An Analysis of Medicaid Private Duty Nursing for

Children With Special Health Care Needs

Prepared by:

Elizabeth Shenkman, PhD

Associate Professor, Department of Pediatrics

Associate Director, Institute for Child Health Policy

Overview

Home health care for children with special health care needs (CSHCN) has been called a “medical and social innovation” that has “potential risks and benefits, inevitable uncertainties, and unique ethical considerations.”[1] An estimated 50,000 children use home health care services daily, with 60% of these services for skilled nursing care.[2] Recent national cost estimates specific to children are not available. However, the Health Care Financing Administration (HCFA) reported overall home health care costs for all ages at $22.3 billion in 1999. In Florida, costs for the private duty nursing component of home health care is reported to be $100 million for State Fiscal Year (FY) 2000-2001.

The purpose of this report is to present:

  • A summary of the literature on private duty nursing for children and relevant case law on private duty nursing,
  • A summary of interviews conducted with staff in five different states about their private duty nursing programs,
  • A summary of telephone survey data collected in 1997 with families whose children are enrolled in Children’s Medical Services (CMS), Florida’s Title V CSHCN Program addressing their unmet health care needs and out-of-pocket spending for home health care services; and
  • An analysis of current expenditures for home health care and private duty nursing among CMS enrollees and projections of future spending.

Review of Literature

Over the past 30 years federal legislative action has greatly influenced approaches toward children with special health care needs (CSHCN).[3] For example, in 1967 Congress mandated that states must provide Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) services through their Medicaid Programs. EPSDT services encompassed screening of individuals under the age of 21, “to ascertain their physical or mental defects, and such health care, treatment, and other measures to correct or ameliorate defects and chronic conditions discovered thereby, as may be provided in regulations of the Secretary.” However, in 1989 Congress passed the Omnibus Budget Reconciliation Act of 1989 (OBRA’89). As part of OBRA’89, preventive care and disability-related services were addressed. Significantly, as it relates to CSHCN, the law required states to provide all medically necessary services that were eligible for federal financial reimbursement to children whose health care screens revealed problems. These services had to be provided even if they were not otherwise covered under the state’s Medicaid Program.[4],[5] This particular provision is a point of serious contention with some state agencies, which believe that it greatly limits their ability to control Medicaid spending.

The recent literature on issues related to home care, private duty nursing, or personal attendant services for CSHCN is very limited. One has to turn to literature that is 10 to 20 years old to find in-depth discussions of home nursing services. In the 1980’s Lou Ann Aday conducted a national program evaluation to assess the outcomes of care for ventilator-assisted CSHCN who were transferred from the hospital to home.[6] This evaluation is one of the most comprehensive assessments of pediatric home care, to include private duty nursing, available. As part of the study, Aday and her colleagues reported that home care costs were significantly lower than hospital costs for these children. Hospital care was used as a basis for comparison because this was the only other alternative for the children’s care. Others have noted that home care costs are less expensive than hospital costs only if the parent is assuming part of the caregiving responsibility. If a nurse provides the majority of home care, the home care costs approach and sometime exceed hospital care costs.[7]

Other early work that considered the financial aspects of children’s long-term care needs focused on the inadequacy of most benefits packages for CSHCN and the out-of-pocket spending that families often experience when caring for these children.[8] Recommendations from this early work focus on ensuring that families and their CSHCN are given appropriate support and services and that benefits packages are structured to best meet their complex needs.

Much of the current literature that might be applicable to understanding issues associated with the provision of private duty nursing for CSHCN fall into the category of long term care (LTC) provision. The majority of this literature focuses on adults and not children. None-the-less the LTC literature documents the rapidly escalating Medicaid expenses for these services, which include the provision of long-term physical, speech and other therapies, long-term institutional care, and long-term home care.

States often use community-based waivers (1915 C waivers) to design programs to provide services for the elderly and persons with physical and developmental disabilities in the home and community.[9] Home and community-based LTC arrangements continue to be seen as the best environment to deliver care as opposed to institutionalizing Medicaid-eligible individuals. In 1998, Medicaid accounted for 17% of total spending on home health care in the United States. To control these expenditures, states are increasingly exploring options of providing a range of LTC services, including home health and personal care services, in a managed care setting. Texas and Michigan are providing such services in managed care environments under 1915(b) and 1915(c) waivers, which typically include limiting freedom of choice for the families selecting service providers.[10]

In a four state study of children receiving Medicaid and incurring $10,000 or more in health care charges annually, Kuhlthau et al., documented that LTC expenditures accounted for 10% to 42% of the total health care expenditures for this group of children. LTC expenditures were not well defined, but did include facility charges, such as structured nursing facilities. Home health expenditures, which was not restricted to private duty or skilled nursing, accounted for 4% to <1% of the total expenditures, depending on the state.[11] The authors noted that one of the uses of their findings was to help states plan for their expenditures for these very high cost children.

In summary, with the exception of considering caring for CSHCN within managed care arrangements, there is little in the current literature about how to address the rising private duty nursing costs for this group of children. Some states have attempted to obtain modifications to OBRA’89 and others are using 1915 waiver programs. Attempts to modify OBRA’89 have failed in the past and the outcomes from states using 1915 waivers to address their LTC costs in Medicaid are not known.

Court cases about LTC issues have involved adults and usually also involve a unique aspect associated with program eligibility. For example, a recent court case involving LTC for adults was heard in Albany, New York (June 2000). The New York Court of Appeals upheld two lower court decisions that the state cannot refuse to provide medical coverage for people needing long-term institutional care in cases where the spouse refuses to turn the ailing person’s assets over to the government.

Another recent case (1999) involved Florida’s Agency for Health Care Administration (AHCA). AHCA revoked home care nursing services for a five year-old child with autism, esophagitis reflux, and dyspahgia on the basis that the services that the child needed were not “skilled nursing services.” The family challenged the decision. The judge ruled that skilled nursing was medically necessary for this child because 1) the child’s physician ordered the services, 2) there was a medical need for a nurse to supervise the child’s feeding to avoid choking, and 3) the child needed nursing services as prescribed by the doctor to combat dysphagia.

State Interviews

To learn more about states’ experiences with private duty nursing in their Medicaid Programs, telephone interviews were held with Title V CSHCN Program and Medicaid Program representatives in six states. Table 1 contains a summary of the states selected for interview and the rationale.

Table 1.States Included for Interviews About Private Duty Nursing for CSHCN in Medicaid

States Included / Rationale
Michigan / Michigan has done extensive working assessing health care use and charges for CSHCN. They offer Medicaid fee-for-service (FFS) and capitated managed care programs for their CSHCN. Thus, it was anticipated that analysis of their approaches would provide useful information for Medicaid FFS and capitated environments.
Texas / Texas has a unique program to identify CSHCN for referral to specialized case management services. It also is a large and culturally diverse state with many demographic similarities to Florida. Thus it is a good state for comparison purposes and useful data in CSHCN’s health care use and charges are available. Texas has a 1915(b) and 1915(c) waiver.
Oregon / Oregon is well known for their work identifying “medically necessary services”. This state tends to take a more restrictive approach to health care services for all its residents, when compared to other states. Oregon provides “home follow-up services” for their CSHCN. More information from a state that has taken a more conservative approach to funding health care was determined to be helpful.
Tennessee / Tennessee is well known for its TennCare Program. This managed care program carefully monitors CSHCN’s health care use and charges. Some view this program as a success and others do not. This program is recommended for inclusion because it is highly managed and there are reports that it has resulted in cost savings to the state. However, it is also a controversial program.
Washington State / Washington has conducted detailed analyses of their CSHCN in Medicaid and likely will be able to provide useful information about these children. Moreover, for their CSHCN in Title V, services are provided based on determining available resources and various payer sources.
Arkansas / Arkansas was selected for interview on the recommendation of Florida’s Title V CSHCN Program staff. Arkansas recently changed their approach to authorizing and providing private duty nursing services for their CSHCN. Learning more about their reasons for changing their approaches and what types of approaches they were using were determined to be important for this analysis.

In addition, interviews were conducted with state Title V and Medicaid staff in Louisiana based on the recommendations of Title V CSHCN Program staff in Arkansas. The Arkansas staff believed that Louisiana had developed some innovative approaches for caring for these children. Tennessee staff were unable to provide detailed information at this time. CSHCN in that state do receive private duty nursing services if it meets their medical necessity guidelines. All private duty nursing services are provided within managed care.

An interview guide was developed to address the following:

  1. Whether the state funds private duty nursing,
  2. The benefit package and any limitations such as the number of total days in a year or the number of hours per day that the service can be provided,
  3. Eligibility criteria in terms of who receives the services and in terms of the amount that can be received,
  4. Who does eligibility determination,
  5. The number of children received private duty nursing for the last three fiscal years,
  6. Expenditures on private duty nursing for children ages birth through 18 annually for the last three fiscal years,
  7. Contracting relationships with agencies providing private duty nursing,
  8. The use of selective contracting for private duty nursing services, and
  9. Alternatives to private duty nursing that the state has considered.

The interviews were conducted in March and April 2001. The participants were sent a copy of the interview guide to review prior to the call and then were interviewed by telephone. One state was required by their state policies to respond in writing and not verbally and to have the responses reviewed by various administrators before the responses could be released to the Institute.

Results of State Interviews

Table 2 contains a summary of the states responses to the topics listed above. The results are described more fully in the subsections below.

Administration of the Benefit: All of the states participating in the interviews offer private duty nursing services to CSHCN age birth to 21 meeting medical eligibility or other criteria. The states all noted that they are required to do so as part of OBRA’89. For three of the six states, the Medicaid Program administers the benefit. For one of these states, this is a recent change. In Arkansas, the State Title V CSHCN Program had administered the benefit. However, due to rising costs, the administration was moved to the Medicaid Program. The rationale for the move was that the Title V Program played too much of an advocacy role and that the Medicaid Program would conduct more objective screening before authorizing the service. For three of the six states, the benefit is administered through programs that are specifically devoted to the care of children with special health care needs.

The Benefit Package: Three of the six states report limits to the private duty nursing benefit, whereas three do not. The limitation to the benefit involves the number of hours per day that the family can receive private duty nursing. Typically the family is expected to provide eight hours of care per day. This requirement is most carefully specified in Michigan and the most liberal in Oregon. For example, Michigan specifies that the family’s eight-hour obligation cannot be met during a time when the child would normally be at school or in a day care facility. Oregon will reduce their usual eight-hour family care requirement to four hours, if the family is having trouble managing the child’s care.

Michigan has specific guidelines that are used to determine the number of private duty nursing hours the child can receive. These guidelines are considered along with social and family factors. A summary of their guidelines is contained in Appendix A.

Similarly, Oregon assesses each task that must be completed when caring for the child and then assigns a score, which is used to determine the number of hours of care the child will receive. For example, a child with a tracheotomy and a 24-hour ventilator requires more care than a child with a tracheotomy and no ventilator. The former child would receive a higher score and therefore more private duty nursing care than the latter child. The child’s care needs are reassessed regularly and the private duty nursing hours adjusted to account for any changes in the child’s condition (either improvement or deterioration).

Three states indicate that they do not have any limitations. However, the average number of private duty nursing hours reported by one state is eight and another is 12. The third state without benefit limitations did not provide the average number of private duty nursing hours delivered. Interestingly, Louisiana reports no benefit limitation. However, this state uses an outside company, Unisys, to determine the amount of hours that are most effective for the child to receive. Unisys does receive information from a decision team that plans the child’s care before authorizing the number of private duty nursing hours.

Program Eligibility: The program eligibility requirements are very similar from state to state. The children all must be Medicaid eligible. Some states also require enrollment in their program for CSHCN. A physician must order the private duty nursing services and the child must have a documented need for such services. States also require that the child have a designated caregiver. Typically the child must also have equipment needs and the need for ongoing skilled nursing intervention. Appendix B contains a summary of the eligibility criteria provided during the interview or through separate, additional documentation from the states. The eligibility for all of the states were very similar.

Conducting the Eligibility Determination Process: The three states that use programs dedicated to CSHCN to administer the benefit also conduct the eligibility determination process. As previously noted, the Title V CSHCN Program in Arkansas used to conduct the eligibility determination. Arkansas Medicaid now conducts this process. Texas recently established a Private Duty Nursing Benefit Administrator Position. The person in this position works with a contracted authorization and utilization review firm) to conduct eligibility determination, to monitor the benefit after it is implemented, and to conduct ongoing quality assurance for the children’s care.