Medicaid Spending on Home, Community-Based Services Up by $116B

Medicaid spending grew to $116 billion on home and community-based services (HCBS) during fiscal year 2020, providing services to 3 million people through waivers and more than 2.5 million people through state benefits, according to a Kaiser Family Foundation (KFF) issue brief.

Medicaid is the primary source of funding for home and community-based services, which provide opportunities for beneficiaries to receive certain home healthcare services.

State Medicaid programs must cover some HCBS benefits, such as nursing services, home health aide services, and medical supplies. Other HCBS benefits—including personal self-care, private nursing services, case management, and rehabilitation services—are optional and coverage varies depending on the state.

KFF researchers collected fiscal year 2020 state-level data between March and August 2021 through a survey of state officials who administer Medicaid HCBS programs.

Beneficiaries can receive HCBS benefits through state plan benefit packages or waivers that allow states to offer HCBS benefits to specific populations, such as individuals with intellectual, developmental, and physical disabilities. Through Medicaid waivers, states can limit the number of beneficiaries that receive services.

In 2020, 2.5 million Medicaid beneficiaries received HCBS benefits from state plan services, whether via home healthcare services, personal care services, Community First Choice, or Section 1915 (i). Meanwhile, 3.0 million beneficiaries received services through waivers, with 1.9 million receiving them through the Section 1915 (c) waiver and 1.1 million through the Section 1115 waiver.

Total Medicaid spending on HCBS benefits in 2020 reached nearly $116 billion. More than two-thirds of that spending was through waivers, while state plan benefits accounted for the remaining one-third.

Section 1915 (c) waivers accounted for 51 percent of Medicaid HCBS spending, KFF found.

“HCBS waivers generally have a higher per person cost compared to state plan HCBS because waivers include a benefit package with multiple types of services as opposed to the single type or narrower range of services typically provided in a state plan category,” the brief stated.

“Additionally, waivers generally require individuals receiving services to meet an institutional level of care and therefore are likely to serve people with more extensive, and costlier, needs.”

From 2019 to 2020, states experienced different changes in HCBS benefits spending due to the COVID-19 pandemic and a growing senior population, though most states saw some degree of increased spending.

For example, 32,000 seniors and non-elderly adults with physical disabilities received HCBS benefits through Pennsylvania’s Section 1915 (c) waiver, which led to a $2.1 billion spending increase.

In Idaho, 11,900 new beneficiaries received home healthcare through state plans in 2020. The state attributed the increase to population growth, Medicaid expansion adoption, the pandemic, and the heightened need for behavioral healthcare.

However, Nevada had 1,300 fewer people receiving HCBS benefits through state plan services. According to the brief, the state said this was due to beneficiaries fearing COVID-19 infection during the pandemic.

The American Rescue Plan Act (ARPA) played a role in the increased Medicaid spending on home and community-based services during the pandemic.

ARPA increased the federal matching rate for HCBS costs by 10 percentage points—a policy that is in effect until March 2022, though states can continue using the funds through March 2024.

KFF noted that the Build Back Better Act could help boost federal matching funds for HCBS benefits. The bill passed in the House in November 2021 but has yet to undergo a vote from the Senate.

If passed, the Build Back Better Act would provide an additional $150 billion in federal funds for Medicaid HCBS benefits, KFF said. The bill would also present a permanent increase in federal matching funds.

“Permanent enhanced funding for Medicaid HCBS, if authorized by Congress, could support state efforts to not only recover from the pandemic but also improve the HCBS delivery infrastructure and expand services to fill existing unmet needs and prepare to serve the growing aging population,” the brief concluded.