Needs-based Funding for Home Care and Community Support Services in Ontario: A New Approach Based on Linked Survey and Administrative Data

1.0 Background Since 1994, the Ontario Ministry of Health and Long-term Care (MOHLTC) has used an equity funding formula to allocate new funding for the delivery of long-term care (LTC) community services, which includes home care services and community support services in the province.[Ontario Ministry of Health 2000] The objective of the formula is to reduce historical disparities in funding among Community Care Access Centre (CCAC) regions by allocating new funds on the basis of the relative need for home care and community support services of the populations living in each CCAC region. Since May 1998, the Ministry of Health and Long-Term Care (MOHLTC), in consultation with CCAC regions and service providers, has been reviewing the equity funding formula to identify possible improvements to the current formula, which is based on only age and sex adjustment. This work was initially conducted by the Long-Term Care Community Equity Funding Formula Review Committee [Ontario Ministry of Health 2000], and since June 2000 by the Community Funding Review Committee (CFRC). The CFRC engaged the Centre for Health Economics and Policy Analysis (CHEPA) as a consultant to carry out research required to develop a modified funding formula. CHEPA’s work has focussed on technical aspects of developing a needs-based funding formula. The formal funding formula that links a CCAC region’s funding to the characteristics of its population cannot address all the issues required to fairly allocate funds to CCAC regions. Additional issues that must be addressed by the CFRC include out-of-CCAC region use, defining clearly the set of services, programs and activities funded through the formula, and the approach to the transition from the current funding approach to new needs-based funding allocations. 2.0 Guiding Principles CHEPA’s work in developing the funding formula was guided by the following principles: a) Develop a population, needs-based funding formula that represents, as accurately as possible, the relative need for home care and community care resources among CCAC regions. The intent of the approach is to determine a region’s relative need for resources in a way that does not depend upon the past level of resources received by the region. b) Seek consensus from the Community Funding Review Committee regarding a set of adjusters to be evaluated for possible inclusion in a needs-based formula. In generating a set of possible adjusters, there should be a sound conceptual relationship between each adjuster and expected need for home care and community support service resources in a CCAC region. c) Seek consensus from the Committee regarding the best way to represent these factors empirically given the available data. d) Include health care system variables as adjusters only when the variable under consideration is not under the control of a CCAC. e) Adjust for costs beyond the control of a CCAC. f) Adjust for out-of-area use through a mechanism other than the funding formula. 3.0 The Analytic Strategy for Developing the Funding Model The richest source of data currently available upon which to base the development of a needs-based funding formula for home care and community support services is the 1996/97 Ontario component of the National Population Health Survey (NPHS). The survey provides detailed demographic, economic, health and related information on a random sample of Ontario residents and, for a sub-sample of individuals, this information can be linked to the administrative files from the Ontario MOHLTC, which document utilization of a wide range of services, including home care, hospital services and physician services. For the sub-sample of individuals for which survey information is linked from MOHLTC administrative data, therefore, we have detailed information on individuals and their health care utilization. (All information is anonymized so that it is not possible to identify any of the individuals surveyed.) The development of the funding formula included four distinct types of analyses. 1. Estimation of a Model for the Need for Home Care Among Individuals Under Age 12 The need for a separate model for those under and over age 12 arises because the sample size among those less than 12 in the Ontario Health Survey is too small to provide a valid basis for formula development. We therefore use the existing equity funding formula to allocate funds to CCAC regions for individuals under 12. 2. Estimation of a Model of the Need for Home Care Among Residents of Ontario Aged 12 or Over The goal of this part of the analysis is to estimate a provincial-level model of the determinants of need for home care among residents aged 12 or over. This model is estimated based on an individual’s use of home care, his/her characteristics (e.g., age, sex, health status) and the characteristics of the area in which the person lives. 3. Determining CCAC Region Budget Shares for Those Aged 12 or Over The Ontario Health Survey is a representative sample of the population of Ontario. Therefore, from the model estimated as per above, which is based on this survey information, it is possible to estimate the needs-based budget share for each CCAC region in Ontario based on the characteristics of each region’s population. 4. Adjustment for Factors Not Included in the Formula Funding to a CCAC region must be adjusted for factors that cannot be incorporated into the formula. We analyzed the appropriateness of such an adjustment for two factors. The first was whether there are differences in the average cost of providing home care services between CCAC regions with low population density and those with high population density, and between high-population CCAC regions and small-population CCAC regions. The second was to assess whether it would be appropriate to adjust the funding to those CCAC regions that experience an influx of temporary summer residents. 4.0 Results 1. Using data from the Ontario component of the NPHS, which includes detailed information on the demographic, health-related, and socio-economic characteristics of a representative sample of Ontarians, linked to administrative data from the MOHLTC, we were able to construct a statistical model that accounted for substantially more of the variation in the relative need for home care services across CCAC regions than does a model based on age and sex adjustment alone. 2. This model can provide a valid basis for a needs-based allocation formula that incorporates adjustment for a wide variety of needs-related characteristics of the population 3. Estimates of the 43 CCAC region needs-based resource shares (of the overall budget for home care and community support services) indicate that substantial reallocation from current funding is required to achieve an equitable sharing of the budget in line with relative need for resources across CCAC regions. 4. The sample size available in the 1996-97 Ontario component of the NPHS is too small to provide estimates for needs-based resource shares with the desired degree of precision. for all 43 CCAC regions. 5. Adjustment of CCAC region resource shares to reflect differences across CCAC regions in the average cost of providing home care services is not necessary. 6. Adjustment of CCAC region resource shares for regions that experience seasonal fluctuations in the number of residents is not necessary. 5.0 Conclusions Home care and community support services are becoming an increasingly important component of our health care system as the population ages and as changes in health care technologies and treatment patterns shift care out of traditional care settings. Both efficiency and equity objectives call for resources to be allocated in line with the relative needs for such care across the province. 1. The concerns that motivated the work of the CFRC are valid. The current age-sex adjusted equity formula fails to capture the substantial variation in need for home care across CCAC regional populations beyond that associated with differences in the age-sex distribution of the population. 2. This variation is highly correlated with demographic, health status and socio-economic characteristics measured in Canadian health surveys. This supports the contention that it is possible to develop a formula that adjusts for needs beyond those captured by age and sex adjustment. It also supports the potential of an approach based on individual, population-based data available in health surveys. 3. Because home care use is a relatively rare event among the general population, the sample size associated with the 1996 Ontario component of the NPHS provides estimates of needs-based resource shares for some CCAC regions that are less precise than might be desired. This issue can be addressed through a larger sample buy-in by Ontario of on-going regular national health surveys conducted in Canada. The benefits of doing this extend beyond the application to allocating funds for home care and community support services; such data can support a wide variety of population based planning activities to improve the efficiency and equity of the Ontario health care system. 4. In the intermediate and short-term it is possible to develop funding approaches based wholly on the population-based health survey data or on an integration of such data with the traditional equity approach that can begin the process of better allocating home care and community support service resource in Ontario in line with relative needs across CCAC regions.