Renewed Focus on Medicaid Home and Community-Based Services

Due to the COVID-19 pandemic, most people have spent considerably more time at home over the past year. For many, this meant long hours of Netflix binging, crossword puzzles, and the occasional zoom happy hour. But for some of the most vulnerable Americans, stay at home orders and social distancing have caused significant interruptions in access to health care services, including preventative doctor visits, medication management and nutritional services. For many Medicaid beneficiaries with chronic health conditions, this inability to leave home for everyday functional and medical needs even preceded the pandemic.

For this population of seniors and people with disabilities, home and community-based services (HCBS) can be a godsend. (My colleague Ross has previously written on HCBS.) According to CMS, HCBS “provide opportunities for Medicaid beneficiaries to receive services in their own home or community rather than institutions or other isolated settings.” States have the option to implement Medicaid HCBS through either waivers or state plan amendments, typically under the authority of section 1915 of the Social Security Act. Because HCBS is a state option, the scope of HCBS program services varies by state. HCBS can include self-care assistance, nutritional programs and medical equipment that address functional needs, promote independence and support community integration. All 50 states and the District of Columbia provide some form of HCBS.

Even prior to the pandemic, HCBS gained a lot of attention as part of the broader push for addressing social determinants of health. The pandemic has only amplified this attention, and now the Biden Administration is taking significant steps in this area of Medicaid.


On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (ARP).  Section 9817 of the ARP provides qualifying states with enhanced Medicaid funding by way of a temporary 10 percentage point increase to the federal medical assistance percentage (FMAP) for certain Medicaid expenditures for HCBS.  Importantly, HCBS for the purposes of the enhanced FMAP is broadly defined to include a variety of items and services furnished in the home, such as durable medical equipment, even outside of a formalized HCBS waiver or state plan amendment. The Kaiser Family Foundation estimates that the ARP’s enhanced FMAP will lead to an additional $11.4 billion in federal spending for HCBS.

On May 13, 2021, the Centers for Medicare & Medicaid Services (CMS) issued a State Medicaid Director Letter (SMDL) to offer “guidance to states on the implementation of section 9817 of the ARP, as well as to describe opportunities for states to strengthen the HCBS system in response to the COVID-19 Public Health Emergency (PHE), increase access to HCBS for Medicaid beneficiaries, adequately protect the HCBS workforce, safeguard financial stability for HCBS providers, and accelerate long-term services and supports (LTSS) reform under section 9817 of the ARP.”

The temporary FMAP increase of 10 percentage points began on April 1, 2021 and will end on March 31, 2022. To receive the enhanced funding, states must meet the following requirements:

  • Federal funds attributable to the increased FMAP must be used to supplement existing state funds expended for Medicaid HCBS in effect as of April 1, 2021; and
  • States must use the state funds equivalent to the amount of federal funds attributable to the increased FMAP to implement or supplement the implementation of one or more activities to enhance, expand, or strengthen HCBS under the Medicaid program.

In other words, states must supplement, not supplant funding for HCBS. Of note, states can use the state funds equivalent to the amount of federal funds attributed to the increased FMAP through March 31, 2024, specifically on activities related to Section 9817. CMS states that this extended time period will provide states with sufficient time to design and implement short-term activities to strengthen the HCBS system in response to the COVID-19 PHE, as well as longer term strategies to enhance and expand the HCBS system and to sustain promising and effective programs and services.

In the SMDL, CMS outlines examples of initiatives in which the state can reinvest its enhanced funding to support COVID-19 related as well as long-term HCBS needs. These include:

  • New and/or additional HCBS
  • Reducing or eliminating HCBS waiting lists
  • Expanding provider capacity
  • Expanding use of technology and telehealth
  • Proving access to additional equipment or devices


As part of its upcoming infrastructure package, the Biden Administration has proposed including $400 billion to expand access to longer-term services under Medicaid and invest in the HCBS workforce. According to the Administration, this funding will provide more people with the “opportunity to receive care at home, in a supportive community, or from a loved one.” The proposal explicitly calls for expanding access to HCBS. According to another report by Kaiser, this proposal would increase annual spending for HCBS in Medicaid by roughly 33% annually. This additional funding, along with the ARP’s enhanced FMAP, would allow states to significantly enhance the scope of Medicaid HCBS services, as well as attract additional participants of the vital caregiver workforce.

Whether the final version of the infrastructure bill will include this allocation for HCBS remains to be seen. But it is clear that – as a result of the pandemic, as well as other factors such as the growing aging population – the importance of HCBS is becoming more evident by the day. We expect this area to continue to gain federal and state attention over the next few years. And as these programs continue to benefit from enhanced funding, it will be interesting to keep an eye on innovative state approaches to expanding the reach of their HCBS programs.


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