A Special Examination of the January 2007 Independent Care Waiver Program by the Georgia Department of Audits and Accounts Russell Hinton, State Auditor This Special Examination was conducted in response to a request by the Senate Appropriations Committee to review the Independent Care Waiver Program (ICWP) administered by the Department of Community Health (DCH). The Committee requested: A 10-year reconciliation, by fund source, of the number of ICWP slots funded by the General Assembly and the actual number of slots funded by the program; An analysis of the expenditures per slot and an explanation of the cost components; A critique of the program's purpose, goals and outcome measures; and General comments on how efficient and effective the program has been over the past 10 years. In response to the four parts of the request from the Senate Appropriations Committee, we found the following: Ten-Year Reconciliation It was not possible to fully accomplish a 10-year slot reconciliation and associated analyses of funding for the ICWP. In order to accomplish this, the following resource elements would be necessary: A uniform understanding of the term "slot" between the agency and the General Assembly; Consistent application of the uniformly understood meaning of "slot"; Appropriations documents that annually identified both the total amount of dollars and total number of slots funded by the General Assembly for the ICWP; and Agency records that annually reflect both the total amount of dollars expended and total number of slots filled in the ICWP. However, as listed below and more fully explained in the following paragraphs, we found that a reconciliation between total annual appropriations and total actual program activities was precluded because these necessary elements did not fully exist. Appropriations documents did not address the total funding or total slots for the ICWP. Consequently, instead of comparing total slots and dollars funded by the General Assembly to total slots and dollars funded by the program, we compared annual incremental changes from the General Assembly to annual incremental changes in the program. Although information we obtained indicates that a "slot" for the ICWP is synonymous with an "unduplicated recipient," we found no correlation between the annual changes in the number of slots funded through appropriations and annual changes in the number of unduplicated recipients actually served. We also found no consistent correlation between changes in the annual amount of funds appropriated and the annual change in the actual amount of program funds expended. Special Examination - Independent Care Waiver Program ii Analysis of Expenditures per Slot There was a significant difference in the average dollar amount expended per slot and the average dollar amount appropriated per slot throughout the 10-year period reviewed. With occasional exception, annual appropriated amounts per slot averaged nearly $50,000 per slot while actual expenditures per slot averaged close to $40,000. Explanation of Cost Components Approximately 90% of ICWP expenditures were attributed to personal support services, which are direct care services that include assisting recipients with eating, bathing, dressing, personal hygiene, and other activities of daily living. The remaining 10% of expenditures were attributed primarily to case management and specialized medical equipment services. Critique of Purpose, Goals and Outcome Measures According to the Code of Federal Regulations, the overarching purpose of all home and communitybased waiver programs is to avoid institutionalization. Similarly, the individual purpose of the ICWP is to offer services to adult individuals with physical disabilities or traumatic brain injury to live in their home and community as an alternative to a nursing facility. The goals of the ICWP are primarily related to the purpose of offering services to the target population of individuals with physical disabilities or traumatic brain injury. The goal of coordinating the enrollment of individuals in the ICWP from a nursing facility is associated with the purpose of avoiding institutionalization. The program, however, has not set any quantitative benchmarks regarding the extent to which any particular goal should be met. Additionally, aggregate data is not collected to specifically monitor the extent to which any particular goal is being accomplished. Overall, the measures used by the ICWP apply to a limited percentage of the client population and encompass a limited time period, thus inhibiting a quantitative evaluation of the performance of the program. Although limited, the reported results show significant program proficiency and client satisfaction. It should be noted, however, that current measures do not clearly pertain to the federallystated purpose of avoiding institutionalization or to the related goal of coordinating the enrollment of individuals in the ICWP from a nursing home. General Comments on Efficiency and Effectiveness The agency does not measure the efficiency of the ICWP, has not reported measures of efficiency to the federal government since 2002, and was unable to explain or document these calculations from prior years. Alternatively, we attempted to compile information on other possible indicators of efficiency, such as the percentage of total ICWP expenditures attributed to administrative costs. Although we calculated this percentage at roughly 6%, the program lacks established benchmarks for use in determining whether such percentages indicate efficient operating levels. Finally, we discovered significant additional Medicaid outpatient costs attributable to ICWP recipients but paid outside of ICWP Medicaid claims. Although the agency has reported in its response to the review that 42 clients have been moved from an institution into ICWP since 2002, without a framework of related goals it is unclear if this number is above or below appropriate performance. Additionally, the extent of the program's effectiveness over the 10-year review period cannot be fully evaluated because of outcome measures with limited applicability. Finally, the program seems to have been effective in transitioning potential clients off of the waiting list and into the program. Table of Contents Background Examination Purpose 1 Explanation of Waiver Programs 1 ICWP Services 1 Scope and Methodology 2 Results of Requested Analyses 10-Year Reconciliation of ICWP Slots Funded and Actual 3 Analysis of the Expenditures per Slot 7 Explanation of the Cost Components 8 Critique of the Program's Purpose, Goals and Outcome Measures 10 General Comments on the Program's Efficiency and Effectiveness 13 Appendix A: Various Data Sources 18 Appendix B: Appropriations Language 21 Special Examination - Independent Care Waiver Program 1 Examination Purpose This Special Examination was conducted in response to a written request by the Senate Appropriations Committee to review the Independent Care Waiver Program (ICWP) administered by the Department of Community Health (DCH). In its request, the Committee asked us to provide: A 10-year reconciliation, by fund source, of the number of ICWP slots funded by the General Assembly and the actual number of slots funded by the program; An analysis of the expenditures per slot and an explanation of the cost components; A critique of the program's purpose, goals and outcome measures; and General comments on how efficient and effective the program has been over the past 10 years. Explanation of Waiver Programs In 1981, Congress established the Home and Community-based Waiver program, which allowed states to use Medicaid funds for services in recipients' homes and communities who would otherwise require nursing facility or institutional care facilities for mental retardation and developmental disabilities (ICF-MR). Under federal regulations, the total cost of providing home and community-based services may not be more than the cost of providing care in a hospital, nursing home, or ICFMR. Each program is designed to help people who qualify for institutional care remain in the community or return to the community from nursing homes, hospitals, or ICF-MRs. Participants are required to be eligible for Medicaid, although qualifying incomes and resources may be higher than those permitted in the regular Medicaid program. Georgia's ICWP is a unique program, as it is apparently the only waiver in the country to combine a target population of individuals with physical disabilities or traumatic brain injuries into the same program. Typically, states have waivers that separately target individuals with physical disabilities or traumatic brain injuries in distinct programs. ICWP Services Georgia's ICWP began in 1992, and in FY 2006 served approximately 670 individuals at a total cost of nearly $26 million. This waiver program is designed to offer services to eligible Medicaid recipients with physical disabilities or traumatic brain injury who: Are from 21 to 64 years of age; Meet nursing home and/or hospital level of care; and Have needs and care that can be provided within the appropriated funds of the program. Special Examination - Independent Care Waiver Program 2 Each home and community-based waiver program offered by the state includes several basic services: Service coordination (help with managing care needs and services) Personal support (assistance with daily living activities, i.e. bathing, dressing, meals, and housekeeping) Home health services (nursing, home health aide, and occupational, physical and speech therapy) Emergency response systems Respite care (caregiver relief) Additional services include specialized medical equipment and supplies, counseling, and home and vehicle modification. The ICWP does not pay for room and board. The ICWP is administered and operated by DCH, which contracts with the Georgia Medical Care Foundation (GMCF) to conduct assessments of all potential ICWP participants and evaluations of all current ICWP participants. Once enrolled in the program, participants' case management is handled by one of 29 entities. The largest of these case management entities is ShepherdCare, which managed 153 clients (as of June 2006), or approximately 23% of the ICWP client population. Scope and Methodology The scope of this Special Examination was limited to the issues regarding the ICWP that were cited in the Committee's request. Our methodology included: Reviews of relevant O.C.G.A. sections, DCH annual reports, reports to the federal government, provider manuals, and waiver documents approved by the Centers for Medicare and Medicaid Services (CMS); Analysis of Medicaid claims payment data; Review of budget, appropriations, and financial documents; Appropriations information provided by the Governor's Office of Planning and Budget (OPB); Review of academic and professional literature; Review of other states' waivers and reported data; and, Interviews with state agency and subcontractor staff. After systematically reviewing data sources to answer the questions, wide variances in reported data were identified. To the extent possible, efforts were made to use data with a clear and replicable methodology. Generally, Medicaid claims payment data generated by the Department of Audits and Accounts (DOAA) Healthcare Information Analysis Group (HIAG) unit was used for analysis related to expenditures and unduplicated recipients. Some of the information is relayed from reports provided by DCH program staff, including the annual 372 Reports of program utilization submitted to the federal government. For a comparison of the available data sources, see Appendix A. Comments regarding this review were received and discussed with the agency and applicable revisions are reflected in this report. Special Examination - Independent Care Waiver Program 3 Results of Requested Analyses A Ten-year Reconciliation, by Fund Source, of the Number of ICWP Slots Funded by the General Assembly and the Actual Number of Slots Funded by the Program It was not possible to fully accomplish a 10-year slot reconciliation and associated analyses of funding for the ICWP. In order to accomplish this, the following resource elements would be necessary: A uniform understanding of the term "slot" between the agency and the General Assembly; Consistent application of the uniformly understood meaning of "slot"; Appropriations documents that annually identified both the total amount of dollars and total number of slots funded by the General Assembly for the ICWP; and Agency records that annually reflect both the total amount of dollars expended and total number of slots filled in the ICWP. However, as listed below and more fully explained in the following paragraphs, we found that a reconciliation between total annual appropriations and total actual program activities was precluded because these necessary elements did not fully exist. Appropriations documents did not address the total funding or total slots for the ICWP. Consequently, instead of comparing total slots and dollars funded by the General Assembly to total slots and dollars funded by the program, we compared annual incremental changes from the General Assembly to annual incremental changes in the program. Although information we obtained indicates that a "slot" for the ICWP is synonymous with an "unduplicated recipient," we found no correlation between the annual changes in the number of slots funded through appropriations and annual changes in the number of unduplicated recipients actually served. We also found no consistent correlation between changes in the annual amount of funds appropriated and the annual change in the actual amount of program funds expended. Identifying Total Slots and Funds Appropriated The total number of ICWP slots or dollars appropriated by the General Assembly cannot be identified in either the annual Appropriations Acts or Budget in Brief documents. Funds for the ICWP are currently included in the DCH Aged, Blind and Disabled Medicaid funding amount, which encompasses various programs funded at a total of more than $3.5 billion annually. Rather than identifying total ICWP funding, the appropriations documents report only incremental changes in the number of ICWP slots and dollars appropriated by the General Assembly. These annual changes were identified and confirmed by OPB. See Appendix B for the appropriations language. Special Examination - Independent Care Waiver Program 4 Identifying Incremental Slots and Dollars Funded by the ICWP Program According to ICWP and GMCF staff, the term slot is synonymous with unduplicated recipient. Using this understood definition, we identified the incremental changes in ICWP slots and dollars funded by the program. The number of unduplicated ICWP recipients can be tracked through the Medicaid claims payment system and is available for all but one year of the 10-year review. The annual changes in ICWP expenditures can also be tracked in the Medicaid claims payment system. It should be noted that reported program information indicates that unduplicated recipients appear, on average, to be in the ICWP for nearly a full year. Reconciliation of Slots Funded by the General Assembly and Funded by the ICWP As evidenced by Exhibit 1 below, there is no correlation between the annual changes in the number of slots funded through appropriations and the number of slots funded by the ICWP. For example, in FY 2001, although 100 additional slots were appropriated, there was an increase of 228 slots in the program. Conversely, in FY 2004, although 10 additional slots were appropriated, there was a decrease of 47 slots in the program. Exhibit 1 Comparison of Annual Changes between Appropriated and Actual Slots Change from Prior Year FY Appropriated Slots1 1997 0 1998 30 1999 25 2000 35 2001 100 2002 85 2003 0 2004 10 2005 0 2006 56 Actual Slots2 66 185 N/A N/A 228 92 -92 -47 5 47 Change in Actual Slots Compared to Appropriated Slots 66 155 N/A N/A 128 7 -92 -57 5 -9 Sources: (1) OPB (2) DCH (1997-2000) / DOAA (2001-2006) Note: There are no Actual Slots numbers in FY 1999 and 2000 because DCH was unable to locate the 372 report for FY 1999, thus eliminating the ability to calculate change in that year and the following year. Special Examination - Independent Care Waiver Program 5 Reconciliation of Annual Incremental Funds Appropriated by the General Assembly and Funds Expended by the ICWP As Exhibit 2 illustrates below, there is no consistent correlation between the annual changes in the amount of total funds (state and federal) appropriated and the amounts expended by the program. For example, in FY 2003, although an additional $3.2 million was appropriated, program expenditures increased by about $4.2 million, or roughly $1 million more than the appropriated amount. Conversely, in FY 2006, although there was an additional $2.7 million appropriated, actual expenditures decreased by $1.1 million. Exhibit 2 Comparison of Annual Changes between Appropriations and Actual Expenditures Change from Prior Year FY Appropriated Funds1 1997 $0 1998 $1,551,000 1999 $950,088 2000 $2,044,033 2001 $5,319,000 2002 $4,832,407 2003 $3,220,062 2004 $545,198 2005 $100,000 2006 $2,781,637 Actual Expenditures2 $3,180,088 $7,190,760 N/A N/A $5,316,686 $5,644,715 $4,157,008 ($899,971) $440,365 ($1,127,954) Change in Expenditures Compared to Appropriations $3,180,088 $5,639,760 N/A N/A ($2,314) $812,308 $936,946 ($1,445,169) $340,365 ($3,909,591) Sources: (1) OPB (2) DCH (1997-2000) / DOAA (2001-2006) Note s : (a) It is inaccurate to relate the Appropriated Funds amounts to the Appropriated Slots numbers shown in Exhibit 1, as these funding amounts represent the total funds appropriated to the ICWP, including those funds designated for something other than additional slots. For example, the $3.2 million shown for FY 2003 was designated entirely for a Medicaid rate increase. (b) There was no increase in appropriated funds from the prior year in FY 1997. (c) There are no numbers in the Actual Expenditures rows in FY 1999 and 2000 because DCH was unable to locate the 372 Report for FY 1999, thus eliminating the ability to calculate change in that year and the following year. Fund Sources of ICWP Expenditures Exhibit 3 on the following page shows actual total ICWP expenditures over the 10year review period by fund source. Special Examination - Independent Care Waiver Program 6 Exhibit 3 Fund Source of Actual Total Expenditures1,2 $30,000,000 $24,000,000 Expenditures $18,000,000 $12,000,000 Federal State $6,000,000 $0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Fiscal Year Sources: (1) DCH (1997-2000) (2) DOAA (2001-2006) Note: DCH was unable to locate the 372 report for FY 1999. As seen in Exhibit 3 above, total ICWP expenditures increased 276% from $6.8 million in FY 1997 to $25.6 million in FY 2006. These expenditures were divided between the federal government and the state at an approximate rate of 60% and 40%, respectively. Special Examination - Independent Care Waiver Program 7 An Analysis of the Expenditures per Slot and an Explanation of the Cost Components Expenditures per Slot There was a significant difference in the average dollar amount expended per slot and the average dollar amount appropriated per slot throughout the 10-year period reviewed. With occasional exception, annual appropriated amounts per slot averaged nearly $50,000 per slot while actual expenditures per slot averaged close to $40,000. As shown in Exhibit 4 on the following page, actual expenditures per slot ranged from a low of approximately $26,000 in FY 2001 to a high of about $45,000 in FY 1997. Recently, actual expenditures per slot declined from an average of almost $43,000 in FY 2005 to an average of roughly $38,000 in FY 2006. During this same period, the average amount appropriated per slot was typically higher, as shown in Exhibit 4. Although FY 1999 showed a much lower amount (approximately $13,000), the amount appropriated per slot for other years ranged from about $52,000 (FY 1998) to nearly $62,000 (FY 2002). In addition to this average expenditure amount information, there are some discrepancies that should be noted. Data from the Medicaid claims payment system used to calculate average expenditure amounts disclosed that, during FYs 2004 through 2006, roughly 15% (101) of unduplicated recipients received program services totaling no more than half the average expenditure amount. This data also showed that roughly 7% (42) of unduplicated recipients received program services totaling more than twice the average expenditure amount. Special Examination - Independent Care Waiver Program 8 Exhibit 4 Comparison of Average Actual Expenditures per Unduplicated Recipient1 (Slot) to Average Amounts Appropriated per Slot2 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Fiscal Year Expenditures per Unduplicated Recipient Appropriations per Slot Sources: (1) DCH (1997-2000) / DOAA (2001-2006) (2) OPB Notes: (a) The Appropriations per Slot were calculated by dividing the annual incremental dollars appropriated specifically for additional slots by the annual number of additional appropriated slots. (b) Fiscal years with no Appropriations per Slot column (1997, 2003, and 2005) mean that appropriation documents did not indicate a funding amount for program slots. Additionally, there is no Expenditures per Unduplicated Recipient column in 1999 because DCH was unable to locate the 372 Report for that fiscal year. Cost Components Approximately 90% of ICWP expenditures were attributed to personal support services, which are direct care services that include assisting recipients with eating, bathing, dressing, personal hygiene, and other activities of daily living. The remaining 10% of expenditures were attributed primarily to case management and specialized medical equipment services. Over the 10-year review period, approximately 90% of program expenditures were attributed to personal support services, which include help with eating, bathing, dressing, personal hygiene, and other activities of daily living (see Exhibit 5 on the following page). The remaining expenditures were largely incurred as part of case management (6%) and specialized medical equipment (3%) services. It should be noted that case management is recorded as a service, not as an administrative cost, in the Medicaid claims payment system. According to DCH, the case management procedural codes represent essentially the full administrative cost of the program, as additional state administrative costs are minimal. Special Examination - Independent Care Waiver Program 9 Exhibit 5 Cost Components1,2 $30,000,000 $25,000,000 $20,000,000 Case Management Other Services $15,000,000 Companion Services $10,000,000 $5,000,000 $0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Fiscal Year Specialized Medical Equipment Personal Support Sources: (1) 372 Reports (1997-2000) (2) DOAA (2001-2006) Note: DCH was unable to locate the 372 Report for FY 1999. The percentage of costs attributable to the various categories has remained stable over the 10-year review period, even though the program has experienced substantial increases in its overall amount of expenditures and units of service. In addition to personal support, case management, and specialized medical equipment services, the remaining services combined to represent only about 1% of ICWP expenditures. These remaining services include: Adult day services Behavior management Counseling services Environmental modification Personal emergency response systems Respite care Skilled nursing A precise percentage breakdown of ICWP expenditures by each cost component is presented in Appendix A. Special Examination - Independent Care Waiver Program 10 A Critique of the Program's Purpose, Goals and Outcome Measures Purpose According to the Code of Federal Regulations, the overarching purpose of all home and community-based waiver programs is to avoid institutionalization. Similarly, the individual purpose of the ICWP is to offer services to adult individuals with physical disabilities or traumatic brain injury to live in their home and community as an alternative to a nursing facility. As listed by Code of Federal Regulations (CFR) 42 441.300, the overall purpose of the waiver program is to offer an array of home and community-based services that an individual needs to avoid institutionalization. Similarly, the purpose of the ICWP, as described in the waiver document, is to offer services to adult individuals with physical disabilities or traumatic brain injuries to live in their own homes and communities as an alternative to nursing facility placement. This programmatic purpose is distinct, as the ICWP appears to be the only waiver in the nation to combine a target population of individuals with physical disabilities or traumatic brain injuries into the same program. Goals The goals of the ICWP are primarily related to the purpose of offering services to the target population of individuals with physical disabilities or traumatic brain injury. The goal of coordinating the enrollment of individuals in the ICWP from a nursing facility is associated with the purpose of avoiding institutionalization. The program, however, has not set any quantitative benchmarks regarding the extent to which any particular goal should be met. Additionally, aggregate data is not collected to specifically monitor the extent to which any particular goal is being accomplished. The most current set of goals are included in the waiver document and bulleted below: To provide quality services, consistent with the needs of the individual member, which are effective in developing, improving and maintaining the member's independence to live actively, safely and successfully in the community; To provide cost-effective services; To facilitate the transition of those individuals that reach age 21 and age out of the children's services, and who meet the waiver eligibility criteria; To involve the member or member's representative in the provisions and decision-making process regarding member care, safety and health; To coordinate the enrollment of a specified number of individuals that are in a nursing home, that are assessed and meet the eligibility criteria of the waiver and have expressed a desire to reside in the community; To provide the option to self-direct personal support services to those individuals and/or their legal representatives who express a desire to self- Special Examination - Independent Care Waiver Program 11 direct a portion of their services and are identified to have the ability to do so. According to ICWP staff, information gathered through the methods explained below and on the following page allows them to somewhat assess indicators of program performance and quality. Outcome Measures Overall, the measures used by the ICWP apply to a limited percentage of the client population and encompass a limited time period, thus inhibiting a quantitative evaluation of the performance of the program. Although limited, the reported results show significant program proficiency and client satisfaction. It should be noted, however, that current measures do not clearly pertain to the federally-stated purpose of avoiding institutionalization or to the related goal of coordinating the enrollment of individuals in the ICWP from a nursing home. The ICWP uses two measures, the monthly ShepherdCare report and the annual Consumer Satisfaction Survey, to evaluate program performance and client satisfaction, respectively. However, instead of reporting substantive program results and impacts, these measures are more representative of the quality of service provision. Additionally, the two measures only apply to a small percentage of the ICWP population and encompass a limited period of time, so it is difficult to quantitatively gauge the success of the entire program in meeting its goals or overall purposes over the 10-year review period. In addition to these limitations, the current indicators included in the measures do not pertain to the federally-stated purpose of avoiding institutionalization or to the related goal of coordinating the enrollment of individuals in the ICWP from a nursing home. Although the ShepherdCare report and Consumer Satisfaction Survey are potentially useful measures of program performance and service quality, the results cannot necessarily be generalized to the entire ICWP population because they applied to only about 20% of the ICWP population and included only two years of data. While not necessarily generalizable, it should be noted that the results of the ShepherdCare report and the Consumer Satisfaction Survey revealed overwhelming program proficiency and client satisfaction, respectively. The ShepherdCare report was first produced in 2004 and indicates the monthly percentage of the 153 ShepherdCare clients (as of June 2006) who satisfy each of the 10 indicators bulleted below. Each indicator was reported as met by at least 90% of the clients. Maintains maximum control over daily schedule and decisions; Socially connected and involved in community activities of their choosing; Assumes responsibility for cost-effective use of medical services and supplies; Problem or symptomatic behavior will not place the ICWP participant at risk of social isolation, neglect or physical injury to themselves or others; Special Examination - Independent Care Waiver Program 12 Diet will be balanced and appropriate for decreasing risk of further disability; Skin is maintained in healthy condition, avoiding breakdowns and pressure sores; Understands and observes medication regimen; Activities of daily living are not interrupted due to cognitive or physical impairments; Bowel and bladder care will promote skin integrity, cleanliness and positive health status; and Transfers and mobility will occur safely and when needed. The ShepherdCare report is the product of a template created by a group of ICWP stakeholders and is intended to be completed by each case management entity on a regular basis. However, ShepherdCare is currently the only one of the 29 entities with reports available for review. The Consumer Satisfaction Survey is alternatively based on the perspective of the client (or the client's representative) regarding the quality of service received. The self-reported survey has only been administered since 2005, so there is only one year of complete survey results to date. The initial survey compiled in March 2005 was completed by 129 clients and is used primarily as a detection tool, meaning that ICWP staff follows up with the clients who report low satisfaction, rather than as a measurement tool. The program's tallied results of this survey show only nominal instances of reported dissatisfaction. Special Examination - Independent Care Waiver Program 13 General Comments on How Efficient and Effective the Program Has Been Over the Past 10 Years Efficiency The agency does not measure the efficiency of the ICWP, has not reported measures of efficiency to the federal government since 2002, and was unable to explain or document these calculations from prior years. Alternatively, we attempted to compile information on other possible indicators of efficiency, such as the percentage of total ICWP expenditures attributed to administrative costs. Although we calculated this percentage at roughly 6%, the program lacks established benchmarks for use in determining whether such percentages indicate efficient operating levels. Finally, we discovered significant additional Medicaid outpatient costs attributable to ICWP recipients but paid outside of ICWP Medicaid claims. Operational Efficiency In order to comment on the operational efficiency of the ICWP, we analyzed Medicaid claims payment data to identify the percentage of total ICWP expenditures attributed to either administrative or direct service activities. This comparison was intended to show the extent to which ICWP efforts were financially directed to its purpose of providing service and not to administrative activities. From this review, we found that administrative expenditures composed roughly 6% of total program expenditures for each of the 10 years reviewed. During this same period, direct service expenditures conversely composed approximately 94% of total ICWP expenditures. The overwhelming percentage of expenditures related to direct services may demonstrate the efficient use of funds to meet the program's purpose of offering services. However, the program had no benchmarks to support whether this 6% administrative figure necessarily represented efficiency. Through our review of Medicaid claims payment data, we found a substantial amount of additional outpatient costs for ICWP clients which are not part of ICWP expenditures. These costs included such services as durable medical equipment and doctor's visits that were incurred to serve individuals while in the ICWP but did not include pharmacy or hospital costs. These costs totaled up to $1.3 million in FY 2002. Six years of data on these additional Medicaid costs is presented in Exhibit 6 on the following page. It is our opinion that the estimates shown in Exhibit 6 are conservative. This opinion is supported by an independent study conducted in 2004, which shows that additional Medicaid outpatient costs for ICWP clients were more than $3 million beyond their waiver costs. This study also shows that pharmacy and inpatient Medicaid costs for ICWP clients were an additional $2 million above their waiver costs. Special Examination - Independent Care Waiver Program 14 Exhibit 6 Additional Medicaid Outpatient Costs Outside of ICWP Expenditures But for ICWP Recipients (not including Pharmacy and Inpatient costs) FY 2001 2002 2003 2004 2005 2006 Cost $ 982,418 $1,314,066 $1,109,889 $ 869,001 $1,077,941 $1,119,163 Comparison to Other States Because there is not a waiver program similar to the ICWP in other states, the efficiency measures discussed above could not be compared among other states. Comparison to the Institutional Alternative The primary measure of waiver cost efficiency is the cost-neutrality equation, which is necessary to satisfy CFR 42 441.303 and its requirement that the annual average per capita expenditure estimate of the cost of home and community-based and other Medicaid services under the waiver must not exceed the estimated annual average per capita expenditures of the cost of services in the absence of a waiver. The cost-neutrality equation is supposed to be presented in the 372 Reports submitted annually by DCH to the federal government. However, this measure of ICWP cost efficiency could not be evaluated because: The 372 Reports have not been produced since 2002. For the years in which the reports were submitted, DCH was unable to support or explain the methodology used to calculate the figures reported. For the years in which actual Medicaid claims payment data was available for comparison to expenditures reported to the federal government on 372 Reports (2001 and 2002), the figures reported on 372 Reports were inconsistent with claims payment data. Further, the institutional care population may not even be comparable to the ICWP population, as nursing facility residents may have very different needs than those of ICWP clients, particularly those with a traumatic brain injury. Special Examination - Independent Care Waiver Program 15 Effectiveness Although the agency has reported in its response to the review that 42 clients have been moved from an institution into ICWP since 2002, without a framework of related goals it is unclear if this number is above or below appropriate performance. Additionally, the extent of the program's effectiveness over the 10-year review period cannot be fully evaluated because of outcome measures with limited applicability. Finally, the program seems to have been effective in transitioning potential clients off of the waiting list and into the program. As stated in the Outcome Measures subsection (p. 11-12), the measures used by the ICWP are the monthly ShepherdCare report and the annual Consumer Satisfaction Survey. These measures, however, were only initiated in 2004 and 2005, respectively, and thus cannot be used to evaluate the overall effectiveness of the program over time. Additionally, these measures applied only to about 20% of the ICWP population and did not pertain to the federally-stated purpose of avoiding institutionalization or to the related goal of coordinating the enrollment of individuals in the ICWP from a nursing home, further diminishing the ability to comment on program effectiveness even in the years in which these reports were produced. In contrast, the status of the waiting list offered a potentially useful measure of effectiveness regarding avoiding institutionalization. The waiting list reportedly includes the number of individuals assessed as eligible for the ICWP who are waiting for an available ICWP slot. It is important to note that individuals on the waiting list are able to receive waiver services in the Community Care Services Program (CCSP). As shown in Exhibit 7 on the following page, there has been a steady decline since FY 2003 in the number of individuals on the ICWP's waiting list. According to DCH and GMCF staff, the waiting list is currently at zero, as every individual formerly on the waiting list was recently transitioned into the ICWP. Additionally, GMCF staff reported that the program now has approximately 60 unfilled slots available. Exhibit 7 also shows, however, that the number of persons reflected on the program's waiting list has not always fluctuated commensurately with changes in the number of ICWP recipients. For example, in FY 2005, the number of unduplicated recipients in the program increased by 5, but the waiting list number decreased by 104. Special Examination - Independent Care Waiver Program 16 Exhibit 7 Unduplicated Recipients vs. Waiting List Unduplicated Recipients1 FY Total Number Annual Change Waiting List2 Total Number Annual Change 2003 664 2004 617 2005 622 2006 669 -92 235 73 -47 230 -5 5 126 -104 47 87 -39 Sources: (1) DOAA (2) GMCF Note: The Waiting List total in each fiscal year is represented by the number of individuals on the waiting list in June of that fiscal year. Special Examination Independent Care Waiver Program 18 APPENDIX A Appendix A presents the various data and information sources available for review in the ICWP program. TOTAL EXPENDITURES Source 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 372 Report1 $6,821,479 $14,012,239 - $12,020,894 $16,559,357 $22,003,899 DCH Annual Report1 $7,920,568 $13,685,700 $15,885,370 $15,394,543 $14,332,406 $18,638,528 $24,003,684 $26,741,232 $26,493,926 - DCH Analysis2 $17,032,511 $23,181,782 $22,717,243 $30,153,420 $27,359,999 $20,308,195 DCH Analysis2 $21,005,601 $24,841,071 $25,169,741 DCH Spreadsheet3 $15,887,735 $17,504,549 $23,171,605 $26,362,428 GMCF / ShepherdCare4 $20,416,045 $25,695,466 $27,816,198 $28,806,966 $28,692,851 $28,457,229 DOAA5 $17,336,580 $22,981,295 $27,138,304 $26,238,333 $26,678,698 $25,550,744 UNDUPLICATED RECIPIENTS Source 1997 372 Report1 151 DCH Annual Report1 235 DCH Analysis2 - GMCF / ShepherdCare4 - DOAA5 - 1998 336 323 - 1 Provided by DCH Reimbursement Services Unit 2 Provided by DCH program staff 3 Provided by DCH Budget Unit 1999 - 393 - - 2000 436 416 - 2001 618 572 491 664 2002 796 670 574 756 2003 - 660 650 581 664 2004 - 615 613 589 617 2005 - 622 617 619 622 2006 - 617 669 4 Analysis using data provided by the Georgia Medical Care Foundation (GMCF) and the Shepherd Center (ShepherdCare) 5 Provided by Affiliated Computer Systems (ACS) and analyzed by the DOAA Healthcare Information Analysis Group (HIAG) Special Examination - Independent Care Waiver Program 19 APPROPRIATIONS Source OPB6 (slots appropriated) 1997 0 1998 30 1999 25 2000 35 2001 100 2002 85 2003 0 2004 10 OPB6 (dollars appropriated) $0 $1,551,000 $950,088 $2,044,033 $5,319,000 $4,832,407 $3,220,062 $545,198 6 Provided by Governor's Office of Planning and Budget (OPB) staff 2005 0 2006 56 $100,000 $2,781,637 Special Examination Independent Care Waiver Program 20 ICWP Category of Service (COS) - Cost of Service Percentages Category Personal Support Services $ in Millions / (% of Total ICWP Expenditures Billed in the Waiver) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 5.94 / (87%) 12.15 / (86.7%) 10.68 / (88.8%) 15.21/ (87.7%) 20.79 / (90.5%) 24.93 / (91.8%) 24.01 / (91.5%) 24.23 / (90.8%) 23.08 / (90.3%) Case Management .41 / (6.0%) .84 / (6.0%) .61 / (5.1%) 1.00 / (5.8%) 1.32 / (5.8%) 1.35 / (5.0%) 1.37 / (5.2%) 1.53 / (5.7%) 1.64 / (6.4%) Specialized Medical Equipment .24 / (3.5%) .46 / (3.3%) .36 / (3%) .44 / (2.5%) .53 / (2.3%) .53 / (1.9%) .57 / (2.2%) .60 / (2.3%) .56 / (2.2%) Companion Services .11 / (1.7%) .24 / (1.7%) .13 / (1.1%) .38 / (2.2%) .02 / (.0.0%) - - - - Behavior Management - .19 / (1.4%) .06 / (0.5%) .12 / (0.7%) .04 / (0.2%) .07 / (0.3%) .07 / (0.3%) .00 / (0.0%) .00 / (0.0%) Environmental Modifications .07 / (1.0%) .05 / (0.4%) .02 / (0.2%) .04 / (0.2%) .12 / (0.5%) .06 / (0.2%) .06 / (0.2%) .08 / (0.3%) .02 / (0.1%) Skilled Nursing .03 / (0.5%) .05 / (0.3%) .14 / (1.2%) .04 / (0.2%) .02 / (0.1%) .01 / (0.0%) .00 / (0.0%) - - Adult Day Services - .01 / (0.0%) .01 / (0.1%) .03 / (0.2%) .06 / (0.3%) .10 / (0.4%) .09 / (0.4%) .10 / (0.4%) .08 / (0.3%) Personal Emergency Response Systems .01 / (0.1%) .02 / (0.1%) .02 / (0.2%) .04 / (0.2%) .05 / (0.2%) .06 / (0.2%) .05 / (0.2%) .06 / (0.2%) .05 / (0.2%) Respite Care - - - - .00 / (0.0%) .01 / (0.0%) .01 / (0.0%) .07 / (0.3%) .08 / (0.3%) Other .01 / (0.1%) .00 / (0.0%) .00 / (0.0%) .03 / (0.2%) .04 / (0.2%) .02 / (0.1%) - - .04 / (0.2%) Counseling .01 / (0.2%) .01 / (0.1%) .00 / (0.0%) .00 / (0.0%) .01 / (0.0%) .01 / (0.0%) .00 / (0.0%) .00 / (0.0%) TOTALS $6,821,567 $14,012,239 $12,020,894 $17,337,580 $22,981,295 $27,138,305 $26,238,333 $26,678,698 $25,550,744 Sources: DCH (1997-2000) and DOAA (2001-2006) Note: DCH was unable to locate the 372 Report for FY 1999. Special Examination - Independent Care Waiver Program 21 APPENDIX B FY 1999 2000 2001 2002 2003 2004 2005 2006 Appropriations Language For increased funding for the Independent Care Waiver. For 10 additional Independent Care Waiver slots (Senate: add 40 additional slots) (CC: 25 slots) * For 30 additional slots in the Independent Care Waiver program (H: Includes 25 slots funded in H.B. 143) (S: 40 slots) (CC: 35 slots) Adds 75 slots to the Independent Care Waiver Program and 25 slots to the Traumatic Brain Injury Program to serve persons with severe physical disabilities. Adds 85 slots to the Independent Care Waiver Program. Funds a 4% increase in reimbursement rates for Independent Care Waiver Program providers. Increases funds to offset a reduction in federal financial participation for the Independent Care Waiver Program and the Medicaid eligibility expansion for pregnant women and infants under age 1 with incomes up to 235% of the federal poverty level. Eliminates funding for the following FY 2002 enhancements: One quarter of funding in the Independent Care Waiver Program available from a slot freeze.* Increases Independent Care Waiver Program rates for personal support services by 10%. Reduces tobacco funding needed to match federal Medicaid funding for the Independent Care Waiver Program and the Medicaid expansion covering pregnant women and children up to age 1 with incomes between 200% and 235% of the federal poverty level. Adds 10 slots to the Independent Care Waiver Program to provide community-based services to the physically disabled. Transfer $100,000 from the Department of Human Resources for Independent Care Waiver slots. Fund 46 additional slots in the Independent Care Waiver Program. Add 10 new slots to the Independent Care Waiver Program for physical disabilities and traumatic brain injuries.* Sources: OPB tracking document (1999-2000) and OPB Budget in Brief (2001-2006) Note: FYs 1999, 2002 and 2006 include appropriations from both the annual budget document and the amended budget document for that fiscal year. The appropriations listed in the amended budget documents are denoted with an asterisk (*). This report was performed by the Program Audits and Management Support Section of the Healthcare Audits Division. We assess the state's healthcare systems and programs to improve operations and reach management solutions. Our reviews focus on healthcare expenditures, best practices, and data analysis, and are requested by agency commissioners, the governor's office, and the state legislature. 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