Abstract
Growth in home and community based services (HCBS) has been implicated in rising long-term care expenditure in the Medicaid program. Its efficiency impact has not been tested. Using Stochastic Frontier Analysis (SFA) and panel data methods, we evaluated the cost efficiency of long-term support services (LTSS) provided by state Medicaid agencies and examined its association with intensity of HCBS use. We compared the efficiency of state funded HCBS programs with federal waiver programs. We found substantial variation in cost efficiency of LTSS programs by states, but all showed improvement over time related to increased HCBS use. Higher participation in federal waivers programs yielded additional improvements in cost-efficiency. Results indicate that increasing HCBS services targeted at “high need” population and developmentally disabled individuals would improve efficiency in LTSS delivery. These results reveal the importance of measuring and comparing efficiencies across Medicaid funded LTSS programs, as we introduce reforms in the LTSS delivery system. We recommend that Medicaid agencies invest in the development of improved data sources for the estimation of cost efficiencies of their programs.
Highlights
Long-term Support Service (LTSS) represents a disproportionate and growing share of Medicaid expenditure
Recognizing that many factors may be contributing to the variation in cost-efficiencies among the states, we present below the results of the multivariable regression analysis, obtained in the second step, to assess the importance of home and community based services (HCBS) program variables in the determination of a state’s efficiency level
We have presented our analysis of interstate variation in cost efficiency (CE) of Medicaid LTSS delivery
Summary
Long-term Support Service (LTSS) represents a disproportionate and growing share of Medicaid expenditure. Two recent studies (Kaye et al 2009; Harrington et al 2011) suggest that wood-work effect notwithstanding, HCBS have a dampening effect on Medicaid cost escalation These findings suggest that HCBS may be associated with overall improvement in efficiency of LTSS delivery by reducing non-productive expenses and waste such as, duplication of services and excess capacity. The services range from help with eating, bathing and toileting to assistance with grocery shopping, transportation, medication management These services can be provided at home and the community (HCBS) or in institutions such as nursing homes and in facilities for people with developmental disabilities (ICFMR). Funding for these services comes jointly from the state and federal governments. The funding for the programs comes jointly from the federal and state governments, the state Medicaid agency is the decision making unit for all Medicaid provided services in the state, including LTSS and can be seen as having organized systems that produce LTSS for its beneficiaries
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