Collectively, our members provide services to a majority of the recipients of long-term care in our current system. Collectively, we have worked with Department of Health and Family Services (DHFS) Secretary Joe Leean and many others over the past three years in seeking to identify ways to improve our long-term care delivery system.

The Coalition strongly supports the Department’s long-term care goal: To develop “a comprehensive long-term care system that maximizes an individual’s choice of services, providers and care settings as long as such care is necessary and meets a minimum level of quality standards and is cost effective.”

The Coalition also continues to support the compelling need for Resource Centers to serve as one-stop shopping service centers for consumer information and assistance with long-term care service availability, benefits, options and eligibility.

However, in the view of Coalition members, Family Care as proposed by the DHFS is a complex and fairly radical departure from the current long-term care delivery system that is based on assumptions which we believe range from unsupported by available data to out-and-out faulty. Because of the myriad of uncertainties and unanswered questions surrounding Family Care as proposed, the Coalition has adopted the following position:

The Long-Term Care Provider Coalition opposes the proposed statewide implementation of Family Care on July 1, 2000, but supports the pilot testing of the Resource Center and Care Management Organization (CMO) components of Family Care. Throughout the pilot projects, the data compiled should be evaluated for the cost effectiveness, quality assurance, and appropriateness of placements provided by the pilot Resource Centers and CMOs.

Statewide implementation of Family Care should not proceed until the data collected through the pilot projects is evaluated thoroughly. If that data suggests programmatic changes to Family Care are warranted, enabling legislation should be adopted prior to statewide implementation which would incorporate the findings and recommendations that result from the data evaluation.

With a proposal like Family Care that is new, complex, costly, and contains many uncertainties, we believe an extensive piloting and evaluation process is the only prudent approach to protect state taxpayers, county property taxpayers and, most importantly, the elderly and disabled persons who will utilize the long-term care services Family Care will provide. As such, the Coalition views a July 1, 2000 statewide implementation date of Family Care as premature.

What are some of the uncertainties which drive our position to support an extensive piloting/evaluation process?

Family Care may fall victim to conflict of interest concerns. Federal waivers from the Health Care Financing Administration (HCFA) will be required to implement a number of provisions contained in the Family Care proposal. Family Care envisions counties to serve as both the Resource Center and CMO, a position which HCFA has indicated raises conflict of interest concerns. If HCFA refuses to provide waivers which permit counties to serve as both a Resource Center and a CMO, how will that impact the Family Care proposal?

HCFA may change its “rules” during the middle of the “game.” We do not know when HCFA will make a decision on the Family Care waivers. Why proceed with the implementation of a program when we don’t even know if the waivers will be approved, what waivers will be approved or when the waivers will be approved? The recent denial of the Badger Care waiver clearly indicates HCFA’s ability to vacillate on waiver requests.

The cost implications of the “woodwork” effect are unknown. Under the DHFS proposal, all persons meeting its comprehensive level eligibility standards will be entitled to expanded benefits under the CMO. The envisioned CMO benefit package is expressly designed to attract enrollees through the promise of expanded choices and benefits. This prospect of entitlement to more extensive publicly-financed long term care services will have a “woodwork” effect that will attract more individuals into the system and accordingly increase aggregate program costs. The pilot projects should be utilized to measure the impact such induced demand will have in increasing program service utilization and cost.

Data is insufficient to support the claim that in-home care is less expensive than congregate care. What may be the key tenet espoused by Family Care proponents is that given the exact same needs, preferences and health status, it is less expensive to provide long-term care services to an individual at home than in a congregate setting. The Coalition strongly argues that neither the DHFS nor Family Care proponents have the data available to support that claim. For example, while each nursing home resident’s health status is identified by a level of care determination established by the DHFS, COP and waiver clients receive no similar comprehensive health status determinations. While the Family Care proposal will provide a uniform functional screen which should provide an apples-to-apples cost comparison between congregate care and community care, no similar comparisons can be made today because of the insufficient data compiled for COP and waiver clients. Thus, the DHFS Family Care cost model could actually be an apples-to-oranges comparison which ultimately reflects vastly overstated savings from a shift to community care. Coalition members believe Family Care should not be implemented fully until the data necessary to support or refute these claims is collected and analyzed.

The average nursing home resident is older, more frail and in need of more costly services than his/her counterpart in the community. In a 1996 profile of long-term care clients developed by the DHFS Office of Strategic Finance, the executive summary stated: “As a group, nursing home residents tend to show more adverse conditions, functionally or mentally, than their community waiver counterparts. Relatively more nursing home residents are at a higher level of skilled nursing care need, have many more functional impairments in activities of daily living ?, and show signs of memory loss or cognitive problems. They also are more likely to exhibit problem behaviors, show signs of mental distress, and have problems with incontinence.” It appears to the Coalition that it may cost more to provide facility-based care, not because community care itself is less expensive, but rather because facility- based residents on average have greater needs and require more costly services than community-care clients.

The DHFS cost model is based on questionable, if not faulty, assumptions. The inadequacy of the DHFS database is not the only concern the Coalition has with the assumptions the DHFS identified in its Family Care cost model. We disagree with or dispute their assumptions related to, among other issues, the cost impact of a healthier elderly population, the bias against congregate care settings, the time and cost to conduct a functional screen, the frequency of client functional/eligibility redeterminations, “outreach” funding, the reliance on “gross cost” averaging, the effect of redesign on Medicaid card costs, the projected reduction in nursing facility utilization, the permanency of initial placements, capitation rates, blended rates, applicability of the Oregon experience, quality assurance programs, cost of payments to family members and authority of care managers. HCFA waivers are dependent upon a showing of “budget neutrality;” in other words, Wisconsin would have to show that within a certain time frame (i.e., 5 years), implementation of Family Care would cost the federal government no more than the cost of continuing the current system. The State believes it can meet this test; Coalition members disagree because we believe the State is relying on faulty cost assumptions and that the true cost of Family Care will be significantly greater than the DHFS projection. What if we are right: will the Federal waivers be granted? More importantly, if we are right, what would the impact be on state taxpayers if Family Care were to be implemented statewide on July 1, 2000?

Proposed federal rules require an actuarial study. As proposed under federal Medicaid rules, DHFS would be required to conduct an actuarial study which would provide a more accurate assessment of the fiscal costs and operational risks the Family Care proposal will present for state and county governments and their respective taxpayers. No such actuarial study has been conducted.

The county property taxpayer ultimately may be asked to subsidize Family Care. Under Family Care, CMOs eventually will be required to accept the same risk as HMOs: a monthly capitation rate will be paid to the CMO for each enrollee and the CMO will be required to manage the care of each enrollee within that capitation rate. If the cost of services exceeds the capitation rate, additional funds will have to be found. Unlike the COP or waiver programs, there will be no option to create a waiting list or suspend services when funds expire. If counties are to serve as CMOs, those “additional funds” almost certainly would have to come from the local property taxpayer. Are counties prepared to accept that kind of risk?

The DHFS budget request for the 1999-2001 biennial budget includes an expenditure of $72.5 million all funds to implement a 5-year phase-in of Family Care. Do we have all the information we need to proceed with the phased-in implementation of this program?

The members of the Long Term Care Provider Coalition agree that Wisconsin’s long term care system needs to be reformed, and we support many of the provisions incorporated into the Department’s Family Care proposal. However, Family Care remains an untested concept, a concept that will touch the lives of over one million Wisconsin residents and will entail the management of over $2 billion. Though reform is necessary, Wisconsin should proceed cautiously and respond to the findings of the pilot projects.

In conclusion, the Coalition firmly believes: