The new Community First Choice program: How will it affect LTC providers?

The Obama Administration seems determined to keep patients in their community settings and out of nursing homes for as long as possible. Obviously that will mean fewer admissions to long-term care facilities, so those facilities must be thinking of ways to adapt in order to remain viable. Let’s take a look at what has transpired thus far regarding community-based care. 

The centerpiece of that effort was the now failed Community Living Community Living Assistance Services and Supports program (the CLASS Act), which would have established a national, voluntary insurance program for purchasing support services needed to help functionally disabled patients who require LTC services to remain in a community setting.

The insurance, which was different than traditional LTC insurance, would have covered such things as housing modifications, assistive technologies, personal assistance services and certain transportation. For nursing homes, the CLASS Act represented both a potential threat and a blessing. On the one hand, potential residents would be incentivized to remain in their homes, thus potentially reducing the number of LTC admissions. On the other hand, beneficiaries who move into nursing homes would have been able to use CLASS benefits to offset the cost of care.

The CLASS program was supposed to become effective January 1, 2011, but CMS failed to issue implementing regulations by the effective date. A year later, CMS gave a gloomy report to House Republicans, stating that the CLASS plan is not financially viable. Indeed, CMS predicted that by 2025 the program would fail to sustain itself. Then in October 2012, Health and Human Services Secretary Kathleen Sebelius announced that the CLASS Act had flat-lined, stating “[W]e have not identified a way to make CLASS work.”

On the heels of the CLASS Act’s apparent demise, CMS recently issued final regulations for a related initiative, known as the Community First Choice program (CFC). The CFC option provides participating states with a six percentage point increase in federal Medicaid matching funds for providing community-based attendant services and supports to beneficiaries who would otherwise need to reside in a nursing home or other institution. These services are similar to the benefits that the CLASS Act insurance would have funded.

States electing the CFC option will make home and community-based attendant services available to assist beneficiaries in accomplishing activities of daily living, instrumental activities of daily living and health-related tasks. The CFC benefits will only be available to beneficiaries who would otherwise require care in a nursing facility, hospital or certain residential psychiatric facilities.

Beneficiaries may self-direct services, which affords them choice and control over the services they receive. States may also choose to provide coverage for non-medical transportation services, as well as transitional costs to assist Medicaid beneficiaries who are leaving institutions and transitioning back to the community. Unlike the CLASS Act benefits, CFC funds will not be available to beneficiaries who currently live in an institution, except as necessary to make the transition to a home or community-based setting.

Underscoring the Administration’s continued focus on community care, Secretary Sebelius also recently announced the creation of the new Administration for Community Living, which is intended to bring together key HHS organizations and offices to work on increasing access to community supports and achieving full community participation for seniors and people with disabilities. This new agency announcement was followed closely by the Secretary’s May 31 press release regarding the availability of $25 million in federal funding for states to expand their ability to help seniors and the disabled access home and community-based long-term services and supports. In partnership with the Veterans Health Administration, which will provide additional contributions, the funding will support Aging and Disability Resource Centers (ADRCs) across the country.

So what does the CFC program mean for LTC providers? For one thing, the Administration is clearly focused on trying to keep patients in their community settings and out of nursing homes for as long as possible. Indeed, in a blog accompanying the announcement of the CFC program, CMS even went so far as to include an anecdotal example of a resident allegedly faring better at home than he did in a nursing home. Putting aside the serious debate over whether nursing homes provide more comprehensive quality care than patients can obtain independently, this new program and others could impact nursing homes’ census and thus their revenues. In fact, CMS offsets the projected costs of the program with the expected savings from beneficiaries being diverted from nursing facilities.

Nevertheless, the CFC programs are focused on long-term Medicaid patients, who may not necessarily be as attractive to nursing homes, which are continuing to transition and focus on caring for more complex residents requiring comprehensive rehabilitation. To be sure, nursing homes will need to continue adapting to the changing reimbursement environments in order to remain profitable and to continue delivering quality care to their residents.           

Topics: Executive Leadership , Medicare/Medicaid