1. Home and Community Based Waivers for Disabled Adults: Program versus Selection Effects Courtney Harold Van Houtven Durham Veteran’s Administration Duke University Marisa Elena Domino University of North Carolina

2. Background Purpose of Waiver programs is to provide coverage for extra services to keep people in communityPurpose of Waiver programs is to provide coverage for extra services to keep people in community –In-home aide services –Respite care –Adult day health care –Others Waivers for disabled adults operate in 47 of the 50 statesWaivers for disabled adults operate in 47 of the 50 states

3. Background Incentives exist for careful selection of enrollees by statesIncentives exist for careful selection of enrollees by states –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 care in NC Hence, states have incentives to select persons partially based on expected spending levelsHence, states have incentives to select persons partially based on expected spending levels

4. Objective To examine the impacts on costs of a Medicaid Home and Community-based Waiver program and whether differences are due to selection effects or true program effects, controlling for endogenous selection of persons into the program.To examine the impacts on costs of a Medicaid Home and Community-based Waiver program and whether differences are due to selection effects or true program effects, controlling for endogenous selection of persons into the program. Expands on Anderson & Mitchell (1997, 2000) study of an AIDS Waiver programExpands on Anderson & Mitchell (1997, 2000) study of an AIDS Waiver program –Continuous measure of waiver participation –Multi-faceted severity measure

5. Study Design –There is no objective way of identifying persons truly at-risk of institutionalization Persons with moderate severity of illness are more likely to be selected for Waiver enrollment over more severely ill individuals.Persons with moderate severity of illness are more likely to be selected for Waiver enrollment 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

6. Study Design We use severity to differentiate institutional risk and expected expenditures.We use severity to differentiate institutional risk and expected expenditures. –Multi-faceted risk adjustment scale (CDPS) specially designed for disabled adults (Kronick, Gilmer et al., 2000). –Predictive of future health care needs and differentiates severity based on expected expenditures.

7. Data Sources North Carolina Medicaid claims and enrollment data from Fiscal Years 1999- 2000North Carolina Medicaid claims and enrollment data from Fiscal Years 1999- 2000 Area Resource File for North Carolina for county-level informationArea Resource File for North Carolina for county-level information State licensure information on home health agenciesState licensure information on home health agencies

8. Sample All Medicaid adults with disabled or blind status whoAll Medicaid adults with disabled or blind status who –were continuously enrolled in Medicaid for the 2 year study period and –had at least $10,000 in expenditures in FY 1999 N=27,056. Waiver participants=1,752N=27,056. Waiver participants=1,752

9. Methods Methods Two-part expenditure models ofTwo-part expenditure models of – Total Medicaid expenditures – Nursing home expenditures – Inpatient expenditures Key Independent variablesKey Independent variables –Percent of the year on waiver –CDPS severity –Demographics –Medicare enrollment

10. Methods Methods Instrumental variables estimation controls for selection into the waiver programInstrumental variables estimation controls for selection into the waiver program Identifying instrumentsIdentifying instruments –Home health agencies in county –County marketing measure

11. Descriptive 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

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

13. Descriptive Statistics

14. Results Endogeneity exists for total cost and nursing home cost modelsEndogeneity exists for total cost and nursing home cost models –Instruments are strong predictors of selection into waiver –Nursing home model includes home health agencies as only instrument

15. Results Waiver participants face –A higher likelihood of having any Medicaid expenditures –No difference in levels of total expenditures –No difference in the likelihood of any nursing home expenditures –Significantly lower 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 expenditures –Slightly lower levels of expenditures Save $2,506 on average compared to non-participantsSave $2,506 on average compared to non-participants

16. Predictions Choosing three types of disabled adults we make predictions about cost savings. Choosing three types of disabled adults we make predictions about cost savings. TypeLow cost adultMedium cost adultHigh cost adult Diagnostic Categories (CDPS) NoneNervous 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 0.00450.00750.0055 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

17. Discussion Participation in a Medicaid Home and Community-based Waiver leads to substantially different patterns of careParticipation in a Medicaid Home and Community-based Waiver leads to substantially different patterns of care We find no savings in total expenditures but savings in nursing home and hospital inpatient expenditures for waiver participants, achieving the goals of the Home and Community Based Waiver Program.We find no savings in total expenditures but savings in nursing home and hospital inpatient expenditures for waiver participants, achieving the goals of the Home and Community Based Waiver Program.

18. Courtney Harold Van Houtven gratefully acknowledges the Agency for Healthcare Research and Quality for funding (T32 HS00032). We appreciatively acknowledge the assistance of the NC Department of Health and Human Services Division of Medical Assistance. The DMA has not reviewed this report and, therefore, cannot validate the accuracy of information contained in this report. Excellent programming was provided by Josh Olinick.