Vermont is likely to find out if spending Medicaid funds on community-based long-term-care programs is more cost-effective than nursing home care.
Last week, Vermont became the first state to receive a waiver that entitles all those who qualify for Medicaid to receive subsidies for community-based services-such as home health.
HHS, which expects the plan to be a cost saver, is considering expanding the pilot to other states. But opponents, including the nursing home industry, expressed some caution, saying the program could be more costly and lead to lower quality of care.
Currently, only nursing home care is an entitlement under Medicaid, but in the past other states-including Vermont-have established programs that allow some recipients to use Medicaid dollars for community-based programs.
Those types of programs have been touted as a way to give patients more options and stretch dollars spent on long-term care. But others-mainly the nursing home industry-have argued that community-based care is not always less expensive than institutionalized settings, such as nursing homes and intermediate-care facilities.
Community-based care is cheaper than nursing homes only if less care is being provided, according to the Kaiser Commission on Medicaid and the Uninsured, a not-for-profit group that studies access for those with low incomes.
Nevertheless, over the last five years Medicaid spending on the community-based programs increased 95.5%, to $21.8 billion in fiscal 2004 from $11.1 billion in fiscal 1999, according to the CMS.
That increased spending has coincided with a 22.2% drop in nursing home residents to 1.4 million in 2004 from 1.8 million in 1990, according to the Kaiser commission.
The Vermont program, which could affect 4,500, will likely lead to the elimination of up to 10% of the roughly 2,200 nursing home beds in the state, said Patrick Flood, commissioner of the state's Department of Aging and Disabilities-the office that applied for the waiver.
Flood said the state could benefit from a cut in nursing home beds, but Mary Shriver, executive director of the Vermont Health Care Association, a nursing home trade group, said the pilot program will create access problems.
She added that the community-care programs aren't as regulated as nursing homes and there's no telling what quality of care patients would receive.