III. Pennsylvania's Policy Decision to Expand Non-Institutional Long-Term Care Services
What occurred in Philadelphia and Montgomery counties following imposition of Pennsylvania's moratorium can be contrasted with what followed its policy decision more than a decade later to fund alternatives to nursing home care for the elderly under Medicaid. In 1995, the state chose to implement the “Pennsylvania Department of Aging Waiver” (“PDA Waiver”), pursuant to Section 1915(c) of the Social Security Act. Congress enacted Section 1915(c) in 1981, the year before Pennsylvania promulgated the moratorium.
Section 1915(c) waivers permit states to draw down federal matching funds for services not generally available under their Medicaid plans, and to offer these services in the home or other community settings to persons who would otherwise need *1168 institutional placement in a nursing facility. In short, waivers fund diversion projects, offered to select populations. Because they must demonstrate cost effectiveness as a precondition to gaining federal approval of a proposed waiver, states limit the menu of services to be offered, as well as the population to whom they will be offered. Federal waiver of the Medicaid statute's requirements of statewideness, comparability of care and services, and methodology for determining financial eligibility authorizes such flexibility. Consistent with federal law, states can target populations of a certain age, those living with a specific medical condition, or people residing in a certain part of the state. As contrasted with the open-ended Medicaid “entitlement” to nursing facility services, waivers also permit states to control expenditures by limiting the number of available “slots” (the equivalent of a nursing home bed). When compared with the capital cost moratorium, which is a blunt instrument designed to discourage the increasing bed supply, waivers enable the state to strategically plant and cap the supply of slots.
In November 1995, Pennsylvania initially implemented the PDA Waiver for individuals age sixty and over in Philadelphia County. Services provided through the PDA Waiver, but not otherwise available to Medicaid recipients, included attendant care, personal care services, companion services, respite care, home support, older adult living centers, environmental modifications, counseling, personal emergency response systems, and home delivered meals. In addition, the PDA Waiver paid for home health services, physician services, and transportation, to the extent not covered under the state plan. The State limited eligibility for the PDA Waiver to individuals who could be served at a cost not to exceed eighty percent of the statewide average Medicaid payment for nursing facility services, consistent with the federal requirement of cost effectiveness. Thus, by rule, it costs substantially less to serve an individual under the PDA Waiver than in a nursing facility.
The State expanded the original waiver, effective February 1, 1996, to twelve additional counties: Allegheny, Bradford, Cambria, Delaware, Fayette, Greene, *1169 Montgomery, Sullivan, Susquehanna, Tioga, Washington, and Westmoreland. Beginning in October 1998, Pennsylvania expanded its PDA Waiver statewide. As of November 30, 2009, it served 15,816 persons in all of Pennsylvania's sixty-seven counties, ranging from a high of 5,949 in Philadelphia County to a low of six in Montour County.
PDA Waiver slots more intensely serve counties with a higher percentage black population. Philadelphia, whose population is 44.8% black or African American (as contrasted with the statewide population, which is 10.8% black or African American) has 37.6% of the PDA Waiver slots. Nearly half of the PDA Waiver slots (49.4%) serve the three counties with the highest black or African American population, although those counties, Philadelphia, Allegheny and Delaware, have just more than a quarter (25.8%) of the total state population.
Predictably, the PDA Waiver serves a much higher percentage minority population than does the nursing home industry. Enrollees in the PDA Waiver are 26.33% black or African American. Non-minority whites comprise 64.23% of enrollees. By contrast, the racial composition of Pennsylvania Medicaid residents age sixty or over in nursing homes is twelve percent black or African American and eighty-five percent non-minority white.
Unfortunately, data is not available to determine the racial composition of the pool of individuals who qualify financially for Medicaid long-term care services. Several factors impede the inquiry: (1) Pennsylvania uses different income standards to determine nursing facility and PDA Waiver eligibility; (2) the nursing facility income limit is not a constant, but fluctuates according to the rate charged by the nursing home to which a person is admitted (i.e., if an individual's monthly income does not exceed the nursing home's monthly charge, she meets the income test); and (3) both *1170 programs impose a resource test (currently $8,000 of “countable” resources for anyone in the waiver and nursing facility residents with income at or below 300% of the federal Supplemental Security Income (“SSI”) rate) which introduces a hard-to-determine variable. However, given the fact that both the PDA Waiver and the Medicaid nursing facility benefit serve individuals of lower income, one can presume that the potential applicant pool is more heavily black or African American than the statewide elderly population as a whole. And since, as explained below, Medicaid eligibility limits for both nursing facility services and the PDA Waiver are higher than for the rest of the elderly Medicaid population, one can conclude that the pool is less heavily black or African American than the elderly population on Medicaid.
Pennsylvania's choices with respect to eligibility requirements for nursing facility services versus the PDA Waiver may also foster a racial disparity between the populations served. Pennsylvania sets the PDA Waiver income standard at three times the federal SSI payment rate, and the asset standard as countable resources below $8,000. The income ceiling was $24,264 annually for a single individual in 2009, based on a payment rate of $674 per month.
Pennsylvania applies the $8,000 asset standard for nursing facility services as well. However, Pennsylvania applies a much higher “medically needy” income rule to nursing home residents only. As noted above, in Pennsylvania a person qualifies for nursing facility services if he or she has a monthly income at or below the nursing facility monthly rate. Some states decline to offer this higher standard for nursing facility services, whereas other states extend the standard to Waiver services. Pennsylvania takes the liberal approach for institutional care and applies the more stringent test for non-institutional services. The current average monthly rate for a nursing home in Pennsylvania is $7,235.82. The annual ceiling is therefore $86,830, which is more than three and a half times the income ceiling for the Waiver. Thus Pennsylvania's nursing home program favors individuals with much higher income, allowing two-thirds of Pennsylvania nursing home residents to qualify for Medicaid.
While nursing homes serve a higher percentage of elderly white persons when compared with the PDA Waiver, it is important to also note the significant disparity in expenditure of resources. Recently, the Commonwealth has sought to shift the balance *1171 of services away from nursing home care and into non-institutional services. However, in fiscal year 2008-09 far more Pennsylvania Medicaid recipients over age 60 received their long-term care in nursing homes than through the PDA Waiver (72.6% vs. 26.6%), at a much higher average monthly cost to the state ($4,437 vs. $1,700). So the program that serves a disproportionate white population serves far more persons at a much higher per capita cost.