This text serves as the basis for the Administrator's oral remarks and should be used with the understanding that material may be omitted or added during presentation.
Good afternoon. I want to thank the Administration on Developmental Disabilities and Commissioner Williams for inviting me here today. HCFA, as you may know, is undergoing an internal reorganization, and one of the key missions of the new HCFA is to renew and strengthen ties with our health care partners -- and this includes the ADD.
In the last year or two, I think our agencies have communicated more effectively, exchanged views, and requested input on a number of issues of mutual concern. It is important to me that we continue to develop our partnership for the benefit of the individuals we serve. HCFA is the largest purchaser of health care services in the United States. As such, it is essential for us to work closely with other purchasers, providers, and advocates to set standards for care and ensure that the needs of our beneficiaries are being met. When it comes to the needs of people with disabilities, much of the services we pay for are provided through Medicaid, which, as you know, is jointly operated by the federal government and the States -- so here again, it is crucial that we support a close working relationship with state agencies for the benefit of the individuals we serve. Of course, driving these collaborative efforts between HCFA and ADD and HCFA and the States, are the developmentally disabled consumers of care, their families, and their advocates. As these voices from the community have grown increasingly organized and effective, there can be no question that their demands for services and payment structures that support maximum self-determination and independence are getting through.
These consumers are our most important partners and the ones we all must attend to first and foremost. The Medicaid Benefit for People with Developmental Disabilities In 1992, about 4.5 million of our 30 million Medicaid beneficiaries were disabled. Of these, just under 30 percent, or 1.3 million, had developmental disabilities. Of those with developmental disabilities, only 20 percent received long-term support through any of the Medicaid-reimbursed service settings -- whether they were nursing homes, State institutions, ICF/MRs, or home and community-based settings in waiver programs.
But Medicaid has been and continues to be critical to the health of people with disabilities. While the bulk of long-term care services for these individuals continues to be provided informally by family and friends, Medicaid covers the greater part of the costs for paid services. Over time, the program has evolved significantly: it was not so long ago that Medicaid funds were channeled exclusively to the large State-operated institutions for people with developmental disabilities -- the "warehouses". In 1971, the Intermediate Care Facility for Mentally Retarded was enacted into law as an alternative to the warehouse approach. The ICF/MR was intended to provide a setting where active treatment was required to help each resident reach his or her maximum functional capability. Ten years later, however, Congress reacted to complaints that long term care was only available as an institutional benefit. To provide an alternative to the "institutional bias" of the Medicaid program, the home and community-based waiver was added to the arsenal of approaches on which States could draw to furnish services to people who would otherwise receive care in an institution. Today, as a result of the 1981 enactment of the HCBS waiver program, we seek increasingly to channel Medicaid funds in a variety of ways that are determined by a process in which the States and the Health Care Financing Administration, working as partners, create locally-based strategies that are more responsive to developmentally disabled individuals and their representatives in the community. One could say that we are in a prolonged state of experimentation, trying out different programs on a State-by-State basis through the HCFA waiver authority. Actually, it would be more accurate to say that we are achieving a kind of equilibrium of creativity based on the understanding that there is no such thing as a single solution but that the solution lies in being adaptable and willing to change as our wisdom and technical abilities increase. This is nowhere more true than in the field of developmental disabilities where the health and social requirements of the individuals in each diagnostic group vary widely and where our understanding of the abilities and needs of these groups has grown so rapidly. The major thrust of most innovations in treatment and services in this field has been to make it possible for individuals to remain in the community and to develop some modicum of independence. The Medicaid program has been central to the development of community settings -- group homes, supervised apartments, and supported living settings. Settings of 15 or fewer beds grew from 7,286 in 1982 to 48,254 in 1994. The Home and Community-Based Waiver Program The major mechanism for implementing community-based programs has been the Home and Community-Based Services Waiver program. At present, every State in the U.S. except Arizona has an HCBS waiver to deliver services as an alternative to institutionalization -- and Arizona is offering the same kind of option through an 1115 waiver. Through the HCBS Waiver program, States have been able to significantly expand community services for people with developmental disabilities. re Between 1993 and 1994 alone, the number of people with mental retardation and developmental disabilities ceiving home and community-based services increased 41 percent -- from 86, 604 to 122,075. In fiscal year 1996 there are, for the first time, more waiver participants than ICF/MR residents across the U.S. This represents a considerable cost-savings for the Medicaid program -- annual costs per resident in ICF/MRs average $90,000 as compared to $28,000 per year for individuals in the waiver programs. And most would agree that these numbers generally represent an improvement in the quality of life for the beneficiaries for whom an ICF/MR used to be the only option. I would like to describe the experience of one of our beneficiaries in Pennsylvania as an example of what these programs can mean to an individual. Germeel, a mentally retarded adult, is a client in Pennsylvania's waiver program for children and adults with mental retardation. He was considered -- quote unquote -- "the worst person" at the institution where he had been living since his early teens and he was heavily medicated. When the County opened an HCBS program, Germeel's family enrolled him immediately. After intensive planning, Germeel was placed in a community home with two other men. His case manager recruited behavior specialists to help him control his explosive anger. Pre-vocational services were provided which helped him participate in work which he values. Today, Germeel no longer takes psychotropic medications; he has a girl friend; and his work is going well. A definite success story. But we must not assume that transfer from an institution into a community setting is a guarantee of better care or better quality of life. The promise that community-based living holds can only be achieved when there is a true commitment on the part of the State. This commitment includes money for services. It means adequate staff to make the program work. It means training for those who will serve as support persons, case managers and oversight personnel. And it means responding to the needs of the people served on the waiver. Monitoring the quality of services is a somewhat more difficult proposition in home and community-based programs and we are working to develop the tools needed to make complete assessments of the many aspects of care they provide. A workgroup comprised of HCFA staff, State agency representatives, advocates, and consumers is currently working on the development of quality indicators for home and community-based care. The focus, as with all HCFA quality initiatives, is outcome-oriented and will comprise a wide range of functions. The workgroup is completing an initial draft of its recommendations, and we expect to make them public later this Spring.
Managed Care for the Developmentally Disabled
When we consider managed care as an option for disabled groups in general and for the developmentally disabled in particular, concerns about quality of care immediately become an issue, as most managed care organizations lack experience in providing long-term care and supportive services to these populations. But the managed care delivery system may hold potential benefits for people with developmental disabilities, such as better service coordination and more accountability for the services clients receive. HCFA is currently supporting the development of improved quality assurance techniques that may be used to explore managed care as an option for this population. For example, the Minnesota Quality Assurance Demonstration Project is an initiative in which the Minnesota Department of Human Services will enter into performance-based contracts with counties and participating ICF/MR programs. The ICF/MR programs combine both acute and long-term care into one program. The contracts will specify the amount and conditions of reimbursement, requirements for monitoring and evaluation, and expected client-based outcomes. This demonstration may have important implications for managed care programs for persons with disabilities. The capitated payment methodology used in the demo will permit us to test its feasibility for this population. We will also be able to study the impact of redirecting the QA system toward consumer outcomes. Michigan has approached us with an idea for an innovative managed care plan for people with developmental disabilities which will change the way these specialized services are financed and will provide greater flexibility at the local level. The State has proposed requiring Community Mental Health Service Programs to qualify as managed care organizations and contract with HMOs for primary care. It is very early in the process to predict how this will turn out but it gives an idea of the kind of creative work going on. We are still at a fairly early stage in the use of 1115 waivers for the developmentally disabled but two programs are promising. The Arizona Long Term Care System, an 1115 waiver program, was implemented in 1988 to provide acute and long-term care, including home and community-based services, for the elderly, the physically disabled, and the developmentally disabled using a managed care approach and a capitated system of payments. Rhode Island has submitted an 1115 long-term care waiver application to consolidate its ICF/MR program, its HCB waiver program, state plan rehabilitation services, and acute care into a single program with a single set of rules. They want the program to be administered as a managed care system with a single payor. We are working with the State to iron out the details of this demonstration program.
Improvements in ICF/MRs
We are also working to strengthen the ICF for persons with mental retardation. The 135,000 people served by the ICF/MR program are particularly vulnerable, with about 25 percent requiring round-the-clock nursing care. Many of these individuals may be better served in the ICF setting. Interestingly, the most recent analysis of those who receive the ICF/MR benefit shows that although 70 percent of individuals in ICF/MRs live in facilities with more than 16 residents, the majority of the facilities serve between four and eight people, and another 18 percent serve nine to 16 people. We want to see a continued movement toward smaller facilities and I think we will. At the same time, we are actively engaged in making improvements to the ICF/MR benefit through outcomes-oriented changes in the survey process; updated ICF/MR regulations; and the development of quality indicators that we hope will eventually be applicable to both ICF/MRs and to HCB waiver programs.
Conclusion
In conclusion, let me say that we continue to support efforts to make home and community-based waivers more widely available to people with developmental disabilities. In the President's FY98 budget proposal, we have proposed changing the HCBS option from a waiver program to a State plan option. Additionally, current law restricts pre-vocational, educational and supported employment services to persons who have been institutionalized in the past. We continue to support the elimination of this outdated requirement for access to these programs -- so far without Congressional support. We will continue to act on the principle of self-determination for the individual beneficiary and I think that we will find that, as the means become increasingly available, the reality will come to fit the principle.