[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]




 
 CONSUMER DIRECTED SERVICES: IMPROVING MEDICAID BENEFICIARIES' ACCESS TO 
                               QUALITY CARE

=======================================================================

                                HEARING

                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 5, 2003

                               __________

                           Serial No. 108-28

                               __________

       Printed for the use of the Committee on Energy and Commerce


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

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                            WASHINGTON : 2003
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                    COMMITTEE ON ENERGY AND COMMERCE

               W.J. ``BILLY'' TAUZIN, Louisiana, Chairman

MICHAEL BILIRAKIS, Florida           JOHN D. DINGELL, Michigan
JOE BARTON, Texas                      Ranking Member
FRED UPTON, Michigan                 HENRY A. WAXMAN, California
CLIFF STEARNS, Florida               EDWARD J. MARKEY, Massachusetts
PAUL E. GILLMOR, Ohio                RALPH M. HALL, Texas
JAMES C. GREENWOOD, Pennsylvania     RICK BOUCHER, Virginia
CHRISTOPHER COX, California          EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia                 FRANK PALLONE, Jr., New Jersey
RICHARD BURR, North Carolina         SHERROD BROWN, Ohio
  Vice Chairman                      BART GORDON, Tennessee
ED WHITFIELD, Kentucky               PETER DEUTSCH, Florida
CHARLIE NORWOOD, Georgia             BOBBY L. RUSH, Illinois
BARBARA CUBIN, Wyoming               ANNA G. ESHOO, California
JOHN SHIMKUS, Illinois               BART STUPAK, Michigan
HEATHER WILSON, New Mexico           ELIOT L. ENGEL, New York
JOHN B. SHADEGG, Arizona             ALBERT R. WYNN, Maryland
CHARLES W. ``CHIP'' PICKERING,       GENE GREEN, Texas
Mississippi                          KAREN McCARTHY, Missouri
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
STEVE BUYER, Indiana                 LOIS CAPPS, California
GEORGE RADANOVICH, California        MICHAEL F. DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire       CHRISTOPHER JOHN, Louisiana
JOSEPH R. PITTS, Pennsylvania        JIM DAVIS, Florida
MARY BONO, California                THOMAS H. ALLEN, Maine
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
LEE TERRY, Nebraska                  HILDA L. SOLIS, California
ERNIE FLETCHER, Kentucky
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho

                   Dan R. Brouillette, Staff Director

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

                         Subcommittee on Health

                  MICHAEL BILIRAKIS, Florida, Chairman

JOE BARTON, Texas                    SHERROD BROWN, Ohio
FRED UPTON, Michigan                   Ranking Member
JAMES C. GREENWOOD, Pennsylvania     HENRY A. WAXMAN, California
NATHAN DEAL, Georgia                 RALPH M. HALL, Texas
RICHARD BURR, North Carolina         EDOLPHUS TOWNS, New York
ED WHITFIELD, Kentucky               FRANK PALLONE, Jr., New Jersey
CHARLIE NORWOOD, Georgia             ANNA G. ESHOO, California
  Vice Chairman                      BART STUPAK, Michigan
BARBARA CUBIN, Wyoming               ELIOT L. ENGEL, New York
HEATHER WILSON, New Mexico           GENE GREEN, Texas
JOHN B. SHADEGG, Arizona             TED STRICKLAND, Ohio
CHARLES W. ``CHIP'' PICKERING,       LOIS CAPPS, California
Mississippi                          BART GORDON, Tennessee
STEVE BUYER, Indiana                 DIANA DeGETTE, Colorado
JOSEPH R. PITTS, Pennsylvania        CHRISTOPHER JOHN, Louisiana
ERNIE FLETCHER, Kentucky             JOHN D. DINGELL, Michigan,
MIKE FERGUSON, New Jersey              (Ex Officio)
MIKE ROGERS, Michigan
W.J. ``BILLY'' TAUZIN, Louisiana
  (Ex Officio)

                                  (ii)




                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Gittens, Patricia............................................    17
    Mahoney, Kevin J., Associate Professor, Boston College, 
      Graduate School of Social Work.............................    11
    White, Terry F., Secretary, Florida Department of Elder 
      Affairs....................................................    20
    Williams, Bob, Codirector, Advancing Independence and 
      Modernizing Medicare and Medicaid..........................    26
Additional material submitted for the record:
    Williams, Bob, Codirector, Advancing Independence and 
      Modernizing Medicare and Medicaid, responses for the record    43

                                 (iii)

  


CONSUMER DIRECTED SERVICES: IMPROVING MEDICAID BENEFICIARIES' ACCESS TO 
                              QUALITY CARE

                              ----------                              


                         THURSDAY, JUNE 5, 2003

                  House of Representatives,
                  Committee on Energy and Commerce,
                                     Subcommittee on Health
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:02 a.m., in 
room 2141, Rayburn House Office Building, Hon. Charlie Norwood 
(chairman) presiding.
    Members present: Representatives Bilirakis, Deal, 
Whitfield, Norwood, Wilson, Buyer, Fletcher, Brown, Waxman, 
Stupak, Green, Capps, and Dingell (ex officio).
    Also present: Representatives Stearns, Markey, and Allen.
    Staff present: Chuck Clapton, majority counsel; Steve 
Tilton, health policy coordinator; Eugenia Edwards, legislative 
clerk; Patrick Morrisey, deputy staff director; Amy Hall, 
minority professional staff member; and Bridgett Taylor, 
minority professional staff member.
    Mr. Norwood We now call this hearing to order. I would like 
to start by welcoming our witnesses and thanking them for 
joining us today. We do appreciate your time and effort to be 
here, all of you.
    It is critical that we have an opportunity to learn from 
people with real-world experiences in the Cash and Counseling 
program. My understanding is that this program has been 
successful, but I believe it is vital that we hear directly 
from the experts as to what has worked and what has not. I am 
also hopeful that you might expand on how we could apply some 
of these principles in this program broadly to other areas of 
Medicaid, if that is possible, and, even better, expand the 
program to other States.
    Once again, welcome all.
    I want to remind the members that they have an opportunity 
of declining an opening statement; and if they do, that will 
increase their time from 5 to 8 minutes in questioning.
    With that, I now yield to Ranking Member Sherrod Brown.
    Mr. Brown. Thank you, Mr. Chairman.
    I want to thank our witnesses. Mr. Williams, especially, 
thank you for joining us.
    Secretary White, nice to see you again. Sorry you are no 
longer in our State.
    I want to thank the chairman and the committee for holding 
this important hearing. It is refreshing to be talking about 
ways to actually strengthen Medicaid and not dismantle it. It 
appears my colleagues on the other side of the aisle have had 
an epiphany. All my Republican colleagues on this committee 
voted to cut $93 billion from the Medicaid program. Now at 
least we want to see--all of us want to see the program 
strengthened.
    Medicaid is the largest health insurer in the Nation. 
Before Medicaid, virtually every low-income child and every 
low-income disabled American lacked coverage. One in five 
people with a specific chronic disability, 30 percent of 
children with chronic disabilities, 15 percent of working-age 
adults with chronic disabilities are covered by this program.
    Over the last decade, the disabled have been the fastest 
growing eligibility category in Medicaid. It plays a critical 
role in providing coverage gaps for low-income disabled people. 
It is an essential part of our country's health care system, 
our long-term care system, and our economy. In Ohio alone, in 
my State, 36,000 health care professionals and 170 hospitals 
provide care to Medicaid beneficiaries.
    I would add that of the 270 million people in our country, 
90 million of them are served--their health care is provided by 
three government programs: Medicare, Medicaid, and SCHIP. To 
show how important these programs are--one out of three 
Americans--and that is why it is so important to continue to 
try to strengthen this program.
    Five years ago Robert Wood Johnson Foundation in 
collaboration with the Federal Government began examining a new 
approach in access to quality health care. The program was 
coined Cash and Counseling, and was designed to empower the 
chronically ill and disabled, and to improve their quality of 
life. Through the Cash and Counseling program, Medicaid 
beneficiaries with disabilities can have a loved one or close 
friend provide personal care services like bathing and grooming 
or meal preparation while in their home. This novel approach 
cashes out the personal care services benefit in exchange for 
giving the beneficiary control over basic, often intimate, 
assistance, who provides the care, when they receive it, how it 
is delivered.
    The preliminary evaluations of the Cash and Counseling 
program have been overwhelmingly positive. Robert Wood Johnson 
reported that satisfaction with the program was high; the paid 
caregivers are diligent in completing required tasks. Cash and 
Counseling could be a best practices program for disabled 
beneficiaries who need a little help to maintain a high quality 
of life. The program may have limits. Not everyone has a family 
member available or willing to deliver care. Not all family 
members have sufficient medical training to deliver more 
sophisticated health care. But the success of the program 
prompted the current administration to continue offering it 
under an Independence Plus waiver. For that, I applaud both the 
Clinton and Bush Administration.
    In this program, it is possible to use the Cash and 
Counseling structure for medical services. It is difficult to 
see how an individual could or would want to hire their family 
member to be their pharmacist or cardiologist.
    Another important consideration is the degree to which we 
are comfortable with intrastate and interstate disparities that 
logically occur when individuals are given a cash sum.
    Realizing this program is in the infant stages of 
development, there are several policy issues to consider. The 
Medicaid program serves 37 million low-income and disabled 
Americans. It is a huge safety net. Part of its success is due 
to the Federal Government commitment to increase the safety net 
during times of economic hardship, times when 2.7 million jobs 
are lost in a matter of 2 years, times when the Federal surplus 
plummets into the red in a matter of 2 years, times like these 
in which we live.
    That is why I am concerned with the Bush Administration's 
proposal to block-grant or more precisely block-loan Medicaid. 
It is nothing more than a loan tied to a Federal funding cap, 
which, in my mind, jeopardizes the future of this program. 
Capping Federal funding on Medicaid is tantamount to taking the 
umbrella from a person already standing in the rain. If 
Medicaid is truly headed toward fund capping, then it is 
unlikely that programs like Cash and Counseling would survive. 
It is nothing short of cruel to make a commitment to compensate 
a family member for providing services, personal services, only 
to cutoff that funding halfway through the year. That is no way 
to run a program. It is a realistic scenario if this block 
grant, block loan program from the Bush Administration is 
adopted.
    Our hearing today highlights a program with potential for 
strengthening Medicaid while preserving its integrity. The 
stability of the States' health care system, the stability of 
the Nation's health care system depends on preserving and 
strengthening good public programs like Medicaid.
    Mr. Chairman, I thank you for your time.
    Mr. Norwood. I thank the gentleman.
    I now recognize Dr. Fletcher from Kentucky for 5 minutes of 
opening statement.
    Mr. Fletcher. Thank you, Mr. Chairman. And I want to thank 
this committee and the chairman for holding this hearing. And 
my thanks to the witnesses as well. We look forward to your 
testimony about the exciting programs in Arkansas, New Jersey, 
and, most notably, Florida.
    I think this is a significant step in the right direction 
for Medicaid programs, but, more importantly, it is a major 
advancement for Medicaid patients. The Cash and Counseling 
program applies common sense to a government program that has 
been lacking it for far too long, giving patients the power and 
ability to purchase services that they determine are 
appropriate services that work, and it has proven to work very 
well, I believe. The experience we have seen with Cash and 
Counseling debunks any misconceptions that people on Medicaid 
or their guardians are not capable of arranging for their own 
health care needs. In fact, they can do it, they want to do it, 
and they are more successful at it than under the old 
inflexible structure that unfortunately still exists in most 
States. How many other government programs have a satisfaction 
rate among participants close to 100 percent? This program 
dispels any myths that the Medicaid population somehow is not 
prepared to make wise decisions regarding their health care.
    The reality is that, generally speaking, Medicaid does not 
optimize how it serves its patient. Additionally, the program's 
effectiveness continues to wane in many areas. A recent article 
by John Igelhart in the New England Journal of Medicine cited a 
study by MedPAC, the Medicare Payment Advisory Commission, that 
documented continued physician withdrawal from the Medicaid 
program. Over the previous 3 years, the number of physicians 
who accept all Medicaid patients dropped from 48.1 percent to 
39.4 percent. This drop occurred despite large increases in 
Medicaid spending over the same timeframe.
    Access to specialists is even worse and more concerning. In 
another study, researchers posing as Medicaid patients with 
fractured arms contacted 50 orthopedic specialists in 
California. A stunning 47, or 94 percent of them, refused to 
accept such a patient. Clearly, more is broken with Medicaid 
than many are willing to admit.
    As a medical doctor who spent most of my adult career and 
professional career treating patients, I can personally attest 
to the access problems that plague America's otherwise 
excellent health care system. Our medical technology, our 
hospitals, our doctors, and our medical schools are second to 
none.
    We must ensure that all Americans have access to our superb 
services. While a narrow experiment with only a few thousand 
patients, Cash and Counseling offers us a glimpse of the 
direction in which we must head to maximize that access. When 
patients, whether with Medicaid, Medicare, or private 
insurance, are afforded control over their health care dollars, 
the care they receive improves dramatically. It is my sincere 
hope that this approach can be expanded so that many more 
Medicaid patients can take advantage of it as well.
    And, again, I want to thank you all for coming and 
testifying, and I yield back.
    Mr. Norwood. I want to remind members that you can have a 
longer questioning period of 8 minutes if you forego your 
opening statement. It doesn't matter to me.
    Mrs. Capps, would you like an opening statement?
    Mrs. Capps. Yes, Mr. Chairman. Thank you very much. I thank 
you for holding this hearing, and I do look forward to hearing 
from our witnesses.
    The Cash and Counseling demonstration projects appear to 
have proven to be very successful. It is exciting news to me. 
They have allowed many Medicaid beneficiaries to take control 
over their own lives, which is a worthwhile goal, and they have 
supported a continuum of care that we know is an important 
ingredient to making Medicare services work. Most health care 
providers can tell you that when a patient or, in this case, a 
beneficiary can get more effective personal attention, they can 
avoid many health care complications. This can lead to a higher 
quality of life and fewer expenses by the beneficiary. It is 
very cost-saving if it works well. The cost savings is to the 
taxpayer, because more extreme treatments down the road could 
perhaps be avoided or prevented. The Cash and Counseling 
demonstration projects support this idea.
    We may be able to use this model to make many other 
improvements to Medicaid, Medicare, and health care delivery in 
general, but I believe we have to also understand this model's 
limits and not get carried away and create a cash and medical 
care system. Cash and Counseling works because it is a set of 
services with predictable expenses and costs that can be 
provided by nonprofessional personnel. It works precisely 
because it does not deal with medical care, per se. It would be 
very hard, my colleague tried to imagine this, to ask a parent, 
a sibling, or a child to provide pharmacy services or to serve 
as a doctor. These example are absurd, but they highlight the 
limits of the model.
    I believe the demonstration project underscores a need 
which many fragile populations have, not all, but some parts of 
them, a need for case management, for a continuum of services, 
for a safety net to make sure that the community is able to be 
responsive to the individual's needs. And the particular 
demonstration project also work in this case I believe because 
they incorporate the direct involvement of the Robert Wood 
Johnson Foundation.
    Robert Wood Johnson Foundation provides quality control and 
administrative support, elements that would be costly if this 
is converted into a national program or applied to medical 
services. I don't mean to say this as a deterrent, but I think 
we need to recognize, I hope we do, and that is why I look 
forward to hearing from you witnesses, to see exactly what the 
parameters are of the kind of services that you have 
experienced. I do want to make sure that we don't get too 
excited and overreach, but I also want us to recognize the very 
real successes that have been demonstrated in this project. And 
I yield back the balance of my time.
    Mr. Norwood. With unanimous consent, I will recognize 
Bridgette's boss next for 5 minutes, Mr. Dingell.
    Mr. Dingell. Mr. Chairman, thank you. I thank you for 
holding today's hearing on consumer-directed personal care 
services and Medicaid. Increasing community-based care options 
for individuals living with disabilities is a critically 
important goal, and we must work with the States to achieve 
that purpose. Expanding access to personal attendant services 
and improving control over such services, the subject of this 
hearing, is an important element for committing options to work 
successfully.
    Last month, along with a number of other members of this 
committee, I introduced H.R. 2000, the Strengthening of Our 
States Act. Amongst other provisions, the legislation 
encourages States to expand personal care services and supports 
under Medicaid, and helps the States expand community-based 
living options. It provides permanent enhanced Federal funding 
for States to provide personal attendant services and supports 
in Medicaid, and enhanced Federal funding for home and 
community-based waivers.
    States do not have the budgetary means to serve all the 
individuals who choose community-based care, so they need to 
partnership with the Federal Government under the Medicaid 
program. For this reason I am particularly concerned with 
proposals I now see coming forward out of the administration on 
so-called Medicaid reform. The President would have us believe 
that severing or limiting State-Federal relationships under 
Medicaid and shifting the financial burden onto the States can 
help the families who depend on these programs. I believe the 
exact opposite will come to pass, particularly in the services 
we are discussing today. The assistance in funding for 
community-based and consumer-based services that are there will 
wither, leaving individuals living with disabilities in a dire 
situation, and forcing many back into institutions or leaving 
them without any care at all.
    One important point to consider is that the consumer-
directed care program has been very successful; but there is no 
inherent reason that vouchers are required in order to give 
families more control over personal care services. States could 
be given incentives to improve consumer choice and control 
without capping funding for families so that families are 
guaranteed an adequate level of service which is not subject to 
future arbitrary budgetary cost-cutting measures.
    In addition, even if people were given the ability to, 
quote, manage, close quote, their money for personal care 
services, this does not mean that people with disabilities 
should be given limited dollars to manage all their health care 
needs. As many will testify today, it is much easier to manage 
certain predictable daily tasks than it is to predict how to 
manage the amount of care an individual with disabilities will 
need when they are sick.
    I look forward to the testimony of all the witnesses today 
on the successes of the Cash and Counseling program and how we 
might work here in Congress to encourage the expansion of this 
model so that it is not limited to only a few States and only a 
few populations. We want to ensure that all individuals living 
with disabilities can choose to receive the benefit of 
directing their own personal care services, but we also want to 
ensure that they have adequate protections so that they do not 
have to worry about whether the money will be there to take 
care of them from week to week.
    Mr. Chairman, I thank you for your courtesy.
    Mr. Norwood. Thank you very much, Mr. Dingell.
    I now recognize Ms. Wilson from New Mexico for 5 minutes on 
an opening statement.
    Mrs. Wilson. Thank you, Mr. Chairman. I wanted to thank you 
and also Chairman Bilirakis, who I think is feeling ill today 
and hasn't come in yet, for arranging this hearing. And thank 
him for giving me the charge as well as my colleague from 
Kentucky Mr. Whitfield, and Dr. Fletcher, and Mrs. Bono, and 
Nathan Deal to look at the Medicaid program over the summer and 
the fall in a task force to see if we can improve the health 
status of those who would depend upon it, and what changes need 
to be made to the Medicaid program to improve the satisfaction 
of those who depend upon it.
    The first thing we wanted to do was to identify some things 
that States are doing. Medicaid is a program that is different 
in 51 States. We wanted to look at what States are doing that 
seem to make a difference and seem to make some common sense. 
And the Cash and Counseling and consumer-directed care is part 
of what we would like to see propagated across the country on a 
program that seems to work for a particular segment of the 
Medicaid-dependent population. Florida, Arkansas, and New 
Jersey have been able to experiment with what happens when 
individuals and families are allowed to determine what care 
they need most and how best to provide it.
    It seems to make sense to me that satisfaction goes up when 
a program is personally tailored to the people who depend upon 
it every day, and I am looking forward to hearing from the 
witnesses today on how this program has operated and affected 
your lives, what you have seen, and what you would recommend to 
us with respect to what we need to change in the Federal law to 
make it easier to do these kinds of things.
    In the past several years, the Congress has focused 
intensely on the Medicare program, and in modernizing it and in 
adding a prescription drug benefit to it and so forth. 
Meanwhile, Medicaid has gone largely under the radar, and yet 
it has now passed Medicare in both dollars and enrollees as a 
Federal health care program. I think it is about time we 
started looking seriously at ways that we make this program 
better for the people who depend upon it, and I look forward to 
the testimony today in this first of what I think will be many 
hearings and meetings over the summer and the fall. And I yield 
back the balance of my time.
    Mr. Norwood. Mr. Markey, we welcome you to our 
subcommittee, and understand that you would like an opening 
statement. You are now recognized.
    Mr. Markey. I thank you very much, Mr. Chairman.
    This is a very good program, obviously, and it is one that 
should be expanded upon in the future in order to help people 
who are trying to help themselves. All of these individuals and 
families are heroes, but heroes need help in situations like 
this. And much of what we are talking about here today is aimed 
at ensuring that families are able to do what is possible in 
order to ensure the best possible standard of life for their 
families.
    This year the Federal Government is spending $177 billion 
on Medicaid, which is a lot of money. By 2006, we will be 
spending $197 billion on Medicaid, the Federal Government. And 
on the one hand, that is a big amount of money, but looking at 
it from a different perspective, it is really not, because the 
tax cuts from 2001 and 2003 combined in 2006 are going to be 
$244 billion just for that 1 year. So that is a huge tax cut 
for 1 year, $244 billion, if the entire Medicaid program is 
only $197 billion.
    So, in other words, you could easily finance the increase 
from $177 billion to $197 billion, the Federal share in 2006, 
which is 20 $billion, out of the $244 billion tax cut of the 
year 2006 alone. And I think, looking at it in that context as 
to whether or not we can afford to continue to expand Medicaid 
to ensure that families are given the help that they need shows 
that the money is there, that we could do it, that we do have a 
capacity to help these families. And a program like this that 
is so successful is a demonstration project, but it has 
demonstrated that success is something that we should continue 
to enhance and improve upon, because the more that we do for 
these families, the more that they can do for us and for our 
country.
    And so I thank you, Mr. Chairman, for having this hearing, 
and I hope that by the end of the day that we will understand 
how important it is to spend the money to help these families.
    Mr. Norwood. I recognized you out of order and hoped you 
would sing us a little song or had a poem. I am disappointed. 
But thank you for being here.
    Mr. Whitfield from Kentucky, do you wish an opening 
statement?
    Mr. Whitfield. Mr. Chairman, I will waive my opening 
statement.
    Mr. Norwood. Mr. Stupak. I apologize.
    Mr. Stupak. I waive.
    Mr. Norwood. You will waive and go for 8 minutes.
    Mr. Green, would you wish an opening statement?
    Mr. Green. Thank you, Mr. Chairman. I would like to place 
my full opening statement into the record. But, again, I 
appreciate you having the hearing, and I know meeting with my 
own constituents that individuals with disabilities, that they 
really would just like to be as close to home as they could, 
and anything we can do to help that, to keep them from being 
institutionalized, again, I appreciate you bringing up this, 
having this hearing so we can discuss it.
    Mr. Norwood. Thank you very much, Mr. Green.
    Is there anyone, any member, who has--Mr. Waxman wishes an 
opening statement. You are recognized for 5 minutes.
    Mr. Waxman. Thank you very much, Mr. Chairman.
    For a person with chronic illnesses or disabilities, 
personal care services could make the difference between 
dependence and independence, between living in an institution 
and living in a community.
    Some people have the financial wherewithal to assure that, 
their own personal care. Some people have families who can 
provide these services on their own, and some people must turn 
to Medicaid. The first thing to be sure of today is that 
Medicaid itself can make these services available to those who 
need them.
    State Medicaid budgets are in crisis, and this Congress and 
the Bush Administration have been unwilling to help States in a 
real way, so there are serious cuts in eligibility, in benefits 
and Medicaid programs around the country. Somehow the Congress 
and the President can find $1 trillion of tax cuts, but they 
cannot find the money to make sure that Americans get basic 
health care. In fact, the Republicans in the House this year 
voted for $100 billion in cuts in Medicaid, but no chairman is 
willing to have a hearing on the real needs of Medicaid and all 
its beneficiaries.
    So let me move on to the more narrow topic of today's 
hearing. The second thing to be sure of today is that when 
these services are available from Medicaid, they are provided 
in a way that best meets the desires and needs of the person. 
For many people Cash and Counseling is clearly the preferable 
model for getting personal care services. People like choosing 
their own attendants, hiring their families and friends as 
caregivers for such intimate care, and doing their own training 
of attendants. It is not for everyone, and it is not 
necessarily easy to carry out, but for those who want to and 
can use it, this model should be available in Medicaid.
    The final thing to be sure of today is that we are cautious 
about what we take away from this discussion. This cannot be 
done on the cheap. There has to be enough cash for Cash and 
Counseling to work. This model is not a cost-containment 
device. The virtues of this model cannot readily be transferred 
to a wide range of medical and health services. You can't hire 
your friends and family to be your pharmacist or your drug 
company. You don't need intimacy with your equipment suppliers. 
And the financing of any expansion beyond personal care 
services would be complicated, risky, and wrong.
    The demonstrations that have been done so far have involved 
a relatively simple assessment of basic services and hours and 
how much they cost. If anybody attempts to carry this to a 
broader range of medical and health services, in essence, a 
voucher program, it would put people at risk almost as severe 
as being completely uninsured. This is the stuff of actuaries 
and risk managers, and even they are predicting for the average 
need, not the individual need. We should not force people to 
risk their health on making a good guess of what they need.
    We have the opportunity to provide good and flexible 
personal services with these models; indeed, many of us have 
supported legislation to provide States with increased 
resources to do so. And I urge my colleagues to consider 
joining in this legislation.
    And, finally, I am grateful to our witnesses for coming 
today. I want to thank them for their testimony and their help, 
and I look forward to hearing from you.
    Thank you, Mr. Chairman.
    Mr. Norwood. Thank you.
    [Additional statements submitted for the record follow:]
Prepared Statement of Hon. Michael Bilirakis, Chairman, Subcommittee on 
                                 Health
    I now call this hearing to order. I would like to start by 
welcoming our witnesses and thanking them for joining us today. I am 
particularly pleased to see my fellow Floridians today and I am very 
much looking forward to your testimony. It is critical that we have an 
opportunity to hear from people with real world experience in the 
``Cash and Counseling'' program. My understanding is that this program 
has been successful, but I believe it is vital that we hear directly 
from the experts as to what has worked and what has not. I am also 
hopeful that you might expand on how we could apply some of the 
principles in this program broadly to other areas of Medicaid--and even 
better expand the program to other states.
    The three Cash and Counseling demonstration programs currently 
supported by the Centers for Medicare and Medicaid Services (CMS) 
increase the health care options for some Medicaid beneficiaries. These 
programs provide the beneficiary with a cash allotment that can then be 
used to purchase health care services or other needed items. The 
structure of this program ensures that beneficiaries are able to meet 
all of their health care requirements while at the same time empowering 
the participants to make use of resources in a way that best meets 
their individual needs. This system makes certain that Medicaid is 
using its limited resources in the most efficient manner possible.
    Medicaid beneficiaries participating in Florida's Cash and 
Counseling demonstration, have reported increased satisfaction with 
Medicaid services and that the overall quality of their care has 
improved. The Florida demonstration also found that the flexibility of 
the program delayed institutional and other high cost out-of-home 
placements by allowing its participants to more efficiently use the 
money that would have otherwise been spent directly by Medicaid.
    I am certain that today's hearing will help us identify whether or 
not these demonstration programs can be used as models to expand and 
build on in other states. I understand that CMS recently approved 
Florida's request to expand its Cash and Counseling program statewide. 
I hope that other states follow Florida's lead and increase beneficiary 
access to this promising model. An expansion is warranted given that 
the Supreme Court's landmark Olmstead decision requires states to 
administer services ``in the most integrated setting appropriate to the 
needs of qualified individuals with disabilities.'' I believe it is 
incumbent on other states to follow Florida's lead and ensure that the 
cash and counseling option is available to every Medicaid beneficiary 
for whom this type of model is appropriate.
    I would again like to offer a warm welcome to all of our panelists 
and thank them for their time and effort in joining us today. I now 
recognize the Ranking Member, Mr. Brown, for an opening statement.
                                 ______
                                 
 Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee 
                         on Energy and Commerce
    Thank you, Chairman Bilirakis, for holding this important hearing 
today. Thanks also to Mr. Mahoney, Mr. White, Mr. Reimers, Mr. Williams 
and Ms. Gittens for making the time to come testify before the Health 
Subcommittee about the innovative Consumer Directed Services available 
through the Medicaid program.
    Of the 40 million Americans covered by Medicaid, about one-sixth or 
6.9 million are non-elderly adults with disabilities. The Medicaid 
program plays an important role for these individuals. Through 
Medicaid, people with disabilities obtain access to medical and 
hospital care, as well as long-term care services.
    Currently about 1.2 million Medicaid beneficiaries receive 
disability-related supportive services in their homes. Most receive 
them from government-selected home care agencies, whose professional 
staff arrange the services for the beneficiary. As a result, many 
Medicaid beneficiaries who have disabilities and receive supportive 
services from these agencies often report that they have little control 
over who provides their care, when they receive it, and how it is 
delivered. For many, this lack of control over basic assistance leads 
to dissatisfaction, unmet needs, and diminished quality of life.
    Over the past few years, with the help of President Bush's New 
Freedom Initiative, some states have expanded opportunities for 
Medicaid beneficiaries. Significantly, some beneficiaries have been 
permitted to direct and manage their own services and control their 
budgets for their heath care needs. Under this model, consumers are 
given a monthly allowance to purchase disability-related goods and 
services. This affords consumers the authority and tools to craft their 
own services plans, with the freedom to use both traditional and 
nontraditional providers. This freedom also empowers beneficiaries with 
the choice of hiring, firing, scheduling, training, and supervising 
their providers, rather than being at the mercy of a particular 
provider.
    Consumer Directed Services also provides assistance to help 
beneficiaries plan and manage their responsibilities, and allows them 
to designate representatives (such as family members) to make decisions 
on their behalf. All of these features make the model adaptable to a 
wide variety of Medicaid beneficiaries including people with 
developmental disabilities, physical disabilities, and serious mental 
illness, as well as elderly individuals.
    From all indications, we are examining a program that works. One 
recent evaluation, completed for the Robert Wood Johnson Foundation, 
revealed that Medicaid recipients with disabilities who direct their 
own supportive services were significantly more satisfied and appeared 
to get better care than those receiving services through traditional 
Medicaid providers. The study found that with self-direction, 82 
percent of the recipients' satisfaction and quality of life were 
improved substantially and many indicated that their unmet needs for 
care were reduced. These compelling results further emphasize the 
importance of expanding Consumer Directed Service to more state 
Medicaid programs.
    Due to their unique and often extensive health needs, Medicaid 
beneficiaries with disabilities use a great deal of medical services. 
On average, Medicaid spends nearly eight times more for a beneficiary 
with a disability than for a child who qualifies for Medicaid based on 
income. In a time when spending on Medicaid consumes between 15 and 20 
percent of all state budgets, and Medicaid costs grew by over 13 
percent last year, almost all states are now being forced to make 
painful cuts to their Medicaid programs. Given the harsh fiscal 
reality, it seems possible that Consumer Directed Services could result 
in a mutually beneficial situation for both the states and 
beneficiaries with disabilities. With a defined contribution for 
Consumer Directed Services, states would have a better ability to 
forecast their Medicaid expenditures, all the while giving 
beneficiaries with disabilities greater discretion when choosing their 
services, and better satisfaction. This could enable beneficiaries with 
disabilities to manage their care in ways that better meet their needs, 
without raising public costs.
    Medicaid beneficiaries should expect to control what happens in 
their own lives. This includes having a direct say about the home and 
community services and some of their health care choices they receive 
through the Medicaid program. Chairman Bilirakis and I are very 
interested in learning more about how we can expand the use of Consumer 
Directed Services in the Medicaid program. We hope you will be able to 
provide a unique perspective on the innovative strategies being pursued 
to improve the critical services that Medicaid currently offers.
    The Medicaid program is truly at a crossroads. If we are not 
willing to make some major changes in Medicaid and look at dynamic 
programs such as Consumer Directed Services, the long-term prospects 
for the program will not be bright. We have serious challenges facing 
Medicaid today. Today, we are focusing on one initiative to put 
patients first and improve the quality of care received by Medicaid 
beneficiaries. Over the next few months, we will look at more 
innovative programs for beneficiaries as well as ways to address the 
long term financing issues facing the program. America's Medicaid 
beneficiaries deserve this and more.

    Mr. Norwood. I would like to take a minute and introduce 
our guests to the committee, your panelists who many have come 
a long way. And we are all very grateful for your participating 
in this. We want you to enjoy this time. And, remember, we 
consider you the experts. So give us your presentation, and we 
are just going to have a very happy dialog here.
    First, we want to welcome Dr. Kevin Mahoney, associate 
professor of Boston College. Thank you, sir, for coming a long 
way. We appreciate it.
    And Ms. Patricia Gittens, who we are delighted you are 
here. Ms. Gittens brings to us real life experiences in this 
Cash and Counseling process, and we are most anxious to hear 
from you and grateful.
    Mr. Secretary, Terry White, we are glad you are here from 
the Florida Department of Elder Affairs.
    And Mr. Bob Williams, thank you, sir, for coming, 
codirector, Advancing Independence and Modernizing Medicare and 
Medicaid.
    We are going to ask each of you in turn to present your 
statement. Try to stay within 5 minutes. I am not going to cut 
you off if it is 6, but try to keep it in that timeframe.
    And with that, we will start with Dr. Mahoney. And if you 
will give us your testimony.

  STATEMENTS OF KEVIN J. MAHONEY, ASSOCIATE PROFESSOR, BOSTON 
  COLLEGE, GRADUATE SCHOOL OF SOCIAL WORK; PATRICIA GITTENS; 
TERRY F. WHITE, SECRETARY, FLORIDA DEPARTMENT OF ELDER AFFAIRS; 
   AND BOB WILLIAMS, CODIRECTOR, ADVANCING INDEPENDENCE AND 
               MODERNIZING MEDICARE AND MEDICAID

    Mr. Mahoney. Thank you very much, Mr. Chairman and members. 
I have the privilege of being the national program director for 
the Cash and Counseling demonstration, and we really appreciate 
this chance to appear before you today.
    Today, in most States, whether you are elderly or a younger 
person with disabilities, if you are on Medicaid and you need 
help with such basic activities as bathing, dressing, getting 
to the bathroom, you have little, if any, choice about who 
helps you, when they come, or what they do. But for years 
people in the disability community have been saying, if I had 
more control over these basics, basic services, my life would 
be a lot better, and I could do it for the same amount of 
money, maybe even a little less.
    The Cash and Counseling demonstration is at its heart a 
test of this very idea. It is a test where people are literally 
given a choice between traditional agency-delivered services, 
or managing an equivalent amount of money to meet their own 
personal assistant service needs. It is a large-scale test that 
has involved over 6,700 people in a three-State controlled 
experiment.
    Janice Maddox is a perfect example of the desire of seniors 
to have more control over who enters their home and who 
provides intimate care. At 75, Ms. Maddox does not have the 
best health; she has diabetes and glaucoma and is confined to a 
wheelchair possibly as a result of several strokes. But despite 
her physical frailty, Ms. Maddox possesses a tremendous asset, 
an extensive support network of friends and family who want to 
help her to continue to live independently.
    For 5 years Mrs. Maddox received personal assistance 
services from aides sent to her by an agency that contracted 
with Medicaid. Then her daughter read about Arkansas' Cash and 
Counseling program in the newspaper. Mrs. Maddox enrolled, and 
her oldest daughter Johnetta Thurman became her representative 
to help her with the decisionmaking process. Mrs. Maddox's 
monthly allowance through Cash and Counseling pays her adult 
granddaughter to spend at least 2 hours a day, 7 days a week 
attending to Mrs. Maddox's needs. Her allowance is also used to 
pay for her grandson $10 a week to do odd jobs around the 
house, and it also helps with such things as cost of over-the-
counter medications and toiletries.
    Mrs. Maddox's daughter, who lives in Chicago and travels 
frequently to Arkansas for her mother, believes the program has 
made an immense impact in improving the quality of her mother's 
life, which she says there is something about having family 
look after her. She doesn't get nearly as many allergic 
reactions or bed sores now. And I think that is because when it 
is your own you are looking after, you pay more attention.
    The Cash and Counseling program has from day one been a 
unique partnership funded by the Robert Wood Johnson Foundation 
and ASPE, the Office of the Assistant Secretary for Planning 
and Evaluation. It operates under waivers and oversight from 
the Centers for Medicare and Medicaid Services.
    As you will see in a few minutes, the quantitative 
evaluation--and this is a major controlled experiment, 
randomized control--is done by mathematical policy research, 
and we have had a qualitative evaluation that follows 25 people 
in each of these States up close and personal, and what did 
this really mean in their lives.
    The three States, as you have heard, are Arkansas, New 
Jersey, and Florida. In Arkansas and New Jersey, this is an 
alternative to the Medicaid personal benefit. Florida, as you 
will hear, it is really an alternative to three different 
1915(C) home and community-based service waivers. All three 
States cover the elderly and adults with disabilities. Florida 
is unique in also covering children with developmental 
disabilities.
    If I could have your permission, I would show a few quick 
overheads. In these opening remarks, I would like to present 
the first results from the demonstration. They come from 
Arkansas, which was the first State to implement. They 
implemented within a month of getting their Federal waivers. 
And it focuses on the effects on quality of care.
    I am going to flash through these because of the--let us 
see. No, nothing is happening. I will flash through these, and 
I will do it this way.
    In the qualitative evaluation, we had the chance to look at 
impacts on satisfaction, on unmet need, health outcomes, and 
life satisfaction. You have copies of these, so I will go at it 
this way. As a key to reading these--and if you could flash 
through, or do you think I can? Okay. Wonderful.
    These are the quality of care measures that we are looking 
at.
    It is still not going forward.
    Mr. Norwood. Mr. Mahoney, we have all of these slides in 
each of our handouts; is that correct?
    Mr. Mahoney. That is correct.
    Mr. Norwood. Your time is over. And I am going to recommend 
to the members of the committee, if they would, and maybe they 
already have, look through these slides in our handout that we 
have.
    Mr. Mahoney. If I could have 30 seconds, I could summarize 
it.
    Mr. Norwood. Thirty seconds.
    Mr. Mahoney. Not unsurprisingly, the effects on reduce--the 
effects on satisfaction are the kind researchers rarely in 
their life will see. They are 20 percentage point difference 
more satisfied, major reductions in unmet need. Where people 
will be surprised at are the health outcomes. They are either 
the same, or you end up with fewer--statistically significantly 
fewer bed sores among the younger adults with disabilities, 
fewer contractures among the elderly. Even effects from modest 
benefits on overall life satisfaction.
    The thing that I hope I get the chance to talk about with 
the committee later is, looking ahead, all three of these 
States in a bipartisan fashion are trying to make this program 
permanent. Florida----
    Mr. Norwood. That is my first question to you, so you are 
going to get a chance.
    Mr. Mahoney. Florida has passed legislation, and the Robert 
Wood Johnson Foundation is looking at additional--a national 
program that could help other States.
    Thank you.
    [The prepared statement of Kevin J. Mahoney follows:]
Prepared Statement of Kevin J. Mahoney, National Program Director, Cash 
              and Counseling Demonstration and Evaluation
    Mr. Chairman and Members of the Committee, good morning. My name is 
Dr. Kevin J. Mahoney. I am the National Program Director for the Cash 
and Counseling Demonstration and Evaluation and a faculty member at the 
Boston College Graduate School of Social Work. Thank you for inviting 
me to testify this morning.
    Today, in most states, whether you are an elderly individual or a 
younger person with disabilities, if you need Medicaid assistance to 
perform basic activities of daily living like bathing, dressing, 
toileting, transferring or eating you will rarely have much say over 
who helps you or when they come, never mind what they actually do. But, 
for years, people with disabilities have been saying, ``If I had more 
control over my services, my quality of life would improve and I could 
meet my needs for the same amount of money or less.'' The Cash and 
Counseling Demonstration (CCDE) is, at its heart, a policy-driven 
evaluation of this basic belief--a test where people are given a choice 
between traditional agency-delivered services or managing an equivalent 
amount of money to meet their ongoing personal assistance service (PAS) 
needs--a large scale test involving over 6,700 individuals from three 
states in a controlled experiment.
    Janice Maddox is a perfect example of the desire of seniors to have 
more control over who enters their home and who provides intimate care.
    At 75, Ms. Maddox does not have the best health. She has diabetes 
and glaucoma and is confined to a wheelchair, possibly as a result of 
several strokes. She needs help getting in and out of bed, dressing, 
bathing, meeting her dietary requirements, taking her medications, and 
keeping up with her housework.
    But despite her physical frailty, Mrs. Maddox possesses a 
tremendous asset: an extensive support network of friends and family 
who want to help her continue to live independently. Her many children, 
grandchildren, great-grandchildren, siblings, and extended family, 
including neighbors, provide a continual stream of sound and motion for 
Mrs. Maddox, a widow, to watch bemusedly from her wheelchair.
    For five years, Mrs. Maddox received personal assistance services 
from aides sent to her by an agency that contracted with Medicaid. Then 
her daughter read about Arkansas' Cash & Counseling program, in the 
newspaper. Mrs. Maddox enrolled, and her oldest daughter, Johnetta 
Thurman, became her representative decision maker.
    Mrs. Maddox's monthly allowance through Cash & Counseling pays her 
adult granddaughter to spend at least two hours a day, seven days week, 
attending to Mrs. Maddox's needs. Her allowance is also used to pay her 
grandson $10 a week to do odd jobs around the house and helps cover the 
cost of over-the-counter medications and toiletries.
    Ms. Maddox's daughter, who lives in Chicago and travels frequently 
to Arkansas to make sure her mother's needs are being met, believes the 
program has made an immense impact in improving the quality of her 
mother's life. ``There's just something about having family look after 
her. She doesn't get nearly as many allergic reactions or bed sores 
now, and I think that's because when it's your own you're looking 
after, you pay more attention.''
    The Cash and Counseling Demonstration and Evaluation (CCDE), funded 
by the Robert Wood Johnson Foundation (RWJF) and the Office of the 
Assistant Secretary for Planning and Evaluation (ASPE) in the U.S. 
Department of Health and Human Services, is a test of one of the most 
unfettered forms of consumer direction--offering elders and younger 
persons with disabilities a cash allowance in place of agency-delivered 
services. It operates under a research and demonstration waiver granted 
by the Centers for Medicare and Medicaid Services (CMS). The purpose of 
this project is to determine whether cash allowances maximize consumer 
choice and promote program efficiencies.
    In the states where the program is being implemented, i.e., 
Arkansas, Florida and New Jersey, consumers who meet project 
eligibility criteria and express interest in participating in CCDE are 
randomly assigned to participate in the program (managing a cash 
allowance to purchase services) or serve as a control group and receive 
services through the state's existing system. The evaluation compares 
outcomes for consumers receiving traditional service packages with 
those receiving cash allowances with respect to cost, quality, and 
satisfaction.
    My presentation today summarizes findings about the effects of Cash 
and Counseling on well-being, unmet needs, health outcomes, and 
consumer satisfaction. It focuses on the first of the demonstration 
programs to be implemented, Arkansas's IndependentChoices. Mathematica 
Policy Research, Inc. conducted the evaluation.
    demonstration tests a new model of medicaid personal assistance
    Medicaid beneficiaries who have disabilities and receive supportive 
services from home care or case management agencies often report that 
they have little control over who provides their care, when they 
receive it, and how it is delivered. For some, this lack of control 
over basic, often intimate, assistance leads to dissatisfaction, unmet 
needs, and diminished quality of life. Many states are expanding 
opportunities for interested Medicaid beneficiaries to direct their 
disability-related supportive services by letting them control the 
budget for their approved care. This approach could enable 
beneficiaries to better meet their care needs, without increasing 
public costs. However, critics fear that such options jeopardize 
consumer health and safety.
    In the Arkansas Cash and Counseling demonstration, called 
IndependentChoices, consumers had the opportunity to receive a monthly 
allowance, which they could use to hire their choice of caregivers 
(except spouses) and to buy other services or goods (such as assistive 
devices and home modifications) to meet their personal care needs. 
Allowances were equal to the number of hours of care consumers were 
expected to receive under the traditional Medicaid program, and 
averaged about $320 per month. Consumers were required to develop 
written plans for managing the allowance and have them approved by 
counselors. In addition, virtually all consumers chose to have the 
program's fiscal agents write checks for their purchases and withhold 
payroll taxes for caregivers hired with the allowance. Consumers who 
were unable or unwilling to manage the allowance themselves could 
designate a representative, such as a family member, to do so for them.
 demonstration's randomized design and comprehensive survey data yield 
                           definitive results
    Cash and Counseling was designed to provide definitive evidence 
about its effects on a variety of outcomes, including many that 
pertained to care quality. Enrollment into the Arkansas demonstration, 
which occurred between December 1998 and April 2001, and was open to 
interested Arkansans who were at least 18 years old and who were 
eligible for personal care services under the state Medicaid plan. The 
2,008 adults who volunteered for the demonstration completed a baseline 
telephone interview and then were randomly assigned to direct their own 
supportive services as IndependentChoices consumers (the treatment 
group) or to rely as usual on services from home care agencies (the 
control group).
    Data on quality of care outcomes were collected nine months later, 
when all treatment and control group members (or their proxy 
respondents) were asked to complete a follow-up telephone interview. 
The 1,739 survey respondents answered factual questions about 
disability-related adverse events and health problems, and gave their 
opinions about (1) satisfaction with care, (2) unmet needs for 
assistance with daily activities, (3) quality of life, (4) general 
health status, (5) self-care, and (6) ability to perform daily 
activities without help from others. Demonstration evaluators then used 
statistical models to compare the treatment and control groups on these 
outcomes for non-elderly and elderly sample members, while controlling 
for a comprehensive set of characteristics that were measured during 
the baseline interviews.
consumer satisfaction improved markedly, with no adverse health effects
    The resulting analysis showed that the Arkansas Medicaid 
beneficiaries who had the opportunity to direct their personal care 
services themselves received better care than the control group, which 
relied on services from agencies. IndependentChoices significantly 
increased the proportion of consumers who were very satisfied with 
their care and their paid caregivers, and thinned the ranks of the 
dissatisfied. Specifically, IndependentChoices consumers were much more 
satisfied with the timing and reliability of their care, less likely to 
feel neglected or rudely treated by paid caregivers, and more satisfied 
with the way paid caregivers performed their tasks. The program also 
reduced some unmet needs for personal assistance services and 
substantially enhanced consumers' quality of life. Moreover, it 
produced these improvements without compromising consumer health or 
functioning. Both elderly and non-elderly adults had better experiences 
under IndependentChoices than under agency-directed services, though 
impacts on most outcomes were larger for the non-elderly.
 findings about costs, caregiver outcomes, and implementation are also 
                                 needed
    Although the quality and consumer satisfaction results suggest that 
the Cash and Counseling model, as implemented under IndependentChoices, 
benefits users of personal care services, other issues must be examined 
before the model's desirability can be fully confirmed. Public costs 
could increase or decrease under IndependentChoices--a critical factor 
in times of state budget crises. In companion analyses, evaluators will 
examine how IndependentChoices may have affected the use and cost of 
personal care, acute care, and long-term care, as funded by Medicaid or 
Medicare. They also will examine program effects on consumers' informal 
and paid caregivers, and explore implementation lessons of interest to 
states. Evaluators will repeat these analyses for Florida and New 
Jersey and compare the results across all three states.
                  cash & counseling consumer profiles
    Often the best way to see the effects of a program is by looking at 
how it affects individuals.
Grace Wall: Aging with Independence
    Grace Wall, of Zephyrhills, Fla., has always been independent. But 
at 83, with a host of health problems that include congestive heart 
failure, two hip replacements, loss of sight in one eye, and lung 
cancer, that independence is harder to maintain.
    For six years, Mrs. Wall took care of her paralyzed husband before 
he died in 1991. Now she lives alone in a mobile home. She gets her 
health care through Medicaid, as well as various personal assistance 
services, such as help with shopping and housekeeping `` things that 
she has difficulty doing on her own now.
    Mrs. Wall used to get those services through a Medicaid contractor. 
But in September 2000, she enrolled in Consumer Directed Care (CDC), 
Florida's Cash & Counseling program. Mrs. Wall says that CDC has 
changed her life.
    ``I just feel better,'' she says. ``This gets what I need to get 
done without much fuss.''
    Now Mrs. Wall can hire people she knows and trusts to help her. A 
good portion of her $437 monthly budget goes toward buying medications 
and health care supplies. She also uses the money for transportation 
and to maintain her home.
    At first, Mrs. Wall admits that she was daunted by the paperwork. 
But her CDC consultant has helped her through that and Mrs. Wall says 
the rewards have been well worth the effort.
    Mrs. Wall says CDC has enabled her to do things she wouldn't 
otherwise have been able to do and made difficult tasks simpler for 
her. She also feels more secure with help that is close at hand and 
accountable to her. Agency workers, she notes, were not always there 
for her when she needed them. ``Now I can rely on my worker, and I 
couldn't before. I can get help when I need it.''
Tammy Svihla: Getting Help on Her Own Terms
    Single motherhood is tough for a woman on a limited income, but 
Tammy Svihla, who has multiple sclerosis (MS), does it all from a 
wheelchair without complaining.
    Not much ruffles this 36-year-old mother of three. She's conquered 
many problems, and she's not about to give in to MS.
    She lives in a rented two-story house in High Bridge, N.J., with 
her two youngest children (her eldest lives nearby with his 
grandparents). Although she is a take-charge type of person, she needs 
help with some of the basics, like dressing, showering, getting up and 
down the stairs, cooking, cleaning, and shopping. Ms. Svihla says she 
gladly accepts help when it comes on her own terms. ``I've had a string 
of personal care aides through here, and most of them never lasted very 
long,'' she says.
    A former retail store manager, Ms. Svihla jumped at the chance to 
direct her own care through New Jersey's Personal Preference program. 
``I saw it as an opportunity to take control `` to decide for myself 
who walks through my front door,'' she says. ``That's very important 
when you have young children in the house.''
    Today, Ms. Svihla employs two reliable, handpicked helpers: a 
neighbor and an aide she found by posting flyers in her neighborhood. 
Ms. Svihla manages her monthly $1,035 allowance herself, with minimal 
assistance from a bookkeeper provided by the program. About half of the 
money covers payroll and taxes, and the rest pays for personal care 
items and goods for her home, including incontinence pads, an air 
conditioner and fans, and touch lamps. She's also purchased some home 
office equipment to help her manage her paperwork better.
    Personal Preference, it turns out, is exactly what Ms. Svihla 
needed. ``This program just makes sense,'' she says. ``Others should 
know about it.''
                            lessons learned
    Consumers like Cash & Counseling. Across all three states, clients 
express high levels of satisfaction.

 In Arkansas, 96 percent of clients say they would recommend 
        the program to others; 82 percent say the program has improved 
        their lives, and 65 percent say the program has improved their 
        lives a great deal.
 In New Jersey, 97 percent of clients say they would recommend 
        the program to others seeking more control over their personal 
        care.
    However, Cash & Counseling is not for everyone. For some, the 
traditional service delivery system works well because they are unable 
or don't want to make decisions about their care and arrange their own 
services.
    Many consumers hire family members or friends to be their personal 
caregivers. This may be a reason why satisfaction with the program is 
so high `` consumers are hiring people they know and trust to work for 
them. During this period of worker shortages, the CCDE allowed 
consumers to tap a new work force.

 In New Jersey, 63 percent of clients used their monthly 
        budgets to hire family members, while 20 percent hired friends, 
        neighbors, or church members.
 In Arkansas, Cash & Counseling consumers were more satisfied 
        with their relationships with their paid caregivers than were 
        consumers receiving traditional services.
    For those under age 65, the program decreased the hours of human 
assistance received, but increased the likelihood of purchasing 
equipment, assistive devices and home renovations.
    Nearly all consumers use the program's financial planning and 
bookkeeping services and find them helpful. These services can reduce 
clients' fears of being overwhelmed by paperwork.

 In Florida, 80 percent of Cash & Counseling clients used a 
        program consultant to help develop their purchasing plans; of 
        those, 90 percent found the assistance useful. Ninety-eight 
        percent of Florida clients said the program's bookkeeper was 
        managing their financial responsibilities for them.
    There have been no major instances of fraud or abuse. Consumers are 
managing their budgets responsibly and spending their money the way the 
program intends.
                             looking ahead
    The Cash and Counseling approach has been a bi-partisan effort in 
all of our states. Each of the three Cash and Counseling states is 
working to make consumer-directed care a permanent option for disabled 
and elderly Medicaid beneficiaries. In fact, Florida has already 
enacted legislation to that effect. At the federal level, the Centers 
for Medicare & Medicaid Services (CMS) have issued model waiver 
templates encouraging states to develop consumer-directed waiver 
program options. Simultaneously, New Jersey and Arkansas have asked CMS 
to clarify its policy to allow states to pay for a wide array of 
assistive devices and home renovations under Medicaid's personal care 
benefit `` without having to rely on waivers.
    Meanwhile, The Robert Wood Johnson Foundation, the Office of the 
Assistant Secretary for Planning and Evaluation, the Centers for 
Medicare and Medicaid Services and the Administration on Aging are 
exploring the feasibility of expanding the Cash & Counseling 
demonstration to other states. As part of an ``environmental 
assessment'' financed by The Robert Wood Johnson Foundation, twenty-one 
states have indicated a desire to replicate this basic ``consumer-
directed individualized budget'' model.
    I appreciate your invitation to participate in this hearing and 
look forward to your questions and comments. For follow-up questions, I 
can be reached at [email protected] or by calling (617) 552-4039.

    Mr. Norwood. Thank you, Dr. Mahoney. I appreciate it.
    Ms. Gittens, you are now recognized for your testimony.

                  STATEMENT OF PATRICIA GITTENS

    Ms. Gittens. Thank you, Mr. Chairman.
    My daughter Jewel Stephen is 15 years old. Jewel has a 
developmental delay and is a med-waiver client in the State of 
Florida.
    When the Consumer-Directed Care Project was introduced, I 
was given the opportunity to enroll Jewel in the project. Now 
she is in the experimental group, and her direct care comes 
from her brother, her sister, her teacher's aide, and myself. I 
order her therapeutic equipment from a catalog. I purchase her 
personal care supplies wherever I can find the best bargain. 
She has had a ramp and a wheelchair-accessible bathroom added 
onto the house we live in. She has access to Hart-Line 
transportation, which provides wheelchair-accessible van pickup 
at the door of our home. We have been able to save 
considerably. The savings that we accumulate I use to purchase 
anything that will enhance Jewel's independence, safety, 
welfare, and health.
    I am a very strong advocate of the Consumer-Directed Care 
Research Project. The project affords the consumer with a wider 
range of selection for providers. Since the providers do not 
need to be med-waiver-certified, the choice is broader. For 
direct care, the consumer can hire family and friends, and they 
are more familiar with the consumer. As a result, Jewel is much 
more comfortable. Jewel now receives care from her brother, her 
sister, and they understood her better, and she is much more 
comfortable having them around. In the past we have had to 
interview many strangers, and we have had to go over the 
initial orientation many times with different people of who 
Jewel is, what Jewel likes, what Jewel needs. But now she is 
around the people that know her best and love her the most.
    The consumer and the family are now in control as opposed 
to the support coordinator, and we know what the providers are 
billing because the time sheets must be approved by the 
representative of the project. The representative in this case 
is my mother, and she handles all of the paperwork. Before, in 
the med-waiver program, the provider billed directly to the 
support coordinator, and there was some accountability lost 
because the provider may or may not have actually provided the 
service. The consumer was unaware of what was billed. Whenever 
I use the monies to spend, I have to account to her present 
consultant, who used to be her support coordinator. Once a 
month I give her all the receipts of all my expenses. When her 
supplies can be purchased at Walgreen's or Sam's Club rather 
than an elite group of med-waiver-certified companies, her 
chances for flexibility and savings increase.
    The services approved through the med-waiver program were 
only for medically necessary services, but now it is much more 
broad, and Jewel's medical, physical, emotional needs are all 
met.
    I do have some concerns about the project's execution. I 
have witnessed some anxiety in families who don't have any 
prior experience in anything of this sort. Because of the 
families' taking control, the support coordinators are 
encouraged to stay clear unless they are called on for help. 
However, I wonder if some families or consumers know the right 
questions to ask.
    I would love to see a support group in existence. A support 
group is one of the perks that were mentioned in the enrollment 
stage, but I have not seen it come to fruition. I would also 
love to see ongoing training offered at certain intervals in 
order to refresh the memories of the consumer and the 
consumer's family.
    There are two other services I would love to see added to 
the budget for the Consumer-Directed Care Research Project. 
They are therapy, and wheelchair-accessible vans.
    Recently my daughter's speech and occupational therapist 
discontinued her service because, according to their report, 
she was not progressing significantly enough. I am very 
concerned about this, because her school report shows that she 
was progressing, and I know that lost therapy could mean lost 
mobility and lost skills. So if therapy was on the program, I 
or my mother, as the representative, could go into the 
community, interview with different therapists, and then hire 
them whether they are through Medicaid med-waiver or not.
    Also, I am not able to take my daughter out as much as I 
would like to due to her size, my size, and the size of our 
car. She receives transportation services, which do help; 
however, the services are limited to certain times, certain 
days, and certain locations. And since she is 15, I believe she 
would love to get out more.
    In conclusion, it is an honor for me to testify today. I am 
extremely grateful that my daughter did happen to be in the 
experimental group. Her being in this project has enhanced our 
family life tremendously, and I hope and pray that the project 
will become a way of life for all interested consumers in the 
United States of America.
    Thank you, Mr. Chairman.
    [The prepared statement of Patricia Gittens follows:]
                 Prepared Statement of Patricia Gittens
    My experience with the Consumer Directed Care Research Project is 
both a personal and a professional one.
    My daughter--Jewel Stephen--is 15 years old. Jewel has a 
development delay, has been diagnosed with agenesis of the corpus 
collosum, and is a Med-waiver client in the state of Florida.
    My first experience with the med-waiver program was as a Support 
Coordinator. In this position, I was responsible for the managing of 
services for developmentally disabled adults. The services were made 
available by ``providers''. Only med-waiver certified providers could 
offer these services. One's being certified required the successful 
completion of a extensive application process.
    When the Consumer Directed Care Project was introduced, I was given 
the opportunity to enroll my daughter. The enrollment process involved 
the completion of a basic application form and survey, which was 
completed by her support coordinator. Once the application was 
submitted, it was keyed into a computer system in Tallahassee. The 
computer randomly assigned half of all the applications into the 
control group and half of all the applications into the experimental 
group. In the control group, everything remains the same. The client 
still has a support coordinator and the client's services are still 
made available by med-waiver certified providers.
    In the experimental group, the client and/or the client's family 
now gains control of the budget, the services provided, and who 
provides the service. My daughter, Jewel, was assigned to the 
experimental group.
    Shortly thereafter, I was asked to serve as the Outreach and 
Enrollment employee for the Consumer Directed Care Research Project 
(``the Project''). My new position involved going to family homes in 
Hillsborough and Manatee Counties of Florida and conducting a 
presentation to explain the Project and answer any possible questions. 
If the family decided to enroll, I would complete the application 
packet for them and forward it to Tallahassee.
    If the consumer was assigned to the experimental group, I would 
also review the purchasing plan that the family submitted. The 
purchasing plan is a budget proposal which itemizes the services needed 
and the projected cost of services. The main components of the 
purchasing plan are:
    Directly Hired Workers (ie. Personal Care Attendants, Respite 
Workers, Homemakers, Companions); Therapeutic Equipment (ie. 
communication devices, eating utensils); Personal Care Supplies (ie. 
gloves, shampoo, incontinent products, lotion); Modification of 
Residence (ie. wheelchair ramps, wheelchair accessible bathrooms); 
Modification of Vehicles (ie. wheelchair lift); Community Services (ie. 
transportation, lawn care); Cash (ie. prepared meals); Savings; and, 
Emergency Back-up.
    Jewel's direct care comes from her brother, her sister, her 
teacher's aide, and myself. I order her therapeutic equipment from a 
catalog. I purchase her personal care supplies wherever I can find the 
best bargain. She has had a ramp and a wheelchair accessible bathroom 
added onto the house we live in. She has access to Hart-Line 
transportation which provides wheelchair accessible van pickup at the 
door of our home. We have been able to save considerably. The savings 
are to be used for the purchase of anything that will enhance the 
welfare, independency, safety, and/or health of the consumer.
    The management of the purchasing plan is the consumer's 
responsibility. The consumer is not to ask the consultant (formerly 
known as the support coordinator) to do things she is responsible for. 
Information about roles and responsibilities can be gathered from the 
CDCRP consumer notebook. If there are still questions, the consumer is 
then encouraged to talk to the consultant.
    The purchasing plan should be updated if the consumer:

 changes the hourly rate pay of one or more employees
 has a change in the monthly budget amount
 adds a new purchasing category
 changes the savings amount or planned savings purchases
 has a change in needs
 has a change in the emergency backup plan
 has an account balance more than 1\1/2\ times the monthly 
        budget
 accumulates excess amounts of cash
    The consumer can be flexible in the spending of the allotted 
funds--as long as she doesn't spend more than the total available 
amount in the account balance. The consumer must keep track of unpaid 
amounts such as payroll and invoices. Also, all properly authorized 
employee timesheets must be submitted to Personal Attendant Accounting 
Services, Inc in Virginia (PAAS). PAAS retains the actual monies of 
each consumer's budget. Bookkeeping services and quality reviews are 
conducted by PAAS. PAAS pays employees by mailing payroll checks to the 
project representative. The representative is a family member or friend 
the consumer chooses to handle all paperwork involved in the project. 
(Jewel's representative is my mother).
    There are rare occasions when a consumer may be disenrolled from 
the project. Disenrollment from CDCRP is usually voluntary, but may 
occur by necessity. Disenrollment is usually due to loss of medicaid 
eligibility or death of the consumer.
    I am a very strong advocate of the Consumer Directed Care Research 
Project. The project affords the consumer with a wider range of 
selection of providers. Since the providers do not need to be med-
waiver certified, the scope of choice is broader. For direct care, the 
consumer can hire family and friends who are more familiar with the 
consumer. For professional services, the consumer can consider (and 
possibly interview) more agencies. As a result, the consumer is much 
more comfortable.
    The consumer and the family are now in control as opposed to the 
support coordinator. The consumer knows what the providers are billing 
because the time sheets must be approved by the consumer. In the med-
waiver program, the provider billed directly to the support 
coordinator. The accountability was lost, because the provider may or 
may not have actually provided the service. The consumer was unaware of 
what was billed.
    When supplies can be purchased at Walgreens or Sam's Club, rather 
than an elite group of med-waiver certified companies, flexibility and 
the chance of savings increase.
    The services approved through the med-waiver program are 
exclusively for ``medical necessity'' and the approval process is much 
more stringent than that for the project.
    I do have some concerns about the project's execution. I have 
witnessed some anxiety in families who have no prior experience in 
anything of the sort. The support coordinators are encouraged to ``stay 
clear'' unless they are called on for help (for the most part). 
However, I wonder if some families or consumers know the right 
questions to ask. I would love to see a support group in existence. A 
support group is one of the perks that were mentioned in the outreach 
and enrollment stage, but, I have not seen it come to fruition.
    I would also love to see ongoing training offered at certain 
intervals in order to refresh the memories of the consumer and the 
consumer's family.
    My daughter happens to have an excellent consultant (formerly known 
as support coordinator). She is reliable and professional. I hope every 
other consumer in the project receives the same quality of consultant 
help.
    There are two other services I would love to see added to the 
budget for the Consumer Directed Care Research Project. They are: 
therapy and wheelchair accessible vans. Recently, my daughter's speech 
and occupational therapists discontinued service because, according to 
their report, she ``was not progressing significantly enough''. I am 
very concerned about this because her school report shows that she was 
progressing and I know that lost therapy could mean lost mobility and 
lost skills for her. Also, I am not able to take my daughter out as 
much as I would like to--due to her size and the size of our car. She 
receives transportation services which help; however, the services are 
limited to certain times, certain days, and certain locations. Since 
she is 15, I believe she would love to get out more.
    In conclusion, it is an honor for me to testify about the project. 
I am extremely grateful that my daughter happened to be in the 
experimental group. Her being in the project has enhanced our family 
life tremendously. I hope and pray that the project will become a way 
of life for all consumers in the United States of America. Thank you.

    Mr. Norwood. Thank you very much.
    Mr. Secretary, you are recognized now for your statement.

                   STATEMENT OF TERRY F. WHITE

    Mr. White. Good morning, Mr. Chairman and members of the 
committee. I want to thank you for your invitation and my 
opportunity to be here before you today to talk about Consumer-
Directed Care.
    The Florida Department of Elder Affairs has been pleased to 
join the Robert Wood Johnson Foundation, the U.S. Department of 
Health and Human Services, and Arkansas and New Jersey in the 
national Cash and Counseling demonstration project and 
evaluation.
    The Florida program called Consumer-Directed Care was 
designed to provide consumers more flexibility, choice, and 
independence in determining and arranging their own care. I 
stand here today as a strong supporter of consumer direction, 
because I know it improves the quality of life by restoring 
self-reliance and dignity.
    The Florida model challenges the traditional mindset of the 
last 38 years in terms of the creation of the Medicaid program 
with the understandings that only the care managers are the 
only folks that can direct care for their clients, and that the 
Medicaid service recipients are incapable of managing their own 
care effectively and responsibly.
    Consumer-Directed Care puts into practice Governor Bush's 
commitment to increasing choices for frail elders and disabled 
Floridians by providing them the opportunity to be an active 
participant in their health care decisions.
    Before discussing the Florida model, I would like to share 
with you the impact that this program has had on one of our 
clients, Lois Duffy. In her own words, quote: My existence has 
become a real life. Now, I purchase the food I want and need 
rather than just what I can think of sitting here alone, 
unquote.
    Her worker Carlene has also benefited from the partnership, 
and in her words: Working for Lois has been a reward for both 
of us. For myself, I needed a part-time job with flexible 
hours; for Lois, it has given her a new lease on life.
    Now, if you would, contrast Lois' experiences with that of 
other Medicaid waiver experiences who are at risk because they 
are not receiving the services that can help them maintain 
independence through the traditional Medicaid system.
    The enrollment group for the Consumer-Directed Care Project 
includes frail elders, developmentally disabled children and 
adults, and physically disabled adults already participating in 
Medicaid waiver programs. Our department administers the 
project in collaboration with other State health and human 
service agencies. Allowable purchases include services and 
items such as personal care, homemaking, consumable medical and 
personal care supplies, adaptive devices, home repairs and 
maintenance, and errands and shopping assistance.
    Florida implemented Consumer-Directed Care through our 
existing networks of case managers and support coordinators, 
who now become known as consultants to our Consumer-Directed 
Care clients. This represents a major paradigm shift from the 
traditional service delivery model. Instead of case managers 
coordinating the care, the consumer develops a plan based on 
their own individual needs.
    To date, Florida has enrolled 2,820 participants in the 
Consumer-Directed Care model, including 814 elders. Based on a 
survey conducted by our Department, 94.4 percent of the 
respondents said that they were either satisfied or very 
satisfied with the project. There will be a formal evaluation 
in 2005.
    Governor Bush and the Florida Legislature believed in this 
program so much that they created a statewide Consumer-Directed 
Care model in the 2002 legislative session, and we are 
currently working on that to implement that statewide. We have 
learned a number of valuable lessons from participating in this 
project, and I would like to share those with you.
    First, consumer direction can increase the quality of life 
and consumer satisfaction. Consumers potentially can receive 
more services with an increase in quality.
    Second, consumer direction care can work for frail elders. 
Though it was utilized in the disability communities since the 
1980's, it was more challenging to implement this within the 
older population in Florida. However, when the concept spread, 
it became very, very popular, and now we have folks really 
wanting to become involved in the system.
    Third, concerns about potential fraud and abuse in consumer 
direction care are unfounded. Florida's Consumer-Directed Care 
Project, like that of Arkansas and New Jersey's, encounter no 
instances of fraud and abuse.
    Fourth, one size does not fit all. Consumers must be 
willing and able to manage their own care or have a 
representative who can act on their behalf. It is true that 
some individuals require a more formalized approach.
    Fifth and last, States that implement Consumer-Directed 
care programs should consider choice and quality issues. We 
have to be careful that we do not create an overabundance of 
options that could potentially lead to fiscal and operational 
challenges that could ultimately harm the consumer.
    We have stretched the Medicaid program in an attempt to 
wrap it around the needs of today's population, yet there are 
still 47,000 Floridians who are potentially eligible for 
Consumer-Directed Care but have no option at this point. The 
Consumer-Directed Care model is, in fact, a model, and one we 
would like to grow for our elders and disabled. As you consider 
reforms for Medicaid, this is an excellent model that shows an 
example of State innovation.
    While you are working in the direction of comprehensive 
Medicaid reform, I would like to highlight some policy 
recommendations from the Medicaid world which we must operate 
in, and that we base this on our experiences.
    First, increase the flexibility in the delivery of home 
community-based care services. Florida would like to have the 
ability to administer the Consumer-Directed Care model without 
the limitations and burdens of a waiver. With the flexibility 
to develop our own programs, we could make a more efficient use 
of our limited resources and meet the needs of our most 
vulnerable citizens.
    Second, consumer direction helps address worker shortage 
issues, especially in our rural areas, by adding family members 
and friends to the available pool of workers.
    Third, consider broadening the definition of personal care 
under the Medicaid State plan services. We would like to join 
our partners in Cash and Counseling demonstration projects in 
requesting a broader definition of personal care that would 
include home modification and assistive technology.
    In closing, I thank you again for the opportunity to be 
before you, and I would be happy to answer any questions later.
    [The prepared statement of Terry F. White follows:]
Prepared Statement of of Terry F. White, Secretary, Florida Department 
                            of Elder Affairs
    Good morning, Mr. Chairman and Members of the Committee. Thank you 
for your invitation and for the opportunity to address the Committee on 
improving Medicaid beneficiary access to quality care through a 
consumer-directed model of services.
    The Florida Department of Elder Affairs has been pleased to join 
the Robert Wood Johnson Foundation, the U.S. Department of Health and 
Human Services, and Arkansas and New Jersey, in the national Cash & 
Counseling Demonstration and Evaluation project. The Florida program, 
called ``Consumer-Directed Care,'' was designed to provide consumers 
more flexibility, choice and independence in determining and arranging 
their own care.
    I speak to you today not only as the Secretary of the Florida 
Department of Elder Affairs, but also as a former executive director of 
an Area Agency on Aging in southwest Florida. It was in my former role 
at the Area Agency on Aging that I was initially skeptical about 
Consumer-Directed Care, because I was concerned about the potential for 
fraud and abuse. Under the Consumer-Directed Care model, Medicaid 
recipients can hire family members and friends as paid workers. My 
apprehension was based on the concern that some family members or 
friends might take advantage of their loved ones, by accepting payment 
without actually providing the services for which the money was 
intended. After viewing the program firsthand for just a short period 
of time, however, my concerns were quickly allayed. I am pleased to 
tell you that I stand here today as a strong supporter of consumer 
direction, because it improves quality of life by restoring self-
reliance and dignity. The Florida model challenges the traditional 
mindset, fostered over the 38 years since the creation of Medicaid, 
that the individuals charged with overseeing and coordinating care for 
Medicaid recipients know what is best for their clients, and that 
Medicaid Waiver service recipients are incapable of managing their own 
care effectively and responsibly. Consumer-Directed Care puts into 
practice Governor Bush's commitment to increasing choices for frail 
elder and disabled Floridians, by providing them with the opportunity 
to be active participants in their health care decisions.
    Before discussing the implementation of the Florida model, the 
project's result and lessons learned, I would like to take a brief 
moment to share with you the impact Consumer-Directed Care has had in 
the life of one of our clients, Lois Duffy. In her own words, ``How 
different is my life now? Setting up days and times for [my worker's] 
help is a cooperative effort and I am glad to say it has never been a 
problem. My existence has become a real life! Now I [go to the store 
to] purchase the food I want and need, rather than [requesting] just 
what I can think of [while] sitting at home alone. She also takes me to 
my average of four doctor's appointment per month. She comes in the 
office with me and afterwards, on the ride home, we discuss what we 
each understood the doctor to say; it's amazing how much recall she has 
and how very helpful to me it is to have her input.'' Her worker, 
Carlene, has also benefited from this partnership: ``Working for Lois 
has been a reward for both of us. For myself, I needed a part-time job 
with flexible hours. Also, I needed to feel like I was needed. For 
Lois, it's given her a new lease on life. She is finally able to trust 
the person working in her home, she's able to have the hours she needs, 
and she's had the transportation to doctors that's been reliable. We 
never run out of things to talk about and have built a nice friendship 
in the process.''
    Contrast Lois' experience with that of many other Medicaid Waiver 
recipients, who tell us that they are unable to obtain the services 
they want when they want them, because of worker shortages or other 
problems with the traditional model of care. Many of these consumers 
sit at home alone, and they are at risk because they are not receiving 
the services that can help them remain independent, yet the traditional 
Medicaid system does not allow them to take advantage of support 
systems that are available right in their community.
                             implementation
    The enrollment group for the Consumer-Directed Care Project 
includes frail elders, developmentally disabled children and adults, 
and physically disabled adults who were already participating in either 
the 1915(C) Aged and Disabled Medicaid Waiver or the 1915(C) 
Developmental Disabilities Program Home and Community-Based Services 
Medicaid Waiver. In order to provide limited cash allowances to 
consumers and to allow responsible family members (such as spouses and 
parents) to be hired as paid workers, Florida was granted a 1115 
Medicaid Waiver for this project from the Centers for Medicare and 
Medicaid Services. The 1115 Medicaid Waiver offers options that surpass 
the traditional 1915(C) Waiver, but it is more difficult to obtain, 
much more complicated to administer, and requires an extensive 
evaluation component. Though we support the objective evaluation of 
public programs, we feel we have enough data and information to support 
the expansion of consumer-directed options. The evaluation requirement 
under the 1115 Waiver poses an administrative burden and diverts 
resources that could be used to serve additional consumers.
    The Florida Department of Elder Affairs, as the grantee 
organization, administers the project in collaboration with a statewide 
workgroup that includes other state health and human services agencies: 
the Agency for Health Care Administration, the Department of Children 
and Families Developmental Disabilities Program and Adult Services 
Program, and the Department of Health Brain and Spinal Cord Injury 
Program. The project was implemented in 19 of Florida's 67 counties for 
elders and physically disabled adults, and statewide for 
developmentally disabled children and adults. Consumers who were 
randomized into the treatment group benefit in the following ways:

 develop a purchasing plan and manage the funds assigned to 
        them;
 receive support services from a consultant (case manager or 
        support coordinator) and a fiscal intermediary/bookkeeper;
 decide which allowable services best meet their needs;
 hire and direct employees and independent contractors who may 
        be family members or friends, and/or agency providers; and
 assess the quality of services received.
    Allowable purchases include the following services and items: 
personal care; homemaking; consumable medical and personal care 
supplies; adaptive devices, wheelchair ramps, grab bars; home repairs 
and maintenance; errands/shopping assistance; and pest control/yard 
work.
    To help ensure budget neutrality, which is required by the 1115 
Medicaid Waiver, the consumer's budget is based on actual expenditure 
history, or it is determined through use of a discounted care plan. The 
discount rates, which were developed at the beginning of the project 
based on historical expenditures in the Medicaid program, range from 
83% for physically disabled adults to 92% for developmental disabled 
adults and children. These percentages represent the actual amount of 
Medicaid dollars that clients were able to access under the 
traditional, case managed service delivery model. This means that 
consumers have been unable to access 8-17% of their approved Medicaid 
budgets, because of problems such as worker shortages. The consumer-
directed model, therefore, offers increased protection for consumers 
who find that agency workers are not available.
    Florida implemented Consumer-Directed Care through the existing 
networks of case managers and support coordinators. Under the project, 
these individuals are ``consultants'' who assist and empower consumers, 
and monitor expenditures and the potential for fraud and abuse. This 
represents a major paradigm shift from the traditional service delivery 
model, where case managers coordinate and direct the care, based on the 
results of assessments. Under consumer direction, the purchasing/care 
plans are developed by the consumer, and are frequently revised as 
conditions change. A viable backup plan is required to assure 
continuity of services in the event a worker or agency representative 
is terminated or otherwise unavailable.
                            project results
    From April 2000 to September 2002, Florida enrolled 2,820 consumers 
in Consumer-Directed Care, including 1,004 adults; 1,002 children; and 
814 elders. Approximately one-half of these individuals were assigned 
to the treatment group, and 917 consumers--420 children, 374 adults and 
123 elders--are still managing budgets and receiving services under 
this program today.
    Though the formal project evaluation conducted by Mathematica 
Policy Research, Inc. is not completed, early results show very high 
consumer satisfaction, increased access to needed services, and an 
overall improvement in quality of life for participants. The formal 
evaluation, which will be completed in 2005, will analyze three 
components: impact, cost and implementation. Other, less formal 
evaluations support these results: fully 94.4% of 251 respondents 
surveyed by the Department of Elder Affairs in April and May 2002 
indicated that they were ``satisfied'' or ``very satisfied'' with the 
project.
    Based in large part on feedback from existing consumers and 
advocacy groups, Governor Bush and the Florida Legislature created a 
new statewide Consumer-Directed Care program during the 2002 session. 
Governor Bush signed the bill into law on May 1, 2002. The new program 
will be administered by the Agency for Health Care Administration, 
Florida's Medicaid Agency, in collaboration with the other departments 
who have participated in the Cash and Counseling Demonstration. The 
Agency for Health Care Administration has received preliminary approval 
from the Centers for Medicare and Medicaid Services on the waiver 
amendment that is needed to implement the new statewide program.
                            lessons learned
    Florida has learned a number of valuable lessons from participating 
in this project.
    1. Consumer direction can increase quality of life and consumer 
satisfaction. In addition to offering more flexibility, choice and 
independence, Consumer-Directed Care improves quality of life and 
consumer satisfaction, because services are tailored to the unique and 
individual needs of the consumer. Under this approach, consumers can 
receive more services, with an increase in quality, for the same 
budget. By hiring workers directly, they do not have to pay agency 
overhead costs.
    2. Consumer direction can work for frail elders. Though elements of 
consumer direction have been utilized in the disability community since 
the 1980s, many policy makers have questioned the applicability for a 
frail elder population. Though it was more challenging to implement 
Consumer-Directed Care among the elder population in Florida due to 
lack of available family supports, the concept became very popular once 
the initial group of consumers began to see the benefits of this 
approach. In addition, some case managers who were originally 
apprehensive about consumer direction became strong advocates once they 
began to see the positive impact on the clients they served.
    3. Concerns about the potential for fraud and abuse in consumer 
direction are unfounded. Florida's Consumer-Directed Care project, like 
the Arkansas and New Jersey Cash & Counseling projects, encountered 
virtually no instances of fraud and abuse. Though the project provides 
consultants and a fiscal intermediary to support consumers, ultimately, 
it is the consumer or their representative who defines quality and 
monitors expenditures. In fact, consumers who encountered problems with 
workers who were family members did not hesitate to terminate 
employment if the family member did not perform satisfactorily.
    4. One size does not fit all. Consumers who participate in 
Consumer-Directed care must be willing and able to manage their own 
care or have a representative who can act on their behalf. We realize 
that we cannot take a ``one size fits all'' approach to providing 
health care for Medicaid recipients. Consumers who find the management 
of finances challenging, or do not have built-in family or community 
supports, may require a more formalized approach to help them maintain 
their independence. The benefits of consumer direction--increased 
access to quality services; more control, flexibility and independence 
for consumers--lead us to believe that this model will help many of our 
most vulnerable citizens remain independent in the community for longer 
periods of time, while dramatically improving the quality of their 
lives.
    5.  States that implement consumer-directed programs should 
consider choice and quality issues. Though multiple options for 
consumer supports are preferred, there are issues involving economies 
of scale and quality that need to be considered in a consumer-directed 
program design. If there are an unlimited number of consultants, and 
each consultant has only a limited number of consumers to assist, some 
consultants may not be able to acquire the experience and develop the 
skills necessary to truly empower consumers. An overabundance of 
consultants could also lead to challenges in the areas of training and 
technical assistance. While multiple options for fiscal intermediaries 
may benefit the consumer, too many options may create a financial 
hardship for each company, ultimately harming the consumer.
                         policy recommendations
    We have stretched the Medicaid program in an attempt to wrap it 
around the needs of today's population. Yet, there are still 47,000 
Floridians who are potentially eligible for consumer-directed care and 
who do not have this option. The consumer directed care model is in 
fact a model, and one we would like to grow for our elders and 
disabled. As you consider reforms to Medicaid, this model is an 
excellent example of the potential of state innovation.
    While you are working in the direction of comprehensive Medicaid 
reform, I would like to highlight some policy recommendations for the 
Medicaid world we must operate in today. Based on experiences with 
Consumer-Directed Care, the Florida Department of Elder Affairs would 
ask you to consider the following:
    1. Increase flexibility in the delivery of Home and Community-Based 
Services. In order to implement a fully consumer-driven model of care, 
states need flexibility to give small cash allowances and to allow 
responsible family members to be paid as workers. The current mechanism 
that provides this flexibility, the 1115 Medicaid Waiver, is much more 
labor intensive to administer than the 1915(C) Waiver. Though the 
streamlined Independent Choice waivers produced by the Centers for 
Medicare and Medicaid Services have helped encourage states to adopt 
consumer-directed models, Florida would like to have the ability to 
administer consumer-directed service models without the limitations and 
burdens of a waiver. With the flexibility to develop our own program 
designs, we can make more efficient and effective use of our limited 
resources, while ensuring that the needs of Florida's most vulnerable 
citizens are met.
    2. Consumer direction helps address worker shortage issues. This 
approach helps consumers, especially those in rural areas, obtain 
increased access to services. This is a major issue for Florida and for 
all states, and the problem will only worsen with the aging of the baby 
boomers.
    3.  Consider broadening the definition of personal care under 
Medicaid State Plan Services. Arkansas and New Jersey, our partners in 
the Cash & Counseling Demonstration and Evaluation, offered a consumer-
directed approach to Medicaid State Plan personal care assistant (PCA) 
services. A broader definition of personal care would allow these 
states, as well as others, to provide increased supports for frail and 
disabled consumers. Presently, the federal definition of personal care 
refers to ``human assistance.'' We join our colleagues in these other 
states in suggesting that this language be broadened to include home 
modifications, assistive technology, and other services and appliances 
that would enable and encourage individuals with disabilities to meet 
their personal care needs.
    I want to thank you again for allowing me the opportunity to speak 
before the Committee today. I will be happy to respond to any questions 
you might have.

    Mr. Norwood. Thank you, Mr. Secretary.
    Mr. Williams, you are now recognized for your opening 
statement.

                   STATEMENT OF BOB WILLIAMS

    Mr. Williams. I have abbreviated my prepared comments 
somewhat to cut to the chase, hopefully. What I think I have to 
offer you most today, however, comes not just from my knowledge 
of the Medicaid program, its strengths and ways it must be 
improved upon, but from the obvious fact that, like others 
testifying today, I rely a lot on help from others and 
technology like I am using now to live the life I have created 
for my family and myself.
    I have always had the good fortune of being employed and 
having employer-based insurance coverage, so I have never been 
on Medicaid. But like the others here, and over 80 percent of 
the estimated 12 million Americans of every age who need this 
help, I have always gotten it from family, friends, and, for 
the last decade, mostly my wife Helen.
    I will draw on these blends of perspectives to try to 
answer two key questions: What are the practical lessons we can 
and ought to learn and apply from the Cash and Counseling 
demonstration? And, equally importantly, what are some things 
that we cannot, and should not, assume or read into the 
findings of this demo?
    Like most other successful experiments, the demo set out to 
provide an obvious answer to a common-sense question: Do people 
with disability want to have a great deal of control over the 
quiet, intimate forms of help and supports that make our lives 
possible? The answer to that question is, of course. Yes, we 
do. And it is important that, as policymakers, you understand 
the reasons why this is so.
    The things that I and others need help with, eating, 
showering, dressing, cleaning one's backside, are all essential 
and very private, personal matters; the type of things, in 
short, that you want someone you know well, can rely upon, 
value, and trust implicitly, that you want to work with you, 
and not a complete stranger, regardless of how competent or 
proficient such a person might be. That is one of the main 
reasons why people want the freedom to use a friend, someone in 
their family, or another individual of their own choosing to 
provide the assistance they need daily.
    Two other reasons have to do with what I will call 
availability and proximity. Now that I have left government, 
for example, I work mostly from home. The major reason for this 
is that Helen also is home a lot of the time. Thus, while I do 
not require a great deal of help during the day, I know, when I 
do, that she will typically be close at hand. Similarly, if 
someone needs help preparing a meal or going shopping, it might 
make sense to hire a friend or neighbor to do it, or to have a 
meal or grocery brought to their front door by a local 
restaurant or something like the Giant Store's Peapod delivery 
service.
    This is the potential strength and beauty of an 
individualized budget approach such as the one used in Cash and 
Counseling. It enables the person with the disability or the 
parents of the child with the disability to decide how to use 
limited Medicaid dollars in ways that best ensures their 
independence and basic well-being. But it is important to 
acknowledge that the approach is no panacea. It has its 
limitations and pitfalls that Congress, the administration, and 
the States, as well as the disability and aging communities, 
must actively work to avoid.
    An approach like Cash and Counseling generally seems to 
work well for people when the following is true in their lives: 
First, the individual has family and friends who already are 
helping them out a good bit or could help them find others who 
could offer the needed assistance. That is, there is already a 
network of support they can tap both to recruit and pay people 
to provide services for them.
    Second, the money allocated in the individualized budget 
must be adequate and be able to be adjusted whenever the needs 
of the person change. There should be clear nationwide 
standards for determining and readjusting such budgets. It 
would be wrong for Congress, in my view, to provide States 
complete license in this regard. I can comment on this further 
during your questioning, but one of my greatest fears about 
this approach is that, based on the continuing State budget 
crises, that absent basic Federal safeguards, that at least 
some States would take advantage of it not simply to encourage 
consumer choice while managing costs responsibly, but to cut 
costs in ways that are extremely harmful to the health and 
independence of children, adults, and older Americans with 
disabilities. You should not allow this to happen.
    I said at the start that there were some things that we 
cannot and should not assume or read into the findings of this 
demo. I would like to briefly highlight what they are, if I 
might.
    The first is the assumption that Cash and Counseling is 
somehow a silver bullet that will in itself dramatically 
increase access to Medicaid community living services in States 
that take it up. This approach can certainly be a critical 
piece for many needing access to these services and supports, 
but it is not the total solution, nor is it an approach that 
everyone can or wants to use. As we have heard, it works well 
for people who already have family and friends and can use the 
money to supplement the help they already receive, but it might 
not work so well for someone without a natural support network 
to turn to who wants to get out of a nursing home or avoid 
going in one altogether. For this reason, States that offer 
this option should do so on a purely voluntary basis and in a 
manner that does not disadvantage those who do not want to take 
it up.
    Another assumption that seems to be being vented, that this 
demo's results may justify the so-called cashing out of the 
entire Medicaid benefit, including medical care and 
prescription drug coverage. I would say a couple of things on 
this. There is nothing in the demo's basic intent, design, or 
findings that would support such a policy leap. And, even more 
importantly, expecting people to know how to navigate, 
purchase, and manage their entire health and medical care is 
not only unrealistic, it would be setting many up to take a 
serious fall or worse.
    My strong plea, therefore, is that, if this notion is put 
forward, Congress rejects it. Hence, if Congress authorizes 
other States to engage in similar activities, it should limit 
them to doing so with regard to personal care and similar 
services only, as the demonstration itself did.
    The individualized budget approach embodied in Cash and 
Counseling is certainly one important way that States can offer 
people with disabilities of every age more choice and control 
over their lives and the services they need, but it is not the 
only one. Many States are using other methods to offer people 
the same choice and control. In the scheme of things, 
therefore, with the fate of Medicaid and the lives of those who 
rely on it very much up in the air, I frankly think that there 
are more pressing matters Congress needs to concern itself 
with.
    There is much I object to about the President's larger 
Medicaid restructuring proposal which I will not go into now, 
but another budget proposal of President Bush that deserves the 
attention and wide bipartisan support in Congress is called the 
Money Follows the Person Initiative. Simply put, the initiative 
would fully reimburse States for 1 year of Medicaid home and 
community-based services for children, adults, and older 
Americans with disabilities who move from institutions into 
their own homes and communities. After the initial year, States 
will be responsible for matching payments at their usual 
Medicaid matching rate. It also would buildupon existing 
States' success stories in Texas, Wisconsin, Michigan, and 
Washington.
    Once again, I want to thank you for this opportunity to 
appear before you this morning, and even more so for your 
interest in these critical issues.
    [The prepared statement of Bob Williams follows:]
Prepared Statement of Bob Williams, Co-Director, Advancing Independence
    Good morning, Mr. Chairman and Members of the Committee. Thank you 
for asking me to testify on what we as a Nation can glean and apply 
from the Cash and Counseling demonstration. For the record, I am Bob 
Williams, the co director of Advancing Independence, a forum that 
promotes responsible changes to Medicare and Medicaid needed to enhance 
the health and independence of Americans with disabilities of all ages. 
Prior to this, I was an advisor to then HHS Secretary Donna Shalala. 
The Office on Disability, Aging and Long Term Care Policy in ASPE that 
I headed had a vital role in the design and funding of the demo, along 
with CMS, the participating States and the RWJ foundation. But, the 
hard work to launch the project was done well before I joined ASPE. So, 
the credit goes to others.
    What I think I have to offer you most today, however, comes not 
just from my knowledge of the Medicaid program, its strengths and ways 
it must be improved upon. But from the obvious fact that like others 
testifying today, I rely a lot on help from others and technology like 
I am using now to live the life I've created for my family and myself. 
I've always had the good fortune of being employed and having employer 
based insurance coverage. So, I've never been on Medicaid. But, like 
the others here, and over 80% of the estimated 12 million Americans of 
every age who need this help, I've always gotten it from family, 
friends, and for the last decade, mostly my wife, Helen.
    I will draw on these blends of perspectives to try to answer two 
key questions. What are the practical lessons we can, and ought to, 
learn and apply, from the Cash and Counseling demonstration? And, 
equally importantly: What are some things that we cannot, and should 
not, assume or read into the findings of this demo? Like most other 
successful experiments, the demo set out to provide an obvious answer 
to a common sense question. Do people with disabilities want to have a 
great deal of control over the quite intimate forms of help and 
supports that make our lives possible?
    The answer to that question is, of course, yes we do; and, it's 
important that as policy makers you understand the reasons why this is 
so. The things that I and others need help with: eating, showering, 
dressing, cleaning one's back side, are all essential and very private, 
personal matters. The type of things, in short, that you want someone 
you know well, can rely upon, value and trust implicitly that you want 
to work with you. And, not a complete stranger, regardless of how 
competent or proficient such a person might be. That is one of the main 
reasons why people want the freedom to use a friend, someone in their 
family or another individual of their own choosing to provide the 
assistance they need daily. Two other reasons have to do with what I'll 
call, availability and proximity.
    Now that I've left government, for example, I work mostly from 
home. A major reason for this is that Helen also is home a lot of the 
time. Thus, while I do not require a great deal of help during the day, 
I know when I do that she will typically be close at hand. Similarly, 
if someone needs help preparing a meal or going shopping, it might make 
sense to hire a friend or neighbor to do it. Or, to have a meal or 
grocery brought to their front door by a local restaurant or something 
like the Giant Stores' Peapod delivery service. This is the potential 
strength and beauty of an individualized budget approach such as the 
one used in Cash and Counseling. It enables the person with a 
disability or the parents of a child with a disability to decide how to 
use limited Medicaid dollars in ways that best ensures their 
independence and basic well being.
    But, it's important to acknowledge that the approach is no panacea. 
It has its limitations and pitfalls that Congress, the Administration 
and the States as well as the disability and aging communities must 
actively work to avoid. An approach like Cash and Counseling generally 
seems to work well for people when the following is true in their 
lives. First, the individual has family and friends who already are 
helping them out a good bit or could help them find others who could 
offer the needed assistance. That is, there is already a network of 
support they can tap both to recruit and pay people to provide services 
for them. Second, the money allocated in the individualized budget must 
be adequate and be able to be adjusted whenever the needs of a person 
change. There should be clear nationwide standards for determining and 
readjusting such budgets. It would be wrong for Congress, in my view, 
to provide States complete license in this regard. I can comment on 
this further during your questioning, but one of my greatest fears 
about this approach is that, based on the continuing State budget 
crises, that absent basic federal safeguards that at least some States 
would take advantage of it. Not simply to encourage consumer choice 
while managing costs responsibly, but to cut costs in ways that are 
extremely harmful to the health and independence of children, adults 
and older Americans with disabilities. You should not allow this to 
happen.
    I said at the start that there were some things that we cannot, and 
should not, assume or read into the findings of this demo. I'd like to 
briefly highlight what they are if I might. The first is the assumption 
that Cash and Counseling is somehow a silver bullet that will in itself 
dramatically increase access to Medicaid community living services in 
States that take it up. This approach can certainly be a critical piece 
for many needing access to these services and supports. But, it is not 
the total solution. Nor, is it an approach that everyone can or wants 
to use. As we have heard, it works well for people who already have 
family and friends, and can use the money to supplement the help they 
already receive. But, it might not work so well for someone without a 
natural support network to turn to who wants to get out of a nursing 
home or avoid going in one altogether. For this reason, States that 
offer this option should do so on a purely voluntary basis and in a 
manner that does not disadvantage those who do not want to take it up.
    Another assumption that seems to be being hinted at is that this 
demo's results may justify the so called, cashing out, of the entire 
Medicaid benefit, including medical care and prescription drug 
coverage. I'd say a couple of things on this. There is nothing in the 
demo's basic intent, design or findings that would support such a 
policy leap. And, even more importantly, expecting people to know how 
to navigate, purchase and manage their entire health and medical care 
is not only unrealistic, it would be setting many up to take a serious 
fall or worse. My strong plea, therefore, is that if this notion is put 
forward, Congress rejects it. Hence, if Congress authorizes other 
States to engage in similar activities it should limit them to doing so 
with regard to personal care and similar services only as the 
demonstration itself did.
    The individualized budget approach embodied in Cash and Counseling 
is certainly one important way that States can offer people with 
disabilities of every age more choice and control over their lives and 
the services they need. But, it is not the only one. Many States are 
using other methods to offer people the same choice and control. In the 
scheme of things, therefore, with the fate of Medicaid and the lives of 
those who rely on it very much up in the air, I frankly think that 
there are more pressing matters Congress needs to concern itself with. 
There is much I object to about the President's larger Medicaid 
restructuring proposal, which I will not go into now. But, another 
budget proposal of President Bush that deserves the attention and wide 
bipartisan support in Congress is called the Money Follows the Person 
initiative. Simply put, the initiative would fully reimburse States for 
one year of Medicaid home and community-based services for children, 
adults and older Americans with disabilities who move from institutions 
into their own homes and communities. After the initial year, States 
will be responsible for matching payments at their usual Medicaid 
matching rate. It also would build upon existing state success stories 
in Texas, Wisconsin, Michigan and Washington.
    Once again, I want to thank you for this opportunity to appear 
before you this morning, and even more so for your interest in these 
critical issues. I will be pleased to respond to questions or concerns 
you have during the questions and answer period.

    Mrs. Wilson [presiding]. Thank you very much, Mr. Williams.
    I would like to now shift into questions, and there is a 
couple of things that I would like to ask you to expand upon, 
if you could. Dr. Mahoney, you wanted to elaborate at the end 
of your statement. I think you were going to go into looking 
ahead and what needs to be done in order to make this permanent 
in some States, but also make it more likely that this model 
propagates across the country. And I wonder, I wanted to give 
you an opportunity to elaborate.
    Mr. Mahoney. Thank you very much. I will give a few 
examples.
    What Florida did in passing, I understand unanimously, 
legislation that built in this consumer-directed option for the 
future I think could serve as one type of a model.
    A second one, the States of New Jersey and Arkansas have 
written to CMS and asked, for instance, if the language for the 
Medicaid personal care benefit, which now is limited to hands-
on human assistance, could be broadened to include the ability 
to--under the personal care benefit, purchase assisted devices, 
home renovations, things that meet that individual's personal 
care need. And we have examples from Cash and Counseling.
    A third example that I am very pleased with is the Robert 
Wood Johnson Foundation in these last few months has authorized 
an environmental assessment where we have had teleconferences 
48 States took part in, and the follow-up is we wanted to talk 
with States that were interested in replicating this model. And 
we have had individual calls with 21 States at this stage. So 
between the foundation and Health and Human Services, we really 
are looking at the need for seed money and technical assistance 
for States to really replicate this individualized budget 
approach.
    Mrs. Wilson. Secretary White, I had two questions for you. 
One was, are any of the Indian tribes involved in this 
experiment, or have you worked with IHS at all for any 
Medicaid-eligible tribal members?
    And the second one, and I will do them back to back here 
and let you elaborate, is you said in your testimony that you 
were initially worried about the potential for fraud in 
consumer-directed care, but that those fears were not realized. 
What is it inherent in this program which makes it--which 
satisfied your fears or calmed your fears?
    Mr. White. The first question with respect to the Native 
Americans, not to my knowledge are there any of those 
individuals involved in this project as of yet. When it goes 
statewide, I am assuming that it will occur.
    In response to your second question, I was an area Agency 
on Aging director in southwest Florida for almost 10 years, and 
I was concerned about the exploitation that might occur with 
the family member who--a child or a drug-dependent child or 
whatever taking advantage of Mom or Dad. In the Department's 
efforts in terms of educating all the network, the idea is that 
you empower the case manager, so to speak, to the point of you 
educating them very well in terms of determining whether or not 
this individual is eligible to be able to do this, and because 
of the training we were able to abort any of the issues with 
respect to fraud or exploitation.
    Mrs. Wilson. Thank you.
    Going down my list here, I think, Mr. Green, you were up 
for questions for 8 minutes, if you are ready to do so.
    Mr. Green. Thank you, Madam Chairman.
    Mr. Williams, I notice your wife's name is Helen, and my 
wife's name is also Helen. And after 30 plus years of marriage, 
I know that I rely on her to get by on a daily basis as much as 
you rely on your wife. If I were to become disabled, and there 
have been times, I guess, 4 years ago that she had to take of 
me after surgery, the need for care similar to the ones that 
you are discussing here today, and I know of no one else in the 
world who I would want to care for me other than my wife or my 
family, and I would like them, if necessary, to be compensated. 
So I can appreciate how liberating and comforting this benefit 
is to many disabled individuals who use it.
    However, you point out in your testimony there are 
limitations to the types of services that family members can 
provide that expect people to know how to navigate, purchase 
and manage your entire health and medical care, would be 
setting many up to take a serious fall or even worse. Can you 
elaborate on that statement? And what kind of difficulties 
could individuals face if they are charged with managing all 
your or my health care as they are with personal care services?
    Mr. Williams. Well, I think the two are like apples and 
oranges because no one ever knows, especially with a 
disability, when an unexpected health cost and illness will 
arise, and when they do, that is often the time I do not want 
to have to think about does this fit my individualized budget.
    Mr. Green. Thank you.
    You do mention your individualized budget. In one way 
States can give individuals with disabilities more choice and 
control over their lives and the services they need, but many 
States are using other methods to offer people the same choice 
and control. Could you describe some of the ways outside of the 
individualized budgets that States can give people more control 
or choice?
    Mr. Williams. The term ``consumer direction'' means that an 
individual has a major say in the selection and direction of 
their own attendants and related services. One way to achieve 
this important end is through the use of individualized budgets 
such as in Cash and Counseling. But some States are ensuring 
the same choice and control by directing Medicaid community 
living providers to let the people with disabilities decide who 
they want to work for them. California, which was an early 
leader in this area, for example, has operated a large 
independent provider network for several decades. The way it 
works is that people with disabilities find people they want to 
use as attendants, and the State contracts directly with those 
individuals as independent Medicaid providers. This is all done 
without individualized budgets.
    My office in ASPE funded a study of this program about 5 
years ago that showed both people with disabilities and their 
independent service providers really like this approach because 
it gives all parties the choice of who they want to work with. 
The two major downsides were that wages were very low, and 
there were no health benefits, which are critical issues across 
the country regardless of how these services are being 
delivered and Congress needs to look and act on sooner rather 
than later.
    Mr. Green. Thank you.
    And is there a way that Congress can encourage these 
activities?
    Mr. Williams. I think most critically it is to make certain 
that the Federal commitment and funding for Medicaid is not 
slashed either here or at the State level. I abbreviated my 
prepared comments somewhat to cut--Friday probably works best. 
What time is good for you?
    Mr. Green. Madam Chairman, I would like to thank Mr. 
Williams.
    Mr. Williams. I think most critically it is to make certain 
that the Federal commitment and funding for Medicaid is not 
slashed either here or at the State level.
    Mrs. Wilson. Thank you, Mr. Green. And thank you, Mr. 
Williams. And I appreciate your patience with this committee, 
and I very much appreciate you being here.
    Mr. Whitfield for 8 minutes.
    Mr. Whitfield. Thank you, Ms. Chairman.
    Secretary White, Mr. Williams in his prepared remarks made 
reference to the importance of national standards for 
budgeting, and I was wondering if you might have any comment on 
what he said about that.
    Mr. White. We believe that with respect to the budgeting 
issue, the individual counselor or the consultant that we work 
with, they are charged with the responsibility of assessing 
that individual client's needs. And with respect to that, they 
establish certain protocol in terms of services that the 
individual might be entitled to, establish a monthly budget per 
se, and then they apply that to the program.
    One of the issues that we--I will acknowledge is the fact 
that we are concerned about some of the issues in terms of when 
people transfer into this program, that there may be a 
potential for it to be like Christmas, so to speak, in terms of 
all of a sudden you have all of the services available to you. 
That is where we believe we need to do a better job in terms of 
training to the consultant to make sure we only purchase the 
services that are available to enhance that individual's 
ability to remain independent.
    Mr. Whitfield. Now these consultants, would they be 
consulting with more than one person or one family?
    Mr. White. Consultants are like a case manager, and they 
would have a caseload. Yes, they would be. The beauty of the 
consultant's ability to coordinate with different families 
would be that they could take the information they learned with 
respect to one family and apply it to another. They might rely 
on some community resources and be able to market better in 
terms of that individual.
    Mr. Whitfield. Ms. Gittens, did you have any say-so in who 
the coordinator for your child would be?
    Ms. Gittens. Yes, I did. Actually I was also a support 
coordinator before my child was put on the program, and I had a 
coworker who I told, if Jewel ever gets on Med-waiver, I want 
you to be her support coordinator. So when Jewel was eligible, 
I was able to ask her to request that Jewel be put on. So I did 
have some say-so to it.
    Mr. Whitfield. Did the State have to approve her being put 
in that position?
    Ms. Gittens. Jewel came in as a Med-waiver client already, 
so she was involved in that particular agency. And then the 
same person, that is the support coordinator, automatically 
becomes the consultant once they have received the correct 
training. At the beginning of the program, not all support 
coordinators were trained to be consultants. Sometimes the 
family did have to interview and select another one. But now I 
would believe almost all of the support coordinators are 
certified to become consultants.
    Mr. Whitfield. How did they determine the actual monthly 
budget for Jewel?
    Ms. Gittens. I as a mother pretty much itemized everything 
that Jewel needed. And her being on Med-waiver, I had a good 
idea of the services from her past cost plan. I itemized 
everything, and I sat down with the consultant, and she helped 
me to figure out the amounts that Medicaid pays for those 
services. And then we completed a purchasing plan and submitted 
it for approval.
    Mr. Whitfield. And then do you actually receive a check 
or----
    Ms. Gittens. For direct care? What happens is I submit the 
time sheets to my representative. She mails it to what we call, 
PASS, Personal Attendant Accounting Services, in Virginia and 
when they receive the time sheets, they actually serve as the 
bookkeepers for the project. So they compute the taxes, and 
they cut a check made out to the direct care worker, and then 
those checks are mailed to the representative's home, and the 
representative gives it to the worker.
    Mr. Whitfield. Have you been satisfied with the way it has 
worked?
    Ms. Gittens. Yes. First it was sort of bumpy, and sometimes 
the checks didn't come on time. We were supposed to get a 
monthly budget report, and at one point we were not getting 
that on a regular basis. Now everything is going very smoothly, 
and everyone seems to be pleased with the way that it works 
because it gives a lot more accountability.
    Mr. Whitfield. Now, if Jewel needs prescription drugs or 
medicine, that cannot be purchased through this program; is 
that correct?
    Ms. Gittens. No, it cannot.
    Mr. Whitfield. But if you and the counselor decide that 
Jewel needs some particular equipment or service, then do you 
actually negotiate that service, or does the coordinator 
negotiate that service, or does a coordinator negotiate it?
    Ms. Gittens. I initiate the process, and I would call the 
coordinator or the consultant and tell her. For instance, I 
will use an example. On Jewel's regular purchasing plan, we 
never had respite because she will not eat for everyone, and I 
never felt comfortable leaving her with someone for that amount 
of time. Within the last couple of months, there has been a 
lady working in her classroom who is excellent with her. She 
does all her feeding as far as helping her to eat. So I called 
the consultant and I said, I think I found someone that would 
be a good respite worker. And my husband and I have not taken a 
vacation pretty much for the last 13 years. My parents were the 
ones that would keep Jewel, but as she got older, we just 
decided we are not going to do it. I called the consultant and 
I told her who I wanted the respite worker to be. I filled out 
a change form. I added the service. I mailed it to the 
consultant, and she forwarded it to the agency, I believe, in 
Tallahassee. And then when we got approval from them, she let 
me know that the funds were added to Jewel's budget.
    Mr. Whitfield. Now if this program was stopped, and you had 
to go back the way it was before, would that upset you, or how 
would you feel about that?
    Ms. Gittens. I would be very disappointed.
    Mr. Whitfield. Would you?
    Ms. Gittens. Yes.
    Mr. Whitfield. Dr. Mahoney, I notice in your testimony or 
someone's testimony they mention in New Jersey a personal 
preference program. Is this the same thing as this cash?
    Mr. Mahoney. The Cash and Counseling program goes by 
different names in each State.
    Mr. Whitfield. Ms. Gittens, what would you say is the--if 
you were going to talk to decisionmakers on one of the real 
problems with the current program that you are involved in, 
what would you say is the biggest practical problem that you 
face?
    Ms. Gittens. I am concerned about the families that come 
on. And being a former support coordinator, I know like in 
anything else, you have good ones, and you have not so good 
ones, and you have excellent ones. Jewel happens to have an 
excellent one. But I am concerned that the family doesn't get 
thrown out into the lion's den without any type of support. The 
consultant is supposed to provide training until the family can 
do this pretty much with their eyes closed, and then they are 
supposed to back off. The consultant's rate of pay is the same 
as the support coordinator's. And I would love to know that 
every consultant is giving it all that they have and letting 
the family know that even though I am not controlling this 
anymore, I am there for you, and I am willing to give you all 
the help you need.
    Mr. Whitfield. Thank you.
    Mrs. Wilson. Gentleman from California Mr. Waxman.
    Mr. Waxman. Thank you very much. I want to thank all the 
witnesses. This has been a very impressive hearing on an 
experiment that seems to be working very well for many people. 
It may not work for everyone, but it can work, and it ought to 
be looked at as a model that could be replicated for the 
purposes which it can serve.
    But what I worry about, because we are facing a lot of 
attempts to cut the Medicaid program, the block grant, to give 
people vouchers, all sorts of ideas like that, but no one take 
a program like this one, Cash and Counseling, and then decide, 
well, that can be a model that can be easily expanded to cover 
medical and health care. That smacks of being a voucher. Maybe 
we can get for the record, Dr. Mahoney, what do you think about 
this? Is this a model for medical health care generally?
    Mr. Mahoney. You know, clearly Cash and Counseling, you 
could say three things about its success. One, it really did 
deal with, you know, basically your nonmedical services, the 
types of personal assistant services families provide for each 
other that wealthier people would buy for themselves. Second, 
it deals--because these people--individuals have chronic needs, 
it deals with a predictable, you know, type of a need. And the 
third one, you know, you have heard from everyone here, this 
isn't for everyone. It is very useful; that it is a choice. It 
has been a wonderful choice for a significant minority of 
people. People can return to the traditional system.
    Mr. Waxman. The fact that that system is there is very 
important, isn't it? By that system, I mean that people can 
then look to the fact that Medicaid will stand behind them for 
other needed medical services.
    Mr. Mahoney. I think that is right. We have also started to 
look in--with certain managed care organizations as far as 
their, you know, interest in the future and consumer direction 
and meeting the needs of people with disabilities as well. And 
some of them--for instance, as you were saying, in New York 
City this independent care system, very interested in that 
approach.
    Mr. Waxman. How does the Cash and Counseling model figure 
out how much cash someone needs, and could the same method be 
used for medical health care services generally?
    Mr. Mahoney. I find the first part easier to answer than 
the second. In all three of these States, people enter the 
system as they do now. They get the same care plan. Then the 
second step is a computation: What is the value of that care 
plan, what is the dollar value of that care plan. Then the 
consumer gets to choose. Hopefully they have information and 
choose what is best for them. But it is the same dollar value 
that that individual would have gotten.
    Mr. Waxman. That is quantifiable.
    Mr. Mahoney. Right.
    Mr. Waxman. And I am trying to get a response here if 
anybody tried to give any estimate for other services, they are 
hard to estimate, and they are hard to price. Mr. Williams 
certainly addressed this in his testimony, and I would like to 
see if he wants to add something to this very point.
    Mr. Williams. I think the only analog that applies here is 
that a medical savings account--and there is a fairly fair bit 
of research on why those don't work particularly well for the 
kinds of humanity, people with disabilities and chronic health 
conditions, that we are discussing here.
    Mr. Waxman. Thank you very much, Madam Chair. May I ask one 
question of Dr. Mahoney?
    Some people suggested replacing the package of Medicaid 
benefits with a package that is like CHP or traditional private 
health insurance. How would a change like that affect low-
income people with disabilities?
    Mr. Mahoney. I am not completely sure.
    Mr. Waxman. Give it some thought, and maybe if you have a 
response, you can put it into the record. And I would like the 
others to respond to the record on that question as well 
because this is an issue that has been bubbling around. And 
some people suggested moving to CHP or a private health 
insurance kind of package with people with disabilities. And I 
would like to get a response of whether or not that is a good 
idea for the record.
    Mrs. Wilson. The chairman of the committee, or the 
subcommittee, Mr. Bilirakis.
    Mr. Bilirakis. Thank you very much, madam chairman. That 
sounds pretty good to me, madam chairman.
    I see that there are 2 out of 4 Members from Florida, and I 
wasn't here to greet you and welcome you, and I apologize for 
that, but as you can tell, I am really under the weather, and I 
welcome you both here, Secretary White and Ms. Gittens. And Ms. 
Gittens comes from my part of Florida.
    You know, I guess this program is a perfect example, I 
think, of the result of open-mindedness, creativity, having 
something that is pretty good, that is working well, that is 
doing the job it is intended to do, but at the same time always 
being open-minded to new ideas to maybe improve it. And if this 
were not available, Ms. Gittens would have the ordinary 
Medicaid, if you will, and that sort of thing, but certainly 
not the help she is now getting. So I think all of us should 
not be close-minded here and be open to new ideas.
    I guess I would ask maybe some more of a follow up to Mr. 
Green's questions than anything else. I hate myself the way my 
voice sounds. Secretary white, did you have any trouble getting 
the waiver?
    Mr. White. The waiver process is long and enduring.
    Mr. Bilirakis. It always has been, even with the 
President's brother being Governor of the State.
    But, Dr. Mahoney, any response to that in terms of the 
waiver process?
    Mr. Mahoney. In many ways I agree. Certainly the Centers 
for Medicaid and Medicare Services have within this last year 
issued these model waivers for both 1915 and the 1115 research, 
calling them Independence Plus, and they are hoping for a more 
expedited process, but I hope it really will be.
    Mr. Bilirakis. Well, that has been a bugaboo as far back as 
I can remember, the problems of States getting waivers. Well, 
the question again asked by Mr. Green was what--I think Mr. 
Whitfield also got into it--what can we do, what can Congress 
do--what should Congress do to facilitate the waivers? Three 
States have received it--an additional I don't know what, an 
additional 20 States are taking first steps toward it. I don't 
know whether they have applied for waivers. Do you all know 
what kind of problems they may be having? Are there 
suggestions--you have an opportunity here not to only to tell 
us about the program, but tell us what we can do legislatively 
or what we should do legislatively coming from grass-roots 
people like yourselves in order to help this program better 
succeed, if you will, to expedite the process, and to tell us 
maybe, going to Mr. Waxman's questions, whether something like 
this should be looked at in terms of expansion aside from just 
the disabled. Whoever wants to--Mr. White first, I guess.
    Mr. White. Yes. Included in my testimony is the Governor's 
commitment in terms of--we understand that there is a rising 
population of folks in the State that need this particular 
service; 47,000 people in the State of Florida are not able to 
participate in it because it is not available. The second thing 
of it is that we know that Medicaid costs are increasing 
rapidly, I believe it is 6 percent increase in enrollment each 
year, with a 13 percent increase in the overall costs.
    It seems we have an opportunity here today to be able to 
not completely make the costs go away, but maybe to control 
them more acceptably in terms of forming some programs that 
allow innovations that would have otherwise forced people 
prematurely into a nursing home, $42,000, versus a program that 
can do it for much less, and the client is much happier because 
they are with their familiar members. We are restoring their 
dignity. Seems to me that that is pretty commonsensical.
    Mr. Bilirakis. You say there are 46-, 47,000 on a waiting 
list and not able to become a part of this program, right?
    Mr. White. That is correct.
    Mr. Bilirakis. Why is that?
    Mr. White. In our model of consumer-directed care, we have 
a pilot in the State of Florida, and it is not available in all 
parts of the State at this point. However, the Florida 
Legislature last year did pass legislation that would allow us 
to go statewide. We have in the past year just received from 
CMS a preliminary approval of this to go statewide, and we are 
anxious to get that going.
    Mr. Bilirakis. I thank you.
    Dr. Mahoney, you are chomping at the bit.
    Mr. Mahoney. If I could expand, the requests that New 
Jersey and Arkansas have made to CMS of clarifying the 
definition of Medicaid's optional personal care benefit so it 
didn't have to be limited just to human assistance is one way 
without waivers, which is the beauty that New Jersey is seeing 
that an option like this could be expanded. So I would speak 
highly of that. And, you know, it goes to the point made 
earlier. With these individualized budgets, it isn't just a 
matter of people being able to know who they can hire. It is 
the freedom to tailor assistive devices, home renovations, a 
chair that they can actually get up from so that they don't 
need someone to help them. That type of thing makes a 
difference.
    The other one is as the Robert Wood Johnson Foundation, at 
their July board meeting, looks at whether to provide 
additional seed money and technical assistance to States to 
expand, I know it will make a difference that there be a 
partnership with Health and Human Services in the funding and 
operating and coordinating of that effort.
    Mr. Bilirakis. Madam Chairman, just to take advantage. The 
Chair will ask you to respond to written questions that will be 
furnished to you. I would also add to that request that you 
furnish to us your ideas on what can be done to improve this 
type of a program and what we might be able to do legislatively 
and that sort of thing. Thank you for your indulgence.
    Mrs. Wilson. The gentleman from Michigan Mr. Stupak for 8 
minutes.
    Mr. Stupak. Mr. Williams, I would like to ask you a 
question. Mr. Waxman was asking some questions, and I would 
like to follow up on it a little bit further.
    You have suggested that Cash and Counseling and the money 
follows the person's initiative, if properly implemented, can 
enable many people with disabilities to live in their own homes 
and communities, but all this is happening in a much larger, 
more disturbing context where we are seeing deep budget cuts at 
the State and also at the Federal level. As you know, the 
administration and some Governors have suggested or proposed 
that Medicaid be turned into a capped program. In response, a 
number of members of this committee have cosponsored the 
Strengthening our States Act, or H.R. 2000, which makes 
personal care and attendant services a new State optional 
service under Medicaid and would provide enhanced Federal 
funding for States that provide this service. The bill also 
provides enhanced Federal funding for all home and community-
based care waivers.
    I know also that many individuals with disabilities are 
also interested in the MCASA bill introduced by Congressman 
Danny Davis, which a number of us Democrats on this committee 
have also cosponsored.
    I would like to hear what are your greatest fears with the 
current financial crisis at both the Federal and State level on 
some of these proposals. What do you believe the Federal 
Government's role should be in this regard?
    Mr. Williams. Right now as we speak, about 300 people with 
disabilities from independent living centers across the country 
are marching and wheeling up Capitol Hill to protest the 
Medicaid cuts and call for the passage of MCASA. Now, that is 
not a large group by Washington standards, and given the times, 
it is easy to write it off as tilting at windmills. But it is 
important to understand why so many of us believe that MCASA is 
the only just and equitable solution to the problem and that 
you and others in Congress recognize the threats those with 
disabilities on Medicaid face everyday.
    Though the 19 States made use of Medicaid waivers to expand 
home and community-based services, even by 2000, when most 
States have budget surpluses rather than deficits, only three 
States spent 50 percent or more of their Medicaid long-term 
care funds on community living services. In contrast, 29 States 
spent less than a third of such funds in this manner. This 
results in huge inequalities across and even within States as 
to what people with different disabilities but a common need 
for a community living service received.
    What does this mean? Take two people with the same degree 
of need for daily help with things like eating, dressing and 
using the bathroom. Odds are that if one of the two is lucky 
enough to get even a limited amount of the help they need to 
live in the community, the other will have to go without it or 
enter a nursing home. Even in the 1990's, when many States were 
actually expanding community living services, many remained 
institutionalized. Many others lived in the community, but 
suffered the indignity and real harm that comes from having 
many of their needs go unmet. These problems are growing worse 
as States cut community services in an effort to deal with 
their massive deficits. The Bush block grant combined with the 
tax relief plan would further exacerbate what some have come to 
see what it is, a national disgrace which must be remedied on a 
consistent nationwide basis, not idiosyncratically by 51 
different States.
    A lot of people are calling for even greater flexibility 
for States as if that will solve these problems. Experience 
shows the opposite to be true. Flexibility leads to enormous 
inequities in respect to what Americans with disabilities 
receive in terms of community living services depending on what 
State they happen to live in.
    I agree on one point with the Nation's Governors. The 
Federal Government should be playing more of the predominant 
role in financing Medicaid, especially community living 
services. But unlike the Governors, I believe and think that 
most Americans would likewise expect that in return for this, 
that the Federal Government should make certain that, as we 
guarantee, all those with disabilities who can live in their 
community with affordable supports have the equal opportunity 
to do so regardless of their age, disability or type of 
assistance they need. This is what MCASA is meant to achieve. 
And I believe H.R. 2000 contains many important powers and 
incentives particularly in providing Federal matching rate for 
community living services that would move our country in this 
crucial direction.
    Mr. Stupak. Thank you.
    Anyone else care to comment on that, the capping or the 
block granting of the Medicaid?
    Ms. Gittens, could I ask you a question? In your testimony 
earlier, you had indicated that one of your concerns was 
families coming on or who may be consultants under this 
program. It seems having well-trained counselors are critical 
to the success of these programs and success for the families. 
Could you comment on that? What are the pitfalls for consumers 
of having counselors who are not motivated or having committed 
to working hard for their clients? You sort of alluded to it, 
but is there something more you could explain?
    Ms. Gittens. I think that if the consumers are just coming 
on, they are experts on what they need. But as far as how to 
get it done, I think there is a lot that has to be learned in 
the area of paperwork and format. And so I think that is where 
the consultant comes in, to help them understand how to get 
what they need. And sometimes I am concerned that they don't 
know what to ask and don't know the right questions to ask. The 
control is given to them, but I think that the support needs to 
be there.
    One of the things I mentioned is that a support group was 
something that was--during the enrollment process was promised 
to everyone who enrolled. So I would love to see that come in 
my area where we don't have a support group. If we had a 
support group of consumers and families, then I believe they 
could train each other and then still have that control, but 
right now we don't have that.
    Mr. Stupak. Dr. Mahoney, did you want to say something?
    Mr. Mahoney. In each of our States they use very different 
approaches. Some try to retrain existing care managers. Some 
try to use new groups. I think we have learned the importance 
of training, and we are actually negotiating with CMS--I don't 
know how to say--a best practice approach for training 
counselors. And I love her idea of the peer support network.
    Mrs. Wilson. Mr. Stearns for 5 minutes.
    Mr. Stearns. As you know, I am not a member of this 
committee, but a member of the full committee, and I wanted to 
ask a question since I had a great deal of interest in 
consumer-driven health care. And, of course, I want to welcome 
my fellow Floridians, Secretary White with Tom Reimers and 
Patricia Gittens, and thank all of you for coming.
    Let me just read the question I have for you, Secretary 
White. You say that States that implement consumer-directed 
programs should consider choice and quality issues, and I 
thought I would work off that. The multiple options for 
consumer supports are preferred. There are issues involving 
economies of scale and quality that need to be considered in a 
consumer-directed program design. If there are an unlimited 
number of consultants, and each consultant has only a limited 
number of consumers to assist, some consultants may not be able 
to acquire the experience and develop the skills necessary to 
truly empower consumers. So basically, an overabundance of 
consultants could also lead to challenges in--basically in the 
areas of training and technical assistance. While multiple 
options for fiscal intermediaries may benefit the consumers, 
too many options may create a financial hardship for each 
company, and I think ultimately harming the consumers.
    So the question is, what is the balance, the balance in the 
latitude in hiring inherent in the CDC with the basic need for 
a level of training and technical assistance?
    Mr. White. In response to that, I believe that achieving 
that balance is going to be one of those things where we have 
to experiment a little bit. I think one of the concerns we had 
in being a fiscal intermediary, if you had too many lives, so 
to speak, in terms of the program, and you had too many 
intermediaries who had a very small portion of those lives, it 
is an economy of scale, so it is not effective to be a fiscal 
intermediary, and, therefore, you may not be doing your job as 
well, or you may be slacking on the number of staff persons in 
order to handle these bills. Ms. Gittens talked about the fact 
that she has numerous bills that she turns in on a monthly 
basis to that fiscal intermediary, and they in turn generate 
the check that goes to those individuals.
    The other concern is that we--going back to Ms. Gittens' 
testimony in terms of training those consultants to be the best 
that they can be, that we really train that core of folks so 
they can go out there and counsel effectively in terms of 
helping family members select the choices that are better for 
them.
    Mr. Stearns. Anyone else wish to speak?
    Mr. Mahoney. Just briefly. We have just about finished 
compiling about a 40-page paper of implementation lessons from 
the three States, and we are hoping that will be helpful to 
other States.
    The other thing is within the next month, a guide for--of 
best practices for quality management in a consumer-directed 
system is one of the things, you know, that we have come up 
with. It is important to us--you know, this isn't just limited 
to people who have family and friends.
    Mr. Stearns. My time is going to expire--Mr. Williams, I 
will come back to you. And let me put this on the plate of 
Secretary White--Dr. Mahoney. Is it possible what we are 
talking about here for Medicaid could be an application for 
Medicare, just to narrow the inquiry, maybe not as an entire 
umbrella for health care, but something that we could do for 
chronic, predictable conditions like asthma in children or 
diabetes? It may seem a condition like this, to have a high 
degree of self-care and self-management would be good and so 
that we could have a consumer-directed in that area.
    Mr. Mahoney. I have been part of a day-long panel with 
people in Medicare of how this might be applied maybe in areas 
like medical equipment, DME, et cetera. For me, the three 
principles we have been working with--you know, the issue of 
nonacute care, nonpredictable and choice are sort of the 
principles that govern our thinking at this point.
    Mr. Stearns. That would be chronic, predictable conditions 
in which you think it could apply.
    Mr. Mahoney. Right. And not with acute care types.
    Mr. Stearns. Mr. Williams.
    Mr. Williams. May I interject? One concern I have about 
Florida's consultant approach, which is that they are State 
employees, and whether or not conflicts of interest already 
exist--and I am not saying there are. The potential conflicts 
are there.
    Mr. Stearns. Anyone else like to speak? I think my time has 
expired.
    Mr. White. The consultants that we are speaking of are case 
managers that are in the field, they are not State employees, 
just to clarify that issue.
    Mrs. Wilson. Thank you. My intention here, because there is 
a vote on the floor in about 12-1/2 minutes, is I think the 
only person who has not had a chance to ask questions is Mr. 
Brown, and unless there are other questions or second round of 
questions, I hope to adjourn the hearing before we go to these 
votes, if that is acceptable to people.
    Mr. Brown.
    Mr. Brown. I have a question for Ms. Gittens and one for 
Mr. Williams.
    Ms. Gittens, it is pretty clear you are knowledgeable and 
understand how to negotiate the pitfalls and the obstacle 
course of this program. Could you discuss the--but many don't 
obviously have the skills and knowledge and ability you do to 
be able to figure all this out. Could you discuss the 
importance of having well-trained and committed counselors to 
help families navigate the program and get the benefits they 
need?
    Ms. Gittens. I think it would be very important for them to 
know who they can talk to and knowing their full range of 
opportunities. And the reason I say that is because sometimes, 
in my personal experience, a consultant may, out of--maybe out 
of ignorance or negligence, or maybe just being very busy, they 
may not give them the entire scope of the opportunities. And 
unless--like me, being on the inside, I was able to know some 
things.
    I think the best way to do this would be through a support 
group, you know, having someone who volunteers, or to lead a 
group that whereas they have more experience and they are able 
to help the others, maybe they can be trained if they have no 
prior knowledge, maybe they can be trained by someone, and then 
they handle their group.
    Mr. Brown. Mr. Williams, under the Cash and Counseling 
demonstration, individuals, as you know, are given personal 
budgets to manage for their personal care services, as you 
outlined in your testimony and others have addressed. A couple 
of questions. Do you believe that the methods for calculating 
the individual budgets have been fair? What about individual 
budgets under the Independence Plus demonstration? Are there 
appropriate safeguards there to ensure that those budgets are 
adequate and that those budgets are fair? Would you answer that 
question, please?
    Mr. Williams. I was lucky in asking when the waivers were 
approved, and what took the most time was grappling with this 
question of how to set an individualized budget. I think we got 
the elements right as far as we could back then. I would, 
however, like to look over the evaluations results more and 
submit a written response on whether what we thought was fair 
turned out to be adequate and something people with 
disabilities as well as States could understand and use 
effectively.
    Mrs. Wilson. We would welcome explanation and expansion 
after you look at the results of the study.
    I wanted to thank you all for being here today. Thank you 
for your research work. It has been very helpful to have those 
independent evaluations.
    Thank you, Mr. Secretary, for the States' perspective, and 
thank you particularly to Ms. Gittens for being here and 
traveling here. I am glad you were to find family care or 
respite care to be here today. And, Mr. Williams, thank you for 
giving your unique perspective to this committee.
    We are going to hold the record open for any members who 
would ask written questions over the coming days, and very much 
appreciate it.
    This hearing is adjourned.
    [Whereupon, at 12 p.m., the was adjourned.]
    [Additional material submitted for the record follows:]
  Responses for the Record from Mr. Bob Williams to Questions of Hon. 
                            Edward J. Markey
    Question 1. Thank you for your testimony at the Energy and Commerce 
Committee's Health Subcommittee. You provided the Subcommittee with 
important insights into the strengths and key areas for improvement 
within the Cash and Counseling demonstration project.
    Given your expertise and substantial first-hand experience in 
Medicare and Medicaid policy, I'm interested to hear your views on 
another important program that has received considerable attention both 
in the Congress and the Administration: Medicare home health services 
for homebound beneficiaries.
    As you know, patients with disabilities who are able to leave the 
home only with extreme difficulty and assistance from others may be 
deemed homebound by the Medicare program and therefore eligible for 
health services provided in their homes paid for by Medicare. To retain 
these services, the patient is required to remain in his or her home 
except for short, infrequent trips outside or to attend a doctor's 
appointment, religious service or adult day care. The purpose of these 
restrictions on departures from the home is to ensure that patients 
don't ``game'' the home health program--meaning that patients who are, 
in fact, physically well enough to leave the home don't take advantage 
of a program meant to help those who are legitimately homebound.
    Unfortunately, these restrictions have produced an unintended 
consequence--they imprison severely and chronically disabled patients, 
such as those with Lou Gehrig's Disease and late-stage Alzheimer's, in 
their homes. That's because patients who are legitimately homebound and 
unable to ever regain the ability to leave their home without 
substantial difficulty and technological assistance are bound by these 
same restrictions on their movement.
    This means that patients such as David Jayne, a courageous man from 
Georgia who continues to battle Lou Gehrig's Disease, cannot leave his 
house to attend his son's hockey game without fear of having his home 
health benefits terminated for violating the homebound rules. In fact, 
when David attended a University of Georgia football game a few years 
ago, his home health agency terminated his benefits when it found out 
about the trip. According to the home health rules, David's trip to the 
game indicated he must not really be ``homebound,'' even though ALS has 
deprived him of the ability to move his arms or legs or breathe on his 
own.
    As you know, last summer the Bush Administration issued additional 
instructions in the Medicare home health agency manual intended to 
clarify homebound criteria and prevent profoundly and chronically 
disabled patients like David Jayne from being caught up in restrictions 
on their movement. Specifically, the Administration announced that: 
``occasional trips to the barber, walk around the block, attendance at 
a funeral . . . or other infrequent or unique event'' would not 
automatically trigger forfeiture of home health benefits. The Bush 
Administration also announced that a patient's overall physical 
condition should be considered when determining homebound status.
    A) In your view, have these additional instructions resolved the 
problem in the Medicare home health program, which has had the effect 
of imprisoning severely and irreversibly disabled beneficiaries in 
their homes?
    Response: Last July twenty-sixth at event commemorating the 12th 
anniversary of the ADA President Bush announced that his Administration 
issued guidance that day to ``clarifying Medicare policy, so people who 
are considered homebound can occasionally take part in their 
communities, without fear of losing their benefits.'' The President 
stressed that the intent behind it is to ensure that ``when Americans 
with disabilities participate in their communities, they should not be 
penalized.'' Unfortunately, the program instruction issued that day to 
home health agencies and Medicare carriers is even more restrictive 
than the already overly restrictive homebound definition in the 
statute.
    In order to receive Medicare home health services, a beneficiary 
must have a post acute or chronic skilled care need and must be 
``homebound''. To be considered ``homebound'': 1. The individual must 
have ``a normal inability to leave home''; 2. ``Leaving home requires a 
considerable and taxing effort by the individual,'' e.g., by relying on 
a wheelchair or cane or the assistance of another person; and, 3. Trips 
outside the home must be of an ``infrequent or of relatively short 
duration''. The exception to this is that the law permits an individual 
to be absent from their home to receive health care or to attend adult 
day care or religious services at anytime The law likewise states that: 
``Any other absence of an individual from the home shall not so 
disqualify an individual if the absence is of infrequent or of 
relatively short duration.'' [42 U.S.C. '1395n(a)(2)(F)]. In recent 
years, however, individuals with severe and permanent disabilities like 
ALS, muscular dystrophy, severe brain injury and quadriplegia are 
increasingly being thrown off the benefit for leaving home regardless 
of how short or infrequently they do so.
    In attempting to address this problem, CMS' new guidance cites 
examples of when ``chronically disabled individuals who otherwise 
qualify as homebound should not lose home health services because they 
leave their homes infrequently for short periods of time for special 
occasions, such as family reunions, graduations or funerals.'' CMS 
points out that its list of excused absences is meant to be 
illustrative rather than all-inclusive. Listing examples like these, 
though, creates more problems than it solves. The Medicare program 
should not be in the business of creating what will always be a finite 
list of ``permissible reasons'' any beneficiary can choose to leave 
their home that ultimately likely will be used to unjustly deny them 
their services and/or their personal freedom.
    B) If the Administration's instructions have not resolved the 
problem, why not?
    Response: Even under current law, a beneficiary theoretically 
should be able to leave home to work, attend college, shop, go to the 
theater, and dine at a restaurant and a myriad of other reasons if such 
``absences'' are of ``infrequent or relatively short duration''. But, 
there is the rub. No one knows what the phrase ``absences of infrequent 
or relatively short duration'' means and any attempt to define it would 
be as arbitrary and capricious as developing a list of government 
approved reasons why law abiding Americans should be ``allowed'' to 
leave home and still retain the skilled home health services they need 
to literally stay alive. The program instruction issued last July puts 
CMS, Medicare carriers and home health agencies over the simple 
liberties of living in the everyday lives of people with significant 
disabilities and chronic health conditions like David Jayne than any of 
these entities have any real reason to exercise--all without adding 
anything to the integrity of the Medicare program.
    Question 2. As you may know, I have introduced H.R. 1874, a bi-
partisan bill co-sponsored by Congressman Chris Smith and members of 
the full committee from both sides of the aisle. The purpose of this 
legislation is to create a three-year pilot project that would lift the 
restrictions on departures from the home only for those home health 
beneficiaries who are the most severely and permanently disabled--such 
as those with ALS and similar profound and debilitating conditions.
    A) Given your expertise in demonstration projects, do you believe 
that such a demonstration project is an effective way to test whether 
providing this exemption for a tightly defined population would 
increase costs or have any adverse effects on the quality of care?
    Response: I believe that it will prove to be an effective way to 
test whether implementing the stringent requirements set out in H.R. 
1874--for certifying that certain individuals will always need skilled 
home health services and lifting the duration requirements of the 
homebound requirement for those persons--would increase costs and/or 
have adverse impacts on quality of care. The proposed demonstration 
would have an enrollment cap, which theoretically could deter some from 
applying to participate in it in the first place. This would be a 
problem if prospective participants had little to gain from signing up 
and going through the process of being screened to determine whether 
they meet the criteria. But, that's clearly not the case here. The 
stark choice here for beneficiaries with the most significant 
disabilities and health conditions is whether to continue to be 
imprisoned within the 4 walls of their homes forever or to apply to 
participate in the project and enjoy the common freedoms of movement 
that all other Americans rightly take for granted.
    For this reason, I am convinced that--if it is designed and 
implemented correctly--far more will apply to take part in this 
demonstration than the enrollment cap will permit. This is lead to 
tragic consequences for some individuals. But, in terms of the 
demonstration itself, I believe this will produce three fairly sizable 
groups of beneficiaries whose needs and characteristics can be assessed 
as part of the evaluation:

 Those who are found to meet the criteria and participate in 
        the demonstration
 Those rejected from the demonstration because they fail to 
        meet the criteria
 Those who apply to participate but are turned away because of 
        the enrollment cap--regardless of need they met the criteria or 
        not
    It will be crucial in my judgement for Congress and the agency to 
examine the patterns that emerge both within and among these three 
groups in order to be able to determine:

 Whether the criteria can be administered the majority of the 
        time in an fair, accurate and predictable manner
 Whether relaxing the current homebound restriction in this 
        manner would increase cost or lower the quality of care
 Whether the number of types of Medicare home health users who 
        apply and are found to meet the criteria will put increased 
        administrative burdens on the program
    A demonstration like the one envisioned in H.R. 1874 would yield 
informed responses to these policy questions and lead to better 
Medicare policy.
    B) As a former deputy assistant secretary at HHS, do you believe, 
in your professional opinion, that the Department should support 
permanently lifting these restrictions for permanently and severely 
disabled beneficiaries?
    Response: Yes, I do.
    Question 3. It's my understanding that the Medicaid home health 
program for homebound beneficiaries does not limit departures from the 
home, although the Medicare program does.
    A) Do you think that it makes good public policy sense for the 
Medicare program to restrict departures, but the Medicaid program to 
permit them?
    Response: The vast majority of Medicare beneficiaries who use 
skilled home health services do so only for a short period of time when 
recovering from an acute illness or injury, the nature of which will 
not permit them to leave home until they recover. In these instances, 
the current Medicare homebound restriction can be applied in a 
consistent, fair and objective manner--i.e., when someone's illness or 
injury resolves itself to at least the point where skilled care is no 
longer required and they can leave home independently they are no 
longer homebound. In these situations I believe the current rule 
continues to serve a valid policy purpose. Where it becomes punitive 
and absurd is when its duration requirements (i.e., that an individual 
can only leave the home for periods of ``an infrequent or of relatively 
short duration'') is when it is applied to those whose significant 
disabilities and/or chronic health conditions are permanent and severe 
enough to task that they receive skilled home health services for the 
rest of their lives. In these instances, the homebound rule can only be 
seen as an arbitrary to put someone who has broken no laws under house 
arrest for the rest of their lives.
    In 2000, CMS told States they could no longer impose a homebound 
requirement on people with significant disabilities and chronic 
conditions needing Medicaid home health services because: 1. Unlike in 
Medicare, there is no statutory provision in the Medicaid law that 
expressly requires or permits States to do so; and 2. More importantly, 
doing so infringes on the civil rights and everyday liberties to live 
their lives in the community like all others. Efforts to do the same in 
Medicare are vital.
    Question 4. As you know, the Bush Administration's New Freedom 
Initiative is intended to enable persons with disabilities ``the 
necessary supports to fully participate in community life.''
    A) In your view, does the homebound restriction--even with the 
Administration's modification last summer--appear to contradict the 
principles it established in the New Freedom Initiative?
    Response: Yes.
    B) Do you believe that elimination of the restriction--only for 
those beneficiaries who have severe and life-lasting conditions such as 
ALS--would be consistent with the intent of the New Freedom Initiative?
    Thank you for your testimony and for providing responses to these 
questions.
    Response: Yes.
                                 ______
                                 
  Responses for the Record from Mr. Bob Williams to Questions of Hon. 
                            John D. Dingell
    Question 1a. Under the Cash and Counseling demonstration, 
individuals were given personal budgets to manage for their personal 
care services. Do you believe that the methods for calculating the 
individual budgets have been fair?
    Response: To respond to this question I have reviewed the final 
evaluations prepared by Mathematica on the implementation of the Cash 
and Counseling projects in Arkansas and New Jersey, which contained 
information on how both States determined the individual budget of each 
person who received cash in lieu of Medicaid personal care services. 
The final evaluation on the Florida project has not been released and 
information on how the State goes about determines the amount of 
person's individual budgets was not available for my review. Thus, my 
response is based on the reported experiences in Arkansas and New 
Jersey. Online versions of the final evaluations prepared by 
Mathematica of the projects in both states are available at http://
www.mathematica-mpr.com/3rdLevel/cashcounselinghot.htm.
    Both States took two quite different approaches to determining the 
individual budget amount each participant received: New Jersey 
determined it on the basis of a person's current need for personal care 
services as described in their ``plan of care'' (hereafter referred to 
as services plan), while Arkansas used a ``discounting method'' that is 
described further below.
    New Jersey took the much more straightforward and potentially 
fairer approach by basing the individual budget on what the person's 
existing service plan said he or she required. According to the 
Mathematica evaluation:
        New Jersey based the amount of the cash allowance on the 
        current PCA care plan. Hours planned were cashed out at the 
        hourly rates the state paid for weekday and weekend PCA 
        services (in New Jersey, care plans differentiate between 
        weekday and weekend hours). At about the time of our visit, the 
        amount of the allowance ranged from about $300 to about $2,800 
        a month. The average was about $1,300. (Mathematica's Final 
        Report on New Jersey's Personal Preference Demonstration, page 
        xiii.)
    There are pro's and con's taking this basic approach. On the 
positive side, especially as a jumping off place, it seems a logical 
and ``fair'' way to set at least an initial individual budget amount 
for the person. But, it is only as fair to the extent that the plan 
accurately and objectively reflects the person's complete personal care 
needs.
    This points up the negative side to this approach, which is that 
service plans can be based less on the actual needs of an individual 
and more on what State professionals and providers understand to be the 
``resources available'' to meet those needs. Thus, an individual budget 
derived from the person's current service plan can only be as fair and 
accurate as the plan itself.
    It is not possible--based on the results reported by Mathematica--
to tell whether the service plans used in New Jersey were accurate in 
documenting the actual needs of those 875 persons that received the 
individual budget payments. (Note: The 875 number is half of the about 
1,750 people participated in the Personal Preference Demonstration in 
New Jersey in evenly divided treatment and control groups between 
December 1999 and June 2002. See Mathematica's Final Report on New 
Jersey's Personal Preference Demonstration, page xiii.)
    But, even if the New Jersey plans proved to be in the main an 
accurate basis from which to derive an individual budget amount, the 
point remain a critical one that Congress must recognize and address: 
Service plans developed in other States that desire to use individual 
budget to expand community living options may be flawed in the ways 
just described. Steps that the federal government should take to remedy 
this are listed in the Recommendations section below.
    Arkansas used a practice known as ``discounting'' in determining 
the individual budget amount each participant received. In its final 
report on the Cash and Counseling project in that State, Mathematica 
explains the process used by Arkansas as follows:
          Arkansas based the amount of the cash benefit on the care 
        plan. The amount was based on the current care plan for 
        treatment group members who were already PAS recipients, and 
        the outreach/enrollment nurses developed care plans for those 
        new to PAS. Both types of care plans were cashed out at $8.00 
        an hour after ``discounting.'' Discounting involves multiplying 
        the care plan hours by the ratio of the cost of services 
        actually received to the cost of services listed on the plan of 
        care. It is intended to ensure the budget neutrality of the 
        cash program by taking into account the fact that the amount of 
        services received is generally less than the amount planned 
        (due, for example, to hospital admission of PAS recipients and 
        insufficient supply of aides). Arkansas developed provider-
        specific discount rates for current recipients of PAS by 
        comparing care plans and claims for the previous year for 
        random samples of those served by various providers of 
        traditional personal assistance. These provider-specific 
        discount rates ranged from about .70 to .91. A rate of .91 was 
        applied to the care plans of new recipients of personal 
        assistance. (See Mathematica's Final Report on Arkansas' 
        Independent Choices Demonstration, page xii.)
    Mathematica indicates that Arkansas relied heavily on using 
discounting to determine individual budget amounts for the following 
combination of reasons:
          A major issue that arises in any program using care plans to 
        set cash benefit levels concerns differences between the amount 
        of service planned and the amount actually received. The amount 
        of service received is generally less than the amount planned. 
        The amount of service received is generally less than the 
        amount planned. (The care plan typically represents the maximum 
        amount of care authorized; thus, the amount of care received 
        does not exceed the amount planned.) Because the cost of the 
        care received is generally less than the cost of the care 
        planned, a discount rate must be applied to ensure that the 
        costs of the cash program do not exceed the costs of the 
        traditional program if the level of the cash benefit is to be 
        based on care plans.
          Care received is generally less than care planned for a 
        variety of reasons. A client may be unexpectedly hospitalized 
        and thus not available when an aide arrives. A home care aide 
        may not appear for work when expected, or an agency may be 
        unable to find enough workers to provide the care it had 
        planned. Agencies sometimes plan for somewhat more care than 
        they expect to render so that they can increase the amount of 
        care without revising the care plan if the client's needs 
        increase. That is, the total hours planned included a ``hedge'' 
        against possible future increases in need. (Mathematica's Final 
        Report on the Arkansas pages 30-31.)
    The Final Report finds that Arkansas' use of the discounting 
methodology proved problematic in several ways, including the 
following:
    Determining the discount rate needed to achieve budget neutrality 
can be difficult. The ratio of the cost of care received to care 
planned may differ for agencies and individual clients. (Note: 
Achieving budget neutrality was not a requirement this demonstration 
but Arkansas chose to use this method anyway.)

 As a result, using a single discount rate for all agencies and 
        all clients may unfairly penalize some cash program 
        participants.
 As the labor market tightened in the late 1990s, it may have 
        been harder for traditional agencies and project participants 
        to find enough workers.
 Discount rates developed for random samples of all personal 
        care recipients may be inappropriate if those who choose to 
        participate in the demonstration differ systematically from 
        other personal care recipients.
(Mathematica's Final Report on the Arkansas project, page xvi.)
    Through this process, the discounted care plan hours were cashed 
out at $8.00 per hour. The difference between $8.00 and the hourly rate 
the state paid to traditional providers ($12.36) was used to cover the 
cost of counseling/fiscal services. (Page 32). This reduced the 
individual budget funds each person could use to actual another person 
to provide them needed assistance by slightly over a third.
    It should be noted that ``the discount rate for care plans 
following reassessment of cash recipients (.91) was more generous, on 
average, than their initial discount rates (which ranged from .70 to 
.91)'' Mathematica's Final Report on the Arkansas project, page xvii). 
But, this appears to have had little to no positive effect on the 
purchasing power of those receiving the cash payments. The report says 
that those who had personal care needs that had gone partially or 
completely unmet by the ``traditional program had a greater incentive 
to participate in IndependentChoices.'' (Page xvi). Yet, it also 
concludes that:
          The average cash payment in Arkansas would not cover even 
        half-time work (assuming an hourly wage of $7.00 an hour). Only 
        late in the demonstration did mechanisms begin to develop to 
        help workers hired with the cash benefit find positions working 
        for other cash recipients. Still other consumers found the cash 
        program less attractive due to restrictions placed on the uses 
        of the cash, according to staff of IndependentChoices. Some 
        consumers were disappointed that the full amount at which the 
        discounted care plan was cashed out ($8.00 per care plan hour) 
        could not be paid as wages. After providing for payroll taxes, 
        the maximum wage possible was about $7.25 an hour (unless the 
        number of hours was reduced). (Mathematica's Final Report on 
        the Arkansas project, page 66. Use of bolding not in the 
        original.)
    Clearly, if a goal of the project was to enable people with 
disabilities with significant unmet needs to purchase more services and 
supports, its use of discounting was ill advised. Moreover, in my view, 
the discounting penalizing people with disabilities for services that 
have not been provided for reasons that are outside their control 
(e.g., hospitalizations, workers not showing up, changes in the economy 
as a whole). This likely was not Arkansas' intent but the results speak 
for themselves and should not be repeated elsewhere. I strongly 
believe, therefore, that Arkansas' use of the discounting method 
produced unfair results and conditions and therefore, it should not be 
allowed to be used by any other State for this purpose.
    Additional concerns and comments: My review of these evaluations 
prompts me to share the following concerns and comments with the 
Committee as well.
    States should assure that whether an individual opts to receive 
personal care in the typical manner or through the use of an individual 
budget that both methods will enable him or her to receive equally 
effective services and supports--Only 10 to 15 percent of those 
eligible for personal care option services in Arkansas and New Jersey, 
respectively, signed up obtain an individual budget. Because of the 
design of the demonstration itself, only half of these received cash 
payments (3295 in all 3 States--see Cash & Counseling At A Glance, June 
30, 2002 at http://www.hhp.umd.edu/AGING/CCDemo/ataglance.html. There 
are many reasons why participation rates in these projects were modest. 
Moreover, interest in using individual budget can be expected to 
increase as people gain more knowledge of the method. But, well into 
the foreseeable future most people with disabilities on Medicaid who 
need personal assistance will receive it through the existing system. 
The findings of the evaluations of the projects in Arkansas and New 
Jersey also confirms what I told the Committee when I testified: An 
individual budget works best for someone with an extensive network of 
family, friends and previous workers from who they can purchase 
services and supports with their cash supplement. One of the major 
successes of both projects enjoyed was that participants were able to 
``tap a new source of personal assistance workers--family members and 
friends''. (Mathematica's Final Report on the New Jersey project, page 
xviii).
    But, Mathematica found the converse to be true in both States as 
well: Those without family and friends had a tougher time getting their 
needs met through using the monthly cash payments. There were a variety 
of reasons for this--the payment was not sufficient, the labor supply 
was tight, there were few supports in place to help with the 
recruitment and screening of potential workers. For example, in terms 
of the New Jersey project, Mathematica found that:
          Recruiting is critical for those consumers who do not have 
        family or friends available to hire as workers. Personal 
        Preference program staff reported that the receipt of the cash 
        allowance was delayed for consumers who had difficulty 
        recruiting a worker and that those who could not recruit a 
        worker tended to drop out of the program. (Mathematica's Final 
        Report on the New Jersey project, page xvix and see pages 123 
        and 153 for similar findings). (Emphasis is in the original).
    Similarly, as previously pointed out those in Arkansas who had to 
hire and retain workers other than family or friends found it difficult 
to do so because of the paucity of the hourly wage they could pay to 
such individuals and the tight labor supply. There is also a separate 
body of research that shows people with disabilities without a network 
of family and friends generally have a harder time getting their 
personal care option needs met, have greater unmet needs and are at 
higher risk of institutionalization as a result. Improvements could no 
doubt be made to help mitigate many of these problems. But, it cannot 
be assumed that even with modifications individual budget would work 
well for all people on Medicaid with personal care needs, particularly 
those who have extensive needs and/or a sparse substance abuse network 
of family and friends. Hence, it is imperative that States that choose 
to offer individual budgets also must be expected to provide equally 
effective access to personal care services through both this method and 
the existing Medicaid program. This is also why States that opt to use 
this approach likewise must be required to meet a strong and 
enforceable ``Maintenance of Effort'' requirement in respect to funding 
personal care services through more typical means as well. To fail or 
refuse to do this would, in my view, be irresponsible.
    States should offer individuals the opportunity and support to 
direct their personal care services through other means than through an 
individual budget--The disability community (i.e., people with 
disabilities ourselves) have long recognized and emphasized that there 
are and need to be many ways for individuals with disabilities to 
direct their own personal assistance services. See pages 5 and 6 of the 
final report on the implementation of the Arkansas demonstration for a 
concise discussion of the historian of the concept and philosophy of 
consumer direction. The Medicaid Community-Based Attendant Services and 
Supports Act of 2003 (S-971/HR2032) includes the following definitions 
related to consumer directed services:
  `(B) CONSUMER CONTROLLED--The term `consumer controlled' means a 
        method of providing services and supports that allow the 
        individual, or where appropriate, the individual's 
        representative, maximum control of the community-based 
        attendant services and supports, regardless of who acts as the 
        employer of record.
  `(C) DELIVERY MODELS--
    `(i) AGENCY-PROVIDER MODEL--The term `agency-provider model' means, 
            with respect to the provision of community-based attendant 
            services and supports for an individual, a method of 
            providing consumer controlled services and supports under 
            which entities contract for the provision of such services 
            and supports.
    `(ii) OTHER MODELS--The term `other models' means methods, other 
            than an agency-provider model, for the provision of 
            consumer controlled services and supports. Such models may 
            include the provision of vouchers, direct cash payments, or 
            use of a fiscal agent to assist in obtaining services.
    These definitions were developed with significant input from people 
with disabilities who use personal assistance extensively. The 
definitions make clear that people with disabilities can and must be 
able to exert choice and control over their services and supports in a 
variety of ways--not just via an individual budget. In spite of this, 
however, CMS has recently taken the position that it views consumer 
direction in a far more narrow and limiting way by stating that:
          The Centers for Medicare and Medicaid Services (CMS) defines 
        a self-directed program as a state program that presents 
        participants with the option to control and direct Medicaid 
        funds identified in an Individual Budget. (Home and Community 
        Based Services: From Institutional Care to Self-Directed 
        Supports &Services, page 11 online at http://cms.hhs.gov/
        newfreedom/528hill.pdf)
    It is presumptive for CMS officials to circumscribe the definitions 
of self-direction and consumer direction--synonyms of each other--to 
fit with their own views of how Medicaid might be better operated as a 
voucher program. Unfortunately, I frankly think that this is an example 
of just that. It would be equally wrong to allow States to do the same 
thing. A State that give people the ``choice'' of using an individual 
budget should offer them the opportunity and support to direct their 
personal care services through other means as well.
    States should provide adequate funding for benefits counseling, 
recruitment and personal assistance registries, fiscal immediaries and 
other services essential to the success of consumer directed services 
in way that does not siphon off service dollars from people with 
disabilities--New Jersey and Arkansas funded their consumer consulting/
counseling and fiscal intermediary services by charging those with 
individual budgets a set monthly user fee (NJ) or taking about a third 
of the rate that the state paid to traditional providers to defray such 
expenses and cashing out the rest (AR). Unfortunately, both of these 
approaches produced adverse impacts. New Jersey's need of monthly 
users' fees, for example, led it to limit participants to 19 hours of 
consulting a year for which project would pay after the cash plan was 
in place. This meant that some who needed substantially more consulting 
assistance than others did, and some needed substantially more than 
expected did not receive it. New Jersey, like Arkansas, also set funds 
aside from the personal care benefit before cashing it out to pay for 
these types of administrative services. Arkansas--practice of 
discounting in general and taking funds out of the base amount that it 
would have otherwise paid to a personal care agency to defer these 
costs and gave the remainder to the participant. As I previously noted, 
this meant that the discounted care plan hours were cashed out at $8.00 
per hour. The difference between $8.00 and the hourly rate the state 
paid to traditional providers ($12.36) was used to cover the cost of 
counseling/fiscal services. (Page 32). This reduced the individual 
budget funds each person could use to actual another person to provide 
them needed assistance by slightly over a third. While it might make 
some sense to have individuals using these services pay some share of 
the costs, it should be a very nominal one. If the federal government 
and States are genuinely interested in pursuing these approaches, 
funding--separate and above Medicaid services dollars--must be made 
available to develop and sustain them.
    Conclusion: In terms of were whether the methods used by Arkansas 
and New Jersey for determining what a person's personal care 
allocations were fair or not, I believe that many, if not most, 
participants with sufficient and stable support networks of family and 
friends that their respective processes proved to be fair much of the 
time. This is because most of these individuals had something to build 
and expand upon as well as support to fall back on when all else 
failed. But, for those without extensive support networks and/or those 
with extensive personal care needs I believe the evidence shows that 
the methods proved to be too rigid, unresponsive and ultimately unfair 
much of the time. That is not to say that such persons can never 
benefit from using an individual budget. Some likely have and more, I 
believe, can. It will, however, require significant time and effort to 
make this outcome possible and I offer the following recommendations 
with this and related aims in mind.
    Recommendations: Based on my review of the results of the Cash and 
Counseling projects in New Jersey and Arkansas, I believe it is 
essential that if other States are to be allowed and urged to use 
individual budget as a way to expand community living services to 
people with disabilities, the federal government should make clear 
that:

    --Setting a person's budget at the same amount as called for in 
their service plan is permissible so long as:

 It is done in a manner that does not disadvantage the person 
        in anyway;
 The State demonstrates that the amount is sufficient enough 
        for the individual to pay for personal care services to an 
        extent that is at least commensurate with those he or she would 
        be able to otherwise receive from Medicaid;
 The service plan fairly and accurately reflects the person's 
        complete personal care needs, including any that currently may 
        not be being met;
 Each person who is considering receiving or currently is 
        receiving a personal care cash supplement, has the right and 
        opportunity to request and receive an independent adjustment in 
        the budget based on needs that are not adequately addressed in 
        the plan and/or have changed;
 The full costs of such an independent adjustment review are 
        paid for by the State (perhaps with Medicaid administrative 
        match) but carried out by independent experts whose findings 
        are binding on the State and the person.
    --A State may not use the method known as ``discounting'' or 
similar practices to determine the individual budget of a person.
    --Prior to agreeing to receive a cash payment, a person and/or 
their representative, where appropriate, must receive a statement 
summarizing:

 The type and number of hour of personal care services he or 
        she needs; and,
 An accurate estimate of what the monthly individual budget 
        amount can be reasonably expected to purchase.
    --Adjustments must be made individual budgets based on changes in 
labor supply conditions as frequently as necessary. If reliable workers 
cannot be hired and retained at the rate permitted by the individual 
budget, the State should increase the monthly allotment as soon as 
possible.
    --A State that offers people with disabilities needing personal 
care the choice of receiving services or a monthly payment to purchase 
such supports must:

 Assure that whether an individual opts to receive personal 
        care in the typical manner or through the use of an individual 
        budget that both methods will enable him or her to receive 
        equally effective services and supports.
 Offer individuals the opportunity and support to direct their 
        personal care services through other means than through an 
        individual budget.
 Assure that the choice of which method to use will be made on 
        a well-informed, voluntary basis by the individual or their 
        representative, where appropriate.
 Maintain current level of effort in respect to funding 
        personal care under the State Medicaid plan.
 Provide adequate funding for services such as benefits 
        counseling, recruitment and personal assistance registries, 
        fiscal immediaries and other services essential to the success 
        of consumer directed services in way that does not siphon off 
        service dollars from people with disabilities.
    Question 1b. Do you believe the methods for calculating the 
individual budgets under the Independence Plus demonstration have been 
fair? Are there appropriate safeguards in the Independence Plus 
demonstration to ensure that individual budgets are adequate and fair?
    Response: To respond to these questions, I have reviewed the two 
template waiver applications developed by CMS to allow States implement 
the Administration's Independence Plus initiative as well as other 
related materials--available online at http://www.cms.gov/
independenceplus/. The initiative is meant to enable States to offer 
eligible families and individuals to receive a cash allowance (in the 
Sec. 1115 Demonstration) or individual budget (in the 1915(c) Waiver) 
to obtain personal assistant services and related supports. Since the 
methods for calculating the individual budgets under the 1115 
demonstration and the 1915c waiver authorities are different from each 
other I will comment on them separately.
The 1115 Independence Plus Demonstration Process:
    To obtain an 1115 waiver for this purpose, a State must assure 
that: a. demonstration expenditures will not exceed what would have 
been incurred without the demonstration; b. the aggregate cost of 
services will be no more than 100% of the cost to provide these 
services without the waiver; and c. the plan of care and budget for 
plan of care will be developed in the demonstration exactly as they 
would have been developed without the waiver. The template furthers 
indicates that ``Procedures for determining the amount, duration, and 
scope of Personal Care services are (to be) identical for Personal Care 
recipients, regardless of whether or not they are part of this 
voluntary demonstration program.''
    Beyond setting these general parameters, however, the current CMS 
1115 template and related materials I reviewed on its Web site do not 
lay out any other criteria a State must follow or even consider when 
determining what the personal care cash allowance should be. This is 
extremely troubling. The 1115 demonstration authority is meant to 
enable the federal government and the States to test both the 
effectiveness and the fairness of providing Medicaid services through a 
variety of means to those eligible to receive them. CMS has a critical 
role and responsibility to set out expectations and criteria in an 
initiative like Independence Plus to ensure that as States propose to 
test various ways of providing personal assistance cash allowances to 
that there be nationwide, consistent guidance on how those allowances 
should be set in the most effective and fair manner possible.
    CMS has already approved an 1115 Independence Plus demonstration 
waiver for one State, Florida, and other applications are likely 
pending or in development. It has been suggested that the 1115 template 
is a living document and that CMS may add additional terms and 
conditions to it as the need and opportunity to do so arise. Based on 
my review of the Florida 1115 waiver, I would respectfully suggest that 
the need to do this is already upon us and I would strongly urge 
Congress to convince the agency to move on this front immediately.
Florida's Independence Plus 1115 waiver:
    Florida's approach to determining individuals' personal care cash 
allowances should be was approved by the Administration this May and 
illustrates why CMS should issue clear guidance in this area.
    Since Florida participated in the Cash and Counseling project there 
are roughly 1500 people with disabilities with individual budgets in 
the State already. For this reason, the State has decided to use--and 
CMS has approved--several different approaches to determining the 
amount of each participant's monthly allowance:
    Setting the individual budget amounts of current individual budget 
users: Those who were in the Cash and Counseling project will receive a 
budget based on prior expenditures and historical claims information. 
The person's expenditures for the twelve months prior to enrollment in 
the new 1115 waiver will determine the annual budget. If a consumer was 
not been in the project for twelve months, the expenditures from at 
least 6 months will be used to determine the budget. When less than six 
months of data is available, the care plan or support plan will be the 
basis for determining the budget amount.
    Setting the individual budget amounts of new individual budget 
users (i.e., consumers who have received waiver services for six months 
or less): The individual budget amount will be set at:
        the value of the services authorized in the care plan or 
        support plan. The value of the authorized services will be 
        adjusted to accurately reflect the amount that would be spent 
        on services in the Medicaid waiver Home and Community-Based 
        Services program. An extensive discount analysis was conducted 
        to determine what percentage of dollars authorized in a 
        Medicaid waiver care plan or support plan is actually spent in 
        each program. For example, on average 89% of the dollars 
        authorized in a Medicaid waiver care plan for an elder is 
        actually expended. An elder who has received waiver services 
        for less than six months, would receive an annual budget equal 
        to 89% of the value of the services in his/her current care 
        plan. During the enrollment visit, consumers will be told the 
        exact budget amount they would receive if randomized to the 
        experimental group. Consumers will not be able to negotiate a 
        budget amount with consultants.
    Setting the individual budget amounts of persons with developmental 
disabilities: The approach requires that:
          All individuals receiving services from the Developmental 
        Services Waiver Program Will have their support plan and cost 
        plan reviewed and revised as appropriate, providing access to 
        increased funding appropriated by the 1999 Florida Legislature. 
        Their budgets will be determined using the care plan method.
    Setting the individual budget amounts of elders and adults with 
physical disabilities: The approach requires that:
          Elders and adults with physical disabilities who have had 
        substantial changes made to the value of their care plan before 
        their enrollment will have their budgets determined using the 
        ``care plan method--described above. The Consumer Directed Care 
        database will track which method is used for each consumer.
See page 9 of Florida's Operational Protocol for this project online at 
http://www.cms.hhs.gov/medicaid/1115/flccoperot.pdf.
    Concerns with Florida's approaches to setting individual budget 
amounts: In my view, the approaches just outlined raise the following 
concerns relating to the adequacy, equity and fairness of the manner in 
which the State sets individual budget amounts:
    Current individual budget users: As indicated previously in respect 
to the Cash and Counseling project in Arkansas, the concern that arises 
with regard to setting the individual budget amount based on a person's 
prior use of services (i.e., the number of hours of services that he or 
she ``actually received'') is that this method invariably penalizes for 
not receiving services that their plan documents they need for reasons 
well beyond their control--they are hospital for two weeks, aides don't 
show up, they are unable to hire workers, etc. Simply put, individuals 
with significant disabilities are not managed care organizations and 
should not be subjected to the same utilization control and discounting 
methods to which profit making plans are subjected. If a State wants to 
base the amount of a person's ``prior expenditures'' and ``actual hours 
of services received'' over some period of time, there may be ways to 
build in a greater degree of fairness to the process. For example, a 
State could use prior expenditures as a general guide for setting the 
amount and then examine the reason(s) for any discrepancy between the 
numbers of hours that were ``called for'' in the person's services plan 
and the number of hours of services that the person ``actually 
received'' during the period. When such a discrepancy is due to factors 
that are beyond their control and unrelated to their documented need 
for services, the amount of the individual budget should be increased 
by the same amount as would have been spent on services that were 
called for in the plan but never delivered due to factors beyond their 
control. Similarly, a State could use prior expenditures as a general 
guide for setting the amount and then set the remainder aside in a 
``rainy day account'' that the person could draw on if their current 
year spending increased over the previous year based on changes in 
their own needs or external conditions (e.g., a shortage of workers, 
the need to pay more for fewer hours of personal care services). 
Finally, a State could set the individual budget amount at a hundred 
percent of the amount required by the services plan. It could then give 
the person the discretion to spend up to the amount of services 
actually received during the prior 6 to 12 months period and require 
the person to seek further consultation if they believe they have to 
exceed this sum. In my view, absent taking these or similar steps, a 
State like Florida cannot reasonably assure--and the Administration has 
no cause to blithely assume--that basing the amount of an individual 
budget of a person with significant disabilities will yield adequate or 
fair results. I also could find no indication in the materials 
submitted by Florida to CMS that it plans to reinvest any savings 
generated by this method in improving or increasing community living 
services more generally. This troubles me as well.
    New individual budget users: The concerns I have in regard to how 
the individual budgets of those in this group will be set are 
essentially the same as I have just outlined in terms of current users. 
I would add one more concern it raises in respect to the use of 
discounting. The original idea behind individual budgets was that they 
would determined based on the looked needs of a specific person--not on 
the basis of some group ``average''--and would, therefore, equip the 
person with both the sufficient resources and the sufficient authority 
to get personal assistance support needs met. Florida's approach to 
determining the budget of new participants resorts to a group 
averaging, take it or leave it approach that undercuts in my opinion 
much of the intent behind the concept and the potential good that might 
come from it as well as set people with significant disabilities up for 
failure or worse. Basing individual budgets on a group average hardly 
makes the process responsive to differences in individual needs. 
Moreover, most people with significant disabilities when given a budget 
with a finite amount and told to make it last for the next 12 months 
will--I have no doubts--make it last for that period even to the point 
of cutting back on needed supports. The Operational Protocol indicates 
that:
          Adjustments will only be made in response to significant 
        changes in needs. Consumers may call to inform the consultant 
        of significant changes in level of care needs or other 
        significant changes such as loss of caregiver. Or, a consultant 
        may identify changes which would warrant an adjustment to the 
        monthly budget amount. Changes in the budget will be granted to 
        obtain more support when the health or safety of the consumer 
        is at risk. (See page 9 of Florida's Operational Protocol for 
        this project online at http://www.cms.hhs.gov/medicaid/1115/
        flccoperot.pdf.)
    The terms and conditions for Florida's Independence Plus 1115 
further specifies that it will provide CMS with: ``procedures for how 
the State will work with families who expend their individualized 
budget in advance of the re-determination date to assure that services 
needed to avoid out-of-home placement and the continuation of the 
health and welfare of the individual are available;'' Together these 
readjustment processes and procedures may address many, if not all of 
my concerns in this regard but having not seen them I can not draw a 
conclusion either way. It is disturbing, however, that CMS did not 
apparently have greater details in writing prior to granting the wide 
sweeping demonstration waiver on such fundamental issues impacting the 
fairness and adequacy of Florida's approach as how the State 
specifically intends to: 1. Define the key term ``significant changes 
in needs''; and, 2. Inform all current and prospective participants of 
their right to request such a readjustment and the process they should 
follow to do so
    Project participants with developmental disabilities, older persons 
and adults with physical disabilities: The concerns I have in regard to 
how the individual budgets of those in these groups will be set are 
essentially the same as I have raised throughout my responses.
    Establishing disability and age specific criteria for determining 
individual budget amounts: Depending on how they are structured 
developing and implementing separate and distinct criteria for 
determining individual budget amounts for people with different types 
disabilities (cognitive, developmental, physical or psychiatric) and/or 
those of different ages (children, working age adults or seniors) will 
likely produce polar opposite results. Such criteria can be and I would 
argue should be developed in a manner that both recognizes and remedies 
inequities which may exist with regard to the degree of access people 
in these different groupings have to Medicaid community living services 
in a State. Or, such criteria can be developed and put in place in a 
way that greatly exacerbates these types of inequities. It is not 
possible based on the information available to me, it is impossible to 
know what prompted Florida to develop 4 distinct ways to determine the 
individual budget amounts for people with different disabilities and 
different ages, much less to hazard a guess on what impact they might 
ultimately have upon improving or exacerbating access problems. What is 
disturbing, however, is CMS did not seem to even consider this question 
when granting this waiver and it is certainly not raised or addressed 
in the agency's 1115 template application either.
The 1915c Independence Plus Waiver Process:
    As I noted at the start of my response, the methods for calculating 
the individual budgets under the 1115 demonstration and the 1915c 
waiver authorities are different from each other. In some ways, the 
template for the 1915c has ``more flesh on the bones'' in the sense 
that it gives States a bit more guidance on how individual budget 
amounts should be determined. Though as my comments will show I think 
CMS needs to provide even further guidance in this area and that any 
criteria it sets for determining individual budgets under 1915c should 
apply to 1115 Independence Plus demonstrations as well. To date, CMS 
has approved 1915c Independence Plus waivers in New Hampshire, South 
Carolina and Texas. Time has not permitted me to review the terms and 
conditions of any of these
    Waivers. Thus, my comments will focus on the template itself. The 
template indicates that a State applying for a waiver of this type 
needs to:
    describe in detail EITHER:

 The State 's uniform methodology for the calculation of 
        individual budgets, OR
 The criteria and approval process for entities with which the 
        State has contracted for day-to-day operations of the program.
    This description addresses the minimum requirements that the 
methodology utilize actual service utilization and cost data, how the 
methodology is explained to the family or individual, the re-
determination process, and how the methodology is open to public 
inspection. (Template for 1915c Independence Plus Waivers, page 26, 
http://www.cms.gov/independenceplus/1915temp.pdf.)
    It further makes clear that: ``Minimum requirements of the 
methodology (to be) are that the budget is built upon actual service 
utilization and cost data, the methodology is described to the 
individual and their family, the methodology is open for inspection by 
authorized public entities including, but not limited to, CMS, and 
there is a process for re-determination. Although the Medicaid Agency 
may contract with another agency or organization for the daily 
operation of the waiver program, it must retain the authority to issue 
policies, rules and regulations related to the waiver.)'' (Template for 
1915c Independence Plus Waivers, page 11, http://www.cms.gov/
independenceplus/1915temp.pdf.)
    Issues and Recommendations: Generally speaking, I believe the 
provisions in the template that were just cited--while perhaps 
representing at least a start at creating consistent, nationwide 
guidance in this area--need to be revised, refined and/or strengthened 
in each of the following key respects:
    Establishing a uniform methodology for the calculation of 
individual budgets: CMS must make clear that the purpose of developing 
and following an uniform methodology is to assure both the adequacy and 
fairness of individual budgets. That is, CMS must make it explicit that 
it will evaluate the efficacy of each ``uniform method'' proposed by 
States on at least 3 crucial dimensions--whether it is sufficient to: 
1. Assure that the individual budget amounts are derived on an 
individualized basis that makes certain that the resources allocated to 
each waiver participant can be shown to be reasonably adequate to meet 
his or her specific personal care needs; 2. Yield individual budget 
amounts that are fair and equitably distributed among different 
individual budget users and different classes of such users (i.e., 
people with different types of disabilities, of different ages, and/or 
those who live in different counties or are served by different 
government or private agencies); and, 3. Make certain that people with 
disabilities on Medicaid who are eligible but do not choose to have an 
individual budget are not penalized by their decision and are offered 
other ways to exercise choice and control over their personal care 
services as I discussed in my response to Question 1a above.
    Creating criteria and approval process for entities with which the 
State has contracted for day-to-day operations of the program: CMS must 
make clear that entities that a State contracts with to implement the 
waiver on a day to day basis must adhere to the uniform methodology the 
State sets for determining the individual budget amounts of each 
participant in a manner that assures the adequacy and fairness of the 
approach with regard to the three dimensions discussed immediately 
above and that it: 1. Assures that the individual budget amounts are 
derived on an individualized basis that makes certain that the 
resources allocated to each waiver participant can be shown to be 
reasonably adequate to meet his or her specific personal care needs; 2. 
Yields individual budget amounts that are fair and equitably 
distributed among different individual budget users and different 
classes of such users (i.e., people with different types of 
disabilities, of different ages, and/or those who live in different 
counties or are served by different government or private agencies); 
and, 3. Makes certain that people with disabilities on Medicaid who are 
eligible but do not choose to have an individual budget are not 
penalized by their decision and are offered other ways to exercise 
choice and control over their personal care services as I discussed in 
my response to Question 1a above.
    Basing the individual budget on ``actual service utilization and 
cost data'': I have raised considerable concerns around this approach 
already and believe strongly that CMS must take the types of steps I 
have recommended throughout my responses to anticipate and address the 
unintended and potentially very harmful impacts on people with 
disabilities relying on individual budgets set in this manner can and 
are likely to produce in my view.
    Public participation: It is essential that CMS require the States 
to assure the active and informed participation of the public--
particularly people with disabilities, families of children with 
disabilities and other representatives--in the design, implementation, 
monitoring and evaluation of all such uniform methodologies and related 
policies, practices and procedures. This requirement like all others I 
have recommended should be applied equally to both the 1115 and 1915c 
Independence Plus.
    Question 1c. Do you believe federal standards are needed to ensure 
that beneficiaries are given enough money under these demonstrations? 
If yes, what should those standards look like?
    Response. Yes, I believe further federal guidance in this regard 
and that it should incorporate and expand upon the recommendations I 
have offered in my responses to Questions 1a-1b.
    Question 2a. The Independence Plus program, recently initiated by 
the Department of Health and Human Services, is an expansion of the 
Cash and Counseling program initiated by the Robert Wood Johnson 
Foundation. While the two programs share the goal of enabling 
individuals with disabilities to live in the community and providing an 
appropriate range of personal care services that individuals can self-
direct, there are some important differences between the two programs. 
Could you please describe the key differences between the Independence 
Plus program and the Cash and Counseling demonstrations?
    Response. The Cash and Counseling demonstrations had a very focused 
purpose and scope. It was meant to test whether people with 
disabilities and their families in appropriate cases could use 
individual budgets to purchase a fairly well defined and limited as 
well as predictable set of personal care services and whether doing so 
would result in getting their needs better met and increased 
satisfaction in general. However, there is an increasing concern that I 
share that States as well as the Administration will use the 
Independence Plus process to cash out basic health care benefits such 
as prescription drugs, physician and hospitalization services that: 1. 
Extend far outside the purpose and scope the original Cash and 
Counseling demonstrations; 2. The need for which, by their very nature, 
varies enormously over time and must not be predicated on past ``actual 
services received'' or similar methods; and, 3. Cashing such services 
out are likely to limit rather than preserving or increasing 
beneficiaries access to them for many of the same reasons I have 
discussed in my responses thus far. There are, however, differences 
between the 1115 and 1915c template in this regard as well; so I will 
comment on each individually.
    The 1115 Independence Plus Template: I believe the potential for 
this to occur is the greatest with regard to the 1115 Independence Plus 
demonstrations. The 1115 template permits States to include--in 
addition to personal care and other recognized community living 
services that States can currently offer through Medicaid--any 
``(o)ther services requested by the State and approved by CMS as budget 
neutral and necessary to avoid institutionalization.'' (Template for 
1115 Independence Plus Waivers, page 7, http://www.cms.gov/
independenceplus/1115temp.pdf ) There are clearly a number of ways 
where it could be argued that prescription drugs, physician and 
hospitalization services could be offered in a budget neutral manner 
under a 1115 and are, of course, essential helping many people with 
significant disabilities to avoid unjustified institutionalization. For 
the 3 reasons I cited in the last paragraph, though, I do think this is 
adequate justification for including them under such waivers.
    The 1915c Independence Plus Template: The 1915c template contains 
similar language on this point but also says that for services already 
covered by the State plan that the waiver must described and presumably 
assure that any such services, including those that fall into the 
``other services as requested'' category, will ``differ in amount, 
scope, supervision arrangements or provider type or be utilized only 
when the state plan coverage is exhausted.'' (Template for 1915c 
Independence Plus Waivers, page 15, http://www.cms.gov/
independenceplus/1916temp.pdf.). This is an extremely important and 
useful clarification to make and one that in my view should be included 
in the 1115 template as well. But, even this provision does not really 
address the deep concerns I and others have raised with regard to the 
harm that could come from cashing out the types of medical and health 
services that can only there be carried out by highly trained 
professionals and the need for which cannot be reliably predicted in 
advance nor predicated on past experience.
Recommendation:
    For the reasons just given, CMS should make clear to the States and 
the Congress that it will not grant 1115 or 1915c Independence Plus 
waivers that would cash out medical and health care services such as 
prescription drugs, physician and hospitalization services.
    Question 2b. What are your thoughts on whether the changes made 
under the Independence Plus demonstration are warranted?
    Response. No, I do not for all of the reasons I have discussed.
    Question 2c. How could these changes affect beneficiaries? What 
should policy makers be looking for in the design and evaluation of 
these demonstrations to ensure beneficiaries are protected?
    Response. I believe I have addressed the first part of the question 
already. In terms of the policy questions that the evaluations of the 
Independence Plus demonstrations should be designed and carried out to 
help answer I think some of the most crucial ones include:

 What are the characteristics of people with disabilities and 
        families of children with disabilities who are most likely to 
        get their personal care needs met by using the individual 
        budget approach?
 What are the characteristics of people with disabilities and 
        families of children with disabilities who are only somewhat 
        likely to get their personal care needs met by using the 
        individual budget approach?
 What are the characteristics of people with disabilities and 
        families of children with disabilities who are least likely to 
        get their personal care needs met by using the individual 
        budget approach?
 What promising practices exist for improving the chances of 
        those in all 3 of these groups of getting their personal care 
        needs met by using the individual budget approach?
 What impacts do these demonstrations have on those who are 
        eligible for Medicaid personal care and other community living 
        services but who not use the individual budget approach?
 What other opportunities and/or desires do persons who are 
        eligible for these services but who do not have individual 
        budgets have in terms of exercising increased choice and 
        control over their services either through an individual budget 
        or other means?
 What types of actions should the federal government; the 
        States and others consider taking based on the responses to 
        these types of evaluation questions?
    Question 3a. Under the Cash and Counseling demonstrations consumers 
were given a cash amount to manage certain services provided under 
Medicaid, personal care services. These are primarily non-medical 
services to provide assistance with activities that are in many 
instances of a very private nature--like bathing or dressing. Can you 
draw any conclusions from the Cash and Counseling demonstrations about 
which services are most appropriate for consumer direction? Is there a 
minimal set of services that should be included to ensure that the 
programs serve their purpose?
    Response: In addition to personal care services, I believe it would 
be both reasonable and useful to clearly delineate the only services 
that can be offered under an 1115 or 1915c Independence Plus waiver 
include other recognized community living services that States can 
currently offer through Medicaid either through a State optional 
service or a waiver. As I said, the requirement currently in the 1915c 
template that services under the waiver ``must differ in amount, scope, 
supervision arrangements or provider type or be utilized only when the 
state plan coverage is exhausted.'' (Template for 1915c Independence 
Plus Waivers, page 15, http://www.cms.gov/independenceplus/
1915temp.pdf.) should be incorporated in the 1115 template as soon as 
possible as well.
    Question 3b. Are there services that do not lend themselves to 
self-direction? For example, do you believe it is appropriate to allow 
for consumer direction of acute care services?
    Response. As I have said I believe it would have deleterious 
impacts on people with disabilities to include any health or medical 
services under the rubric of an Independence Plus waiver.
    Question 3c. What are the advantages and disadvantages of including 
durable medical equipment and home modification costs in individual 
budgets and how would this work in practice?
    Response. The goods and services that fall into the broad 
categories of what constitutes durable medical equipment or home 
modifications can range in costs widely from under $50 for purchasing 
grab bars to perhaps a hundred or so for installing them to several 
thousands of dollars for putting in a roll in shower that enables a 
person with limited mobility to shower more easily. Similarly, 
purchasing a splint one uses to hold eating utensil or pen may cost a 
few dollars while purchasing a motorized wheelchair can cost tens of 
thousands of dollars. The practical implications of this I believe are 
as follows: It may be useful and reasonable to build in resources to 
purchase low to modestly priced durable medical equipment and home 
modification good and services into someone's individual budget. 
Significant care must be taken, however, to ensure that if this is done 
that the resources included for this purpose are over and above those 
that the person needs to purchase personal care services. For 
expenditures on these types of goods and services a State should 
establish a separate fund or consumer friendly process individuals can 
use. Many States already have very low to no interest loan programs in 
place that people with disabilities can use to obtain needed DME and 
home modifications and then pay it back in small monthly installments 
over an extended period of 10 years or more. CMS and States should 
explore ways to tap or develop such mechanisms under both types of 
Independence Plus waivers. It is also extremely important that as 
States move in this direction that they and CMS do so in a way that 
affords people with disabilities who do not use individual budgets but 
use personal care services and need access to DME and/or home 
modification goods and services have an equally effective opportunity 
and way to obtain them.

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