More than half of Medicaid spending on long-term services and supports (LTSS) currently supports home and community-based services (HCBS) rather than institutional care (for example, long-term care facilities).
Personal and family preferences and the relative cost-effectiveness of home and community-based care contribute to this higher use of HCBS. In fact, a recent survey suggests that 88% of adults ages 50 and older want to stay in their homes and communities as they age.
The pandemic further underscored that delivering essential health and other supportive services in homes and communities is critical to allowing vulnerable individuals to shelter in place and reduce risk of exposure to COVID-19.
Recognizing the importance of home and community-based services, the American Rescue Plan Act (ARPA) included a provision to increase the federal medical assistance percentage (FMAP) for spending on Medicaid HCBS by 10% between April 2021 to March 2022. The FMAP reflects the federal government’s share of the cost of covered services in state Medicaid programs. States can leverage ARPA funding to enhance their HCBS programs in several ways including investing in worker training, providing paid family leave for the direct care workforce and providing assistive technology for program recipients.
A Kaiser Family Foundation survey from early August found that more than 20 states reported early plans to use new ARPA enhanced funds for Medicaid HCBS. Of these early plans, states most frequently reported provider payment rate increases and workforce recruitment as priority activities.
The enhanced HCBS funds through ARPA are available only until March 2022, though recent federal proposals have considered extending additional funding. While the pandemic highlighted the importance of strong HCBS systems, improving HCBS delivery is likely to continue to be a priority for states for many years to come.
Samantha Scotti is a senior policy specialist in NCSL's Health Program.