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Key State Policy Choices About Medicaid Home and Community-Based Services

State Medicaid programs must cover long-term services and supports (LTSS) provided in nursing homes, while most home and community-based services (HCBS) are optional. State policy choices about HCBS shape these benefits in important ways for the seniors and people with disabilities who rely on them to live independently in the community. This issue brief presents the latest data (2017) from the Kaiser Family Foundation’s 17th annual survey of Medicaid HCBS program policies in all 50 states and DC. Related briefs present state-level HCBS enrollment and spending data and answer key questions about HCBS waiver waiting lists. Key themes in state HCBS policies include the following:

  • States are using Medicaid HCBS to advance community integration and counter the historical bias toward institutional care. For example, most states are using waivers to expand HCBS financial eligibility up to the federal maximum (300% SSI) and are using the same financial and functional eligibility criteria for HCBS and institutional care, placing HCBS on equal footing with nursing homes. A few waivers use less stringent financial and/or functional eligibility criteria compared to nursing homes, offering HCBS to these individuals before their needs rise to the more stringent (and often costlier) institutional level of care. States also are expanding the settings for personal care services beyond the beneficiary’s home. Over 70% of states with the personal care state plan benefit offer services at a beneficiary’s work site, and over 60% offer services elsewhere in the community outside of a home or work setting. Nearly all states allow beneficiaries to self-direct HCBS through at least one state plan or waiver authority.
  • States are using newer HCBS state plan authorities, including Section 1915 (i) and Community First Choice (CFC), to expand or augment the populations and services they are covering under waivers. While the majority of HCBS continue to be provided through waivers, nearly all states that elect the CFC attendant services option also offer personal care state plan services, and nearly all states that elect the Section 1915 (i) HCBS state plan option also serve the same target populations through waivers. Section 1915 (i) targets people with functional needs that are less than an institutional level of care, which enables states to provide services earlier, before people’s needs deteriorate to an institutional level of care, which may forestall or prevent the need for costlier more intensive services provided under waivers.
  • States are continuing to make policy changes in response to key federal regulations affecting HCBS. Most of the 24 states with capitated managed long-term services and supports programs already have put policies in place that follow changes in CMS’s 2016 revision of the federal Medicaid managed care rule. States were further along in identifying policy changes required to come into compliance with CMS’s home and community-based settings rule compared to the prior two years, with most having identified settings that must be modified to continue being used for Medicaid-funded HCBS, settings that cannot be modified and will require beneficiaries to relocate, and/or settings for which the state will submit information to CMS to overcome the presumption that they are institutional. An increasing number of states are making policy changes in response to the U.S. Department of Labor’s application of minimum wage and overtime rules to direct care workers compared to the prior two years, such as by restricting worker hours or budgeting state funds for worker overtime and/or travel pay.

State HCBS policies have been instrumental in increasing beneficiary access to HCBS and shifting the balance of Medicaid LTSS spending in favor of HCBS over nursing homes and other institutional care. The historical bias toward institutions, requiring states to cover nursing home case while making most HCBS optional, remains in federal Medicaid law. Still, states continue to take advantage of various options to use federal Medicaid matching funds to increase HCBS eligibility and covered services and to modify their delivery systems and provider policies to support HCBS. As the primary payer for LTSS and the only source of many HCBS important to the daily needs and independent living of seniors and people with disabilities and chronic illnesses, Medicaid will continue to play an important role in this area, and state Medicaid HCBS policy choices will remain a key area to watch.

Issue Brief