Missing the Mark: CalAIM creates new barriers that prevent nursing home diversion/transition to assisted living [Opinion]

By Jason Bloome and John Amber

When we spoke a few years ago with representatives at California Coordinated Care Managed Care Organizations (CCI MCOs) in Los Angeles they said they would love to develop nursing home diversion/transition programs to assisted living homes (aka residential care facilities for the elderly – RCFEs) but since they had no way to recapture the costs they could not fiscally justify those programs. Even worse, they pointed out, CCI was contrary to policy goals when rate structures gave CCI MCOs economic incentive to keep members on Long Term Support and Services (LTSS) in skilled nursing facilities (SNFs) rather than allowing them to reside in RCFEs. 

The Research Triangle Institute in 2018 prepared an analysis of CCI for the Centers for Medicare and Medicaid Services.  In their report they detailed many problems with the program: it was not cost-effective, had Medi-Cal waiver carve outs that disrupted the continuity of care, suffered from low enrollment, and failed to lower unnecessary institutionalization. 

CCI is a demonstration program for Managed Long Term Support and Services (MLTSS) active in 7 counties.  The state-wide MLTSS program, California Advancing and Innovating Medi-Cal (Cal AIM), is expected to begin in January 2022.  Both Cal AIM and CCI will run concurrently until CCI fully transitions into Cal AIM in 2023. Cal AIM beneficiaries will include, among others; the homeless, disabled, children and the elderly. 

MLTSS involves capitated payments to MCOs to manage LTSS for members on Medi-Cal and the use of In Lieu of Services (ILOS) to provide cost-efficient substitutes “in lieu of” nursing for members eligible for nursing home diversion/transition.  The federal government encourages states to use ILOS as a tool for saving state and federal Medicaid dollars as LTSS is rebalanced from expensive SNFs to more affordable home and community-based care settings.  

One section of the Cal AIM proposal p. 204 titled Nursing Home Diversion/Transition to Assisted Living involves the use of ILOS and RCFEs.

 The section begins:

Nursing Facility Transition/Diversion services assist individuals to live in the community and/or avoid institutionalization when possible. The goal is to both facilitate nursing facility transition back into a home-like, community setting and/or prevent skilled nursing admissions for beneficiaries with an imminent need for nursing facility level of care (LOC). Individuals have a choice of residing in an assisted living setting as an alternative to long-term placement in a nursing facility when they meet eligibility requirements.

And spells out that beneficiaries are responsible for the room and board expenses (e.g. with social security supplemental income) and ILOS can only be used for non-room and board costs (e.g. medical care, activities of daily living, incontinent supplies, etc.). 

For individuals who are transitioning from a licensed health care facility to a living arrangement in a Residential Care Facilities for Elderly (RCFE) and Adult Residential Facilities (ARF); includes non-room and board costs (medical, assistance w/ ADLs.). Allowable expenses are those necessary to enable a person to establish a community facility residence that does not include room and board.

It allows the use of ILOS and enhanced services to allow individuals to be safely and stably housed in RCFEs:

Coordinating with the Medi-Cal managed care plan to ensure that the needs of participants who need enhanced services to be safely and stably housed in RCFE/ARF settings have in lieu of services and/or enhanced care management services that provide the necessary enhanced services or fund RCFE/ARF operator directly to provide enhanced services.

It reiterates ILOS requirements:

In lieu of services are alternative services covered under the State Plan but are delivered by a different provider or in a different setting than is described in the State Plan. In lieu of services can only be covered if:

1)     the State determines they are medically-appropriate and a cost effective substitutes or settings for the State plan service,

2) beneficiaries are not required to use the in lieu of services and

3) the in lieu of services is authorized and identified in the Medi-Cal managed care plan contracts.

Includes RCFEs among the list of allowable contracted providers:

• Case management agencies

• Home Health agencies

• Medi-Cal managed care plans

 • ARF/RCFE Operators

 Requires the RCFEs to be licensed:

The RCFE/ARFs are licensed and regulated by the California Department of Social Services, Community Care Licensing (CCL) Division.

And ends the section by clarifying what ILOS should accomplish in replacing state plan services:

Examples of State Plan services to be avoided include but are not limited to skilled nursing facility services.

As written, the Cal AIM Nursing Home Diversion/Transition to Assisted Living component appears to be a godsend for the low-income elderly who could benefit from nursing home diversion/transition.  In their 2020 LTSS California report card, AARP/SCAN estimates at least 8,000 SNF residents on LTSS with low level care needs could safely reside in assisted living homes.   Every year many IHSS recipients who require too much care to remain at home transfer to nursing homes even when they could reside in assisted living homes.  Providing nursing home diversion/transition pathways from expensive nursing homes to more affordable assisted living homes is humane, sensible and fiscally prudent.  

Imagine, then, our surprise when we wrote the Department of Health Services (DHCS) to confirm details about Cal AIM and this was their response:  

1) Can CCI MCOs use ILOS to pay for the RCFEs’ “assisted living” expenses (e.g. ADLs, medical) for seniors on LTSS eligible for nursing home diversion/transition? (Page 204, Paragraph 4)?

DHCS: The Nursing Facility Transition/Diversion ILOS is focused on facilitating members’ transitions from Nursing Facilities and on activities to help prevent skilled nursing admissions. The ILOS includes assessment, assistance with communication and with obtaining and presenting options, activities aimed at retaining facility housing, and coordination with MCOs to ensure members’ needs are met; however, the ILOS does not cover an RCFE’s “assisted living” expenses, such as ADLs or medical costs, for MLTSS members eligible for the ILOS.  ILOS are intended to assist members in ways that allow them to live more independently, but do not replace benefits that members are authorized to receive under Medi-Cal.   California does have an Assisted Living Waiver program that will pay for services for RCFE residents who would otherwise qualify for nursing home care, however this program is limited to a few counties in California.

2) Can MLTSS MCOs use ILOS to pay for “assisted living expenses” in RCFEs after January 2022 (Page 14, Paragraph 4)?

DHCS: Payment for “assisted living expenses” in RCFEs is not included as part of the Nursing Facility Transition/Diversion to Assisted Living Facilities ILOS, nor in any of the other ILOS options.  Members remain eligible to receive their Medi-Cal benefits while staying in an RCFE. Persons on SSI/SSP or on the Aged and Disabled Federal Poverty Level Program (A & D FPL) are eligible with no share of cost, and for those whose income is too high to qualify for SSI or the Aged and Disabled Program, there is a special “Board and Care Deduction” which can help them qualify for no cost or low share of cost Medi-Cal.

3) Will the Assisted Living Waiver program be merged into Cal AIM and, if so, when will the program end?

DHCS: No, at this time, the Assisted Living Waiver (ALW) Program is not a part of the CalAIM initiative. However, as a part of CalAIM, many beneficiaries (dual and non-dual) enrolled in 1915(c) HCBS Waivers will be subject to mandatory enrollment into Medi-Cal managed care plans by January 1, 2023.

The Cal AIM section titled Nursing Home Diversion/Transition to Assisted Living has many of the right words, but they ring hollow when seniors eligible for nursing home diversion/transition are denied the option of assisted living because MLTSS MCOs cannot use ILOS to pay for care costs in those settings.  

Unfortunately, Cal AIM is also unintentionally cruel when it permits the following hypothetical conversation between a MLTSS MCO care coordinator and their LTSS member:

Mr. Johnson, you and I have discussed that you require 24-hour assistance and need too much care to remain at home.  You are eligible to reside in an assisted living home.  Perhaps you would like to consider a small assisted living where two staff take care of 4-6 residents?  You would? Perfect!  Oh, I am very sorry to tell you, Mr. Johnson, while we are allowed to assess your care needs, present to you the option of assisted living and can even pay for your move; unfortunately, this option is unavailable to you since it is not one of our covered services.  However, we are reimbursed for another type of care setting.  Would you like to consider residing in a nursing home? 

The state should not expect MLTSS MCOs to promote nursing home diversion/transition to assisted living programs when they deny them the use of the single most important tool: recapturing care costs in assisted living by claiming them as ILOS “incurred claims” towards the Medical Loss Ratio and annual capitated rates calculations.  

DHCS references the Assisted Living Waiver, the only state program which allows Medi-Cal to pay for RCFEs.  ALW currently has a waitlist of 4,400 people, has more than 80% of program participants defined with “nursing level of care” in large 100+ bed RCFEs that frequently have 1 staff to 30-40 residents, has no provision for hospital to RCFE transition for seniors unable to return home and does not allow for participation by seniors with Medi-Cal share of costs.  Since ALW is only active in 14 counties there is no prospect for nursing home diversion/transition to RCFEs for seniors on LTSS who do not live in those counties.

Linking ALW with Cal AIM is also problematic when MLTSS MCOs realize no fiscal benefit when they transfer members from one Medi-Cal funding stream they control (skilled nursing home payments, etc.) to another Medi-Cal funding stream controlled by the state (the ALW program). Since ALW expenses are not included in annual capitated rate calculations, MCOs realize more profits when members are in nursing homes (where they are fully funded) rather than with ALW providers.

The pivotal, operative phrase in the Cal AIM proposal (p. 205, paragraph 4) for RCFEs, ILOS and nursing home diversion/transition is:  “Allowable expenses are those necessary to enable a person to establish a community facility residence”. 

DHCS has asked that public comment on the recently released Cal AIM Enhanced Care Management and In Lieu of Services Contract Template Provisions be submitted to them at:  CalAIMECMILOS@dhcs.ca.gov by March 16.  Senior advocates and stakeholder groups should suggest a vital revision to fulfill Cal AIM’s core intent:  Add to Page 18, Section 2a (and to other  relevant sections) the following as an allowable ILOS: 

Care costs (e.g. ADLs, incontinent supplies, etc.) in assisted living for members on state services (e.g on IHSS, in a SNF on LTSS) eligible for nursing home diversion/transition.

A bridge without proper supports is always at risk of collapsing.  Cal AIM should not repeat the same mistakes made with CCI which was not cost-effective, failed to promote LTSS rebalancing and provided fiscal incentives to MLTSS MCOs to keep seniors in instead of out of nursing homes.  The Cal AIM proposal urgently needs an update with language that is unequivocal: MLTSS MCOs that invest time, money and energy for nursing home diversion/transition to assisted living can use ILOS for all necessary program components.

Jason Bloome is owner of Connections – Care Home Consultants and founder of the Olmstead Now Coalition.  

John Amber was the West Coast Director for the American Parkinson’s Disease Association from 1997-2010. 

Glossary:

ADLs: Activities of Daily Living (e.g. help with dressing, bathing, etc.)
ALW: Assisted Living Waiver
Cal AIM: California Advancing and Innovating Medi-Cal
CCI: California Coordinated Care Initiative
ILOS: In Lieu of Services
LTSS: Long Term Support and Services
MCO: Managed Care Organization
MLTSS: Managed Long Term Support and Services
RCFE: Residential Care Facility for the Elderly
SNF: Skilled Nursing Facility