REMARKS OF MARK B. MCCLELLAN, M.D., PHD. NATIONAL COUNCIL ON INDEPENDENT LIVING ANNUAL CONFERENCE KEYNOTE ADDRESS

It’s a privilege to join you today, as we honor some people who have made real contributions to your mission—creating a world in which people with a disability can participate fully.   It’s especially an honor to be invited back to this conference, where the theme is Ending Institutional Bias, because right now we have some unprecedented opportunities to do it.

Each time I’ve talked with you in the past, we’ve focused on this goal. We’ve talked about progress, about pilot projects, and on what new legislation and new Federal funding it would take to get us there.   This year it’s different—after years of working to pass Money Follows the Person, we’ve passed new legislation.  I’d like to thank all of you who have worked so hard with us for so long to make it happen. I want to thank you for all the conference calls and updates, for all the work with Hill staff and members.  You made sure that this key reform made it into the Conference Report of the Deficit Reduction Act in a meaningful way.

Now, as a result of your efforts, we have a new law. It has been an honor, a privilege and a uniquely rewarding experience working with all of you on this.   It’s been one of the best experiences I’ve had in government.   I also want to give a special word of thanks to the staff at CMS in the Disabled and Elderly Health Programs Group, and to others in the federal government for their tremendous efforts—this public-private collaboration has been truly impressive.

Now I’ll tell you what we don’t have any more:   We don’t have an excuse.  It is time for every person on Medicaid to have the opportunity to choose the care that they prefer.

We also don’t have time to waste. So today, I am going to talk about some of the reforms that are available now, and how we can work together to take advantage of them.

***

Before I turn to this, though, I also want to thank you for your tremendous efforts to help people with a disability take advantage of the new Medicare prescription drug coverage.   CMS was proud to collaborate with NCIL through a grant from the Administration on Aging, and through partnerships all over the country.

We saw steady enrollment throughout the open enrollment period, which ended on May 15, and we also got a big surge ahead of the deadline. While we are still tabulating final enrollment numbers, more than 38 million people with Medicare now have good, secure coverage for prescription drugs. 

This was the direct result of a nationwide grassroots education and support effort that was both unprecedented and uniquely American. Since November 15th, our 10,000 grassroots partners sponsored over 50,000 Medicare events and opportunities for people to get personalized assistance.   More than 40,000 volunteers in communities across the country worked during this enrollment period by counseling beneficiaries and sponsoring events to help people with Medicare. 

I want to thank all of you for this effort.   It showed us what a difference giving people choice and support can make.  First, 90 percent of our beneficiaries chose coverage other than the standard benefit passed by Congress.  People overwhelmingly chose coverage that got rid of the deductible, that provided flat co-payments for their drugs, and that filled in the doughnut hole.  Second, people overwhelmingly chose less costly coverage.    

The average premium was forecast to be $37 just a year ago, but based on the plans that people chose, this year’s actual premium is going to be around $24 or less—a third less than expected.   And last month, as part of the annual Medicare Trustees Report, our independent actuaries announced that the cost of the drug benefit was going to be 20 percent lower than projected last year.  Better coverage and lower costs happened because beneficiaries were able to choose how to get their care, and in turn, that happened because of your partnership with us. 

But we aren’t through. As a result of this unprecedented outreach effort, we’ve made a lot of progress in turning Medicare from a program that mainly pays the bills when people get sick, into a program that partners with them to help them stay well using prevention oriented coverage. Medicare now has preventive benefits, including care management and care coordination services for chronic illnesses. 

Yet, though we’ve closed the coverage gap in Medicare with these benefits, we still have a big prevention gap—particularly when it comes to actually getting high-quality care that prevents complications from chronic illnesses.   That’s where most Medicare spending goes today, and much of it is preventable through prescription medicines, through better decisions about how to get care, and through greater beneficiary awareness and control about their diseases and how to manage them.  It’s time to close this prevention gap, and I want to challenge you to continue to work with us to make that happen too.

We want to use the same grassroots networks and personalized support systems that were so effective in supporting the drug benefit enrollment, to partner with our beneficiaries to close the prevention gap in Medicare.   Working through community-based outreach, partnerships, and increased support for beneficiaries and caregivers are the successfully proven ways that Medicare should be doing business every day.  We are looking to continue to make Medicare a permanent “grassroots” program.    

Now that the enrollment period for the drug coverage is over, we plan to turn our attention to ensuring that everyone who is enrolled takes full advantage of the new prescription drug coverage and Medicare’s other important preventive benefits.    We want to do this in close partnership with you.

***

This year, 2006, is unquestionably a historic year in Medicare.   I want to turn it into a historic year in Medicaid as well:  the year that marks the beginning of the end of institutional bias in Medicaid.  It won’t be easy.  The Deficit Reduction Act is not exactly the legislation that some had hoped for—final legislation never is.  And making this change will take more work state by state.  Even so, this is the opportunity we’ve long been waiting for, and we are ready to partner with you to take advantage of it.

As a result of the Deficit Reduction Act, we are about to enter a new era of personal control, the era of “New Freedom,” when it comes to long-term care.   These reforms—funding for self-directed and home and community based services, new support for long-term care insurance, and especially, the Money Follows the Person initiative—will enable us to reset Medicaid long-term care services.

This is what all of you have been working for since the Olmstead decision was handed down, since the Councils for Independent Living were formed, even—some of you—since before 1973 when the Rehabilitation Act was signed.    For too long, people have had to “follow the money.”  It’s time to have the money go where people want it to go—and now there’s no excuse. 

We recently released a Medicaid Roadmap for Long-Term Care Reform. This roadmap, which you can find at cms.hhs.gov/NewFreedomInitiative/downloads/LTC, outlines all of the new authorities and new funding we have as a result of the DRA to provide new support and momentum for your efforts. 

As you know, the key change in the DRA is a program that will provide states with a greatly enhanced match rate for implementing Money Follows the Person.  It’s a strong financial incentive to set up choice-based financing for long-term services.  It’s also an important incentive for states to improve the entire spectrum of long-term care services—home-based services to every institutional setting, including nursing homes, ICF/MR and psychiatric facilities.

Now, every year I talk about how the evidence supporting these reforms is stronger than ever— evidence that personal control leads to much better beneficiary satisfaction, better health outcomes, and lower costs per person served.   This means that Medicaid dollars go further and do more.  This year as well, the evidence keeps getting stronger.

For example, here’s what the program has accomplished in my home state of Texas  , which helped lead the way with a Money Follows the Person program in September, 2001. As of March 31, 2006, 10,711 people have chosen to leave nursing facilities, have the institutional funds follow them, and move into the community.  And this is what we’ve learned: 

First, MFP works regardless of age, race, or gender.  Currently, in Texas , MFP assists the very young to the very old.  One-hundred five participants are children aged nine or younger.  An additional 44 are between 10 and 17 years old.  Twelve people in the program are over 100 years old.  Approximately two-thirds of the people in the program are over age 65; more than seven percent are older than 90.  Sixty-five percent are female, 20 percent are Hispanic, and 13 percent are African American.

Second, MFP works for people with many different living arrangements.  In Texas , 22 percent live alone, 46 percent live with family, and three percent live with other persons who are in a waiver program.  Most of the remaining 29 percent live primarily in residential care or adult foster care.

Third, MFP saves money.  One estimate is that Texas saves about 20 percent of what it previously spent on long-term services and supports. 

Not so long ago, we worked with Vermont  to expand their MFP-type program.  Some very exciting things are happening in that state as well.   Choices for Care initially took effect in 1997.  Vermont ’s goals for this program were to provide choice and equal access, serve more people, manage the costs of long term care, create a balanced system, and prevent institutionalization. 

With a new focus on public information and quality assurance, a new community ombudsman, and a new “cash and counseling” program, Vermont  has documented a significant increase in community services and a significant decrease in the number of older Vermonters who require nursing home care.  The most significant was among the state’s residents who were over 85 years old.  They were 22 percent of the nursing home residents in 1994, compared with being only 13 percent of nursing home residents in 2004.

In Fiscal Year 1996, 88 percent of Vermont  ’s long-term care expenditures went to nursing homes; 12 percent to community-based services.  In contrast, in 2005, 68 percent of LTC expenditures went to nursing homes, and 32 percent went to community based services. 

Vermont  estimates that without its rebalancing initiative, long-term care expenditures would have been more than eight percent higher.  With the money it saved, the state says it was able to both expand and better manage the nursing-home and home-based care funds, and not only give consumers choice but also serve more people as funds became available.

So the evidence is clear, and now, the funding is there.   But that’s not all of the new support available for rebalancing.  The DRA makes other “person-centered” changes that add significantly to this unprecedented opportunity.

It offers new “cash and counseling” support to allow people with disabilities on Medicaid greater flexibility and control to manage their care and its cost.   

It gives states authority to boost the availability of home and community-based care without coming to us first by going through all the steps to get a waiver.   I’ve talked about the importance of this step before.  If you were designing Medicaid today, you wouldn’t have to get a waiver to give people control of their benefits, you’d get a waiver to offer an institution-only benefit.   That day is getting closer.

In addition, the new law offers fresh support for home and community-based alternatives to psychiatric residential treatment facilities for children, so families can stay together.   Before this change, believe it or not, a psychiatric residential treatment facility was the only option under Medicaid for children with mental illnesses to get the services they needed.  

The DRA also enables states to expand the Long-Term Care Partnership program to help individuals plan and finance their future long-term care needs, enabling them to get more affordable insurance for their long-term care needs, and avoid much Medicaid spending at the same time.   It set up a National Clearinghouse for Long-Term Care Information which will help individuals and their caregivers navigate the range of long-term support options.

These are critical steps for long-term care reform for at least two reasons. First, more long-term care planning means more people will have the ability to choose the long-term care services that are best for them.   Second, more support for long-term care financing means less pressure on Medicaid as the Baby Boom ages.  This will help Medicaid continue to serve people with truly limited means, now and in the future.  We look forward to implementing these critical programs with your help as well.

The evidence is overwhelming, the funding is unprecedented, and the time is now. Every time I meet with you, I talk about the progress we’ve made, but then have to point out that despite all the progress, most people using long-term care services in Medicaid still don’t have a choice about how they get their care. And most Medicaid spending still goes to institutional care, as much as 70 percent. 

Let’s make this the last time I have to say that. Money Follows the Person and other reforms make it possible for any state to take action to rebalance its Medicaid program, with the Federal government paying the overwhelming part of the costs of the transition. 

States that do not apply for this program are not only failing to give their beneficiaries the choice and control they deserve, they are also passing up a huge federal funding opportunity. Let’s make sure that doesn’t happen.

Especially, let’s make sure that doesn’t happen for the sake of all the people who are counting on us.   I said at the outset that working with many of you on enacting MFP was one of the most rewarding experiences of my time in government.  The main reason why, I’m sure is obvious to many of you, there are few things that we do that can make so dramatic of a difference in the lives of so many people.

***

So, 2006 can be a truly historic year.   Not so long from now, I’d like to be able to look back with many of you on how we entered a new phase of Medicaid long-term care benefits in 2006.  I’d like to look back on this as the year when we truly moved past pilots and demonstrations to nothing short of overall Medicaid rebalancing.   Let’s make sure that day comes soon, by making sure that every state in the nation follows through on the opportunity provided by implementing the Money Follows the Person Initiative. 

Of course, we’ll keep building on this progress.   CMS plans to release a Money Follows the Person Rebalancing Demonstration RFP to states later this summer.  As individuals move into the community, we understand how important it is for support services to be available to them.  The long-term care system needs to be one that encompasses these support services as well. 

We must continue to work with our Federal and state partners and others in broadening the scope of what is traditionally viewed as the long-term care system to include more efficient use of a full complement of support services such as housing, counseling, transportation, and other assistance with independent living.  

We need to take advantage of the opportunities today in Medicare and in Medicaid to create more prevention-oriented health care programs, to prevent disabilities when possible, slow the rate of declining health by preventing complications of diseases that cause disabilities, and move further ahead toward improving quality of life. 

We all are working toward a future of long-term care which optimizes choice and independence. Our long-term care arrangements will not be driving a patient toward institutional care when a less restrictive environment is more appropriate.    

I know we can get there. We’ve done a lot already in a limited period of time.   Thanks to your efforts, we’re providing people with the opportunity to take control of their health and live their lives on their terms. 

I’m looking forward to the day when people with disabilities will be full participants in community life as a matter of routine.   This is not only good public policy—it’s also the right thing to do.