Medicaid Home and Community-Based Services Programs: 2012 Data Update

Developing home and community-based services (HCBS) alternatives to institutional care has been a priority for many state Medicaid programs over the past three decades. The national share of Medicaid LTSS spending on HCBS has nearly tripled, from 18 percent in 1995 to 51 percent in 2013.¹ States’ efforts to expand HCBS options for LTSS have been driven by beneficiary needs and preferences, the United States Supreme Court’s 1999 Olmstead decision finding that the unjustified institutionalization of people with disabilities violates the Americans with Disabilities Act,² and efforts to control growth in total LTSS expenditures. Medicaid LTSS expenditures represent 34 percent of total Medicaid spending in 2013, with HCBS typically costing less than comparable institutional care.³ Budgetary constraints in an environment of sustained economic improvement after the worst recession since the Great Depression and the administrative complexities of implementing and coordinating the various LTSS options may pose challenges as states and the federal government continue to work toward increasing access to Medicaid HCBS, reducing institutional bias, and rebalancing Medicaid LTSS expenditures.

Over the last fourteen years, the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured (KCMU) has worked with researchers at the University of California, San Francisco (UCSF) to track the development of the three main Medicaid HCBS programs: (1) the mandatory home health services state plan benefit, (2) the optional personal care services state plan benefit, and (3) optional § 1915(c) HCBS waivers. Medicaid HCBS also may be provided through new and expanded options available under the Affordable Care Act (ACA), such as the § 1915(i) HCBS state plan option, the Money Follows the Person demonstration,⁴ the § 1915(k) Community First Choice state plan option, and the Balancing Incentive Program;⁵ participants and expenditures attributable to the ACA HCBS options are outside the scope of this report.

In addition, a minority of states provide some or all of their HCBS through § 1115 demonstration waivers, which are briefly discussed in this report. For example, Arizona, Rhode Island, and Vermont do not offer any
§ 1915(c) waivers and instead operate their entire Medicaid LTSS programs through § 1115 demonstration waivers.

Beginning in 2002, we also surveyed the policies states use to control spending growth in § 1915(c) waiver programs, such as eligibility criteria and waiting lists. In 2007, we expanded the policy survey to include home health and personal care services state plan benefits. In these state-level surveys, we collect data on eligibility criteria, providers, and scope of services as well as provider reimbursement rates. This report summarizes the main trends to emerge from the latest (2012) participant and expenditure data for the three main Medicaid HCBS programs and findings from the 2014 survey of policies impacting the mandatory home health services state plan benefit, the optional personal care services state plan benefit, and § 1915(c) waivers.