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At a Glance


The Robert Wood Johnson Foundation

U.S. Department of Health and Human Services, Assistant Secretary for Planning and Evaluation

Project Time Frame:



Project Publications


Cash and Counseling Evaluation Changes Policymakers' Approach to Consumer-Directed Care

Mathematica’s evaluation of the Medicaid Cash and Counseling Demonstration altered policymakers’ thinking about consumer-directed care, leading the federal government to pass legislation encouraging it, and states to incorporate it into their Medicaid programs. A team of Mathematica researchers and programmers partnered with funders, state program directors, and journal editors to complete and disseminate high impact research on this innovative approach to providing home-based personal assistance to Medicaid beneficiaries who are frail or have disabilities.

Participants in the Medicaid Cash and Counseling Demonstration managed a monthly allowance to purchase assistance with routine daily living activities from sources other than traditional home care agencies. They could also purchase equipment or home modifications to facilitate independent living. The goal was to increase beneficiaries’ control over and satisfaction with personal care by allowing them to decide what services they wanted, who (including possibly family members) would provide them, and how and when the services would be provided, while limiting Medicaid spending to what their authorized care would have cost from an agency. Another important goal was to reduce the burden on unpaid family caregivers who provide the majority of care that beneficiaries receive.

The program was implemented as a demonstration in Arkansas, Florida, and New Jersey between 1998 and 2004. Approximately 2,000 adults in each state (plus 500 Florida children) who volunteered for the study were randomly assigned to participant or control groups. Our evaluation investigated effects on consumers, unpaid caregivers, hired workers, and Medicaid costs.

Participants typically hired relatives, but about one-third hired only unrelated individuals. Researchers found large, statistically significant, favorable effects on unmet needs, satisfaction with care, and quality of life for all three states, for both elderly and nonelderly adults, and for children with developmental disabilities in Florida. More than half of participants in each state reported that the program had improved their lives a great deal. Participants’ rates of adverse health events related to caregiving were similar to or lower than controls’. Participants’ primary unpaid caregivers reported significantly less physical, emotional, and financial stress than control group caregivers, lower rates of adverse health effects from caregiving, and greater satisfaction with life. Participants’ nursing home use was reduced 18 percent in Arkansas. Workers hired under the program also fared well compared to agency workers, reporting higher satisfaction with their pay and similar rates of job-related injuries and physical strain.

The evaluation found that the program participants had higher Medicaid expenditures for personal care than controls, but lower expenditures for other Medicaid services. It also found that in two states, the reason for participants’ higher expenditures was that control group members received far less services than had been authorized, while in the third state the participants received substantially higher allowances than their initial care plans recommended.

The findings were disseminated quickly to different stakeholders through publications, congressional briefings, press releases, webcasts to states, audiotapes for legislators, and presentations at conferences attended by state officials. The first peer-reviewed findings were published as “web exclusives” in Health Affairs in 2004 to get them out quickly. Findings on family caregiver effects and the experiences of hired workers were published in the Gerontologist. A Medical Care article examined the reduction in nursing home use. A special ten-paper issue of Health Services Research was commissioned, describing the origins of the program, implementation challenges, and all program effects. Reprints of all publications and short, informal issue briefs were distributed broadly to state Medicaid directors and to federal policymakers. The National Program Office for Cash & Counseling used the research extensively in promoting the program to state Medicaid directors and federal legislators.

Assured that this type of consumer direction is safe and that costs of the program could be controlled, policymakers made changes to improve the lives of thousands of Medicaid beneficiaries and their caregivers:

  • Congress included a provision in the Deficit Reduction Act of 2005 permitting states to offer cash and counseling without burdensome waivers, and provided incentives to use the model to transition nursing home residents into the community.
  • In January 2008, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to allow more beneficiaries nationwide to direct their personal assistance services.
  • Twelve more states adopted Cash and Counseling programs, and over half the remaining states have adopted or are developing similar alternatives to traditional services.

Data Collection Highlights

Survey data were collected via computer-assisted telephone interviewing. Our work included a baseline survey (conducted prior to random assignment), a four-month survey (treatment group only), a nine-month survey, and two caregiver surveys. Baseline response rate was 100 percent by definition—if the baseline interview was not completed, the person was not part of the study. Additional response rates were as follows:

  • Four-month survey: 90 to 95 percent across the three states
  • Nine-month survey: 84 to 87 percent across the three states
  • Informal caregiver survey: 75 to 83 percent across the three states
  • Paid caregiver survey: 84 to 85 percent across the three states

HSR Award 2009

As a result of the study's important impact on policy, the research team was awarded the HSR Impact Award from AcademyHealth in 2009.


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