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December 2013 Policy Study, Number 13-12


Iowans Want to Age in Place


Older Iowans Legislature



The Older Iowans Legislature (OIL), an aging policy advocacy group in Iowa formed originally as a lobbying arm for the Iowa Department on Aging (which has since become financially independent of the Department), is proposing a bill that removes the institutional bias of the Medicaid HCBS Waiver. In fact, this proposed bill is their number two priority, behind advocating for an elder abuse law. An act to eliminate the institutional bias of the Medicaid HCBS Waivers, seven currently in Iowa, via a 1915 (i) State Plan Amendment is what is proposed under OIL Bill 13-10.[48]


Services provided under HCBS waivers do not need to be offered statewide and they may be targeted only to certain populations (e.g., elderly and physically disabled adults, persons with MR/DD, ventilator-dependent children, persons with severe mental illness, persons with HIV/AIDS). Iowa has seven waiver programs targeted at different populations. It is estimated that it would require an investment of $11.5 million to clear all the persons on the six HCBS waivers which have a waiting list;[49] the elderly waiver does not a have a waiting list, however there is a limit to the number that are issued and it is approved under the same State Plan Amendment.


The reality is that if an elderly individual requires assistance with one or more ADLs, then he or she qualifies for institutional-level care and Medicaid will pay for these services for the patients who also meet the eligibility requirements for Medicaid. However, if this same patient wishes to receive the same level of less costly HCBS services in the comfort of their home, they must now apply for them via a HCBS Waiver. There are only a limited number of waivers available and the process of application and approval is complicated and burdensome.


HCBS are less costly as determined in a March 2013 Meta study based on a collection of 38 studies as published by AARP and titled “State Studies Find Home and Community-Based Services to Be Cost-Effective.”[50] The study, authored by Wendy Fox-Grage of the AARP Public Policy Institute and Jenna Walls of Health Management Associates, concluded that there is evidence of cost containment and a slower rate of spending growth in states that have expanded HCBS.[51] “Furthermore, although few studies have documented absolute cost savings, the studies have consistently found much lower per-individual, average costs for HCBS compared with institutional care. Overall, the findings illustrate cost reductions by diverting and transitioning individuals from nursing homes to HCBS.”[52]


Of note in Iowa, during the 2013 Legislative session, SF446, the Health and Human Services Budget for Medicaid, was sent to the Governor for approval after moving successfully through both Houses. An appropriation had been made in the amount of $8.7 million to reduce the Medicaid HCBS Waiver waiting lists and this was the result (note the strikethroughs are the Governor’s line-item vetoes):


MEDICAID: Increases Medicaid funding by 25 per cent for the fiscal year beginning July 1, 2013 ($1.14 billion total) and makes a $34.4 million supplemental appropriation to help Medicaid pay its bills this fiscal year (through the end of June 2013). Includes $8.7 million increase to reduce the number of people on the waiting list for Medicaid waiver services (estimated cost to remove all people on current waiting list is $11.5 million). Increases Medicaid provider rates by 1-5 per cent depending on the provider type (1 per cent for rehabilitation agencies; 1 per cent for dental providers; 3 per cent for HCBS waiver providers). Requires all provider rate increases be used to increase non-administrative staff salaries and/or benefits. Includes increase of $300,000 to fund reimbursement adjustments resulting from the inclusion of staff training as a reimbursable direct cost for Medicaid HCBS providers. Adds $15.3 million to rebase nursing home reimbursement rates ($268.7 million total – a 6 per cent increase).[53]


The Governor chose instead to allocate an additional $15.3 million to increase nursing-home- reimbursement rates. The disturbing part of this decision is that in addition to having already established that nursing-home care is less desired and more costly, the recent Long Term Care Commission report scored Iowa an “F” in direct-care-service hours in a nursing home.[54] This grade was based on several factors, one being the amount of time a nursing-home resident (residing 24 hours in facility) received direct care. The national average is 2.5-4.1 hours of direct care, and Iowa’s average is 2.2 hours – well below the national average. Had the Governor and his staff been aware of this information, then it may have been a better decision for the Governor to clear the HCBS waiting lists at $11.5 million and then require the nursing-home industry to meet certain quality measures, including increasing direct-care staffing, prior to allocating them any additional funds.


Furthermore, there exists a legal basis for this recommendation by OIL via the 2001 Olmstead decision that:


… recognition and unjustified institutional isolation of a person with disabilities
is a form of discrimination reflect[ing] two evident judgments: 1) Institutional
placements of people with disabilities who can live in, and benefit from,
community settings perpetuates the unwarranted assumptions that persons
so isolated are incapable or unworthy of participating in community life;
and 2) confinement in an institution severely diminishes everyday life activities
of individuals, including family relations, social contacts, work options,
economic independence, educational advancement, and cultural enrichment.[55]


“This decision effects not only all persons in institutions and segregated settings, but also people with disabilities on waiting lists to receive community based services for the elderly, preventing premature institutionalization.”[56] While many states have yet to be challenged on this point, the legal basis for a Community First Option remains via the Olmstead Act of 2001.


Section 1915 (i) HCBS State Plan Amendments allow states to provide LTSS in the community similar to existing Medicaid “waiver” programs, but with three major differences: 1) the individual does not need to meet an institutional level of care in order to qualify; 2) states may not cap enrollment (financial limits); and 3) the program must operate statewide (not just in select counties). Nine states have been approved. Two states are awaiting approval, and 11 are considering it.[57]


The individuals currently on waiting lists for HCBS all have different stories. Some are relegated to receive their care in a nursing home while they spend down their assets in order to qualify for Medicaid and wait for their spot to come up on the waiting list. Some have family support; caregivers who leave their jobs or work part-time to stay home and care for their loved ones on HCBS waiting lists in hopes that when their turn comes up they can return to full-time employment again once their loved one has adequate care. Some individuals on the disability-related waiver waiting lists could be productive members of their communities if they had access to HCBS and supports, but instead their barrier is an unmet need for transportation and assistance with ADLs.


It is likely the costliest of scenarios for an individual on a HCBS waiting list is one where the individual bounces in and out of the hospital as they lack financial support for the less costly HCBS. OIL believes that although there will be an initial investment in “clearing” the waiver waiting lists, the long-term savings of providing lower-cost care in the patient-preferred setting that results in better health outcomes will benefit Iowans, particularly older Iowans.




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