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Tuesday, January 25, 2011

Home and Community-Based Services Under Medicaid

Julie Stone
Specialist in Health Care Financing

Medicaid is the largest public payer of home and community-based long-term care (LTC) services in the country. This is primarily because federal and state governments, the two sources of funding for Medicaid, have devoted significant efforts over the past several decades to expanding Medicaid’s offering of home and community-based services (HCBS) for persons with disabilities and to reducing reliance on institutional care, often referred to as rebalancing.

Despite relatively high spending on LTC nationally, however, significant variation exists in the proportion of each state’s Medicaid HCBS spending versus institutional care. In part, this variation is due to the enormous flexibility allowed to states under Medicaid law concerning which populations with LTC needs to cover and which services to offer them. As a result of this flexibility, no two state Medicaid LTC programs look alike.

The health reform law (the Patient Protection and Affordable Care Act, PPACA, P.L. 111-148) gives states new options to expand their coverage of HCBS and provides them with financial incentives to do so. States will be faced with decisions about whether to take up any of these new options given other pressing demands on state budgets. Members of the 112
th Congress may want to know whether and how states take up these new options and may want to evaluate whether the significant variation in state spending on HCBS versus institutional care meets Congress’s policy goals. A discussion about the increasing financial strain of Medicaid’s institutional and HCBS spending on state and federal budgets will likely be part of this debate.

This report looks at (1) the history of the Medicaid program as it relates to state flexibility in offering HCBS; (2) basic eligibility rules for accessing HCBS under Medicaid; (3) the existing Medicaid state plan and waiver authorities that states may use to offer HCBS; (4) the variation in state spending on HCBS versus institutional LTC care; and (5) challenges states face in expanding their HCBS programs.

Date of Report: January 19, 2011
Number of Pages: 32
Order Number: R41600
Price: $29.95

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