Rebalancing in Rhode Island: The Shift to Home and Community-Based Care for Older Adults
As the elderly population grows and the costs of caring for them rise, there has been an evolution in thinking about the best way to provide long-term care for seniors. Many states are transitioning older adults in need of long-term services and supports (LTSS) from institutional care to community-based services ranging from home health care to assisted living to adult day centers. This “rebalancing” is widely accepted as a way to lower overall costs to state Medicaid budgets, increase quality of care, and meet older adults’ preference to stay in the community as long as possible.1
While rebalancing the long-term care system can have significant benefits, research shows that rebalancing is not as simple as reducing reimbursements to nursing homes and increasing investment in Home and Community Based Services (HCBS). There are a number of elements required to build a robust system of home- and community-based care, from cultivating a sizable pool of skilled care workers to ensuring affordable, accessible housing.
To better understand rebalancing in Rhode Island, we reviewed the existing research literature on long-term care, analyzed demographic trends on the elderly and the LTSS workforce, and analyzed Medicaid data on the utilization and quality of LTSS in the state. We also conducted interviews with twenty key stakeholders representing trade associations, the Long-Term Care Coordinating Council, nursing home administrators, HCBS providers and program managers, and direct care workers.
THE COSTS AND BENEFITS OF REBALANCING
Costs of Care to Older Adults
One of the benefits of home- and community-based care is that it is often less expensive than institutional care. The median cost of a semi-private room in a nursing home in Rhode Island is $8,304 a month. In comparison, it costs $4,931 a month for a private room in an Assisted Living Facility and $4,767 a month for care from a home health aide.2 However, even the price of home-based care is out of reach for many older adults. Forty-two percent of Rhode Island’s senior households have annual incomes of less than $30,000, far too little to afford the costs outlined above.3 Due to the high cost of long-term care, many seniors spend down their personal assets quickly until they reach the eligibility requirements to receive Medicaid coverage for LTSS.4
Long-term care in Rhode Island is more expensive than in many other parts of the country. National research shows that, without government support, average nursing home costs would consume 246% of the median annual household income of older adults.4 Utilizing home care is more affordable, yet still eats up 84% of seniors’ annual median income.4 In comparison, the average cost of home care services in Rhode Island is 111% of seniors’ annual median income, making the state the least affordable in the nation for home care.4
These high costs can be a challenge, particularly for the one in five Rhode Island seniors living below the poverty line.5 Eighty eight percent of Rhode Island’s older adults receive Social Security Income, but on average they receive just $12,779, which equates to approximately $1,065 a month.5 This is not enough to cover the average cost of housing in Rhode Island, much less long-term care. Only 46% of Rhode Island seniors have retirement income from other sources such as pensions, private retirement savings, and survivor benefits.5
Fig. 1 Household Income in Rhode Island, 2011-2015
SOURCE: U.S. Census Bureau (2011-2015).5
Costs of Care to the State
For the government, which funds much of the LTSS seniors receive, HCBS generally costs less than institutional care.(a) Delaying or preventing institutionalization can save federal and state governments between $45,000 and $70,000 dollars per individual each year.6 Among the eleven states, including Rhode Island, that use the Medicaid Section 1115 Managed LTSS Waiver to direct Medicaid funds to HCBS, the average spending per participant receiving institutional services is nearly three times greater than for participants receiving HCBS.7
(a) A large part of the disparity in costs across these two settings is due to the inclusion of room and board costs in institutional care and the exclusion of housing costs for community-based care. Seniors who receive HCBS are shouldering the cost of food and housing themselves, while those receiving nursing home care are not.
While HCBS represents a lower per person expenditure, these programs can serve more people than institutional care, which means a shift to HCBS may not decrease overall state spending in the short term.1 However, research shows that states with well-established HCBS programs save money on LTSS over time compared to states spending a lower proportion of their LTSS funds on HCBS.8 A 2012 analysis of state Medicaid spending on LTSS from 1995 to 2009 found that gradually increasing the percentage of spending devoted to HCBS reduces total spending on LTSS, while a rapid increase in HCBS spending has the potential to increase overall LTSS spending.1
REBALANCING IN RHODE ISLAND
Our research indicates that Rhode Island has been slow to move toward rebalancing its long-term care system, and stakeholders anticipate that the goal of rebalancing will not be achieved anytime soon. Of the state’s total Medicaid spending on LTSS for adults 65 and older, in 2011 just 12% went to HCBS while the remaining 88% was spent on institutional care. By 2016 the amount spent on HCBS had increased slightly, to 16%, but the vast majority still went toward institutional care.9
Rhode Island also has significantly more people in nursing homes per capita(b) than the rest of the country: 56 nursing home residents per 1,000 individuals in the state, compared to 38 nursing home residents per 1,000 individuals nationally.10 While some of this is due to Rhode Island having an older population than other states, research also shows that the nursing home residents in Rhode Island are less impaired and have a lower severity of need than in the rest of the country, suggesting that some of them might be served by HCBS instead.10
It is important to keep in mind that HCBS makes sense for some seniors but not others. There are two segments of the LTSS market: older adults who need round-the-clock care and those who need fewer hours of care. The stakeholders we interviewed indicated that the question of whether home care is a better option than institutional care really depends on which group a person is in. HCBS is often cheaper for those who are relatively independent, have some family support, or only need a few hours of paid care a week. On the other hand, for older adults who need full-time supervision and support, a nursing home is often more efficient.
Ultimately, seniors need a continuum of care ranging from occasional assistance with household tasks through daily support in the home or an assisted living facility up to 24-hour nursing home care. Even with rebalancing, nursing homes will always be required for some people at later stages in life, as the need for an institutional level of care triples once people are over age 85.11 Most seniors will require a range of care providers over the course of their later life and will need help navigating the complexities of the system.
OBSTACLES TO REBALANCING
Capacity & Coordination
One of the main obstacles to rebalancing in Rhode Island is a lack of HCBS capacity. Seniors who are healthy and independent enough that they do not require institutionalization often still need help with tasks like shopping, laundry, house cleaning, transportation, bathing, using the restroom, getting dressed, preparing meals, and taking their medications. Many stakeholders we interviewed emphasized that there are not enough programs to help people with these tasks, and waiting lists for the programs that do exist are long.
This lack of HCBS capacity is due in part to low reimbursement rates for providers, which limit the number of providers willing to offer services in a home setting.12 Currently, the state has 55 licensed home nursing care providers that employ registered (RN) or practical (LPN) nurses to provide direct nursing services in the home. However, the state only has 16 licensed home care providers that provide health care services that are not direct nursing care, as well as help with household tasks. In addition, while Medicaid LTSS will cover Assisted Living and Adult Day Programs, only three Assisted Living facilities in Rhode Island accept Medicaid patients.
The stakeholders we interviewed also emphasized the need to better coordinate care across the state. They explained that care providers often operate in silos with little communication or cooperation. Finding a way to connect all the care providers in the state would help create a more integrated system where their work could complement each other. The Long Term Care Coordinating Council (LTCCC) works to preserve senior’s quality of life in all care settings by addressing key issues of standards and quality of care. However, in our research it was clear that communication of policy and payment changes across providers could be improved.
One of the biggest challenges to rebalancing is a shortage of caregivers, both paid and unpaid, to provide support and services to seniors in their homes and communities. With the Baby Boomer generation aging, there is a growing “care gap” as the elderly population increases faster than the number of people available to care for them.13 Because more women work, couples have fewer children, and divorce rates are higher than in the past, there are fewer family caregivers available for Baby Boomers than for previous generations.14, 4
The number of paid caregivers is not growing fast enough to fill the resulting care gap. Recent estimates from the U.S. Bureau of Labor Statistics show that an additional 1.1 million home health workers will be needed by 2024, and an inadequate supply of direct care workers is expected to reach crisis proportions in the next decade.15 In Rhode Island, estimates suggest a need for more than 7,600 additional home health workers by 2022.16
A number of the stakeholders we interviewed indicated that there are not enough direct care workers to provide HCBS in Rhode Island. The biggest reason is low wages, which are typically $10 to $15 an hour, and limited benefits.12 Earnings are so low that one in six direct care workers in Rhode Island have incomes below the poverty line.17 Wages for direct care workers in Rhode Island are not competitive with neighboring states, leading workers to seek jobs in Massachusetts and Connecticut instead.
(b) The occupancy of nursing home facilities in Rhode Island has been declining for some time, which our interview participants attributed to the rise of Assisted Living facilities.
Fig. 2 Median Hourly Wages for Direct Care Workers in Rhode Island, 2005-2015 (Adjusted for Inflation)
SOURCE: Paraprofessional Healthcare Institute (2017).16
Fig. 3 Median Hourly Wages for Direct Care Workers, 2016
SOURCE: U.S. Bureau of Labor Statistics (2016).18
Several other factors contribute to the shortage of direct care workers in Rhode Island. Care work can be physically and emotionally taxing. Training may be inadequate to prepare workers for these challenges, as it often fails to provide practical experience in the field. In addition, homecare workers often feel their work is unappreciated by their patients, their supervisors, and society in general.19 One care worker we interviewed said, “Low wages [are] just one indicator of how little the system values our services. Many people see me as an ass wiper.” All of these issues can lead to low worker morale, high turnover, and diminished quality of care.
If seniors are to receive care in the community, rather than institutional settings, they must have affordable housing suited to their needs.20 Many of the stakeholders we interviewed identified a lack of affordable, accessible housing as one of the most significant barriers to rebalancing the long-term care system.(c) A large share of seniors are “cost-burdened” by housing, meaning they spend 30% of more of their income on housing. In Rhode Island, more than half (52%) of older adults who rent and a third (34%) of those who own their homes are cost-burdened, and this percentage only increases as people age.21
Housing quality and accessibility are also critical issues. Rhode Island has some of the oldest housing stock in the country, with the majority of housing built before 1979.22 This means that many homes are not accessible according to Americans with Disabilities Act (ADA) standards, making them unsuited for older adults who have difficulty walking, climbing stairs, turning door knobs and light switches, or using other features of their homes. Without substantial investment in home modifications and maintenance, it can be very difficult for older adults to remain in their homes as they age, even if they have adequate home care services. Studies show that access to home modifications and housing options that incorporate services, such as assisted living facilities, can affect aging adults’ health, quality of life, and ability to stay in their communities longer.14, 23
(c) Many seniors who enter a hospital or nursing home find themselves spending down their assets to pay for their care and sometimes losing their homes as a result. One stakeholder we interviewed said that transitioning older people back into the community after institutionalization is extremely difficult because they often lack housing.
Fig. 4 Housing Cost Burden for Homeowners in Rhode Island
SOURCE: U.S. Census Bureau (2011-2015).5
Fig. 5 Housing Cost Burden for Renters in Rhode Island
SOURCE: U.S. Census Bureau (2011-2015).5
Healthcare policy has taken notice of the important role housing plays in the ability of aging individuals to remain in the community and avoid or delay nursing home admission. Through 1915(c) Waivers, states now have the option to use Medicaid to fund housing-related services including home accessibility adaptations and modifications, community transition, case management, and housing coordination.20 In addition to housing, other community services such as transportation and senior centers have been found to be essential for adults aging in the community.24
THE PATH FORWARD
While a number of factors influence whether older adults choose nursing homes or community-based care, research shows that state investments and policy decisions greatly affect access to and utilization of different care settings.1, 7, 12, 14 This means that state policymaking around long-term care can and will impact the type and quality of care seniors receive. It also affects the state budget. In fiscal year 2015, Rhode Island spent a little over a third ($832 million) of its total Medicaid budget on LTSS, including both nursing home care and HCBS, for seniors and adults with disabilities.3 Nursing home facilities account for nearly two-thirds (65%) of Medicaid expenditures for the elderly population in the state.3
Given what is at stake, continuing efforts to rebalance the long-term care system to make it more efficient and effective are critical. However, rebalancing should not be driven by an assumption that home care is always better than institutional care. Rebalancing is about offering more options and providing seniors with the appropriate care for their level of need.
With this goal in mind, it is imperative that researchers and policymakers design and develop standard measures that allow us to compare the quality and cost of care across systems (HCBS and institutional care). For instance, while HCBS may appear more affordable than institutional care, the calculus changes once we factor in the costs that are diverted to the consumer or patient under HCBS, such as food and housing. We must also consider the potential long-term consequences of rebalancing. For example, as state initiatives reduce reimbursement rates to nursing homes, some facilities are forced to care for Medicaid patients at a loss, leaving them unable to keep their facilities up to date and attract private pay patients.
Ultimately, our top concern should be the growing care gap. While gains have been made through rebalancing, the increasing population of older adults and the shortage of services, supports, and care workers for them indicate that there is more to be done. A lack of HCBS capacity and care workers in the state is a critical issue. Affordability is also a major challenge, whether seniors are obtaining care in their home or an institution. Safe, affordable, accessible housing is essential if older adults are to receive care in their homes and communities. If seniors lack the resources to afford the care they need, do not have a suitable home to live in while receiving care, or are unable to find available caregivers and services, they may end up unnecessarily institutionalized. Successful rebalancing is not possible without addressing capacity and affordability issues.
1. Kaye, H. S. (2012). “Gradual Rebalancing of Medicaid Long-Term Services and Supports Saves Money and Serves More People, Statistical Model Shows." Health Affairs, 31(6), 1195-1203.
2. Genworth. (2016). Genworth 2016 Cost of Care Survey: Rhode Island. New York, NY: Genworth.
3. Executive Office of Health and Human Services. (2016). Rhode Island Annual Medicaid Expenditure Report - SFY 2015. Cranston, RI: State of Rhode Island.
4. Reinhard, S. C., Kassner, E., Houser, A., Ujvari, K., Mollica, R., & Hendrickson, L. (2014). Raising Expectations: A State Scorecard on Long-Term Services and Supports for Older Adults, People with Physical Disabilities, and Family Caregivers. Washington, D.C.: AARP.
5. U.S. Census Bureau. (2011-2015). American Community Survey (ACS): 5-Year Public Use Microdata Sample (PUMS) [dataset]. Washington, D.C.
6. National Association of Area Agencies on Aging. (2017). What Policymakers Must Know About an Aging America. Washington, D.C.
7. Watts, M. O., & Musumeci, M. (2017). Medicaid Section 1115 Managed Long-Term Services and Supports Waivers: A Survey of Enrollment, Spending and Program Policies. Washington, D.C.: The Henry J. Kaiser Family Foundation.
8. Kaye, H. S., LaPLante, M. P., & Harrington, C. (2009). “Do Noninstitutional Long-Term Care Services Reduce Medicaid Spending?” Health Affairs, 28(1), 262-272.
9. Executive Office of Health and Human Services. (2017). State Annual Progress Report on Long-Term Care System Reform and Rebalancing, May 2017. Cranston, RI: State of Rhode Island.
10. Executive Office of Health and Human Services. (2011). Money Follows the Person Operation Protocol for the Rhode Island "Rhode to Home" Demonstration Project. Volume I: Narrative. Cranston, RI: State of Rhode Island.
11. Mather, M., Jacobsen, L. A., & Pollard, K. M. (2015). “Aging in the United States.” Population Bulletin, 70(2).
12. Ko, M., Newcomer, R., Kang, T., Hulett, D., Chu, P., & Bindman, A. B. (2014). “Payment Rates for Personal Care Assistants and the Use of Long-Term Services and Supports among Those Dually Eligible for Medicare and Medicaid.” Health Services Research, 49(6), 1812-1831.
13. Redfoot, D., Feinberg, L., & Houser, A. (2013). The Aging of the Baby Boom and the Growing Care Gap: A Look at Future Declines in the Availability of Family Caregivers. Washington, D.C.: AARP Public Policy Institute.
14. Chen, Y.M., & Thompson, E. A. (2010). “Understanding Factors that Influence Success of Home- and Community-Based Services in Keeping Older Adults in Community Settings.” Journal of Aging and Health, 22(3), 267-291.
15. Butler, S. S., Brennan-Ing, M., Wardamasky, S., & Ashley, A. (2013). “Determinants of Longer Job Tenure Among Home Care Aides: What Makes Some Stay o the Job While Others Leave?” Journal of Applied Gerontology, 33(2), 164-188.
16. Paraprofessional Healthcare Institute. (2017). Workforce Data Center: Rhode Island [dataset]. Bronx, NY.
17. U.S. Census Bureau. (2000-2015). American Community Survey (ACS): One-Year Public Use Microdata Sample (PUMS) [dataset]. Washington, D.C.
18. Bureau of Labor Statistics. (2016). Wage Data by Area and Occupation [dataset]. Washington, D.C.: U.S. Department of Labor.
19. Rhode Island CNA Study Group. (2001). Crisis in Care: A Report of the CNA Study Group. Providence, Rhode Island: State of Rhode Island.
20. Jopson, A., & Regan, C. (2016). Bringing Independence Home: Housing-Related Provisions under Medicaid 1915(c) Home and Community Based Services Waivers. Boston, MA: Center for Consumer Engagement in Health Innovation.
21. Brown, K. (2017). Seniors and Housing in Rhode Island. Providence, RI: HousingWorks RI, Roger Williams University.
22. Housing Works RI. (2016). Projecting Future Housing Needs Report. Providence, RI: HousingWorks RI, Roger Williams University.
23. Viveiros, J., & Brennan, M. (2014). Aging in Every Place: Supportive Service Programs for High and Low Density Communities. Washington, D.C.: Center for Housing Policy.
24. Raimondo, M., Lawrence, S., & Maigret, M. (2017). Supporting People as They Age in Community: Senior Centers. Providence, RI: The College and University Research Collaborative. Maigret, M. (2017). Supporting People as They Age in Community: Transportation. Providence, RI: The College and University Research Collaborative.
Type of Research
- Responds to questions of Policy Leaders with research projects that closely align with state priorities
- Provides implications for challenging state issues