Care-management organizations (CMOs) manage the Family Care benefits, providing services in community, residential, and institutional settings (Justice, 2003). Funding from multiple programs (e.g., home- and community-based waiver services, state general-revenue-funded programs, and Medicare long-term care services) are consolidated into the single Family Care program, and CMOs are paid a capitated rate. This creates an incentive for the CMOs to provide support to enrollees in their homes rather than in institutions. The program also allows enrollees to have a high level of self-direction, organizing services around enrollees’ unique needs and preferences rather than strictly by allowable services or designated providers.

Through its focus on social outcomes, the program has succeeded in increasing choice and access and improving quality, but early results found no effect on claims-based measures, such as utilization, and it was not possible to determine the cost-effectiveness of the program (Alecxih et al., 2003). Regardless, enrollees did not experience a decline in service levels at the start of the program, and the demand for services from the centers has been much stronger than anticipated (Medstat, 2003).

Cash and Counseling

Under the national cash and counseling demonstration project conducted in three states, individuals received a monthly allowance (in the form of direct cash payments) to purchase disability-related goods and services. Enrollees were provided with counseling and financial assistance to help them plan and manage their choices. An evaluation found that the program improved satisfaction and the quality of life for enrollees and caregivers, reduced most unmet needs among enrollees without adversely affecting health or safety, and resulted in a reduction in nursing-home and other long-term care costs (Foster et al., 2003; RWJF, 2006). Costs were somewhat higher for enrollees because they were receiving more of the care that they were authorized to receive. Similar programs are now being adopted in 12 more states, and federal waiver authority is no longer required for states to implement cash and counseling programs.

One unusual aspect of these efforts is that they often allow patients to hire informal caregivers as their workers. Critics suggest that this allowance presents an opportunity for fraud and abuse and worry that costs will soar if informal caregivers currently providing unpaid care start to demand payment for their services (Stone, 2000). Others contend that the allowance will expand the pool of available caregivers and that the services provided may be more in line with patients’ preferences (Benjamin, 2001). Evidence of the effect of hiring relatives is not clear. One study found that about one in five paid informal caregivers had not been providing care prior to the



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