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News Release

People Eligible for Medicaid Personal Care Services Get More Home Care and Use Nursing Homes Less When They Direct Their Own Care, Study Finds

Model Consumer-Directed Care Program Costs Medicaid No More than Traditional Agency Care

Arkansas Medicaid enrollees who had the opportunity to direct their own personal care services using a cash allowance were much more likely to actually receive such services than were enrollees who were eligible for services but had to get them in the usual way, from an agency, according to the results of a study published online today by the journal Health Affairs. Furthermore, even those who did obtain care from agencies received only about two-thirds of the hours of care to which they were entitled, the study found.

While this better access to care led to higher overall costs for personal care under the consumer-directed program, these added costs were offset by lower Medicaid costs for nursing homes and other long-term care services. Thus, consumers received significantly more personal care at no greater net costs to Medicaid by the end of the second year.

These findings are from an ongoing evaluation of the Cash & Counseling Demonstration and Evaluation Program, which was jointly supported by U.S. Department of Health and Human Services (HHS) and The Robert Wood Johnson Foundation operating under waivers from the Centers for Medicare and Medicaid Services (CMS). In the program -- currently underway in Arkansas, Florida and New Jersey -- Medicaid enrollees who qualify for personal care are given an allowance and a high degree of flexibility and freedom to choose personal care assistants and decide how to manage their own personal care needs.

"When we began this program in 1999, we knew that consumers would benefit if they could make their own choices about how their personal care needs are met," said Kevin Mahoney, Ph.D., director of the Cash & Counseling national demonstration, which is based at Boston College Graduate School of Social Work. "But we weren't so sure what would happen to Medicaid costs. We're thrilled to discover that, under Cash & Counseling, consumers can get more personal care services at no more cost to Medicaid."

This phase of the Cash & Counseling evaluation examined Arkansas' IndependentChoices program -- the first of the three state programs to be implemented -- and compared both the level and cost of personal care services provided through the consumer-directed and agency-directed approaches. An earlier look at the Arkansas program found that it greatly improved quality of life, reduced unmet needs for care and did not compromise participants' health or safety. Those results were published in a Health Affairs Web exclusive article on March 26, 2003.

Today's study found that due, in part, to a worker shortage, home care agencies in Arkansas delivered only about two-thirds of the personal care services to which consumers were entitled, with some consumers receiving no services at all. In addition, more consumers who hired their own personal care assistants were able to receive services in the evenings and on weekends. This differential in the amount of services received resulted in the consumer-directed care approach costing over $2,000 more than the agency model in both the first and second years after enrollment. By the second year after enrollment, however, these higher personal care expenditures were offset by reductions in expenditures on nursing home and other Medicaid services.

"Arkansas' Cash & Counseling program demonstrates that states can design a consumer-directed care program that better meets the needs of people with disabilities at no greater cost," said Randall Brown, Ph.D., co-author of today's article and senior fellow and project director at Mathematica Policy Research, Inc., which conducted the study. "In fact, it appears that the better the traditional agency model is at providing Medicaid authorized services to people, the greater the likelihood of immediate savings from a 'cash and counseling' alternative. In states where the agency model is not performing well, a cash and counseling alternative would help meet those needs and help minimize the higher long-term care costs that result when needs go unmet."

The Cash & Counseling program was designed to compare outcomes of traditional agency-directed personal care services with services directed by the recipient. Personal care services include help with such daily tasks as bathing, toileting, dressing and meal preparation. Under the program, recipients are provided with a monthly allowance to spend on hiring their own personal care aides -- possibly friends or family -- or purchasing assistive equipment or making home modifications that increase their ability to live independently.

The results announced today compared eligible Medicaid beneficiaries who volunteered for the study and were then randomly assigned to the Cash & Counseling approach with volunteers who were randomly assigned to the control group. The control group had to rely on traditional agencies to deliver the personal care services for which the participants qualified. Approximately 1.2 million Medicaid recipients nationwide get supportive services.

HHS has taken action to assist more states to develop consumer-directed services along the lines of a "cash and counseling" program. HHS' "Independence Plus" waiver program, introduced last year, established a process for states to obtain authorization to operate such programs. Also, this fall, CMS awarded $5.4 million in "Independence Plus" grants to 12 states to support such efforts.

In addition, President Bush has proposed changes in the Medicaid program that would give states much more flexibility. Under the proposal, states would be able to implement programs of this kind without needing to obtain HHS permission.

The Cash & Counseling programs in Arkansas, Florida and New Jersey are funded by The Robert Wood Johnson Foundation. The independent evaluation of the three programs is funded jointly by the foundation and the HHS Office of the Assistant Secretary for Planning and Evaluation.

Today's study, conducted by Mathematica Policy Research of Princeton, N.J., is available at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w3.566.

More information on the Cash & Counseling demonstration program is available at www.umd.edu/aging.

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Note: All HHS press releases, fact sheets and other press materials are available at http://www.hhs.gov/news.

Last Revised: November 19, 2003