Medicaid Home or Community-Based Services HCBS

Historically, Medicaid funded long-term care (LTC) only in institutional settings such as nursing homes for older people and for people with conditions such as cognitive disabilities, physical disabilities, mental health disabilities, and disabling chronic diseases. With costly nursing home care, Medicaid LTC expenditures increased significantly over the years. To contain the massive growth in LTC expenditures and satisfy the public’s preference for LTC at home or in their communities, starting in the early 1980s, Medicaid implemented the Home or Community-Based Services (HCBS) program. The Medicaid HCBS mainly funds three programs that constitute the majority of its enrollment and spending: a mandatory home health state plan, an optional personal care state plan, and optional waivers. The Medicaid HCBS state plans are available to every Medicaid-eligible person with limited resources. Medicaid optional waivers allow states to waive general requirements in regular Medicaid programs, such as Medicaid state plan programs. For example, Medicaid waivers can select a particular population to serve, set limits on participants, and expand coverage through generous financial requirements that are not allowed in regular Medicaid programs. Medicaid waivers “waive” these requirements to realize the specific purpose of these programs.

Medicaid Aging Waivers

Medicaid aging waivers target older adults who are 65 and above. The mission of Medicaid aging waivers is to provide LTC for older adults at home as well as to improve their quality of life by allowing them to age in place. The specific features of Medicaid aging waivers are as follows. First, the Medicaid aging waiver serves only older people who are 65 and above with a certain level of LTC needs. Second, each state can set its own income and asset eligibility criteria for the Medicaid aging waiver. In 2018, most states used 300% Supplemental Security Income (SSI) as the income eligibility cutoff (\$27,756/year for an individual) and \$2,000 as an asset limit. Third, each state has flexibility to determine the scope of services covered in Medicaid aging waivers. Participants in Medicaid aging waivers are informed of all qualified service providers and have freedom to choose any type of provider available in the program. The majority of Medicaid aging waivers cover home-based services and equipment or technology modifications for the convenience of elderly individuals to stay at home. Enrolled providers in Medicaid aging waivers are paid directly through the Medicaid claims processing system. Thus, eligible older people can purchase in-home formal care at an affordable price.

Medicaid aging waivers are optional programs funded by the state and federal governments. To obtain a Medicaid aging waiver, states first submit an initial application to the federal Centers for Medicare and Medicaid Services (CMS). The application presents the waiver’s design and details in each section, such as waiver eligibility, services covered, service delivery, and cost-effectiveness. CMS makes approval decisions primarily based on two criteria: cost-neutrality and the state’s capability to serve the older population in the application. Most importantly, states need to justify the cost neutrality requirement that the total expenditures of participants covered at home in the Medicaid aging waiver cannot exceed the spending if these participants were to be served in nursing facilities. The most commonly used strategy is to cap enrollment, service coverage, units of services, and total expenditures in the application. In addition, states need to justify that the services covered under the waiver satisfy the needs of participants and that the services are provided by qualified providers. Speciffically, the qualifications and procedures for verifying the qualifications of service providers are detailed in the application. For example, the state verifies whether providers meet the required licensure and certification standards every year. States are also required to demonstrate that they have designed and implemented a system to monitor service providers. The state can create regional or state quality councils to evaluate the performance of providers and deal with complaints about providers such as abuse, neglect, and exploitation.

In general, an approved Medicaid aging waiver lasts five years, so the expenditures in each covered year should be cost-neutral, as justified in the application. Once approved, CMS monitors the operation and execution of Medicaid aging waivers. The central office of CMS in Baltimore, Maryland has the primary authority for Medicaid aging waiver administration. In addition, there are ten regional offices that represent CMS to monitor and administer the operation of Medicaid aging waivers for states in the region. States are required to submit annual reports to disclose the performance of Medicaid aging waivers. Any operational problems detected by CMS and failure to satisfy any of the requirements will cause amendments to Medicaid aging waivers in each year.

For each state, the state Medicaid agency administers and operates the Medicaid aging waiver. Medicaid agencies may directly operate the waiver or assign local contracted entities to perform administration and operation as long as the authority of the Medicaid aging waiver is maintained. Some states might experience unexpected delays in implementing the waiver due to the lack of an operational system and unexpected deviation from the approved waiver by redesigning a modified waiver. After the initial approval period, continuation of the current waiver requires the submission of a renewal application, in which the CMS central office and regional offices determine whether states continue to meet these requirements.