New Jersey Medicaid reform under the 1115 waiver - U-KNOW

Prepared for PSCI 12: Public Policy and Administration
A community-Based Learning Course at Drew University
In Partnership with the United Way of Northern NJ,
Morris County
Research Conducted by: Adrianna Hardaway, Anargiros
Mitropoulos, Brittney Coleman, Lauren Longfield, Noran
May 2012
Research Question
 Our research question comes to us from the United
Way of Northern NJ, Morris County
 Research Question: What will the proposed state
changes to Medicaid (through the 1115 waiver) have on
Medicaid recipients? In particular, what impact is the
transition to Medicaid managed care/HMO’s having
on our vulnerable population, i.e. seniors in nursing
homes and mental health consumers.
 In September 2011, the State of New Jersey applied for
the 1115 waiver which would allow the state to attempt
to find a more innovative and sustainable way to
provide health services to Medicaid recipients and rein
in costs.
 The State of New Jersey sought to improve the quality
of health care and its deliverance by moving Medicaid
recipients into HMO/ managed care plans.
Historical Background
 In 1996, President Bill Clinton signed the Personal
Responsibility Work Opportunity Reconciliation Act
(PRWORA) which represents the most recent
rearrangement of poverty-directed welfare programs
(Johnston, 124).
 PRWORA was heralded by some as an important piece of
legislation because it was the first instance of devolution of
power from the federal government to the state
 PRWORA’s legacy lies in the fact that the federal
government essentially used this piece of legislation to
create a level of independence from reliance on welfare and
left it to the states to achieve this objective (Johnston, 140).
PRWORA’s Legacy
 PRWORA’s legacy can be seen in the objectives of New
Jersey’s 1115 waiver; the 1115 waiver represents a shift
from institutional and emergency services to
preventative and community based care.
 This shift represents an attempt by the state to focus
the care of Medicaid recipients from institutionally
based to community based; this shift can be
considered an attempt by the state to cut costs.
Medicaid Section 1115 Waiver
Current Policy Landscape
 Medicaid is the largest source of federal revenue for
 States on average pay 43% of Medicaid costs
 Primary Medicaid Community Care Waiver does not
pay for behavioral health for adults
Current Policy Landscape Cont.
 Children and parents make up 75% of Medicaid
 Account for less than a third of the spending
 Elderly and disabled make up 25%
 Account for two-thirds of the spending
(Key Questions)
Organizational Landscape
 New Jersey Department of Human Services
 Medicaid Director: Valerie Harr
Balancing resources
Nursing Home/institution to Community based
 The Arc of New Jersey
 Director of Public Policy and Family Advocacy: Denbigh
 Intellectual and developmental diseases
 Advocate for disabilities, major part of 1115 waiver
Diagnosis of Policy
 Currently, New Jersey serves more nursing
homes/institutions than every other state but
Texas (Shelton).
 Behavioral health for adults under 1115 Waiver, July
 2009, Medicaid spending per capita:
-Families (parents & children): $3,442
-Elderly/disabled: $17,763
(Key Questions)
Policy Alternatives
 Shift to long-term care
 Community based living versus nursing home/institutional
 Administrative flexibility
 Child Care
From Dept. of Developmental Disabilities to Dept
of Children and Families
Pros and Cons
 $300 million will be saved under the 1115 comprehensive
 Behavioral health for adults under 1115 Waiver will be
 Community Care Waiver 1915c
 Supports Waiver
 Promote competition between HMOs for efficient services
 Downside can also be lost of services
1115 Waiver: Proposed move
to Managed Care
 Managed care systems rely on HMOs to act as an
intermediary between the physician and the patient by
setting up the patient with a primary care provider and
arranging for the lowest out of pocket cost possible for the
patient (Povar, et. al, 2004).
 4 main HMO groups Amerigroup, Horizon, Health First,
and University Health Plan (Department of Health, 2012)
 Move to HMO is to make the companies more competitive
and more accountable for the care of their patients
(Department of Health, 2012).
Changes that may occur
 Change of provider
 Not covered if patient travels outside of the network of
HMO providers
 Limited reliance on adult day care centers
 Reassessment of needs and services
 Role of home health aides cut
Policies in place to alleviate
burden of change
 Any willing provider
 Opportunity to appeal HMO decision after assessment
of needs
 Capitation
Reality of Policy implementation
 Physicians not willing to join managed care
 Absence of service for 60 days can be dire
 Capitation lessens quality of care
 Enrollment in HMOs increased from 24 percent of the Medicaid
population in 1996 to 40 percent in 2002 (Thompson et. al, p.
1000, 2007).The increase in use of commercial and Medicaid
HMOs did not correspond to either a decrease in medical costs
or an increase in access to care.
The Elderly and The 1115
 As part of the 1115 Medicaid waiver, the waiver gives a
preference to community and home based health care
options are given preference over institutional forms of
 However, if they did not qualify or are unable to, nursing
homes are available for them
 This preferred move from nursing homes to community-
based care is because of the costs of nursing homes
 The comprehensive waiver would provide a home-health
aid, a nurse, or different workers for the senior citizen to
ensure they are given the proper treatment and assistance
in their own communities.
[Keyser & Dept. Human Services]
Organizational Landscape
 Home health services are provided by licensed
home health agencies (HHAs).
 HHAs provide skilled nursing intervention,
home health aide services, physical therapy,
speech therapy, occupational therapy, and
medical social services and can be hospital
based or freestanding.
 About 25 percent of HHA patients are
Medicaid beneficiaries, 60 to 70 percent are
Medicare beneficiaries, and 5 to 10 percent are
 Independent Elder Advocate
Nursing Homes vs. Home Care
 Nursing Homes:
 Pros:
Full attention provided for individuals
Trained staff that are comfortable and used to the nursing
home atmosphere
 Cons:
Not always the highest quality of staff
Extremely expensive
Medicaid does not always cover all costs
Sometimes there are cases of neglect or physical abuse
Home Care: Pros and Cons
 Pros:
 The elderly will be more comfortable in their homes
 Will not feel confined or uncomfortable
 Will be able to be around their family and friends more often
 Not as costly
 Preferred by Medicaid, most likely to be covered
 Cons:
 The staff that care for the individuals in their homes may be
receiving wage cuts, thus less hours and less care
 May not have the assistance they need at all times which can result
in emergencies and hospitalization
 Staff will not be familiar with the atmosphere in which they would
be now working in
Consequences of the Waiver?
 Many senior citizens may not receive adequate help
because many workers and nurses would not be given
too many hours of work, thus resulting in less care for
the senior citizen.
 Trade-off between work hours and federal money which
would result in less care and focus on the senior citizens
 “Who is going to pay?” in regards to care and the
covering of medical costs will be constantly asked. In
regards to managed care and health care programs (such
as AmeriGroup or United Healthcare) there is much
confusion within the administration of these managed
care programs.
Consequences Cont.
 Changes in provider rates. Many of the rates may decrease
because they are trying to help more people but only have X
amount of money.
 This supply and demand would affect the elderly in the long
run because of the lack of money and cuts in wages and rates,
there would be less employees, thus resulting in less
 When an elderly individual is not receiving the aid they need
immediately because of shortage of staff, instability could
occur and senior citizens may have to be admitted into
hospitals because of health complications
 The waiver is intense but is meant to be gradual and help in
the long run.
If one wanted to prepare for the changes and understand
what would happen, they would have much trouble in
figuring out the required information, because unfortunately,
not all workers are aware of the changes/proposed changes.
Communication is crucial for individuals to understand what
is going to change or what they should expect
These trade offs are very common and usually unavoidable, it
is important for individuals receiving these benefits to
understand what is expected to happen so they can plan
Without understanding what they are eligible for, the home
care policies, changes in eligibility requirements, and the
proposed changes, confusion will be an end result
Organizational Landscape
 The Mental Health Association in NJ, Coalition of Mental
Health Consumer Organizations of New Jersey, and NJ
psychiatric rehabilitation association were the
organizations that came together to try and help improve
the education for mental health consumers referring to the
Medicaid drug coverage.
 The Division of Mental Assistance and Health
 the leading advocacy organization addressing the full
spectrum of mental and substance use conditions and their
effects nationwide, works to inform, advocate and enable
access to quality behavioral health services for all Americans.
Affects of the 1115 waiver
 According to Corvino, the new 1115 waiver will affect
people with disabilities by state benefit from
additional federal money.
 He said the improvements needed as the waiver
suggests, “there is a war between what are the
individual needs vs. what happens when people are
served in groups”
Results of the 1115 waiver
 An enhanced, more flexible community based service
Customized care coordination
New methods of assessing individuals needs and using
those assessments to allocate resources
A new quality assurance and oversight system
Transition of more individuals from campus based
institutional settings to community settings with enhanced
Creation of Medicaid-funded safety net services
A funding platform that supports flexible, community
based supports and services (NYSARC)
 Need to be aware of the benefits available
 Educated on the particular topic
 Ability to understand strategies to cope with potential
 Family members are forced to quit jobs to take care of loved
 High costs and people are forced to be put on waitlists
 Mental Health American is the leading nonprofit
organization in the country and its purpose is to help all
people live mentally healthier lives (
 Administration on Developmental Disabilities
 This program exists in every state and United States territory
and it provides funding, monitoring, and policy guidance to
its programs Nationwide (
 National Association of State Directors of Developmental
Disabilities Services
 The goal of this association is to promote and aid state
agencies in developing effective service delivery systems that
push for high quality supports to people with developmental
disabilities (
Proliferation of Medicaid Waivers
 In an era of devolution, the federal government has
advocated the use of Medicaid waivers because they
could be used to control program efficiency and
control expenditures; 1115 waivers are designed to allow
states to experiment with Medicaid formation and
 The State of New York and Oklahoma both
implemented Medicaid waivers and can be seen as a
foundation for the New Jersey waiver.
New York v. Oklahoma Waivers
 The New York waiver seeks to
restructure its long-term care
system by shifting the
reliance on institutional
forms of care to at home
 Target groups includes the
elderly and the disabled;
preventative care is advocated
to keep this group healthy
and thus decrease the chance
of them getting sick.
 The Oklahoma waiver was
implemented to address
the growing imbalance
between need and
availability of services for
Medicaid recipients.
 Target groups include
young children,
preventative care is
advocated to keep these
kid healthy so they don’t
get sick.
What Can New Jersey Learn From
 The New York and Oklahoma Medicaid waivers can
show New Jersey the importance of identifying a target
population who will benefit from Medicaid reform.
 New Jersey can also learn that HMOs/ managed care
plans are the most cost-effective way of implementing
Medicaid reform.
Caregivers Under The 1115 Waiver
The 1115 waiver and Caregivers
 The 1115 waiver is intended to maximize the role of the
caregiver in the community. Given the fact that 65.7
million Americans (29% of adults) are caregivers,
maximizing their role would be beneficial in
promoting preventative care (National Alliance of
 Caregivers however have had some trouble adjusting
to the recent Medicaid reforms.
Caregivers Grievances
 Information about Medicaid reforms have not been
distributed to the public, and when information is
given to Medicaid recipients and caregivers, it is done
so in language that is difficult to understand.
 Caregivers are particularly frustrated about the shift to
managed care plans; the HMOs offer very little
coverage and sub-par quality care. Caregivers are afraid
that once the managed care plans go in affect, they will
lose the personal touch they once had with their
Medicaid case worker.
Caregivers Grievances (continued)
 An additional burden will be placed on the caregiver as a
result of the new Medicaid changes. “The typical caregiver
will receive less help under this new Medicaid system
because institutions such as nursing homes and adult
daycares will no longer be available for the sick.” –Jim
 By maximizing the role of the caregiver, the caregiver may
find that additional stress is placed upon them; caregivers
may too find that their ability to work and provide for
themselves may change as they become the primary
caregiver for their loved ones.
How do we solve this problem?
 One way to alleviate this stress is to keep funding
home health agencies which allow caregivers some
time off from caring for their loved ones.
 Make the transition to managed care plans smoother
by giving out information to Medicaid recipients and
 Provide caregivers with a salary to compensate them
for the time they put in, caring for their loved ones.
 Watchdog programs to monitor HMOs and make sure high quality
services are being implemented.
 Effectively monitor funds and work at communication between
advocacy groups and the state.
 Physicians should be held more accountable by allowing patients to
file malpractice suits. Also HMOs should focus on course of care
instead of cost of care when it comes to need assessment. This way
patients care that they are accustomed to could be continued.
 Home health aides should be able to provide for their patients
without having to subscribe to the HMO.
 New Jersey should be responsible for informing &
educating senior citizens about the changes proposed
in the waiver.
 The State needs to provide better access of
information for people with developmental
 Keep the caseworker-caregiver relationship or make
the shift to managed care an easier transition for
 The state of New Jersey has found that its current health care system
was too costly so it chose to deviate from its national standards and
adopted the 1115 waiver.
 The 1115 waiver represents a major shift in how health care is
administered throughout the state, particularly amongst vulnerable
populations like the elderly and those with disabilities.
 The 1115 waiver seeks to reduce costs while providing quality care –
which will be fully seen in 2014.
 The shift to managed care plans has Medicaid recipients and caregivers
infuriated and confused because this new system is difficult to figure
out and many recipients are losing coverage.
Conclusions Cont.
 The 1115 waiver will have a huge impact on the elderly and the
disabled because of long-term care changes and preference to
community-based living.
 The 1115 waiver comes with its own set of advantages and
disadvantages; however it must be realized that the 1115 waiver is
a policy alternative to the previous form of health care that was
in place in New Jersey.
 Although caregivers, Medicaid recipients and even Congressmen
have aired their grievances about the waiver, the 1115 waiver is an
attempt by the state to provide quality health services to a wider
range of Medicaid recipients at a fraction of the costs.
Special Thanks
A special thanks to our United Way liaison, Carol
DeGraw, to professor McGuinn, and to all the people
we interviewed that provided us with great research
and a newfound understanding of Medicaid in New

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