Open Bridges: CalAIM and the Use of In Lieu of Services Offers Hope For Thousands of the Elderly Who Could Benefit From Skilled Nursing Facility Diversion/Transition.

By Jason Bloome

California is currently requesting stakeholder input for their CalAIM proposal, an ambitious undertaking which will streamline the delivery of Medicare and Medi-Cal services with the ultimate goal of transitioning the state to Managed Long Term Support and Services (MLTSS).  One component of CalAIM, the use of In Lieu of Services (ILOS), will open pathways which allow the low-income elderly to benefit from SNF diversion/transition to residential care facilities for the elderly (RCFEs).  Stakeholders should consider the merits of the following proposals:

Develop a CalAIM workgroup specifically related to the aging and the use of ILOS for SNF diversion/transition.

In their 2018 Long Term Support and Services (LTSS) report card for California AARP/SCAN estimate at least 10,000 patients on LTSS in SNFs have low level care needs which could be met by community-based care settings, which include RCFEs.  For every 10% of this population that transfers from SNFs to RCFEs the state saves $24 million annually.  In addition, every year thousands of seniors who need more than the maximum allowable In Home Support and Services (IHSS) hours (e.g. 283 hours/month) end up residing full time on LTSS in SNFs.  Many, if given the option, could safely reside in RCFEs.  The use of ILOS to fund pathways to RCFEs is critical for thousands of seniors eligible for SNF diversion/transition and provides the prospect of millions of annual Medi-Cal cost savings to the state yet there is no significant representation on the CalAIM ILOS workgroup by advocacy groups for the elderly, consumer stakeholders that specialize with RCFEs or experts in SNF diversion/transition to RCFEs.  A specific subgroup of ILOS should be established to focus solely on these issues and interested stakeholders should be invited to apply for participation.  Topics discussed should include:

Remove the two tiered ILOS activation period which permits SNF diversion/transition for non dual-eligibles but delays it for dual-eligibles enrolled with CCI.

Under the Americans with Disability Act and the Olmstead decision of the Supreme Court, Medicaid recipients are entitled to receive care in the most integrated care settings, which includes, RCFEs.   Low income seniors on Medicare and Medi-Cal (dual-eligibles) deserve access to Olmstead as soon as possible yet, according to the CalAIM proposal (p.13), the state is developing a two-track system which allows Medi-Cal MCOs to use ILOS for SNF diversion/transition for non-dual eligibles in 2021 but delays this option for two years for dual-eligibles, including those enrolled with the California Coordinated Care Initiative (CCI).  The timetable for SNF diversion/transition should not favor one population (e.g. a non dual-eligible young person) while penalizing another (e.g. a dual-eligible senior).  CCI MCOs should be allowed to use ILOS for SNF diversion/transition to RCFEs in 2021 at the same time as non-CCI Medi-Cal MCOs can develop these programs for non dual-eligible members.

Fix the CCI MLTSS rate tables before it is integrated into MLTSS.

CalAIM specifically addresses problems with CCI which include inefficiency, declining enrollment, lack of flexibility and delivery system carve-outs which prevent the integration of Medi-Cal services (p. 63).  A critical flaw at the heart of CCI is there is no CCI MLTSS rate category for seniors who choose to receive their care in RCFEs. Without this category seniors who choose to reside in RCFEs are considered “uncategorized” or Community Well/Healthy.  The rate tables are nonsensical when a senior classified as “severely impaired” (HCBS High) or in a SNF (Institutionalized) is considered “healthy” when he/she chooses to receive care in a RCFE.  Since the Community Well/Healthy capitated payment is not enough to pay for care in a RCFE the state has created a perverse fiscal incentive which, instead of promoting Olmstead and saving Medi-Cal dollars, rewards MCOs for placing members in expensive SNFs and punishes them when their members choose to reside in more affordable RCFEs. 

Add a new RCFE rate category to the CCI MLTSS rate tables and allow CCI MCOs to develop SNF diversion/transition to RCFE pilot programs which can be tested and vetted before CCI ends in 2023. 

CCI is a pilot program that will continue until 2023.  Pilot programs should be adjusted when they have faulty components.  Adding a RCFE rate category to the CCI MLTSS rate tables would allow CCI MCOs to develop, begin and test pilot programs for SNF diversion/transition to RCFEs two years before it ends.  The new CCI MLTSS RCFE rate category (between HCBS High and Institutionalized) would pay for a RCFE’s “assisted living” expenses and the senior’s Supplemental Security Income contribution (approximately $1,014/month for a RCFE) would pay for “room and board” costs.  The new rate would be above the HCBS High rate (approximately $1,800/month) but below the SNF rate ($5,300/month) and would be cost-neutral since SNF transition to RCFE could offset any new SNF diversion-RCFE expenses.  The CCI MLTSS RCFE rate for SNF diversion/transition pilot programs could also be synchronized with the future ILOS capitated rates established for RCFEs.

Allow Medi-Cal MCOs to develop their own SNF diversion/transition to RCFE programs instead of carving ALW into MLTSS. 

ALW, the only state program which allows Medi-Cal to pay for RCFEs, has many intractable problems: a 14 month wait list for community referrals, limited quality control measures (many of the providers have numerous Type A and Type B violations) and ineligibility by Medi-Cal recipients with share of cost expenses.  In addition, since ALW was never developed with small (4-6 bed) providers in mind, more than 90% of program participants reside in large (50-100+ bed) RCFEs which frequently have 1 staff to 20-40 residents.  Community Care Licensing does not require large RCFEs have mandated staff to resident ratios and there is no current mechanism that requires increased staffing levels in large RCFEs that accept 5+ ALW participants who need substantial help with their activities of daily living.    

Instead of carving ALW into MLTSS, the state should consider working with stakeholder groups to establish SNF diversion/transition to RCFE protocols which include: 1) establishing a fair market RCFE rate to encourage a large network of high quality providers 2) quality control measures (e.g. monthly checks of community care licensing violation reports, follow-up calls with families, etc.) that ensure resident satisfaction, 3) program components that facilitate the ample participation of small 4-6 bed RCFEs with high staff to resident ratios, 4) the participation of seniors who have Medi-Cal shared of costs, 5) reimbursement to home health agencies that provide insulin shots as needed or new CCL guidelines which allow for the use of liability waivers (e.g. similar to what they currently use in Oregon) to allow insulin shots to be given by RCFE staff and, 6) the reimbursement to RCFE administrators for care giving courses offered by the Alzheimer’s Association.   

Program guidelines which are friendly to small RCFEs is also essential for accommodating patients with significant dementia who “wander” especially when most large RCFEs either do not have dementia units or have units which are prohibitively expensive.   The lack of safe housing for low income “wanderers” is further compounded when very few SNFs have secured dementia units and, among them, are many considered substandard (

Develop sufficient fiscal bonuses for MCOs to promote SNF diversion/transition to RCFEs.

In order to successfully transition to MLTSS, CalAIM proposes offering financial incentives and shared cost savings to Medi-Cal MCOs to drive plans to develop infrastructure, pathways and housing for recipients who could benefit from ILOS (p.48).  The rate setting will be developed in 2020.  The proposed ILOS sub-workgroup for SNF diversion/transition to RCFEs should discuss among other topics:

  1. Potential Medi-Cal cost savings for large scale SNF to RCFE transition programs.
  2. Paying MCOs the SNF rate for a full year when LTSS patients transfer to lower cost RCFEs which could be used for shared cost savings and to offset new expenses for SNF-RCFE diversion.
  3. Determining potential SNF diversion cost savings by establishing a state database to determine how many past IHSS recipients who transferred from home to SNF LTSS could have benefited from SNF diversion to RCFEs.

Enact protocols to permit SNF diversion from hospitals directly to RCFEs

The Centers for Medicare and Medicaid Services estimates more than 1 in 5 seniors recycle back to hospitals within one month of discharge and penalizes hospital with high readmission rates. Cal AIM enhanced care management protocols should include direct discharge from the hospital to RCFEs for patients at risk of premature institutionalization (e.g. require more care than the maximum allowable IHSS hours) and, for those eligible, rehabilitation services that follow the person to the RCFE. Care transitions that involve only one move (hospital-RCFE) instead of two moves (hospital-SNF-RCFE) is cost-efficient, streamlines the delivery of care services, and lessens the risk of hospital readmission when short-term rehabilitation services is provided in the same RCFE where a senior will end up residing long term.  In addition, direct placement to the RCFE from the hospital will overcome discharge barriers frequently encountered by social workers when most SNFs want only short-term, high-paying Medicare patients as opposed to long term residents funded by Medi-Cal.

Enable CCI MCO subcontractors that manage Medicare and Medi-Cal to use the CCI RCFE rate category or ILOS to develop SNF diversion/transition to RCFE programs in 2021.   

CCI required dual-eligibles in pilot program areas to enroll with a CCI MCO to manage their Medi-Cal services with the option through the Cal MediConnect (CMC) program of having their Medicare services managed by the same provider.  Most dual-eligibles opted-out of CMC which prevented CCI MCOs from providing coordinated medical, behavioral health, LTSS and HCBS through a single organized Medicare/Medi-Cal delivery system.  Having both Medicare and Medi-Cal services administered together is not an issue for MCOs, like Kaiser, which contract with the state to provide Medicare services for all of their members and, with sub-contracts with CCI MCOs manage the Medi-Cal benefits as well.  Using ILOS or the new proposed CCI MLTSS RCFE capitated rate would allow non-CCI MCOs that already manage both Medicare/Medi-Cal to become factories of innovation for SNF diversion/transition to RCFE pilot programs well before the state transitions to MLTSS in 2026. 

Develop protocols for a new type of residential care home (ARF-Specialized) for a new type of population.

Adult Residential Facilities (ARFs) provide 24-hour non-medical care for adults ages 18 through 59, who physically handicapped, developmentally disabled, and/or mentally disabled.  RCFEs, with some exceptions, mostly cater to the elderly.  An ARF/RCFE is not an ideal setting for a young person who requires 24-hour care due to a stroke, early stage dementia or Parkinsons and/or has similar care needs to RCFE residents.  Once the state and stakeholder groups establish the protocols for ILOS to pay for ARFs/RCFEs there will be a marketplace for a new type of residential care setting (e.g. ARF- Specialized) for low income young residents with 24-hour care needs who would like to live in homes with other young residents with similar care needs.  To satisfy this niche group some RCFE owners might consider opening up ARF-Specialized and Medi-Cal MCOs will be able to incorporate these homes in their provider networks for all young members eligible for SNF diversion/transition.    

Jason Bloome is owner of Connections – Care Home Referrals, an information and referral agency to care homes in Southern California. More information at

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