Combined Federal and State Spending on Medicaid Home and Community-Based Services (HCBS) Totaled $116 billion in FY 2020, Serving Millions of Elderly Adults and People with Disabilities

The federal government and the states together spent a total of $116 billion on Medicaid home and community-based services (HCBS) in FY 2020, serving millions of elderly adults and people with disabilities, a new KFF analysis finds.

Medicaid is the nation’s primary payer for such services, which include assistive technology, personal care to help people with bathing or preparing meals, and therapies to help people regain or acquire self-care and independent living skills. There is long-standing unmet need for such services nationally, as well as perennial shortages in the direct care workforce. Both have been exacerbated by the pandemic and rising demand for services related to the aging population.

Congress took a step toward approving new funding for HCBS when lawmakers included $150 billion for such services in the House-passed Build Back Better Act (BBBA). But the bill faces legislative challenges in the Senate and the fate of the proposed funding remains uncertain.

The new analysis, based on KFF’s 19th survey of state officials administering Medicaid HCBS programs in all 50 states and DC, finds that most enrollees receive home and community-based services that are optional coverage choices made by state Medicaid programs, usually in the form of waivers or optional state plan benefits. That results in substantial variation in HCBS eligibility, spending and benefits across states.

A second analysis based on KFF’s survey examines the landscape of state policy choices about Medicaid HCBS in FY 2020, presenting the latest data available, and the first since the onset of the pandemic. For the last decade states have pursued expanding HCBS as an alternative to institutional long-term care. Spending on HCBS accounted for 59 percent of total Medicaid long-term services and supports spending in FY 2019, the most recent year for which data is available.

Nationally, 3 million people receive HCBS through waivers. Over 2.5 million people receive HCBS as part of the state plan benefit package. However, the total number of people who received HCBS across all authorities is not available because some individuals may receive both waiver and state plan services.

Because states can limit enrollment in HCBS waivers, most states report having HCBS waiver waiting lists, totaling over 665,000 people nationally. However, state variation in policies makes waiting lists an incomplete measure of program needs and state capacity, and makes it difficult to compare waiting lists across states or from year to year. Notably, the majority of people on waiting lists are in seven states that do not screen for waiver eligibility before placing individuals on such lists.

Spending data shows that among waiver target populations, annual per person costs for people with intellectual and developmental disabilities ($48,900) were much higher than per person costs for seniors and adults with physical disabilities ($17,600)

States vary in scope of services provided as well as reimbursement for providers. The average provider reimbursement rate for home health agency services is $118.82 per visit, based on analysis of the survey data provided by 20 states. The average provider reimbursement rate paid to personal care agencies is $23.09 per hour in 22 of 37 states reporting this data.

Federal funding for Medicaid HCBS was temporarily boosted by the American Rescue Plan Act of 2021 (ARPA). The House-passed BBBA would provide a permanent increase in the federal matching rate and $150 billion in new federal funds for Medicaid HCBS. Information in these KFF analyses can serve as a useful baseline to measure the impact of changes in ARPA as well as changes from BBBA if enacted.

For more data and analyses about Medicaid HCBS, visit kff.org.