Medicaid Home & Community-Based Services: People Served and Spending During COVID-19

The COVID-19 pandemic brought new focus to the long-standing unmet need for home and community-based services (HCBS) among seniors and people with disabilities and direct care workforce shortages. Recognizing Medicaid’s role as the primary payer for HCBS, the American Rescue Plan Act (ARPA) temporarily increased federal funding to support Medicaid HCBS. The Build Back Better Act, passed by the House in November 2021, would provide $150 billion in new federal funds for Medicaid HCBS, including a permanent increase in the federal matching rate. This issue brief presents FY 2020 state-level data on the number of people receiving Medicaid HCBS and HCBS spending. This is the latest data available, and the first since the onset of the COVID-19 pandemic. The data were collected in KFF’s 19^th survey of state officials administering Medicaid HCBS programs in all 50 states and DC. A related brief presents the latest data and highlights themes in key state policy choices about optional HCBS. Key findings include the following:

• Nationally, 3.0 million people receive HCBS through waivers, and over 2.5 million people receive HCBS as part of the state plan benefit package (primarily home health and personal care services). The data do not allow us to present a total number of people who receive HCBS because some people receive services through both waivers and state plan benefits. Most people receiving HCBS get services that are provided at state option, which results in substantial variation among states.
• If passed, the BBBA would provide states with permanent enhanced federal matching funds for HCBS, which could allow them to serve more people. States may be more likely to increase the number of people receiving waiver services (which can be capped) if they know they can count on enhanced federal funds without an expiration date. The new funding also could enable states to offer optional services that they do not currently provide. To receive BBBA funds, states would have to assess the current availability of HCBS and identify access barriers to address.
• Joint federal and state Medicaid HCBS spending totaled $116 billion in FY 2020, with the vast majority (96%) for optional services. Waivers continue to comprise the majority of people receiving HCBS and spending. Among waiver target populations, spending for people with intellectual and developmental disabilities (I/DD) is disproportionate to the number of people served because per person costs for this population ($48,900) are higher than per person costs for seniors and adults with physical disabilities ($17,600). Under federal law, services in nursing homes are mandatory, but most HCBS are optional. According to other data, in FY 2019, spending on HCBS accounted for 59% of total Medicaid long-term services and supports (LTSS) spending. The trend toward increased HCBS spending has occurred over the last decade, and interest in expanding HCBS as an alternative to institutional LTSS has increased due to the pandemic.
• As passed by the House, BBBA would provide states with an additional six percentage points on their current federal matching rate for HCBS, an estimated $150 billion in new federal funds over 10 years. Increased federal funds without an expiration date could allow states to make longer term investments needed to expand HCBS (by serving more people and/or offering additional services) and support the direct care workforce (by increasing provider payment rates and requiring providers in turn to raise worker wages and supporting worker training).

Looking ahead, the COVID-19 pandemic and the aging population are expected to continue to influence Medicaid HCBS. Substantial variation in state HCBS eligibility, spending, and benefits persists across states. Over the past year, states have received temporary enhanced federal HCBS funding from the ARPA. Permanent enhanced funding for Medicaid HCBS, passed by the House and pending consideration in Senate in the Build Back Better budget reconciliation package, could support state efforts to not only recover from the pandemic but also improve the HCBS delivery infrastructure and expand services to fill existing and anticipated unmet needs. FY 2020 data about the number of people receiving HCBS and HCBS spending may be the baseline from which to assess the impact of ARPA, and if passed, Build Back Better Act, funds in terms of both expanding the number of people served and expanding the scope of services for people already receiving some HCBS who may still have unmet needs.