Long Term Care Will Be Statewide, Yet Local Under Joint Finance Plan

MacIver Institute Budget Blog | May 28, 2015

To Republicans, it’s the best of both worlds. To Democrats, it’s the end of the world. The Joint Committee on Finance (JFC) approved a hybrid plan for Wisconsin’s long term care system on Wednesday that would adopt many of the reforms Gov. Walker is seeking, but keep in place a number of existing services.

Long term care is a set of Medicaid programs for Wisconsin’s frail elderly and disabled populations. The two biggest long term care programs, Family Care and Include, Respect, I Self-Direct (IRIS) have been the subject of much debate ever since Gov. Walker proposed changes in his budget proposal.

The JFC plan will require the Department of Health Services (DHS) to negotiate a waiver with the federal Center for Medicaid Services (CMS) to get approval for a number of changes to the current system. Long term care would be expanded from its current 57-county operation to be run statewide, in every county. However, multiple plans would have to be offered to eligible participants in each of at least five regions throughout the state. Plans would be offered by “integrated health agencies,” which could be for-profit or non-profit providers in each region.

The current long term care system is only available in 57 of Wisconsin’s 72 counties, but some counties like Dane County offer their own services. Nine regional non-profit “managed care organizations” (MCO) currently administer Family Care in Wisconsin with no competition from other providers. The JFC plan would introduce competition while keeping a regional structure. Each region would have to be large enough for a provider to have a sufficient risk pool.

The plan would also preserve local Aging and Disability Resource Centers (ADRCs) that act as a gateway to long term care services for eligible participants.

DHS would be required to make sure that IRIS is offered in a similar fashion to how it’s provided now. IRIS allows more patient-directed health packages for individuals who want to manage more of their own care.

Instead of each MCO setting their own costs for taking care of program participants, as they do now, the state would commission an independent actuary to calculate per patient spending. This creates consistency and accountability in how much taxpayer money is directed toward these services.

Republicans defended the plan as a way to make long term care services available statewide, address growing costs, and keep as much of the existing structures in place as possible.

“Integrating long term care, primary care and acute care is the future in Wisconsin,” described Sen. Vukmir, who is a nurse in her professional life. “The model will bring in efficiencies, but what’s most important is it will improve outcomes.”

Many other states have taken a similar statewide, integrated approach to long term care such as Tennessee, Texas and neighboring Iowa. However, Democrats pointed to an AARP study that showed these states are not performing as well in long term care as Wisconsin is.

“The states you’re touting as a model we outrank significantly,” said Rep. Chris Taylor (D-Madison).

“If its not broke don’t break it,” was the minority party’s sentiment throughout the discussion on long term care.

Once a waiver is approved with CMS, the plan will have to come back to JFC for another look before it can be implemented. Once finalized, the rollout would not occur until 2017 or later.

So why mess with a system that seems to have good outcomes and is popular among users? Republicans say that it is about costs and quality.

Long term care programs accounted for just seven percent of Medicaid enrollees in FY14 but made up 40 percent of the costs in that year. Family Care in particular has ballooned from 10,000 participants to 40,000 in less than 10 years and now costs the state over $1 billion to operate.

IRIS has grown even faster. The program had 700 participants when it started in 2009 and has grown by well over 1,000 percent to 10,000 current participants.

The regional MCO structure also causes administrative overlap and varied costs between providers. MCO’s do not integrate services as much as a potential statewide system would. The current system provides truly managed care for some services, such as taking care of a disabled person’s basic day-to-day needs, but leaves many aspects of acute care in the “fee-for-service” realm which is much more expensive.

The long term care discussion in Wisconsin is far from over as these reforms will take years to fine tune and fully implement.

In other Joint Finance news, pork projects have made their way back into the budget. JFC members voted to approve $110 million in new General Purpose Revenue (GPR) supported borrowing for four state building projects on Wednesday. The largest amount is $86 million for a new chemistry building at UW-Madison. The other three are $5 million in bonding for a new Wisconsin Agricultural Education Center near Sheboygan, $3 million in bonding for a science building at Carroll University in Waukesha, and the Eau Claire Confluence project was raised from the dead and will get $15 million in GPR bonding for its completion. While the chemistry building project at UW-Madison in more aligned with our state’s needs, there is very little justification for the other $23 million in local pork that taxpayers are helping to pay for.

The last item of note that JFC voted into the budget on Wednesday is an increased penalty for Unemployment Insurance (UI) fraud. If you are caught trying to game Wisconsin’s UI system, you are currently required to pay back 115 percent of what you fraudulently received. The Joint Finance motion will increase that payback amount to 140 percent.

UI fraud is still all too fresh for Wisconsin as the Depertment of Workforce Development have worked to clean up the system after 37,000 cases of unemployment fraud was identified in 2011.

JFC will have a busy Friday as the big ticket items of the UW-System, Stewardship and transportation remain to be voted on. Plus, will we see a prevailing wage insertion during this last session? And how many other pork projects will politicians try to get away with?

The MacIver Institute will cover all of this and more. Stay tuned for up to the minute updates.