Testimony
|
Statement by
Dennis Smith, Director
Centers Medicaid and State Operations,
Centers for Medicare & Medicaid Services
on
The New Freedom Initiative
before the
Senate Finance Committee
|
April 7, 2004
Chairman Grassley, Senator Baucus, distinguished Committee members,
thank you for inviting me to discuss the Medicaid legislative
proposal under the New Freedom Initiative. The
New Freedom Initiative is President Bush’s plan to ensure
that individuals with disabilities have the opportunity to live
independently in their communities. As part of the
initiative, the President asked relevant Federal agencies,
including agencies within HHS, to evaluate their policies,
programs, statutes, and regulations to determine whether they
should be revised or modified to improve the availability of
community-based services for qualified individuals with
disabilities, so they may live with the respect and dignity
independent living brings. While New Freedom is a
government-wide initiative, I will focus specifically on the
Medicaid provisions that require statutory changes in order to
implement it.
Medicaid Spending on Home and Community-Based Waivers
Medicaid is a vital resource of financial support for community
living. More than 800,000 individuals are served through
home- and community-based waivers. State and Federal
expenditures have increased from $13.9 billion in FY 2001 to an
estimated $20.7 billion in FY 2004.
Between 2001 and 2004, a total of $68.7 billion will be spent under
home- and community-based waivers. More money has been spent
in those four years than was spent during the previous eight years
($56.6 billion). Over the same period, care expenditures for
state plan service grew, from $5.25 billion to $7.95 billion, a 51
percent increase.
New Freedom Initiative in the FY 2005 Budget
CMS remains committed to identifying and eliminating obstacles
faced by those with disabilities. To further enhance the
opportunities for people to live meaningful lives in the community,
the President included support for the New Freedom Initiative in
his FY 2005 budget proposal. The budget authorizes
approximately $428 million in FY 2005 and approximately $2.2
billion over 5 years to improve community services, help transition
people out of institutions, and support Americans in the community
through a variety of initiatives.
Money Follows the Individual
Our message is simple and clear. We believe individuals and
families make better decisions for themselves than the current
institutional-based, provider-driven systems. In 2001, 71
percent of Medicaid funds for long-term support for seniors and
people with disabilities were spent on institutional
services. While states are making efforts to develop
infrastructures designed to support community-based services,
progress in reducing dependence on institutional care has been
difficult to achieve due to the fiscal challenges states are
facing. The Money Follows the Individual Rebalancing
Initiative is a $1.75 billion, five-year demonstration program to
help Americans with disabilities transition from nursing homes or
other institutions to community living. The initiative will
help states achieve a more equitable balance between the proportion
of total Medicaid spending on institutional services and the
proportion of funds used for community-based support in their state
plans and waivers. The initiative also will help States
design flexible financing systems for long-term supports that allow
funds to move with the individual to the most appropriate and
preferred setting as the individual’s needs and preferences
change.
To assist individuals who move voluntarily from a
Medicaid-certified institution to the community, the initiative
will pay for one year the full cost of home and community-based
services for each individual moved from institutional care to a
package of home and community-based services. At a minimum,
the package of services must be equivalent to the services that a
state could provide under a Medicaid waiver. After the
demonstration year, the state would agree to continue such care at
the regular Medicaid matching rate and agree to maintain a balance
between institutional and community-based services in their
long-term care systems. States will be required to develop a
multi-year plan that includes specific action steps to redesign
funding arrangements to implement the principles of money follows
the person and reduce reliance on institutional forms of Medicaid
service. The plan also must identify steps to increase the
infrastructure for community services and improve the ability of
individuals to live and participate in their communities.
The President's commitment to the New Freedom Initiative budget
proposal has not changed. The President’s FY 2005
budget proposes the authorization of $1.75 billion over five years
for the Money Follows the Individual Rebalancing
Demonstration. While we recognize that the Budget in Brief
that was published on the web shows budget outlays of $0 in FY 2005
and $500 million over 5 years we should not confuse proposed budget
authority with estimated outlays.
While CMS will award a total of $350 million a year in grants for
each year of the initiative (FY 2006- FY 2009), we anticipate that
States will likely spend their awards slowly over the course of
their 5-year project periods. As a result of this assumption, CMS
estimated smaller initial outlays to States.
The outlay estimate also takes into account our assumption that CMS
will need time to develop a solicitation, review proposals, and
award the demonstration grants. Awards are likely to be made close
to the end of the fiscal year, and as a practical matter given the
timing of awards, states will likely begin to draw down funds at
the beginning of FY 2006.
LIFE Accounts
The President’s budget proposes the Living with Independence,
Freedom, and Equality (LIFE) Account Savings Program as the next
improvement in the home- and community-based system. LIFE
Accounts will be personal savings accounts owned and directed by
the individual. At no cost to the federal government, LIFE Accounts
will remove barriers to independence, community living, and
participation in the labor force for Medicaid-eligible individuals
with disabilities by giving them the opportunity to build savings
for purchases that will increase their independence and
productivity while also maintaining their vital health coverage and
standard of living.
Currently, individuals who live in states with a CMS Independence
Plus waiver are permitted to direct their own long-term supports in
order to delay institutional or other high-cost placement outside
their community. In states with such programs, individuals
may direct and control their own supports within the bounds of an
individualized budget established in agreement with the relevant
state agency. States that have programs built on this concept
encourage high-value, cost-effective decision-making.
Independence Plus waivers have built on the very successful
“Cash and Counseling” waiver.
Under the President’s proposal, individuals who self-direct
all of their Medicaid, community-based, long term supports will
have the opportunity to place up to 50% of the savings from their
self-directed Medicaid community-based service budget into LIFE
Account at the end of the year. Earnings from employment and
limited contributions from others may be used in the LIFE Accounts
to align the amount in the fund with the level of need.
To prevent the assets in a LIFE Account from jeopardizing an
individual’s ability to qualify for other forms of
assistance, income and resources in the accounts will not be
considered when making a determination for a state’s Medicaid
program or any federal assistance program. LIFE Account
income and assets will not be considered in establishing benefit
levels under those programs for either the account holder or for
any members of the account holder’s immediate family.
New Freedom Demonstrations
The President’s FY 2005 budget proposal also includes a
number of other investments in the New Freedom Initiative.
T TThree innovative demonstrations will enhance the
ability of individuals with disabilities to live and fully
participate in the community. These demonstrations support:
-
Respite services to caregivers of adults with disabilities
-
Respite services to caregivers of children with severe
disabilities
-
Home- and community-based services for children residing in
psychiatric residential treatment facilities.
With $18 million proposed for FY2005 (and $327 million over
five-years), these demonstrations willtest the provision of respite
for caregivers of adults as a Medicaid service, the provision of
respite for caregivers of children with substantial disabilities as
a Medicaid service, and the provision of family- and
community-based programs for children with psychiatric disabilities
as an alternative to psychiatric residential treatment facilities.
Other proposals in the President’s FY 2005 budget are
designed to provide flexibility to families and States.
Spousal Exemption – Under current law, if an
individual is Medicaid eligible and that individual’s spouse
participates in the section 1619(b) program – a Supplemental
Security Income work incentive program, the spouse’s earnings
could cause the individual to lose his or her
Medicaid. The President’s budget proposes
to protect the Medicaid coverage of an individual married to a
disabled individual participating in 1619(b).
Presumptive Eligibility – To reduce the prevalence of
individuals entering nursing facilities from hospitals due to the
length of time required to determine Medicaid eligibility for home
and community-based services, the President has proposed to offer
States the option of providing those individuals who need Medicaid
home- and community-based care with services for up to 90 days
while Medicaid eligibility is being determined. Under this
proposal, the Federal government will pay its share of the first 90
days of community services whether or not the individual is
ultimately deemed Medicaid-eligible.
Direct Service Community Workforce Demonstration –
Proposes $3 million in discretionary funds to continue a
demonstration to increase recruitment and retention of direct care
service workers including an emphasis on the provision of a health
care benefit for the workers.
Real Choice System Change Grants – Proposes $40
million in discretionary funds to continue assistance to States in
developing systems that support community-based care alternatives
for people of all ages with disabilities.
Existing CMS Initiatives
The President’s FY 2005 budget proposal builds upon a number
of accomplishments that have been achieved since the President
signed an Executive Order on June 18, 2001, directing Federal
agencies to “tear down the barriers” to community
living for individuals with disabilities. This order called
for a government-wide framework to provide the elderly and people
with disabilities with the support system necessary to choose where
they want to live and to participate fully in community life.
CMS has been working diligently on the initiative to eliminate the
obstacles facing people with disabilities who want to live and work
in their communities.
Real Choice System Change Grants
Since 2001, CMS has awarded approximately $158 million (FY
2001-2003) in grants to help states and others develop programs
that allow people with disabilities or long-term illnesses to live
meaningful, productive lives in the community. These grants
are intended to foster the systemic changes necessary to allow
those with disabilities to access quality services from their
choice of providers in accordance with their living preferences and
priorities. For example, a number of states, including Maine
and Pennsylvania, received grants for “Money Follows the
Person” research and demonstration programs in FY 2003.
These particular grants helped States to determine what
infrastructure and policy changes would be required to rebalance
their long-term support systems and to implement the principles of
money follows the person. Also in FY 2003, CMS funded
feasibility study grants in areas that are included in the
President’s FY 2005 budget, including respite for adults,
children, and alternatives to community-based treatment for
children.
Independence Plus Initiative
In 2002, CMS launched the Independence Plus Initiative to afford
Medicaid participants increased choice and control that results in
greater access to community living. The Independence Plus
Initiative expedites the ability of states to request waiver or
demonstration projects that give individuals and their families
greater control over their own services and supports.
Currently there are five Independence Plus Programs, including four
1915(c) waivers (New Hampshire, Louisiana, South Carolina and North
Carolina), and one 1115 Demonstration (Florida). The Independence
Plus programs allow participants to design a package of
individualized supports, identify and attain personal goals, and
supervise and pay their caregivers.
Florida's Independence Plus Program, funded through CMS'
1115 demonstration authority, was recently recognized with a grant
from the Social Security Administration to expand the impact of the
program. The new collaborative program, named the Florida
Freedom Initiative, will waive certain SSI rules to test whether
the combination of Medicaid and Social Security waivers will foster
greater self-sufficiency among the SSI and CMS beneficiaries who
participate in the demonstration.
Additionally in FY 2003, CMS awarded 12 grants to states under the
Real Choice Systems Change grant opportunity to help states design
self-directed waiver and demonstration programs. These
“Independence Plus” grantees are: Connecticut,
Colorado, Florida, Georgia, Idaho, Louisiana, Massachusetts, Maine,
Michigan, Missouri, Montana, and Ohio.
CMS Action Plan for Quality
CMS has taken a multi-faceted approach to addressing quality of
care issues in home and community-based services. Earlier
this year, Secretary Thompson submitted to Senators Grassley and
Breaux an updated report on CMS’s Action Plan for Quality
in HCBS. The Action Plan provides a status report
on the quality initiatives that CMS has undertaken in Medicaid home
and community-based services. I am pleased to inform the
Committee that the majority of the actions (16 of the 18 promised
actions) to which we committed have been completed. We have
made substantial progress on the other two. One example of
our success in this area was the development of the Quality
Framework, a guide to provide states with a uniform national
format to describe the key components of their quality assurance
and quality improvement programs. We intend the Quality
Framework to serve as a common frame of reference. CMS also has
worked with a variety of key stakeholders, subject matter experts,
and consumers to complete a national inventory of state quality
assurance and improvement strategies and provide technical
assistance to states to assist them in redesigning their quality
management systems.
Additional Accomplishments
CMS has made progress on a number of other fronts through the New
Freedom Initiative. This year, CMS awarded a total of $15.7
million in grants to 28 States and the District of Columbia to help
people with disabilities keep and find work without endangering
their health benefits as part of the Ticket to Work and Work
Incentives Improvement Act.
CMS also funded approximately $6 million in grants to improve the
recruitment, training, support, and retention of direct service
workers in FY 2003. For FY 2004, CMS plans to fund additional
grants to States and others at the same level of support.
Recognizing the importance of providing information to and
receiving input from key stakeholders, CMS holds Open Door Forum
teleconferences on the New Freedom Initiative to discuss possible
reforms that could remove barriers to community living and
participation of those with disabilities. Last year, 2,519
people participated in 9 forums.
Conclusion
Chairman Grassley, Senator Baucus, and members of the Committee,
thank you again for the opportunity to speak to you today about the
New Freedom Initiative, a nationwide effort to remove barriers to
independent, community living for people of all ages with
disabilities and long-term illnesses. The President is
committed to helping people with disabilities exercise more control
over all aspects of their lives, including the supports they
receive and where they live. This commitment is critical to
helping people with disabilities achieve the freedom and
independence they deserve. The New Freedom Initiative
represents an important step in working to ensure that all
Americans have the opportunity to learn and develop skills, engage
in productive work, and live with the dignity and respect that
comes with full participation in community life. Thank you
again for this opportunity, and I look forward to answering any
questions you might have.
Last Revised: April 8, 2004
|