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CMS BACKGROUNDER

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January 11, 2007

To assist states in offering greater choices, the DRA made changes in Medicaid that will allow states to add home- and community-based services to their permanent array of benefits without having to go through a waiver program. Under a DRA provision separate from the MFP initiative, states now have the option to provide home and community-based services without a waiver program.

States receiving grants today under the MFP initiative (see list below) will design programs with four major objectives:

• Increase the use of home and community-based, rather than institutional, long-term care services;
• Eliminate barriers or mechanisms that prevent Medicaid-eligible individuals from receiving support for appropriate and necessary long-term services in the settings of their choice;
• Increase the ability of the state Medicaid program to assure continued provision of home and community based long-term care services to eligible individuals who choose to move from an institutional to a community setting; and 
• Ensure that procedures are in place to provide quality assurance for individuals receiving Medicaid home and community-based long-term care services and to provide for continuous quality improvement in such services.

All states were eligible to apply for participation in the five-year demonstration that requires a commitment to participate in the demonstration services for at least two consecutive years. A second round of state grants may be announced later this year using 2007 grant money.

States receiving grant funds may be eligible to receive a higher percentage of federal matching dollars to help cover the costs for people moving out of institutions and into community settings. The higher matching rate will be applied to certain services provided to an individual for a one-year period after the individual moves out of an institution and into the community. The state must continue to provide community services after that period as long as the person needs community services and is Medicaid eligible.

For more details about the New Freedom Initiative, of which this demonstration is part, visit the CMS web site at: http://www.cms.hhs.gov/newfreedom/.