DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland   21244-1850 
 
Center for Medicaid, CHIP and Survey & Certification 
 
                  SMDL# 11-010 
ACA# 20 
 
 
Dear State Medicaid Director:  
 
This letter provides guidance to States on the implementation of Section 10202 of the Affordable 
Care Act, which establishes the State Balancing Incentive Payments Program. hereafter referred to 
as the Balancing Incentive Program.   
 
The Balancing Incentive Program provides a strong financial incentive to stimulate greater access to 
non-institutionally based long-term services and supports (LTSS).  This provision will assist States in 
transforming their long-term care systems by improving systems performance and efficiency, 
creating tools to facilitate person-centered assessment and care-planning, as well as enhancing quality 
measurement and oversight.  In addition, the Balancing Incentive Program provides new 
opportunities to serve more individuals in home and community-based settings, adding to the 
available tools for realization of the integration directive included in the Americans with Disabilities 
Act (ADA), as upheld by the Olmstead decision.    
 
This letter provides a high-level overview of the Balancing Incentive Program, along with the 
required structural changes and timeframes for implementation.  As described in more detail in the 
accompanying application, the funding authorized in Section 10202 of the Affordable Care Act will 
provide an increased Federal Medical Assistance Percentage (FMAP) payment to States participating 
in the Balancing Incentive Program for non-institutional LTSS and will be made available as a non-
competitive grant to States.  This letter and the accompanying application serve as a notice of this 
funding opportunity. All questions regarding this opportunity, as well as all application materials, 
should be sent to Balancing-Incentive-Program@cms.hhs.gov.  
 
Background 
 
Effective October 1, 2011, the Balancing Incentive Program offers a targeted increase in the FMAP 
for non-institutional LTSS to States that undertake structural reforms to increase access to non-
institutional LTSS.  The enhanced matching payments are tied to the percentage of a States non-
institutional LTSS spending, with lower FMAP increases going to States with a less significant need 
for reforms.  Total funding over the four-year period (October 1, 2011  September 30, 2015) cannot 
exceed $3 billion in Federal increased matching payments.     
Page 2 - State Medicaid Director 
 
 
Implementation of Structural Changes 
 
As part of the Balancing Incentive Program application, the State agrees to make the following 
structural changes:  
  
1.  A No Wrong DoorSingle Entry Point system (NWD/SEP);  
2.  Conflict-free case management services; and  
3.  A core standardized assessment instrument.    
 
States must provide a letter of commitment to make the required structural changes and submit a 
work plan for the implementation of the structural changes within six months from the date of 
application submission.  The draft work plan must demonstrate that the structural changes will be in 
effect no later than September 30, 2015 and that States will meet the statutory rebalancing spending 
targets. 
 
This opportunity aligns with other provisions and activities that move toward the development and 
implementation of these important structural changes. CMS will work with States to help accomplish 
these changes.  CMS will monitor compliance with the structural changes required under the program 
and agreed to under the State work plan. Failure to meet required changes under the work plan will 
result in loss of the Balancing Incentive Program increased FMAP.  
 
Detailed information about the classification of long-term services and supports for the purposes of 
determining States eligibility and the required structural changes can be found in the accompanying 
application.  
 
We hope the guidance set forth in the application increases the likelihood of States participation in 
this exciting opportunity to support balancing the States long-term services and supports system.  
We look forward to working with States, individually and collectively, to provide assistance and to 
facilitate collaboration in implementing this new grant program. CMS would like to reiterate that this 
option is but one tool among many in current law and Affordable Care Act that States can use to 
improve service delivery for all people, not just those with chronic conditions or those covered by 
Medicaid.  
 
Please send any comments or questions to Balancing-Incentive-Program@cms.hhs.gov. 
 
Sincerely,  
 
            /s/ 
 
Cindy Mann  
Director  
 
 
 
  Enclosure 
 
cc:  
 
CMS Regional Administrators  
 
CMS Associate Regional Administrators  
Division of Medicaid and Childrens Health  
 
Matt Salo 
Executive Director 
National Association of Medicaid Directors  
 
Alan R. Weil, J.D., M.P.P.  
Executive Director  
National Academy for State Health Policy  
 
Ron Smith 
Director  
Health Services Division  
American Public Human Services Association  
 
Christine Evans, M.P.H.  
Director, Government Relations  
Association of State and Territorial Health Officials  
 
Debra Miller  
Director for Health Policy  
Council of State Governments  
 
Joy Wilson  
Director, Health Committee  
National Conference of State Legislatures 
 
Heather Hogsett 
Director of Health Legislation  
National Governors Association