Feasibility of a Medicaid Home and Community Based Services Waiver for Persons with Serious Mental Illness Report to the Governor & General Assembly State of Connecticut

In order to calculate an estimate of Medicaid savings for each year of the Home and Community-Based Services (HCBS) waiver, a 'phase-in' model was developed. The model assumes that 72 new people will be covered under the waiver per year at a rate of six people per month, or a total of 216 people during the three-year waiver period. The average monthly, per person, savings for the each of the three years of the waiver was used as the basis for the cost analysis for persons covered during that year. This yielded a conservative estimate of savings.

The analysis revealed Medicaid savings of $210,165 in Year 1 of the HCBS waiver, $892,485 in Year 2, and $1,802,966 in Year 3. The figure below shows cumulative savings for each month totaling $2,905,615 by the end of Year 3 of the wavier.

Federal regulations permit the Secretary of the U.S. Department of Health and Human Services to waive certain Medicaid requirements and include as 'medical assistance' a variety of home and community based services (excluding room and board) provided to individuals with serious mental illness who would otherwise require nursing home care. If granted, the so-called 1915 (c) Waiver would enable Medicaid to cover the cost of 'habilitation services' designed to assist individuals in acquiring, retaining, and improving the self-help, socialization, and adaptive skills necessary to reside successfully in home and community based settings. In order to meet federal requirements for a waiver, Connecticut must demonstrate that alternative community services for persons served under the waiver would cost no more than Medicaid-covered institutional care.

In this study, cost neutrality is assessed using actual clinical profiles of five people currently residing in Connecticut nursing homes. Each clinical profile contains a description of the individual's community service needs and the estimated cost of those services, compared to the cost of their nursing home placement. A fiscal analysis found that the Medicaid cost neutrality requirement was met. Compared with the net cost of their nursing home stay, all five people profiled had lower Medicaid costs for each of the three years following discharge from the nursing home.

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