One of the questions raised by our state legislators with respect to the continuum of care legislation was how a new state license that brings all of Misericordia’s homes under a single license might affect the federal Medicaid matching funds received by Illinois for the residents living at Misericordia.  Here is a short primer on Medicaid funding for residential services provided to individuals with developmental disabilities and why such funding should be unaffected by the new license.

The Medicaid program was added to the Social Security Act in 1965.  Medicaid is funded by both the state and federal government.  No state is required to participate in Medicaid.  However, if it does, the federal government reimburses the state for half of the state’s Medicaid costs.  In exchange for the federal matching funds, the state must comply with federal regulations established by the federal agency Health and Human Services (HHS), and, in particular, the Centers for Medicare and Medicaid Services (CMS), a department with HHS.  The original Medicaid statute in 1965 provided funding for long term care facilities for individuals with developmental disabilities, otherwise known as ICF/DDs.  Because the funding for ICF/DDs is written into the statute, it is referred to as an entitlement.  If a state elects to participate in Medicaid, as Illinois does, it is required to provide ICF/DDs for those of its citizens who need them.  It is true that some states (Oregon and Michigan) who participate in Medicaid no longer have ICF/DDs located in their states.  However, if a citizen in those states wishes to reside in an ICF/DD, that individual must find an ICF/DD in a different state and his or her home state will have to provide the funds for that person to live in an out-of-state ICF/DD.  This is how Oregon and Michigan continue to meet their obligations under the Medicaid statute.

 

In 1981, Congress amended the Medicaid statute to allow the Secretary of HHS to permit Medicaid funding for home and community based alternatives to ICF/DDs that are approved by the Secretary.  This is what is referred to as a waiver program, because it is an alternative to ICF/DDs which are prescribed in the statute.  This particular waiver program covers community integrated living arrangements (CILAs).  Because the Secretary of HHS must approve alternatives to ICF/DDs, the Secretary has discretion to decide what types of homes in the community qualify for waiver funding.  In 2014, CMS drafted a new set of rules defining what it will consider to be a community setting which will qualify for waiver funding.  The new rules are too complicated to get into in this article, but they basically require that a community setting be sufficiently separated from an “institutional” setting such as an ICF/DD and that the individuals in the community setting have the same access to and contact with the community as a non-disabled person.  The states have until March 2019 to make sure that all of the CILAs in the state comply with these new CMS rules.

 

Each state must submit for CMS’s approval a transition plan explaining how the state will make sure that by 2019 all of its waiver funded facilities meet CMS’s new rules.  Illinois is in the process of developing its transition plan.  We need to keep informed on Illinois’s plan as it is developed so that we can provide comments if the plan proposes to impose rules that we believe do not make sense or that inhibit choice.  The CMS rules provide only the minimum standards that a community setting must meet.  States are permitted to develop more stringent rules and some community advocates are trying to get states to adopt more stringent rules.  Again, we must keep a close eye on this.  We believe that Misericordia’s ten CILAs meet the new CMS rules. 

 

The new continuum of care license would not change any of the Medicaid funding rules that I have described above.  While all of Misericordia’s homes, on compass and off, would operate under a single state license, the homes would not be viewed any differently than they are now under the Medicaid rules.  The on-campus homes would be considered ICF/DDs for Medicaid funding purposes and would continue to qualify for federal Medicaid matching funds as an “entitlement” under the statute.  The off-campus homes, the CILAs, would still qualify for “waiver” funding under the Medicaid statute as community settings.

 

The continuum of care legislation does require that the State apply to the Secretary of HHS for what is called a Section 1115 waiver under the Medicaid statute for Misericordia.  This is a different waiver program than the home and community based waiver program described above.  An 1115 waiver covers what are called “demonstration” projects which are innovative methods of delivering high quality healthcare in an efficient manner.  We believe that we can show that Misericordia’s continuum of care model is innovative, delivers high quality care, and does so efficiently.  If CMS grants an 1115 waiver for Misericordia, the federal Medicaid matching funds would then come from this waiver program, instead of from the entitlement program or the home and community based waiver program.  However, we have specifically provided in the statute that if the 1115 waiver is not granted, or if it comes to an end and is not renewed, funding will continue or resume under the very same statutory provisions that Medicaid funds are currently provided as described above.

 

Medicaid is a very complicated area of the law, one I am just starting to learn.  If you have any questions, please contact me at This email address is being protected from spambots. You need JavaScript enabled to view it..  

    

Scott