In 2013, for the first time since Medicaid began, the majority of its long-term services and supports (LTSS) spending was for home- and community-based services (HCBS) rather than institutional care. As of fiscal year 2016, 57 percent of Medicaid LTSS dollars went toward HCBS. However, Medicaid retains an institutional bias because Medicaid programs are required by law to cover institutional care settings. But the majority of HCBS are optional. LTSS for older adults and people with physical disabilities lag other populations; just 45 percent of these dollars went to HCBS.
Since the passage of the Americans with Disabilities Act in 1990, many states have implemented changes in their Medicaid programs to shift at least some of the funding for institutional care to HCBS, an effort referred to as rebalancing or balancing. A balanced LTSS system will make efficient use of resources while meeting the needs and preferences of people who want to receive LTSS in their homes and communities.
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.
Programs aimed at rebalancing Medicaid’s institutional and HCBS services have included:
- higher federal matching rates for states allocating resources toward HCBS;
- the Money Follows the Person program which encouraged states to identify people in institutions who want to return to their communities and facilitated that return; and
- rules requiring states to protect assets for spouses whose partners receive Medicaid HCBS rather than just for those receiving institutional care.
The State Balancing Incentive Payments Program, which ran for four years (from October 1, 2011, to September 30, 2015), provided grants to qualifying states that committed to making structural changes in their Medicaid programs to improve the balance of spending between HCBS and institutional services. Grants increased states’ Federal Medical Assistance Percentage (FMAP) by either two or five percentage points, depending on a state’s current allocation of Medicaid spending for HCBS. Another initiative is the Community First Choice option. This increases a state’s FMAP by six percentage points if the state offers statewide attendant services and supports to certain Medicaid-eligible individuals with disabilities without enrollment restrictions.
The law also strengthened the Money Follows the Person (MFP) Rebalancing Demonstration program, which encouraged states to identify people in institutions who want to return to their communities. When a state transitioned such people, it received an enhanced FMAP for the Medicaid-funded HCBS that people receive for their relocation’s first year to help them live in the most appropriate and preferred settings. The ACA extended the MFP program through September 30, 2016, and appropriated an additional $450 million for each of the five fiscal years 2012–2016. Any unused grant funds as of 2016 can be used until 2020.
In addition, the law modifies the existing 1915(i) Medicaid state plans for HCBS to make it easier for states to use this authority to expand HCBS. It also requires 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 beneficiaries who reside in nursing facilities.
In 2014, CMS issued a final rule giving states new flexibility and responsibility for paying for HCBS through Medicaid. The rule provides a new definition of HCBS settings, emphasizing an outcomes-oriented approach so that older adults and people with disabilities have informed choices of settings and service options. The new rule emphasizes person-centered planning that reflects the care recipient’s goals and preferences and acknowledges that family caregivers play a vital role in enabling the recipient to continue living at home or in the local community. The new rule also allows states to combine multiple Medicaid waivers that cover HCBS based on functional need rather than age or diagnosis, and that serve more than one population in a waiver. States will have to submit transition plans to meet the new HCBS rule and then will have up to five years to implement the plan.
States have implemented numerous changes in their LTSS systems in order to expand HCBS and reduce reliance on nursing facilities.
In January 2017, CMS approved Washington State’s request for a new five-year Medicaid demonstration program, the Medicaid Transformation Project, in accordance with section 1115(a) of the Social Security Act. Under this waiver, Washington State will offer ways to support family caregivers of older adults who need help to live at home by getting supports for the family caregiver necessary to continue to provide care and to focus on their own health and well-being (see also this chapter’s section on Supporting Family Caregivers.)
States that have achieved greater success in transforming their LTSS systems to give people choices and reduce their reliance on nursing facilities share certain characteristics, including the following:
Philosophy—all decisions extend from a commitment to deliver services to older adults and people with disabilities and their family caregivers in the most independent living situation possible and to expand cost-effective HCBS options through person- and family-centered planning. The most important factor in creating a balanced LTSS system may be the state’s determination to promote quality of life for older adults and people with disabilities and give participants a choice in how they obtain their services.
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 his or her family caregiver are less likely to channel people into institutions.
Organization of responsibilities—assigning responsibility for the state’s LTSS system to a single administrator is a key decision 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—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 must 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 determination process.
Standardized assessment tool—some states use a single tool to assess functional eligibility and service needs and then develop a person- and family-centered plan of services and supports. This helps to minimize differences among care managers and prevent unnecessary institutionalization. It can also be used to collect consistent data, leading to better system management. In states where people are disproportionately institutionalized compared to other states, initiatives targeted at reducing institutionalization should be established.
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, coordinate services, and monitor quality can support people who have their own resources to pay for services, as well as 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 a difficult time negotiating complex systems. One model is the Aging and Disability Resource Centers, which most states are in various stages of implementing.
Participant direction—the movement to allow people a greater role in determining who will provide their services, as well as when and how they are delivered, responds to the desire of older adults and people with disabilities to maximize their choices and control over their lives.
Relocation from nursing facilities—some states regularly assess the possibility of transitioning people out of nursing facilities and into their own homes or home-like community alternatives. States may assign staff to visit nursing facilities to identify, assess, and help people 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.
Integrating health services and LTSS—a few states have developed methods for ensuring that the array of health services and LTSS provided to older adults and people with disabilities are coordinated and delivered in a cost-effective manner. Differences in how Medicare and Medicaid programs are administered have complicated these efforts. Yet among people age 65 and older, the vast majority of those receiving Medicaid are eligible for Medicare as well.
EXPANDING HOME- AND COMMUNITY-BASED SERVICES: Policy
Eliminating Medicaid's institutional bias
The federal government should eliminate Medicaid’s bias favoring nursing facilities by mandating the provision of home- and community-based services (HCBS) for everyone who meets Medicaid eligibility criteria and chooses to receive services in HCBS settings.
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, based on uniform and independent assessments, should be admitted to nursing facilities unless they choose to receive services in a nursing facility.
The federal government should provide federal matching funds to reimburse states for erroneous presumptive eligibility determinations regarding beneficiaries who receive Medicaid HCBS and nursing facility services.
Expanding home- and community-based services
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.
Creating or expanding nursing facility transition programs
The federal government should continue to fund and expand the Money Follows the Person program. The federal and state governments should build diversion and transition programs that have sufficient capacity to assist any person who can be served in HCBS settings rather than nursing facilities.
Offering a comprehensive range of home- and community-based services
States should fund the services needed to meet individuals’ LTSS needs and allow them to remain in the community. These services, at a minimum, 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, including supportive housing and adult day centers. These services should be offered through Medicaid, state-funded LTSS programs, the Social Services Block Grant, and the OAA.
States should expand HCBS options to include a range of residential choices as well as home modifications and assistive technologies.
This can be done through waivers and other processes such as state plan amendments, Administration for Community Living programs, or state-only funding sources. Particularly important are programs that provide LTSS for low-income residents of assisted living, or board and care homes, at risk of entering a nursing facility. However, current Medicaid beneficiaries should not be forced to move or have benefits reduced by the implementation of a waiver or other program.
States should expand the new requirement to assess the needs of family caregivers under the 1915(i) HCBS state plan option to all assessment tools for Medicaid HCBS. Such assessments will identify at-risk family caregivers before they burn out or compromise their own physical and mental health.
States should support family caregiver services such as education and training, counseling, legal consultations, and respite care, which can delay or decrease the likelihood of needing to enter a nursing facility.
Streamlining administration of long-term services and supports programs
States should consolidate LTSS programs, policies, and budgets within one state agency to promote efficiency, create single points of entry for LTSS, and implement the data collection necessary to manage LTSS strategically.
- develop the capacity for prompt financial and functional Medicaid eligibility determinations for applicants who need and want HCBS, and should 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 can use the money saved through reduced nursing facility use for increased coverage of HCBS;
- consolidate LTSS programs, policies, and budgets within one state agency to promote efficiency, true single points of entry for LTSS, and the data collection necessary to strategically manage LTSS;
- 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—such participation would include 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 plan of care, and design programs and policies to protect consumers and avoid the erosion of family care networks—programs and policies should protect consumers, guard against fraud and abuse, and avoid disincentives for unpaid caregiving;
- identify barriers that unintentionally curtail consumers’ ability to self-direct their care 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 the 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 service use, by 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;
- seek to 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 regardless of whether the care recipient is eligible for Medicaid or a publicly funded program, or is a private-pay individual; and
- allow family caregivers who are assisting care recipients with moderate incomes, and who would not otherwise qualify for publicly funded respite services, to buy into or otherwise access these services.