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States Should Act Quickly for New Home- and Community-Based Services Funding

The American Rescue Plan, enacted in March, gives states a time-limited opportunity to receive more than $11 billion in added federal Medicaid funding for home- and community-based services (HCBS). This funding can help seniors and people with disabilities receive services safely in the community rather than in nursing homes and other congregate care settings. But it’s only available for 12 months, and states must submit their spending plans to the Centers for Medicare & Medicaid Services (CMS) by June 12, so they need to act quickly.

The pandemic has taken a grave toll on people living and working in nursing homes; more than 132,000 residents and more than 1,800 staff have succumbed to COVID-19. While vaccines have helped address the immediate crisis for people in these settings, the past year has brought renewed attention to the benefits of providing services in the community instead of in institutions (such as reducing social isolation), the associated cost savings, and the opportunities for Medicaid to better respond to growing demand.

The Rescue Plan offers states a 10-percentage-point increase in the federal government’s share of spending on HCBS (known as the federal medical assistance percentage, or FMAP) for 12 months (April 1, 2021 through March 31, 2022). States must “supplement, not supplant” their current HCBS spending to qualify for the increase.

As guidance from CMS explains, to meet this requirement, states must (1) maintain their HCBS eligibility standards, benefits (including amount, duration, and scope), and provider rates in effect on April 1, 2021; and (2) use the new funds to enhance, expand, or strengthen HCBS. The guidance includes examples for two kinds of HCBS investments states could make with the added funds:

  • Helping address COVID-19-related HCBS needs, such as by: adding new HCBS services or enhancing the amount, duration, or scope of existing services; making workforce improvements like increasing reimbursement rates, providing hazard pay, and purchasing personal protective equipment; conducting recruitment activities and offering incentives for new home health and direct support professionals; increasing behavioral health provider pay; and providing education about COVID-19 prevention to Medicaid enrollees and their families.
  • Redirecting Medicaid’s long-term services and supports away from institutional care in favor of HCBS, such as by: developing cross-system partnerships (for example, between Medicaid and housing); streamlining HCBS eligibility and enrollment processes; increasing HCBS waiver slots to bring people off HCBS waiting lists; expanding programs to help people transition from institutional settings to the community; and investing in technology and telehealth infrastructure.

While the new federal dollars will help states address the impact of the pandemic on stretched HCBS programs, states struggled to meet the need for HCBS even before the crisis. This single-year increase won’t be sufficient to meet the growing demand for HCBS or to mitigate the shortages of trained home health and direct service workers needed to serve more people.

A robust national recovery from the pandemic and recession must include additional, longer-term investments to ensure that people with complex needs can live in the community if they want, and that the workforce to care for them is well trained and fairly compensated. President Biden proposed a $400 billion investment in HCBS in his American Jobs Plan. Funding on this scale could enable states to sustain improvements they make as part of the Rescue Plan incentive, expand HCBS eligibility and benefits, and offer home care and direct support professionals better benefits, pay, and training to meet growing needs.