Transforming home- and community-based services: Lots of opportunity, lots of work

The American Rescue Plan’s investment in Medicaid home- and community-based services is the largest infusion of funds in this space since the creation of HCBS waiver programs in the early 1980s. While the Congressional Budget Office scored this provision as costing $13 billion, proposed spending inclusive of state and federal funds in state spending plans totals more than $34 billion. The opportunities are significant – and so is the workload to operationalize the transformational plans states proposed to the Centers for Medicare and Medicaid Services that are now being partially approved.

States are looking not just at the straightforward changes, such as rate increases and expanding services. They’re getting creative and ambitious around provider training to build out the workforce, leveling the playing field for behavioral health and HCBS providers with electronic health records, building housing supports, and making capital investments to create more physical sites to provide HCBS.

This is all happening under a ticking clock. The funding enhancements expire on March 31, 2022. The earliest states could feasibly start claiming that enhancement was early October. So there’s a narrow window of opportunity for states to draw down this enhancement to build up the resources to invest in all the innovations described in their spending plans.

The downside of all the opportunity and innovation? CMS said yes to most of it. It’s the dog catching the car. Now there’s a monumental task to do all this work with limited staff bandwidth, administrative resources, and under an evolving framework around how these dollars get claimed through CMS reporting processes.

Here’s a look at some snapshots of innovation from a few states:

• Wisconsin is a state that already has a robust HCBS program. Their strategy is not focused on service expansion, as they’re already where they want to be from a service coverage perspective. Instead, they’re focusing on HCBS rate reform to develop a consistent rate system and smooth out any shocks to providers from that rate work, investing in the workforce, building out an HCBS grant program, and investing in long-term care systems for the state’s Tribal populations. One of their most promising initiatives is a pilot program to support older adults who are at risk of entering Medicaid long-term care because they are forced to spend down their community resources. With supports from the state to the unpaid caregivers of these individuals, that outcome may be avoided.
• Oregon faces a challenge due to the fact that almost all HCBS programs sit outside of the single state Medicaid agency. That means partnership and collaboration across these agencies is key to successful HCBS investments with new federal dollars. The state is explicitly focused on health equity across its work, including these HCBS investments. Some promising ideas in Oregon include state dollars freed up by the new federal investment in HCBS enhancements that will be used to fill in gaps where investments can’t generate additional federal dollars. These are areas like crisis services for justice-involved individuals, supports for individuals facing loneliness and isolation, and one-time purchases of emergency preparedness and disaster management resources. Oregon’s need for emergency service investments was made starkly clear in 2020 and 2021. A series of natural disasters including wildfires, snap freezes, and an unprecedented heat wave illustrated the limits of what fee-for-service Medicaid can do. There’s no payment code for driving a vulnerable Medicaid member to a cooling site or a shelter.
• New Hampshire understands that with great funding opportunities comes great fiscal responsibility. There they are focused on ensuring that how the state builds out its spending plans sets it up for success in terms of mitigating any future audits or disallowances from the federal government. It’s not just about writing a plan, it’s going to the next step and getting your ducks in a row with CMS’s required process, forms, and approvals. Only then will the new dollars start flowing.