Administration Cuts $15.5 Million From Key MassHealth Elderly Services

Just hours before a major snowstorm hit the State, the Patrick Administration released a blizzard of cuts to MassHealth programs targeted to poor people and the elderly.

At a short meeting on the afternoon of January 11, 2011, the Patrick Administration announced a series of rate cuts in several key MassHealth programs. The rate reductions come with more than half the current fiscal year already over. A total of roughly $3.25 million will be cut from key programs in the remaining months of FY 2011, plus another $12.3 million will be cut from the FY 2012 budget as a result of rate cuts that will take effect on the Ides of March.

Here are the impacts of several of the major cutbacks announced.

Adults Foster Care: AFC is a program that provides daily assistance with personal care and case management oversight by the provider in caregivers home on a 24/7 basis. The proposed amendments decrease the payment rates for all adult foster care (AFC) services by 6.2% effective March 15, 2011.

• the proposed rate for AFC Level I services will decrease from $47.13 to $44.21
• the rate for AFC Level II services will decrease from $83.09 to $77.94
• the rate for Alternate Placement Level I services will decrease from $37.47 to $35.15
• the rate for Alternate Placement Level II services will decrease from $74.93 to $70.28
• the rate for Intake and Assessment services will decrease from $242.38 to $227.35

The Division of Health Care Policy and said it was proposing these amendments “to ensure that the payment rates are consistent with efficiency, economy, and quality of care, while maintaining access to services.” DHCFP estimates that the AFC rate cuts will result in aggregate annual expenditure reductions in FY 2012 by MassHealth of approximately $4 million or 6.2% as a result of this proposal. Since the cuts begin on March 15th, they will be in effect for three and a half months in FY 2011, and will reduce payments to AFC providers by $1 million this fiscal year.

In May of 2008, when the Patrick Administration proposed cutbacks in AFC rates, Mass Home Care testified against the rate cuts. “The fact remains,” Mass Home Care said, “that at the end of the day, the core of this program---the caregivers---are making $9,281 per year for level I, and $18,137 per year for level II. When caregivers apply for this program, it will not take them long to calculate these annual rates.” Mass Home Care said two things were certain: “These caregivers are enormously undervalued compared with people doing similar work in state agencies, and the new rates will not be enough to attract the caregivers needed to expand this program, and the ultimate losers from this situation will be the state’s taxpayers, who will foot the bill for more costly placements.”

Mass Home Care concluded in 2008: “Adult Foster Care holds the promise of becoming one of the critical growth programs under Governor Patrick’s “Community First” initiative. Yet today, this program is still largely unknown, and marginally utilized. AFC will become more important because it is a 24/7 residential alternative, and as such, is highly targeted towards those who are in need of significant personal assistance. The level II program in fact, is targeted to those who would otherwise need expensive institutional care. However, if this program continues to remain obscure, with rates that do not reflect the level of care and attention required by its clients, then the Commonwealth will lose the opportunity to keep people in the least restrictive setting, and pay the price for that loss.”

Adult Day Health: ADH is a community based day program providing nursing and therapeutic services and oversight for members in an effort to postpone nursing facility placement. Services provided include nursing, therapy, nutrition, dietary counseling, case management, activities, and assistance with activities of daily living. The proposed amendments decrease the payment rates effective March 15, 2011 for adult day health (ADH) services by an average of 7.8%. The proposed rate for Basic ADH services will decrease from $53.93 to $49.98 per day (7.3%); the rate for Complex ADH services will decrease from $68.68 to $62.95 per day (8.3%); and the rate for Health Promotion and Prevention (HPP) services will decrease from $27.86 to $25.69 per day (7.8%). Rates for ADH services are calculated based upon the median of industry unit costs as reported by ADH providers, to which efficiency standards for productivity and administrative costs, and a cost adjustment factor are applied. The proposed rates for Basic and Complex ADH services are based on 2009 reported costs. The proposed rate for HPP services decreases the current rate by 7.8%.

The Division estimates that aggregate annual expenditures by MassHealth in FY 2012 for ADH will decrease by approximately $3.32 million or 7.49 % as a result of this proposal. Because these rate cuts will take effect for 3.5 months in FY 2011, the cuts are projected to save roughly $968,000 in the current fiscal year. In October of 2009, Mass Home Care testified before DHCFP against cuts in Adult Day Health rates. “ADH is helping almost 7,000 individuals to remain living in the community,” Mass Home Care said, “saving state and federal taxpayers millions of dollars annually. If 7,000 people had to be institutionalized due to lack of ADH services, the cost would be roughly $408.8 million annually. The entire spending for the ADH program for FY 2009 is $90.49 million (including transportation). It is clearly more cost effective to keep people in the community, even when you combine ADH with other in-home supports that these individuals may be receiving.”

Group Adult Foster Care: GAFC is a program providing daily assistance with personal care services and case management oversight by the provider in an elderly/disabled housing complex, or Assisted Living Residence. Because this program does not operate with a set of regulations, it does not have to go through the same public hearing, rate setting process. The Administration has proposed cutting GAFC rates by 7.6%, which will reduce program expenditures in the remaining months of FY 2011 by $1.25 million, and cut FY 2012 expenses by $5 million.

In addition to these listed services, the Administration has proposed cuts to MassHealth dental services, day habilitation, and other services targeted to low-income people.

“Cutting community based services for the elderly is fiscally wrong-headed,” said Mass Home Care Executive Director Al Norman. “Day care and foster care programs keep seniors out of more expensive institutions. At a time when revenues are limited, it makes sense to invest in programs that save taxpayer’s money. As budget strategy, these cuts are inexplicable. On a human level, these cuts are indefensible.”