The Centers for Medicare and Medicaid Services will award over $23 million in 2007 to states that move long term care recipients out of institutions such as nursing homes and into their own homes or other community settings.

The awards, announced Jan. 12, will go to 17 states that offer demonstration programs to move LTC recipients out of institutions, said Leslie Norwalk, acting director of CMS. The state aid will ultimately total as much as $900 million over the next 5 years to the 17 states.

A second group of states will be awarded grants later this year, CMS says. Total grants to all states expected to participate could reach $1.75 billion by 2011.

The grants, known as Money Follows the Person Rebalancing Demonstration Awards, will provide extra federal matching dollars to help participating states cover the costs of moving people out of institutions such as nursing homes.

Made possible under provisions of the Deficit Reduction Act of 2005, the MFP program allows states to use the funds to make it easier for individuals to receive LTC services where they choose. States would also be able to continue improvements in treatment quality.

“People who need long term care prefer to remain in their own homes and communities whenever possible,” Norwalk said. “States will also get more for their money by giving the elderly and people with disabilities more control over how and where they get the Medicaid services they need.”

The awards will help states move 20,000 individuals into care at their own or relatives’ homes or into community residences, she added.

All states were eligible to apply to participate in the 5-year demonstration program, which requires them to participate for at least 2 straight years.

States getting grants can receive an increase in federal matching dollars, which are to be applied to services to an LTC beneficiary for one year after the individual moves out of an institution and into the community. The state must then continue to provide community services as long as the person needs them and is Medicaid-eligible.

Connecticut Gov. Jodi Rell said the $24.2 million CMS grant her state will receive is “a tremendous step forward” for disabled people and their families in the state.

“This approach will be cost-effective for taxpayers and lead to wonderful improvements in the quality of life for many of our seniors and people with disabilities,” she said.

Connecticut projects that the grant will enable 700 residents to move out of nursing homes over the next 5 years. Its grant will total $1.3 million in 2007 and $24.2 million over the full 5 years.

The state will use the money to cover live-in assistance to seniors and disabled individuals, along with costs of home alterations to accommodate handicaps and for other medical equipment.

The federal government will reimburse the state for 75% of its costs for each individual returned to the community, rather than the previous 50%, according to the state’s Department of Social Services.

In addition, the state will expand its home-care program for elders to include personal assistance and assisted-living services, provide a 40% increase of slots in the state’s Personal Care Assistance Program and give rental aid to those moving back into the community.

However helpful the new program may be to some Medicaid recipients, at least one observer notes it comes on the heels of cutbacks in Medicaid assistance.

For instance, the DRA made it harder for seniors who had already spent down whatever savings they had to qualify for Medicaid by disallowing LTC assistance to people who had given money to a grandchild or to charity within the previous 5 years.

LTC insurance expert Jesse Slome warns that people who rely on the government to help care for them in their senior years could find themselves let down.

“What the government giveth, the government can also take away or certainly change,” observes Slome, executive director of the American Association for Long-Term Care Insurance, Westlake Village, Calif.

“Medicaid is intended as a poverty program, not universal health care,” he says. “As baby boomers age and more people need long term care, state budgets will be stretched beyond their current capacity, and that’s when changes get implemented.”

People who provide for their own future will be in the best position to control their choices and care options, Slome argues.

“There are people who say, ‘I want to be responsible and take care of [LTC needs],’” he says. “That’s where the insurance industry solves their problems.”