Case Study: Cash and Counseling Demonstration Finds Large Favorable Effects, Leading to Policy Changes

Model Tested in Three States

Cash & Counseling had the gold standard, a randomized trial. That level of research is what helps people get behind it. Without that, it’s just another program that people think is a good idea.

- Nancy Fishman, Robert Wood Johnson Foundation program officer for the Cash & Counseling program during its replication phase
Project Facts

The program was implemented in Arkansas, Florida, and New Jersey in the demonstration phase from 1998 to 2004.The first peer-reviewed findings were published as web exclusives in Health Affairs in 2003 to disseminate them quickly, followed by several additional journal articles. A special issue of Health Services Research in February 2007 published the full set of findings from the demonstration.

  • More than half of the participants in each state reported that the program had improved their lives a great deal.
  • The Mathematica research team earned the HSR Impact Award from AcademyHealth in 2009.
  • As a result of the success of the program, it was continued on a permanent basis after the demonstration ended.  Twelve additional states adopted Cash and Counseling in a second (replication) phase of the program.

Notes on Data Collection. Approximately 2,000 adults in each state (plus 1,000 Florida children) who volunteered for the study were randomly assigned to participant or control groups. The evaluation investigated the effects on consumers, unpaid caregivers, hired workers, and Medicaid and Medicare costs. Survey data were collected via computer-assisted telephone interviewing and included a baseline survey (conducted before random assignment), a four-month survey (treatment group only), a nine-month survey, and caregiver surveys of paid and unpaid workers. Response rates to the 9-month consumer followup survey were very high, ranging from 80 to 90 percent across states and age groups.

The Issue

Medicaid beneficiaries who are frail or have disabilities have long sought greater control over their own home-based personal care than was available through the typical home care agency-directed care, but policymakers have balked, fearing abuse of consumers, safety issues, and fraud. To address this issue, the Robert Wood Johnson Foundation and the U.S. Department of Health & Human Services, Office of the Assistant Secretary for Planning and Evaluation, launched the Medicaid Cash and Counseling Demonstration.

The Approach

Through the Medicaid Cash and Counseling Demonstration, participants managed a monthly allowance to purchase assistance with routine daily living activities from sources other than traditional home care agencies. Participants typically hired relatives, but about one-third hired only unrelated individuals. Counselors provided oversight and support to ensure that consumers developed reasonable spending plans and followed them. Checks were typically written by fiscal intermediaries, based on consumers’ invoices. Mathematica was hired by the funders to conduct a rigorous evaluation of the demonstration.

The Impacts

Mathematica’s evaluation and dissemination of positive evidence-based findings from the Medicaid Cash and Counseling evaluation allayed policymakers’ concerns and changed policy to dramatically improve the lives of Medicaid beneficiaries, their families, and caregivers. Researchers found large, statistically significant, positive effects on program participants’ 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. Participants’ rates of adverse health events related to caregiving were similar to or lower than the control rates on every measure examined, for every age group and state. Workers hired under the program also fared well compared with agency workers, reporting higher satisfaction with their pay and similar rates of job-related injuries and physical strain. Although program participants had higher Medicaid expenditures for personal care than control group members (in part due to underservice to control group members), they had lower expenditures for other Medicaid services.

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 consumer direction without burdensome waivers and required states participating in the Money Follows the Person program to offer a consumer direction option to nursing home residents that the program helps transition back to the community.
  • In January 2008, the Centers for Medicare & Medicaid Services issued a proposed rule to allow more beneficiaries nationwide to direct their personal assistance services.
  • Twelve more states adopted Cash and Counseling programs, and more than half the remaining states have adopted or are developing similar alternatives to traditional services.
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This case study is for informational purposes only. Mathematica Policy Research, a nonpartisan research firm, provides a full range of research and data collection services, including program evaluation and policy research, survey design  and data collection, research assessment and interpretation, and program performance/data management, to improve public well-being. Its clients include federal and state governments, foundations, and private-sector and international organizations. The employee-owned company, with offices in Princeton, N.J.; Ann Arbor, Mich.; Cambridge, Mass.; Chicago, Ill.; Oakland, Calif.; and Washington, D.C., has conducted some of the most important studies of education, disability, health care, family support, employment, nutrition, and early childhood policies and programs.

About the Project

Medicaid beneficiaries who are frail or have disabilities have long sought greater control over their own home-based personal care than was available through the typical home care agency-directed care. Policymakers were concerned that consumers might not receive care of adequate quality or might be injured or taken advantage of, so a demonstration to test the model in three states—Arkansas, Florida, and New Jersey—was jointly developed and funded by the Robert Wood Johnson Foundation and the U.S. Department of Health and Human Services, Assistant Secretary for Planning and Evaluation. The evaluation assessed the effects of the program in each state on consumers, paid and unpaid caregivers, and costs to Medicaid and Medicare.

Researchers found large, statistically significant, favorable effects on unmet needs, satisfaction with care, and quality of life in all three states where the demonstration took place for both elderly and nonelderly adults, and for children with developmental disabilities in Florida. Family caregivers of program participants experienced much higher quality of life and lower levels of physical, emotional, and financial stress than control group caregivers, in all three states.

Based on the dramatic positive impacts, policymakers made changes to simplify the waiver process allowing states to offer consumer direction of Medicaid HCBS and required new programs to include a consumer direction option, improving the lives of thousands of Medicaid beneficiaries and their caregivers.