Money Follows the Person Rebalancing Demonstration: Extension or Termination?

The disabled and the elderly find it increasingly more difficult to find employment opportunities nowadays. It becomes even more difficult for those disabled and elderly who are in institutionalized care. Part of the reason is because many of them do not possess the necessary funds that would allow them to enter the work force after being institutionalized. These seniors have no savings account to rely on and instead have to rely upon Medicaid or Medicare assistance for daily survival.

There are many institutionalized seniors and people with disabilities who seek employment, however. These individuals find nursing homes uncomplimentary to their lifestyles, or, in some cases, as the source of their declining health.[1]

One such example is the story of a Maryland resident named Kathy. She is one of four profiles published on the website of Kaiser Family Foundation (KFF). Kathy worked in retail for all of her working life, until she suffered an injury that fractured every bone in one of her ankles. The injury left her immobile and required surgery, followed by a long hospital stay. Because she was sixty-one years old with no family to take care of her, Kathy could not be left alone in her home. Although Medicaid covered her hospital expenses, Kathy’s hospitalization prevented Kathy from being autonomous and going to work. This eventually led to losing her job and her rental home.[2]

As a result, Kathy stayed in institutionalized care, which she described as “very unpleasant”. Her health spiraled downwards in the nursing home she was assigned — but she had no home to return to. Kathy would be forced to live out the rest of her life in the nursing home, with no hope to reenter society as a contributing citizen.

With the Money Follows the Person Rebalancing program, however, Kathy was granted the necessary funds to help her kickstart her life anew in a community setting. She was given leave from her nursing home and transitioned back into society smoothly. Kathy qualified for 40 hours of personal care services per week, and was given a one-time $700 allowance to pay outstanding gas and electricity bills. The program was vital to guiding Kathy back into her community.

The Money Follows the Person Rebalancing Demonstration is part of a federal effort to support states in making widespread changes to their long-term health care services. Institutional care, while important for the recovery of work-abled seniors, tends to stiffen the lives of individuals who are disabled, or seniors, or both.[3] The initiative reduces states’ reliance on institutional care and helps develop a community-based care system that enables those with disabilities and seniors to reintegrate into their communities.

As of December 2016, the plan that was enacted in 2007 has helped more than 75,000 beneficiaries transition back into their communities. For five years since its launch, MFP was allocated $1.75 billion. By 2010, thirty states participated in the program.[4] In February of 2011, Congress increased funding to $4 billion, and 13 additional states joined the program. Federal funding for the program ended in 2016, pushing states to stop accepting new participants and start relying on reserve money to continue supporting existing enrollees until the end of 2020.

Because the MFP program was regarded as expensive but, for the most part, widely successful, there has been renewed support to continue the program. Representative Frank Pallone, Jr. introduced H.R. 259, or the Medicaid Extenders Act of 2019, on January 4th of this year. The bill forwarded the extension of MFP program and included new provisions to extend protection for Medicaid beneficiaries receiving community-based services. It specified that states cannot be prohibited from disregarding an individual’s spousal income and assets to determine eligibility for community-based services.[5]

There seems to be wide support for the bill and others like it in congress, as well. In December of last year, a bill introduced by Representative Joe Barton, H.R. 7217, contained a provision that was similar in content and scope to H.R. 259. H.R. 7217 passed by a 400-11 vote in the House.

However, there has been some backlash against this proposal. H.R. 259 was introduced with little forewarning, halting the progress of transitioning out of the MFP Demonstration program that states have already undergone. Many states planned their Medicaid budgets accordingly in anticipation for the Medicaid program’s end by 2021. Some argue that it is unnecessary to continue funding for a program that has had a short term life from its inception.[6]

In addition, adversaries bring forth the evidence uprooted in 2008: the MFP program failed to help beneficiaries transition into communities at the rate its proponents predicted. Not by a slight margin, either; by the end of 2008, participating states had only discharged 37 percent of their initial predicted numbers. The MFP program does not help transition people from institutionalized care systems to community care systems at a rate that provides sure confidence. In fact, the entire process seems to be rather slow. 

Opponents of the MFP program and the continued federal support of the program argue that the program itself is not cost effective. The funds for the program could be allocated to Medicaid and Medicare, instead, bolstering their funds before the projected increase in spending in the next few years. Institutionalized care is care, at the end of the day. Instead of funding for a program that provides money to those who wish to work, shouldn’t there be a stronger effort made to provide information of employment opportunities available to them? This could be achieved by lowered federal funding, and instead of supporting transition periods, the funding could support educational services to help beneficiaries find jobs. Proponents argue that, since the average spending per person decreased by almost 25 percent for those transitioning out of institutionalized care, the program is actually as cost effective as a program for Medicaid can be.[7]

[1] "Money Follows the Person Demonstration Bill Advances." Money Follows the Person Demonstration Bill Advances. Accessed March 25, 2019. https://www.leadingage.org/legislation/money-follows-person-demonstration-bill-advances.

[2] Watts, Molly O'Malley, Erica L. Reaves, and MaryBeth Musumeci. "Money Follows the Person Demonstration Program: Helping Medicaid Beneficiaries Move Back Home – Profiles – 8581-B." The Henry J. Kaiser Family Foundation. May 16, 2014. Accessed March 25, 2019. https://www.kff.org/report-section/money-follows-the-person-demonstration-program-helping-medicaid-beneficiaries-move-back-home-profiles-8581-b/.

[3] MFP Bills – Protect Our Medicaid. Accessed March 25, 2019. https://medicaid.publicrep.org/empower-care-act/.

[4] "Money Follows the Person." Medicaid.gov. Accessed March 25, 2019. https://www.medicaid.gov/medicaid/ltss/money-follows-the-person/index.html.

[5] Think_Allison. "House May Pass Medicaid Planning Measure This Week." ThinkAdvisor. January 08, 2019. Accessed March 25, 2019. https://www.thinkadvisor.com/2019/01/08/house-may-pass-medicaid-planning-measure-this-week/?slreturn=20190224221542.

[6] Money Follows the Person: Are We Getting Our Money's Worth?" Money Follows the Person: Are We Getting Our Money's Worth? | American Society on Aging. Accessed March 25, 2019. https://www.asaging.org/blog/money-follows-person-are-we-getting-our-money’s-worth.

[7] MFP Bills – Protect Our Medicaid