During the early stages of the Department’s redesign exploration, WAHSA endorsed the following LTC redesign goal as suggested by the DHFS:

“The redesigned LTC delivery system should maximize 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.” (See DHFS LTC Concept Paper, dated September 18, 1995.)

WAHSA also strongly endorsed the DHFS' suggested creation of a redesigned system which “integrates acute and primary care, long term care and supportive services in order to provide, finance and manage the health and LTC needs of clients.” (See WAHSA’s LTC Redesign: A Vision of a New System, dated January 1997. Copies of this paper are available from the WAHSA office).

In May 1997, DHFS Secretary Joe Leean released a 57- page report, Redesigning Wisconsin’s LTC System: Preliminary Proposal of the Department of Health and Family Services. In this report Secretary Leean called for a redesigned system to include the following features:

Subsequent to the release of the Department’s May 1997 report, some advocates and counties voiced their strong opposition to the preliminary plan. Opposition focused on two concerns. First, the DHFS recommendation to integrate acute and primary care with the LTC system proved to be controversial. Although elderly persons in need of LTC services typically also have significant health care needs, some advocates believe integration would lead to an overly “medicalized” system dominated by acute care providers. Second, many counties opposed the DHFS May 1997 plan due to its reliance on care management organizations. Counties assumed they might not be able to function as a risk-bearing CMO and therefore would lose responsibility for many of their current programs such as the Community Options Program (COP).

In response to the political pressure marshaled by some advocates and counties, DHFS Secretary Leean has announced the Department will not seek full integration, at least initially. While an integrated acute, primary and LTC system remains the ultimate objective of the DHFS redesign plan, the Department’s efforts now center on addressing issues surrounding the currently fragmented LTC system. Additionally, DHFS has somewhat addressed concerns by counties regarding the role of CMOs. According to DHFS officials, counties will be given the “right of first selection” to be a CMO over other proprietary or not-for-profit organizations. However, DHFS has stated any CMO must be able to meet performance standards established by the DHFS and be willing to assume some financial risks relative to the care and service needs of covered LTC clients.

Legislative Authorization: Family Care Program

Pursuant to 1997 Wisconsin Act 27, the 1997-99 biennial budget act, DHFS has begun to pilot test the Single Entry Point concept. Counties in which the SEP will be tested during 1998-99 include Fond du Lac, Jackson, Kenosha, La Crosse, Marathon, Milwaukee, Portage, and Trempealeau, plus the Oneida Tribe.

Governor Tommy Thompson’s proposed 1998-99 budget adjustment bill (1997 Senate Bill 436 and 1997 Assembly Bill 768) contains several provisions which would authorize advancement of the DHFS redesign plan (See redesign features listed on page one of this paper). The Governor has named the proposed redesign system “Family Care.” Under SB 436/AB 768, the Department would be required to submit drafting instructions to the Legislative Reference Bureau by July 31, 1998 to:

The budget adjustment bills would appropriate $725,000 to provide start-up costs for 4-6 CMO pilot programs. These funds could be used for planning, networking, systems integration, developing consumer educational materials or other ways to “demonstrate the ability of counties and tribes to manage all long term care programs under a long term care management organization.” The Department hopes to award CMO contracts to the pilot counties in July 1998 with a tentative client enrollment period from December 1998 to March 1999.

WAHSA's Position on LTC Redesign

WAHSA remains supportive of the Department’s redesign efforts and recommends the Legislature adopt the LTC redesign provisions contained in SB 436/AB 768. These provisions generally, but with some exceptions, are in agreement with the Department's and WAHSA’s goal to maximize an individual’s choice of necessary services, providers, and care settings; establish a minimum level of quality standards; and adhere to cost-effective principles.

WAHSA is especially supportive of the following redesign components:

Single Entry Point: According to DHFS, there are over 40 different LTC programs in Wisconsin. Secretary Leean has referred to these programs not as a “system”, but more like a confusing maze of providers and services. The redesign system will consolidate these programs into a single system. As a result, clients will be able to obtain information, counseling, referral and access to the system from one entity, the SEP.

Functional screens and comprehensive assessments: Under the redesign system under discussion, comprehensive information will be gathered for each LTC client. Decisions regarding care plans, settings and costs will be based on actual client data. Policy makers will be guided by comprehensive information to determine the most appropriate care setting for each client. No longer will LTC funding and policy decisions be based on anecdotal information; clients will be served in the most appropriate, cost-effective setting possible, and the CMO will be held accountable to ensure clients receive high quality care and services.

Dollars will follow the consumer: The current LTC system may limit consumer choice relative to care settings and providers. For example, Medicaid funding may be available to fund a client’s care in a nursing home, but funding for alternative care settings (e.g., residential care apartment complex, community-based residential facility, home-based waiver services, etc.,) may not be available to the client, even if the alternative care setting was less- costly than nursing home care. Conversely, nursing homes will remain an appropriate option for persons with high acuity needs and/or behavioral symptoms requiring intensive care and services.

Under the envisioned redesign system, the dollars would follow the client to the most appropriate cost-effective setting. As such, policy makers would experience greater confidence in the LTC system knowing that public dollars are being utilized more efficiently and effectively. Further, the budget battles witnessed in recent years between providers, advocates, counties and others could be lessened since “the system” would determine, based on comprehensive information, how the LTC needs of the client can best be met.

Acute, Primary and LTC Integration Issues

WAHSA remains disappointed with the DHFS decision to not immediately pursue a fully integrated acute, primary and LTC system. Elderly persons in need of LTC services often have experienced a major health episode. For these persons, it is almost impossible to categorize their needs as either “medical/health” or “long term care.” In fact, their needs are often both.

Every year over 45,000 persons over the age of 75 are admitted to hospitals because of a chronic condition. These patients often are discharged to a nursing home to receive further health and rehabilitative services. In 1996, approximately 76% of all nursing home admissions were from hospitals. Failure to move toward an integrated system will ignore the fact that “individuals with chronic diseases and disabilities move back and forth between physicians, hospitals, nursing homes, and other providers with great frequency over many years, even after a person requires ongoing residential care…Isolating chronic care to the long term care environment is simply not a reflection of reality…” (see April 1993 Issue Brief published by the National Chronic Care Consortium).

WAHSA believes that a redesign system that does not ultimately include Medicare, Medicaid, waiver programs, and other LTC community-based LTC programs will not fully address the problems evident in the current “system.” Failure to integrate will perpetuate already existing incentives to shift costs between the acute/primary care and LTC systems.

With this said, it would appear the political will to pursue full integration is lacking and some form of compromise is in order. WAHSA recommends that the LTC capitation rate for CMOs exclude the first 100 days of skilled nursing care (equivalent to the Medicare benefit). Carving-out the first 100 days of skilled care would: (1) Save individuals and the State substantial dollars by fully utilizing the federal Medicare benefit (In 1996, sixty-five percent of all nursing home admissions were covered by Medicare, compared to only 12% in 1987); and (2) Recognize that the future role of many nursing homes will be to serve residents with increasingly complex medical or behavioral symptoms and in need of a short term stay in a nursing facility. In short, payments for nursing home stays which are an extension of the acute care system should be excluded from any redesign system that is not fully integrated.

Redesign Implementation Questions

Redesigning Wisconsin’s LTC system is an extremely ambitious endeavor. Over the past two and one-half years, hundreds of individuals have participated in redesign workgroups to address some of the anticipated programmatic details of the envisioned system. Legislators may be interested in the following questions, which to date remain unanswered. This is not to say that the Department has not been forthright regarding its LTC redesign intentions. Rather, the process of consolidating and capitating the myriad of LTC programs is remarkably complex and largely untried by any other State. {Note: The following questions are merely a sample of the questions being pondered by LTC redesign participants. These questions are highlighted to provide the reader with some perspective of the challenges of redesigning the current LTC system.}

Information gathering and rate-setting: A cornerstone of the envisioned redesign system is the collection and use of comprehensive client data. The State presently lacks cost, acuity, functional status and other related information on clients served throughout the LTC spectrum. However, without this information, it may well be impossible to build a successful redesign system.

Question: Will the State invest in the data collection systems required to measure cost-effective allocation of scarce public dollars. Absent comprehensive client data, how will capitation rates provided to CMOs be set to avoid unnecessarily high expenditures (i.e., unanticipated Medicaid and related program deficits)?

Counties serving as CMOs: The Department has indicated counties will be given the first option to serve as the CMO. According to DHFS, a CMO must be willing to assume the financial risk associated with managing the care and services for elderly and disabled persons. Although it is expected the risks borne by counties would be minimized during the early implementation stages, counties nonetheless would be required to accept capitation payments for clients and in turn provide all necessary care for each client, regardless of the actual cost of such care. Failure to properly manage those funds and services would put the county property taxpayer at risk.

Question: Will counties accept the financial risks required to serve as a CMO? Given the risks inherent in CMO operations, will county Boards vote to authorize CMO risk-taking operations?

Consolidating LTC funding within the CMO: The current LTC system is funded by a variety of county, state, and federal sources. Counties provide millions of dollars for LTC services through their community aids match and over-match requirements. County nursing facilities help the State generate over $94 million in intergovernmental transfer payments (IGT) to fund county home deficits and the Medicaid reimbursement formula.

Question: How will the State allocate LTC funding to CMOs, particularly those not operated by the county? Will counties be required to transfer local dollars to the State system? How would counties replace these lost dollars?

Improving An Already Good LTC System

As policy makers contemplate redesigning Wisconsin’s LTC system, they should do so recognizing that our existing system already is one of the best in the nation. Consider the following:

Closing Comments

WAHSA supports efforts to redesign the current LTC delivery system. A redesigned system will offer consumers greater choice of services, providers, and care settings; establish quality standards throughout the LTC system, and promote cost-effective allocation of scarce public dollars. For the redesign system to work effectively and efficiently, it should include the integration of acute and primary care with the LTC system. If full integration is not supported, funding for the first 100 days of a nursing home stay should remain outside the control of the CMO.

Redesigning Wisconsin’s long term care system will not happen quickly. Because of the complex nature of this undertaking, WAHSA recommends that pilot programs be utilized to test and analyze redesign options. Pilot programs will be especially helpful to gain insights relative to functional screening, comprehensive assessments, setting capitation rates, and CMO operations.

The Wisconsin Association of Homes and Services for the Aging (WAHSA) is a statewide membership organization of not-for- profit corporations principally serving the elderly and disabled. Membership is comprised of 195 religious, fraternal, private and governmental organizations which own, operate and/or sponsor 145 not-for-profit and 47 county-operated nursing homes, 23 facilities for the developmentally disabled, 56 community-based residential facilities, 10 licensed home health agencies, 91 independent living facilities, 40 adult day care programs and over 300 community service agencies which provide programs ranging from Alzheimer’s support, child day care, hospice and home care to Meals on Wheels. For more information, please contact the WAHSA staff at (608) 255-7060: John Sauer, Executive Director; Tom Ramsey, Director of Government Relations; Brian Schoeneck, Financial Services Director.

Wisconsin Association of Homes and Services for the Aging
204 South Hamilton Street
Madison, WI 53703
Telephone: (608)255-7060 FAX:(608)255-7064