Bye-bye, Boren.

At the March annual policy meeting of the American Association of Homes and Services for the Aging (AAHSA), a senior Clinton Administration official offered a pragmatic perspective on the future of the embattled Boren Amendment. According to Sally Richardson, director of HCFA's Medicare Bureau, elimination of the Boren Amendment is the only shared feature among the Medicaid reforms proposed by the Republican-controlled Congress in October, the Clinton Administration in November, and the nation's governors in February. The Boren guarantees of equitable reimbursement for nursing homes have apparently few friends in Washington, and seem unlikely to survive the next rewrite of Medicaid, regardless of who is in power.

The situation may not be quite as stark as it seems. Even though the Republican proposal would have eliminated all private rights related to Medicaid, including the rights of patients to quality care and the rights of providers to fair reimbursement, the governors' proposal was less harsh: while nursing homes would lose the right to sue for fair reimbursement, patients (or residents) could still file a class action in state courts. The Clinton Administration, for its part, says it wants to maintain the objectives of the Boren Amendment, but argues that the Amendment's language stands in the way of the goal of encouraging managed care for elderly patients eligible for both Medicare and Medicaid. Sally Richardson told AAHSA members that the Amendment isn't really needed to protect the interests of patients and providers if Medicaid remains an entitlement. "Provider rates must be set at rates that will guarantee access and cost-efficient services," she said, in an apparent reference to Civil Rights Act actions that have been brought in health care access-related cases. Meanwhile, retention of the OBRA regulations, thus guaranteeing national standards, would force states to provide reimbursements needed to maintain quality care, she contended.

Richardson suggested that the Boren Amendment was in fact responsible for frivolous suits and extensive legal costs that hurt both the states and long-term care providers.

Richardson's stance failed to convince many of the attendees. One challenged her assumptions, stating that there is no guarantee of a minimum level of quality of care because of variations in states' interpretations of OBRA. Richardson turned the argument around, pointing out that the Boren Amendment's demand of reimbursement for "efficient and effective" care lacked a nationally-accepted definition, while the OBRA enforcement provisions placed in effect last year provided at least some hard measures for quality.

The audience's skepticism about the credibility of the Administration's views and the virtues of "flexibly-administered" managed care was further fueled by Richardson's remark that "managed care is inexperienced with frail elderly and disabled patients." According to Richardson, states that have used waivers to encourage use of managed care have tended to greatly increase the number of people eligible for assistance, but have cut costs often by cutting back on the level of services and number of providers. She noted that Oregon's Medicaid reform was struggling with underfinancing due to "property tax limitations," and that Tennessee's TennCare program achieved greatest success in limiting overall costs after roughly half of all health care providers refused to participate.

An earlier presentation on state experiments in Medicaid managed care - including Arizona's managed long-term care program - conjured up an administrator's nightmare. When Arizona established Medicaid reimbursement for long-term care, it simultaneously eliminated certificate-of-need requirements. The number of nursing homes doubled within five years and occupancy rates dropped. This worked to the advantage of managed care: with the glut of nursing home beds, price replaced quality as the criterion for patient placement, and nursing homes found themselves engaged in cutthroat competition to achieve even 80% occupancy. Today, single-facility nursing homes in Arizona reportedly have "negligible" ability to negotiate fair rates for services. Multi-facility providers do have some leverage, but use the pre-managed care fee-for-service rates as a reimbursement "ceiling figure."

According to the discussions at the AAHSA meeting, the for-profit long-term care providers actually received better treatment under the Arizona system, in part because they generally decline to offer the customized services that some not-for-profit facilities demand as part of their reimbursement base (such as kosher meals for residents of Jewish homes for the aging).

Arizona may illustrate "life without the Boren Amendment." Nevertheless, few in Washington policy circles appear to be swayed by this. Republicans and the Clinton Administration both are quick to insist that turning all reimbursement questions over to the states must result in greater fairness because, after all, the states are "closer to The People." Presumably, this means that "The People" are willing and able to instruct their state governments on such matters as disproportionate share for hospitals, provider risk factors, and allowed allocations for overhead costs. Or maybe the assumption is that "The People" no longer want governments to be bothered by such concerns.