In an experiment being watched nationally, Tennessee has revised its Medicaid long-term care options to make it harder for certain low-income elderly people to qualify for state-paid nursing home care.

The state is creating a category of seniors who officials say need assistance but not in a nursing home and not with an equivalent level of treatment via home- or community-based services. The state TennCare Medicaid program will pay up to $15,000 a year to help these participants stay in their homes or receive meals and other services in adult day-care facilities or other less-restrictive community settings.

But consumer advocates worry that the $15,000 annual limit will fall short of meeting the needs of some seniors, who could end up going without services or relying on funds from family or friends. Gordon Bonnyman, executive director of the Tennessee Justice Center, said he feared that “a lot of frail people are not going to make it on the reduced package.”

State officials say that the money should be sufficient and that seniors whose need for care increases may qualify for more-extensive TennCare benefits of up to $55,000 a year for nursing home or community-based care.

TennCare hopes to save $47 million this year from the new program, which has received federal approval and began this month. In the longer run, the state predicts that by retooling the system, it will be better prepared to accommodate an expected spike in enrollees as baby boomers age.

TennCare’s long-term care system serves 23,705 elderly. TennCare, like Medicaid in other states, is financed with federal and state funds. In addition to low-income seniors, it covers children, pregnant women and the disabled. Tennessee’s financial share for long-term elderly care is $1.1 billion per year.

The new program is the second time in three years that TennCare has moved to reduce the use of nursing homes. In 2009, the state obtained permission from the federal government to offer nursing home patients — and new long-term care enrollees — the option of receiving care in a family- or community-based setting.

That change has been successful. In 2010, about 83 percent of Tennessee’s long-term Medicaid patients were in nursing homes, with 17 percent in home and community settings under a prior waiver. Today, 66 percent of patients are in nursing homes and 34 percent are receiving home- and community-based services.

Melinda Henderson, executive director at UnitedHealthcare Community Plan, one of three managed-care organizations that administer Tennessee’s Medicaid system, said patients overwhelmingly choose not to be in nursing homes.

“You kind of lose your independence at a nursing home,” said Sarah Stewart, who lives in Bolivar, in the state’s rural southwest. “I just prefer to be at home and be independent.”

Stewart, 78, had a heart attack in 2008 and is legally blind because of macular degeneration. She was hospitalized for breast cancer surgery in 2011 and put in a nursing home afterward, an experience she did not enjoy, in part, she acknowledged, because she was not allowed to have Molly, her Chihuahua, with her.

The 2009 change enabled her to leave nursing care last fall and go home, where a caregiver helps her with shopping, housework and personal needs for six hours a day, five days a week.

The new program is an outgrowth of what officials said they learned from the 2009 change: that many people didn’t need more than $15,000 a year in assistance.

Under the new regulations, the previous requirement — that someone need help with an “activity of daily living,” such as dressing or using the bathroom — has been replaced by a complicated weighted point system that makes it considerably more difficult for patients to reach the standard to qualify for nursing home care.

The focus of this endeavor, said TennCare Assistant Commissioner Patti Killingsworth, is to make sure healthier patients who had, under the old system, qualified for nursing facilities are served “more appropriately” in community-based settings. “We want nursing homes to target patients who truly need their services,” she said.

Killingsworth said that 40 percent of elderly Medicaid patients receiving community benefits before the change spent “less than $15,000 per year” and that if they were entering the system now, they would receive “an appropriate level of benefits.”

Bonnyman, the consumer advocate, said TennCare has not done the analysis to warrant that assertion. “On paper, what they’re talking about looks fine,” he said. But “all of this starts with a mandate designed to save $47 million.”

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.