Alabama is the 44th state to adopt the federally funded program. One state legislator says the state missed out on millions in savings by not adopting the approach earlier.
"We’re a day late and a dollar short," said Sen. Linda Coleman, D-Birmingham.
State officials began meeting last month to plan out the future of the state's Money Follows the Person program, an effort to "rebalance" Medicaid by finding Medicaid patients in nursing homes who might be able to live in their own home or a community home, with a little assistance.
About two thirds of the state's nursing home patients -- roughly 14,000 people -- are paid for by Medicaid, the joint state-and-federal program that covers health care needs for people in poverty. Medicaid officials say the average nursing home resident costs Medicaid about $50,000 per year.
Another 16,000 people are on Medicaid waivers. They're people who might otherwise qualify for nursing home care due to health problems or disabilities, but have instead been approved for Medicaid-funded in-home care. Medicaid officials say those clients cost Medicaid an average of $15,000 per year.
State officials say most people in nursing homes need to be there, due to their medical needs. But there may be hundreds who could make the transition to in-home care. The Money Follows the Person program would identify as many as 600 people who are ready to make the switch, state officials say, and pay to set them up with in-home-care.
The federal government would pick up the tab for the move, a projected $28 million over five years -- and state officials project the state would save $11 million per year on the clients who make the switch.
That $11 million would be welcome relief for the Alabama Medicaid program, where rising costs have become an annual crisis for the state's budget-writers. A post-recession influx of Medicaid patients has more than doubled the state's cost for the program since 2008. The state's current $615 million Medicaid expense comes out of the $1.7 billion General Fund budget, where revenues grow very slowly. As a result, state budget writers have been forced to trim other areas of the budget -- and raid a state trust fund of $437 million -- to keep paying for the program. This year, the Legislature approved a statewide reorganization of Medicaid, designed to stem the growth in the program's costs.
The Money Follows the Person program -- so called because it allows Medicaid money to follow patients out of nursing homes and into other settings -- has saved money in other states, said Erica Reaves, an analyst for the Kaiser Family Foundation, a Washington, D.C., nonprofit that studies health policy.
It's also been popular with Medicaid patients, who would rather live at home, she said.
"When you ask people if they'd like to get out of an institutional setting, they usually say, when can I do that?" she said.
Reaves said Money Follows the Person was set up in 2006 as part of the federal Deficit Reduction Act. States were slow to adopt the program at first, she said, but many of them joined the program after the 2008 recession.
A 2012 Kaiser study found that of 25 states where officials responded to a survey, 24 said Money Follows the Person has lowered their state's costs for the patients who participated. One state reported that the costs were comparable to keeping those patients in a nursing home.
Advocates for the program had pushed for Alabama to become involved as early as 2007. Some, such as Coleman, the state senator, say they were motivated as much by patient welfare as by the potential cost savings.
"We know that when people live at home, their quality of life is better," Coleman said. “Their health is better.”
Coleman introduced a bill to require participation in Money Follows the Person in 2007, but it failed in the Senate. A later bill, encouraging adoption of the program, passed in 2009. But the state didn't apply for inclusion in the program until 2012.
"Previous state administrations chose not to pursue the program," said Medicaid spokeswoman Robin Rawls.
"Previous administrations" would seem to mean the administration of Gov. Bob Riley, who left office in 2011 after two terms as governor.
Neither Rawls nor other state officials would comment on why the Riley administration was reluctant to adopt the program. However, in January 2011, shortly before Riley left office, Rawls told The Florence Times-Daily that the state hadn't applied for Money Follows the Person because of a concern that it would lead to an expansion of Medicaid services.
“We didn’t apply because of the potential to create program expansion in the state in times when the state is unable to afford that expansion,” Rawls told the Times-Daily.
Reaves, of the Kaiser Foundation, said officials in a number of states expressed "expansion" concerns in the early years of the program. The worry wasn't about adding new people to Medicaid, she said. They were more concerned about the added paperwork and new administrative staff it would take to start moving people from nursing homes to other settings.
"Obviously, to states that are operating under long-standing budget constraints, the idea of expanding any program can be daunting," she said.
Where MFP programs are already in place, Reaves said, finding housing for patients who want to make the move is difficult.
Reaves, who once worked in Maryland’s program, said it took years to get Money Follows the Person online there. Many states are behind their initial goals for the number of Medicaid clients moved out of nursing homes.
“Agencies tend to operate in silos,” she said. “It’s hard to get everyone to the table to work.”
Capitol & statewide correspondent Tim Lockette: 256-294-4193. On Twitter @TLockette_Star.