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Federal Funding for Home and Community-based Services (HCBS): Enacted and Proposed Investments

This week, our In Focus reviews federal enacted and proposed investments in home and community-based services (HCBS). HCBS are critically important for millions of Americans with disabilities and older adults, assisting them to remain in their homes and participate in their communities. People with disabilities and older adults have also been disproportionately affected by COVID-19, yet little federal funding has been directed to HCBS during the public health emergency. This changed on March 11, 2021, when the American Rescue Plan Act (ARPA) was signed into law, with both Medicaid and non-Medicaid HCBS funding included. Additionally, the Administration has recently proposed further HCBS investments in both The American Jobs Plan and the President’s 2022 Discretionary Request.

Section 9817 of ARPA provides an increase for Medicaid-funded HCBS by offering states the option to claim an additional 10 percentage point increase in federal match (FMAP) for the one-year period from April 1, 2021, to March 31, 2022.  This increase will be added to other current enhanced state FMAP options, including the 6.2 percent increase available under the Families First Coronavirus Response Act, the 6 percent available under the Community First Choice option, and increases in match rates for Medicaid expansion populations, as long as the total federal share does not exceed 95 percent.

The Congressional Budget Office estimated that this could add $12.7 billion in funding for HCBS. The impact in each state depends on a wide range of factors and state decisions related to HCBS policy and program implementation. States are not required to draw down the additional federal match.

The statutory language is simple, without many operational specifics, articulating only two major requirements. The HCBS funds must be used to:

  • Supplement, and not supplant, the level of state funds expended for HCBS in effect on April 1, 2021
  • Implement, or supplement the implementation of, one or more activities to enhance, expand, or strengthen Medicaid-funded HCBS

The Centers for Medicare & Medicaid Services (CMS) is currently developing guidance for states, with no date for release, but anticipated to be issued soon. Questions and considerations that stakeholders hope to see covered in the CMS guidance include:

  • Defining the requirements for “supplement, not supplant”:
    • Should this be based solely on expenditure amount as of April 1, 2021?
    • Will states be required to maintain current HCBS eligibility standards as well as HCBS amount, duration and scope during the claiming period?
    • What will be the processes and reporting requirements to demonstrate compliance?
  • Claiming and reporting requirements for the enhanced match:
    • Specificity related to which services and claims will be eligible for the enhanced match
    • Clarity regarding requirements and claiming for funds for HCBS provided under capitated rate structures, such as managed care and PACE programs
    • Requirements related to demonstrating non-duplication of expenditures, including funds available under the Paycheck Protection Program, Provider Relief Funds, and state HCBS provider retention payments
    • While the claiming is available for one year, how long will states have to obligate and expend the funds?
  • Allowable expenditures for the funds, including:
    • The importance of stakeholder engagement at the state level regarding the priorities for the use of funds
    • Options for increased provider payments or for expanding the population served without creating future obligations or baseline rate increases, given the short-term nature of the funding
    • Identifying activities that would be effective in expanding and improving HCBS
    • Ability to expend the funds on HCBS capacity development, infrastructure, quality initiatives, innovations and pilots, technology, research and policy, training/workforce supports or other related HCBS needs
    • Opportunities to make capital improvements in HCBS settings

Additionally, several non-Medicaid HCBS programs also benefitted from ARPA funding increases:

  • $460 million for Older American Act (OAA) supportive services
  • $25 million for OAA services for Native American communities
  • $44 million for OAA evidence-based health promotion and disease prevention programs
  • $145 million for the National Family Caregiver Support Program
  • $10 million for the Long-Term Care Ombudsman Program
  • $276 million to fund the Elder Justice Act
  • $50 million for grants to public transit systems to improve transportation access for older adults and people with disabilities
  • $10 million to create a new technical assistance center for kinship families in which the primary caregiver is an adult age 55 or older or the child has one or more disabilities

Finally, the Administration has recently announced two additional proposed investments in HCBS:

  • The American Jobs Plan includes $400 billion to expand access to HCBS, extend the Money Follows the Person initiative (that assists people to move from institutional settings to the community), and to improve wages and benefits for the direct support workforce
  • The President’s 2022 Budget Request includes an increase of $551 million to non-Medicaid HCBS programs for people with disabilities and older adults

Taken together, these enacted and proposed investments represent a tremendous increase in HCBS resources that may become available to assist people with disabilities and older adults across the country to live healthy lives at home or in the community.

HMA will provide additional information once the CMS ARPA HCBS funding guidance is available.