Projecting Cost Savings from the ADRC Network. Summary of Findings General fund savings to Medi-Cal...
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Transcript of Projecting Cost Savings from the ADRC Network. Summary of Findings General fund savings to Medi-Cal...
Projecting Cost Savings from the ADRC Network
Summary of FindingsGeneral fund savings to Medi-Cal for nursing facility
stays could cover the cost of the ADRC Network infrastructure and options counseling if options counseling diverts 4% of its participants from NFs
The Lewin calculator yields much higher savings, equivalent to $6.90 for every $1 invested
There is already some evidence of lower long-term care costs in ADRC counties.
However, all estimates are based on a series of strong assumptions.
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Focus on Costs to General Fund
Reducing costs is not an explicit purpose of ADRCs as envisioned in the Older Americans Act
However, the possibility of Medi-Cal savings offers a compelling incentive for the State of California to invest in the ADRC Network
Therefore, this cost analysis focuses on: Cost of the ADRC Network (not ongoing ILC
and AAA services) Potential Savings for Medi-Cal
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What does it take to fund the ADRC Network annually?
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ADRC Network ComponentCost
Estimate
State infrastructure
Central office staffing and related costs $594,464
ADRC development/implementation contracts (5 @$100,000)
$500,000
CalCareNet annual website hosting & upkeep $50,000
Options counseling
Training/TA $71,500
Reimbursements (3,000 people @$45/hr for 4 hrs)
$540,000
Estimated Total $1,755,964
Focus on Options Counseling Role in Preventing Institutional
Care
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Nursing facility
(Medicaid)
Nursing facility
(private-pay)
Increasing level of care need
Living at home (formal
or informal home care)
→ Spend down→ Acute illness or hospital stay→ Loss of primary caregiver→ Depleted funds
Depleting private resource
Extending the Ability of People to Live at Home Saves Medi-Cal Dollars
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Nursing facility
Medicaid
Nursing facility
(private-pay)
Living at home (formal or informal home care)
→ Spend down
Increasing level of care need
Depleting private resource
Typical Annual General Fund Cost for NF Care: $22,719
$5,679.85 per person per month in 2012-13
DHCS May 2013 Budget Estimate
Assume average 8 month stay
Eight month average is used by Lewin in the calculator
Consistent with people starting at different times a year or a mix of long-term and short-term stays
Total $45,439, 50% paid by federal match
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Savings are substantial even if Medi-Cal pays for HCBS
CareFor example: Multipurpose Senior Services
Program (MSSP): $3,781 annual costs for waiver participants
-$45,439 + $3,781 = -$41,658
Per person who receives MSSP instead of NF
-$20,829 annually for federal costs
-$20,829 annually for general fund
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However, estimated savings are very sensitive to
assumptionsHow much will community-based services
cost? If costs are similar to waiver costs, which waiver?
IHSS averages $12,530 per person per year, which would lower general fund savings to $16,454
Who will use community-based services that would never use Medi-Cal NF care? “Woodwork” effect
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Assume $16,454 annual savings per person not
entering NF
Assumes each person not entering a NF due to ADRC options counseling has costs equal to IHSS costs
The $12,530 per person ($6,265 GF) is probably too high but can help account for woodwork effect
Same net cost would occur if each person received $4,176 in HCBS services, but two more people used community services for every person that avoided a nursing facility 10
The ADRC network pays for itself if just 4 percent of those who receive options counseling take avoid nursing facility care
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Where does 4% come from?
$16,454 savings per person not entering a NF
$1,755,964 divided by $16,454 = ~107
Savings for diverting 107 people is $1,760,578
If 3,000 people receive options counseling and 107 avoid NF care, this means 3.6% avoid NF (107/3000)
So, if 4% (120) avoid NF, Medi-Cal GF saves $1,974,480 or $218,516 more than the network costs
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ADRC Network ComponentCost
Estimate
State infrastructure
Central office staffing and related costs $594,464
ADRC development/implementation contracts (5 @$100,000)
$500,000
CalCareNet annual website hosting & upkeep $50,000
Options counseling
Training/TA $71,500
Reimbursements (3,000 people @$45/hr for 4 hrs)
$540,000
Estimated Total $1,755,964
Is it plausible that options counseling will divert 120
people?
Two ways of checking:
1.Lewin ADRC Cost Offsets Calculator
2.Medi-Cal NF use in existing ADRC counties
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Calculating Diversion Population in the Lewin ADRC Cost Offsets
Calculator
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Lewin ADRC Cost Offsets Calculator Applied to California
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844 diverted would yield $6.90 for each $1 invested in
ADRCs
$16,454 times 844 = $13,887,176 saved
Minus $1,755,964 costs = $12,131,212 saved net
$12,131,212 divided by $1,755,764 in cost = 6.9
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Long-term care days are falling in California; falling faster in ADRC
counties
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Fall in LTC Days
2008-2012*
Fall in Medi-Cal LTC Days 2008-2012*
ADRC Counties
15% 10%
Non-ADRC Counties
9% 9%
*Adjusting for change in population aged 65+
Cost to Medi-Cal for LTC in ADRC counties is $4,461,474 less than it would have been if LTC
days had matched the rest of the state
Summary of FindingsGeneral fund savings to Medi-Cal for nursing facility
stays could cover the cost of the ADRC Network infrastructure and options counseling if options counseling diverts 4% of its participants from NFs
The Lewin calculator yields much higher savings, equivalent to $6.90 for every $1 invested
There is already some evidence of lower long-term care costs in ADRC counties.
However, all estimates are based on a series of strong assumptions.
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Discussion QuestionsIs there a better basis to estimate the costs (to the
State) of services for those receiving options counseling?
Is it plausible that 4% of people who receive options counseling avoid Medi-Cal NF care? Is options counseling well targeted to this group?
How comparable are options counseling and other ADRC activities to functional assessment for Medi-Cal level of need?
What network costs are left out (that aren’t otherwise ILC or AAA costs)?
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