Medicaid Reforms to Expand Coverage, Control Costs and Improve Care: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2015 and 2016

Long-Term Services and Supports Reforms

Key Section Findings

Nearly every state reported actions to expand the number of persons served in community settings in both years (46 states in both FY 2015 and in FY 2016), primarily through increases in HCBS waivers and SPAs. Eighteen (18) states in FY 2015 and 23 states in FY 2016 reported implementing or expanding PACE programs. The ACA created and expanded several LTSS-related options intended to promote LTSS rebalancing including the Community First Choice Option and the Section 1915(i) HCBS State Plan Option. Thirteen (13) states reported having at least one of these options in place in FY 2014; an additional six states reported implementing at least one of these options in FY 2015 and eight states reported plans to do so in FY 2016. Additional information on LTSS expansions implemented in FY 2015 or planned for FY 2016 can be found in Tables 13 and 14. These tables are also available in a downloadable PDF.

Medicaid is the nation’s primary payer for long-term services and supports (LTSS) covering a continuum of services ranging from home and community-based services (HCBS) that allow persons to live independently in their own homes or in the community, to institutional care provided in nursing facilities and intermediate care facilities for individuals with intellectual disabilities (ICF-ID). Long-term services and supports represent at least one-third of Medicaid spending and are an important focus for state policymakers.¹ This year’s survey shows that almost all states are employing a variety of tools and strategies to expand HCBS options including traditional Section 1915(c) HCBS waivers, PACE programs,² and managed LTSS.

Nearly every state reported actions to expand the number of persons served in community settings in both years (46 states in FY 2015 and in FY 2016). The number of states taking such actions has increased since FY 2012 (26 states) and FY 2013 (22 states). While virtually every state reported using Section 1915(c) waivers or Section 1915(i) state plan authority to expand HCBS, a significant number of states (17 in FY 2015 and 19 in FY 2016) also reported that the incentives built into their managed care programs were expected to increase the availability of HCBS. Also, 18 states in FY 2015 and 23 states in FY 2016 reported implementing or expanding PACE programs. (Figure 9) A number of states (15 states in FY 2015 and 15 in FY 2016) reported closing or downsizing institutions that led to more community placements and several states (four states in FY 2015 and three states in FY 2016) reported implementing or tightening a Certificate of Need program or imposing a moratorium on construction of new institutional beds. States also reported increased take up of ACA options to expand community-based LTSS (discussed below).

Several states reported on a number of other rebalancing initiatives. California reported that its Department of Health Care Services will collaborate with its Department of Housing and Community Development to award rental subsidies to developers and Medi-Cal community-based organizations (CBOs) using grant awards received from the U.S. Department of Housing and Urban Development. The CBOs will use the subsidies to transition institutionalized or homeless Medi-Cal beneficiaries into private independent living settings partnered with home and community-based services.³ Connecticut reported that it was continuing to implement its Strategic Plan to Rebalance Long-Term Services and Supports including a second round of rebalancing grant awards, announced by Governor Malloy in May 2015, to help the state’s nursing home industry diversify services to meet the changing needs of older adults and other people with disabilities. Several states also noted the implementation of conflict-free case management and single points of entry⁴ and one state commented that it was in the process of developing and testing a uniform assessment tool that, in the future, should have a positive impact on rebalancing the LTSS system.

Three states (Iowa, Illinois and Tennessee) reported new HCBS restrictions or limitations in FY 2015 or FY 2016: Iowa reported that its HCBS waiver for persons with intellectual and developmental disabilities (IDD) had reached its federally approved enrollment cap causing the state to implement a waiting list in FY 2015; Illinois reported that it is planning to change its Level of Care criteria for nursing homes as part of a legislative mandate which will also reduce the number of persons eligible for Section 1915(c) waiver services; and in FY 2016, Tennessee will also begin limiting new enrollment into a Section 1915(i)-like group (offered under Section 1115 authority) to SSI eligible beneficiaries only. People already enrolled in the group under institutional income standards will be grandfathered.⁵

Long-Term Services and Supports Options in the ACA

The ACA created and expanded several LTSS-related options intended to promote LTSS rebalancing. This year’s survey asked about two LTSS-related options intended to promote LTSS rebalancing that were created or expanded by the ACA: the Community First Choice Option and the Section 1915(i) HCBS State Plan Option. Thirteen (13) states reported having at least one of these options in place in FY 2014; six states reported implementing at least one of these options in FY 2015 and eight reported plans to do so in FY 2016. (Figure 10) State utilization of each of these options is discussed below.

An additional program, the Balancing Incentive Program (BIP) was created under the ACA to provide enhanced Medicaid matching funds to certain states that meet requirements for expanding the share of LTSS spending for HCBS (and reducing the share of LTSS spending for institutional services). The enhanced funding ended in September 2015. For more information on the impact of this program, please see the following brief.⁶

Section 1915(i) HCBS State Plan Option

This option allows states to offer HCBS through a Medicaid state plan amendment (SPA) rather than through a Section 1915(c) waiver. As a result of changes made in the ACA, income eligibility for this option was extended up to 300 percent of the maximum SSI federal benefit rate and states were permitted to target benefits to specific populations and offer the same range of HCBS under Section 1915(i) as are available under Section 1915(c) waivers. Unlike Section 1915(c) waivers, however, states are not permitted to cap enrollment or maintain a waiting list and, if offered, the benefit must be available statewide. If enrollment exceeds the state’s projections, the state may tighten their Section 1915(i) needs-based eligibility criteria, subject to advance notice and grandfathering of existing beneficiaries. Twelve states reported having an HCBS state plan option in place in FY 2014. Four states (Connecticut, Delaware, DC and Indiana) reported implementing in FY 2015; Connecticut and Indiana already had 1915(i) SPAs in place but implemented additional ones in FY 2015. Five states (Maryland, Minnesota, Mississippi, New York and Texas) reported plans to implement in FY 2016.

States were also asked to describe the target populations for their Section 1915(i) SPAs. Adults with significant mental health needs were identified by the largest number of states (7) followed by persons with intellectual and developmental disabilities (5), children with significant mental health needs (4), the elderly (3) and persons with vision impairments or physical disabilities (1). For some states, the target population included more than one of these categories. Also, two states (Connecticut and Idaho) have two Section 1915(i) SPAs in place, while Indiana implemented a third Section 1915(i) SPA in FY 2015 for adults diagnosed with mental health conditions and have incomes below 300 percent of the supplemental security income benefit rate (SSI), including persons who lost Medicaid coverage when the state’s spend-down program was eliminated.⁷

Community First Choice (CFC) State Plan Option

States electing this State Plan option to provide Medicaid-funded home and community-based attendant services and supports receive an FMAP increase of six percentage points for CFC services. In this year’s survey, four states (California, Maryland, Montana and Oregon) reported having CFC in place in FY 2014. Two states reported implementing this option in FY 2015 (New York⁸ and Texas), and four states reported plans to implement in FY 2016 (Connecticut, Delaware, Minnesota and Washington).

Table 13: Long-Term Care Expansions in all 50 States and DC, FY 2015 and 2016 

Table 14: State Adoption of ACA LTSS Options in all 50 States and DC, FY 2014 – 2016