Background
The COVID-19 public health emergency (PHE) has underscored the urgent need to reduce the reliance on institutional services and expand access to high-quality home and community-based services (HCBS) to improve outcomes for people with long-term services and supports (LTSS) needs. HCBS allow millions of Medicaid beneficiaries to receive services in their own home or community rather than institutions or other isolated settings.
Consistent with many beneficiaries’ preferences for where they would like to receive their care, HCBS have become a critical component of the Medicaid program and of broader efforts across the federal government to promote community integration of older adults and individuals with disabilities. As the primary funder of HCBS nationally, Medicaid plays a critical role in supporting states’ efforts to strengthen these services for their beneficiaries. In November 2020, CMS released a toolkit to help states to rebalance their LTSS systems by increasing the share of spending and service use delivered through HCBS, relative to spending and services provided through institutional care.
On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (ARP) (Pub. L. 117-2). Section 9817 of the ARP provides qualifying states with a temporary 10 percentage point increase to the federal medical assistance percentage (FMAP) for certain Medicaid expenditures for HCBS beginning April 1, 2021, and ending March 31, 2022. This increased funding represents a rare opportunity for states to identify and implement changes aimed at addressing existing HCBS workforce and structural issues, expand the capacity of critical services, and begin to meet the needs of people on HCBS waitlists and family caregivers. This funding also provides states an important opportunity to enhance individual autonomy and community integration in accordance with the home and community-based settings regulation, Olmstead implementation, and other rebalancing efforts. States expect to spend over $25 billion on activities to enhance, expand, or strengthen HCBS as a result of ARP section 9817.
Use of the Funds to Enhance, Expand, or Strengthen HCBS
CMS recognizes the significant value of these additional funds, and is committed to working with our state partners to realize these improvements in the HCBS system, both in response to the COVID-19 PHE and in response to longstanding reform priorities. While states have broad flexibility in the use of the funds, CMS strongly encourages states to use the funds to implement structural changes to:
• Expand eligibility and increase access to HCBS for all Medicaid beneficiaries including those on waiting lists for HCBS waiver programs, children with disabilities, and people with behavioral health conditions;
• Offer a broader range of community-based services, particularly for people with behavioral health conditions;
• Make long term investment in HCBS infrastructure, including capital investments to expand access to non-disability specific settings as part of a state’s implementation of the home and community-based settings regulation;
• Support compliance with the home and community-based settings regulatory criteria and promote community integration;
• Strengthen the direct service workforce, including by increasing the pay and benefits of direct support professionals; and
• Address social determinants of health and improve equity for older adults and people with disabilities.
* In addition to demonstrating enhancing, enhancing, or strengthening HCBS, any use of the funds for capital investments must result in settings that are fully compliant with the home and community-based settings criteria.
State Activities Under ARP Section 9817
All 50 states and the District of Columbia have been fully approved to claim the HCBS FMAP increase April 1, 2021, until March 31, 2022, and to begin implementing activities in their spending plans and narratives.
States have included a number of innovative and exciting activities in their spending plans and narratives. For example, states are:
• Providing recruitment and retention bonuses, pay increases, and student loan forgiveness for direct support professionals, including behavioral health providers, as well as developing certification and training programs for direct support professionals (Nearly all state spending pans and narratives include workforce development initiatives);
• Expanding coverage of HCBS services to those who are currently on wait lists;
• Implementing in-home and mobile COVID-19 vaccination programs for people with disabilities and older adults;
• Developing deed-restricted accessible and affordable housing units for people with disabilities;
• Expanding access to assistive technologies to promote independence and community integration;
• Expanding HCBS eligibility to children with disabilities in the TEFRA group (commonly referred to as the Katie Beckett waiver);
• Implementing new behavioral health crisis response services for people with intellectual and developmental disabilities;
• Providing additional home-based services to support people to return home and avoid a skilled nursing facility admission following a hospitalization;
• Building partnerships to increase access to affordable and accessible housing and housing assistance for people with disabilities and older adults;
• Providing housing-related services and supports, such as home accessibility modifications and case management and other supportive services to help people obtain and maintain housing; and
• Developing new initiatives to increase access to competitive integrated employment for people with disabilities.
Recently Announced Changes
On June 3, 2022, CMS announced that it will not require states to demonstrate compliance with the March 31, 2024 deadline to fully expend the additional funding they received. States originally had a three-year period—from April 1, 2021, through March 31, 2024—to use the additional funding. Instead, CMS expects states to expend the funds by March 31, 2025. The extended timeframe of an additional year will help to facilitate high quality, cost-effective, person-centered services for people with Medicaid to remain in the setting of their choice, whether it is their home or another setting, and remain a valued part of their communities. CMS also announced that it has updated states’ reporting requirements to reduce state reporting burden while ensuring that CMS continues to receive timely and up to date information on state spending under ARP section 9817. See CMS’s State Medicaid Director letter announcing these changes for more information.
Additional Information
- State Medicaid Director Letter # 21-003, Implementation of American Rescue Plan Act of 2021 Section 9817: Additional Support for Medicaid Home and Community-Based Services during the COVID-19 Emergency
- State Medicaid Director Letter # 22-002, Updated Reporting Requirements and Extension of Deadline to Fully Expend State Funds Under American Rescue Plan Act of 2021 Section 9817
- ARP Section 9817 State Spending Plans and Narratives and CMS Approval Letters
For more information, contact HCBSincreasedFMAP@cms.hhs.gov.