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The Deregulated Service System and the Case for Case Management

For the first five years after the Older Americans Act created the Aging Network, the AAAs functioned in a market fixed and controlled. Certain key service providing agencies with clearly recognized and publicly-accepted roles had developed mutual acceptance regarding the scope of their respective services and the geographic area each would serve. This assured each agency of a monopoly of sorts, whereby each agency could control the flow of its clients, and cross-referrals and exchange of information could be reasonably encouraged. Duplication was generally avoided, certainly discouraged.

The Request for Proposal process was often used by AAAS to sort out pretenders to community legitimacy, contracts were used to facilitate coordination, and advocacy was persuading agencies to live up to their contracts and their brochures. Funding decisions were a result of efforts to provide a 'continuum of care,' a range of services which would be available for each level of need and disability an older person might face.

While agencies frequently fell victim to the Law of the Instrument that is, seeing the clients' needs exclusively through the services they could offer, they still subscribed to the Principle of Residual Responsibility that is, assuming the responsibility for all clients

who needed their services.

In the late 1970's and early 1980's, this static system was beset by two powerful forces: the national tide of deregulation, and the implementation of the Medicare Prospective Reimbursement System.

Deregulation created a competitive market in human services, particularly in home care. The handful of quasi-franchised agencies were replaced by a wave of competing agencies, which recognized no designated service areas and exercised their commercial right to choose what services to offer and what clients to serve and what clients not to serve.

The Principle of Residual Responsibility gave way to market segmentation, the 'creaming' of lucrative clients and the 'dumping' of costly clients which would render 'a favorable casemix.' Duplication was intrinsic to competition, and cross-referrals and agency-initiated coordination diminished markedly, information-sharing became a threat to agency survival

In 1983 the plight of the vulnerable was exacerbated with the introduction of the DRGs in Medicare. Older patients, whose conditions did not warrant skilled nursing care, but who had been discharged quickly, were particularly at risk. And hospitals and nursing homes, hoping to take advantage of the client flow through their discharge systems, jumped into the home care business, often leaving to the free-standing agencies the less profitable and less attractive patients.

It became obvious that provider demand had become the primary force driving the market. The 'invisible hand' of Adam Smith's classical market system simply didn't work with third party payer systems, and the chief victims in this case were those vulnerable elders whose needs in their efforts to remain in their own homes were too extensive or too varied to be attractive to competing community agencies.

It became also obvious that our AAA's macro-management of the service system through contract implementation and monitoring was not adequate in our advocacy for at risk elders, and that we had to micro-manage the system on their behalf, beginning with the " needs of individual clients and turning the resources of the system to address their individual circumstances.

The mechanism for individual advocacy we chose was case management, which was not without precedent in the Aging Network. Several states had already implemented statewide case management systems through their Area Agencies on Aging.

Case management is very different from other hands-on services to seniors. We recognized that it would give more dimension and authority to our advocacy and would enhance our

system planning and administration, particularly when used in conjunction with our clienttracking system

The appropriateness for AAAs' delivery of case management was established in the rules for the implementation of the Older Americans Act. The OAA Regulations of 1979 cited for appropriate direct delivery by AAAs those "services directly related to the statutory advocacy and service delivery functions of the area agency ... which must be performed in a consistent manner throughout the agency's jurisdiction. These services are: information and referral, outreach, advocacy, program development, coordination, individual needs assessment and case management."

These services were separated from other services for which a waiver for direct service provision by AAAs may be necessary "to assure an adequate supply," ... "such as nutrition, homemaker, transportation, and legal services."

It was, in fact, the AAAs' service-neutrality which made it particularly appropriate for our direct provision. Our AAA's initiative in individual needs assessment and case management has not only not compromised our advocacy efforts, but it has been the key to our effort in individual advocacy,

The Region IV Area Agency on Aging's Experience in Community-Based Long Term Care

or as we call it, care management

Our AAA's initiative in case management when we won Michigan's Demonstration Case Management Program through competitive bidding in 1983. This modest grant allowed us to staff a single multi-disciplinary team a nurse and social worker and some administrative support.


We chose to have a murse on the team because we knew that most of our clients would bave physical disabilities and may have come home from a hospital following an acute care episode. We were assured we had done the right thing when our first few cases revealed a pattern of need for intensive health care for the first few weeks after hospital discharge, followed by an indefinitely extended period of maintenance care using primarily non-health support services.

We always use the team to conduct the initial comprehensive assessment and care plan, but turn the care over to one member of the team for followup and monitoring, calling in the other if circumstances demanded it.

We chose also to target tightly our clientele to those with multiple and complex needs." This not only concentrated our resources on those in greatest need, the ones often shunted to institutions by agencies vigorously pursuing the more profitable less-disabled market, but also avoided any turf problems we might have had with home care providers.

We also set aside some of our state service dollars for purchasing services directly on a client-by-client basis, which would allow us to meet those special needs of at-risk seniors with products and services not reimbursable through existing sources. We could buy grabrails, ramps, raised toilet seats, etc.- those no-recurring purchases few programs pay for and other more conventional services which may not be available through our regular contracts. We established agreements with all kinds of community agencies, setting out available services, costs, and agency capacity. All participating agencies, including our subcontractors, agreed that our at-risk clients had priority for service and that the level, frequency, and duration of services for Care Management clients would be set by the AAA The agencies also understood that their delivery of services would be regularly monitored on site, and poor performance would result in their not being used.

We learned quickly some very interesting things. Several agencies, after seeing the charges

of other agencies, asked to renegotiate their charges, dropping them down to more competitive rates. This had, as far as we could tell, little effect on the pay of aides and nurses since many worked for more than one agency and realized little difference in remuneration.

We also learned that agencies which sometimes performed in cavalier ways for programs utilizing paper reviews gave us good quality services, knowing that our on-site visits would quickly reveal deficiencies.

We have found that, on balance, our providers can and do give us quality services.

Although the system was designed primarily to address the issues of access for our vulnerable clients, the quality of care provided them, and the efficient use of our AAA dollars (see chart on CM and market system), there was an interest in whether or not our project had any impact of our clients' care on their utilization of other systems.

We had read the preliminary results of research on the Channelling Demonstration Projects, which for all practical purposes we discounted. To design projects in one administration to

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