It’s the largest influx in federal funding for Medicaid home- and community-based services (HCBS) in a decade. And state governments must act fast to capitalize on it.
The American Rescue Plan Act (ARPA) designated an estimated $12.67 billion for the expansion of state Medicaid HCBS services in the wake of COVID-19. This funding will be distributed through Federal Medical Assistance Percentage (FMAP) reimbursements – each state receiving a 10 percent increase for the period of one year.
State governments can use this bump to enhance HCBS activities, increase eligibility, strengthen oversight and accelerate long-term serves and supports (LTSS) reform and innovation.
As the law – passed in March 2021 – currently stands, this financial boost will happen only once, and state governments have until March 2024 to reinvest the funds in allowable HCBS activities. Preliminary plans have already been submitted to the Centers for Medicare and Medicaid Services (CMS) for approval and the proposed investments vary.
States Outline Priorities
The CMS released a Stated Medicaid Director Letter (SMD) shortly after the ARPA passed outlining guidance for how states can use the COVID-19 relief funding in the law. Though there are limitations, state governments can generally use their discretion for how to invest and improve services and supports for older adults, people with disabilities, and their caregivers. Proposed initiatives may target direct services, eligibility expansions, provider payment increases, recruitment and retention activities, improving quality and strengthening program administration and oversight.
A recent report from ADvancing States outlined the priorities for every state and the District of Columbia, excluding South Dakota. No plans had been approved by the CMS at the time of the report, so the findings were preliminary and based on submitted proposals.
Service expansions are a priority for 39 states with 24 of those pledging to increase caregiver support services, according to the analysis from ADvancing States. Additionally, 15 states have proposed extending HCBS benefits to those struggling with behavioral health problems and mental illness. The ARPA included a broad definition of beneficiaries of Medicaid HCBS and extended to those struggling with behavioral health, mental health and substance abuse disorders.
Another popular proposal was increasing funds for provider training and certifications – as noted by 38 states. Pennsylvania, for example, has outlined a strategy for co-training of nurses and family members. Additionally, the commonwealth hopes to boost recruitment and retention of providers by offering student loan forgiveness and scholarships.
Regarding health information technology improvements for state agencies, 19 states are seeking general technology upgrades. Several states have also expressed interest in implementing new or enhancing current case management systems.
Next Steps
Once initial proposals are approved by CMS, states are tasked with providing quarterly status updates and spending plans for their projects and initiatives. The added administrative tasks accompanying this exciting opportunity to expand Medicaid HCBS services in your state may prove burdensome during a period already plagued by COVID-19-era backlogs and healthcare delivery challenges.
FEI Systems stands ready to partner with you on this journey to develop and implement solutions that allow you to deliver HCBS programs more efficiently while supporting more members, services and/or providers. Whether you are seeking to automate previously manual eligibility, determination and enrollment processes, improve care coordination platforms or develop electronic health records for state hospitals and HCBS facilities, our health IT solutions and services create seamless experiences for the entire HCBS ecosystem.
