Home and Community Based
Waivers for Disabled Adults:
Program versus Selection Effects
Courtney Harold Van Houtven
Durham Veteran’s Administration
Duke University
Marisa Elena Domino
University of North Carolina
Background
• Purpose of Waiver programs is to provide
coverage for extra services to keep people
in community
– In-home aide services
– Respite care
– Adult day health care
– Others
• Waivers for disabled adults operate in 47
of the 50 states
Background
• Incentives exist for careful selection of
enrollees by states
– States must select persons
• “At-risk” of institutionalization
• Care for the person must be cost-neutral.
– $2,553 to $3,360 per month for home
care in NC
• Hence, states have incentives to
select persons partially based on
expected spending levels
Objective
• To examine the impacts on costs of a
Medicaid Home and Community-based
Waiver program and whether differences are
due to selection effects or true program
effects, controlling for endogenous selection
of persons into the program.
• Expands on Anderson & Mitchell (1997,
2000) study of an AIDS Waiver program
– Continuous measure of waiver participation
– Multi-faceted severity measure
Study Design
– There is no objective way of identifying
persons truly at-risk of institutionalization
• Persons with moderate severity of illness are
more likely to be selected for Waiver enrollment
over more severely ill individuals.
Low likelihood
of enrollment
High likelihood
of enrollment
Moderate likelihood
of enrollment
Less ill
More ill
Severity threshold
that makes a person
at risk of institutionalization
Study Design
• We use severity to differentiate
institutional risk and expected
expenditures.
– Multi-faceted risk adjustment scale
(CDPS) specially designed for disabled
adults (Kronick, Gilmer et al., 2000).
– Predictive of future health care needs
and differentiates severity based on
expected expenditures.
Data Sources
• North Carolina Medicaid claims and
enrollment data from Fiscal Years 19992000
• Area Resource File for North Carolina
for county-level information
• State licensure information on home
health agencies
Sample
• All Medicaid adults with disabled or blind
status who
– were continuously enrolled in Medicaid for
the 2 year study period and
– had at least $10,000 in expenditures in FY
1999
• N=27,056. Waiver participants=1,752
Methods
• Two-part expenditure models of
– Total Medicaid expenditures
– Nursing home expenditures
– Inpatient expenditures
• Key Independent variables
– Percent of the year on waiver
– CDPS severity
– Demographics
– Medicare enrollment
Methods
• Instrumental variables estimation controls
for selection into the waiver program
• Identifying instruments
– Home health agencies in county
– County marketing measure
Descriptive Statistics
Table 1. Demographic characteristics of disabled adults on North Carolina
Medicaid, FY 1999
Variable
Dependent variables
Costs of Care1
Any Costs
Total Costs for Users
Any Nursing Home
Total Nursing Home
Any Inpatient
Total Inpatient
Non-Waiver
Disabled Adults
N=25,304
Mean
90.3%
28,826
27.5%
53,256
24.2%
9,387
Endogenous variable
Average percent of year on
CAP
Waiver
Disabled Adults
N=1,752
Mean
**
**
**
**
*
99.8%
29,374
6.3%
9,057
31.6%
7,682
89%
* = p<.05; ** = p<.01 for a test of the equivalence of means between CAP and non-CAP
samples
1. Number of observations differ depending on type of utilization
Descriptive Statistics
Table 1. Demographic characteristics (continued)
Variable
Instruments
Home health agencies
Average Daily Percent
of CAP capacity
Demographics
Male
White
Black
Native American
Other race
Hispanic
Age
Medicare enrolled in FY
2000
County population 1999
Non-Waiver
Disabled Adults
N=25,304
Mean
Waiver
Disabled Adults
N=1,752
Mean
17.04
60.5%
*
**
13.75
62.3%
47%
49%
39%
0.14%
0.10%
0.03%
44
72%
**
**
**
34%
54%
32%
0.14%
0.12%
0.03%
49.0
80%
139,123
**
**
*
116,501
* = p<.05; ** = p<.01 for a test of the equivalence of means between CAP and non-CAP samples
Descriptive Statistics
Severity
Non-Waiver Waiver
Characteristics Participants Participants
Average
3.5
5
number
of CDPS
categories?
Percent of
12 percent
>1 percent
sample
with no CDPS
diagnoses?
Results
• Endogeneity exists for total cost and
nursing home cost models
– Instruments are strong predictors of
selection into waiver
– Nursing home model includes home health
agencies as only instrument
Results
Waiver participants face
– A higher likelihood of having any Medicaid
expenditures
– No difference in levels of total expenditures
– No difference in the likelihood of any nursing
home expenditures
– Significantly lower nursing home expenditures
• Save $25,491 on average compared to non-participants
– No difference in the likelihood of any inpatient
expenditures
– Slightly lower levels of expenditures
• Save $2,506 on average compared to non-participants
Predictions
Choosing three types of disabled adults we make predictions about cost savings.
Type
Low cost adult
Medium cost adult
High cost adult
Diagnostic Categories
(CDPS)
None
Nervous System –
Low; Pulmonary –
High
Nervous System – Low;
Pulmonary –High;
Developmental Disability Medium
Predicted change in
probability of total costs*
-0.36
-0.12
-0.00024
Predicted change in tot.
costs for avg. enrollees
(both parts of model)
$5,312
$6,819
$9,078
Predicted change in
probability of nh costs
-0.35
-0.41
-0.078
Predicted change in nh
costs for avg. enrollees
$725
$439
$18,102
Predicted change in
prob. of inpatient costs
0.0045
0.0075
0.0055
Predicted change in
inpatient costs for
average enrollees
$225
$473
$302
*
All predicted differences are the result of the difference between predictions calculated on
 
  

IV models, as f ˆX | CAP  0  f ˆX | CAP  1 , probabilities are expressed on the unit interval
Discussion
• Participation in a Medicaid Home and
Community-based Waiver leads to
substantially different patterns of care
• We find no savings in total expenditures
but savings in nursing home and
hospital inpatient expenditures for
waiver participants, achieving the goals
of the Home and Community Based
Waiver Program.
Courtney Harold Van Houtven gratefully
acknowledges the Agency for Healthcare Research
and Quality for funding (T32 HS00032).
We appreciatively acknowledge the assistance of
the NC Department of Health and Human Services
Division of Medical Assistance. The DMA has not
reviewed this report and, therefore, cannot validate
the accuracy of information contained in this report.
Excellent programming was provided by Josh
Olinick.