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Waterstone, D., Kang, T., Flores, C., Howes, C., Harrington, C. & Newcomer, R. (2004) California’s In-Home Supportive Services Program: Who is Served? Published on the Center for PAS website http://pascenter.org/documents/IHSS_Final_Report.pdf
Abstract
From the Executive Summary
"Governor Schwarzenegger’s preliminary 2004-05 Budget Bill proposed to eliminate a component of California’s In-Home Supportive Services (IHSS) program serving approximately 68,000 individuals. This component, known as the Residual Program, included Protective Supervision and Domestic Care services, and services provided by parents and spouses. Under the then existing regulations and the state’s approved state plan for Medicaid, these services did not qualify for shared financing with the Medicaid program and were thus funded solely by state and county sources. The objective of the administration’s proposal was to obtain an estimated net savings from the IHSS program in Fiscal Year 2005 of $366 million.
These proposals were strongly opposed by service recipients, family members, providers, and advocates for home and community-based care. Additionally, analyses by the Legislative Analyst’s Office, the University of California, San Francisco and others suggested that the cost savings may have been overestimated, and that other cost savings alternatives may be available and more viable. The administration eventually withdrew the proposal to eliminate the Residual Program and elected to pursue revisions in the state plan and waivers from existing Medicaid regulations. This new approach left in tact the services available in the Residual Program, but permitted the receipt of federal matching funds, effectively reducing state and county expenses for the residual services by 50 percent. The waiver request was approved on August, 2004. The study reported here examines several key assumptions underlying the state’s original net savings estimate and other cost shifts that had not been included in this estimate of net savings. These results show that the original savings estimates were overly optimistic. The approach eventually adopted, that of seeking federal matching funds, likely yields more true cost savings to the state.
Population Affected: With the proposed Residual program elimination, approximately 70,000 recipients would lose services. Individuals would be affected very differently, depending on the services lost. The groups potentially affected by program elimination would have been: 1) recipients with a parent or spouse provider, 2) recipients receiving only domestic care services, 2) recipients receiving protective supervision services, 4) recipients utilizing the Advance Pay option, and 5) those receiving restaurant/meal allowance services. Of these groups, those receiving Protective Supervision appeared to have had the highest risk of institutionalization or out-of-home placement as a result of the policy proposal. Others, such as individuals utilizing Advance Pay and those with meal allowances, had a high likelihood of moving into the regular IHSS program.
State Costs from Eliminating the Residual Program: There is a large degree of uncertainty in determining where individuals would turn in the absence of Residual Program services. This report has considered state costs from Residual recipients utilizing four possible service options: the IHSS Personal Care Services Program (PCSP), nursing homes, Community Care Facilities, and Intermediate Care Facilities for the Developmentally Disabled. Alternative scenarios were developed showing the potential state costs under varying assumptions about the proportion of persons electing these options.
The originally proposed Residual Program cost savings likely underestimated the number of Advanced Pay and meals allowance recipients who would move into the standard IHSS program, and the number of those receiving Protective Supervision and/or parent spouse reimbursed care who might enter out-of-home placements. Also underestimated was that the state could have been funding the Domestic Care Only and Protective Supervision component of the Residual Program under shared federal expenses, and that these recipients could be transferred into the standard program. The uncertainty of the new costs associated with elimination contrasts with the certainty of state expenditures reductions obtained by retaining the Residual Program services under practices that qualify for federal matching funds.
In reviewing the IHSS Residual Program operations, we identified that the Domestic Only Services program and the Protective Supervision program both qualified for federal matching funds. These programs provide basic services to meet the instrumental activities of daily living needs (e.g., shopping, meals preparation) and cueing services. Such services have been allowed under federal state plan rules since 1997. The Centers for Medicare & Medicaid Services (CMS) have since approved (effective in August 2004) the state’s request to include these services as part of its standard IHSS program, and to fund the other services under a Medicaid section 1115 waiver.
Litigation Expenses and Penalties: A further consideration relative to the possible elimination of the Residual Program was that such an action would likely be challenged in a legal battle with the disability community based on the United States Supreme Court’s 1999 Olmstead decision. This ruling requires states to increase home and community-based alternatives to institutional care for the elderly and disabled. Litigating Olmstead-related lawsuits would bring extra costs for the state. They will also likely delay implementation of any proposed reductions, moving back any realized cost savings expected in the budget.
Other Alternatives: Even with the eventually adopted and approved options of modifying the Medicaid state plan to include Protective Supervision and Domestic Care Only in the IHSS program, and obtaining a Medicaid waiver to reimburse parent and spouse providers, and the Advance Pay recipients, the state continues to seek means of reducing overall expenses within the IHSS program. The Legislative Analyst’s Office and others have suggested refinements in the administrative practices of the program as one possible source of such savings. Our analysis has documented the wide variability among counties in the number of hours of service authorized under the IHSS program. Reducing this variability through implementation of a more uniform assessment and care planning process, and perhaps the adoption of the administrative procedures of some of the more efficient counties, may be a viable source of additional cost reductions."
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