A new independent analysis of the Home Care Savings & Reinvestment Act — a proposal to eliminate the role of managed long-term care plans in administering home care — shows that some of the savings estimated by proponents of the legislation could indeed come to fruition.
Implementation of the proposal, which would shift the management of home care from private insurance companies to a state-run Medicaid fee-for-service program, could save $975 million in state and federal Medicaid spending in 2025, according to an analysis by the Step Two Policy Project, a nonpartisan think tank that publishes reports on health care policy in New York state.
“This idea — which has been around for a long time — may be an idea whose time has come,” said Paul Francis, former budget director and chairman of the Step Two Policy Project.
The analysis, which was released last month, found that it would cost the state less money to manage home care services through a fee-for-service model than it does through the current managed long-term care system. The state spent roughly $1.7 billion in 2023 on care management and administrative costs paid to plans — an expense that’s expected to surpass $2 billion by 2025, according to the report.
The elimination of those costs could save the state a lot of money, even with additional expenses of managing home care services itself, Francis told Crain’s. Once the state’s fee-for-service program got up and running, the analysis estimates it could save $487 million in state Medicaid spending.
The estimate from the Step Two Policy Project represents the first independent analysis of a contentious policy proposal. Advocates estimate that the proposal could save the state up to $3 billion annually, according to an analysis by labor union 1199 SEIU. But health plans have clapped back by stating that it will actually cost the state billions to manage home care on its own.
Home care advocates have repeatedly pushed for the passage of the Home Care Savings & Reinvestment Act, gathering again in Albany yesterday to condemn Gov. Kathy Hochul’s proposed budget cuts and push for a complete home care overhaul. The proposed legislation, introduced in December, would shift home care management from the state’s 24 managed care plans to independent care managers chosen by the state. The state previously managed home care services under a fee-for-service model before shifting it to Medicaid managed care in 2011 in an effort to improve efficiency and reduce costs — goals that home care advocates say have not been realized.
Francis said that more data is needed to fully estimate the potential cost savings of the Home Care Savings & Reinvestment Act, and he noted that the Step Two Policy Project is not making a formal recommendation on the bill. But he added that the cost savings are worth considering.
The questions around the viability of the current home care payment system arise as the state eyes ways to cut exorbitant Medicaid spending. Hochul has looked to home care, and specifically to the Consumer-Directed Personal Assistance Program, to cut costs. Managed long-term care and personal care spending totaled $8.4 billion during the 2023 fiscal year — roughly a quarter of all Medicaid spending, the analysis from Step Two shows.
Insurers say that the proposal to cut out managed care plans would only increase costs to the state, racking up state spending on administrative fees while resulting in a loss in taxes paid by the plans. Eric Linzer, president and CEO of the New York Health Plan Association, called the Home Care Savings & Reinvestment Act “penny-wise and pound-foolish.”
The Step Two Policy Project accounted for potential losses in tax revenue in its analysis.
Helen Schaub, interim political director of 1199 SEIU, noted that the $3 billion in savings estimated by the union’s analysis is an average over 10 years. As the fee-for-service program gets off the ground, the early savings estimates would be closer to $1.7 billion, she said.
“This may not have been a good idea 10 to 12 years ago, and it may not be a good idea now,” Francis said. “But it’s a serious idea, and there are a lot of reasons to believe that this could be a better way to run the program.”
Amanda D'Ambrosio , 2024-03-05 10:33:05
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