better than the hiring of state employees (or vice versa). Neither the Personal Preference enrollment contractor nor state employees were able to sustain an enrollment pace that met the sample-size target for the evaluation.

• While both elderly adults and younger adults with physical disabilities found Personal Preference attractive, younger adults appear to have been more likely to enroll. More than half (53 percent) of those enrolled in the demonstration were elderly beneficiaries. However, younger adult participants in the Personal Preference demonstration represented more than 20 percent of the number of non-elderly adult PCA recipients in New Jersey in the year before the demonstration, while the elderly participants represented just over 10 percent of the number of elderly PCA recipients that year. Thus, the cash program in New Jersey attracted a substantial minority, but not a majority, of adult Medicaid personal care recipients.

Consulting Agencies

• Cash allowance programs may find it difficult to recruit enough agencies to provide consumers across the state with a choice of agencies providing satisfactory consulting services. New Jersey had difficulty recruiting multiple agencies in some parts of the state and dropped some agencies out of dissatisfaction with the consulting services provided.

• Consumers do not necessarily value having a choice of consulting agencies. Most Personal Preference consumers did not have knowledge about or experience with the agencies offering consulting and did not seem to value having a choice.

• Agencies of a variety of auspices can satisfactorily provide consulting. Satisfactory consulting services were provided to Personal Preference consumers by public; private, nonprofit; and for-profit agencies.

• A minimum agency caseload is necessary for efficient provision of consulting. This caseload needs to be large enough to support a single consultant, working for an appreciable portion of time on the Cash and Counseling program. Consultants with small caseloads have difficulty staying up-to-date on program procedures and policies. Having a single consultant per agency can work, although that consultant needs peer support, supervision, and backup.

• Having 10 to 15 consulting agencies statewide can work. Having a large number of consulting agencies consumes program staff time to recruit (and replace) agencies and to ensure the quality of consulting services. By spring 2001, 12 agencies (down from 34) were providing Personal Preference consulting, and the state program staff was satisfied with their performance.

Cash Planning and Consulting Services

• Careful planning of the initial consulting home visit reduces the need for multiple visits and thus cuts delays in receipt of the cash allowance and program costs. Before the initial consulting visit, Personal Preference consumers were asked to begin to think about how to spend the allowance, whom to hire, and whether to name a representative. Family members and friends who were potential workers and representatives were asked to be present.

• Revisions to the cash management plan are frequently necessary. Because expenditures are checked against the cash management plan, the plan must be revised to reflect changes in consumer need, and such changes occur frequently.

• The need for revisions to cash management plans can be reduced by writing flexible plans, and the cost of revision can be reduced by automation. Personal Preference reduced the number of situations in which a revision was required by writing flexible cash plans that did not name workers or vendors. The program entered the cash plan into an electronic spreadsheet, thereby speeding recalculation of plan totals.

• Consumers need varying amounts of consultant assistance, with some needing a substantial amount. Some Personal Preference consumers needed substantially more consulting assistance than others did, and some needed substantially more than expected. The 19 hours of consulting a year for which Personal Preference would pay (after the cash plan was in place) was sometimes exhausted.

Representatives

• Many consumers participating in the Cash and Counseling model will name a representative to help them manage the cash allowance. Personal Preference consultants reported that up to two-thirds of elderly beneficiaries named representatives. Sometimes, the family (rather than the consumer) wanted a representative named.

• Representatives are usually family members or friends who are already helping the consumer.

• The need for a representative depends on the availability of training from consultants, familiarity with the cash program, and availability of supportive equipment--as well as consumer disability. As consumers learn about the cash program from consultants, the consumer may take over management of the allowance from a representative. Rarely, supportive equipment (such as a talking computer for a blind consumer) can eliminate the need for a representative.

• The role of the representative can vary considerably. While the representative was the sole decision maker for those Personal Preference consumers who were completely unable to communicate their preferences, both the consumer and representative typically contributed to the management of the cash allowance under Personal Preference. In some cases, representatives solicited consumer preferences; in other cases, consumers and representatives functioned as a team. Sometimes, the consumer was the primary decision maker and the representative functioned as a liaison to the outside world.

• Representatives successfully manage the cash allowance on behalf of consumers. Consultants judged that representatives were obtaining input from the consumers when possible and were faithful to the best interests of the consumers.

Amount of Allowance

• The appropriate discount rate may change over time. New Jersey personal care industry sources reported a substantial reduction during the demonstration in average hours of personal assistance received, as a result of a state utilization review. Hours received also may have been reduced by changes in the supply of aides as the unemployment rate fell. These changes may have resulted in a change in the ratio of the cost of hours of care planned to hours of care received, and possibly a need to introduce a discount rate for Personal Preference.

Uses of Cash

• Restrictions on the use of the cash allowance need not trouble consumers. Most consumers did not find the Personal Preference program's restrictions on the uses of the cash allowance troublesome. While insisting that purchases be related to the need for personal assistance, the program fostered creative use of the allowance and interpreted it broadly.

• The Cash and Counseling model appears to tap a new source of personal assistance workers--family members and friends. Program staff reported that most workers hired by consumers were willing to assist a loved one but were not interested in agency employment. Family members and friends can help people whom agencies were not able to serve fully.

Time to Receipt of Cash Payment

• Streamlined procedures can reduce time to receipt of the first cash payment. Under Personal Preference, the time required for each of the steps leading up to receipt of the cash payment could appreciably delay its receipt. Elimination of consumer choice of consulting agencies reduced delay to receipt of the first cash payment, and Personal Preference decreased notice time to personal care agencies regarding consumers about to receive their first cash payments.

• Communication problems can be serious enough to increase the time to receipt of the first cash payment. With four major actors (consumer/representative, consultant, state program staff, and fiscal staff), there were 12 one-way communication pathways under Personal Preference. From this perspective, it is not surprising that communication was sometimes serious enough to delay receipt of the first cash payment.

• Efficient procedures can reduce communication problems. Personal Preference improved communication by training consumers about whom to call for what issue, adding an explanation of errors in exception reports from the fiscal agent, and using multiple-party telephone calls to reduce the need for several one-on-one calls.

Consumers as Employers

• Almost all consumers (including those with representatives) prefer to have a fiscal agent handle payroll functions and disburse funds from the allowance. Although Personal Preference consumers paid modest fees for the services of the fiscal agent, they overwhelmingly chose to delegate responsibility for payroll functions and check writing to the fiscal agent.

• Recruiting is critical for those consumers who do not have family or friends available to hire as workers. Personal Preference program staff reported that the receipt of the cash allowance was delayed for consumers who had difficulty recruiting a worker and that those who could not recruit a worker tended to drop out of the program. (Since our visit, New Jersey has moved to develop a worker registry to assist consumers in recruiting workers.)

• Almost all consumers (who are able to recruit workers) learn to fulfill the non-fiscal responsibilities of employers. Personal Preference consumers (and representatives) varied with respect to the amount of consultant training they needed on hiring, training, supervising and firing workers. However, even those who needed a substantial amount of consultant assistance, learned in time to fulfill successfully the non-fiscal responsibilities of an employer.

Avoiding Abuse and Exploitation

• Abuse of a cash allowance--even an allowance of a substantial amount--can be prevented by careful development of a management cash plan, followed by strict enforcement of procedures to ensure payment for only those goods and services allowed under the plan. Personal Preference cash allowances averaged about $1,300 a month at the time of our visit. Every cash management plan (including every revised plan) was reviewed to be sure that only allowable goods and services were included, and the fiscal agent rigorously checked every disbursement against the cash plan. Review of receipts was not required in Personal Preference and thus was unimportant in preventing abuse of the cash allowance in New Jersey.

• Neglect and exploitation of consumers can be eliminated before cash payment is made if members of the program staff are mindful of the possibility and attentive to cases in which something seems amiss. Under Personal Preference, the few cases of potential neglect or exploitation were identified before or during the first home visit by consultants. These cases were resolved before the consumers received their first cash payment.

Value of Counseling and Fiscal Services to Consumers

The tenet of the Cash and Counseling model that most distinguishes it from other benefit and voucher programs is the provision of counseling and fiscal services to help consumers manage the cash allowance. Clearly, consumers valued having fiscal services available. Although consumers were charged fees for fiscal services, almost all chose to use the fiscal agent.

The value of consulting services is more difficult to assess. Consumers varied greatly in the amount of advice and assistance they needed from consultants. Many needed oral explanations of the program and its procedures, in addition to written materials. Some needed a great deal of assistance as they developed a cash management plan, recruited workers, and fulfilled the other responsibilities of an employer. Overall, consulting seems to have been very valuable--perhaps essential--to the success of the cash program in New Jersey. Future analysis of surveys that asked consumers about their satisfaction with consultants will shed more light on this issue.

Future Cash Program?

New Jersey views a consumer-directed cash program as a valuable part of a package of programs within its Medicaid state plan designed to meet the needs of its citizens. The state is working to offer an ongoing waiver program similar to Personal Preference and is interested in expanding the personal assistance benefit to include equipment so that it can offer a consumer-directed program similar to Personal Preference without waiver authority.

The Full Report is also available from the DALTCP website (http://aspe.hhs.gov/daltcp/home.shtml) or directly at http://aspe.hhs.gov/daltcp/reports/enablepp.htm.