A consultant’s presentation to the Health Reform Legislative Task Force on Wednesday pointed out one of the most wasteful and inhumane health care issues in the state: Medicaid’s reliance on institutions in caring for the elderly and the disabled, rather than using home or community-based services.

Arkansas Medicaid tends to route people into nursing homes and similar institutions rather than paying for, say, home health aides, or other services that might allow a greater degree of independence to folks with long-term needs. This is despite the fact that home/community-based services (HCBS) cost far less, on average, than institutional care on a per-patient basis. 


The Stephen Group, the consultant chosen to review Arkansas’s health care system for the task force, presented the legislative panel on Wednesday with detailed information on behavioral health, developmental disability (DD) services and much more. It’s in advance of an eventual set of recommendations that the group is scheduled to present in October. (Rep. Charlie Collins (R-Fayetteville), the task force chair, asked that anyone in the state wanting to submit in put on the work of the task force to email him.)

The presentation included a reminder of just how expensive it is to keep people in institutions, as compared to providing them with home and community-based services. Here’s a Stephen Group graph showing the gap between the average per-capita cost to taxpayers of paying for nursing homes versus HCBS for elderly Arkansans on Medicaid. The title of this slide states, “Nursing Home Costs are Twice as Much as HCBS.”


What this graph doesn’t take show is quality of life. The fact is — big surprise! — most elderly people want to stay away from nursing homes as long as possible, given the choice.

It makes sense that home and community-based care is preferred by the majority of elderly patients, rather than being confined to a facility. The somewhat counterintuitive thing is that, on average, it’s actually cheaper to pay for HCBS than it is to house someone in a nursing home, once one considers all the overhead of keeping a medical facility open 24/7.


That’s on an aggregate basis. For some patients who require intensive, round-the-clock care, it might be more cost-effective to go the institutional route. But on the whole, it’s clearly cheaper to taxpayers to if elders delay their entrance to a nursing home unless it’s a necessity. Fortunately, Medicaid-eligible elderly people in Arkansas who require a high level of care can receive an “ElderChoices” waiver from the Department of Human Services that allow them to receive HCBS instead of being institutionalized. (Although many senior Arkansans are likely unaware of the option.)

Unfortunately, that’s not the case with another population: The developmentally disabled.

As I wrote in a story for the Times almost a year ago, there are almost 3,000 Arkansan families on a waiting list to receive a DHS waiver to get HCBS for developmentally disabled children and adults. The “DD” waiver program for home and community-based services has been capped, though, and so parents face an eight-year wait to get services for children with severe autism and other disabilities. The alternative is to simply stick them in an institution — a fine option, perhaps, for some individuals, but a terrible one for others who might thrive and grow with the right treatment. It’s inhumane to tell families they have to institutionalize a loved one when he or she could get services at home or in a less restrictive community setting.

Add the taxpayer perspective and it becomes not just cruel, but absurd. As with the elderly, it’s usually much cheaper to pay for HCBS rather than to pay for institutionalization. Here’s the Stephen Group comparison on per-capita costs of people receiving DD waivers against people in ICFs, or “intermediate care facilities” — institutional settings for individuals with intellectual disabilities. Again, the cost is halved, in general:


Previously, I’ve usually equated providing HCBS with the Community First Choice Option — a federal funding mechanism made possible by the Affordable Care Act. CFCO gives extra Medicaid dollars to states that commit to clearing their waiver waiting lists by giving all elderly and developmentally disabled (and physically disabled) people the option of home and community services. But CFCO has encountered opposition in the legislature for many reasons — because it’s associated with the dreaded Obamacare, because it’s a threat to the vested interests of nursing homes and other facilities, because it’s a new and untested program, because some families worry it’ll hurt the state-ran Human Development Centers their children depend on. CFCO therefore keeps getting deferred.

However, the Stephen Group, while clearly endorsing a move towards using more home and community-based services, said on Wednesday it wasn’t sure the Community First Choice Option was the best route for Arkansas to reach that goal. Among other things they said it might require compliance with federal requirements that could put the state on the hook for more money down the road. The consultants seemed to suggest using an alternative policy route — an expanded 1115 waiver — to clear the waiting list, although they were careful (in true consultant form) to avoid making concrete recommendations prematurely. 

Well, OK. Whatever. CFCO (with its enhanced federal match rate) still sounds like a good deal to me, but I’m no Medicaid expert, and if there’s another way to get those thousands of families the care they deserve, so be it. If the legislature is willing to come up with a CFCO alternative that serves beneficiaries, that’s great. We’ll have to see what the consultants produce in their final report.