Home and Community Based Home and Community Based Waivers for Disabled Adults: Waivers for Disabled Adults:

Program versus Selection EffectsProgram versus Selection Effects

Courtney Harold Van HoutvenCourtney Harold Van Houtven

Durham Veteran’s AdministrationDurham Veteran’s Administration

Duke UniversityDuke University

Marisa Elena DominoMarisa Elena Domino

University of North CarolinaUniversity of North Carolina

BackgroundBackground

• Purpose of Waiver programs is to provide Purpose of Waiver programs is to provide coverage for extra services to keep people coverage for extra services to keep people in communityin community– In-home aide servicesIn-home aide services– Respite careRespite care– Adult day health careAdult day health care– OthersOthers

• Waivers for disabled adults operate in 47 Waivers for disabled adults operate in 47 of the 50 statesof the 50 states

BackgroundBackground• Incentives exist for careful selection of Incentives exist for careful selection of

enrollees by states enrollees by states – States must select persons States must select persons

• ““At-risk” of institutionalization At-risk” of institutionalization • Care for the person must be cost-neutral. Care for the person must be cost-neutral.

– $2,553 to $3,360 per month for home $2,553 to $3,360 per month for home care in NCcare in NC

• Hence, states have incentives to Hence, states have incentives to select persons partially based on select persons partially based on expected spending levelsexpected spending levels

ObjectiveObjective

• To examine the impacts on costs of a To examine the impacts on costs of a Medicaid Home and Community-based Medicaid Home and Community-based Waiver program and whether differences are Waiver program and whether differences are due to selection effects or true program due to selection effects or true program effects, controlling for endogenous selection effects, controlling for endogenous selection of persons into the program.of persons into the program.

• Expands on Anderson & Mitchell (1997, Expands on Anderson & Mitchell (1997, 2000) study of an AIDS Waiver program2000) study of an AIDS Waiver program– Continuous measure of waiver participationContinuous measure of waiver participation

– Multi-faceted severity measureMulti-faceted severity measure

Study DesignStudy Design– There is no objective way of identifying There is no objective way of identifying

persons truly at-risk of institutionalization persons truly at-risk of institutionalization • Persons with moderate severity of illness are Persons with moderate severity of illness are

more likely to be selected for Waiver enrollment more likely to be selected for Waiver enrollment over more severely ill individuals.over more severely ill individuals.

Low likelihood High likelihood Moderate likelihood of enrollment of enrollment of enrollment

Less ill More ill Severity threshold that makes a person at risk of institutionalization

Study DesignStudy Design

• We use severity to differentiate We use severity to differentiate institutional risk and expected institutional risk and expected expenditures.expenditures.– Multi-faceted risk adjustment scale Multi-faceted risk adjustment scale

(CDPS) specially designed for disabled (CDPS) specially designed for disabled adults (Kronick, Gilmer et al., 2000).adults (Kronick, Gilmer et al., 2000).

– Predictive of future health care needs Predictive of future health care needs and differentiates severity based on and differentiates severity based on expected expenditures.expected expenditures.

Data SourcesData Sources

• North Carolina Medicaid claims and North Carolina Medicaid claims and enrollment data from Fiscal Years 1999-enrollment data from Fiscal Years 1999-20002000

• Area Resource File for North Carolina Area Resource File for North Carolina for county-level informationfor county-level information

• State licensure information on home State licensure information on home health agencieshealth agencies

SampleSample

• All Medicaid adults with disabled or blind All Medicaid adults with disabled or blind status who status who – were continuously enrolled in Medicaid for were continuously enrolled in Medicaid for

the 2 year study period the 2 year study period andand– had at least $10,000 in expenditures in FY had at least $10,000 in expenditures in FY

19991999

• NN=27,056. Waiver participants=1,752=27,056. Waiver participants=1,752

MethodsMethods• Two-part expenditure models ofTwo-part expenditure models of

– Total Medicaid expendituresTotal Medicaid expenditures– Nursing home expendituresNursing home expenditures– Inpatient expendituresInpatient expenditures

• Key Independent variablesKey Independent variables– Percent of the year on waiverPercent of the year on waiver– CDPS severity CDPS severity – DemographicsDemographics– Medicare enrollmentMedicare enrollment

MethodsMethods

• Instrumental variables estimation controls Instrumental variables estimation controls for selection into the waiver programfor selection into the waiver program

• Identifying instrumentsIdentifying instruments– Home health agencies in county Home health agencies in county – County marketing measureCounty marketing measure

Descriptive StatisticsDescriptive Statistics

* = p<.05; ** = p<.01 for a test of the equivalence of means between CAP and non-CAP samples

1. Number of observations differ depending on type of utilization

Table 1. Demographic characteristics of disabled adults on North Carolina Medicaid, FY 1999 Non-Waiver

Disabled Adults Waiver

Disabled Adults N=25,304 N=1,752 Variable Mean Mean Dependent variables Costs of Care1 Any Costs 90.3% ** 99.8% Total Costs for Users 28,826 ** 29,374 Any Nursing Home 27.5% ** 6.3% Total Nursing Home 53,256 9,057 Any Inpatient 24.2% ** 31.6% Total Inpatient 9,387 * 7,682 Endogenous variable Average percent of year on CAP

89%

Descriptive StatisticsDescriptive Statistics

* = p<.05; ** = p<.01 for a test of the equivalence of means between CAP and non-CAP samples

Table 1. Demographic characteristics (continued) Non-Waiver

Disabled Adults Waiver

Disabled Adults N=25,304 N=1,752 Variable Mean Mean Instruments Home health agencies 17.04 * 13.75 Average Daily Percent of CAP capacity

60.5% ** 62.3%

Demographics Male 47% ** 34% White 49% ** 54% Black 39% ** 32% Native American 0.14% 0.14% Other race 0.10% ** 0.12%

Hispanic 0.03% 0.03%

Age 44 49.0 Medicare enrolled in FY 2000

72% ** 80%

County population 1999 139,123 * 116,501

Descriptive StatisticsDescriptive Statistics

Severity Characteristics

Non-Waiver Participants

Waiver Participants

Average number of CDPS categories?

3.5

5

Percent of sample with no CDPS diagnoses?

12 percent

>1 percent

ResultsResults

• Endogeneity exists for total cost and Endogeneity exists for total cost and nursing home cost modelsnursing home cost models– Instruments are strong predictors of Instruments are strong predictors of

selection into waiverselection into waiver– Nursing home model includes home health Nursing home model includes home health

agencies as only instrumentagencies as only instrument

ResultsResultsWaiver participants faceWaiver participants face

– A A higherhigher likelihood of having any Medicaid likelihood of having any Medicaid expenditures expenditures

– No difference in levels of total expendituresNo difference in levels of total expenditures

– No difference in the likelihood of any nursing home No difference in the likelihood of any nursing home expendituresexpenditures

– Significantly Significantly lowerlower nursing home expenditures nursing home expenditures • Save $25,491 on average compared to non-participantsSave $25,491 on average compared to non-participants

– No difference in the likelihood of any inpatient No difference in the likelihood of any inpatient expendituresexpenditures

– Slightly Slightly lowerlower levels of expenditures levels of expenditures• Save $2,506 on average compared to non-participantsSave $2,506 on average compared to non-participants

PredictionsPredictions Choosing three types of disabled adults we make predictions about cost savings.Choosing three types of disabled adults we make predictions about cost savings.

Type Low cost adult Medium cost adult High cost adult

Diagnostic Categories (CDPS)

None Nervous System – Low; Pulmonary –High

Nervous System – Low; Pulmonary –High; Developmental Disability - Medium

Predicted change in probability of total costs*

-0.36 -0.12 -0.00024

Predicted change in tot. costs for avg. enrollees (both parts of model)

$5,312 $6,819 $9,078

Predicted change in probability of nh costs

-0.35 -0.41 -0.078

Predicted change in nh costs for avg. enrollees

$725 $439 $18,102

Predicted change in prob. of inpatient costs

0.0045 0.0075 0.0055

Predicted change in inpatient costs for average enrollees

*

$225 $473 $302

All predicted differences are the result of the difference between predictions calculated on

IV models, as , probabilities are expressed on the unit interval 1|ˆ0|ˆ CAPXfCAPXf

DiscussionDiscussion• Participation in a Medicaid Home and Participation in a Medicaid Home and

Community-based Waiver leads to Community-based Waiver leads to substantially different patterns of care substantially different patterns of care

• We find no savings in total expenditures We find no savings in total expenditures but savings in nursing home and but savings in nursing home and hospital inpatient expenditures for hospital inpatient expenditures for waiver participants, achieving the goals waiver participants, achieving the goals of the Home and Community Based of the Home and Community Based Waiver Program.Waiver Program.

Courtney Harold Van Houtven gratefully Courtney Harold Van Houtven gratefully acknowledges the Agency for Healthcare Research acknowledges the Agency for Healthcare Research and Quality for funding (T32 HS00032). and Quality for funding (T32 HS00032).

We appreciatively acknowledge the assistance of We appreciatively acknowledge the assistance of the NC Department of Health and Human Services the NC Department of Health and Human Services Division of Medical Assistance. The DMA has not Division of Medical Assistance. The DMA has not reviewed this report and, therefore, cannot validate reviewed this report and, therefore, cannot validate the accuracy of information contained in this report. the accuracy of information contained in this report.

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