oversight

Medicaid: States' Plans to Pursue New and Revised Options for Home- and Community-Based Services

Published by the Government Accountability Office on 2012-06-13.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                             United States Government Accountability Office

GAO                          Report to Congressional Requesters




June 2012
                             MEDICAID

                             States’ Plans to
                             Pursue New and
                             Revised Options for
                             Home- and
                             Community-Based
                             Services



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GAO-12-649
                                                 June 2012

                                                 MEDICAID
                                                 States’ Plans to Pursue New and Revised Options for
                                                 Home- and Community-Based Services
Highlights of GAO-12-649, a report to
congressional requesters




Why GAO Did This Study                           What GAO Found
The 1999 Supreme Court decision in               The four Medicaid options for home- and community-based services (HCBS)
Olmstead v. L.C. held that states must           included in the Patient Protection and Affordable Care Act (PPACA) provide
serve individuals with disabilities in           states with new incentives and flexibilities to help increase the availability of
community-based settings under                   services for Medicaid beneficiaries. Two of the options were newly created by
certain circumstances. Under the joint           PPACA, and the other two were existing options amended by the law. Three of
federal and state Medicaid program,              the options provide states with financial incentives in the form of enhancements
states are required to cover nursing             to the Medicaid matching rate that determines the federal share of the program’s
facility care for eligible individuals,          costs.
while the provision of most HCBS is
optional. In 2010, PPACA created two             Medicaid Options for HCBS in PPACA
new options and revised two existing
options for states to cover HCBS for                                                                                  New or        Financial
                                                  Option                                                              existing?     incentives?
Medicaid beneficiaries.
                                                  Community First Choice                                              New           Yes
GAO was asked to assess the                       Covers personal care and other services for eligible individuals.
implementation status of the four                 Balancing Incentive Program                                         New           Yes
                                                  Provides incentives for eligible states to rebalance their
Medicaid HCBS options in PPACA.                   long- term services and supports systems towards more home-
GAO assessed (1) how the four                     and community-based care.
options are structured to increase the            Money Follows the Person                                            Existing      Yes
availability of services, (2) what is             Supports the transitioning of eligible individuals who want to
known about states’ plans to use the              move from institutional settings back to the community.
                                                  1915(i) state plan option                                           Existing      No
options, and (3) factors affecting
                                                  Covers a range of HCBS for eligible individuals.
states’ decisions regarding
                                                 Source: GAO analysis.
implementing the options.
To determine the structure of the                As of April 2012, 13 states had applied for and received Money Follows the
options, GAO reviewed federal statutes           Person grants, in addition to the 30 states and the District of Columbia that had
and regulations and interviewed                  received grants prior to PPACA, and states were beginning to apply for the other
officials at CMS. To determine what is           three options. The 13 new Money Follows the Person states were awarded
known about states’ plans, GAO                   $621 million and were in various stages of implementation. One state had
obtained copies of states’ grant                 applied for Community First Choice. Two states had received approval to
applications and state plan                      participate in the Balancing Incentive Program, and the Centers for Medicare &
amendments. To understand factors                Medicaid Services (CMS) was reviewing two additional state applications. Three
affecting states’ decisions, GAO                 states had received approval to offer the revised1915(i) state plan option since
conducted interviews with officials in           PPACA’s enactment.
10 states. The states were selected to
reflect a range of state Medicaid                The 10 states GAO contacted reported considering several factors in deciding
spending for HCBS as a percentage of             whether to pursue the PPACA options, including potential effects on state
total Medicaid expenditures for long-            budgets, staff availability, and interaction with existing state Medicaid efforts.
term services and supports.                      States were attracted by the increased federal funding available under some of
                                                 the options, but were concerned about their ability to contribute their share of
GAO provided a draft of this report to
                                                 funding. Limited staff resources and competing priorities were also concerns.
HHS. HHS had no general comments
                                                 Finally, broader Medicaid reform efforts, such as transitions to statewide
on the report but provided technical
comments, which GAO incorporated as
                                                 managed care, and the potential interaction with existing HCBS options factored
appropriate.                                     into states’ considerations. The Department of Health and Human Services
                                                 (HHS) and CMS have initiatives under way to assist states with their HCBS
                                                 efforts. The complexities of the Medicaid HCBS options available and the
                                                 changing factors affecting states’ planning underscore the importance of ongoing
View GAO-12-649. For more information,
contact Katherine Iritani at (202) 512-7114 or   federal technical assistance to help states navigate various HCBS options as
iritanik@gao.gov.                                they seek to ensure appropriate availability of HCBS.

                                                                                                   United States Government Accountability Office
Contents


Letter                                                                                    1
               Background                                                                 4
               Four PPACA Options Provide States with New Incentives and
                 Flexibilities for Offering HCBS                                        11
               Since PPACA’s Enactment, 13 States Applied for and Received
                 New Money Follows the Person Grants, and States Have Begun
                 to Apply for the Other Three Options                                   17
               States Are Factoring Potential Effect on State Budgets, Staff
                 Availability, and Interaction with Existing Reform Efforts into
                 Their Decisions                                                        25
               Concluding Observations                                                  32
               Agency Comments                                                          32

Appendix I     Medicaid Options for Home- and Community-Based Services
               in the Patient Protection and Affordable Care Act                        34



Appendix II    Description of Money Follows the Person Evaluation Findings              38



Appendix III   Money Follows the Person Planned Demonstration and
               Supplemental Services in States Awarded Grants in 2011                   41



Appendix IV    GAO Contact and Staff Acknowledgments                                    44



Tables
               Table 1: Amounts Awarded and Date Approved to Begin
                        Transitioning Individuals for Money Follows the Person
                        Programs in States Awarded Grants in 2011                       18
               Table 2: Projected Number and Percentage of Transitions by Target
                        Population for the Money Follows the Person Programs in
                        States Awarded Grants in 2011                                   19
               Table 3: Summary of Selected Components of Medicaid HCBS
                        Options Authorized or Amended in the Patient Protection
                        and Affordable Care Act (PPACA)                                 34




               Page i                          GAO-12-649 Home- and Community-Based Services
         Table 4: Money Follows the Person Program Names and Planned
                  Demonstration and Supplemental Services in States
                  Awarded Grants in 2011                                                           42


Figure
         Figure 1: Variation in State Spending on HCBS as a Percentage of
                  LTSS Spending, Fiscal Year 2009                                                   7




         Abbreviations

         ADL               activities of daily living
         CMS               Centers for Medicare & Medicaid Services
         FMAP              federal medical assistance percentage
         FPL               federal poverty level
         HCBS              home- and community-based services
         HHS               Department of Health and Human Services
         IADL              instrumental activities of daily living
         LTSS              long-term services and supports
         MSTAT             Medicaid State Technical Assistance Teams
         PPACA             Patient Protection and Affordable Care Act
         SSI               Supplemental Security Income


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         Page ii                                 GAO-12-649 Home- and Community-Based Services
United States Government Accountability Office
Washington, DC 20548




                                   June 13, 2012

                                   The Honorable Max Baucus
                                   Chairman
                                   Committee on Finance
                                   United States Senate

                                   The Honorable Tom Harkin
                                   Chairman
                                   Committee on Health, Education, Labor, and Pensions
                                   United States Senate

                                   The Honorable John D. Rockefeller IV
                                   Chairman
                                   Subcommittee on Health Care
                                   Committee on Finance
                                   United States Senate

                                   For many individuals with physical, developmental, or cognitive
                                   disabilities, receiving care in the community through home- and
                                   community-based services, such as adult day care, home health, or
                                   personal care, is preferable to receiving care in a nursing home or other
                                   institutional setting. Increasing the availability of home- and community-
                                   based services is also important to states’ ability to comply with the
                                   Supreme Court’s 1999 decision in Olmstead v. L.C., known as the
                                   Olmstead decision, in which the Court held that unjustified
                                   institutionalization of a person based on disability violates Title II of the
                                   Americans with Disabilities Act. 1

                                   Medicaid—the joint federal-state financing program for health care
                                   services for certain low-income individuals—is the nation’s primary payer




                                   1
                                    Olmstead v. L.C., 527 U.S. 581 (1999). In particular, the Court held that states must
                                   provide community-based services for persons with disabilities who are otherwise entitled
                                   to institutional services when such services are appropriate, the individual does not
                                   oppose such treatment, and the community-based services can be reasonably
                                   accommodated, taking into account the resources available to a state and the needs of
                                   others with disabilities.




                                   Page 1                                  GAO-12-649 Home- and Community-Based Services
of long-term services and supports, 2 including home- and community-
based services. While states are required to cover institutional care as
part of Medicaid, coverage for most home- and community-based
services is optional. State spending on home- and community-based
services as a percentage of total spending on long-term services and
supports varies widely, from less than 20 percent in one state to over
70 percent in others. 3 The Medicaid program provides states with several
tools to make home- and community-based services available to eligible
elderly individuals and nonelderly individuals with disabilities, and the
Patient Protection and Affordable Care Act (PPACA) further expanded
these opportunities. PPACA created two new options and revised two
existing options for Medicaid home- and community-based services:
Community First Choice, the Balancing Incentive Program, Money
Follows the Person, and the 1915(i) state plan option, respectively.

The availability of home- and community-based services can enable
individuals with disabilities to remain in their homes, maintain their
independence, and participate in community life to the fullest extent
possible. You asked about how the four Medicaid home- and community-
based services options in PPACA could potentially affect access to
services and the status of their implementation. Our review examined the
following questions:

1. How are the four Medicaid home- and community-based services
   options in PPACA structured to increase the availability of services?

2. What is known about states’ plans to use the PPACA Medicaid home-
   and community-based services options?

3. What factors affect states’ decisions regarding implementing Medicaid
   home- and community-based services options under PPACA?


2
 For this report, we use the term long-term services and supports rather than long-term
care. Long-term services and supports is a term that is commonly used by researchers
and policymakers to describe the types of assistance that are provided to persons with
disability and frail, elderly individuals. The Patient Protection and Affordable Care Act uses
the term long-term services and supports and defines the term to include certain
institutionally based and noninstitutionally based long-term services and supports. Pub. L.
No. 111-148, §10202(f)(1), 124 Stat. 119, 926-27 (Mar. 23, 2010).
3
 Centers for Medicare & Medicaid Services, Patient Protection and Affordable Care Act
Section 10202: State Balancing Incentive Payments Program Initial Announcement
(Baltimore, Md.: September 2011).




Page 2                                   GAO-12-649 Home- and Community-Based Services
To determine how the four Medicaid home- and community-based
services options in PPACA are structured to increase the availability of
services, we reviewed relevant federal statutes and regulations,
examined guidance and other documents issued by the Centers for
Medicare & Medicaid Services (CMS), and interviewed CMS officials
responsible for overseeing Medicaid programs covering home- and
community-based services.

To determine what is known about states’ plans to use the PPACA
Medicaid home- and community-based services options, we interviewed
program officials at CMS responsible for each of the four options and
obtained copies of proposed and approved state applications for the
Balancing Incentive Program, state plan amendments for Community
First Choice and the 1915(i) state plan option, and state operational
protocols for Money Follows the Person that states had submitted for
these options to CMS.

To understand the factors affecting states’ decisions on implementing the
Medicaid home- and community-based services options in PPACA, we
conducted interviews with state Medicaid and other state agency officials
in 10 states: Florida, Maine, Michigan, Mississippi, Montana, Nevada,
New Jersey, New Mexico, Oklahoma, and Oregon. The states were
judgmentally selected by stratifying all states and the District of Columbia
on their percentage of Medicaid long-term services and supports
spending on home- and community-based services and then identifying
10 states that reflected the range of state spending on home- and
community-based services. We conducted the state interviews between
November 2011 and February 2012. To supplement the state interviews,
we also conducted interviews with officials from several state associations
and health policy organizations that track Medicaid home- and
community-based services issues, including the National Association of
States United for Aging and Disabilities, National Academy for State
Health Policy, National Association of Medicaid Directors, National
Association of State Directors of Developmental Disabilities Services, and
the National Association of State Mental Health Program Directors.

We conducted this performance audit from October 2011 to May 2012 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.


Page 3                           GAO-12-649 Home- and Community-Based Services
                         Long-term services and supports (LTSS) include many types of health
Background               and health-related services for individuals of all ages who have limited
                         ability to care for themselves because of physical, cognitive, or mental
                         disabilities or conditions. Individuals needing LTSS have varying degrees
                         of difficulty performing activities of daily living (ADL), such as bathing,
                         dressing, toileting, and eating, without assistance. They may also have
                         difficulties with instrumental activities of daily living (IADL), such as
                         preparing meals, housekeeping, using the telephone, and managing
                         money. Assistance for such needs takes many forms and takes place in
                         varied settings, including care provided in institutional settings, such as
                         nursing homes; services provided in community-based settings, such as
                         adult foster care; and in-home care. 4 Home- and community-based
                         services (HCBS) cover a wide range of services and supports to help
                         individuals remain in their homes or live in a community setting, such as
                         personal care services to provide assistance with ADLs or IADLs,
                         assistive devices, respite care for care givers, and case management
                         services to coordinate services and supports that may be provided from
                         multiple sources.


Medicaid Financing and   While a variety of sources are used to pay for LTSS, Medicaid is the
Eligibility              largest. States and the federal government share responsibility for
                         Medicaid costs. In general, state Medicaid spending for medical
                         assistance is matched by the federal government, at a rate that is based
                         in part on each state’s per capita income according to a formula
                         established by law. The federal share of Medicaid expenditures, known
                         as the federal medical assistance percentage (FMAP), typically ranges
                         from 50 to 83 percent. Although Medicaid is jointly financed by the states
                         and the federal government, it is directly administered by the states, with


                         4
                          On May 3, 2012, CMS published a notice of proposed rulemaking that proposed defining
                         the qualities of a home- and community-based setting in which the provision of home- and
                         community-based services is eligible for federal reimbursement. Under the proposed rule,
                         in order to be an eligible site for the delivery of HCBS, a setting must (1) be integrated in,
                         and facilitate an individual’s full access to, the greater community; (2) be selected by the
                         individual among all available alternatives and identified in the individual’s person-
                         centered service plan; (3) protect the individual’s right to privacy, dignity, and respect, and
                         freedom from coercion and restraint; (4) allow for individual initiative, autonomy, and
                         independence in making major life decisions; and (5) allow for the individuals to choose
                         their services and supports and who provides them. Medicaid Program; State Plan Home
                         and Community-Based Services, 5-Year Period for Waivers, Provider Payment
                         Reassignment, and Setting Requirements for Community First Choice, 77 Fed.
                         Reg. 26362, 26400 (May 3, 2012).




                         Page 4                                    GAO-12-649 Home- and Community-Based Services
                        oversight from CMS, within the Department of Health and Human
                        Services (HHS).

                        For the most part, individuals who qualify for and receive Medicaid
                        coverage of LTSS are age 65 or older, disabled, or blind. Such individuals
                        typically qualify for Medicaid coverage of LTSS on the basis of their
                        eligibility for the federal Supplemental Security Income (SSI) program, a
                        means-tested income assistance program that provides cash benefits to
                        individuals who meet certain disability criteria and have low levels of
                        income and assets. 5, 6 States may also require individuals to meet state-
                        defined level-of-care criteria for Medicaid coverage of certain LTSS.
                        These criteria, which generally include some measures of an individual’s
                        functional limits, help states manage overall service utilization and
                        therefore costs.


Medicaid Spending for   For decades, the majority of Medicaid LTSS expenditures have been for
HCBS Relative to        care provided in institutional settings, but Medicaid spending for HCBS
Institutional Care      has been steadily increasing as states invest more resources in
                        alternatives to institutional care. Under Medicaid, coverage of certain
                        institutional services is mandatory, while coverage of nearly all HCBS is
                        optional for states. Since the Medicaid program was first established in
                        1965, states have been required to cover nursing facility care for all
                        Medicaid beneficiaries age 21 and older. States may also offer other
                        types of institutional care under their Medicaid programs, including care
                        provided in intermediate-care facilities for individuals with intellectual
                        disabilities and care provided for individuals age 65 or older and certain
                        individuals under age 22 in institutions for mental diseases. 7 Medicaid


                        5
                         In 2012, an individual qualifying for SSI cannot have countable income of more than
                        $698 per month or countable assets of more than $2,000.
                        6
                         States also have options to determine income eligibility through non-SSI pathways. For
                        example, states may cover aged, blind, and disabled individuals with higher incomes who
                        “spend down” their anticipated income to a specified level by incurring medical expenses
                        and aged, blind, and disabled individuals who are institutionalized and who have incomes
                        less than 300 percent of the SSI benefit rate.
                        7
                         Rosa’s Law, enacted in October 2010, amended provisions of federal law to substitute
                        the term “an intellectual disability” for “mental retardation,” and “individuals with intellectual
                        disabilities” for “the mentally retarded” or “individuals who are mentally retarded.”
                        Intermediate Care Facilities for Persons with Intellectual Disabilities is the new title for the
                        program formerly known as Intermediate Care Facilities for the Mentally Retarded. Pub. L.
                        No. 111-256, §4,124 Stat. 2643, 2645 (Oct. 5, 2010).




                        Page 5                                     GAO-12-649 Home- and Community-Based Services
initially provided limited coverage for care provided in community settings
or in the home, but numerous changes to federal Medicaid law since the
program’s inception have expanded states’ options for covering HCBS.
States have taken advantage of the new options, and since 1995,
Medicaid spending for HCBS has steadily increased by 1 to 3 percentage
points each year. In fiscal year 2009, total Medicaid expenditures for
LTSS were $127.1 billion. Of this amount, about $55.9 billion was for
HCBS, which was about 44 percent of all Medicaid LTSS spending that
year, up from 18 percent in 1995. 8

States’ ability to leverage federal Medicaid funding for the provision of
HCBS can help them achieve compliance with the Olmstead decision,
which outlined the scope and nature of states’ obligations to provide
HCBS for individuals with disabilities; however, state spending on HCBS
as a percentage of total LTSS spending varies widely. States have
considerable flexibility in designing their Medicaid programs. Within broad
federal guidelines, each state establishes its own eligibility standards;
determines the type, amount, duration, and scope of covered services;
and sets provider payment rates. In 2009, state spending on HCBS as a
percentage of total LTSS spending ranged from 14.4 percent in
Mississippi to 83.2 percent in New Mexico. (See fig. 1.)




8
 Steve Eiken, Kate Sredl, Brian Burwell, and Lisa Gold, Medicaid Expenditures for Long-
Term Services and Supports: 2011 Update (Cambridge, Mass.: Thomson Reuters,
October 2011).




Page 6                                 GAO-12-649 Home- and Community-Based Services
Figure 1: Variation in State Spending on HCBS as a Percentage of LTSS Spending, Fiscal Year 2009




                                        Note: Data developed by CMS included estimates of states’ expenditures for managed care LTSS
                                        based on data provided by states and other sources.




                                        Page 7                                    GAO-12-649 Home- and Community-Based Services
Medicaid Coverage of   States have covered HCBS through a wide and complex range of options
HCBS                   within Medicaid, including through state plan benefits and through
                       waivers. A state Medicaid plan defines how the state will operate its
                       Medicaid program, including which populations and services are covered.
                       States are required by federal Medicaid law to cover certain mandatory
                       benefits in their state Medicaid plan. For example, all states are required
                       to offer the Home Health benefit to all individuals entitled to nursing
                       facility coverage under the state’s Medicaid plan. Services that may be
                       covered under this benefit include nursing, home health aides, medical
                       equipment, and therapeutic services. States may also elect to cover other
                       HCBS through optional benefits. For example, states have the option to
                       offer the Personal Care benefit, which covers assistance with ADLs and
                       IADLs, furnished either at home or in another location. According to a
                       recent study, 33 states and the District of Columbia offered the Personal
                       Care benefit in 2008. 9 Changes a state wishes to make to its state
                       Medicaid plan, including adding an optional state plan benefit, must be
                       submitted to CMS for review and approval in the form of a proposed state
                       plan amendment. With certain exceptions, services provided through
                       state plan benefits (both mandatory and optional) must (1) be sufficient in
                       amount, duration, and scope to reasonably achieve their purposes; (2) be
                       comparable in availability among different groups of enrollees; (3) be
                       offered statewide; and (4) allow beneficiaries freedom of choice among
                       health care providers or managed care entities participating in Medicaid.

                       States have also covered HCBS for Medicaid beneficiaries through
                       waivers. Waivers can allow states to provide services not otherwise
                       covered by Medicaid to designated populations who may or may not
                       otherwise be eligible for Medicaid services. If approved, a waiver may
                       allow a state to limit the availability of services geographically, target
                       services to specific populations or conditions, control the number of
                       individuals served, and cap overall expenditures—actions that are
                       generally not otherwise allowed under the federal Medicaid law, but which
                       may enable states to control costs. States must submit their waiver
                       requests to CMS for approval. The 1915(c) waiver, authorized under
                       section 1915(c) of the Social Security Act, is the primary means by which
                       states provide HCBS for Medicaid beneficiaries and accounts for the


                       9
                        Kaiser Commission on Medicaid and the Uninsured, Medicaid Home- and Community-
                       Based Services Programs: Data Update (Washington, D.C.: December 2011). Two of the
                       states with the Personal Care option—Rhode Island and Delaware—did not report any
                       individuals in their program.




                       Page 8                               GAO-12-649 Home- and Community-Based Services
                        large majority of state Medicaid HCBS expenditures. 10 Under 1915(c)
                        waivers, states may cover a broad range of services to participants, as
                        long as these services are required to prevent institutionalization; thus to
                        be eligible, individuals must meet the state’s level-of-care criteria for
                        institutional care. Included among the services that may be provided are
                        homemaker/home health aide, personal care, adult day health, and other
                        services as approved by the Secretary of HHS. States can have multiple
                        1915(c) waivers that target different populations, for example, one for
                        individuals with developmental disabilities and another for individuals with
                        physical disabilities. In fiscal year 2010, 47 states and the District of
                        Columbia operated 318 1915(c) waiver programs, expending over
                        $35 billion, according to a study using CMS data. 11


Medicaid HCBS Options   PPACA created two new Medicaid options for states to cover HCBS—
Created or Amended by   Community First Choice and the Balancing Incentive Program—and
PPACA                   amended two existing Medicaid HCBS options—the 1915(i) state plan
                        option and Money Follows the Person.

                        •     Community First Choice is a new optional state plan benefit created
                              by PPACA to finance home- and community-based attendant and
                              other services for Medicaid beneficiaries. 12 Community First Choice
                              became effective October 1, 2011.

                        •     The Balancing Incentive Program is a new time-limited program
                              established by PPACA to help increase access to HCBS for
                              beneficiaries. 13 The Balancing Incentive Program became effective
                              October 1, 2011, and expires September 30, 2015.



                        10
                          In addition, some states use section 1115 waivers, either in addition to or in place of
                        1915(c) waivers, to provide HCBS to targeted populations. Section 1115 of the Social
                        Security Act provides the Secretary of HHS with broad authority to grant states waivers of
                        certain federal Medicaid requirements and to provide federal matching funds for
                        expenditures that are not otherwise allowable for the purpose of demonstrating alternative
                        approaches to service delivery. Relative to 1915(c) waivers, section 1115 waivers offer
                        states more flexibility, including in the design of the benefit package and the delivery of
                        services.
                        11
                            Eiken, Burwell, Gold, and Sredl, Medicaid 1915(c) Waiver Expenditures: 2011 Update.
                        12
                            Pub. L. No. 111-148, §2401, 124 Stat. at 297 (Mar. 23, 2010).
                        13
                            Pub. L. No. 111-148, §10202, 124 Stat. at 923 (Mar. 23, 2010).




                        Page 9                                   GAO-12-649 Home- and Community-Based Services
•     The 1915(i) state plan option was established by the Deficit Reduction
      Act of 2005 as a new optional state plan benefit under section 1915(i)
      of the Social Security Act. 14 The 1915(i) state plan option provides
      states with a way to offer beneficiaries a comprehensive package of
      HCBS under a state plan option. One important distinction from
      1915(c) waivers is that individuals qualifying for services under the
      1915(i) state plan option do not need to meet the state’s institutional
      level of care criteria to receive HCBS. However, a state that offers
      services under the 1915(i) state plan option must establish needs-
      based criteria for determining eligibility for services under the option
      that are less stringent than the state’s criteria for determining eligibility
      for institutional care. Five states—Colorado, Iowa, Nevada,
      Washington, and Wisconsin—had offered 1915(i) prior to the changes
      to the option made by PPACA. 15 These revisions included expansions
      to the scope of covered services and eligibility requirements, among
      other changes, and became effective October 1, 2010. 16

•     Money Follows the Person was established by the Deficit Reduction
      Act of 2005 as a demonstration grant program to support states’
      transition of eligible individuals who want to move from institutional
      settings back to the community. 17 Each state’s Money Follows the
      Person program consists of a transition program, to identify Medicaid
      beneficiaries living in institutions who wish to live in the community
      and help them do so, and a rebalancing program for states to make
      systemwide changes to support Medicaid beneficiaries with
      disabilities living and receiving services in the community. A total of
      $1.75 billion in federal funds was appropriated for Money Follows the
      Person for fiscal years 2007 through 2011, and CMS awarded Money
      Follows the Person grants to 30 states and the District of Columbia in




14
    Pub. L. No. 109-171, § 6086, 120 Stat. 4,121 (Feb. 8, 2006).
15
  Washington received approval to implement its 1915(i) state plan option beginning
January 1, 2010. The state later removed the option from its state Medicaid plan, effective
October 1, 2011.
16
    Pub. L. No. 111-148, § 2402, 124 Stat. at 301 (Mar. 23, 2010).
17
    Pub. L. No. 109-171, § 6071, 120 Stat. at 1020 (Feb. 8, 2006).




Page 10                                   GAO-12-649 Home- and Community-Based Services
                           2007. 18 PPACA extended the program through 2016 and provided
                           additional funding to continue the demonstration. The changes made
                           by PPACA, which included an expansion of the eligibility
                           requirements, became effective April 22, 2010. 19

                      The four PPACA options include new incentives and flexibilities to help
Four PPACA Options    states increase the availability of HCBS for Medicaid beneficiaries. Three
Provide States with   of the options—Community First Choice, Balancing Incentive Program,
                      and Money Follows the Person—provide states with financial incentives
New Incentives and    in the form of enhanced federal matching funds for HCBS. All four options
Flexibilities for     allow states flexibility in designing their coverage of services and
Offering HCBS         implementing HCBS. For example, the revised 1915(i) state plan option
                      allows states to design benefit packages to meet the needs of particular
                      groups. In addition, three of the options have maintenance of effort or
                      eligibility requirements that require states to sustain or increase HCBS
                      expenditures or maintain existing eligibility standards, methodologies, or
                      procedures as a condition of receiving enhanced federal funding, which
                      should help to ensure that the options increase the availability of services.
                      These options also include evaluation components or data reporting
                      requirements that may help discern the extent to which the options have
                      increased the availability of HCBS for beneficiaries. For a summary of
                      specific features of the four options, see appendix I.

                      Community First Choice provides incentives for states to finance
                      attendant and other services. Community First Choice provides states
                      with a 6 percentage point increase in their FMAP for home- and
                      community-based attendant and other services provided to beneficiaries.
                      Under the benefit, states must cover services to help individuals
                      accomplish ADLs and IADLs and health-related tasks and services to
                      support the acquisition or maintenance of skills necessary for individuals




                      18
                       The original Money Follows the Person grantees were Arkansas, California,
                      Connecticut, Delaware, District of Columbia, Georgia, Hawaii, Illinois, Indiana, Iowa,
                      Kansas, Kentucky, Louisiana, Maryland, Michigan, Missouri, Nebraska, New Hampshire,
                      New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon,
                      Pennsylvania, South Carolina, Texas, Virginia, Washington, and Wisconsin.
                      19
                       Pub. L. No. 111-148, §2403, 124 Stat. at 304 (Mar. 23, 2010).




                      Page 11                                GAO-12-649 Home- and Community-Based Services
to accomplish ADLs and IADLs. 20 Beyond personal care services, states
must also cover back-up systems, such as personal emergency response
systems, pagers, or other mobile electronic devices, to ensure continuity
of services in the event that providers of services and supports are not
available. States must also cover voluntary training for individuals on how
to select, manage, and dismiss their personal attendants. Community
First Choice also allows states the flexibility of covering transition costs,
such as rent and utility deposits, and other expenditures that allow for
greater independence, such as nonmedical transportation services.

PPACA included several requirements for Community First Choice.
Structured as a state plan benefit, Community First Choice does not allow
states to set ceilings on the number of people who can receive services
and requires services to be offered statewide. Further, unlike other HCBS
options that states may use to cover personal care services, such as
1915(c) waivers and the 1915(i) state plan option, which allow states
significant flexibility to restrict the type of services available, Community
First Choice requires states to provide a specified set of HCBS. CMS
described Community First Choice as a “robust” service package. Also,
states offering Community First Choice must adhere to maintenance of
effort requirements. Specifically, for the first full fiscal year the option is
implemented, participating states must maintain or exceed the preceding
year’s level of expenditures for personal care services. Additionally, data
reporting requirements included in the law may shed some light on the
extent to which states are covering additional individuals as a result of the
option. States that offer Community First Choice must report the number
of individuals who received services under the option the preceding fiscal
year and whether they had been previously served under the state plan or
waivers, such as the personal care benefit, 1915(c) waivers, and 1915(i)
state plan benefit. PPACA also requires the Secretary of HHS to conduct
an evaluation of Community First Choice to determine (1) the
effectiveness of the provision of services in allowing individuals to lead
independent lives, (2) the impact of the services on individuals’ physical




20
  On May 3, 2012, CMS published a proposed rule defining the qualities of a home- and
community-based setting in which the provision of HCBS under the Community First
Choice option will be eligible for federal reimbursement. Medicaid Program; State Plan
Home and Community-Based Services, 5-Year Period for Waivers, Provider Payment
Reassignment, and Setting Requirements for Community First Choice, 77 Fed. Reg.
26362, 26400 (May 3, 2012).




Page 12                                GAO-12-649 Home- and Community-Based Services
and emotional health, and (3) the cost of services provided under the
option compared with the cost of institutional care. 21

Balancing Incentive Program incentivizes certain states to rebalance their
LTSS systems toward home- and community-based care. The Balancing
Incentive Program offers a targeted increase in FMAP to states in which
less than 50 percent of LTSS expenditures are for HCBS and that
undertake certain structural reforms to their Medicaid programs to
increase access to HCBS. 22 Under the program, states that spent under
25 percent of the LTSS expenditures on HCBS in fiscal year 2009 qualify
for a 5 percentage point increase in their FMAP for state HCBS
expenditures, and states that spent between 25 and 50 percent are
eligible for a 2 percentage point increase. 23 Participating states are
required to make three structural changes to their LTSS programs to help
increase access to HCBS. They must establish (1) a “no wrong door/
single-entry point system” to enable consumers to access all long-term
services and supports; (2) conflict-free case management services in
which the persons responsible for assessing the need for services and
developing plans of care are not related to or financially responsible for
the individual, or are not a provider of services for the individual; and (3) a
standardized assessment instrument to determine eligibility for HCBS.
States receiving a 5 percentage point increase in FMAP must achieve a
rebalancing benchmark of 25 percent of total Medicaid LTSS
expenditures for HCBS by the program’s end, September 30, 2015; and
similarly, states receiving a 2 percentage point increase in FMAP must
achieve a rebalancing benchmark of 50 percent by then. PPACA set a
limit of $3 billion in enhanced FMAP payments for the Balancing Incentive
Program; funds from enhanced FMAP must be used to provide new or



21
 HHS is required to submit an interim report to Congress on the evaluations’ findings by
December 31, 2013, and a final report by December 31, 2015.
22
  CMS identified 38 states as eligible for the Balancing Incentive Program based on
available data. States are permitted to provide CMS with additional information on their
Medicaid expenditures for LTSS and HCBS for fiscal year 2009 for the purposes of
determining Balancing Incentive Program eligibility.
23
  The increased federal match rate under the Balancing Incentive Program is applicable to
expenditures for HCBS provided under several different Medicaid authorities, including the
home health care services and personal care services state plan benefits, 1915(c),
1915(i), and Community First Choice. According to CMS, the enhanced FMAP available
under the Balancing Incentive Program can be added to the enhanced FMAP available
under Community First Choice but not Money Follows the Person.




Page 13                                 GAO-12-649 Home- and Community-Based Services
expanded offerings of HCBS. States participating in the Balancing
Incentive Program must meet maintenance of eligibility requirements that
prohibit the state from applying methodologies or procedures for
determining eligibility for HCBS that are more restrictive than the eligibility
methodologies or procedures in effect on December 31, 2010. In addition,
states must collect data on services, quality, and outcomes and inform
CMS on a quarterly basis how they are collecting these data. Outcome
measures to be collected include measures of beneficiary and family
caregiver experience with providers and satisfaction with services; and
measures for achieving desired outcomes appropriate to a specific
beneficiary, including employment, participation in community life, health
stability, and prevention of loss in function.

PPACA revisions to 1915(i) state plan option provide increased flexibility
to offer new services to targeted populations. While several features of
the 1915(i) state plan option remain the same—including its availability to
individuals not needing an institutional level of care and its lack of an
enhanced matching rate—PPACA made several changes to the option
that provide states with increased flexibility in designing their benefit
packages. 24 First, PPACA expanded the range of services previously
available under the 1915(i) benefit. Formerly, states that offered the
1915(i) could cover only those services explicitly identified in the statute,
which among other services included homemaker/health aide, case
management, personal care, and respite care. PPACA revised the option
to allow states to offer services not specifically identified in the law if
approved by CMS, as they are able to do under 1915(c) waivers. Second,
as a result of the changes in PPACA, states are able to offer HCBS to
specific, targeted populations. States may offer 1915(i) service packages
that differ in type, amount, duration, or scope to specific population
groups, either through one service package or through multiple 1915(i)
service packages. 25 For example, a state could have one 1915(i) benefit



24
  In addition, on May 3, 2012, CMS published a proposed rule for the 1915(i) state plan
option. Among the proposals included was the establishment of the qualities of a home-
and community-based setting in which the provision of HCBS under the 1915(i) state plan
option will be eligible for federal reimbursement. Medicaid Program; State Plan Home and
Community-Based Services, 5-Year Period for Waivers, Provider Payment Reassignment,
and Setting Requirements for Community First Choice, 77 Fed. Reg. 26362 (May 3,
2012).
25
  States that elect to offer HCBS to specific targeted populations under 1915(i) may do so
for a period of 5 years and may renew the election for additional 5-year terms.




Page 14                                 GAO-12-649 Home- and Community-Based Services
package specifically for individuals with chronic mental illness and
another for children with autism. Third, PPACA expanded income
eligibility for the option by allowing states to offer the benefit to individuals
with incomes up to 300 percent of the SSI benefit rate if they are also
eligible for HCBS under certain waivers, which may require the individual
to meet the state’s institutional level of care criteria. 26, 27 The law also
allows states to expand Medicaid eligibility to individuals with income up
to 150 percent of the federal poverty level who are eligible to receive
HCBS under the 1915(i) state plan option. Although PPACA provided new
flexibility to states under the 1915(i) option, the law also eliminated the
ability states had previously under 1915(i) to limit the number of
individuals who could receive services and to offer services in selected
geographic areas. States that offer 1915(i) are required to report the
number of individuals projected to be served under the option. 28

PPACA extension of Money Follows the Person included additional
funding and some new flexibility. PPACA extended the Money Follows
the Person demonstration program, which was scheduled to expire
in 2011, for 5 years through fiscal year 2016. PPACA appropriated
$450 million for the program annually for each of fiscal years 2012
through 2016, for a total of $2.25 billion. Most features of the
demonstration program were unchanged by PPACA, including the
program’s enhanced FMAP of up to 90 percent for certain services for




26
  In 2012, the maximum federal SSI annual payment amounts were $8,386.75 for an
individual and $12,578.71 for a couple.
27
  PPACA also continued to allow states to offer the 1915(i) state plan option to individuals
with incomes up to 150 percent of the federal poverty level. Such individuals must meet
the state’s needs-based criteria for the option, but are not required to demonstrate a need
for institutional care. In 2012, the federal poverty level for individuals in the 48 contiguous
states and the District of Columbia was an annual income of $11,170 for an individual and
$15,130 for a couple.
28
  In it its proposed rule for the 1915(i) state plan option, CMS proposed that states
annually report both the projected number of individuals to be served and the actual
number served in the previous year. States would also be required to develop and
implement an HCBS quality improvement strategy that must be provided to CMS upon
request. Further, for a state that chooses to target the 1915(i) option to specific
populations, CMS would evaluate the state’s performance at the time of renewal every
5 years, based upon the state’s HCBS quality outcomes and requirements contained in its
state plan amendment.




Page 15                                   GAO-12-649 Home- and Community-Based Services
12 months for each Medicaid beneficiary transitioned. 29 One change
PPACA did make was to relax one of the eligibility requirements for
Money Follows the Person. Under the original program, an individual had
to reside for not less than 6 months but no more than 2 years in an
inpatient facility, such as a nursing facility, to be eligible to receive
services. PPACA shortened the minimum number of days from 6 months
to 90 consecutive days. 30 Some of the initial Money Follows the Person
grantees reported that the 6-month institutional residency requirement
was a barrier to recruitment because many candidates interested in
transitioning had not been institutionalized long enough to qualify and
individuals who do meet the requirement often have complex medical or
mental health needs that make it more difficult to serve them in the
community. Some states have transition programs that have less
stringent institutional residency requirements. The reduction in the
institutional residency requirement in Money Follows the Person may
potentially increase the number of individuals who can be transitioned
through the program. PPACA made no changes to a maintenance of
effort requirement included in the original demonstration. Under the
program, a state’s expenditures for HCBS in each year of the
demonstration must not be less than such expenditures for fiscal year
2005, or for the fiscal year preceding the first year of the demonstration,
whichever is greater.

PPACA also extended the national evaluation of Money Follows the
Person, which was designed to assess whether the demonstration had
met its goals to increase the number of institutionalized Medicaid
beneficiaries who can be transitioned to the community and to rebalance
states’ LTSS systems. The Deficit Reduction Act of 2005 allowed up to
$1.1 million of the funds appropriated for Money Follows the Person each
fiscal year to be used for the evaluation through 2011; PPACA extended
the program’s evaluation and the funding for it through 2016. See
appendix II for more information on the national evaluation of the program
and the results to date.


29
  The enhanced FMAP available under Money Follows the Person is equal to taking the
published FMAP for a state, subtracting it from 100 percent, dividing the total in half, and
adding that percentage to the published FMAP. The maximum enhanced FMAP available
under the demonstration is 90 percent.
30
  PPACA also stipulated that any days that an individual was in an institution for the sole
purpose of receiving short-term rehabilitative services that are reimbursed under Medicare
would not count toward the 90-day minimum residence requirement.




Page 16                                  GAO-12-649 Home- and Community-Based Services
                            Thirteen of the 20 states that had not previously received Money Follows
Since PPACA’s               the Person grants applied for and received new grants made available as
Enactment, 13 States        a result of funds appropriated in PPACA. In addition, states were
                            beginning to apply and applications had been approved for the other
Applied for and             three PPACA HCBS options.
Received New Money
Follows the Person
Grants, and States
Have Begun to Apply
for the Other Three
Options
Since PPACA’s Enactment,    In February 2011, CMS awarded Money Follows the Person grants to
13 New States Applied for   13 of the 20 states that had not previously received Money Follows the
and Received Grants for     Person grants under the original program. 31 A total of $621 million was
                            awarded to these 13 states and will be available to these states through
Money Follows the Person
                            fiscal year 2016. The amounts awarded varied from a low of
                            approximately $6.5 million for Idaho to a high of approximately
                            $187 million for Minnesota.

                            By April 2012, most of the 13 states were making some progress
                            implementing their Money Follows the Person programs, as evidenced by
                            CMS’s approval to allow the states to begin enrolling and transitioning
                            individuals to their homes or the community. When applying for Money
                            Follows the Person grants, states must submit operational protocols to
                            CMS that detail how the states plan to implement their programs. Once
                            CMS has approved a state’s operational protocol, the state can begin
                            enrolling and transitioning individuals from institutions to the community.
                            As of April 2012, CMS had approved operational protocols for 11 of the
                            13 states. 32 Some states received approval of their operational protocols
                            not long after their grants were awarded in February 2011 and thus could



                            31
                              The states that had received grants under the original Money Follows the Person
                            program are continuing their programs, with the exception of South Carolina and Oregon.
                            South Carolina, although an original grantee, had not implemented its program as of April
                            2012. Additionally, Oregon temporarily suspended transitioning individuals in October
                            2011. As of April 2012, Oregon had not reinstituted its program.
                            32
                             Florida’s and Minnesota’s operational protocols had not been approved as of April 2012.




                            Page 17                                 GAO-12-649 Home- and Community-Based Services
begin transitioning individuals at that time, while others received approval
much later. See table 1 for information on the amounts awarded to the 13
states and the dates on which these states could begin transitioning
individuals.

Table 1: Amounts Awarded and Date Approved to Begin Transitioning Individuals
for Money Follows the Person Programs in States Awarded Grants in 2011

                                                                       Date approved to begin
    State                            Amount awarded                   transitioning individuals
    Colorado                               $22,189,486                                11/23/2011
                                                                                                  a
    Florida                                $35,748,853                            Not applicable
    Idaho                                   $6,456,560                                    3/25/2011
    Maine                                   $7,151,735                                    2/24/2012
    Massachusetts                         $110,000,000                                    7/12/2011
                                                                                                  a
    Minnesota                             $187,412,620                            Not applicable
    Mississippi                            $37,076,814                                    4/28/2011
    Nevada                                  $7,276,402                                    4/29/2011
    New Mexico                             $23,724,360                                     4/4/2011
    Rhode Island                           $24,570,450                                    7/26/2011
    Tennessee                             $119,624,597                                    10/1/2011
    Vermont                                $17,963,059                                     4/4/2011
    West Virginia                          $22,220,423                                    10/3/2011
    Total                                 $621,415,359
Source: CMS.
a
Florida’s and Minnesota’s operational protocols had not been approved as of April 2012.


The 11 states with approved operational protocols planned to transition
approximately 8,800 individuals from institutions to their homes or
communities between 2011 and 2016. Individual states projected
transitioning from 122 individuals (Maine) to 2,225 individuals
(Tennessee) during the course of the demonstration. The 11 states
planned to target a variety of populations to transition, including
individuals age 65 or older and individuals with physical disabilities,
developmental or intellectual disabilities, or mental illness. About half of
the individuals the states planned to transition are age 65 or older, but
most states planned to target three or more populations. For example,
Maine planned to transition older adults; adults with physical disabilities;
and persons with any complex combination of medical, behavioral, and
cognitive impairment. (See table 2.)




Page 18                                    GAO-12-649 Home- and Community-Based Services
Table 2: Projected Number and Percentage of Transitions by Target Population for the Money Follows the Person Programs
in States Awarded Grants in 2011

                            Projected number and percentage of transitions by targeted population (2011–2016)
                                                                               Individuals with
                      Individuals       Individuals with                      developmental or      Individuals with
                                 a                                                                                 b                 c
State             age 65 or older    physical disabilities              intellectual disabilities    mental illness           Other        Total
Colorado                      158                          210                                72                     45             5        490
Florida                         --                            --                               --                      --           --          --
Idaho                         180                          115                                30                                             325
Maine                          75                            27                                                                    20        122
Massachusetts               1,358                          510                               142                    182                     2192
Minnesota                       --                            --                               --                      --           --          --
Mississippi                    72                          142                               138                    243                      595
Nevada                        256                          256                                12                                             524
New Mexico                    295                          287                                                       70            18        670
Rhode Island                  576                            64                                                                              640
Tennessee                   1,195                          980                                50                                            2225
Vermont                       324                            51                                                                              375
West Virginia                 195                          340                                                       65                      600
Total                       4,684                       2,982                                444                    605           43       8,758
(percentage)                (53.5)                      (34.0)                              (5.1)                  (6.9)        (0.5)      (100)
                                        Source: CMS and state operational protocols.

                                        Note: Dashes indicate that the state did not have an approved operational protocol, as of April 2012.
                                        a
                                         Includes data for states that characterized the target population as “elderly,” “older adults,” “nursing
                                        home elders,” or “elderly over age 65.”
                                        b
                                          Includes data for states that characterized the target population as individuals with severe mental
                                        illness.
                                        c
                                         Other target populations include individuals with a dual diagnosis and individuals with a qualifying
                                        brain injury.


                                        These 11 states with approved operational protocols planned to provide a
                                        broad range of Money Follows the Person demonstration services—
                                        program-specific services provided only to Money Follows the Person
                                        participants and not to other Medicaid beneficiaries—to help individuals




                                        Page 19                                           GAO-12-649 Home- and Community-Based Services
transition to home- and community-based settings. 33 For example,
Nevada planned to offer transition navigation, community transition
services, environmental accessibility adaptation, housing coordination,
and personal emergency response systems. Idaho planned to provide
community transition services and transition management services. (See
appendix III for information on the demonstration and supplemental
Money Follows the Person services that states planned to provide.)

While many states’ operational protocols were approved in 2011, some
had not planned to transition, or did not start transitioning, individuals to
the community until 2012. During the original Money Follows the Person
demonstration, it took longer than states had planned to build the
necessary infrastructure for their programs, including establishing
channels of coordination across state agencies, garnering community and
provider support, and building data reporting and quality assurance
systems. Additionally, transitioning individuals out of institutions was more
complex than many states had anticipated, in part due to the scarcity of
appropriate housing options and the complex needs of the population.
According to CMS officials, 4 of the 13 states that had been awarded
grants in 2011 had completed 215 transitions as of March 2012. 34

In February 2012, CMS announced that it would award additional Money
Follows the Person grants, open to the seven states that had not
previously received a grant. 35 The agency issued two solicitations—one


33
  Under Money Follows the Person, each state is allowed to provide up to three
categories of services: qualified HCBS, demonstration HCBS, and supplemental HCBS.
Qualified HCBS are defined as services that the state covers, including through the state
plan or through HCBS waivers, for all Medicaid beneficiaries, regardless of whether they
participate in the Money Follows the Person program. Demonstration HCBS are services
specific to Money Follows the Person, provided only to participants in the demonstration
and not to other Medicaid beneficiaries, and are covered only during a participant’s
12-month transition period. An example of demonstration HCBS are extra hours of
personal care assistance beyond what is allowed under the state’s plan. Qualified and
demonstration services are reimbursed at the Money Follows the Person enhanced FMAP
for the state. Supplemental HCBS services are services essential for successful transition
to the community, are expected to be required only during the transition period or to be a
one-time cost to the program, and are typically not Medicaid-covered services. Examples
of supplemental HCBS include security deposits and household set-up costs.
Supplemental HCBS are reimbursed at the state’s regular FMAP.
34
 The four states are Idaho, Massachusetts, Mississippi, and Tennessee.
35
 The seven states are Alaska, Alabama, Arizona, Montana, South Dakota, Utah, and
Wyoming.




Page 20                                 GAO-12-649 Home- and Community-Based Services
                            for a planning grant, to help states prepare their grant application
                            (including a draft operational protocol), and the other for the actual
                            demonstration. 36 CMS officials reported that three states (Alabama,
                            Montana, and South Dakota) of these seven had applied and been
                            awarded planning grants.

                            CMS provides states with technical assistance for Money Follows the
                            Person through an online technical assistance website. 37 The agency also
                            provided guidance to states on the extension of the demonstration in a
                            June 2010 State Medicaid Directors’ Letter. 38


States Have Begun to        As of April 2012, states have begun to apply for the newly established
Apply for the Other Three   Community First Choice, the Balancing Incentive Program and the
PPACA Options               revised 1915(i) option, and applications have been approved for the
                            Balancing Incentive Program and 1915(i) options.

Community First Choice      As of April 2012—6 months after the option first became effective and
                            before CMS had issued final program guidance—one state, California,
                            has applied for Community First Choice. According to California’s
                            application, the state plans to provide services required under the statute
                            related to assistance with ADLs, IADLs, and health-related tasks.
                            California’s application indicated that the state had proposed to transition
                            eligible individuals from the state plan personal care benefit to the
                            Community First Choice program. CMS officials told us that, at least
                            initially, California planned to maintain its state plan personal care
                            services program, which would allow individuals to receive personal care
                            services if they decide not to receive such services under the Community
                            First Choice option. As of April 2012, California’s proposed state plan
                            amendment had not been approved by CMS and thus could change as a
                            result of the review process.

                            Besides California, other states have expressed interest in Community
                            First Choice. According to CMS officials, as of April 2012, five additional
                            states have requested technical assistance from CMS regarding the


                            36
                             The solicitation for the actual Money Follows the Person program grants closes
                            August 8, 2012.
                            37
                             The Money Follows the Person technical assistance website is http://www.mfp-tac.com/.
                            38
                             CMS, Letter to state Medicaid directors, SMDL #10-012, June 2010.




                            Page 21                                GAO-12-649 Home- and Community-Based Services
                              Community First Choice option. States have asked CMS questions
                              pertaining to program eligibility, data collection, and quality improvement
                              requirements, among others. Additionally, some states have had
                              questions about replacing their state plan personal care services benefit
                              with Community First Choice. For example, Maryland is interested in
                              consolidating personal care services available under three existing state
                              Medicaid programs—the state plan personal care benefit and two waiver
                              programs—under Community First Choice.

                              CMS officials said that states may have been waiting for the final rule
                              before applying for Community First Choice. CMS issued a proposed rule
                              for Community First Choice in February 2011. 39 Although the Community
                              First Choice option became effective on October 1, 2011, CMS only
                              recently published a final rule implementing the program on May 7,
                              2012. 40 Since Community First Choice is a permanent Medicaid option for
                              states, there is no deadline for states to apply for it.

Balancing Incentive Program   As of April 2012—6 months after the program first became effective and
                              16 months before the application deadline—two states had applied for
                              and received CMS approval to participate in the Balancing Incentive
                              Program. One of the states approved, New Hampshire, was awarded the
                              full amount of enhanced matching funds it requested from CMS for the
                              program—$26.5 million. The requested amount was based on total
                              projected community-based LTSS expenditures of $1.32 billion from
                              January 1, 2012, through September 30, 2015. In fiscal year 2009, New
                              Hampshire spent 41.2 percent of its LTSS expenditures on HCBS, and
                              the state expects to get to 50 percent by September 30, 2015. The state
                              plans to use the Balancing Incentive Program funds to support the design
                              and implementation of LTSS enhancements, help develop a community
                              infrastructure across the state, and strengthen the community-based
                              network of services across the continuum of care and populations in New
                              Hampshire. Another state, Maryland, was awarded $106.34 million in
                              enhanced matching funds for its Balancing Incentive Program, based on
                              the state’s total projected HCBS expenditures. Maryland plans to use the
                              Balancing Incentive Program funds to further expand community capacity.
                              Specifically, the state plans to use the funds to improve provider payment
                              rates for personal care providers. As of April 2012, two additional states—


                              39
                               Community First Choice Option, 76 Fed. Reg.10736 (Feb. 25, 2011).
                              40
                               Medicaid Program; Community First Choice Option, 77 Fed. Reg. 26828 (May 7, 2012).




                              Page 22                              GAO-12-649 Home- and Community-Based Services
                            Georgia and Missouri—had also applied for grants under the program.
                            Other states have expressed interest in the Balancing Incentive Program.
                            According to CMS, a dozen additional states have requested technical
                            assistance, in particular regarding CMS’s expectations for the required
                            LTSS structural changes. The Balancing Incentive Program became
                            effective October 1, 2011, and states have until August 1, 2014, to apply
                            or until the $3 billion in authorized funds have been expended, whichever
                            is earlier. CMS has provided several types of guidance to states about the
                            Balancing Incentive Program, including a letter to state Medicaid
                            directors, an implementation manual, and a technical assistance
                            website. 41

1915(i) State Plan Option   As of April 2012—18 months after PPACA’s changes to the option
                            became effective—three states had submitted state plan amendments
                            and received CMS approval to offer the revised 1915(i) state plan option.
                            Under the approved amendments, the three states—Idaho, Oregon, and
                            Louisiana—plan to target children with developmental disabilities or
                            individuals with mental illness.

                            Idaho’s 1915(i) program became effective in July 2011, and the state
                            plans to add HCBS services for children with developmental disabilities.
                            To be eligible, a child must require assistance due to substantial
                            limitations in three or more major life care activities and have a need for
                            interdisciplinary services because of a delay in developing age-
                            appropriate skills. The state plans to serve approximately 3,200
                            individuals during the first year of its program.

                            Oregon’s 1915(i) program will become effective in June 2012, and the
                            state plans to provide home- and community-based habilitation services,
                            as well as home- and community-based psychosocial rehabilitation
                            services for individuals with chronic mental illness. Eligibility is limited to
                            individuals who need assistance for at least 1 hour per day to perform two
                            personal care services and who are not eligible for such services under
                            the state’s 1915(c) waiver. 42 Oregon plans to serve approximately 3,000


                            41
                              (1) CMS, Letter to state Medicaid directors, SMDL #11-010, September 2011;
                            (2) Mission Analytics Group, The Balancing Incentive Program: Implementation Manual,
                            prepared at the request of CMS (San Francisco, Calif., October 2011); and (3) the
                            Balancing Incentive Program technical assistance website is
                            http://www.balancingincentiveprogram.org/.
                            42
                              Eligibility for services under Oregon’s 1915(c) waiver is limited to aged and physically
                            disabled individuals who meet a nursing home level of care.




                            Page 23                                  GAO-12-649 Home- and Community-Based Services
individuals during the first year of its program (June 1, 2012, through
May 31, 2013).

Louisiana’s 1915(i) program became effective on March 1, 2012, and the
state plans to provide psychosocial services to adults with mental illness,
including adults with acute stabilization needs, serious mental illness, and
major mental disorders. The state plans to limit the option to adults who
exhibit at least a moderate level of risk of harm to self and others and
moderate levels of need based on a standardized assessment tool. The
state plans to provide such services under the 1915(i) option to a much
higher number of individuals than either Idaho or Oregon—55,000 during
the first year of its program.

In addition to the states with approved 1915(i) state plan amendments,
four states—California, Connecticut, Florida, and North Carolina—
currently have 1915(i) applications under review with CMS, according to
officials. Proposals in California and Florida—which had not been
approved by CMS, as of May 2012, and thus could change as a result of
the review process—showed varying plans for targeted groups and
services proposed, as the following examples illustrate.

•   Florida proposed to provide various types of family therapy services to
    redirect troubled youth away from residential placements and into
    treatment options that will allow them to live at home. The state plans
    to serve 597 children in the first year.

•   California has submitted two 1915(i) state plan amendments. The first
    proposes to target infants and toddlers with developmental delays and
    would provide a 1-day session with families to prepare the children for
    school or other appropriate facilities, which is currently funded with
    state-only funds. California anticipates serving 3,800 in the first year.
    The second proposes to target developmentally disabled individuals
    with a need for habilitation services. Services to be provided would
    include community living arrangement services, respite care, and day
    services. The state anticipates serving 42,000 in the first year.

The changes made by PPACA to section 1915(i) became effective
October 1, 2010. CMS provided guidance to states about the changes in




Page 24                           GAO-12-649 Home- and Community-Based Services
                              an August 2010 letter to state Medicaid directors. 43 CMS published a
                              proposed rule for the 1915(i) state plan option on May 3, 2012. 44


                              Medicaid officials in the states we selected for our study reported being
States Are Factoring          attracted to the enhanced federal matching funds available under three of
Potential Effect on           the PPACA options, but also expressed concern about the potential effect
                              on budgets given continuing fiscal challenges at the state level. Further,
State Budgets, Staff          Medicaid officials cited limited staff availability to research or implement
Availability, and             these options. Officials were also considering broader Medicaid reforms
Interaction with              occurring in the state and the potential interaction with existing HCBS.

Existing Reform
Efforts into Their
Decisions
States Are Attracted by       Officials from the 10 states we contacted for our study reported they are
Increased Funding but         considering the new HCBS options with an eye to how they might affect
Concerned about Their         their state’s budget. States, in general, continue to experience fiscal
                              challenges, and the state officials we talked with noted that while they are
Ability to Contribute State   attracted by the enhanced federal matching funds that come with
Share                         Community First Choice and the Balancing Incentive Program especially,
                              there were limits as to how much the state can contribute. Officials from 8
                              of the 10 states we selected reported that state budget considerations
                              were either a general concern when evaluating any potential new HCBS
                              option or a specific concern regarding Community First Choice or the
                              Balancing Incentive Program. A state official in Mississippi noted that her
                              first consideration of a new Medicaid option is how much the federal
                              government is providing in funding and for how long. She said that she
                              needs to determine what the cost will be to the state now, and if
                              applicable, what the cost to the state would be once the enhanced federal
                              matching rate ends. Regarding the Balancing Incentive Program, Nevada
                              officials similarly reported that while the state is eligible for the 2 percent
                              enhanced federal match, it does not have the money to build the



                              43
                               CMS, Letter to state Medicaid directors, SMDL #10-015, August 2010.
                              44
                               Medicaid Program; State Plan Home and Community-Based Services, 5-Year Period for
                              Waivers, Provider Payment Reassignment, and Setting Requirements for Community First
                              Choice, 77 Fed. Reg. 26362 (May 3, 2012).




                              Page 25                              GAO-12-649 Home- and Community-Based Services
infrastructure, quality assurance system, and financial tracking system
called for by the program.

Although the enhanced federal matching rate in Community First Choice
was attractive to several states, they also noted potential financial risk
caused by the inability to limit the program’s enrollment or utilization.
Officials in half of the states we interviewed noted concerns about a
potential inability to control expenditures in Community First Choice given
the requirement that the option be offered statewide and the prohibition
on state enrollment and utilization caps. Mississippi officials reported that
their main problem with pursuing the option is the inability to limit potential
state expenditures. Officials from the National Association of State
Directors of Developmental Disabilities Services reported that the fact that
there is no way for states to cap Community First Choice deters states
from taking up the option. States wonder how to keep such a program
within their budgets if they cannot limit either enrollment or utilization. In
contrast, more than half of the state officials we interviewed found the
1915(i) state plan option attractive because of the ability to limit the
provision of services to specific populations, thus providing the state with
the opportunity to limit state financial exposure.

In considering the options that would provide the most federal funding
possible, officials from a few states told us that when they initially looked
at Community First Choice it was to replace existing state options that do
not qualify for enhanced federal matching rates. Oregon officials noted
that if they chose to use Community First Choice, which provides a 6
percent enhanced federal matching rate, it would be as a replacement for
one of the state’s existing 1915(c) waivers. Expenditures under 1915(c)
waivers qualify for the standard federal matching rate. However, the state
officials did not think that the Community First Choice option would allow
them to cover all the services in their 1915(c) waiver, which would then
require the state to cover these services with state-only funds or drop
them altogether. Officials from Nevada similarly reported that they initially
considered using Community First Choice as a replacement for the
state’s existing self-directed personal care state plan option. 45 While the


45
  Under section 1915(j) of the Social Security Act, states are given the choice of covering
self-directed personal care services. The self-directed program must allow beneficiaries to
express choice and control over the budget, planning, and purchase of their services.
Other requirements include an assessment of the beneficiary’s needs, the availability of a
support system to counsel beneficiaries, a written service plan, an individualized budget,
and appropriate quality assurance and risk management.




Page 26                                 GAO-12-649 Home- and Community-Based Services
                           state has not ruled out taking up Community First Choice, the officials
                           thought that the administrative requirements included in Community First
                           Choice, specifically the requirements for backup systems and the
                           establishment of a Development and Implementation Council to engage
                           stakeholders, 46 as well as the additional reporting requirements, meant
                           that Community First Choice would not be a cost-effective replacement
                           for its existing self-directed personal care option.


Limited Staff Resources    According to state officials, staffing shortages in a number of states have
and Competing Priorities   made it difficult for states to review all the new HCBS options in depth or
Pose Barriers to States’   put together the teams needed to assemble applications and implement
                           the options. Officials from New Mexico told us that they previously had a
Pursuing New Options       hiring freeze and have a current staff vacancy rate of about 9 percent.
                           They said their current staff of 190 runs a $4 billion Medicaid program,
                           which already included a personal care option, a Money Follows the
                           Person program, and a managed care program for LTSS. The officials
                           said that if they decided to pursue, for instance, the Community First
                           Choice option, they would have to use these same staff to implement and
                           oversee the program, including writing the state plan amendment,
                           obtaining public input, and shepherding the amendment through the CMS
                           approval process. According to the New Mexico officials, the current staff
                           already has too much work. Officials in Maine told us that the state
                           recently offered retirement incentives to staff as a cost-saving measure.
                           Under the retirement incentive policy, positions that are open because of
                           the incentive cannot be filled for 2 years. The state is also under a hiring
                           freeze. Officials from the National Association of Medicaid Directors
                           reported that state Medicaid programs are running with a fraction of their
                           prior staff. Given this, officials from the association said states may not
                           even have enough staff to put together an application.

                           State officials also reported that the time involved in making other
                           changes to their state Medicaid programs as a result of PPACA has
                           prevented their staff from doing in-depth research on the new HCBS
                           options. Officials from two states specifically said they had not had



                           46
                             PPACA requires that states using Community First Choice consult and collaborate with
                           a Development and Implementation Council during development and implementation. The
                           Development and Implementation Council, which will provide stakeholder input, must
                           include a majority of members with disabilities, elderly individuals, and their
                           representatives.




                           Page 27                               GAO-12-649 Home- and Community-Based Services
                           enough time to research the opportunities in full as a result of their other
                           work. Nevada officials, for instance, noted that staff is working on
                           developing the Health Home state plan option in PPACA, which allows
                           states to provide for care coordination for persons with chronic conditions
                           or serious mental illness, and is making other PPACA-required changes
                           to its Medicaid program. 47 The officials reported prioritizing all the state
                           requirements in PPACA and said the Balancing Incentive Program keeps
                           dropping down the list. Similarly, officials in Montana said the HCBS
                           options were a lot to consider at the same time states are facing many
                           other changes as a result of PPACA, including accommodating a large
                           number of new individuals expected to become eligible for Medicaid. 48
                           National Association of Medicaid Directors officials reported that PPACA
                           contained both state mandates and options and that therefore states
                           needed to triage where they invest staff resources. They also noted that
                           they would expect states to invest resources in mandated changes rather
                           than the optional changes, such as the new HCBS options.


Planned Changes to State   Officials in several of the states we interviewed reported putting off
Medicaid Programs and      decisions about the HCBS options in PPACA until they completed major
Potential Interaction of   reforms to their Medicaid programs. Four of the 10 states we contacted
                           reported being in the midst of or planning for broad Medicaid reforms.
Options with Existing      This situation is consistent with national trends. One national survey of
HCBS Programs Factor       states found that 11 were planning to implement a managed care system
into States’ Decisions     for long-term services and supports in either 2012 or 2013. 49 New Jersey,
                           for example, was in the midst of planning for the transition of its Medicaid
                           program, including LTSS, to managed care. Under the proposal
                           submitted to CMS, managed care organizations would take over
                           responsibility for care, including HCBS and nursing home care, for
                           individuals who are enrolled in one of several of the state’s HCBS
                           waivers, who require a nursing home-level of care, or who reside in a



                           47
                            PPACA created an optional Medicaid state plan option for states to establish Health
                           Homes to coordinate care for individuals with chronic conditions or serious mental illness.
                           PPACA’s Health Home state plan option provides states with an enhanced federal
                           matching rate of 90 percent for the first eight quarters that the state plan option is in place.
                           48
                             PPACA mandated that states expand Medicaid eligibility to all individuals with income
                           under 133 percent of the federal poverty level beginning in 2014.
                           49
                            M. Cheek, M. Roherty, L. Finnan, et al, On the Verge: The Transformation of Long-Term
                           Services and Supports (Washington, D.C.: AARP Public Policy Institute, February 2012).




                           Page 28                                   GAO-12-649 Home- and Community-Based Services
nursing home. The managed care organizations would be required to
develop and implement an annual person-centered plan of care and
individual service agreement for each individual requiring LTSS and
would have authority to place an individual in the most cost-effective
setting, whether a home- or community-based setting or a nursing
home. 50 The managed care organization, however, would also be
expected to emphasize services that are provided in members’ homes
and communities in order to prevent or delay institutionalization whenever
possible. At the time we spoke with New Jersey officials, the state was
awaiting CMS’s decision on the proposal. Given the planned transition of
LTSS to managed care, the New Jersey officials did not think applying for
the 1915(i) option at this time made sense, and their decision on whether
to apply for Community First Choice would depend on how their managed
care system looked if approved by CMS. Similarly, Florida was also
moving to statewide Medicaid managed care. Officials in the state told us
that they had not explored the Balancing Incentive Program or
Community First Choice because the state Medicaid agency’s primary
focus has been on the transition to statewide managed care and the time
and resources they have devoted to the transition have prevented them
from exploring the new HCBS options.

States also factored in how easily the new HCBS options would fit in with
their existing HCBS programs, according to state officials. States that
decided to take up some of the new HCBS options reported doing so
because they complemented existing HCBS options. Four of the five
states we interviewed that received the Money Follows the Person grant
following the initial post-PPACA solicitation told us the state had an
existing transition program to move individuals from institutions into the
community. 51 Each of these states told us that Money Follows the Person



50
  Under New Jersey’s proposal, the plan of care would analyze and describe the medical,
social, behavioral, and long-term services that the member would receive. In developing
the plan of care and the individual service agreement, the managed care organization
would consider appropriate options for the individual related to his or her medical,
behavioral health, psychosocial, and case-specific needs at a specific point in time, as
well as goals for longer-term strategic planning.
51
  Among the original 30 grantees, those with an existing transition infrastructure to build
upon at the start of the program generally made the most progress through the end of
2010. See C. Irvin, D. Lipson, A. Wenzlow, S. Simon, A. Bohl, M. Hodges, and J.
Schurrer, Money Follows the Person 2010 Annual Evaluation Report, Final report
submitted to the Centers for Medicare & Medicaid Services, Mathematica Policy
Research, Inc. (Cambridge, Mass.: Oct. 7, 2011).




Page 29                                  GAO-12-649 Home- and Community-Based Services
would be a supplement to their existing programs and would provide the
state with additional federal funds. 52 Officials from Nevada, for example,
told us that while the state had an existing state-funded community
transition program, they thought the Money Follows the Person program
would give the state the opportunity to target more difficult populations
that could still benefit from community placement. The state plans to use
the Money Follows the Person rebalancing fund to integrate the state’s
various HCBS case management systems and expand outreach.
Similarly, New Jersey state officials told us they planned to apply for the
Balancing Incentive Program because it fit in well with the state’s existing
efforts to rebalance LTSS funding toward HCBS. The state officials told
us that, in part, the state’s move to a managed care model reflects an
effort to increase the availability of HCBS in the state. Because the
managed care organizations assume financial risk, the state officials
believed the organizations would have an incentive to increase HCBS
placements, which are generally less costly than institutional placements.

State officials said one reason states were interested in taking up the
1915(i) state plan option is that it offers the opportunity to provide
services to people who could not necessarily be served under other
HCBS options. Officials in both Oregon and Montana said they were
looking at the 1915(i) state plan option to provide a set of services for
adults with serious mental illness or children with serious emotional
disorders who cannot be targeted under a 1915(c) waiver either because
of its cost neutrality requirement or because the individuals do not meet
an institutional level of care. 53




52
  Three of the five states that received Money Follows the Person grants post-PPACA told
us that PPACA’s reduction of the residency requirement for persons in institutions from
180 days to 90 days made Money Follows the Person more attractive to the state. The
other two states said it was not a factor in their decision to apply for the post-PPACA
Money Follows the Person grants.
53
  Under 1915(c) waivers, states must show that the average Medicaid expenditures for
services provided under a waiver are equal to or less than the average for the same
population to be served in an institution. Medicaid does not provide federal payment for
services provided to individuals older than 21 years and younger than 65 years in an
institution for mental disease. Therefore, for individuals currently receiving services in
institutions for mental disease, it is impossible to show that Medicaid expenditures for
services provided to such individuals in the community would be less than the Medicaid
expenditures for services for such individuals in an institution for mental disease.




Page 30                                  GAO-12-649 Home- and Community-Based Services
While the selected states were more likely to find the new HCBS options
attractive if they complemented existing options or offered the opportunity
to serve new populations, state officials also noted the complexity of
layering new HCBS options on top of their state’s existing HCBS system.
Nevada officials told us that each waiver and each program the state
operates is its own silo, with each requiring its own reporting structure,
provider enrollment system, and quality assurance system. As such, the
Nevada officials told us that they were already reporting to CMS on four
1915(c) waivers, the personal care state plan option, and a 1915(i) state
plan option. Each of those, according to the Nevada officials, came with
its own set of requirements. Mississippi officials said that, when looking at
how the four PPACA HCBS options relate to each other, as well as to
existing HCBS options, it becomes hard not only for state staff, but also
for providers and beneficiaries, to work out the differences in all the
different programs. They said they would like CMS to send out guidance
about how states could use these different options together, instead of
issuing guidance on each option separately.

CMS officials told us they have recently undertaken a number of
initiatives to help states coordinate and align the different Medicaid HCBS
options. While the CMS officials noted a number of efforts to align the
options, they also noted a natural trade-off between giving states
maximum flexibility and simplifying the number of different HCBS options
available to states. In February 2011, CMS established Medicaid State
Technical Assistance Teams (MSTAT), which consist of CMS staff with
knowledge of Medicaid financing, eligibility, coverage, waivers, and state-
specific issues. 54 The teams work with individual states to assist in any
area a state has identified or to help states identify specific program areas
that may yield efficiencies. According to CMS, as of April 2012, 27 states
have used MSTATs, and a majority of those have included at least some
discussion of the various HCBS options. In addition to the MSTATs, CMS
officials told us they offer technical assistance to states in several areas.
For example, there is a specific technical assistance provider that can
help states build quality measurement into their systems that can work
across the different options. CMS staff also has presented information
during all-state conference calls and at an annual HCBS conference to
help states learn about the different options and how they can work


54
  The goal of the teams is to partner with states to ensure that states have the information
allowing them to take full advantage of existing Medicaid opportunities and are structuring
new program innovations to maximize resources.




Page 31                                  GAO-12-649 Home- and Community-Based Services
                  together. CMS recently formed a work group consisting of representatives
                  from the National Association of Medicaid Directors, the National
                  Association of States United for Aging and Disabilities, and the National
                  Association of State Directors of Developmental Disabilities Services, as
                  well as officials from 10 states, including 14 HCBS waiver administrators,
                  to focus in part on developing quality in a systems approach as opposed
                  to within individual 1915(c) waivers. In addition, in April 2012, HHS
                  announced the establishment of a new agency—the Administration for
                  Community Living—which will combine the efforts of several HHS
                  agencies for the purpose of enhancing and strengthening HHS’s efforts to
                  support seniors and people with disabilities and ensuring consistency and
                  coordination in community living policy across the federal government. 55


                  In the 13 years since the Olmstead decision, states have continued to
Concluding        make progress rebalancing their LTSS systems toward more HCBS,
Observations      increasing opportunities for individuals who need LTSS to live more
                  independent lives in the community. The four Medicaid HCBS options
                  established or revised by PPACA add to the array of options states have
                  to consider in designing their coverage of services for beneficiaries. Some
                  states that are further along in rebalancing their provision of LTSS may
                  have less need to utilize these new options. Other states have further to
                  go in determining whether and how to incorporate these options into their
                  existing programs and have many factors to weigh, including their state
                  budgets and the coverage and flexibility the options provide to reach their
                  rebalancing goals. The complexities of the Medicaid HCBS options
                  available and the changing factors affecting states’ planning underscore
                  the importance of ongoing federal technical assistance to help states
                  navigate various HCBS options as they seek to ensure appropriate
                  availability of HCBS.


                  We provided a draft of this report to HHS for review. HHS had no general
Agency Comments   comments on the report but provided technical comments, which we
                  incorporated as appropriate.




                  55
                    The Administration for Community Living will include the efforts of HHS’s Administration
                  on Aging, Office of Disability, and Administration on Developmental Disabilities.




                  Page 32                                 GAO-12-649 Home- and Community-Based Services
As arranged with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days from the
report date. At that time, we will send copies to the Secretary of Health
and Human Services, the Administrator of the Centers for Medicare &
Medicaid Services, and appropriate congressional committees. In
addition, the report will be available at no charge on the GAO website at
http://www.gao.gov.

If you or your staffs have any questions about this report, please contact
me at (202) 512-7114 or at iritanik@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made key contributions to this
report are listed in appendix IV.




Katherine M. Iritani
Director, Health Care




Page 33                            GAO-12-649 Home- and Community-Based Services
Appendix I: Medicaid Options for Home- and
                                         Appendix I: Medicaid Options for Home- and
                                         Community-Based Services in the Patient
                                         Protection and Affordable Care Act


Community-Based Services in the Patient
Protection and Affordable Care Act
                                         The Patient Protection and Affordable Care Act (PPACA) created two
                                         new options—Community First Choice and the Balancing Incentive
                                         Program—and amended two existing options—1915(i) state plan option
                                         and Money Follows the Person—for states to cover home- and
                                         community-based services (HCBS) for Medicaid beneficiaries. Table 3
                                         summarizes components of the four options.

Table 3: Summary of Selected Components of Medicaid HCBS Options Authorized or Amended in the Patient Protection and
Affordable Care Act (PPACA)

                      Community First           Balancing Incentive                                         Money Follows the
                                                                                   a
                      Choice                    Program                     1915(i)                         Person
Summary of PPACA      Created new state plan    Created time-limited        Revised existing 1915(i)        Extended existing
provision             option to provide home-   program providing           state plan option by            demonstration program
                      and community-based       enhanced federal            (1) expanding scope of          through 2016 and
                      attendant services and    matching funds for states   covered services;               appropriated additional
                      other services.           that have spent less than   (2) allowing states to offer    funding. Also reduced
                                                50 percent of long-term     different packages of           minimum stay requirement
                                                services and supports       services to different           for individuals to be
                                                (LTSS) dollars on home-     populations; (3) expanding      eligible from 6 months to
                                                and community-based         income eligibility for          90 days in an inpatient
                                                services (HCBS). A state    certain populations; and        facility.
                                                must undertake three        (4) eliminating states’
                                                structural changes to its   ability to cap enrollment
                                                LTSS system to increase     and limit services to
                                                access to HCBS:             certain geographic areas.
                                                (1) establish a “no wrong   Also granted states the
                                                door/single-entry point”    option of extending
                                                system to enable            Medicaid eligibility to those
                                                consumers to access         that qualify for services
                                                LTSS, (2) implement         under the state’s 1915(i)
                                                conflict-free case          option.
                                                                        b
                                                management services,
                                                and (3) develop a core
                                                standardized assessment
                                                instrument.
Status of option as   Option became effective   Option became effective     Revised option became           Revised option became
of May 2012           Oct. 1, 2011. Proposed    Oct. 1, 2011. Application   effective Oct. 1, 2010.         effective April 22, 2010.
                      rule issued Feb. 25,      available Sept. 2011;       State Medicaid Directors’       Grant awards were made
                      2011; final rule issued   application closes Aug.     letter explaining changes       in February 2011.
                      May 7, 2012.              2014.                       issued Aug. 2010.               Solicitation for another
                                                                            Proposed rule issued            round of grants issued
                                                                            May 3, 2012.                    Feb. 2012; application
                                                                                                            closes Aug. 2012.
                                                                                       c                                               d
Duration              Permanent                 Expires Sept. 30, 2015.     Permanent                       Expires Sept. 30, 2016.
Funding limit         None                      $3 billion through          None                            $2.25 billion for fiscal
                                                Sept. 30, 2015.                                             years 2012-2016.




                                         Page 34                                   GAO-12-649 Home- and Community-Based Services
                                               Appendix I: Medicaid Options for Home- and
                                               Community-Based Services in the Patient
                                               Protection and Affordable Care Act




                         Community First              Balancing Incentive                                          Money Follows the
                                                                                           a
                         Choice                       Program                      1915(i)                         Person
Enhanced federal         6 percentage point           5 percentage point          None                             A percentage point
medical assistance       increase in FMAP.            increase in FMAP for                                         increase equal to
                  e
percentage (FMAP)        Applied to expenditures      states that have spent less                                  (100 - current FMAP)/2,
                         related to option.           than 25 percent of LTSS                                      up to a maximum FMAP of
                                                      expenditures for HCBS.                                       90 percent. Applied to
                                                      2 percentage point                                           HCBS expenditures for up
                                                      increase in FMAP                                             to 12 months after an
                                                      for states that have                                         individual has transitioned
                                                      spent between 25 and                                         from an institution to the
                                                      50 percent of LTSS                                           community.
                                                      expenditures for HCBS.
                                                      Applied to expenditures
                                                      for personal care, home
                                                      health, and other HCBS
                                                      authorized under certain
                                                      state plan benefits and
                                                      waivers. Funds from
                                                      enhanced FMAP must be
                                                      used to provide new or
                                                      expanded offerings of
                                                      HCBS.
                                                                     f
Individual eligibility   Individuals eligible for    Not applicable.               Individuals eligible            Individuals who have
                         Medicaid, who in the                                      for Medicaid whose              resided in an inpatient
                         absence of HCBS would                                     income does not exceed          facility for at least 90 days;
                         require an institutional                                  150 percent of the FPL,         are receiving Medicaid
                         level of care, and who                                    without regard to their         benefits for inpatient
                         have income that does                                     need for an institutional       services provided at the
                         not exceed 150 percent                                    level of care, but who also     facility; and who reside in
                         of the federal poverty                                    meet the state’s need-          a qualified residence
                         level (FPL), or if greater,                               based criteria for the          beginning on the initial
                         are eligible for nursing                                  option, which must be less      date of participation in the
                         facility services under                                   stringent than the state’s      demonstration.
                         the state plan.                                           criteria for institutional
                                                                                   care. States may also
                                                                                   elect to serve individuals
                                                                                   eligible for certain waiver
                                                                                   programs with incomes up
                                                                                   to 300 percent of the
                                                                                   Supplemental Security
                                                                                                               g
                                                                                   Income (SSI) benefit rate.
State eligibility        All states are eligible to   States that spent less than All states are eligible to       States that did not
                         apply.                       50 percent of their          apply.                          previously receive a
                                                      Medicaid LTSS                                                Money Follows the Person
                                                      expenditures for HCBS in                                     grant are eligible.
                                                      2009 are eligible. Data
                                                      published by the Centers
                                                      for Medicare & Medicaid
                                                      Services (CMS) indicate
                                                      that 38 states are eligible.




                                               Page 35                                   GAO-12-649 Home- and Community-Based Services
                                            Appendix I: Medicaid Options for Home- and
                                            Community-Based Services in the Patient
                                            Protection and Affordable Care Act




                        Community First           Balancing Incentive                                         Money Follows the
                                                                                       a
                        Choice                    Program                       1915(i)                       Person
Covered services or     Covered services         Certain HCBS covered           Covered services include      Covered services include
services eligible for   include personal care    under the state plan and       case management,              (1) qualified services—any
enhanced FMAP           attendant services to    waivers are eligible for the   homemaker/home health         HCBS available to
                        help individuals         enhanced FMAP.                 aide, personal care           beneficiaries under state
                        accomplish ADLs,                                        services, adult day health    plan or waiver authority;
                        IADLs; back-up systems                                  services habilitation, and    (2) demonstration
                        to ensure continuity of                                 respite care. In addition,    services—program-
                        services or supports in                                 for persons with chronic      specific services provided
                        the event that providers                                mental illness: day           only to Money Follows
                        are not available;                                      treatment, other partial      the Person participants
                        training for individuals                                hospitalization services,     and not to other
                        on how to select,                                       psychosocial rehabilitation   Medicaid beneficiaries;
                        manage, and dismiss                                     services, and clinic          and (3) supplemental
                        their attendants. States                                services. Further, PPACA      services—services
                        can also choose to                                      allowed states to request     essential for successful
                        cover transition costs,                                 approval from CMS to          transition to the
                        such as rent and utility                                provide services not          community, typically not
                        deposits.                                               expressly identified in the   covered by Medicaid.
                                                                                law.                          Enhanced FMAP available
                                                                                                              for qualified and
                                                                                                              demonstration services
                                                                                                              provided to Money
                                                                                                              Follows the Person-
                                                                                                              eligible individuals.
Maintenance of effort For the first full          Standards,                    Not applicable.               State expenditures for
or eligibility        12-month period that        methodologies, and                                          HCBS in each year of a
                      the option is in effect,    procedures for                                              Money Follows the Person
                      state must maintain or      determining eligibility for                                 demonstration project
                      exceed expenditures for     HCBS may not be more                                        must not be less than the
                      personal care services      restrictive than those in                                   greater of such
                      for the preceding           effect Dec. 31, 2010.                                       expenditures for fiscal
                      12-month period.                                                                        year 2005 or for the fiscal
                                                                                                              year preceding the first
                                                                                                              year of the demonstration
                                                                                                              project.




                                            Page 36                                   GAO-12-649 Home- and Community-Based Services
                                         Appendix I: Medicaid Options for Home- and
                                         Community-Based Services in the Patient
                                         Protection and Affordable Care Act




                    Community First              Balancing Incentive                                                             Money Follows the
                                                                                                   a
                    Choice                       Program                                 1915(i)                                 Person
Evaluation          The Secretary of Health      States are required to                  The proposed rule would      National evaluation of the
component or data   and Human Services           inform CMS of their                     require states to submit     demonstration extended
reporting           (HHS) must conduct an        processes for collecting                annually a projection of     through 2016.
requirements        evaluation to determine      data on services, quality,              the number of individuals
                    (1) the effectiveness of     and outcomes.                           to be enrolled in the
                    the provision of services                                            benefit and the actual
                    in allowing individuals to                                           number enrolled in the
                    lead independent lives,                                              benefit in the previous
                    (2) the impact of the                                                year. The proposed rule
                    services on individuals’                                             also requires states to
                    physical and emotional                                               have a quality
                    health, and (3) the cost                                             improvement strategy that
                    of services provided                                                 can be provided to CMS
                    under the option                                                     upon request. For states
                    compared with the cost                                               that target populations,
                    of institutional care.                                               CMS proposes to require
                    HHS is required to                                                   states to submit, with their
                    submit an interim report                                             renewal application every
                    to Congress on its                                                   5 years, HCBS quality
                    findings by Dec. 31,                                                 outcomes and
                    2013, and a final report                                             performance requirements
                    by Dec. 31, 2015.                                                    detailed in the state plan
                                                                                         amendment.
                                         Source: GAO summary of relevant provisions of the Patient Protection and Affordable Care Act and CMS documents.
                                         a
                                          CMS issued a proposed rule to implement the revised section 1915(i) state plan option on May 3,
                                         2012. 77 Fed. Reg. 26362 (May 3, 2012). Our description of the revised section 1915(i) option is
                                         based on our review of the statute and proposed rule.
                                         b
                                          Conflict-free case management services means that the persons or entities responsible for
                                         conducting the evaluation, assessing the individual, and developing the individual’s service plan are
                                         independent of the individual and are not providers of services for the individual.
                                         c
                                          Individual state plan options are effective for 5-year periods in states that target services to specific
                                         populations.
                                         d
                                          Funds are appropriated through Sept. 30, 2016 but may remain available for expenditure by state
                                         grantees until Sept. 30, 2020.
                                         e
                                          The federal medical assistance percentage (FMAP) is the federal share of Medicaid expenditures.
                                         The rate is based in part on each state’s per capita income, according to a formula established by
                                         law, and typically ranges from 50-83 percent.
                                         f
                                          Section 10202 of PPACA, which establishes the Balancing Incentive Program, provides, at state
                                         option, an election to increase eligibility for HCBS under a 1915(i) state plan amendment to
                                         individuals with incomes up to 300 percent of the SSI benefit rate. It is CMS’s position that this
                                         provision is duplicative of PPACA’s expanded 1915(i) option, which similarly allows states to provide
                                         HCBS under a 1915(i) state plan amendment to individuals with incomes up to 300 percent of the SSI
                                         benefit rate, provided they are eligible for HCBS under a waiver.
                                         g
                                          SSI is a means-tested income assistance program that provides cash benefits to individuals who
                                         meet certain disability criteria and have low levels of income and assets.




                                         Page 37                                                  GAO-12-649 Home- and Community-Based Services
Appendix II: Description of Money Follows
              Appendix II: Description of Money Follows the
              Person Evaluation Findings



the Person Evaluation Findings

              In 2005, Money Follows the Person was established as a demonstration
              grant program to support states’ transition of eligible individuals who want
              to move from institutional settings—such as nursing homes or
              intermediate care facilities for the intellectually disabled—back to their
              homes or the community. The Centers for Medicare & Medicaid Services
              (CMS) awarded Money Follows the Person grants to 30 states and the
              District of Columbia as part of the original round of funding in 2007. 1 The
              Patient Protection and Affordable Care Act extended the demonstration
              through 2016 and provided additional funding to support the original
              Money Follows the Person state grantees and to award grants to
              additional states. While these newer grantees are just beginning to
              implement their Money Follows the Person programs, the national
              evaluation contractor has released results from the original round of
              grantees.

              According to CMS officials, results from the Money Follows the Person
              evaluation show that since the program’s inception in 2007, participating
              states had transitioned over 20,000 individuals to the community as of
              December 31, 2011. Some states were initially slow to transition
              individuals to the community through the Money Follows the Person
              program because they encountered problems or delays in meeting
              federal planning and data reporting requirements and challenges
              identifying affordable and accessible housing. 2 States that had prior
              experience transitioning individuals to the community through existing
              transition programs generally were able to complete more transitions than
              states without such programs, in part due to availability of staff with
              transition experience. 3 Over time, the number of transitions per year has
              been steadily increasing, with cumulative transitions totaling nearly 1,500
              in 2008, 5,700 in 2009, and 12,000 in 2010.




              1
               South Carolina was an original grantee but has not yet started its Money Follows the
              Person program. Therefore, we refer to 30 original grantees hereafter.
              2
               N. Denny-Brown, and D. Lipson, “Early Implementation Experiences of State MFP
              Programs,” The National Evaluation of the Money Follows the Person (MFP)
              Demonstration Grant Program, Reports from the Field, no. 3, Mathematica Policy
              Research, Inc. (Cambridge, Mass.: November 2009).
              3
               See C. Irvin, D. Lipson, A. Wenzlow, S. Simon, A. Bohl, M. Hodges, and J. Schurrer,
              Money Follows the Person 2010 Annual Evaluation Report, final report submitted to the
              Centers for Medicare & Medicaid Services, Mathematica Policy Research, Inc.
              (Cambridge, Mass.: Oct. 7, 2011).




              Page 38                                  GAO-12-649 Home- and Community-Based Services
Appendix II: Description of Money Follows the
Person Evaluation Findings




The original 30 grantees used the Money Follows the Person program
to transition different kinds of institutional residents. Approximately
37 percent of individuals transitioned through June 2011 were under
age 65 and had physical disabilities, 34 percent were elderly, 25 percent
had intellectual disabilities, and the remainder had other characteristics or
conditions that were unknown. 4 According to the national Money Follows
the Person evaluation contractor, the percentage of total transitions by
elderly individuals and individuals under age 65 with physical disabilities
has been increasing since 2008, while the percentage of transitions by
individuals with intellectual disabilities has decreased during the same
time frame. 5 The evaluation contractor noted that many states had
ongoing initiatives to move individuals with intellectual disabilities out of
intermediate care facilities for the intellectually disabled at the start of the
demonstration. Therefore, individuals with intellectual disabilities were
some of the first to start transitioning. Since then, more individuals in the
other target populations have begun transitioning.

The large majority of individuals who have transitioned to the community
through the Money Follows the Person program remained in the
community for at least 1 year after their transition. For individuals for
whom, as of 2010, more than 1 year had passed since their transitions
(4,746 participants), 85 percent remained in the community more than
1 year after their transition, 9 percent had been reinstitutionalized in a
nursing home or other institutional setting for stays of 30 days or more,
and 6 percent had died. 6 Those who did return to an institution tended to
do so in the first 6 months, most likely in the first 3 months.




4
 See N. Denny-Brown, D. Lipson, M. Kehn, B. Orshan, and C. Stone Valenzano, Money
Follows the Person Demonstration: Overview of Grantee Progress, January to June 2011,
report submitted to the Centers for Medicare & Medicaid Services, Mathematica Policy
Research, Inc. (Cambridge, Mass.: December 2011).
5
 See Irvin, Lipson, Wenzlow, Bohl, Hodges, and Schurrer, 2010 Annual Evaluation
Report, 10-11.
6
 See J. Schurrer, and A. Wenzlow, “A First Look at How MFP Participants Fare After
Returning to the Community,” The National Evaluation of the Money Follows the Person
(MFP) Demonstration Grant Program, Reports from the Field, no. 7, Mathematica Policy
Research, Inc. (Cambridge, Mass.: July 2011).




Page 39                                  GAO-12-649 Home- and Community-Based Services
Appendix II: Description of Money Follows the
Person Evaluation Findings




The annual per-person HCBS costs of Money Follow the Person
participants were nearly $40,000 during the first year of community
living. 7 Costs were generally the least for the elderly, about $20,000 per
year, and the highest for those with intellectual disabilities, about $75,000
per year. 8 Across all populations, monthly HCBS costs were significantly
higher during the first month after an individual’s transition. Monthly
expenditures during the first 30 days after the initial transition were, on
average, more than 50 percent higher than those for the remainder of the
year. Many of these costs include services specific to the transition—such
as transition planning and coordination—which are only needed in the
short term. The costs incurred after the first 30 days are more likely to
reflect the costs associated with ongoing care needed for individuals to
remain in the community for the long term. Overall, early evaluation
results indicated that average annual spending on HCBS for Money
Follows the Person program participants was about one-third lower than
average annual Medicaid spending on institutional care for elderly
individuals in nursing homes. The evaluation noted that further analyses,
which take into account total health care costs, including hospitalizations
and emergency room visits, would be needed before the cost-
effectiveness of the program could be determined. 9




7
 C. Irvin, A. Bohl, V. Peebles, and J. Bary, “Post-Institutional Services of MFP
Participants: Use and Costs of Community Services and Supports,” Reports from the
Field, No. 9, Mathematica Policy Research, Inc. (Cambridge, Mass.: February 2012).
8
See Irvin, Bohl, Peebles, and Bary, “Post-Institutional Services,” 1.
9
 See Irvin, Lipson, Wenzlow, Bohl, Hodges, and Schurrer, 2010 Annual Evaluation
Report, 57.




Page 40                                  GAO-12-649 Home- and Community-Based Services
Appendix III: Money Follows the Person
              Appendix III: Money Follows the Person
              Planned Demonstration and Supplemental
              Services in States Awarded Grants in 2011


Planned Demonstration and Supplemental
Services in States Awarded Grants in 2011
              Under the Money Follows the Person demonstration program,
              participating states can cover demonstration and supplemental home-
              and community-based services (HCBS), in addition to HCBS available to
              other beneficiaries under the state Medicaid plan or through waivers. 1
              Demonstration HCBS are services specific to Money Follows the Person,
              provided only to participants in the demonstration and not to other
              Medicaid beneficiaries, and are covered only during a participant’s 12-
              month transition period. Enhanced matching funds are available for
              demonstration HCBS. Supplemental HCBS are services essential for
              successful transition to the community, are expected to be required only
              during the transition period or to be a one-time cost to the program, and
              are typically not Medicaid-covered services. Supplemental HCBS are
              reimbursed at the state’s regular Medicaid matching rate. Table 4
              provides information on the 13 states awarded Money Follows the Person
              grants in 2011, including the names of the demonstration programs and
              information on the demonstration and supplemental services that the
              states planned to provide.




              1
               HCBS available to other beneficiaries under the state Medicaid plan or through waivers
              are referred to as qualified HCBS under the Money Follows the Person demonstration.




              Page 41                                 GAO-12-649 Home- and Community-Based Services
                                           Appendix III: Money Follows the Person
                                           Planned Demonstration and Supplemental
                                           Services in States Awarded Grants in 2011




Table 4: Money Follows the Person Program Names and Planned Demonstration and Supplemental Services in States
Awarded Grants in 2011

                State name of
State           demonstration program           Demonstration services                                    Supplemental services
Colorado        Colorado Choice Transitions     Assistive technology, behavioral health support,
                                                enhanced nursing services, family services, home
                                                delivered meals, extended home modifications,
                                                independent living skills training, intensive case
                                                management, transition mental health counseling,
                                                on-call attendant services, transitional substance
                                                abuse counseling, extended dental/vision,
                                                specialized day rehabilitation services
        a
Florida         --                              --
Idaho           Idaho Home Choice               Transition management, community transition
                                                services
Maine           Homeward Bound                  Transition assistance, clinical assessments,
                                                independent living assistance, household start-up,
                                                enhanced care coordination, planning services,
                                                care coordination technology extension services,
                                                peer support
Massachusetts   Money Follows the Person        Assistive technology, case management, mobility
                                                training, transitional assistance
            a
Minnesota       --                              --
Mississippi     Money Follows the Person        Transportation, extended pharmacy, caregiver
                                                support, crisis supports, therapy services, life skills
                                                training, peer counseling/peer supports, transition
                                                care management, household furnishings and
                                                goods, moving expenses, environmental
                                                accessibility adaptations
Nevada          Money Follows the Person        Transition navigation, community transition
                                                services, environmental accessibility adaptation,
                                                housing coordination, personal emergency
                                                response systems
New Mexico      Money Follows the Person        Community transition services; case management; Enhanced comprehensive
                                                intensive case management                       community support services
                                                                                                (only for adults with mental
                                                                                                illness)
Rhode Island    Rhode to Home                   Community transition services provided by
                                                transition coordinators (for individuals age 65 or
                                                older)
Tennessee       Money Follows the Person                                                                  Transition allowance
Vermont         Money Follows the Person        One-time transition payment




                                           Page 42                                    GAO-12-649 Home- and Community-Based Services
                                         Appendix III: Money Follows the Person
                                         Planned Demonstration and Supplemental
                                         Services in States Awarded Grants in 2011




                State name of
State           demonstration program           Demonstration services                                            Supplemental services
West Virginia   Take Me Home, West Virginia Transition navigation, community transition                           Supportive housing (for
                                            services, extended direct care services, Take Me                      individuals with severe mental
                                            Home goods and services, cognitive rehabilitation                     illness)
                                            therapy, case management, personal attendant
                                            services, transportation (for individuals with
                                            traumatic brain injury)
                                         Source: Money Follows the Person state operational protocols.
                                         a
                                          State did not have an approved operational protocol, as of April 2012.




                                         Page 43                                                   GAO-12-649 Home- and Community-Based Services
Appendix IV: GAO Contact and Staff
                  Appendix IV: GAO Contact and Staff
                  Acknowledgments



Acknowledgments

                  Katherine M. Iritani, (202) 512-7114 or iritanik@gao.gov
GAO Contact
                  In addition to the contact named above, Catina Bradley, Assistant
Staff             Director; Lori Achman; Sandra C. George; Jawaria Gilani; Linda McIver;
Acknowledgments   and Roseanne Price made key contributions to this report.




(290981)
                  Page 44                              GAO-12-649 Home- and Community-Based Services
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