Providing Optional Home- and
Community-Based Services (HCBS)
With the exception of home health services, states do not have to provide home- and community-based services (HCBS) in Medicaid. However, all states provide some optional HCBS, and many states are making concerted efforts to expand HCBS. There are several reasons:
- Studies show that beneficiaries prefer to receive care in the community over an institution;
- Community- or home-based care can be less expensive per person;
- In 1999, in Olmstead v. L.C., the Supreme Court held that states had to provide care in “the most integrated setting,” meaning the setting that is most integrated into the community and meets a person’s needs. States must show that they are making progress in implementing the Olmstead ruling in their Medicaid programs.
There are different administrative mechanisms through which states can offer optional home- and community-based services—a state Medicaid plan or plan amendment, a waiver, demonstration project, or other special projects. The mechanism used makes a difference in program requirements.
The following sections give more details on benefits, services, and limitations of the major avenues for states to offer home- and community-based services:
Personal Care Services
States have the option of adding personal care services through an amendment to their state Medicaid plan. Plan amendments are approved by the Center for Medicare and Medicaid Services (CMS).
- Eligibility
- This benefit is available to people who are eligible for the state Medicaid program and are not living in an institution.
- Services
- States can provide aide services to help people with activities of daily living (i.e., bathing, dressing) and instrumental activities of daily living (housekeeping, laundry, telephone support, shopping). The benefit can include a wide range of services. Services cannot be provided by a family member or at an institution. A physician-prescribed treatment plan is not required.
- States that have this option must provide services to all Medicaid beneficiaries who meet program eligibility criteria based on need. States have significant flexibility in defining what services can be covered, setting clinical eligibility criteria, or limiting services in duration. Many states limit the number of visits, hours of care covered, and services covered.
- Availability
- In 2008, 35 states and the District of Columbia had a personal care option.
- Spending
- This option accounted for over 20 percent of all Medicaid spending on home- and community-based services in 2008.
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Section 1915c Waivers (Home- and Community-Based Services Waivers)
Under various sections of the statute that governs Medicaid (the Social Security Act), the Department of Health and Human Services (HHS) can allow states to establish special programs that waive certain Medicaid requirements.
Section 1915c allows states to establish home- and community-based programs that cover services not typically covered under Medicaid. In a 1915c waiver program, states can target services to specific populations defined by age, diagnosis, or functional need; cap enrollment; have waiting lists; have different income eligibility criteria; and offer services in specific geographic areas rather than statewide.
States must apply to HHS for a waiver. HHS does not have to approve waiver requests, but if a waiver is approved, it is usually for a three year time period initially. Waivers can be renewed for five year periods. Programs must be cost neutral, meaning that federal costs cannot be greater than the expected costs to the federal government absent the waiver program. Cost neutrality is determined by comparing the average per-capita HCBS costs to average per-capita costs in the institutional setting and deter¬mining how many persons would have been institutionalized in the absence of the waiver services.
Section 1915c waivers are the mechanism that states most frequently use to offer home- and community-based services. In 2007, 49 states had at least one 1915c waiver approved.
1915c waivers vary in the services and populations covered. Examples of groups states have targeted in specific waiver programs include head trauma survivors, the elderly, individuals with multiple sclerosis, children with severe disabilities, and stroke victims. It is common for states to have multiple waivers in operation. In 2007, the average number of 1915c waivers per state was just over five.
- Eligibility
- Waivers can cover individuals with incomes up to 300 percent of Supplemental Security Income (SSI) (the same upper income limit for individuals residing in institutions). This allows states to offer waivers to non-institutionalized individuals who have incomes that would normally be too high for Medicaid eligibility.
- Individuals must fall into one of the Medicaid eligibility categories (e.g., over 65, disabled, etc.).
- 1915c waiver programs must be limited to Medicaid-eligible individuals who meet the state’s clinical/functional eligibility test for needing institutional care.
- As noted above, states can target waiver programs to specific populations. If this is the case, individuals must be within the target population for the waiver program.
- Services
- States have wide latitude in services that can be covered under a waiver program. There is a list of services waivers can cover, and states can cover other services on a case-by-case basis as approved by CMS. Examples of waiver services are case management, home-maker services, respite care, personal aides, adult day care, transportation, and home health care.
- Services can vary depending on the target population.
- States can limit program size by setting caps, budget maximums, and maintaining waiting lists.
- Availability
- Every state has at least one waiver program.
- Spending
- In 2008, waivers accounted for 65 percent of all Medicaid spending on home- and community-based services.
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State Plan Amendment (Section 1915i)
Section 1915i of the Social Security Act is another option for states to offer home- and community-based services in Medicaid. It allows states to offer home- and community-based services through a state plan amendment (generally easier administratively than a waiver) and to offer services to individuals who have a lower level of need than the state’s clinical/functional eligibility requirements for nursing facility care. The program is available to individuals up to 150 percent of poverty; states can extend full Medicaid eligibility to individuals who meet the income and clinical eligibility criteria (this is a Medicaid eligibility category).
The Deficit Reduction Act of 2005 created this option. The requirements have changed substantially due to health reform. This outlines program requirements in the new law, which became effective April 1, 2010.
- Eligibility
- States can offer this option to individuals who meet state criteria for needing services “needs-based” criteria and have incomes up to 150 percent of poverty. For 1915i programs, the criteria for needing services must be less restrictive than what is required for nursing facility care. States determine an individual’s need for services based on his or her ability to perform activities of daily living (ADLs) without assistance.
- States can make services under this program available to individuals who are in a home-and community-based care waiver program. This allows states to extend the services under this state plan program to individuals with higher levels of need (1915c waiver recipients must need an institutional level of care) or higher incomes (waiver programs can serve individuals with incomes up to 300 percent of SSI). Services offered to individuals with incomes above 150 percent of poverty can vary in scope and duration from those offered to individuals who meet the needs-based criteria.
- States can target services to specific population for five-year terms as long as the state enrolls all eligible individuals before the end of the term. HHS may extend a state’s request to target certain populations beyond five years in some cases.
- Services
- States can offer a wide range of services that are comparable to those available through a 1915c waiver as well as additional services as approved by the state and the Secretary of Health and Human Services.
- Services must be offered statewide. States cannot cap the number of slots in the program. These are both changes from the initial program structure that are part of health reform.
- Availability
- This option just became available to states in 2007. Iowa was the first state to receive approval of this option. Use of this option is not widespread; so far only five states use it.
- Spending
- Spending data is not yet available.
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Section 1115 Waivers
Section 1115 of the Social Security Act lets the Department of Health and Human Services authorize experimental, pilot, or demonstration projects. States must apply to qualify. All 1115 demonstration projects must show how new approaches to services delivery or financing or how extending services to broader populations will promote the objectives of Medicaid. States can expand services, expand populations covered, or offer services not normally covered by Medicaid. Several states have 1115 demonstration projects for long-term services.
Section 1115 projects must be budget neutral, meaning that the program cannot cost the Medicaid program more than it would have spent absent the program. Because these programs often expand services, the budget neutrality requirement is met by showing savings that would offset any added costs from service expansions.
Only some states have 1115 waivers and each 1115 waiver is unique, so it is not possible to make generalizations about benefits or eligibility.
For example, Arizona’s entire Medicaid program, including its long-term services, is operated through an 1115 waiver. Vermont has two waivers, one covering the Medicaid program generally and one targeting long-term services.
- Vermont’s Global Commitment Waiver affects the state’s Medicaid program in its entirety. It imposes a cap on federal Medicaid payments, establishes the state as a managed care organization, allows the state to use federal funds for fiscal relief and non-Medicaid health programs, and gives the state added flexibility to cut programs.
- Vermont also received approval for a long-term care plan, Choices for Care, which gives individuals an entitlement to either institutional or home- and community-based care, at the individual’s election.
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Other Programs that Help States Provide Home- and Community-Based Services
There are demonstration programs and additional delivery options that states can use to provide home- and community-based services in Medicaid. These are some of those programs.
Money Follows the Person
This program was initiated through the Deficit Reduction Act of 2005. It provides five-year federal grants to states that participate. Participating states establish programs to move eligible individuals from institutions back to community settings where they will receive their care through home- and community-based Medicaid programs. For each person successfully moved back into the community, the state receives increased federal matching funds for costs associated with that person’s home- and community-based care for one year. The increased match can be anywhere from 75 to 90 percent. There are 31 states that participate in this program. Implementation of the program began in 2008 and it is currently being evaluated, but hundreds of individuals have transitioned out of institutions already.
Health Reform Note: Health reform extended this program for an additional five years, reduced the nursing facility residency requirement from six to three months, and removed a cap on the time a person needs to reside in a facility to be eligible. These program changes mean more people will be eligible, and faster.
Cash and Counseling
Rather than Medicaid paying service providers for beneficiaries receiving personal attendant services, Cash and Counseling permits states to allow individuals to get cash benefits and self-direct their care. There are 15 states that offer Cash and Counseling programs. Waivers are not required for states to adopt this option. Programs do not have to be statewide.
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New Options in Health Reform
Health reform establishes two new programs for home- and community-based services in Medicaid. Both begin on October 1, 2011. More information on the law is available at http://www.familiesusa.org/assets/pdfs/health-reform/help-with-long-term-health-needs.pdf.
Community First Choice
This is a new personal attendant state plan option that covers broader services and higher income eligibility than the existing personal care option. States that take up this option will receive an additional 6 percentage points in federal matching dollars for program costs. This will become effective October 1, 2011. Details and regulations are being developed.
State Balancing Incentives Payment Program
This is a new program in health reform that will give qualifying states a 2 or a 5 percentage point increase in their federal match for home- and community-based services costs. Only states where less than 50 percent of Medicaid long-term services spending was for home- and community-based care services in 2009 will qualify. States must apply and agree to program administrative changes designed to increase home- and community-based service use in Medicaid.
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