A multi-billion dollar federal initiative to move low-income elderly and people with disabilities from long-term care facilities into the community has fallen far short of its goals, as many states have struggled to cobble together housing and other services.

Launched in 2007 during the Bush administration, the states initially projected placing 35,380 Medicaid recipients in the first five years. As of March 31 at least 22,500 had made the transition, about 36 percent below the states’ target.

The numbers vary sharply by state. Some, such as Texas and Ohio, have helped thousands find homes in their communities. Others, including North Carolina, Missouri and Kentucky, have moved fewer than 500 each.

In California, only 827 people have made the jump since 2008, although the state was awarded $41 million during that time. “We’re not doing a good job of it here,” said Deborah Doctor, legislative advocate for Disability Rights California. “It’s pathetic.”

Some states have found it especially difficult to move the elderly. While the vast majority of eligible people are seniors, only about one-third of the program’s participants are age 65 or over, according to Mathematica Policy Research, a Princeton, N.J.-based firm hired by the government to evaluate the project. Most of the other participants are adults under 65 with physical disabilities living in nursing homes and people with developmentally disabilities living in institutions.

While advocates strongly support the program and its goals, many say they are disappointed with what they see as its glacial pace, given the $4 billion Congress has authorized and the fact that about 900,000 people living in institutions meet the eligibility requirements.

“It’s very frustrating to us,” said Kate Ricks, who heads Voices for Quality Care, a multi-state long-term care advocacy group based in Maryland. “At the rate they’re getting people out, everyone who is eligible will be dead.”

Officials from the federal Centers for Medicare & Medicaid Services, which administers the program, acknowledge that it was tough for many states to get rolling; some states didn’t start until 2008. But they say the pace has picked up — placements have doubled in the last few years.

“We’ve transitioned individuals from nursing homes who have been over 90 years old and have been able to serve them extremely well in the community,” said Ron Hendler, CMS’ technical director for the program. “They have been very complicated transitions, but we’ve been able to do them — and very successfully.”

States Receive Extra Funds

To participate in the program, a person must express interest and be enrolled in Medicaid, the state-federal program for the poor and those with disabilities. Transition counselors help coordinate their move into houses, apartments or group homes of four or fewer residents — or, in some cases, assisted living facilities.

The program, called Money Follows the Person, offers states extra Medicaid funding to pay for the participant’s home and community-based services over 12 months, as well as furniture, security deposits and renovations to make housing accessible to the handicapped.

The program was slow to get off the ground for a number of reasons. Some states had a shortage of direct care workers. Some faced bureaucratic obstacles — for example, problems meeting federal reporting requirements or setting up quality monitoring systems. Some ran into delays in negotiating contracts with transition specialists or case management contractors, according to a July 2011 report by the National Association of States United for Aging and Disabilities.

Mathematica found that some of the barriers to moving the elderly included dealing with their intensive medical needs, lack of community-based services and difficulty arranging support from family members.

Another challenge in many states is finding affordable, accessible housing for participants. Elderly nursing home residents may not have a house or apartment to return to. Long waiting lists for subsidized housing vouchers may delay transitions for adults with physical disabilities.

Wayne Cook, of San Leandro, Calif., struggled to find a place to live.

Cook, 56, suffers from polymyositis, an inflammatory disease that attacks the muscles. He was living in a nursing home when he signed up for the program.

His transition counselor gave him a list of apartments, but many had been rented months earlier. “I just started getting on the bus and looking for places on my own,” said Cook, who uses a wheelchair.

Cook said it took him more than six months to find a landlord who would accept his Section 8 housing voucher. He finally moved into a one-bedroom apartment that wasn’t handicap-accessible but was on the first floor.

“Man, it’s kind of hard to describe what it was like to go back to an apartment,” he said. “I had come a long way from people telling me I was going to be bedridden for the rest of my life. I can’t put it in words what it felt like to get my own door key again.”

Cook said the hardest part for him has been dealing with tasks such as paying bills and grocery shopping.

Transitions Present Challenges

That’s a common concern for people transitioning out, said Robyn Grant, outreach director for the National Consumer Voice for Quality Long-Term Care, an advocacy group.

Grant has interviewed more than a dozen Money Follows the Person participants who’ve left nursing homes. While they praised the program, they’ve stressed the need for more life-skills training in areas such as personal hygiene, menu planning and hiring caretakers.

“Nursing home life is very regimented,” Grant said. “You go from everything being decided for you to it being wide open. A number of people said getting used to that was a big adjustment.”

Some participants end up returning to nursing homes and institutions. The states routinely send CMS data about how many people died or have been reinstitutionalized during their time in the program. CMS officials would not release those numbers to Kaiser Health News.

A 2011 Mathematica report found that out of 4,746 participants studied, about 14 percent of seniors and about 10 percent of people with physical disabilities returned to an institution within the year. Eleven percent of seniors died during that time, as did six percent of people with physical disabilities.

For participants who remain in the program, once the year ends, the states are expected to use their Medicaid dollars to continue paying for the participant’s day-to-day services, such as home health, case management and personal care.

States are also required to take some of the Medicaid funds they’ve gotten for Money Follows the Person and reinvest them in long-term care services, shifting spending from institutional to home and community-based care. The idea is to help keep people out of nursing homes and institutions from the start.

Congress Repeatedly Invested In The Program

In 2005, Congress authorized $1.75 billion to fund the original five-year project in 30 states and the District of Columbia. States started receiving their awards in 2007, and by the end of 2008, most had launched their programs. In 2010, Congress authorized another $2.25 billion for the program under the Affordable Care Act and extended it through September 2016. Thirteen more states won grants last year, bringing the total to 44.

So far, the federal government has paid or committed to pay $1.1 billion to the states, according to CMS officials.

Each state decides which target population it wants to transition: the elderly, adults with physical disabilities, those with developmental disabilities or the mentally ill. Some states choose one or two groups, others include all of them. Some have comprehensive community care networks already in place. Others don’t, and must spend a big chunk of grant money getting their programs running.

“The states that started from almost zero have had to really struggle,” said Barbara Edwards, director of CMS’ Disabled and Elderly Health Programs. “The states need the dollars to make the investment in the infrastructure, but you don’t get the dollars till you move people. But you can’t move people without the infrastructure. There was a chicken and egg problem.”

Even now, a handful of states are responsible for the bulk of placements. The biggest by far is Texas, which was awarded $123 million for the first five years of the program and by the end of 2011 had moved out 5,298 people.

Texas officials say their state had already been operating its own version of Money Follows the Person starting in 2001. “We had earlier experience and looked for the barriers and how to address them,” said Marc Gold, manager of Texas’ Promoting Independence program. “I think other states having problems probably didn’t have an infrastructure at all.”

Some states are struggling. Joel Weeden, who runs the program at the California Department of Health Care Services, blames much of the problem there on the logistical headache his agency faces because it contracts with a network of two dozen local agencies responsible for transitioning people.

“We did not have an existing statewide system in place for coordinating home and community based services,” Weeden said. “California has a fragmented system.”

In a few states, Money Follows the Person never even got off the ground — or ended abruptly.

In Florida, lawmakers last year failed to give state officials the authority to use their $35.7 million grant award because the funding was authorized under the Affordable Care Act, which the state is challenging in federal court.

And in Oregon, officials suspended their program last October after a state investigation cited irregularities and money spent improperly. While the probe found no evidence of fraud or collusion, it concluded that the director had agreed to use grant funds to pay providers for construction and remodeling of housing that wasn’t allowed. The director resigned and two other state officials left their jobs.

“The issue here was a lack of oversight and lack of adequate controls,” said Jim Scherzinger, the Oregon Department of Human Services’ chief operating officer.

In the four years the program operated, the state spent $16 million in federal funds on client services and $5 million on administrative costs, according to Scherzinger. Only 306 people transitioned out. Scherzinger said the program was “of marginal benefit” because his state already was a leader in diverting people from nursing homes into community settings.

Oregon State Sen. Jackie Winters, who serves on the Ways and Means committee, said the program was “wracked with problems.”

“They grabbed the money without real planning,” said Winters, a Republican from Salem. “The federal government holds out the carrot for states to receive revenues. States have been very, very strapped. They’re anxious for the dollars that come down… It’s just like a kid going into a candy store.”

One area that Congress didn’t address when it authorized Money Follows the Person was whether it would save money.

In a February review, CMS contractor Mathematica found that the cost of community-based long-term care services is 34 percent lower than what Medicaid programs typically pay for nursing home care. But the study was inconclusive about whether Money Follows the Person is saving taxpayer money because it did not assess the cost of medical care for people living in the community.

“We have not made that determination. We feel it’s a little too early,” said Mathematica project director Carol Irvin. “Don’t construe that it saves money to have someone in the community.”

Other than the Mathematica reports, no federal agency has evaluated the program. The Government Accountability Office is expected to release a report in June that examines the states’ plans for providing home and community services and how they are implementing different types of options, said Katherine Iritani, a GAO director for health issues. The review will include Money Follows the Person, but won’t be assessing its cost effectiveness or quality.

Whether the program saves money or not, both advocates and government officials agree that it’s the right policy direction because it gives people choice in how and where they live their lives.

But even boosters say there need to be improvements.

Federal officials want states to continue modernizing their data and tracking systems. Advocates want improved monitoring and oversight.

“One of the things we’re most concerned about is that people are actually getting the quality services and follow-up,” said Lori Smetanka, a director at The Consumer Voice. “The states have to submit assurances about how they’re going to monitor the quality, but we aren’t yet satisfied about how they’re doing that.”

This article was produced by Kaiser Health News with support from The SCAN Foundation.

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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