Avoid derailing of coming LA long term care reform

Gov. Bobby Jindal apparently saved the best for last in his revamping of health care delivery for the indigent and developmentally disabled in the Louisiana, as his administration is poised to make changes to the provision of long term care in the state that will provoke controversy among a privileged class.

Recently, the Department of Health and Hospitals announced the formation of a group to advise in this area of policy, with a planned implementation date in 2015. Currently, the state pays $2.4 billion a year, or about a tenth of its budget, for long term care to about 70,000 individuals, or an average cost of almost $35,000 a year. The concept is to move administration of these services to a managed care concept that would better match needs to services, which probably would save taxpayers money as well, but with a primary goal of expanding access.

If there is one area of health policy that just begs for increased coordination, this is it. Basically, the elderly indigent qualify to have the state pay for their care, and the disabled also may receive services with a higher ceiling on assets and income to qualify. Until about 15 years ago, this garnered a single state response: chuck them in a nursing home and reimburse these providers day after day.

But given court cases that mandated that states had to provide services in the least restrictive settings if they were to provide that service, given the cost effectiveness of that service provision, this meant that some portion of the his population had to be served in homes and in the communities, through what are called “waiver” programs. As long the overall aggregate cost of the waiver programs did not exceed the same cost for institutionalizations, and there was not some medical appropriateness to place individuals in an institution that could not be replicated outside of one on a case by case basis, as many as possible were to be placed in home and community settings.

The implementation of this unfortunately spawned a confusing and inefficient intake and processing bureaucracy. Multiple waiver programs popped up doing different things where individuals could qualify for several, creating waiting lists filled with many of the same people that slowed down assignment of services. Procedures were such that in instances of immediate need few could get these services – if they even knew about them – meaning the only alternative was nursing home placement even if that provision far exceeded the actual need in many cases, and probably the cost. But it was administratively far simpler and offered the path of least resistance.

It also was desired intensely by the nursing home industry, which had predicated its future on an ever-flowing spigot of dollars – an inefficient utilization that Louisiana policy had encouraged –to pay for long term care for a disproportionately aged population. When that began to change, it found itself overbuilt, whereupon it used its political clout to work out favorable deals for protection and taxpayer subsidies of empty beds and reimbursement rates.

Yet this reform is the most serious shot across its bow to date encountered. Explicitly, the plan is to shift dollars and service provision away from nursing homes, and even if cost reductions are not planned and do not come about, to enable more to receive more services inevitably means a reduction in nursing home populations and revenues. This is a big deal to institutions because in Louisiana in any given year somewhere around 85 percent of all revenues come from government, mostly Medicaid.

At this point they are putting a brave face on it, but if long term care is headed in the direction of managed care – such as in the Bayou Health program that serves three-quarters of the state’s Medicaid population where third-party administrators determine on what services dollars are spent and saved over $135 million in its initial year of operation – they know these organizations will place fewer cases into nursing homes. The current inefficient system serves nursing homes’ interests, so expect that any move to improve will be fought by them, not just through the advisory panel, but also at the Capitol.

While to date the Jindal Administration health care delivery reform efforts, such as with Bayou Health and with the ongoing privatization of operations at state-owned hospitals that should average around $100 million a year in savings for the next few years, have focused on reducing costs while maintaining or improving service provision, this effort really is all about improving the reach and quality of that provision. While it remains a process challenge – system reform to better match resources to need – it also becomes a political challenge given that vested, privleged interests will be disadvantaged by it. Policy-makers need to keep a firm resolve throughout to do what’s right for program clients and taxpayers and not to placate an influential special interest.