Medicaid Home and Community-Based Services Enrollment and Spending

Medicaid continues to be the primary source of coverage for long-term services and supports (LTSS), financing over half of these services in 2018 (Figure 1). LTSS help seniors and people with disabilities with self-care, such as bathing and dressing, and household activities, such as preparing meals and managing medication. LTSS needs arise from a range of conditions, such as cognitive disabilities, like dementia or Down syndrome; physical disabilities, like multiple sclerosis or spinal cord injury; mental health disabilities, like depression or schizophrenia; and disabling chronic conditions, like cancer or HIV/AIDS.1

Figure 1: Long-term services and supports (LTSS) spending, by payer, 2018

State Medicaid programs must cover LTSS in nursing homes, while most home and community-based services (HCBS) are optional.2 Spending on HCBS surpassed spending on institutional care for the first time in 2013, and comprises 57% of total Medicaid LTSS spending as of 2016 (Figure 2). Factors contributing to this trend include beneficiary preferences for HCBS, the fact that states are encouraging HCBS as an alternative to typically more costly institutional care, and states’ community integration obligations under the Americans with Disabilities Act and the Supreme Court’s Olmstead decision. In Olmstead, the Supreme Court held that the unjustified institutionalization of people with disabilities is illegal discrimination and violates the Americans with Disabilities Act.

Figure 2: Medicaid long-term services and supports spending, by institutional vs. community setting

This issue brief presents the latest (FY 2018)3 state-level Medicaid HCBS enrollment and spending data from KFF’s 18th annual survey of all 50 states and DC. The survey tracks Medicaid HCBS across four types of state plan benefits and two types of waivers, which are described in more detail in Table 1,4 and also presents enrollment and spending by target population where relevant. In general, state plan benefits are provided to all Medicaid beneficiaries for whom they are medically necessary. Waivers allow states to provide services to specific populations, set enrollment caps, and expand income and asset limits. State plan HCBS include home health; personal care; Section 1915 (i), which authorizes HCBS targeted to a particular population with functional needs that are less than an institutional level of care; and Community First Choice (CFC) attendant services and supports. HCBS waivers include Section 1915 (c) and Section 1115,5 both of which allow states to expand financial eligibility and offer HCBS to seniors and people with disabilities who would otherwise qualify for an institutional level of care, while limiting enrollment.6 The Appendix Tables contain detailed state-level data. A related brief presents the latest data and highlights themes in state HCBS policies.

Table 1: Medicaid Home and Community Based Services (HCBS) Authorities
State Plan Benefits
Home Health Services
  • Part-time or intermittent nursing services, home health aide services, and medical supplies, equipment and appliances suitable for use in the home
  • At state option – physical therapy, occupational therapy, and speech pathology and audiology services
Required
Personal Care Services
  • Assistance with self-care (e.g., bathing, dressing) and household activities (e.g., preparing meals)
Optional
Community First Choice
  • Attendant services and supports for beneficiaries who would otherwise require institutional care
  • Income up to 150% FPL or eligible for benefit package that includes nursing home services; state option to expand financial eligibility to those eligible for HCBS waiver
Optional
Section 1915 (i)
  • Case management, homemaker/home health aide/personal care services, adult day health, habilitation, respite, day treatment/partial hospitalization, psychosocial rehabilitation, chronic mental health clinic services, and/or other services approved by the Secretary
  • Beneficiaries must be at risk of institutional care
  • Population targeting permitted
Optional
HCBS Waivers
Section 1915 (c)
  • Same services as available under Section 1915 (i)
  • Beneficiaries must otherwise require institutional care
  • Secretary can waive regular program income and asset limits
  • Cost neutrality required (average per enrollee cost of HCBS cannot exceed average per enrollee cost of institutional care)
  •   Enrollment caps permitted
  • Geographic limits permitted
  • Population targeting permitted
Optional
Section 1115
  • Secretary can waive certain Medicaid requirements and allow states to use Medicaid funds in ways that are not otherwise allowable under federal rules for experimental, pilot, or demonstration projects that are likely to assist in promoting program objectives
  • Federal budget neutrality required
  • HCBS enrollment caps permitted
Optional

HCBS Enrollment and Spending by Authority

Nearly all HCBS are provided at state option. Home health state plan services are the only HCBS that are required for states participating in Medicaid, covering 616,800 enrollees. Among the optional HCBS authorities, waivers continue to be the most commonly used. While some states have taken up Section 1915 (i) and/or CFC, these relatively newer state plan options have not supplanted waivers as the primary authority through which HCBS are provided. Personal care services are the most commonly used HCBS state plan option, offered in 34 states (Figure 3 and Appendix Table 1).

Figure 3: Enrollment in Medicaid HCBS by program authority, FY 2018

Enrollment across the various HCBS authorities ranges from 81,000 individuals receiving Section 1915 (i) state plan services to 1.8 million individuals receiving Section 1915 (c) waiver services (Figure 3 and Appendix Table 1). Most HCBS enrollees receive services provided through an optional authority. Over 2.5 million individuals receive HCBS through a Section 1915 (c) or Section 1115 waiver, and nearly 1.2 million individuals are served in the personal care state plan option, while about 600,000 individuals receive home health state plan services through the sole required HCBS benefit. Total home health state plan enrollment omits some or all individuals in four states (AZ,1 HI,2 NE,3and TX)4 and total personal care state plan enrollment omits individuals in two states (KS5 and NM)6 that provide services through capitated managed care and cannot separately report enrollment data. In addition, New York is unable to report enrollment for CFC and Section 1115.7

HCBS enrollment under a state plan authority is slightly less than enrollment under a waiver authority (2.3 million vs. 2.5 million) (Figure 3). Total HCBS enrollment across all authorities is not presented as individuals may receive services under more than one authority. For example, in some states, an individual could receive some personal care hours through the state plan option and additional personal care hours through a Section 1915 (c) waiver. States can choose to allow enrollees to self-direct their personal care and/or home health services. Box 1 contains enrollment data for those services.

Box 1: Enrollment in Self-Directed Personal Care and Home Health State Plan Services
Nearly 700,000 people are self-directing personal care state plan services in 15 (of 20) states reporting this data.8 Self-direction typically allows enrollees to select and dismiss their direct care workers, determine worker schedules, set worker payment rates, and/or allocate their service budgets.9 The number of individuals self-directing services varies considerably from state to state. California has the greatest number of individuals (over 516,000) self-directing personal care state plan services, followed by Michigan (61,000) and Massachusetts (45,000). Self-direction of home health state plan services is less common. Among the three states that allow self-direction for home health state plan services, one state reports enrollment data (over 12,400 individuals in NJ).10

Medicaid HCBS spending totaled $92 billion in FY 2018, with nearly all spending for services provided at state option. Six percent of total HCBS spending is devoted to mandatory home health state plan services (Figure 4 and Appendix Table 2).  Additionally, over two-thirds of all Medicaid HCBS spending is on services provided under a waiver authority compared to a state plan authority. Total spending under a state plan authority is under $30 billion, or about one-third of total Medicaid HCBS spending. Total home health state plan spending omits some or all spending in four states (AZ,11 HI,12 NE,13and TX)14 and total personal care state plan spending omits two states (KS15 and NM0)16 that provide services through capitated managed care and cannot separately report spending data. In addition, New York is unable to report spending for CFC and Section 1115,17 and DC is unable to report spending for Section 1915 (i).

Figure 4: Medicaid HCBS spending by program authority, FY 2018

National per enrollee spending varies among the HCBS authorities, ranging from under $8,000 for Section 1915 (i) state plan services to nearly $30,000 for Section 1915 (c) waivers (Figure 5 and Appendix Table 3). This variation likely is due to the type and extent of services provided in the different HCBS authorities. For example:

Figure 5: Medicaid HCBS spending per enrollee, by program authority, FY 2018

  • Lower per enrollee spending for Section 1915 (i) compared to other authorities may reflect that Section 1915 (i) serves enrollees with functional needs that are less than an institutional level of care. By contrast, Section 1915 (c) waivers generally require enrollees to meet an institutional level of care and therefore are likely to serve individuals with more extensive and intensive – and therefore generally costlier — service needs.
  • Lower per enrollee spending on home health state plan services compared to other authorities likely reflects shorter periods of service utilization. In contrast, Section 1915 (c) waiver enrollees typically use services over an extended period of time, due to chronic long-term needs.18
  • Lower per enrollee spending for Section 1115 waivers compared to Section 1915 (c) waivers may reflect that most Section 1115 waiver states use this authority for seniors and adults with physical disabilities but continue to serve people with intellectual or developmental disabilities (I/DD), the costliest population, through Section 1915 (c).

Enrollment and spending increased in each HCBS authority from FY 2017 to FY 2018, except home health state plan services (Table 2).19 The two authorities with the largest percent increases in total spending were CFC and personal care state plan services; spending increases in these authorities appear to be driven by increased per enrollee costs rather than by increased enrollment. Notable state-level changes from FY 2017 to FY 2018 include the following:

  • Sizeable growth in CFC total spending and spending per enrollee is largely attributable to substantially increased spending in California (76%). More modest growth in CFC enrollment primarily reflects an increase from 61,000 to nearly 80,000 individuals in Washington.
  • Increased total spending and spending per enrollee for personal care state plan services reflects notable spending growth in South Dakota, Colorado, and California. Although enrollment in personal care state plan services increased slightly across all states electing this option, two states (MD and MT) had enrollment declines in both FY 2017 and FY 2018, as individuals transitioned to CFC services.
  • Growth in Section 1915 (c) waiver spending reflects notable increases in Nebraska (36%) and Pennsylvania (19%). Specifically, spending in one I/DD waiver in Nebraska grew substantially (87%), while spending in three Pennsylvania waivers serving seniors and adults with physical disabilities and individuals with I/DD grew by more than 20 percent.
  • Growth in Section 1115 waiver enrollment was driven by an increase in New Jersey (19%).
  • Growth in Section 1915 (i) enrollment is largely due to an increase from 3,100 to 7,000 individuals in Ohio.

Home health state plan services is the only authority with both enrollment and spending declines, which could be attributable at least in part to increased enrollment in capitated managed care, and states’ inability to isolate home health enrollment and spending from other services included in the capitation payment. States with substantial home health state plan enrollment declines as a result of such data limitations include Texas (-55%) and Nebraska (-85%). Overall enrollment across all HCBS state plan authorities also decreased from FY 2017 to FY 2018, likely driven by the home health decrease.

HCBS Enrollment and Spending by Target Population

Section 1915 (c) waivers20

People with I/DD account for less than half of overall Section 1915 (c) waiver enrollment but more than two-thirds of spending (Figure 6 and Appendix Tables 4 and 5).21 Spending for this population is disproportionate to their enrollment as a result of their generally more intensive needs. By contrast, seniors and people with physical disabilities comprise over half of Section 1915 (c) waiver enrollment and over a quarter of spending.22 Other target populations, including people with mental health disabilities,23 people with traumatic brain or spinal cord injuries (TBI/SCI),24 children who are medically fragile or technology dependent,25 and people with HIV/AIDS,26 together account for a small share of Section 1915 (c) waiver enrollment and spending.

Figure 6: Medicaid § 1915 (c) HCBS waiver enrollment and spending by target population, FY 2018

The fact that services for people with I/DD comprise over two-thirds of total Section 1915 (c) waiver spending reflects high per enrollee costs for this population. There is substantial variation in per enrollee spending among Section 1915 (c) waiver target populations, ranging from about $11,000 for people with HIV/AIDS to over $46,000 for people with I/DD (Figure 7 and Appendix Table 6). Per enrollee spending for people with I/DD is closely followed by the TBI/SCI population ($44,000) and medically fragile children ($35,000). In addition to people with HIV/AIDS, per enrollee spending is relatively lower for seniors and adults with physical disabilities ($16,000) and people with mental health disabilities ($13,000).

Figure 7: Section 1915 (c) waiver per enrollee spending, by target population, FY 2018

Section 1915 (i) state plan option

People with I/DD account for the vast majority of enrollment and spending in the Section 1915 (i) state plan option, largely due to California’s program (Figure 8).27 Unlike waivers which require an institutional level of care, Section 1915 (i) state plan HCBS are provided to people with functional needs that are less than an institutional level of care. The next largest Section 1915 (i) target population for both enrollment and spending is people with mental health disabilities.28 Nearly three-quarters of Section 1915 (i) enrollment for this population is in Iowa and Ohio, while Iowa’s program comprises most of the spending ($94 million). Seniors and adults with physical disabilities account for a very small share of Section 1915 (i) enrollment and spending.29

Figure 8: Medicaid § 1915 (i) HCBS state plan option enrollment and spending by target population, FY 2018

Per enrollee spending is similar across Section 1915 (i) state plan HCBS target populations. Section 1915 (i) state plan HCBS per enrollee spending was nearly $10,000 (in 2 of 3 states reporting)30 for seniors and adults with physical disabilities, less than $9,000 for people with I/DD (in 4 states),31 and under $6,000 for people with mental health disabilities (in 4 states).32 Lower per enrollee spending for Section 1915 (i) state plan HCBS compared to Section 1915 (c) waivers could reflect a more limited scope benefit package and/or the fact that Section 1915 (i) enrollees have fewer and/or less intensive needs (less than an institutional level of care) that Section 1915 (c) waiver enrollees (who must meet an institutional level of care).

Looking Ahead

Medicaid HCBS enrollment ranges from 81,000 individuals receiving Section 1915 (i) state plan services to 1.8 million individuals receiving Section 1915 (c) waiver services, with joint federal and state spending across all HCBS authorities totaling $92 billion in FY 2018. Medicaid HCBS promote independence and self-determination for seniors and people with disabilities and chronic conditions by enabling them to receive assistance with self-care needs and household activities outside an institution. Medicaid provides substantial federal funding to help states meet their community integration obligations under Olmstead and the Americans with Disabilities Act.

Most HCBS enrollees receive services provided through an optional authority, and nearly all HCBS spending is devoted to authorities provided at state option. Although home health state plan services are the only HCBS that states participating in Medicaid must offer, all states elect at least one optional HCBS authority. While nearly all Medicaid HCBS authorities are optional, Medicaid fills a gap by covering HCBS that are typically not available through private insurance or Medicare, and not affordable for many paying out-of-pocket, especially those with lower incomes. The optional nature of most HCBS results in substantial variation across states in enrollment and spending, reflecting states’ different choices about optional authorities, benefit package contents, and scope of covered services. States would lose some of their existing optional HCBS authorities and flexibility if the entire ACA ultimately is struck down in Texas v. Azar.33 Specifically, the option to offer CFC services would cease to exist, as would provisions that provide states with the flexibility to offer the current full scope of Section 1915 (i) services and to target those services to specific populations.34

The optional nature of most HCBS has implications for federal and state spending, especially during economic recessions. States face increasing pressures from revenue shortfalls during times of economic downturn. Optional Medicaid eligibility pathways and services, including HCBS, may be at risk for cuts as states must make difficult choices to balance their budgets.35

The 2020 elections also could have important implications for Medicaid and HCBS as policymakers may consider a range of proposals that could affect these populations and services. At one end of the spectrum, a Medicaid program-wide federal financing cap is proposed in President Trump’s FY 2020 budget, though efforts to repeal and replace the ACA and cap federal Medicaid funding through a block grant or per capita cap were narrowly defeated in Congress in 2017.36 In addition, Tennessee has submitted a proposal to CMS that seeks capped federal Medicaid funding through a Section 1115 waiver pursuant to state legislation that includes some seniors, nonelderly adults with physical disabilities, and children and adults with I/DD receiving HCBS.37 Depending on how they are structured, policies that would cap federal Medicaid funding could affect coverage, services, provider payment rates, and access to care for vulnerable populations.

At the other end of the policy spectrum, continued attention to Medicaid HCBS enrollment and spending is important to understanding proposals from some Democrats to create a single, federal, universal health insurance program known as Medicare-for-all. One of the most fundamental changes under Medicare-for-all would be uniform coverage of community-based long-term care services for all Americans. The current Medicare-for-all proposals would require and explicitly prioritize HCBS over institutional services, eliminating the state variation in eligibility, benefits, and payment and delivery systems that exists today under Medicaid, while also shifting responsibility for designing and implementing much of health policy from states to the federal government.38

While the economy, the litigation challenging the ACA, and the upcoming election all will have implications for Medicaid and HCBS, changing demographics also will result in increased pressure for states to meet the health and LTSS needs of a growing elderly population in the coming years. The number of adults age 65 and older is expected to more than double in size between 2014 and 2060, with the largest increase during this period (18 million) expected in this decade, from 2020 to 2030.39 With the aging of the baby boomers, one in five U.S. residents will be age 65 or older by 2030,40 and for the first time in U.S. history, older adults are projected to outnumber children by 2034.41 All of these factors make continued attention to Medicaid’s role in providing HCBS an important policy area to watch.

MaryBeth Musumeci and Priya Chidambaram are with KFF.
Molly O’Malley Watts is with Watts Health Policy Consulting.
Executive Summary Appendix Tables