1 Family Care (report 11-5) Legislative Audit Bureau January 2012

2 Areas of Review u Program expenditures and participation from FY through FY u Services provided to participants and assessment of their needs u Process for setting capitation rates for managed care organizations (MCOs) u Financial solvency of MCOs u Quality-of-care indicators

3 Program Administration u Through FY , Family Care expanded from 5 to 53 counties. u In FY , four more counties participated— Langlade, Lincoln, Waupaca, and Winnebago. u Nine MCOs arrange and manage care. –5 Long-Term Care Districts –3 Nonprofit Organizations –1 County

4 Program Participation Family Care Participants June 2010

5 Expenditures and Residential Rates u The State’s expenditures for Family Care increased from $248.4 million in FY to $936.4 million in FY u Residential services accounted for 44.3 percent of all service expenditures. u DHS discontinued its plans to establish uniform residential rates in 2011.

6 MCO Administrative Expenditures u MCO expenditures for salaries, supplies and services, and rent totaled $53.2 million in u Compensation for MCO executives exceeded $200,000 in four instances, including one executive who was paid more than $300,000. u The highest executive salaries were generally paid by the three private, nonprofit organizations.

7 Cost of Care u In June 2010, almost three-fourths of Family Care participants were disabled. u Those with developmental disabilities were the most costly ($2,900 to $4,600 per month). u In FY : –17 percent of the 31,000 participants were “high-cost.” –Those with developmental disabilities represented 74.2 percent of high-cost participants.

8 MCO Financial Solvency u OCI uses two measures in assessing the risk of insolvency: –Analysis of net assets –Maintenance of funds to protect against insolvency u Three MCOs have been identified as being at greater risk of insolvency: Care Wisconsin First, Community Health Partnership, and NorthernBridges. u DHS established corrective action plans for Community Health Partnership and NorthernBridges in late 2010.

9 Eligibility Determinations u A “functional screen” assessment tool is used to evaluate eligibility for services. u We reviewed all assessments completed in FY and found errors for less than 1.0 percent. u MCOs are required to annually reassess participants’ eligibility. u Assessments were largely timely, and we found no pattern to suggest MCOs were systematically decreasing care levels to limit their own costs.

10 Compliance with Program Requirements u DHS contracts for annual reviews of each MCO’s compliance with federal and state program rules. u MCOs complied with most of the 129 regulations and requirements the contractor assessed. u MCOs fully met between 87.1 percent and 89.5 percent of all standards in each year we reviewed. u Evaluations of participants’ personal outcomes have not been completed recently. u More than 80 percent of participants surveyed by MCOs expressed satisfaction with Family Care in 2009.

11 Cost Effectiveness u Cost-effectiveness is difficult to assess. u A 2005 study estimated Family Care participants cost $452 less per month than similar individuals. u Family Care expenditures increased by an average of 6.5 percent annually from FY through FY , compared to 7.9 percent annually for similar services nationally. u Some growth in Medical Assistance expenditures may be attributed to Family Care’s efforts to promote independence and quality of life that may not have occurred in the absence of the program.

Biennial Budget Act u Generally prohibits the expansion of Family Care into additional counties through June 30, u With limited exceptions, places an enrollment cap on Family Care through June 30, u Provides $12.6 million in each fiscal year to provide long-term care services to individuals on the Family Care waiting list with “urgent” needs.

13 Audit Recommendations u We recommended DHS report by September 1, 2011, on: –rate-setting; –oversight of service delivery; –financial oversight; and –performance measurement and evaluation efforts. u We recommend DHS report by August 31, 2012, on the status of the program.