How States Could Expand Medicaid HCBS Programs

A large chunk of the home-based care industry and its workforce is focused on the Better Care Better Jobs Act, a recently introduced piece of legislation that would pump billions of dollars into care for the elderly.

Medicaid-reimbursed in-home care providers haven’t forgotten about the increased federal matching rate — or “FMAP” — for home- and community-based services (HCBS) spending built into the American Rescue Plan Act (ARPA), however.

Broadly, ARPA paved the way for states to receive more federal funding to expand existing HCBS, as long as they followed certain guidelines.


“Millions of individuals across the county — including people with disabilities and older Americans — rely on home-based care and the workforce that provides that critical care,” Xavier Becerra, secretary of the U.S. Department of Health and Human Services (HHC), said in a May announcement. “The Biden-Harris administration continues to support states and workers by making critically needed investments in home- and community-based services.”

Moving forward, there’s a good chance that not all states will pursue the increased FMAP, as the federal bump would only be made available for one year. Accepting federal help to make big investments in HCBS, some states believe, would create a future financial cliff when that help goes away.

Still, there are states currently in the process of developing plans to access the increased FMAP.


Exactly how they plan to use the funding is still a work in progress, but a new Kaiser Family Foundation (KFF) analysis offers several possible strategies by highlighting how states have leveraged Section 1115 demonstration waivers.

Typically, those efforts have fallen under four buckets.

In some cases, states have used additional resources to streamline eligibility processes and the overall start of care, according to KFF. In others, states have expanded financial eligibility rules to help certain enrollees afford to live in their home or community instead of a long-term care institution.

Rhode Island, for example, has used waiver flexibility to authorize HCBS benefits to new long-term care applicants during a presumptive eligibility period while final financial eligibility determinations are pending. New York has used waiver authority to implement a special “income disregard” that factors in rent costs when determining HCBS financial eligibility.

“An evaluation of New York’s waiver has found positive impacts among individuals transitioning out of institutional settings, including that high percentages of enrollees remained in the community,” the KFF analysis reads.

In other instances, states have looked to bolster HCBS by opening up services to additional populations.

Washington has taken such steps with its Tailored Support for Older Adults (TSOA) program, which creates a new eligibility pathway and benefit package for otherwise ineligible adults older than 55 who require a nursing-facility level of care. Elsewhere, Rhode Island’s 1115 waiver covers young adults ages 19 to 21 who age out of HCBS programs for medically fragile children.

Finally, some states have also used additional resources to offer entirely new services through alternative benefit packages.

“While states may add services to existing benefit packages without 1115 authority, they instead may use 1115 waivers to design alternative benefit packages,” the analysis states. “For example, the [Medicaid Alternative Care] program created by Washington’s 1115 waiver provides an alternative benefit package to support unpaid caregivers for older adults who are otherwise Medicaid eligible.”

If passed, the Better Care Better Jobs Act would make states eligible for a permanent increase to their federal Medicaid match of 10 percentage points, building upon the temporary bump built into ARPA.

Medicaid HCBS spending is estimated to be about $114 billion in FY 2021, before ARPA increases, according to KFF. Medicaid funds approximately 57% of HCBS in the U.S., with private insurance covering 12% and 7% paid out of pocket.

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