U.S. Department of Health and Human Services

Changing to Consumer-Directed Care: The Implementation of the Cash and Counseling Demonstration in Florida

Executive Summary

Barbara Phillips and Barbara Schneider

Mathematica Policy Research, Inc.

July 2004

This report was prepared under contract #HHS-100-95-0046 between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and the University of Maryland. For additional information about the study, you may visit the DALTCP home page at http://aspe.hhs.gov/_/office_specific/daltcp.cfm or contact the ASPE Project Officer, Pamela Doty, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 20201. Her e-mail address is: Pamela.Doty@hhs.gov.

The opinions and views expressed in this report are those of the authors. They do not necessarily reflect the views of the Department of Health and Human Services, the contractor or any other funding organization.

Consumer direction seeks to give frail elders and people with disabilities more options and greater personal autonomy in determining how best to meet their care needs. Cash and Counseling is one model of consumer-directed home- and community-based services. Under the Cash and Counseling model, eligible people receive a monthly allowance. In turn, they assume responsibility for arranging and managing their care and must use the benefit to purchase goods or services to meet their needs for home- and community-based services--this includes hiring their own workers. Consumers may ask consultants for training on how to meet those responsibilities and may have a fiscal agent hold their allowance, manage payroll taxes, and disburse funds on their behalf.

The Robert Wood Johnson Foundation (RWJF) and the Office of the Assistant Secretary for Planning and Evaluation of the U.S. Department of Health and Human Services are sponsoring a demonstration and evaluation of Cash and Counseling. A National Program Office operates from the University of Maryland, Center on Aging and Boston College. The Centers for Medicare & Medicaid Services (CMS) provides technical assistance and waivers of certain federal Medicaid regulations. Mathematica Policy Research, Inc. (MPR) is evaluating the demonstration, which has been implemented in Arkansas, Florida, and New Jersey. The evaluation used a randomized design--half of the enrollees are assigned to a treatment group to receive the allowance, half to a control group to continue with traditional services.

This report describes the design and implementation of the Consumer-Directed Care Research Project (CDC), Florida’s model of Cash and Counseling, and draws lessons from the state’s experience. The report is based primarily on in-person interviews conducted in January 2002, about 18 months after the project began enrolling beneficiaries. Interviews were conducted with Florida state officials, state employees at the regional level, CDC staff members, and staff members of organizations providing consulting and fiscal services under CDC. (Florida used the term “consulting” rather than “counseling” in its demonstration.)

The Consumer-Directed Care Project

Feeder Programs and Host Departments. Under Section 1115 demonstration authority, Florida chose to “cash out” home- and community-based services covered under its Medicaid 1915(c) waiver programs for children and adults with developmental disabilities, adults with physical disabilities, and elderly beneficiaries. The Developmental Disability Program (DDP) within the Department of Children and Families (DCF) was responsible for 1915(c) programs and for the CDC project for children and adults with developmental disabilities. The Office of Adult Services (AS), within DCF, had similar responsibilities for adults with physical disabilities, and the Department of Elder Affairs (DOEA) had similar responsibilities for elderly beneficiaries. DOEA was the official grantee and housed the central office for the CDC program. Each of these 1915(c) waiver programs covers a variety of goods and services. These goods and services range from personal care supplies, to personal assistance, to professional services (such as nursing and behavioral therapy).

Structure of Traditional Waiver Services. In Florida’s waiver programs for children and adults with developmental disabilities, support coordinators help program participants manage their care (support coordination services were not cashed out). The support coordinators are employed by agencies (typically proprietary firms) or are independent contractors. Many support coordinators serve populous areas of the state, and consumers may choose a support coordinator with whom they are comfortable.

Similarly, in Florida’s waiver programs for adults with physical disabilities and elderly beneficiaries, case managers help program participants manage their care (case management services also were not cashed out). In each county in Florida, a single agency--called a lead agency--provides case management services to all elderly participants in that county. The lead agencies typically are public agencies, and all lead agencies provide case management under contract to the local Area Agency on Aging (AAA). Each of the 11 AAAs in Florida is under contract to the state to procure and oversee Medicaid waiver services for elderly people living in its catchment area. Case management for adults with physical disabilities may be provided by state employees or case management agencies under contract to the state.

Eligibility for CDC. The only people eligible to enroll in CDC were beneficiaries receiving services under one of the Medicaid waiver programs being cashed out and living in the catchment area for the CDC project. For children with developmental disabilities, the catchment area consisted of the entire state. For adults with developmental disabilities, the catchment area consisted of the entire state, except for a few counties in the northern part of the state where another consumer-directed pilot program was already under way. For adults with physical disabilities and elderly beneficiaries, the catchment area consisted of 19 counties and included most of the state’s major metropolitan areas.

Waiver program participants who wished to enroll in CDC, but who were unable to manage their own services, were still eligible for CDC. Adults could name a family member or friend as a representative to act on their behalf. Representatives, invariably a parent or guardian, were mandated for children.

Outreach and Enrollment. Initially, Florida required agencies providing case management/support coordination services to conduct outreach for CDC. Case managers and support coordinators were required to inform waiver program participants of their eligibility for CDC, just as they were required to inform them of all programs for which they were eligible.

This approach to outreach and enrollment proved largely unsuccessful, however. Many case managers were skeptical about the value of consumer-directed care, and support coordinators were overwhelmed with work following a substantial expansion of funding for traditional waiver services for those with developmental disabilities.

Faced with lagging enrollment in CDC, Florida arranged for the state governor to send a CDC invitation letter to each waiver program participant. (Arkansas had also done this.) In addition, Florida hired temporary state staff as enrollment specialists to contact waiver program participants to describe CDC and to enroll those who were interested. After the state took these steps, enrollment surged. When enrollment for the evaluation sample ended (in July 2002), 1,004 children, 1,002 nonelderly adults, and 814 elderly beneficiaries had enrolled in CDC.

Determining the Amount of the Monthly Budget. Florida based the amount of the allowance (which it called the monthly budget) on the waiver recipient’s claims history or on his or her care plan or support plan (the latter term is used for those with developmental disabilities). The claims history methodology was not used for beneficiaries with developmental disabilities. For other beneficiaries, the care plan methodology was used if the beneficiary did not have a stable, recent claims history or the benefit amount based on the care plan was materially larger than that based on the claims history.

To try to ensure the budget neutrality of the CDC project, the amount of a monthly budget based on care/support plan hours was discounted to adjust for the fact that, on average, the cost of services received is less than the cost of services planned. Based on analyses of care plan and claims data for samples of beneficiaries, Florida set the discount rates at 89 percent for elderly beneficiaries, 83 percent for adults with physical disabilities, and 92 percent for children and adults with developmental disabilities.

About the time of our visit to Florida in January 2002, the average monthly budget (after discounting) in Florida was $975 for elderly adults and adults with physical disabilities and $1,825 for children and adults with developmental disabilities.

Purchasing Plan and Use of the Monthly Budget. Before consumers could receive the first payment, CDC required them to develop a plan for the purchase of goods and services. Plans could provide for the consumer to receive up to 20 percent of the monthly budget in cash (or more with special permission). (Later, the cash payment was limited to $250 a month.)

CDC consultants visited the consumer’s home to train the consumer on the permissible uses of the monthly budget and the development of the initial purchasing plan. Consumers were required to develop a revised purchasing plan if the amount of the monthly budget or the amount of any line item in the plan changed.

Consultants reviewed and approved all initial or revised purchasing plans, then submitted them to a state or district office for approval. Plans for consumers with developmental disabilities were reviewed and approved by the Medicaid specialist in the DDP district office for that region. The CDC project central office reviewed and approved the plans for adults with physical disabilities and elderly consumers.

Consumers used the monthly budget to purchase a wide variety of goods and services, just as CDC had intended. Many hired workers, most of whom were family members. Some hired a parent (for the demonstration, a waiver of Medicaid regulations permitted the hiring of a parent of a minor child or a spouse). A few representatives were hired as workers. Some consumers also purchased personal care supplies (such as diapers).

Monitoring. Florida required CDC consultants to visit consumers’ homes during the 2nd and 12th month after enrollment (and annually thereafter) to monitor the consumer’s condition. Consultants were also required to telephone consumers at least monthly.

Consulting Agencies. Florida asked agencies and independent contractors providing waiver program case management/support coordination to also provide consulting for beneficiaries who enrolled in CDC. The availability of funding was a major factor in this decision--state funds were already committed for the payment of these agencies and contractors. In addition, Florida believed that reliance on the existing networks would be beneficial to consumers for two reasons: (1) case managers and support coordinators were already knowledgeable about other programs and community resources, and (2) continuity of care could be enhanced by having a consumer’s case manager or support coordinator continue to work with that person as a CDC consultant.

In practice, however, only a few staff members at each agency provided CDC consulting (often only one or two even in large agencies). This approach was more efficient than having many staff members, each of whom provided consulting to only a few consumers. In addition, the shift in responsibilities under CDC from case manager/support coordinator to consumer was sometimes more difficult when the person who had been a case manager (or support coordinator) became the consultant.

CDC adopted different payment structures for consulting by support coordinators and consulting by case managers. A monthly rate per beneficiary was paid for support coordination/consulting; this rate was the same as that paid for traditional support coordination. In contrast, a flat sum was paid for each case management/consultant training visit to develop the purchasing plan (up to two visits), followed by an hourly rate for consulting services (payments at the hourly rate were capped).

Fiscal Services. Florida issued a solicitation to procure a single fiscal agent for CDC consumers across the state. After a lengthy delay, it contracted with a human services organization in another state on the eastern seaboard. This delay occurred after the initial consultant training sessions had already taken place, necessitating refresher training for consultants.

Florida required that CDC consumers purchase services from the fiscal agent. Those who wished to manage the monthly budget themselves had to demonstrate that they were capable of doing so and had to purchase a monthly review of their records and receipts from the fiscal agent. All other consumers were required to use the fiscal agent to cut checks and process payroll documents. For these consumers, the fiscal agent’s duties were to process employment forms, federal and state payroll taxes, and time sheets and vendor payments; disburse cash to consumers; and prepare monthly financial statements to consumers (with a copy to consultants).

Florida’s approach to ensuring that expenditures conformed to the purchasing plan was to have consultants compare monthly financial statements to plans and retrain consumers if there were discrepancies. In addition, consumers had to retain receipts for the consultant to review for purchases made with cash from the monthly budget.

Most of the compensation for the fiscal agent was in the form of fees charged to consumers for the services they used. A consumer was charged about $5 per check cut, up to a maximum of $25 a month. Consumers who managed the monthly budget themselves were charged about $10 a month for fiscal agent review. Florida also paid the fiscal agent for some design tasks (such as design of the bookkeeping skills examination for consumers).

Lessons from the Consumer-Directed Care Project

Florida’s experience provides many lessons about operating a consumer-directed program as an alternative to Medicaid home- and community based waivers. The state was willing to learn from its experience and try a different approach if problems arose. Here, we describe lessons pertaining to specific components of CDC, followed by lessons that cut across components and that are unique to Florida among the three Cash and Counseling states.

Outreach and Enrollment

• A consumer-directed program that cashes out traditional services needs the cooperation of the agencies providing those services; however, assigning these agencies responsibility for outreach and enrollment can be fraught with problems. Case management agencies often have their clients’ trust and can easily discourage enrollment if they are opposed to the concept of consumer direction. Even when that is not the case, agency staff members who are pressed by other responsibilities are unlikely to give priority to the time-consuming tasks of outreach and enrollment.
• If state agencies are responsible for outreach and enrollment, arranging for enrollment statistics to be reported to the highest levels of state government may be a useful way to get the attention of the responsible officials. When enrollment in CDC was lagging, DDP arranged for statistics on the outreach effort to be included in monthly reports reviewed by the governor’s office in assessing administrator performance. After that, enrollment improved.
• Providing information to advocacy groups can be a successful approach to generating interest in an allowance program. Florida has a tradition of strong advocacy for those with developmental disabilities, particularly through its Family Care Councils. Presentations to the councils generated considerable interest in Florida’s allowance program.
• Because direct mailings to eligible beneficiaries are targeted, they are more efficient than outreach methods that blanket the community with information. Letters from the governor to recipients of Medicaid waiver services were particularly effective in generating enrollment in Florida’s allowance program.
• Calculating the amount of the allowance before enrollment is important but can be time-consuming. Beneficiaries need to know the amount of the allowance to make an informed decision about enrollment. If the allowance is based on the claims history or the care/support plan, the amount must be calculated under each methodology.
• Hiring dedicated enrollment specialists may be the best approach to building a caseload relatively quickly. Unless agency staff are enthusiastic about consumer direction, hiring dedicated employees is preferable to paying agencies to have their staff conduct outreach and enrollment.
• A limited number of dedicated enrollment staff may successfully serve a wide geographic area. Dedicated enrollment staff can come into an area, contact all members of the eligible population there, and then move on. Florida’s experience is that such enrollment specialists can be supervised from district offices or remotely by telephone, e-mail, and an Internet chat room.
• The explanation of the cash program provided to prospective enrollees should be as clear as possible. Although an allowance program can be difficult for consumers to understand, lack of clear explanation engenders confusion, which consultants must correct. Moreover, consumers might disenroll when the misunderstanding is corrected.

Consulting

• The same person can readily provide both consulting and case management (or support coordination) services. Case managers and support coordinators who were comfortable with the philosophy of consumer direction did not have difficulty providing case management or support coordination to waiver program participants and consulting to CDC consumers.
• Consultants require substantial training, followed shortly by practice. Florida limited its training session for consultants to one and a half days, and consultants generally felt that more time was needed. Knowledge gained in the initial training session was forgotten because consultants were not able to put it into practice quickly.
• Conference calls can provide updates and peer support to consultants working in far-flung agencies. Conference calls give consultants a means to learn “tricks of the trade.” Apart from cost, the only disadvantage of conference calls is that they may provide a forum for consultants to voice negative opinions that may adversely affect staff morale.
• Regional program supervisors can provide valuable support to frontline consulting staff. DDP Medicaid specialists reduced the burden on central CDC staff by supervising enrollment specialists and by reviewing and approving consumer purchasing plans. Some became so knowledgeable about CDC that they were able to offer technical assistance and support to consultants and consumers.

Purchasing Plans and Use of the Allowance

• Advance preparation can expedite the development of the purchasing plan. Some Florida consultants expedited the development of the purchasing plan. They did this, for example, by asking consumers to review the program manual and to begin, before the home visit, to think about their needs and what to purchase to meet those needs.
• A consumer manual is an important tool. It helps the consumer become familiar with program procedures and rules before the initial consultant training visit. It is also useful as a reference manual.
• Although working with a consumer on the initial purchasing plan can be time-consuming for consultants, a consumer’s need for help in completing the plan does not necessarily indicate inappropriateness for an allowance program. Florida learned that consumers and representatives were usually able to identify the goods and services to be included in an initial purchasing plan but that many needed help (for example, with arithmetic) to complete the plan. Of itself, the need for such help did not indicate that a consumer was inappropriate for CDC.
• Purchasing plans must be revised as consumer needs and plans change, and this requires a substantial amount of staff time. However, flexible plans can reduce the need for revision. Because the purchasing plan is critical to ensuring that the allowance is not abused, it must be revised to accommodate changes in consumer needs. Doing so requires a substantial amount of time from consultants and from other program staff who must approve revised plans. The need for revision can be reduced by listing the wage and hours for a position, earmarking a larger proportion for cash, and using an addendum to specify a change in the good or service for which funds are being saved.
• Consumers may be able to purchase goods for less than the Medicaid program does. By shopping for sale prices, Florida consumers were able to purchase goods such as personal care supplies from commercial establishments for less than the Florida Medicaid program paid vendors.

Representatives

• Consumers usually choose family or friends who were already helping them as representatives to assist in managing the benefit.
• All, or almost all, consumers with development disabilities will require a representative, and many elderly consumers will select a one. All minor children will require a representative.
• Naming representatives at enrollment may be advantageous. The consultant can begin to work with the representative on the purchasing plan before the initial home training visit, thereby reducing delay of the receipt of the allowance.
• Representatives are generally faithful to the best interests of consumers and try to take their wishes into account. While this was true for all consumers, Florida consultants reported that parents sometimes went to extraordinary lengths for their children.
• Special forms of monitoring are needed when a representative is also a worker, as this situation presents an inherent conflict of interest. Because representatives are responsible for supervising workers, allowing the same person to play both roles presents a conflict of interest. When such a situation could not readily be avoided, Florida asked someone identified by the consumer’s family to check on the consumer’s well-being, and the counselor telephoned that person as well as the representative. A similar approach might be beneficial when the representative is the coach of an adult with developmental disabilities living in a group home. Such a coach has a responsibility to the group home as well as to the consumer.

Fiscal Services

• A fiscal agent may need assistance with cash flow until it reaches a “break-even” caseload. The CDC project was a financial drain on the host organization for fiscal services, in part because of the slow buildup of the caseload.
• The quality of consumer services may suffer if the fiscal agent is under prolonged financial strain because its costs exceed its payments. The fiscal agent for CDC reduced its staff in response to the financial strain it faced, which adversely affected responsiveness to consumer requests and timely production of consumer financial statements.
• Timely, understandable, and detailed financial statements are important to consumers’ ability to manage the allowance, but a fiscal agent may have difficulty producing such statements. As in other Cash and Counseling states, the fiscal agent for CDC had difficulty producing monthly financial statements that were timely, easily understandable, and detailed. Consumers value statements that detail the date, amount, and payee of each debit from their accounts.
• Fiscal agents need procedures that minimize the use of postal services for time-critical deliveries. Examples of such procedures used in CDC are direct deposit of workers’ pay into bank accounts and submission of the first time sheet for a given worker by facsimile (with the original to follow by mail).

Monitoring to Prevent Neglect of Consumers and Abuse of the Allowance

Exploitation and neglect of consumers and abuse of the allowance were rare in the CDC project.

• Referral arrangements with organizations providing protective services may be beneficial. Florida developed formal arrangements for consultants to refer cases of potential neglect or exploitation to protective services so that expert assistance was available to consultants immediately.
• Telephone monitoring that involves only the representative is inadequate. The appropriate frequency for monitoring visits varies with the population served. If consumers can articulate their needs and concerns, a call to the consumer (as well as to the representative) is necessary to identify the rare cases of potential neglect or exploitation of the consumer. More frequent monitoring visits are likely required for consumers (such as those with developmental disabilities) who have difficulty articulating their needs and concerns.
• Relying on consultants to compare monthly financial statements to purchasing plans increases the need for communication between the consultant and the fiscal agent, which can be problematic. Having consultants compare expenditures to purchasing plans may be problematic, especially when consultants and fiscal staff are organizationally separate.
• Review of receipts is not critical to preventing abuse of funds held by the fiscal agent. CDC required review of receipts only for cash held by the consumer, and some consultants reported that they did not routinely review these receipts. Yet abuse of funds held by the fiscal agent was almost nonexistent.

Cross-Cutting Lessons Unique to Florida

Florida was the only one of the three Cash and Counseling programs to rely primarily on agencies providing traditional services to provide outreach, enrollment, and consulting under its cash program. It was the only one of the three to cash out services for children, services for beneficiaries with developmental disabilities, and services provided under a waiver rather than the state Medicaid plan. Arguably, Florida’s program invested more responsibility in the consumer (or representative) than did the other two programs. Here, we draw cross-cutting lessons related to these unique features of Florida’s allowance program.

• Many factors seem to affect the level of resistance of providers of traditional services to an allowance program. States interested in relying on agencies providing traditional services to implement an allowance program may be able to reduce their resistance. The factors that affect the level of resistance include agency monopoly position, competing demands on staff time, concerns about loss of agency revenue if consumers hire workers directly, adequacy of compensation for agency effort in outreach and consulting, concerns about agency liability for decisions that consumers make, and conflicting professional norms about responsibility for beneficiary welfare. Techniques to overcome these factors include avoiding reliance on agencies that have local monopolies on traditional services in favor of agencies that must compete, avoiding implementation of an allowance program when other demands on agency staff are high or when agencies are experiencing a reduction in revenue, ensuring agencies are fairly compensated, stressing that consumers (not agencies) are liable under a Cash and Counseling-like program, and demonstrating that some beneficiaries benefit dramatically from a cash program.
• States may be able to better able to secure the interest and support of organizations providing traditional services if they consult with these organizations early in the design of an allowance program. Florida regretted that the schedule for Cash and Counseling prevented early consultation with agencies providing traditional services.
• The Cash and Counseling model is very attractive to parents of children with developmental disabilities. As a percentage of those eligible, more children with developmental disabilities enrolled in a Cash and Counseling program than any other population. As of the end of intake for the evaluation, the percentages of the eligible elderly and adult populations enrolling in all three Cash and Counseling states were roughly 8 to 10 and 15 to 20 percent, respectively. The comparable percentage for children with developmental disabilities was roughly 25 percent.
• Paying parents to be workers is a sensitive issue, but parents rarely take unfair advantage of the situation. While the parents of minor children are legally responsible for their care, caring for a child with disabilities requires a tremendous amount of time and energy, which affects the time a parent can devote to other family members or to paid work. With the safeguards implemented in CDC (including special monitoring when the representative was also a worker), Florida’s experience was that only very rarely did parents of minor children even appear to take unfair advantage of the opportunity to be paid.
• The evidence from Florida is that consumers and their representatives are able to manage some professional services, as well as personal care. Professional services (such as behavioral therapy and nursing) are covered under Florida’s waiver programs and were cashed out. Thus, Florida consumers were implicitly given responsibility for making decisions about their need for professional services. This did not result in material neglect or exploitation of consumers.