Home- and Community-Based Services Succeed in Reducing Institutionalization But Vary Greatly from State to State

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Historically, the Medicaid program in the United States has paid for the medical care of the nation’s poor. The program, jointly funded by the federal government and state governments, pays for medical appointments, tests, prescriptions, as well as covering the cost of nursing homes for people who require a significant level of care. Several decades ago, government health experts noticed that many Medicaid residents in nursing homes were not there for medical reasons, but rather they were there because they did not have someone at home who could help them with activities of daily living, such as bathing, grocery shopping and preparing meals.

In 1981, recognizing that with adequate support many people in need of these services can live at home, Congress gave the U.S. Health Care Financing Administration (now the Centers for Medicare & Medicaid Services (CMS)) the power to issue “waivers.” These waivers would allow states to use Medicaid funding to provide select groups of people with tailored services directly in their homes or communities, called home and community-based services (HCBS). The goal was to pay for in-home supports that would allow people to move out or stay out of institutions and regain their lives as members of their communities. “They saw it as an opportunity to allow states to experiment with how services were funded and delivered,” says Allen Heinemann, PhD, Director of the Center for Rehabilitation Outcomes Research at the Shirley Ryan AbilityLab. “The states have acted accordingly and been very innovative within the constraints given to them.”

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By most measures, the waiver program has been wildly successful. All 50 states now provide waivers for HCBS to some residents, and Medicaid spending has shifted drastically (1). In 2013, Medicaid’s spending on HCBS surpassed its claims for institutional care (1). And in 2018, home- and community-based services accounted for 57% of Medicaid spending on long-term services and supports (LTSS), up from 18% in 1995 (1). But the waiver system has created a patchwork of benefits that differ widely by state, notes Edith Walsh, PhD, an expert on HCBS at RTI International, a nonprofit research institute headquartered in North Carolina. “States vary tremendously in what waivers they have. The states are able to define a population and provide only as many slots as they are willing to pay for, so a waiver doesn’t have to be available to everyone in a state,” Walsh says. “Waiver eligibility generally follows the state’s nursing home eligibility, which also vary by state, so only people who are candidates for nursing homes are eligible for HCBS.”

Waivers for HCBS can cover people with physical, intellectual/developmental, age-related, and/or mental health disabilities, depending on the state. Home- and community-based services can include visits by nurses or occupational therapists; personal care aides who assist with activities of daily living, household work, and transportation. In many places, the programs can also pay for home repairs and respite care for family care givers (1).

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It’s estimated that between 4 and 5 million people in the U.S. are receiving Medicaid-funded HCBS, a fraction of those who could benefit from such care (1). Forty-one states have HCBS waiting lists that total more than 800,000 people, according to the Kaiser Family Foundation, which surveys states on waiting lists (2). Texas leads the way with 385,000 people on a waiting list, followed by Florida with 72,000 and Ohio with almost 69,000 (2). There are ten states plus the District of Columbia that reported having no waiting lists at all (2). But those statistics do not tell the whole story, experts say. States with tough-to-meet requirements for institutional care exclude many people who would qualify for HCBS if they lived in another state. For example, even though Illinois has historically been more generous with Medicaid spending than Indiana, Illinois has a waiting list of almost 20,000, compared with only 1,500 for Indiana, points out Heinemann. Similarly, Maine, one of the states with the most stringent requirements for nursing home care, only has 1,515 people on its waiting list (2).  

Because HCBS are available only as part of the income-based Medicaid program, middle-class households are mostly not eligible because they earn too much and have too many assets.  “In the middle, it’s a struggle,” says Steven Lutzky, PhD, President of HCBS Strategies, a Baltimore consulting firm that works with states on their HCBS programs. “Most people have to spend down their assets to qualify and by the time they do that, they may have deteriorated, and their family support system may be burned out. The question is how we can intervene early with service coordination and a limited package of supports so they might be able to remain in their community.”

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Good news is on the horizon: the $1.9 trillion COVID-19 economic relief package passed in March contained a provision for an additional $12.7 billion for HCBS from April 2021 through March 2022 (3). Some disability advocates hope the money will be used to boost the low pay for personal care aides, who earn below the minimum wage in many parts of the United States (3). But, because it is a one-time addition, it’s more likely the surplus funding will be used to strengthen states’ HCBS delivery systems, experts say. 

Much more funding could be on the way if the Biden Administration’s American Jobs Plan is passed by Congress. The plan proposes spending an additional $400 billion over the next eight years on HCBS (3). Nonprofit groups that advocate for people with disabilities and older adults have described it as an historic opportunity to build a stronger framework of HCBS. The fact that COVID-19 killed more than 180,000 people in nursing homes and other long-term care facilities, one-third of all U.S. deaths from COVID-19, fundamentally shifted the American view of safe places for their loved ones to live, they add (4).

Some advocates are proposing the additional funds be used to eliminate all state waiting lists for HCBS. But others note that there are not enough direct support workers to supply that number of services. They estimate that an additional 1 million workers would have to be recruited and trained. Meanwhile, Congress is divided on what should be included in the final bill for jobs and infrastructure, so passage is not guaranteed.

Several disability experts have agreed that even if the American Jobs Plan is not enacted, the funding from the COVID-19 relief bill will be a catalyst to change and improve the HCBS system for the coming years. “There will be a lot of changes in the HCBS system,” Lutzky predicts. “COVID has really shaken things up and caused us to rethink the delivery system.”

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References: 

1. Musumeci, M. B., Watts, M. O. M., & Chidambaram, P. (2020, February 18). Medicaid Home and Community-Based Services Enrollment and Spending. https://www.kff.org/medicaid/issue-brief/medicaid-home-and-community-based-services-enrollment-and-spending/.
    
2. Musumeci, M. B., Watts, M. O. M., & Chidambaram, P. (2020, February 18). Key State Policy Choices About Medicaid Home and Community-Based Services. https://www.kff.org/medicaid/issue-brief/key-state-policy-choices-about-medicaid-home-and-community-based-services/

3. Musumeci, M. B. & Chidambaram, P. (2021, March 15). Potential Impact of Additional Federal Fumds for Medicaid HCBS for Seniors and People with Disabilities. https://www.kff.org/medicaid/issue-brief/potential-impact-of-additional-federal-funds-for-medicaid-hcbs-for-seniors-and-people-with-disabilities/

4. The New York Times. (2021, April 28). Nearly One-Third of U.S. Coronavirus Deaths Are Linked to Nursing Homes. The New York Times. https://www.nytimes.com/interactive/2020/us/coronavirus-nursing-homes.html.