Director's Message

Sept. 14, 2007

To: All DHS employees

From: Bruce Goldberg, M.D., director

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James Toews, assistant director for the Seniors and People with Disabilities Division, is writing this week's message while Director Goldberg is out of town.

"Never believe that a few caring people can't change the world. For, indeed, that's all who ever have."
~Margaret Mead

While recent news headlines have focused on the Congressional debate over children's health insurance funding, an equally disturbing trend affecting low-income seniors and people with disabilities is going largely unnoticed -- a growing number of community-based facilities are turning away Medicaid recipients, thereby forcing them into more expensive nursing homes.

Take, for example, the recent closing of St. Rita's Care Center in Salem and the decision by two other facilities to stop taking Medicaid clients. Before the changes, the average net service payment per client was $1,245. After the Medicaid clients were forced into new settings, the average payment jumped to $2,780, an increase of 123 percent.

Twenty percent fewer clients are using adult foster care services now than were in the 2001-2003 biennium. Although some of this decrease is attributable to the loss of eligibility and other factors, we believe providers are responding to an economic reality -- Medicaid payments have not kept up with inflation or the rate of private paying clients.

The level of increased expenditures highlighted above is not sustainable. Not only does moving individuals to nursing homes disrupt people's lives, the increased costs of nursing home care put a severe strain on the budgets of DHS and the Seniors and People with Disabilities Division. This set of problems clearly illustrates the need to maintain adequate community-based care access for SPD clients.

Currently, the use of adult foster homes and residential care facilities is decreasing, and the use of assisted living facilities is projected to decrease in the next two years.

In fact, 31 facilities representing 18 percent of Oregon's assisted living providers who take Medicaid recipients have requested withdrawal contracts just within the past year. In addition, 14 residential care facilities, which mostly serve clients diagnosed with Alzheimer's, also have executed gradual withdrawal contracts. To exacerbate the problem, there is a statutory moratorium on building new facilities until June 30, 2009.

In all, these problems could lead to a potential 10-15 percent increase in the use of nursing homes. If accurate, this means the nursing home expenditures could exceed the legislatively approved budget by a significant amount. Failure to plan and then take action to address this trend will result in a budget crisis, or will force DHS and SPD to serve fewer clients.

Recognizing the potential seriousness of this problem, the 2007 Legislature instructed SPD to develop a new rate structure for Medicaid-funded community services. Work has begun to model new rates that are responsive to changing client conditions, close the gap with private pay rates, and include incentives for providers to expand the Medicaid portion of their services. Key stakeholder groups will be included in this planning.

One thing is certain. For the sake of Medicaid recipients living in community-based programs, something needs to be done to respond to the changing realities of the marketplace.

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To provide feedback email: DHS.Directorsoffice@state.or.us

This message is intended for all department employees. Please read it electronically, if possible. Managers and supervisors are asked to share the message each week with employees who do not have email access.