Consultant: Long-term Care Too Costly, Managed Care Would Help

Arkansas is spending too many health care dollars to keep long-term individuals in costly nursing homes and not enough for cheaper home- and community-based options, a health care consultant said Wednesday, with managed care one option for lowering health care costs.

John Stephen, founder of The Stephen Group, made those comments Wednesday (Oct. 26) at the Long-Term Services and Supports Policy Summit sponsored by AARP and the Department of Human Services. The Stephen Group is consulting the Health Reform Legislative Task Force, the group of legislators who are preparing a report about overall health care reform by the end of the year. The Stephen Group made its report to the task force earlier this month.

Stephen said the state could save $2.4 billion between now and 2021 by moving to a managed care system, where private companies would manage services with oversight by DHS. Other states have done so.

“You have a department today that either you’re going to manage three or four or five vendors that have all the sophisticated public integrity, data analytics, cost control methods, and also identifying through the assessments what is needed, providing the care coordination, providing what’s needed for the community, working with providers, which we see in other states, i.e, managed care,” he said. “Or you’re going to have your department really step up to being a managed care level of competency and administrative oversight and review and identification.”

Stephen said high-cost populations – the elderly, mental health and developmentally disabled populations – are responsible for 74% of the Medicaid program’s costs. Unfortunately, he said, “There’s nothing in terms of care coordination and management that we saw of significance in the high-cost populations that we’re talking about.”

Stephen said Arkansas had 11,958 patients in nursing homes in 2015 and 14,847 in community-based settings. However, 65%, or $757 million, of spending for long-term elder care was for nursing homes. He said nursing homes annually cost an average of $63,649 versus an average of $27,176 spent on home and community-based services.

Stephen said Arkansas’ overall low investment in assisted living is “astonishing” and that the state does not offer enough community or family support. He said the form used by DHS to determine nursing home level of care doesn’t even mention community-based, home care or assisted living.

He said that, at a 5% growth rate, the state general revenue portion of Medicaid’s budget will increase from $1.55 billion to more than $2 billion by fiscal year 2021.

But the system does have enough funding if it makes some changes, including focusing on outcomes and having independent clinical assessments to help determine the appropriate type of care for patients.

“There is enough money, I will continue to say this, in your system today to take care of those needs, and then there are certain areas it is not being spent wisely,” he said. “It is not being coordinated, it is not being managed, and you can do it. It’s going to take a lot of work, but you can absolutely do it.”