U.S. Department of Health and Human Services

Policy Issues Affecting the Medicaid Personal Care Services Optional Benefit

Executive Summary

Simi Litval, Ph.D., and Jae Kennedy, M.A.

World Institute on Disability
Research and Training Center on Public Policy in Independent Living

December 1991

The Purpose of this Study

This study analyzes how states are using the Medicaid Personal Care Services Optional (PC-Option) benefit. Under the PC-Option, state may choose to include personal care services in their state Medicaid plans, but are not required to do so. The only Federal requirements for the PC-Option are that personal care services be: (1) provided in the home; (2) authorized by a physician in accordance with the recipient's treatment plan; (3) supervised by a registered nurse (RN); and (4) provided by a qualified individual who is not a member of the recipient's family. The first requirement has been modified by Federal legislation passed in 1990 which allows states to offer services outside the home by 1994. There is great variability among states on interpretation of the other requirements. The states determine how physician authorization is obtained and what constitutes a treatment plan. States also determine the nature and scheduling of RN supervision, set qualifications for providers, and determine what types of family members are excluded from becoming paid service providers.

In order to formulate long-term services policy, the Department of Health and Human Services contracted with the World Institute on Disability (WID) for this study to provide accurate "baseline" information to inform future policy decisions regarding the PC-Option. The data in this report (unless otherwise noted) is based on two national surveys of personal assistance service (PAS) programs conducted in 1985 and 1990 by WID, as well as site visits to six states which utilize the PC-Option.

Research Findings

The PC-Option programs fill different niches in the community-based PAS systems in every state. The programs range from those which are small and insignificant parts of the state's long-term services system to those in which the major or only source of PAS in the state is the PC-Option program. Even in states with a multiplicity of programs there are people who are unserved or under served: no state serves everyone who needs PAS.

The target population for Medicaid PC-Option programs is defined in each state by income, age, disability and other miscellaneous eligibility requirements. These populations may include children, working age adults and older people with physical, cognitive, and psychiatric disabilities. It seems that historical circumstances and the political clout of certain population groups have often determined which groups are served in a given state. The perceived needs of the target populations often influence the structure of the programs in terms of service mix, hours available, degree of oversight, etc. Determining who is actually being served by these programs is often difficult, due to the inconsistency of the management information systems that are designed to collect demographic data. As states attempt to serve diverse and growing populations needing PAS, they may opt to expand existing programs or develop new ones.

Most programs offer a basic core of activity of daily living and instrumental activity of daily living services but chore, repair and maintenance services are rarely offered. Transportation and escort services, if offered at all, are usually limited to medical appointments. Almost half the PC-Option programs limit services to less than 40 hours per week, regardless of level of disability.

The provision of paramedical services, particularly "invasive procedures" (e.g., assistance with medications, injections, catheters or ventilators) is particularly problematic for PC-Option programs. Such services are usually not readily available to consumers who need them, due in part to legal restrictions set by state Nurse Practice Acts which usually prohibit non-licensed individuals other than family members from doing invasive procedures. State administrators often cite these laws, and concern over liability for negligence, as reasons for not providing paramedical services through their programs.

Due to the lack of adequate paramedical, chore, transportation and escort services, the PC-Option programs in most states do not enable significantly disabled individuals to be full participants in their communities unless they have sufficient informal or voluntary assistance to fill in service gaps. This situation does not appear to be improving: between 1984 and 1988 there was a slight decrease in the number of programs providing paramedical services, as well as a decrease in the number of programs offering services at any time during the day or week.

There are several different ways in which personal assistance providers are employed. Independent or individual providers experience different conditions of employment depending upon the program and state. They may be considered self-employed or employed by the disabled recipient. Agency providers work for non-profit or for-profit agencies, and are generally considered the employees of the agency which hires them. Government agency providers fall into two different categories: civil service employees with the same wage scale and benefit packages as other government employees of similar skill and rank, and contract workers, employed by state and county governments on a primarily part-time basis with rates of pay, working conditions and benefits similar to those of independent providers.

On the average, agency providers and government workers receive the best wages, and government civil service workers receive the most benefits. Independent providers are the most poorly compensated providers. There is a strong relationship between the number of hours an individual is able to receive from a program and the type of provider utilized: generally programs that use independent providers provide more hours of service.

State administrators say that managerial concerns, such as liability, workers compensation, and tax withholding have shaped the structure of their programs in terms of provider type. Many states addressed these concerns by utilizing homecare agency providers, thereby shifting liability from the state to private agencies. Other states which utilize independent providers have developed different ways of dealing with withholding. Because there are advantages to using either type of provider, these issues become very complex. Both agency and individual providers have a role to play in a comprehensive system of PAS.

There are a number of ways in which states and the Federal government have tried to influence the quality of the PC-Option programs. These include: state-level oversight of overall program compliance standards, case level oversight, nurse supervision of attendants, attendant training and screening, and recipient complaint and grievance mechanisms. All states have some of these quality assurance mechanisms in place. Which mechanisms a state employs depends upon its philosophy or view of quality assurance. Some states emphasize quality assurance from "below", i.e., training the recipient to recognize quality and providing avenues for problems to be addressed; while others relied on quality assurance systems from "above", i.e., paper reviews and site visits. Still other limit their efforts to minimum compliance with regulatory requirements.

In 1988, the Health Care Financing Administration (HCFA) proposed new regulations for the program in an attempt to more concretely define "personal care", service location, "home", provider, and the nature of physician and nurse involvement. HCFA collected comments on the proposed regulations, but has not promulgated new regulations. The degree to which the states meet the proposed HCFA criteria varies. Some would have to radically change their program to meet the proposed regulations.

The PC-Option programs on the average experienced a high rate of growth. Seven states have added the PC-Option to their Medicaid plans since WID's first survey in 1984. Between 1984 and 1988, the number of recipients grew 65 percent and expenditures grew 144 percent. Average expenditures are growing at a faster rate than caseloads, possibly due to program changes such as provider wage increases, increases in administrative costs, more intensive case management, and an increase in more significantly disabled recipients requiring more hours of service. Though some programs tightened their per recipient service allowances and limited the times in which services were available, these restrictions usually failed to limit the overall growth in program expenditures.

The Changing Role of the PC-Option in Home and Community-Based Service Systems

The Medicaid PC-Option has been a major source of public funding for home and community-based long-term services, and is currently experiencing significant growth at both a national and state level. In an era of shrinking state revenues, many states view the PC-Option as one of the few vehicles left for leveraging Federal dollars to expand PAS. Medicaid Waivers, despite their proliferation, have failed to bring PAS to most of the people who need it, as the waivers tend to be relatively small and targeted to special populations (i.e., Federal figures indicate that two-thirds of waiver spending goes toward services for people with developmental disabilities). In many states the number of people served through purely state or Social Service Block Grant funded programs have declined because of new fiscal restraints. The PC-Option has therefore become the mainstay of many states' home and community-based services systems.

The same fiscal climate which has contributed to greater utilization of the PC-Option has created pressure to contain PAS program costs. Despite the Federal match, Medicaid services are increasingly viewed as "budget busters" because of their entitlement status, and are coming under legislative and executive scrutiny. States vary dramatically in the degree to which they limit access to services, but all programs are caught between the growing demand for services and the need to contain costs.

The growth in caseloads and expenditures can also be attributed to expanding and diverse populations seeking services, i.e., children and adults (under and over age 65) with a variety of physical, cognitive, and psychiatric disabilities. One of the major questions raised by this study is whether -- or to what extent and by what means -- it is possible to accommodate the sometimes disparate needs of different populations in a single program.

Traditionally, "long-term care", whether provided in nursing homes or in home and community-based settings, has been primarily associated with the needs of persons over 65 who develop age-related functional disabilities as the result of chronic medical conditions, including Alzheimer's disease and other dementias. The Medicaid PC-Option was originally modeled on an Oklahoma program that sought to augment the in-home services available to the disabled elderly by paying small stipends to individuals -- primarily friends and neighbors -- recruited by the care recipient or his or her family to supplement informal supports.

Although the Oklahoma prototype and most subsequent PC-Option programs serve older people with disabilities, many programs have evolved which serve a sizable number of younger people. Most programs limit service to people with physical disabilities, although this is changing as more people move from institutions into the community.

The growth in the number and types of people seeking home and community-based long-term services has been accompanied by growing political and economic scrutiny of existing service delivery systems. Disability rights advocates are increasingly demanding a service delivery system which facilitates independence and empowerment by maximizing consumer involvement in all aspects of PAS. They argue that consumers are the best qualified to assess how much service they need, what kinds of services they need, and when, where, and how these services should be delivered. They therefore prefer "independent providers" who are hired, supervised, and paid directly or indirectly by the consumer or his/her chosen surrogate. Until recently, advocates for seniors focused on expanding professional accountability and government regulations for Medicaid and Medicare services to ensure "quality" (which is largely defined as the lack of negative outcomes such as abuse and neglect), but recent research and advocacy efforts indicate that older people with disabilities are also concerned with autonomy issues.

The type of system promoted by disability rights advocates is seen as a challenge to the traditional "medical model" of service delivery. That model defines personal assistance as a medical or medically-related need and puts certain types of medical and social service professionals (physician, nurses, and/or medical social workers) in charge of allocating and monitoring a limited range of services, usually provided via private or non-profit homecare or home health agencies. Advocates for seniors have also voiced criticisms of the medical model, although on somewhat different grounds. Typically, they are concerned with the fragmentation of the financing and delivery system that results when coverage of "non-medical" services is prohibited under medical insurance programs such as Medicare or Medicaid.

Will the states be able to use the PC-Option to meet the needs of the diverse and increasingly vocal population demanding services, while trying to address their own managerial concerns? Does it make more sense to administer a multitude of programs with different administrations, eligibility requirements, and types of service delivery to serve the needs of different groups, or can a single program be developed which is flexible enough to respond to the needs and preferences of a heterogenous consumer population? The following problems and in the organization of PC-Option programs will need to be addressed in order to better serve all people who need personal assistance services.

Problems with the Existing Programs

The following problems are impeding states in their ability to serve the heterogeneous and expanding population which needs PAS.

• The number of hours of service available may not meet the needs of the significantly disabled population.

• The scope of services available may not meet the needs of the populations served. Particularly problematic for many consumers are the lack of supervision services, emergency services, and paramedical services.

• Limits on the times services and locations in which services are provided often impede participation in the family, community, and workplace.

• Income eligibility requirements limit service access, and discourage marriage and employment for consumers.

• Family providers are not included in the repertoire of possible provider arrangements, despite the potential cost savings and desires of some consumers.

• Utilization of independent providers is limited, despite the lower per unit cost and greater consumer control, because of liability concerns and withholding issues.

• Consumers do not have a choice among provider modes.

• Assessment of service quality is based on board administrative standards instead of consumer experience.

Increasing Access to Services

Across the United States there is extraordinary variability in the number of people receiving necessary services. Some states make a concerted effort to provide personal assistance services to many of those who need it, while others provide very little. Some sort of Federal action would probably be required in order to address these disparities.

The full report ends with a discussion of proposals for Federal action. These include making personal care a mandatory Medicaid service, shifting a percentage of the current Medicaid expenditures from institutional services to home and community-based services, expanding the 1915(D) home and community-based waiver, and consolidating all Federal PAS programs into a block grant program which is indexed and does not require state matching funds. All of these proposals have drawbacks, but some sort of resolution of the access issue is imperative. As political, economic, and demographic pressures build, Federal and state government will need to initiate a formal process of dialogue between administrators, legislators, providers, advocates and consumers. PAS is essential to a growing number of Americans, and a way must be found to provide these services.