Home- and Community-Based Services


In 1999, the U.S. Supreme Court ruled in Olmstead v. L.C. that unjustified institutionalization and segregation of people with disabilities violates the Americans with Disabilities Act. The Court said that people with disabilities have a right to live in the most integrated setting possible. Thus, the Department of Justice requires states to develop and implement what is called an Olmstead State Plan. These plans are intended to integrate people with disabilities fully into community settings. 

As a result, since 2013, the majority of Medicaid long-term services and supports (LTSS) spending has been for home- and community-based services (HCBS). Prior to this, the majority of funds went to institutional care. In 2020, Medicaid HCBS spending totaled $162 billion. This represents well over half of all Medicaid LTSS dollars spent. By comparison, just $53 billion went to pay for care in institutional settings. However, spending on HCBS for older adults and people with physical disabilities varies by state. At least four states spend more than 75 percent of Medicaid LTSS dollars on HCBS, while 15 states spend less than 50 percent. This is because Medicaid retains an institutional bias as it is required by law to cover services provided in institutional care settings. On the other hand, coverage of most HCBS is optional. 

As part of the 2010 Affordable Care Act (ACA), Congress established new financial initiatives to facilitate states’ expansion of their HCBS programs and provided additional funding for several existing programs. 

Several programs and policies are aimed at better balancing Medicaid spending on institutional and HCBS services: 

  • Person-centered counseling through Aging and Disability Resource Center/No Wrong Door systems provides people at risk of nursing home placement with information about publicly and privately funded HCBS options. 
  • The Money Follows the Person demonstration program encourages states to identify people in institutions who want to return to their communities and facilitates their return. 
  • Federal rules require states to protect some assets for individuals whose spouses receive Medicaid HCBS rather than only for those receiving institutional care. 

The ACA established the Community First Choice Option under the 1915(k) authority. This option allows states to provide home- and community-based attendant services and supports to eligible Medicaid enrollees under their state plan. States that use this option receive a 6 percent higher federal match. Individuals must be eligible for Medicaid under the state plan and have an income that does not exceed 150 percent of the Federal Poverty Level to receive service. Or, if their income is greater, they must meet institutional level-of-care criteria. 

The ACA also strengthened the Money Follows the Person (MFP) Rebalancing Demonstration program, which encourages states to identify people in institutions who want to return to their communities. When a state transitions such people, it receives an enhanced Federal Medical Assistance Percentage match for the Medicaid-funded HCBS they receive in the first year after relocation. 

From the program’s start in 2008 through the end of 2020, states transitioned more than 107,000 people to community living under MFP. On September 23, 2020, the Centers for Medicare & Medicaid Services (CMS) announced a supplemental funding opportunity available to the 33 MFP demonstration states that were operating MFP-funded transition programs. In 2022, CMS awarded additional funding to five states to begin or re-start MFP demonstration programs. Its purpose was to increase rebalancing efforts in the states participating in the MFP demonstration. MFP is currently authorized through September 30, 2023. 

In addition, the ACA modified the existing 1915(i) Medicaid State Plan option to make it easier for states to use this authority to expand HCBS. The 1915(i) authority allows states to offer services and supports before individuals need institutional care. It also required all states to apply spousal impoverishment protection rules to HCBS for five years (2014–2019). States already are required to do this for the spouses of Medicaid participants who reside in nursing facilities. Medicaid HCBS spousal impoverishment protections are funded through September 30, 2023. 

In 2014, CMS issued a final rule giving states additional flexibility and responsibility for paying for HCBS through Medicaid. The rule provides a new definition of HCBS settings. It emphasizes an outcomes-oriented approach so that older adults and people with disabilities can make an informed choice about care settings and service options. The new rule emphasizes person-centered planning to meet individual goals and preferences. It also acknowledges that family caregivers are vital for allowing individuals to continue living at home or in the community. The rule also allows states to combine multiple Medicaid waivers to cover HCBS based on functional need rather than age or diagnosis and to serve more than one population. 

In 2021, the American Rescue Plan Act (ARPA) became law. Section 9817 of ARPA provides states a 10-point increase to the percent of Medicaid HCBS spending for which CMS will pay. This temporary, enhanced match must be spent by March 2025. These enhanced dollars come with conditions that states do not narrow services, restrict eligibility, or cut provider rates until March 2025 or earlier, only if they spend the funds down before March 2025. 

States have implemented numerous changes in their LTSS systems in order to expand HCBS and reduce reliance on nursing facilities. And some states have undertaken major re-designs of their Medicaid LTSS program. For example, in 2017, Washington State began implementation of a five-year Medicaid demonstration program, the Medicaid Transformation Project, in accordance with section 1115(a) of the Social Security Act. Under this 1115 waiver, Washington State will provide support family caregivers need to continue providing care and protect their own health and well-being (see also this chapter’s section on Support for Family Caregivers). 

More areas of the country have access to Programs for All-Inclusive Care for the Elderly (PACE) as new and existing PACE organizations have grown. From 2012 to 2022, PACE enrollment has more than doubled to more than 60,000 older adults served. 

In addition, some states, communities, and provider organizations have deployed restorative care models of HCBS beyond traditional waiver services. Some of these, such as CAPABLE (Community Aging in Place—Advancing Better Living for Elders), are supported by evidence of care improvement and cost savings. They have the potential to support a broad range of older adults. 

States that have achieved success in transforming their LTSS systems to give people choices and reduce their reliance on nursing facilities share certain characteristics, including the following: 

Philosophy: The most important factor in creating a balanced LTSS system may be a state’s determination to promote quality of life for older adults and people with disabilities. Also important is dedication to allowing participants to choose how they will obtain their services. 

All decisions are based on a commitment to: 

  • deliver services to older adults and people with disabilities and their family caregivers in the most independent setting possible, 
  • expand cost-effective HCBS options, and 
  • identify and provide the services people need using person- and family-centered planning. 

Comprehensive array of services: States that provide a comprehensive array of culturally appropriate services designed to meet the needs of each individual, regardless of income and family caregiver, are less likely to channel people into institutions. 

Single administration: Assigning responsibility for the state’s LTSS system to a single administrative agency is a key factor in some of the most successful states. 

Coordinated funding sources: Coordination of multiple funding sources can maximize a state’s ability to meet the needs of older adults and people with disabilities. 

Single appropriation: This approach, sometimes called global budgeting, allows states to transfer funds among programs and, therefore, make more timely decisions to serve people in their preferred settings. 

Timely eligibility determination: Hospital discharges account for nearly half of all nursing facility admissions. When decisions must be made quickly at a time of crisis, state Medicaid programs need to arrange for HCBS in a timely manner. Delays in eligibility decisions often result in unnecessary placement in nursing facilities. Successful states either presume financial eligibility for Medicaid HCBS or fast-track the eligibility determination process for people being discharged from hospitals. 

Standardized assessment tool: Some states use a single tool to assess functional eligibility and service needs for multiple programs. They then develop a person- and family-centered plan of services and supports. Such tools can be used to collect consistent data, leading to better system management. In states where people are disproportionately institutionalized, these data can be used to develop policies to reduce institutionalization. 

Single-entry point: Research demonstrates the need for a single access point to a comprehensive array of LTSS for older adults and people with disabilities. Effective systems that determine eligibility, arrange and coordinate services, and monitor quality can support people who have the resources to pay for services and those who qualify for public programs. A robust system of information and assistance is critical because most older adults, people with disabilities, and their families have difficulty negotiating complex systems. Administration for Community Living and CMS have funded Aging and Disability Resource Center/No Wrong Door systems in every state to provide single-entry point functions. 

Participant direction: This is a service model that allows public program participants a greater role in determining who will provide their services, as well as when, where, and how they are delivered. It addresses the desire of individuals who need LTSS to maximize their choices and control over their lives. 

Transition from nursing facilities: Some states regularly assess the possibility of transitioning people from nursing facilities to their own homes or home-like residential care settings. States may assign staff to visit nursing facilities to identify, assess, and help people to relocate. Medicaid payment for transition services is critical to the success of these efforts. 

Quality improvement: States are incorporating participant-defined measures of success in their quality improvement plans. 



Medicaid's institutional bias

The federal government should eliminate Medicaid's bias favoring nursing facilities. It should mandate the provision of home- and community-based services (HCBS) for everyone who meets Medicaid eligibility criteria and chooses to receive services in HCBS settings. 

Individuals who qualify for Medicaid should have a choice between HCBS or nursing facility care and have a choice of providers. Federal and state governments should identify and remove barriers to the equitable access to HCBS. 

The federal government should give states more flexibility to set separate eligibility criteria for nursing facility care and HCBS waiver services. Only people who cannot be safely, adequately, appropriately, and cost-effectively served in the community should be admitted to nursing facilities unless they choose to receive services in that setting. Uniform and independent assessments should be used in making the determination. 

The federal government should provide federal matching funds to reimburse states for erroneous presumptive eligibility determinations regarding consumers who receive Medicaid HCBS and nursing facility services but are ultimately found to be ineligible for these services. 

Expansion of HCBS

Congress and the states should expand funding for a wide range of HCBS through Medicaid, the Older Americans Act (OAA), the Social Services Block Grant program, and other programs that offer long-term services and supports (LTSS).

States should fund sufficient HCBS waiver slots to eliminate waiting lists.

Federal and state governments should allocate a greater proportion of Medicaid funding for HCBS instead of nursing facility care.

Nursing facility transition programs

The federal government should convert the Money Follows the Person (MFP) demonstration program into a permanent state option with increased Federal Medical Assistance Percentage. This can be done either through a waiver program or the state plan. State diversion and transition programs should have sufficient capacity to assist any person who can be served in HCBS settings rather than nursing facilities. 

Until the MFP demonstration program becomes a permanent option, its funding should be continued and expanded. 

Comprehensive range of HCBS

States should fund the services needed to meet individuals’ LTSS needs and allow them to remain in the community. At a minimum, these services should include personal care, conflict-free care management, adult day services, home modifications, assistive technologies, respite care, and other caregiver support services, such as education and training. Services should be offered in a range of settings. This includes supportive housing and adult day centers. These services should be offered through Medicaid, state-funded LTSS programs, the Social Services Block Grant, and OAA programs. 

States should expand HCBS options to include a range of residential choices, home modifications, and assistive technologies. 

This can be done through waivers and other processes such as state plan amendments, Administration for Community Living funding, or state-only funding sources. Particularly important are programs that provide LTSS for low-income residents of assisted living and other residential care settings and those at risk of entering a nursing facility. However, current Medicaid participants should not have to move to a residential care setting or nursing facility to receive services or have their current benefits reduced by the implementation of a waiver or other program. 

States should expand the requirement to assess the needs of family caregivers under the 1915(i) HCBS state plan option to all assessment tools to all Medicaid HCBS authorities. Such assessments will identify at-risk family caregivers before they burn out or compromise their own physical and mental health and support them in their caregiving roles. 

States should support family caregiver services that can delay or decrease the likelihood of needing to enter a nursing facility. These include education and training, counseling, legal consultations, and respite care. 

Coordinating administration of LTSS programs

States should coordinate LTSS programs, policies, and budgets. This can be done in one state agency or across multiple agencies. It would promote efficiency, create single points of entry for LTSS, and implement the data collection necessary to manage LTSS strategically. 

States should: 

  • develop the capacity for prompt financial and functional Medicaid eligibility determinations for applicants who need and want HCBS, and use presumptive eligibility for people who are at risk of nursing facility placement without Medicaid-funded HCBS; 
  • use a unified global budget for publicly funded LTSS, so they have flexibility in allocating expenditures and utilize the money saved through reduced nursing facility use for increased coverage of HCBS; 
  • ensure that Olmstead plans include specific action steps, timelines, and strategies for securing necessary HCBS funding; 
  • ensure that consumers fully participate in implementing and monitoring state Olmstead plans and waivers at the state and local levels, including serving on advisory committees and governing boards; 
  • continue to monitor and revise, as needed, their Olmstead implementation plans; 
  • establish policies to pay relatives and friends who care for people with LTSS needs as part of a service plan, design programs and policies to protect consumers and avoid the erosion of family-care networks, guard against fraud and abuse, and avoid disincentives for unpaid caregiving; 
  • identify barriers that unintentionally curtail consumer ability to direct their services or to arrange to have certain nursing tasks provided by unlicensed direct-care staff authorized and trained to do so by a registered nurse; 
  • ensure that registered nurses are protected from liability if they have followed the prescribed protocols for delegation, training, and supervision outlined in their states’ nurse practice acts; 
  • ensure that states with a formal process for allocating the number of nursing facility beds—such as a certificate of need—base decisions on the number of people who require a specific level of care and on data projecting the need for LTSS in different areas of the state; 
  • provide data on nursing facilities and HCBS use by race, ethnicity, age, and geographic region, as well as per capita and aggregate cost of services, including Medicaid services in nursing facilities and HCBS to the extent possible; 
  • ensure data gathered is sufficient to answer questions about disparities and support strategies to address them; 
  • provide data on the range of the level-of-care scores of people age 85 and older who are in nursing facilities; 
  • preserve and expand funding for respite care services in a range of settings, such as personal care services in the home or adult day services, to ensure that more family caregivers can have a break from their caregiving duties; 
  • preserve and expand funding for respite care services for all caregivers whether or not the individuals they are assisting are eligible for Medicaid or another publicly funded program; and 
  • allow family caregivers assisting individuals with moderate incomes, and who do not qualify for publicly funded respite services, to buy into or otherwise obtain these services.