Modernizing Medicaid, Monadnock Developmental Services

Modernizing Medicaid in New Hampshire
Arguments in favor of the current system and against "modernization"

Points concerning Medicaid "modernization"

The Medicaid system is not broken. Those people who receive care benefit from high quality cost-effective services that are the envy of most other states.
Though the Medicaid modernization process has been proposed by the Bush Administration, there is no evidence that the impetus for changing Medicaid is coming from CMS. The State should not volunteer to "fix" a system that isn't broken. Not all change is good by definition, but all change has real cost implications. The question is, who will bear the costs of an unneeded "modernization" of Medicaid in New Hampshire?
Monadnock Development Services and Monadnock Family Services are national leaders in providing cost-effective, quality care to people with special needs and mental health problems in the community. Both non-profit organizations meet the goals for service provision laid out in the Commissioner's paper calling for Medicaid modernization.
NH is an innovator in providing cost-effective developmental and mental health services and is studied by other states whose costs are much higher and service quality much lower. According to the Centers for Medicare and Medicaid Services in their report "Promising Practices in Long Term Care Systems Reform" (2003), NH was selected as one of nine state systems to be emulated for its best practices.
The administrative costs of the community mental health centers average below 10%, an enviable record in comparison to administrative or managerial costs of most other types of organizations.
The system is performing very well for those who have the services. Unfortunately, the waitlist remains for a substantial number of our most vulnerable citizens to obtain the services they need. The problem is not system performance but adequate funding.
Though the State Legislature and Governor need to be recognized for allocating funding to reduce the waitlist during a period of fiscal austerity, there are still approximately 260 people who need services still on the waitlist for essential services. Many have been waiting for over a year. The State needs to redress this situation as a matter of priority.
Denying the needy services will lead to increased demands for much more costly institutional care, including the state hospital, jails, state prison, and nursing homes. Not funding the elimination of the waitlist is not only unjust it doesn't make good economic sense.
While we are all for improving efficiency (and have been conscientiously pursuing this goal within both organizations) we are against the de facto policy of the State to finance the budget deficit on the backs of our State's most vulnerable citizens. This is not the New Hampshire way. It contravenes the State's basic principles of upholding human rights and social justice.
The Medicaid cuts will seriously damage community-based services and will lead to increased demands for much more costly institutional care, including the state hospitals, jails, state prison, and nursing homes.
The cuts in Federal Medicaid funding are a General Fund problem that needs to be resolved by expenditure cuts throughout the State budget, not within the Medicaid-funded program areas exclusively. The "Mediscam" dollars being lost have largely gone to the General Fund to balance the State budget and pay for non-Medicaid expenditures.
The proposed cuts in Medicaid and any narrowing of eligibility criteria will only transfer issues and costs to school districts and to local and county governments.
Changing to a block grant financed Medicaid system in NH will erode effective oversight and accountability - a hallmark of the current system. Loss of oversight and accountability would greatly increase the risk of mismanagement, waste, fraud and most importantly reductions in services to those in need.
Block grants shift the financial risk of service cost increases from a situation where they are shared by the Federal Government to one in which the State bears all the risk. These cost increases can occur because of inflation, increased enrollment, or technological changes (new drugs, new equipment etc). By switching to block grant funding the State would be gambling with the welfare of the poorest and most vulnerable members of society.
The current Medicaid funding is economically counter-cyclical - a good thing. Enrollment and thus disbursements tend to increase during periods of economic downturn. Medicaid funding under a block grant would be pro-cyclical - a bad thing. As the economy goes through a down-turn and enrollment increases, Federal funds will remain fixed, thus placing added fiscal pressure on the State at a time when its revenues are probably declining as well.
Under the current Medicaid funding the State has an incentive not to cut its contribution to the program since it loses one Federal dollar for every dollar it cuts. Under a block grant, the marginal effect of reducing spending at the State level would be reduced. The State would retain its entire block grant even if it cut State appropriations so long as it claimed to be serving the same population. This could be achieved by cutting back on the mix of services offered to current beneficiaries. Similarly, the State would have a disincentive to increase State spending on Medicaid since any additional dollars spent would no longer be matched by the Federal Government.
Seeking a 1115 Waiver to transform Medicaid funding to a block grant is likely to reduce the potential for innovation rather than increase it as is often claimed. Change usually takes funding, and the block grant takes away any additional Federal funds with which to initiate change.A block grant shifts the risk of cost increases to the State. The natural response to increased risk exposure is to become more conservative and to avoid innovation.
A block grant will lock the State into a predetermined budget level that by definition will reduce its capacity to innovate and respond flexibly, efficiently and equitably to changing needs and realities.
Ultimately, whether the State will benefit from a shift to a block grant will depend upon whether State expenditures / costs are expected to grow at a rate that exceeds or is less than the statutory 8.5% growth rate that would be provided under the block grant (for the first 10 years). Evidence from the past 10 years in NH suggests that it is very likely that actual State health care provider costs will increase at a higher rate than 8.5%. Over the past decade, the average annual growth rate has been 15%. Even if the State institutes draconian cuts in health care expenditures - something that would definitely impose an enormous burden on our most vulnerable citizens - it would be hard to imagine them achieving the 8.5% target. It is more likely that continued medical care inflation, and economic recession will cause cost increases to remain constant or even increase. As such, changing to a block grant will reduce the State's capacity to meet future needs and will necessarily result in a cut in services and an increasing wait list for people in need.
Innovations such as the MEAD program are reducing the cost of health service provision to the State while increasing the ability of people with developmental disabilities to be productive income-earning members of our society. These innovative programs are at risk under Medicaid "modernization."
The funding mechanism for DD and MH services must meet the Parent Test. Simply put - parents have to trust it. Parents of children with mental health illnesses, autism, Down Syndrome or other developmental disabilities need to be sure that their children will not be neglected after the parents' death. The only way to meet that test is through effective burden-sharing, and risk-sharing, between federal and state governments.

Recommended cost-saving alternatives to Medicaid "modernization"

Transform long term care for the mentally ill from a costly institutional model to a cost-effective and qualitatively enhanced community-based model. This alone could save the State $40 million or more.
Reform elder care for "transitional" elders who do not need to be institutionalized in nursing homes but whose families' are unable to support them in their homes without assistance. Create a community-based supportive-living "bridge" for transitional elders to reduce current nursing care expenditures and stem the projected substantial increase in future costs.
Institute joint ventures that help people with developmental and mental illnesses maintain employment. Currently, Voc Rehab terminates employment support after 3 months. We should seek Federal funds to allow Voc Rebab to provide long-term, intermittent employment support, as is being done in some other states. This will be a money-saver in the long run.

Comments on the process initiated by the Commissioner for Medicaid "modernization"

Very much agree with HHS paper that this needs to be an OPEN PROCESS; Forum a first step
But, needs to be two-way street. A step in this direction would be for Governor Benson to clarify what precisely is involved with his famous "handshake" agreement on Medicaid?
Governor Benson used the term "block grant" after his meetings in Washington, and you (the Commissioner) said you were impressed with his negotiating skill. This implies there was some detail to the agreement. Why has the public been kept in the dark?
If we are going to have an open process, we also need to be able to count on direct, factual statements from you (the Commissioner) and your department. There are some problems here, because the HHS statements are misleading and skew this process.
The first misleading statement was in the press release for this Forum stating that the Federal government is "requiring" the State to make changes in our Medicaid programs. This is simply not true. In fact, it sounds like the Governor is volunteering changes that no other state is undertaking.
We need clarification on the intentions of the Governor to force individuals receiving Medicaid to "share in the cost of services." Would New Hampshire, the 6th most wealthy state, with the lowest tax burden this side of Alaska, really want to be the first state in the country to require the poor and disabled - who already bear huge burdens - to bear higher costs?
Another disturbing factor concerning the "openness" of the process is the active efforts by the Governor and the Commissioner to discourage the Legislature from reviewing your possible reform proposals. We believe strongly that the Legislature should hold hearings on these critical issues, and we are glad so many legislators are present tonight.