Medicaid Coverage of Long-Term Services and Supports - R43328

Kirsten J. Colello
Specialist in Health and Aging Policy

Long-term services and supports (LTSS) refer to a broad range of health and health-related services and supports needed by individuals who lack the capacity for self-care due to a physical, cognitive, or mental disability or condition. Often the individual’s disability or condition results in the need for hands-on assistance or supervision over an extended period of time. Medicaid plays a key role in covering LTSS to aged and disabled individuals. As the largest single payer of LTSS in the United States, federal and state Medicaid spending accounted for $133.5 billion or 42.1% of all LTSS expenditures in 2011 ($317.1 billion). LTSS are also a substantial portion of spending within the Medicaid program relative to the population served, accounting for over onethird (35.6%) of all Medicaid spending. Of the 66 million total enrolled Medicaid population, an estimated 4.2 million (or 6.4%) Medicaid beneficiaries received LTSS in 2010.

Medicaid funds LTSS for eligible beneficiaries in both institutional and home and communitybased settings, though the portfolio of services offered differs substantially by state. Moreover, states are required to offer certain Medicaid institutional services to eligible beneficiaries, while the majority of Medicaid home and community-based services (HCBS) are optional for states. In recent decades, federal authority has expanded to assist states in increasing and diversifying their Medicaid LTSS coverage to include HCBS. As a result, the share of Medicaid LTSS spending for HCBS has more than doubled, accounting for 20.8% of Medicaid LTSS spending in 1995 to just over half (50.6%) of total Medicaid LTSS spending in 2011.

States now have a broad range of coverage options to select from when designing their LTSS programs. In general, Medicaid law provides states with two broad authorities, which either cover certain LTSS as a benefit under the Medicaid state plan or cover home and community-based LTSS through a waiver program which permits states to ignore certain Medicaid requirements in the provision of these services. Given the range of available coverage options, states continue to enhance or expand their LTSS delivery systems to cover additional services or target services to specific populations with a focus on HCBS. In FY2012 and FY2013, states reported expanding their state plan benefits to include HCBS through the Section 1915(i) HCBS state plan option, the Section 1915(k) Community First Choice (CFC) option, and Programs for All-Inclusive Care of the Elderly (PACE). States also reported adopting new HCBS waiver programs or expanding existing waivers to include additional services. Finally, states reported efforts to implement demonstrations and other grant activities to enhance or expand their LTSS delivery systems under the Money Follows the Person (MFP) Rebalancing Demonstration and the Balancing Incentive Payments (BIP) Program, as well as efforts to implement or expand the financing and delivery of Medicaid LTSS through managed care arrangements.

This report provides a description of the various statutory authorities that either require or otherwise allow states to cover LTSS under Medicaid. The Appendix provides a brief legislative history of Medicaid LTSS from Medicaid’s enactment and initial coverage requirements for institutional care through the evolution of HCBS options available to states. A discussion of changes to Medicaid made by the Patient Protection and Affordable Care Act (ACA, P.L. 111- 148, as amended) with respect to LTSS coverage options is also provided.

Date of Report: December 5, 2013
Number of Pages: 32
Order Number: R43328
Price: $29.95

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