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Expanding Long-term Care Choices for the Elderly

Payment Incentives & Models


Penny Black, Director, Home and Community Based Services Division, Washington Aging and Adult Services Administration, Olympia, WA.

Jon Ihli, Long-term Care Fiscal and Data Analyst, Home and Community Rates Division, Washington Aging and Adult Services Administration, Olympia, WA.

Washington State created an interim solution rate structure for several reasons:

  • To decrease Exceptions to Policy and Flexible Rate Requests related to the existing three-level system, thereby lessening the administrative burden.
  • To respond to the low rate in certain adult residential care settings.
  • To capture the issues that require more caregiver interventions.
  • To buy the same personal care in all settings, keeping in mind that the variance among settings is related to the acuity of clients and the specific services needed.

An interim solution was needed while the State develops its Resident-Focused Payment System, a process expected to take 2 or 3 years. This system will be based on a modified case-mix payment methodology that takes into account the price model and scaling of the direct care component for specific client characteristics. This case-mix reimbursement system is expected to include 8 to 12 levels. It cannot be fully implemented until the new comprehensive assessment and time study are completed.

The development of the interim solution has taken 2 years. First, a workgroup examined a study done of the State's long-term care (LTC) system (the Ladd Study), the Olmstead Supreme Court decision, and other relevant issues and documents.

The workgroup next analyzed data to determine which client characteristics were driving the Exception to Policy and Flexible Rate Requests in various residential settings. Most commonly, these were combinations of characteristics including:

  • Management of bladder and bowel control.
  • Wandering with exit-seeking.
  • Orientation to person/place/time.
  • Anxiety (particularly when coupled with orientation).
  • Disruptive behavior.

The workgroup also surveyed other States to determine their rate structure and methodologies.

The Interim Solution Pilot took place from December 1999 until April 2000. It provided the State with more than 800 client assessments to analyze for specific characteristics driving the requests and then to build the four-level payment system. Adjustments were made in the lowest and highest payment levels, based initially on a model borrowed from the residential care industry and using cost data from each pilot region.

From this analysis, the State could project a cost savings, based on a large group of low-care clients identified in the assessments. (For the biennium, this cost savings is estimated at $4 million.) The Aging and Adult Services Administration would give the funds saved to the Division of Development Disabilities in order for that division to use the new payment system for their clients as well. This allowed equitable rates for equitable services between the two administrations.

Administrative costs to develop this payment system centered on automation. Ms. Black noted that the State uses top-of-the-line computer equipment. She stressed how valuable this investment has been in developing much-needed data systems.

The focus of the interim solution is on behavior symptoms. The determinations are based on the following:

For current behaviors (defined as having occurred within the past 7 days): The frequency of the behavior's occurrence is weighted, then the ease with which the behavior symptom could be altered is documented.

For past behaviors (defined as not having occurred within the past 7 days, but having occurred within the past 5 years and having effects on the client today): Options include "past issue managed by current interventions" and "no interventions in place, or interventions are not effective." This provides a way to identify training opportunities with providers.

A larger pilot of the four-level payment method was implemented July 1, 2000, in three geographic regions: a metropolitan area, a nonmetropolitan area, and King County (which includes Seattle). In each of the pilot regions:

  • All new adult clients admitted to residential care settings are assessed using the Interim Comprehensive Assessment.
  • Clients in these settings prior to July 1 are only assessed if there is a significant change in their condition or at annual review.
  • Area Agencies on Aging use the Interim Comprehensive Assessment to assess their clients moving to these residential settings.

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