The Case for 

Medicaid Self-Direction:

A White Paper on Research, 

Practice, and Policy Opportunities

National Council on Disability

May 22, 2013
National Council on Disability

1331 F Street, NW, Suite 850

Washington, DC 20004

The Case for Medicaid Self-Direction: A White Paper on Research, 

Practice, and Policy Opportunities

This report is also available in alternative formats upon request and on the National 

Council on Disability (NCD) Web site (www.ncd.gov).

May 22, 2013

202-272-2004 Voice

202-272-2074 TTY

202-272-2022 Fax

The views contained in this report do not necessarily represent those of the 

Administration, as this and all NCD documents are not subject to the A-19 Executive 

Branch review process.
National Council on Disability

An independent federal agency making recommendations to the President and Congress 

to enhance the quality of life for all Americans with disabilities and their families.

Letter of Transmittal

May 22, 2013

The President 

The White House 

Washington, DC 20500 

Dear Mr. President: 

The National Council on Disability (NCD) is pleased to submit the enclosed report, “The 

Case for Medicaid Self-Direction: A White Paper on Research, Practice, and Policy 

Opportunities.” In keeping with the community living theme central to your 

Administration, the goal of self-directed services is to maximize an individual’s 

opportunities to live independently in the most integrated community-based setting of his 

or her choice. As more states enroll people with disabilities into managed care plans, it is 

critical that self-directed services remain an option for enrollees.

This report:

● Traces the history of self-directed services in the United States and its emergence 

and subsequent growth within the Medicaid policy arena; 

● Examines the fundamental concepts that under gird a self-directed approach to 

organizing and delivering community-based long-term services and supports;

● Reviews the basic components of self-directed services as spelled out in federal 

Medicaid policy; 

● Summarizes the findings and conclusions from existing studies of the costeffectiveness of self-directed services; 

● Explores the ramifications of the growing use of Medicaid managed care 

arrangements for the future of self-directed services and supports; and

● Recommends strategies for improving the accessibility and quality of self-directed 

Medicaid services and supports. 

We will also share this report with the Centers for Medicare and Medicaid Services, and 

would welcome the opportunity to work with the Administration on behalf of Medicaid 

beneficiaries with disabilities.

1331 F Street, NW ■ Suite 850 ■ Washington, DC 20004

202-272-2004 Voice ■ 202-272-2074 TTY ■ 202-272-2022 Fax ■ www.ncd.gov

1 
2 

This report was approved by the Council prior to me becoming its Chair. I fully support 

the report and look forward to working with the Administration on the report’s 

recommendations.

Sincerely, 

Jeff Rosen

Chairperson

(The same letter of transmittal was sent to the President Pro Tempore of the U.S. Senate 

and the Speaker of the House of Representatives.)
3 

National Council on Disability Members and Staff

Members

Jonathan M. Young, PhD, JD, Chair

Janice Lehrer-Stein, Vice Chair

Gary Blumenthal

Chester A. Finn

Sara Gelser

Matan Koch

Lonnie Moore

Ari Ne’eman

Stephanie Orlando

Kamilah Oni Martin-Proctor 

Dongwoo Joseph (“Joe”) Pak, MBA

Clyde E. Terry

Fernando M. Torres-Gil, PhD

Linda Wetters

Pamela Young-Holmes

Staff

Aaron Bishop, Executive Director

Joan Durocher, General Counsel & Director of Policy

Anne Sommers, Director of Legislative Affairs & Outreach

Stacey S. Brown, Staff Assistant

Julie Carroll, Senior Attorney Advisor

Lawrence Carter-Long, Public Affairs Specialist

Gerrie-Drake Hawkins, PhD, Senior Policy Analyst

Sylvia Menifee, Director of Administration

Carla Nelson, Administrative Specialist

Robyn Powell, Attorney Advisor
4 

Acknowledgments

The National Council on Disability wishes to express its deep appreciation to the 

National Association of State Directors of Developmental Disability Services team that 

conducted the research and writing for this paper: Robert Gettings, Charles Moseley, 

and Nancy Thaler.
5 

Contents

Letter of Transmittal........................................................................................................ 1

National Council on Disability Members and Staff....................................................... 3

Acknowledgments........................................................................................................... 4

Executive Summary ........................................................................................................ 7

CHAPTER 1. Basic Concepts ....................................................................................... 9

Employer Authority and Budget Authority ................................................. 9

Employer Authority ...........................................................................10

Budget Authority...............................................................................10

Individual Budgets...................................................................................11

Person-Centered Planning......................................................................13

Need Determination ................................................................................14

Use of Representatives...........................................................................15

Employing Family Members....................................................................16

CHAPTER 2. Origins of Self-Directed Services ........................................................17

CHAPTER 3. Evolution of Self-Directed Medicaid Services ....................................21

Personal Care/Personal Assistance Services .........................................21

Home and Community-Based Waiver Services ......................................23

HCBS State Plan Options .......................................................................24

CHAPTER 4. Basic Features of Self-Directed Medicaid Services ...........................29

Operational Components ........................................................................29

Financial Management Services .............................................................31

Quality Assurance and Improvement ......................................................32

Managing Risk, Balancing Personal Autonomy, and Protecting from 

Harm .......................................................................................................32

CHAPTER 5. Cost-Effectiveness of Self-Directed Services.....................................35

CHAPTER 6. Implications of Managed Long-Term Services and Supports...........37

Wisconsin ................................................................................................38

New York ................................................................................................40

CHAPTER 7. Future Directions in Self-Directed Services........................................43

Endnotes........................................................................................................................55
6 
7 

Executive Summary

In recent years, self-direction has emerged as a game-changing strategy in organizing 

and delivering Medicaid funded services, a means of affording people with disabilities 

enhanced opportunities to live fulfilling lives of their own choice in local communities. 

Yet, despite the growth in self-directed services, many key questions remain to be 

answered about the most effective ways of promoting individual choice and control within 

a Medicaid funding environment. 

To assess the current state of knowledge and pinpoint remaining gaps that need to be 

filled, in the fall of 2011 the National Council on Disability commissioned a study of 

Medicaid-funded self-directed services. This paper summarizes the key study findings, 

conclusions, and recommendations, and more specifically— 

● Traces the history of self-directed services in the United States and its emergence 

and subsequent growth within the Medicaid policy arena; 

● Examines the fundamental concepts that undergird a self-directed approach to 

organizing and delivering community-based long-term services and supports;

● Reviews the basic components of self-directed services as spelled out in federal 

Medicaid policy; 

● Summarizes the findings and conclusions from existing studies of the costeffectiveness of self-directed services; 

● Explores the ramifications of the growing use of Medicaid managed care 

arrangements for the future of self-directed services and supports; and

● Recommends strategies for improving the accessibility and quality of self-directed 

Medicaid services and supports. 
8 
9 

CHAPTER 1. Basic Concepts

Within the disability policy arena, self-direction refers to an approach to delivering home 

and community-based services (HCBS) that allows eligible individuals to directly control 

a range of services and supports—with the assistance of representatives of their 

choice—based on their own preferences and needs. The central goal of self-direction is 

to maximize an individual’s opportunities to live independently in the most integrated 

community-based setting of his or her choice. In contrast to traditional approaches that 

rely on the service provider to coordinate and deliver necessary supports, self-directed 

strategies shift control over resources and staffing to the individual, allowing each person 

to determine the role that the provider will play in his or her life. From the person’s point 

of view, it means going about one’s life and being able to incorporate services into the 

flow of daily activities. Depending on the program context, self-direction sometimes is 

referred to as “consumer-direction” or “participant-direction.” 

In a self-directed program model, a considerable degree of authority is transferred to the 

participant and, in some instances, a family member who is selected or legally 

authorized to represent the participant. This approach is in sharp contrast to a traditional 

service delivery model where decision-making and managerial authority is assigned to 

professionals who may be state employees, state contractors, or service providers. In 

this sense, self-direction marks a major paradigm shift in the delivery of publicly funded 

HCBS. 

Employer Authority and Budget Authority

Medicaid HCBS policy recognizes two basic types of self-direction: employer authority 

and budget authority, each of which can take several forms. Participants exercising 

employer authority are authorized to hire, fire, and supervise personal support workers 

(e.g., personal care attendants, homemakers). The more comprehensive form of selfdirection, referred to by Centers for Medicare and Medicaid Services (CMS) as budget 
10

authority, allows participants to purchase goods and services as well as supervise 

personal support workers and manage expenditures within the limits of a specified 

budget allocation.1

Employer Authority

To be recognized as a form of self-direction, program participants, at a minimum, must 

be allowed to hire, manage, and dismiss their personal support workers. Employer 

control includes the following functions: recruiting job candidates, interviewing applicants 

and checking their references (unless the participant knows the applicant very well), 

deciding who to hire, setting and negotiating work schedules and determining training 

needs, assigning tasks to workers, supervising and evaluating the workers’ job 

performance, and deciding when to dismiss a worker whose performance has been 

unsatisfactory. Participants who self-direct their services also play a role in paying 

workers. At a minimum, participants should approve workers’ timesheets. In some 

programs, however, they also are responsible for co-signing the workers’ paychecks. 

Participants typically play no role in establishing the hourly wages of workers in selfdirected programs using the employer authority only. In contrast, participants in 

programs with budget authority may negotiate hourly wage rates and additional fringe 

benefits with their workers. The only requirement is that they observe applicable federal 

and state laws governing minimum wage, overtime pay, workers compensation, disability 

insurance, and unemployment insurance. In some states, participants also must abide by 

collective bargaining agreements with unions representing participant-directed workers. 

Budget Authority

Under the budget authority model, participants are allowed to use their funding allotment 

to not only hire personal support workers, but also to purchase other goods and services 

designed to meet disability-related needs and, in the case of people with psychiatric 

disabilities, recovery-related supports. Some of these goods and services may substitute 
11

for human assistance or otherwise enhance the individual’s independence (e.g., 

assistive technology, home modifications, transportation services, laundry services, meal 

services, personal care supplies, noncovered prescription and nonprescription 

medications). Participant-directed goods and services usually include items that would 

not be covered under traditional HCBS programs, and these goods and services may be 

purchased from nontraditional sources. Each self-direction program establishes its own 

ground rules governing approvable purchases, with some programs being considerably 

more permissive than others. 

Individuals receiving support may vary in the extent to which they require or desire 

assistance in carrying out their responsibilities under the program. Some may rely on 

considerable support from friends and family members to manage their services, while 

others may self-direct with minimal assistance. Still others may depend on a paid support 

broker, a navigator, or a recovery coach to establish goals, develop budgets, and 

navigate their way through the service system. 

Individual Budgets

An individual budget expresses in dollar terms the amount of funding deemed necessary 

to meet the anticipated service and support needs of an individual with a disability who is 

enrolled in HCBS. When services are self-directed, the individual decides how all or a 

defined portion of his or her individual budget is to be used. Experts in self-directed 

services generally agree that the methodology used in establishing individual budgets 

must be:2

 

● Accurate – It must be based on a valid assessment of the individual’s needs and 

yield an amount sufficient to ensure that the participant’s needs are met. 

● Consistent – The methodology has to be applied consistently across the entire 

program, state, and target population. 
12

● Reliable – It should produce consistent results over time and with repeated 

applications. 

● Equitable – Participants with similar support needs and circumstances should 

receive comparable budgets that also establish a defensible relationship between 

the cost of participant-directed services and agency-directed services. 

● Flexible – Individual budgets should be revised in a timely manner when the 

participants’ circumstances, needs, and choices change. 

● Transparent – The budget development process should be open to public 

scrutiny. 

The following processes are involved in developing and using individual budgets: 

assessing individual needs, developing an individualized spending allocation, calculating 

individual budget amounts, and determining a spending plan. The order in which these 

activities occur varies from one self-directed program to another. Some programs begin 

by calculating the budget amount and subsequently assessing individual needs and 

developing a spending plan. This approach is referred to as prospective budgeting. 

Other programs begin the process by first assessing the individual’s needs, then 

developing a service plan to address those needs, and conclude by calculating the dollar 

value of the plan using a specific formula (i.e., determine the amount of the individual’s 

budget). This latter approach is referred to as retrospective budgeting.3

● Prospective Budget Development. The amount of an individual’s benefit is 

determined before the person-centered planning process begins and is based on 

an objective assessment of the individual’s support needs. This information is 

translated into a dollar figure using a statistical modeling methodology that 

predicts the amount of funding required to meet the person’s service and support 

needs. Once the total budget amount is determined, a person-centered plan is 

prepared and spending allocations determined, taking into account the person’s 

support needs, preferences, and life goals. When an individual’s budget allocation 
13

is established in advance, a state is able to predict systemwide expenditures more 

accurately and control costs while permitting participants to exercise broad control 

over their personal budgets.

● Retrospective Budget Development. In a retrospective approach, the amount of 

the benefit is determined by the individual’s needs through an open, interactive 

process designed to identify specific needs for external support and assistance, 

and the costs of the services to be provided. The resulting judgments on support 

needs may be based on expressed and observed needs rather than on empirical 

data. Projected costs are typically based on current payment rates or schedules. 

Given the state authority’s responsibility to manage both services and costs, there 

generally is an authorization process prior to finalizing the service plan and 

individual budget. Once an individual’s needs are determined, the costs of 

meeting those needs are assessed by using either traditional fee-for-service rate 

schedules or alternative methods. With the budget amount in hand, self-directing 

participants prepare a personalized spending plan and implementation strategy.

Regardless of the methodology used by a state, the core components of an individual

budget development process include (1) an assessment of individual needs, (2) a plan 

for meeting those needs, (3) the establishment of a personal budget amount, and (4) the 

preparation of a spending plan and implementation strategy. It is important to keep in 

mind that determining those needs and figuring out the best approach to meeting them

are part of the service planning process in self- and agency-directed services.4

 

Person-Centered Planning

Person-centered planning (PCP) is an integral part of calculating individual budgets. 

PCP methodologies vary from state to state and population group to population group. 

State/local service systems for people with developmental disabilities (DD) typically 

employ PCP processes that focus on identifying major life goals and making related 

decisions regarding living arrangements, companions, training, and employment. 
14

DD planning processes tend to be highly structured, using assessment tools, checklists, 

and protocols to guide decision-making. By comparison, systems serving elderly 

individuals and younger people with physical disabilities tend to use more informal PCP 

processes, focusing on identifying the services and supports necessary to allow an 

individual to perform essential daily living tasks (e.g., bathing and meal preparation).

Regardless of the methods used, all PCP processes should adhere to the following 

principles:5

● All planning activities and decision-making are led by the participant;

● Participants receive all of the relevant information and support they need to make 

informed decisions; and

● Service planning decisions are built around the participant’s strengths, 

capabilities, preferences, desires, life goals, and support needs, rather than the 

availability of community supports. 

Need Determination

The needs assessment process takes into account an individual’s (1) medical 

condition(s); (2) functional capabilities and restrictions, specifically the ability to perform 

activities of daily living (ADLs) and instrumental activities of daily living (IADLs); (3) living 

arrangements; (4) access to unpaid supports; (5) social environment; and (6) access to 

required behavioral supports, if required. The methods used in assessing individual 

needs vary significantly from state to state, from population group to population group, 

and sometimes even within different geographic areas of a state. For years, state DD 

service systems have used standardized assessment tools, such as the Individual Client 

Assessment Profile or the Developmental Disability Profile to assess individual needs. In 

programs serving elderly individuals and younger people with physical disabilities, the 

primary focus is on assessing ADLs and IADLs along with the person’s medical 

condition(s), often with a lesser reliance on standardized assessment tools. 
15

In recent years, a growing number of state DD service systems have begun to use the 

Supports Intensity Scale (SIS) to assess individual needs. Using the assessment results, 

individuals are grouped into a series of levels based on the intensity of their support 

needs and this information is combined with historical service cost data to generate 

Individual Budget Allocations (IBAs). The resulting IBAs are used to calculate payment 

rates for traditional community provider agencies and determine the budgets of 

individuals who choose to self-direct their HCBS.

6

 

In HCBS programs for elders and younger people with physical disabilities, a few states 

use the Minimum Data Set – Home Care (MDS-HC), a comprehensive assessment tool 

that gathers information on multiple need-related factors. An individual’s characteristics 

are assigned a weighed score based on their predictive relationship to utilization and 

costs. These weighed scores are added to reach a total score that is adjusted to account 

for regional economic conditions (e.g., variations in labor costs), historical expenditure 

patterns, and funding restrictions to arrive at an empirically derived individual budget. 

Use of Representatives

Typically, self-directed service programs allow participants to use family members and 

friends to help them manage and direct their services and service budgets. Especially in 

the case of people with significant cognitive impairments, a representative can act as an 

intermediary in articulating the individual’s needs and preferences and also perform 

tasks that the individual is unable to carry out without assistance. In some cases, the 

representative may be the person’s court-appointed personal guardian or conservator, 

but usually representatives play a less formal, advisory, and facilitating role. 

Some self-directed services programs do not require representatives to be formally 

designated; however, other programs mandate that potential representatives be 

screened to ensure that they have a strong commitment to the participant’s wellbeing, 

are capable of carrying out their program responsibilities, and are willing to comply with 

program requirements. A representative may function in an individual capacity, or a 
16

group of individuals (often referred to as a “circle of support”) may come together to 

ensure that a participant receives the assistance and personal support that he or she 

needs. In either case, one key challenge is to ensure that the views and interest of the 

participant remain the paramount consideration in reaching all plan-related decisions.

Employing Family Members

Most self-directed programs, including Medicaid-funded programs, now permit relatives 

of a program participant to act as paid caregivers. Federal Medicaid regulations prohibit 

legally responsible relatives from serving as paid providers of personal care/personal 

assistance services (PAS) (42 CFR 440.167). The meaning of legal responsibility is 

defined in state law and therefore varies from state to state, but generally the term refers 

to the parents of a minor child. Operationally, some states prohibit payments to a 

spouse. This prohibition is based on the presumption that legally responsible relatives 

should not be paid for providing supports that they ordinarily would be expected to 

provide to their loved ones.

Parents and other relatives (e.g., siblings, aunts, uncles, cousins, a spouse) of adults 

with disabilities usually are not considered under state law to be legally liable for 

providing care and, consequently, may receive Medicaid payments for the provision of 

personal care/assistance services. In addition, since the mid-2000s, CMS has permitted 

states to make payments to legally responsible relatives for personal care or similar 

HCBS when such services are deemed to be extraordinary in scope and result directly 

from the individual’s disability, provided that the state sets forth satisfactory criteria for 

authorizing such service payments.7 In recent years, similar policies governing payments 

to legally liable relatives have been applied to Section 1915(i) home and communitybased state plan services and Section 1915(j) self-directed state plan PAS. An important 

point to keep in mind is that federal policy is permissive regarding payments to relatives 

and, consequently, decisions with respect to the circumstances under which relatives 

may serve as paid caregivers rests with the individual state.
17

CHAPTER 2. Origins of Self-Directed Services

Shortly after World War II, the Veterans Administration launched a cash-benefit program 

to allow veterans with disabilities to hire personal attendants. With the exception of 

comparatively small family support and respite care programs, however, the notion of 

substituting cash payments for in-kind government benefits failed to take root in civilian 

programs until the mid-1990s, when the U.S. Department of Health and Human Services

(HHS) joined forces with the Robert Wood Johnson Foundation (RWJF) to launch 

demonstration programs that enabled participants to manage the funding allocated on 

their behalf and directly control the staff who worked with them.

The advantages of providing PAS on an outpatient basis became evident in 1953 when 

Rancho Los Amigos Medical Center in Los Angeles hired personal assistants at a cost of 

$10 a day to care for 158 iron lung users, thus avoiding the $37 a day cost of providing 

inpatient care. This Los Angeles County program eventually was expanded statewide, 

becoming the California In-Home Supportive Services (IHSS) program in 1973.8 Initially, 

IHSS benefits were financed through a combination of state and local revenues, plus 

federal Social Services Block Grant funds authorized under Title XX of the Social 

Security Act. In 1993, however, California amended its Medicaid state plan to make 

IHSS benefits an optional coverage for individuals meeting the state’s income eligibility 

and disability standards. With more than 435,000 current participants,9 IHSS is the 

largest public program in the nation offering self-directed services to frail elders and 

other people with physical, developmental, and psychiatric disabilities. 

Early self-directed service models were a product of the independent living movement of 

the 1960s and 1970s. Several pilot programs sprung up during the late 1960s. One such 

program was the self-directed attendant care program at the University of California at 

Berkeley, founded by Ed Roberts and other disability activists. In 1972, Roberts and his 

allies launched a similar program for nonstudents called the Center for Independent 

Living using a combination of federal and private grant funds. Beginning in the late 1970s, 
18

the World Institute on Disability, in tandem with rehabilitation professionals, began to 

articulate the philosophical principles underlying self-directed PAS and the ways in which 

these principles should guide public policies toward people with disabilities.

In 1995, RWJF launched two national programs to empower people with disabilities and 

chronic illnesses to make their own choices regarding long-term services and supports: 

the Self-Determination program for people with intellectual and developmental disabilities 

and the Independent Choices program for seniors and nonelderly people with physical 

disabilities. Various program models were explored as part of RWJF’s Independent 

Choices initiative with varying success. In general, the initiative stimulated some innovative 

approaches and focused attention on the technical challenges of designing and operating 

consumer-directed services for senior citizens and people with physical disabilities.10 

Eighteen states received seed money grants from the foundation under the SelfDetermination initiative to pilot self-directed service models for people with intellectual 

and developmental disabilities.11 Most of the participating states were able to expand 

self-direction options by using the RWJF grant dollars to draw down federal matching 

funds through their Section 1915(c) Medicaid waiver programs. In several states, the 

RWJF grants were used in conjunction with a special, time-limited Medicaid funding 

authority called Community Supported Living Arrangements (CSLA), created by 

Congress in 1990.12 This special Medicaid authority in combination with the foundation 

grants led many states to build self-determination options into their Medicaid home and 

community-based waiver programs over the following decade. 

In 1998, RWJF joined forces with HHS to launch the Cash and Counseling Demonstration 

program. Three states—Arkansas, Florida, and New Jersey—were selected to pilot new 

approaches to financing and delivering Medicaid-funded long-term services and supports 

and granted statutory waivers necessary to mount their programs. A Mathematica Policy 

Research evaluation of the Cash and Counseling program13 concluded that— 

● The program significantly reduced the unmet needs of Medicaid participants 

requiring PAS; 
19

● Participants in the demonstration experienced positive health outcomes;

● Both participants and their caregivers experienced an improved quality of life;

● Consumer control did not lead to increased misuse of Medicaid funds; 

● Personal care costs were somewhat higher for demonstration participants 

compared to other recipients of Medicaid-funded PAS, mainly because 

demonstration participants received more of the care they were authorized to 

receive; 

● Increased Medicaid personal care outlays were partially offset by reduced 

institutional and other long-term care costs; and

● Cash and counseling need not cost more than traditional PAS if states carefully 

design and monitor their programs. 

Later, the Cash and Counseling model was replicated in 12 additional states. As 

discussed in greater detail below, the results of the Cash and Counseling and selfdetermination demonstrations led Congress to establish several Medicaid self-directed 

funding options in recent years. 

Self-direction has taken longer to gain a foothold in the mental health service sector, 

mainly because most self-directed support options have been funded through the 

Medicaid HCBS waiver program and few nonelderly adults with mental illnesses are 

eligible to receive waiver services. The Florida Self-Directed Care Program, founded in 

2002, is one of the earliest attempts to apply person-directed support principles to 

serving people with mental illnesses.14 In addition to the Florida program, small 

programs extending budget authority to people with psychiatric disabilities are under way 

in several other states, including pilot programs in Pennsylvania and Texas. 
20
21

CHAPTER 3. Evolution of Self-Directed Medicaid 

Services 

Personal Care/Personal Assistance Services

Self-direction initially emerged as a Medicaid funding alternative under the “personal 

care” state plan coverage option. Although personal care was recognized as a state plan 

option in the mid-1970s, for years services had to be prescribed by a physician and 

delivered in the beneficiary’s home by a qualified provider under the supervision of a 

registered nurse. Because of the strong medical orientation of the service, comparatively 

few states elected to offer personal care services as a state plan coverage, and those 

that did often restricted the circumstances under which such services would be treated 

as Medicaid-reimbursable costs (e.g., limiting such services to a recuperative period 

following a period of acute hospitalization).

By the late 1980s, however, a few states (e.g., California, New York) began to broaden 

the scope of reimbursable personal care services offered under their state plans, 

permitting such services to be furnished outside the individual’s home and allowing 

individuals to self-direct their services and supports. Responding to the growing demand 

for a more flexible array of HCBS, Congress in 1993 added personal care to the list of 

optional services that states could cover under their Medicaid state plans.15 In adopting a 

new statutory definition of personal care, Congress granted states explicit authority to 

provide such services outside the recipient’s home. The legislation also removed a 

previous regulatory requirement that the delivery of personal care services be supervised 

by nurses, and allowed such services to be authorized by methods other than a 

physician prescription if a state so elected. In November 1997, the Health Care 

Financing Administration (HCFA); later renamed the Centers for Medicare and Medicaid 

Services (CMS) promulgated regulations reflecting the above statutory provisions.16
22

In January 1999, HCFA released a State Medicaid Manual transmittal that completely 

revised the agency’s guidance on the coverage of personal care services.17 The new 

guidance made it clear that personal care services could include both assistance in 

performing essential ADLs as well as assistance in performing IADLs, such as light 

housework, laundry, meal preparation, transportation, grocery shopping, medication 

management, and money management. HCFA also indicated that relatives, except for 

“legally liable relatives” (e.g., parents of a minor child), could act as paid providers of 

personal care services. 

In addition, the 1999 manual transmittal clarified the agency’s policies with respect to 

personal care services for people with cognitive and mental disabilities by pointing out 

that “cueing along with supervision to ensure the individual performs the tasks properly” 

constitutes a reimbursable activity. Moreover, HCFA’s guidance explicitly recognized for 

the first time that personal care services could be directed by the beneficiary. Consumer 

direction had been a key feature of the personal/attendant care program in several states 

for many years (e.g., California, Massachusetts) but had never been formally reflected in 

federal policy. The 1999 manual transmittal, however, officially sanctioned such 

practices, including consumer training and supervision of personal aides/attendants.

Since federal policy governing Medicaid-reimbursable personal care services was 

relaxed during the mid- to late 1990s, states’ claims for such services have increased 

significantly. According to an analysis performed by Thomson Reuters Healthcare, total 

Medicaid payments for personal care services increased from $2.9 billion in fiscal year 

(FY) 1996 to $12.5 billion in FY 2008.18 However, more than three-fifths (61.9%) of 

FY 2008 payments were directed to two states: California and New York. The vast 

majority of states still prefer to include personal care services as one of several services 

covered under Section 1915(c) home and community-based waiver programs because 

of the greater flexibility it affords them in defining the scope of such services, and the 

protections against escalating service demands that are built into the waiver authority. 
23

Home and Community-Based Waiver Services

As discussed earlier in this paper, states began to introduce self-directed HCBS as part 

of their Section 1915(c) waiver programs in the wake of the Self-Determination and 

Independent Choices demonstrations sponsored by RWJF. Soon, states that had not 

participated in these demonstrations began to ask CMS for authority to add self-directed 

service options to their HCBS waiver programs. Observing this development, CMS 

decided in 2002, as part of President Bush’s New Freedom Initiative, to spell out the 

circumstances under which a state could offer self-directed HCBS services under 

Section 1915(c) waiver and Section 1115 waiver/demonstration programs by issuing a 

special, “Independence Plus” waiver application template. 

The term self-directed services was defined in CMS’ Independence Plus guidelines as “a 

state Medicaid program that presents individuals with the option to control and direct 

Medicaid funds identified in an individual budget.”19 States interested in operating an 

Independence Plus waiver program were required to ensure that each participant would 

have (1) a person-centered plan developed in collaboration with the participant and, 

where appropriate, his/her family members and other allies; (2) an individual budget 

“... under the control of and direction of the program participant”; (3) access to financial 

management services (FMS) to assist in administering the individual budget and 

complying with federal and state withholding and reporting requirements; (4) access to 

support brokerage services to help the participant arrange and orchestrate paid, 

voluntary and generic community supports; and (5) a quality assurance plan designed to 

protect the health, safety, and wellbeing of each participant.20

Between 2002 and 2004, 11 Independence Plus waiver requests were approved by CMS 

in 10 states. In addition, 12 states were awarded 2003 Real Choice System Change 

grants to assist them in developing Independence Plus waiver proposals by 2006. 

Furthermore, as noted above, RWJF, in partnership with the HHS Office of the Assistant 

Secretary for Planning and Evaluation and the Administration on Aging, awarded Cash 

and Counseling development grants to 11 additional states in October 2004.
24

The Independence Plus waiver template was folded into a new Section 1915(c) Webbased application template in late 2005. The instructions accompanying the new HCBS 

waiver template incorporated an expanded version of the original Independence Plus 

guidelines.21 States were given the option of requesting authority to operate a separate 

waiver program for people choosing to self-direct their services or establishing a selfdirection component of a broader HCBS waiver program. States electing the former 

option (a separate self-directed waiver program) could ask that their programs be 

designated an “Independence Plus” waiver if all participants had the opportunity to selfdirect their services and the program provided access to “a full-range of supports for 

participant direction.”22 Since there are no financial advantages to the Independence 

Plus designation, in practice most states elected to build a self-direction component into 

a broader waiver program, avoiding the administrative hassle and overhead cost 

involved in operating separate waiver programs. In 2009, 94 waiver programs in 

36 states offered some form of self-direction, while 15 waiver programs required selfdirection for some or all services offered under the program.23 

HCBS State Plan Options

The Deficit Reduction Act of 2005 (DRA; P.L. 109-171) established two optional 

Medicaid state plan coverages of HCBS: Section 2086 of the DRA added Section 1915(i) 

to the Social Security Act, allowing states to offer HCBS under their Medicaid state plan, 

rather than under Secretarial waivers only; and Section 6087 added Section 1915(j) to 

the Act, permitting states to provide self-directed PAS as part of their Medicaid plans. 

A state must stipulate that Section 1915(j) beneficiaries otherwise would be eligible to 

receive agency-directed PAS under the state’s Medicaid plan. In addition, a state must 

ensure that beneficiaries choosing to self-direct their PAS receive choice counseling and 

(1) are allowed to manage their own budgets, planning and purchasing services of their 

own choosing; (2) have their needs, strengths, and preferences assessed before 

services are designed and initiated; (3) have an individual service plan developed on 
25

their behalf; and (4) have access to FMS to assist them in paying providers, tracking 

costs, and filing required reports. 

States may limit the number of people receiving self-directed PAS and restrict the 

provision of such services to certain geographic areas of the state. In addition, at the 

option of the state, people who enroll in Section 1915(j) may (1) hire legally liable 

relatives (such as spouses and parents of minors); (2) manage a cash disbursement; 

(3) purchase goods, services, and supplies that increase their independence or 

substitute for human assistance; and (4) use a discretionary portion of their individual 

service budgets to purchase nonlisted items or items previously reserved for permissible 

purchases.24 

The Patient Protection and Affordable Care Act of 2010 (ACA) included revisions to 

Section 1915(i) of the Act aimed at making the HCBS state plan option more attractive to 

the states.25 In particular, the ACA amendments to Section 1915(i) (1) affords states 

enhanced flexibility in delineating the group(s) eligible to receive HCBS state plan 

services; (2) gives states the option of providing services to people with income up to 

300 percent of the federal Supplemental Security Income (SSI) payment standard (in 

addition to people with income at or below 150 percent of the federal poverty level, as 

permitted under the original 2005 legislation); (3) permits states to design distinctive 

service packages for different groups of targeted beneficiaries; and (4) allows states to 

claim federal reimbursement for all HCBS authorized under Section 1915(c)(4)(B) of the 

Social Security Act, including “other services” approved by the Secretary of HHS, as well 

as day treatment, partial hospitalization, psychosocial rehabilitation, and clinic services 

for people with chronic mental illnesses. 

In keeping with the requirement of the original 2005 legislation, states still may establish 

need-based eligibility criteria that include individuals who do not require an institutional 

level of care. As a result, states may qualify people with psychiatric disabilities under its 

Section 1915(i) coverage who otherwise would be ineligible for Medicaid-reimbursable 

HCBS due to the institution for mental diseases exclusion.26 However, under the 

provisions added by the ACA, states no longer are permitted to restrict the number of 
26

individuals eligible for Section 1915(i) state plan services or establish waiting lists for 

such services. In addition, under the ACA amendments, states no longer have the option 

of providing Section 1915(i) services on less than a statewide basis. States, however, 

still have the option of providing self-directed services to Section 1915(i) beneficiaries on 

terms similar to those applicable to recipients of Section 1915(j) services.27

In addition to amending the provisions of Section 1915(i) of the Social Security Act, the 

ACA also added two further inducements for states to serve Medicaid-eligible people

with chronic disabilities in home and community-based settings. First, the 

2010 legislation added another HCBS state plan option under Section 1915(k) of the Act, 

called the Community First Choice Option. Under this state plan option, participating 

states are eligible to receive a 6 percentage point increase in their federal Medicaid 

matching ratio for community-based attendant and other services aimed at assisting

people with ADLs and IADLs deficits and helping them acquire and maintain the skills 

necessary to independently perform such tasks. States must offer recipients of 

Section 1915(k) services the option of self-directing their services and supports.28 

Second, the ACA authorized an enhanced matching ratio for states choosing to 

participate in the State Balancing Incentive Payments Program (hereafter referred to as 

the Balanced Incentive Program), an initiative aimed at helping states improve their 

capabilities to manage and deliver HCBS to people with disabilities, thereby increasing 

the proportion of Medicaid beneficiaries served in home and community-based settings. 

Participating states that expend less than 25 percent of their long-term services dollars 

on HCBS are eligible to receive a five point increase in their Federal Medical Assistance 

Percentage FMAP rate, but must raise the proportion of long-term services expenditures 

devoted to HCBS to 25 percent by September 30, 2015, when the program ends. States 

spending between 25 percent and 50 percent of their LTS dollars on HCBSs are eligible 

to receive a 2 percentage point increase in their FMAP rate but must increase the 

proportion of long-term services expenditures devoted to HCBS to 50 percent by the end 

of the program. In addition, states choosing to participate in the Balanced Incentive 

Program must agree to (1) implement a No Wrong Door – Single Entry Point system, 
27

(2) establish “conflict-free” case management services, and (3) develop and use a 

standardized assessment instrument. As of September 2012, eight states (Georgia, 

Indiana, Iowa, New Hampshire, Maryland, Michigan, Missouri, and Texas) had received 

Balanced Incentive Program grants.29 Funding for the program is capped at $3 billion 

over four fiscal years (October 1, 2011, through September 30, 2015). 

The Section 1915(i) and Section 1915(j) coverage options became effective January 1, 

2007, while the Section 1915(k) coverage option went into effect on October 1, 2011. 

CMS issued final regulations governing the coverage of self-directed PAS on October 3, 

2008.30 Revised, proposed regulations implementing HCBS under Section 1915(i), along 

with final regulations governing the Community First Choice Option, were issued by CMS 

on May 3, 2012.31 
28
29 

CHAPTER 4. Basic Features of Self-Directed Medicaid 

Services

Currently, federal Medicaid law offers the states several approaches to funding selfdirected home and community-based services and supports, including the— 

● Home and community-based state plan services under Section 1915(i) of the Act;

● Community First Choice Option under Section 1915(k);

● Self-directed PAS under Section 1915(j); and 

● HCBS waiver program under Section 1915(c).

These statutory authorities may be employed separately or in combination. States may 

also link efforts to promote self-directed supports to other Medicaid funding authorities, 

such as the Money-Follows-the-Person Demonstration grant program and the State 

Balancing Incentive Payments program, to leverage desired systemic changes. These 

Medicaid funding authorities have slightly different operating policies, but they all share 

the same basic requirements, including the following:

32 

Operational Components

1. Person-Centered Planning. Federal statutory and regulatory policies require 

states to perform individualized assessments and use person-centered planning 

in developing service plans for Medicaid beneficiaries who choose to self-direct 

their supports. The process must be directed by the person receiving assistance, 

with or without the assistance of a representative(s) selected by the individual. 

The planning process must take into account and plan for possible contingencies 

(such as the unavailability of a regularly scheduled support worker) and include 
30

these back-up strategies in the individual’s written service plan. In addition, the 

state is responsible for ensuring that a risk assessment is conducted for each 

program participant and the results of the assessment are taken into account in 

developing back-up or contingency plans for the affected individual. 

2. Individual Service Plan. Each recipient of self-directed supports must have a written 

plan specifying the services and supports required to meet his or her preferences, 

choices, capabilities, and needs, as well as the assistance the recipient requires in 

order to direct those services and supports and remain in the community. 

3. Individualized Budget. The amount of funds under the control and direction of the 

person is referred to as the individualized budget. A participant’s budget is tied to his 

or her service plan and developed through a person-centered planning process that 

emphasizes the importance of individually tailoring the budget to the person’s needs, 

preferences, and life goals. States are required to spell out the methods to be used in 

calculating the dollar value of individualized budgets based on reliable cost and 

service utilization data. In addition, states must specify the methods and processes to 

be used in adjusting a participant’s budget when service plan changes occur and 

delineate the procedures to be used in evaluating a participant’s expenditures. 

4. Information and Assistance in Support of Self-Direction. States are required 

to provide or arrange for the provision of a system of supports that is responsive 

to each individual’s needs and desires for assistance. The amount and frequency 

with which self-directing participants use available supports is likely to vary from 

person to person and change in response to situations that arise. Among the 

types of assistance to be made available on an as-needed basis are help in 

developing a person-centered service plan and individualized budget, managing 

personal support workers and services, and performing other employer-related 

and budget management tasks. The state also is responsible for ensuring that 

participants are informed about such matters as the operation of self-directed 

services, individual rights and responsibilities, available resources, counseling, 

personal support worker supervision and training; the use of FMS, and access to 
31

an independent advocacy system. Some states have created a separate 

Medicaid-reimbursable service—referred to as support brokerage, individual 

counseling, or personal guide—to perform these functions and act as a liaison 

between the individual and program administrators. In these situations, the 

support broker, consultant, counselor, or guide usually acts as an agent of the 

program participant and takes direction from the participant. 

Financial Management Services

Although individuals who self-direct their Medicaid HCB services may elect to assume 

personal responsibility for handling some or all financial management tasks, very few 

choose to do so. CMS defines the term “Financial Management Services” as follows: 

A service/function that assists the family or participant to: (a) manage and 

direct the distribution of funds contained in the participant-directed budget; 

(b) facilitate the employment of staff by the family or participant by 

performing as the participant’s agent in performing such employer 

responsibilities as processing payroll, withholding and filing federal, state 

and local taxes, and making tax payments to appropriate authorities; and 

(c) performing fiscal accounting and making expenditure reports to the 

participant and/or family and state authorities.33

Principal FMS functions include helping Medicaid recipients to— 

● Understand their billing and documentation responsibilities; 

● Perform payroll and other employer-related duties on the individual’s behalf (e.g., 

withholding and filing required reports on federal, state, and local payroll and 

unemployment taxes; purchasing workers’ compensation coverage and other 

types of insurance; collecting and processing worker timesheets; calculating and 

processing employee benefits; issuing payroll checks); 

● Purchase approved goods and services authorized under the individual’s service plan; 
32

● Monitor and track expenditures against the individualized budget; and

● Identify expenditures that are over or under the budgeted amount. 

A state must make FMS available to all Medicaid-eligible participants who elect to selfdirect their services. 

Quality Assurance and Improvement

Federal quality monitoring and reporting requirements vary according to the Medicaid 

home and community-based funding authority a state elects to use. However, each state 

must have a system for continuously monitoring and improving the quality of its 

Medicaid-funded HCBS. This system must be based on a cyclical process of discovery, 

remediation, and quality improvement. The state must have a systemic approach to 

monitoring the quality of HCBS. When deficiencies are identified, a state must be 

capable of taking prompt corrective actions to restore service quality. In addition, a state 

must be capable of identifying systemic weaknesses in its service delivery process and 

instituting quality improvement projects to rectify such weaknesses. Finally, the state

Medicaid agency must exercise overall responsibility for monitoring system performance 

and individual outcome measures. 

Managing Risk, Balancing Personal Autonomy, and Protecting from 

Harm

In designing self-directed support programs, one of the main challenges that public 

policymakers face is to determine a means of affording participants greater personal 

freedom and control while at the same time ensuring that they are able to live safely in 

the community. Achieving the appropriate balance between personal autonomy and 

protection from harm is especially complex in the case of people with cognitive, 

intellectual, and psychiatric disabilities who are able to make informed choices only when 

they receive direct assistance and support from another person(s). 
33

Federal and state policies require HCBS providers to adopt an aggressive posture to 

protect the individuals they serve from abuse, neglect, and mistreatment. Given the 

consequences of failing to fulfill these fundamental responsibilities, personal choices 

often are constrained by actual and perceived risks to an individual’s health and safety, 

and consequently they become the subject of negotiation between the person and the 

support agency rather than being viewed as an individual right. Under a self-directed 

program model, authority and control over a person’s health, welfare, and lifestyle are 

shifted to the individual, along with commensurate responsibilities. The resulting 

realignment of authority and responsibility necessitates changes in the manner in which 

services and supports are managed. But it does not alter a state’s obligation to ensure 

the health and safety of Medicaid recipients. Policies and practices reflecting this 

realignment of authority and responsibilities, therefore, must occur at the individual, 

program, systemic, and administrative levels of a state’s service delivery system.34

Policies must address the following concerns:

1. Individual risk related to the decisions a person makes with respect to her or his 

lifestyle, health, and general welfare. To ensure that such decisions are made in 

an accountable manner, a state should (1) define the role of the individual in the 

assessment and management of risk; (2) identify the methods to be used in 

determining an individual’s competency to give informed consent and to describe

her or his decision-making capacity; and (3) articulate a shared understanding of 

the meaning of risk, liability, and mitigation for self-directed services.

2. Program risk related to the roles and responsibilities of each individual and the 

agency supporting her/him in determining risk-sharing relationships. State policies 

should (1) describe program features designed to limit risk and mitigate the 

consequences when necessary, (2) outline an appropriate risk management 

protocol to address provider agency risks, and (3) provide mechanisms for 

individuals receiving support and organizations providing support to resolve 

differences with respect to balancing personal choice with provider responsibility. 
34

3. Systemic risk related to the development of a comprehensive community 

infrastructure with the capacity to minimize risk and institute timely and 

appropriate responses to emergency situations. State policies should (1) identify 

the basic components and desired outcomes of a risk management system; 

(2) spell out criteria for distinguishing between reasonable and unreasonable 

risks; (3) ensure effective responses to identified hazardous situations; (4) specify 

how liability is to be managed with respect to health conditions, chronic 

disabilities, physical and mental impairments, personal actions, decisions, and the 

exercise of choice and inappropriate or criminal behavior; and (5) ensure effective 

oversight, monitoring, and follow-up. 

4. Administrative risk and liability associated with financial management, U.S. 

Department of Labor and Internal Revenue Service requirements governing 

wages, hours, and conditions of employment, and ensuring that support staff hired 

and supervised by people with disabilities is appropriately trained.

The mechanisms used to assess and respond to risk vary according to the population 

being served and the nature, extent, and responses of each individual to her/his 

disabilities. Because impairments in judgment among people with psychiatric disabilities 

often are episodic in nature, for example, the use of proactive planning tools such as 

Wellness Recovery Action Plans, Advance Psychiatric Directives, and negotiated risk 

agreements should be viewed as critical components of a well-designed risk 

management system.

There is ample evidence that people with cognitive, intellectual, and mental disabilities, 

with appropriate support, can successfully direct their own services. But states must 

ensure that appropriate policies are in place to ensure that such individuals receive the 

support they need to make their own choices and exercise control over their lives. As 

Moseley points out, “[a] system that fosters self-determination must consistently reinforce 

the central role of the individual receiving support.”35
35

CHAPTER 5. Cost-Effectiveness of Self-Directed 

Services

The fundamental aim of most self-direction programs is not to save money but to give people 

with disabilities greater control over the services and supports they receive and when, by 

whom, and how they are delivered. In virtually all instances, however, the increase in personal 

control is accompanied by requirements that total service costs are not to exceed the costs 

that a community provider agency would incur in delivering the same array of services and 

supports. In some instances, the upper limit on self-directed support plans is set at 

100 percent of the cost of provider-controlled services and supports; in other programs, a 

discount factor is applied to self-directed support plan allocations (e.g., 90% of provider 

agency costs) to be held as a “risk pool” of funds that can be used by the state or provider 

agency to meet unanticipated cost increases over the course of the year. As a result of such 

policies and the variability among self-directed programs across and within states, it is difficult 

to draw valid comparisons between the costs of self-directed versus agency-directed services.

Head and Conroy reported a median reduction of 8 percent in the cost of serving 

70 participants in a self-determination demonstration program for people with intellectual 

and developmental disabilities in Michigan. Comparisons of expenditures on behalf of 

these individuals were made before they entered self-directed programs and again three 

years following their enrollment in the program. The savings increased to 14 percent 

when expenditures were adjusted for inflation over the three-year period, with the 

median public cost per participant declining from $67,322 to $56,778 in inflation-adjusted 

dollars. The study also found that participants reported that they had more and better 

choices, less professional domination, and a higher overall quality of life. The study did 

not analyze control or comparison group data, and therefore the authors warn against 

generalizing from the findings of this small, single-state study.36 

When personal care cost data of participants in the Cash and Counseling demonstration 

program were compared with those of a control group receiving agency-directed 
36

personal care services, researchers discovered that participants incurred higher costs 

primarily because program enrollees received more of the care they were authorized to 

receive than control group members. In addition, the increased personal care costs were 

partially offset by lower institutional and other long-term care outlays on behalf of Cash 

and Counseling participants. The evaluation team concluded that, if a state carefully 

designs and monitors its Cash and Counseling program, self-directed services should 

not cost any more than traditional, agency-provided services.37 The Arkansas Cash and 

Counseling program saved $5.6 million after nine years of operation, not including the 

additional savings associated with reduced nursing home utilization.38 

In examining the experiences of states operating consumer-directed support programs 

for people with intellectual and developmental disabilities (I/DD), Walker found that cost 

savings usually are built into a state’s funding assumptions. Typically, a state either pays 

a set fraction (e.g., 90%) of the total amount allowed for traditional agency-directed 

services, or establishes a lower allowance for self-directed administrative/overhead costs 

than for agency-directed administrative/overhead costs.39 

Walker also points out that some states have created consumer-directed support 

programs with tight spending caps that are aimed at stabilizing families and preventing 

emergency out-of-home placements of individuals on a waiting list for full-time residential 

supports. By dampening demand for residential placements, this comparatively low-cost 

option allows a state to extend services to additional wait-listed individuals, thus reducing 

the gap between supply and demand. One I/DD program administrator estimated that his 

state was saving more than $1 million a year by offering low-cost self-directed support 

options to families caring for loved ones with an I/DD in their homes.40 

In summary, studies of the cost-effectiveness of self-directed services are few in number 

and generally have yielded inconclusive and sometimes contradictory results. The limited 

utility of such studies in shaping public policy can be attributed in large part to the cost 

assumptions underlying most existing programs and the methodological problems 

involved in conducting such research (e.g., accounting for (and weighting) all of the 

relevant cost variables that influence outcomes). 
37

CHAPTER 6. Implications of Managed Long-Term 

Services and Supports

Increasingly, states are turning to managed care in an attempt to improve the quality and 

cost-effectiveness of Medicaid Managed Long-Term Services and Supports (MMLTSS). 

According to a recent CMS-sponsored survey, the number of states operating MMLTSS 

programs doubled between 2004 and 2012 (from 8 to 16) and is expected to grow to 26 

by 2014. A majority of states currently operating MMLTSS programs (12 of 16) have built 

self-directed service options into their programs.41 Generally, these program components 

are based on preexisting self-direction initiatives within the states’ traditional fee-forservice systems. Little comparative information, however, is currently available on the 

nature and scope of self-directed initiatives within MMLTSS programs. 

In several important ways, the basic concepts underlying managed care conflict with the 

principles of consumer choice and control that lie at the heart of self-directed services. 

Managed care attempts to achieve systemwide efficiencies by consolidating decisionmaking authority in a single management entity, restricting consumer choice to networkapproved providers, and substituting lower-cost interventions for higher-cost 

interventions wherever possible. The self-direction model, in contrast, vests decisionmaking authority with the individual receiving supports, with or without the assistance of 

a designated representative(s). However, a well-designed managed care program may 

help to reduce some of the barriers to implementing self-direction, especially in the 

behavioral health arena. For example, some states are incorporating a self-direct 

services component in their health home initiatives on behalf of people with psychiatric 

disabilities. 

The current interest in applying managed care principles to public long-term support 

systems is motivated primarily by a desire on the part of public policymakers to curb the 

growth in future Medicaid outlays for services to high-cost beneficiaries, primarily people

with substantial, chronic disabilities. Fueled by the escalating service needs of an aging 
38

U.S. population, federal Medicaid expenditures are projected to increase by 134 percent 

between FY 2012 and FY 2022 (from $253 billion to $592 billion) and grow as a 

percentage of the gross domestic product from 1.7 percent to 2.4 percent over the same 

period.42 The question is: can self-direction thrive in an environment in which the 

principal aim of public policy is to limit the growth in program outlays by tightly managing 

utilization and expenditures and standardizing interventions practices? 

Managed care originated in primary and acute health care delivery systems, with an 

emphasis on medical treatment and recovery. Only a handful of states and health care 

management firms have had extensive experience in adapting managed care techniques 

to the long-term services sector. Many disability advocates are deeply concerned that 

the significant differences in the nature, duration, scope, and intent of acute care and 

LTSS will smother participant choice and control under a new wave of medical 

paternalism once managed care is introduced to MMLTSS. 

Are these fears justifiable? Will self-direction play a prominent role in future MMLTSS 

systems? Let’s examine the recent experiences of Wisconsin and New York, which have 

long traditions of consumer-directed HCBS and are in the process of shifting to MMLTSS

systems. 

Wisconsin

Participant choice and self-determination have been core precepts of Family Care since 

Wisconsin’s managed long-term services and supports program was initially proposed in 

the late 1990s. As Family Care was phased in during the 2000s, however, it became 

clear that too few program participants were being afforded opportunities to self-direct 

their services and supports. When the required Secretarial waivers to operate the Family 

Care program came up for renewal in 2007, CMS insisted, as a condition of waiver 

renewal, that the state establish a separate HCBS waiver program for qualified adults 

who elect to self-direct their services and supports. 
39

The IRIS (Include, Respect, I Self-Direct) Section 1915(c) waiver program was launched 

on July 1, 2008, to enhance opportunities for Family Care-eligible seniors and adults with 

physical and developmental disabilities to self-direct their Medicaid-funded services. The 

program is available to qualified adults only in counties participating in the Family Care

program (46 of the state’s 72 counties as of August 2012). The state Department of 

Health Services, the single state Medicaid agency, retains an IRIS Consultant Agency to 

assist participants in selecting a qualified individual (consultant) to help them develop 

and manage a person-centered plan. The Department of Health Services also contracts 

with a Financial Service Agency to pay the bills and handle other back-office functions 

for IRIS participants and, with Disability Rights Wisconsin to act as program 

ombudsman, assist participants to file and settle grievances and appeals.43 

As initially conceived, the IRIS program was to serve as an alternative for a 

comparatively small number of individuals who elect to self-direct their services rather 

than receive them through one of the nine managed care organizations (MCOs) 

participating in the Family Care program. Department of Health Services officials initially 

projected that 1,500 individuals would be enrolled in the IRIS program by 2011. In 

practice, almost 6,000 individuals were participating in the program by early 2012.44 

The unexpected surge in enrollment in the IRIS program led to a series of problems, 

including a lack of program integrity and accountability, a flawed infrastructure to support 

participant choice and control, and an inequitable process of establishing individual 

budget allocations. These and other operational issues imposed constraints on the 

extent to which IRIS participants were able to select where and with whom they live as 

well as their capacity to direct their own services and supports. Some of these problems 

were pointed out in a 2011 evaluation of the Family Care program conducted by the 

nonpartisan Legislative Audit Bureau.45 

In response to the audit bureau’s findings, as well as legislative and gubernatorial 

concerns about the growing cost of the Family Care program (which is expected to top 

$2.8 billion, or about 40% of the state’s Medicaid budget, during FY 2011–12),46 the 

Wisconsin Department of Health Services developed a plan to promote the long-range 
40

sustainability of the program. The plan includes a variety of action steps to strengthen 

the IRIS program and improve “...the ability of consumers to choose the most integrated, 

community-based and cost-effective services.”47 It is not clear, at this early stage of the 

process, whether the planned changes will revitalize self-direction options for Family 

Care-eligible adults.

New York

The roots of consumer-directed Medicaid services can be traced back to the late 1970s, 

when a group of young adults with disabilities in New York City rebelled against having 

home care administrators, nurses, and social workers control their lives. They formed an 

organization called Concepts of Independence to administer their home care services on 

a self-directed basis. In late 1980, Concepts became the state’s first certified provider of 

consumer-directed PAS, with responsibility for acting as a fiscal conduit for Medicaid 

beneficiaries who elected to self-direct their home care supports. Over the following 

decade, consumer-directed service programs sprang up in other areas of the state; and, 

in 1996, the state legislature converted a statewide demonstration program into the 

Consumer Directed Personal Assistance Program (CDPAP) with a mandate that the 

Department of Health give all New York State Medicaid recipients the option of selfdirecting their Medicaid supports through a certified fiscal intermediary.48 

One of Governor Andrew Cuomo’s initial actions upon assuming office in January 2011 

was to issue an executive order creating a Medicaid Redesign Team (MRT). The 

governor’s charge to the MRT was to develop a comprehensive plan to “transform health 

care delivery for New Yorkers who are enrolled in both Medicaid and Medicare.”49 One of 

the MRT’s recommendations was to mandate the enrollment of low-income seniors and 

adults with physical disabilities in existing managed long-term care plans. Approved by 

the New York General Assembly as part of the state’s FY 2011–12 budget (along with 

many other MRT recommended actions), the plan calls for delivering MMLTSS through 

existing Managed Long-Term Care plans, including existing services to more than

60,000 CDPAP participants, approximately 40,000 recipients of home health state plan 
41

services, and 24,000 participants in HCBS waiver services for seniors and adults with 

physical disabilities.

Disability advocates contend that the transition to MMLTSS threatens the integrity of 

current and future self-directed services, due both to the abbreviated transition period 

(i.e., all people to be enrolled in Managed Long-Term Care plans by the end of 2013) 

and the many key policy issues that have not yet been addressed. The concerns of 

disability advocates revolve around potential conflicts between the interests of the MCOs 

and the interests of the individual,50 including the following: 

● The inherent conflict between the medically-oriented care management model 

used by existing MCOs and the overarching goals of self-direction (independence,

personal control, and improved quality of life); 

● The possibility that MCOs will be assigned responsibility for determining whether 

an individual is self-directing his/her services or has designated a willing and able 

representative to direct the service plan on his/her behalf;

● Whether MCOs will be responsible for notifying self-directing participants of their 

opportunity to appeal denials of eligibility and their right to a fair hearing on such 

appeals; and

● Whether MLTC plans will be required to contract with independent providers of 

CDPAP services instead of using existing home care contractors to furnish in-plan 

CDPAP services. 

Participants in the Comprehensive HCBS waiver program administered by the state 

Office of People with Developmental Disabilities (OPWDD) are exempted from 

mandatory enrollment in MLTC plans.51 “Due to the complexity of the OPWDD system,” 

the Medicaid Reform Team decided that a separate federal managed care waiver 

program should be established for services to people with intellectual and developmental 

disabilities.52 This waiver request, referred to as the People First demonstration, waiver 
42

was submitted in final form to CMS in April 2012 and remained under federal agency 

review at the time this report was prepared.53 

As part of the proposed People First waiver program, OPWDD plans to build on nearly 

20 years of experience in offering self-directed support options under the state’s 

Comprehensive DD waiver program. The state’s proposal treats self-directed supports 

as a “non-negotiable” element of planned systemic reforms, and spells out in 

considerable detail the steps that OPWDD is prepared to take to ensure that people with 

I/DD have opportunities to control their own services and supports. Although they

support the state’s efforts to ensure access to self-directed services, some disability 

advocates express concern over the proposed model. Noting the importance of conflictfree case management, advocates point out that the current proposal to allow nonprofit 

and public managed care entities—referred to in the state’s People First waiver request 

as Developmental Disabilities Individual Services and Supports Coordination 

Organizations—to both provide and coordinate HCBS to plan enrollees would constitute 

an inherent conflict of interest for individuals who choose to self-direct their services. 

Self-direction, they argue, is not likely to flourish in such a provider-driven service 

delivery system. 

The problems that Wisconsin and New York have encountered in attempting to ensure 

access to self-directed supports for enrollees in MMLTSS plans are far from unique. 

Various sensitive issues must be resolved if participants in MMLTSS plans are to be 

afforded genuine opportunities to self-direct their own services and supports.
43

CHAPTER 7. Future Directions in Self-Directed 

Services

The number of people with disabilities participating in Medicaid-funded self-directed 

services has grown rapidly over the past decade. An inventory completed last year by a 

survey research team at Pennsylvania State University in conjunction with the National 

Resource Center for Participant-Directed Services found that every state has at least one 

participant-directed program in which enrollees exercise employer authority and 43 states 

have at least one program where enrollees exercise budget authority. At the time the 

preliminary results of the survey were tabulated, researchers had identified 298 programs 

providing self-directed services nationwide at an estimated FY 2010–11 cost of 

$8.0 billion. Included were 62 programs for veterans with disabilities sponsored and 

funded by the U.S. Department of Veterans Affairs. Approximately 810,000 individuals 

were participating in these programs.54 

Participation in self-directed HCBS, however, varies considerably from state to state and 

community to community. California, with 143 out of 1,00055 people with disabilities 

participating in self-directed service programs, had the highest proportion of people with 

disabilities in the nation self-directing their services and supports. In contrast, the six 

states with the lowest enrollment levels had fewer than one adult with disabilities per 

1,000 enrolled in self-directed HCBS. Indeed, nearly two-thirds of the adults using selfdirected services nationwide were residents of California.56 

Clearly, the available evidence suggests that the potential for further growth in selfdirected services, nationwide, is quite significant, which raises the following questions: 

What are the remaining barriers to expanding access to self-directed support options 

within the federal-state Medicaid program? And what can policymakers do to remove or 

minimize these barriers? 
44

ISSUE #1: Support Worker Qualifications

Efforts to improve the quality of HCBS have, in some cases, worked at crosspurposes with self-directed services. For example, the central premise of selfdirection, that participants set the required qualifications of personal support 

workers and use the resulting criteria to screen and select job candidates, may be 

abridged by state or local training and credentialing requirements for personal 

support workers that limit the number and types of job candidates available to 

people wishing to self-direct their services.

RECOMMENDED SOLUTION #1: CMS’ technical guide to designing and 

operating Section 1915(c) waiver requests affords states considerable latitude in 

accommodating their HCBS quality assurance provisions to self-directed services. 

The guide states that:

When the participant is the common law employer, responsibility for 

conducting necessary background checks devolves to the 

participant whenever a participant-selected worker is subject to such 

a check under state law. However, a FMS [Financial Management 

Service] or other entity may arrange for the background check on 

behalf of the participant. Under the Agency with Choice57 model, the 

agency is generally responsible for conducting necessary 

background checks.58 

The CMS technical guide also makes it clear that, while the provider qualifications 

adopted by a state are applicable to all providers within a particular service 

category, a state “may establish additional staff qualifications based on [a selfdirecting participant’s] needs and preferences.... So long as the additional 

participant-specific qualifications do not contravene the qualification set 

[established by the state], they are permissible.”59 In others words, a state can 

tailor the qualifications of a personal support worker to the needs and preferences 

of an individual who chooses to self-direct her/his services and supports. 
45

In planning self-direction initiatives, states should use the flexibility built into the 

HCBS waiver technical guide to circumvent potential quality assurance-related 

barriers to self-direction—whether such initiatives are pursued under Secretarially

approved waivers (Section 1915(b), Section 1915(c), or Section 1115) or under 

applicable Medicaid state plan amendments (e.g., Section 1915(i), (j), or (k)). 

ISSUE #2: Unionization of Personal Support Workers

Personal/home care workers are unionized in some states (e.g., California, 

Michigan, Oregon, and Washington). Generally, unionization has led to higher 

wages and improved benefits (including health insurance coverage for workers in 

some states), as well as better retention rates and an enhanced sense of 

professionalism among direct care workers. Some workers (including family 

members of participants), however, object to joining a union and all the 

obligations membership entails (e.g., payment of union dues, mandatory training, 

criminal background checks), thus limiting the potential employee pool available 

to individuals desirous of self-directing their services and supports. 

A second concern expressed by some individuals receiving services is that the efforts of 

workers to gain increasing control over their conditions of employment and scope of work 

through collective bargaining will conflict with the ability of people with disabilities to 

direct and manage the delivery of the supports that they receive through self-direction. 

People are concerned that people with disabilities, particularly intellectual disabilities, are 

at an unfair advantage when negotiating the terms of employment and duties to be 

performed by the worker. 

RECOMMENDED SOLUTION #2: Advocates of self-direction should collaborate 

with employee unions in the pursuit of common objectives, such as better wages 

and benefits, improved working conditions, expanded access to training and skill 

development, and enhanced public funding of self-directed services—all of which 

should contribute to higher employee retention rates and a more stable and 

professional workforce. States and other funding entities should develop 
46

guidelines for identifying the mutual roles and responsibilities of people with 

disabilities who are self-directing and the workers who support them. Such 

guidelines should be designed to ensure that the service delivery structure does 

not supersede the ability of people to manage and control the supports they 

receive. 

Disability advocates and union representatives also should create a common 

framework for resolving disputes. A November 2011 agreement between several 

national disability organizations and a union representing more than 2 million 

public service workers outlined a set of principles to guide the development of 

such collaborative efforts. In the sensitive area of the recruitment of 

personal/home care workers by employee unions, the guidelines suggest that 

“... workers seeking to form a union and union staff who support them shall:

• Respect the privacy of the individual receiving support by not seeking 

information about the individual or the individual’s place of residence.

• Seek to contact workers at their own home and not at their employer’s home, 

unless that is also the worker’s home. 

• After initially contacting workers, keep lists of those who wish to have further 

contact and those who do not. When workers and [self-direction program] 

participants share the same home, lists shall also note when the participant 

and worker have asked to have meetings in other locations.

• Clearly and promptly identify their name and affiliation with the union when 

contacting workers. 

• Provide literature during home visits on worker rights and the rights of the 

individuals receiving services that relate to union activities, and that includes 

contact information for any further questions.”

60 
47

Oregon illustrates how a state can collaborate with a public employee union to 

improve opportunities for both personal care workers and people with disabilities 

who choose to self-direct their services and supports. In 2000, the citizens of 

Oregon approved a constitutional amendment creating a Home Care 

Commission, funded by the Department of Human Services, to improve services 

to frail elders and people with physical disabilities. The responsibilities of the 

commission subsequently were expanded to include home care and personal 

care services to people with DD, mental illnesses, and medically fragile children.61 

The Oregon Home Care Commission has four major responsibilities: (1) to define 

home care worker qualifications; (2) to create a statewide registry of home care 

workers, (3) to provide training opportunities for home care workers and 

consumers of services, and (4) to serve as the “employer of record” for purposes 

of collective bargaining with home care workers paid with public funds.62 In its 

latter capacity, the commission represents the state in collective bargaining 

negotiations with Local 503 of the Service Employees International Union (SEIU), 

a union representing more than 20,000 home care workers in the State of Oregon, 

including 12,500 workers who care for seniors and people with physical 

disabilities and 7,500 workers who care for people with DD, mental health needs, 

and medically fragile children.63 

The commission is composed of nine members appointed by the governor to 

three-year terms, including five consumers of home care services and one 

representative each from the Department of Human Services, the Governor’s 

Commission on Social Services, the Oregon Disabilities Commission, and the 

Oregon Association of Area Agencies on Aging and Disabilities. Individuals 

electing to self-direct their home care services are empowered to screen, hire, 

and set the conditions of employment of their personal care workers, including 

hiring, disciplining, and dismissing such workers.64

Since the commission assumed responsibility for negotiating collective bargaining 

agreements with the SEIU local, home care workers have achieved higher wages 
48

and significantly improved benefits. For example, workers logging more than

80 hours of service a month are entitled to health insurance coverage with low 

copayments under the current collective bargaining agreement.65 Meanwhile, 

most observers agree that the quality of home care services has improved over 

the past decade as a result of a better-trained, fairly compensated work force. 

Oregon also has an innovative Brokerage System which allows adults with 

Developmental and Intellectual Disabilities to have full control over their annual 

budgets to purchase necessary goods and support services. Under this system, 

individuals with disabilities have full authority to choose which services to 

purchase, who to hire, and how much to spend. Many of the staff providing

services through the Brokerages are not covered by the Home Care Commission. 

In 2010, legislation was passed to allow providers through the brokerage system 

to be organized. Negotiations are continuing between all stakeholders to ensure 

that workers are able to work for fair wages and benefits and have access to 

appropriate training without removing any control from individuals with disabilities 

to make choices about their own services. One key priority for the disability 

community is to ensure that individuals with disabilities maintain complete control 

over their budget, rather than being given vouchers for particular services which 

would erode their ability to direct their services. 

ISSUE #3: Managed Care and Self-Direction

Unless a state establishes policies that allow self-direction to flourish within a 

managed care environment, the opportunities of people with disabilities to selfdirect their own supports could be significantly curtailed once they are enrolled in 

MMLTSS programs.

RECOMMENDED SOLUTION #3: States operating or planning to initiate 

MMLTSS programs should ensure that individuals who choose to self-direct their 

services and supports are able to exercise effective control over their lives and the 
49

resources allocated on their behalf, without jeopardizing their health and safety. In 

particular, state MMLTSS policies should ensure that— 

• Service eligibility determinations are made by state personnel. States 

may contract for evaluation and recommendations for eligibility. The 

MCO or state personnel, not the service providers, assess the service needs 

and develop the individual plan, and do so separately from service financing 

and delivery to avoid potentially serious conflicts of interests. This approach is 

consistent with statutory requirements governing the Balanced Incentive 

Program. 

• All plan enrollees, including those who choose to self-direct their 

supports, should receive conflict-free support coordination services. In 

guidelines and regulations governing the Balanced Incentive Program, CMS 

has articulated the following core characteristics of conflict-free case 

management:

o Responsibility for providing case management services is separated from 

responsibility for the provision of direct services and supports; 

o Case managers are not employed by an entity providing services; 

o Case managers are not responsible for determining individual funding 

levels; and

o Persons performing evaluations and assessments or developing individual 

plans of care cannot be related by blood or marriage to the individual or 

any of the individual’s paid caregivers.

A number of avenues are available to ensure conflict-free case management, as 

explained in CMS’ Balanced Incentive Program Implementation Manual.66 
50

• MCOs enroll in their provider networks: individual support workers 

selected by the individual and/or by community support providers, and 

financial management entities that are experienced in assisting 

individuals who self-direct their LTSS, provided that such community 

agencies and independent support workers are willing to accept MCOs 

payment rates and operating requirements. The goals of self-direction will 

be thwarted if MCOs are not obligated to enroll support workers selected by 

self-directing individuals. Encouraging existing community providers to enroll in 

MCO networks, moreover, is an important step toward promoting continuity of 

services and maintaining critical interpersonal relationships as people with 

disabilities transition to MMLTSS plans. 

• Individuals choosing to self-direct their services and supports have 

access to independent advocacy (ombudsman) services and retain the 

right to pursue grievances and appeals through established Medicaid 

channels, including appealing directly to the single state Medicaid 

agency and requesting a fair hearing. Given the highly individualized nature 

of self-directed support plans, it is particularly important that the rights of such 

individuals not be curtailed once they are enrolled in MMLTSS plans.

• Quality management policies and practices accommodate the special 

circumstances that apply when an individual is self-directing his or her 

services and supports. The aim of such accommodations should be to strike 

a reasonable balance between safeguarding the individual’s health and safety 

and respecting the person’s right to control his/her own life. Required 

safeguards should be based on individual circumstances rather than 

standardized provisions (e.g., training should be customized to the needs and 

aspirations of each person, rather than being applied uniformly across all 

program participants).
51

• Fair, equitable, and transparent methods are used in determining and 

adjusting individual budget allocations of people who elect to self-direct 

their LTSS. Public resources are finite and, therefore, it is important that each 

plan enrollee receive sufficient funding to cover the costs of his or her 

essential support needs and nothing more. 

The safeguards outlined above must be built into state operating policies and MCO 

contractual requirements to ensure that self-direction opportunities are fully supported 

and are not curtailed once individuals are enrolled in MMLTSS plans. The recent 

experiences of self-advocates and their allies in Wisconsin and New York underscore the 

nature of the risks involved.

ISSUE #4: Risk Management

In self-directed services, risk management is a critical ingredient in striking a 

balance between individual safety and personal choice and control. Managing risk 

is a process that involves (1) objectively assessing an individual’s exposure to 

potentially harmful situations, (2) developing plans to prevent such exposure, and 

(3) ensuring the capacity to respond quickly in a dangerous situation.67

Various standardized risk assessment tools are currently in use, but, given the highly 

diverse capabilities and vulnerabilities represented within the population of people with 

disabilities, additional studies are needed to establish the validity and reliability of risk 

assessment instruments for specific subgroups, and institute effective policies and 

procedures for identifying roles and responsibilities within the service delivery system to

plan and implement individualized risk management strategies and monitor compliance 

with such plans.

RECOMMENDED SOLUTION #4: States offering self-directed HCBS should 

establish and maintain risk management systems that include— 
52

• Policies and procedures that clearly identify the roles and responsibilities of 

key actors within the service delivery system, including people with disabilities, 

their case managers/counselors/support coordinators, state or local support 

agency staff, and direct support workers;

• A well-defined process of identifying circumstances that could endanger the 

health, safety and well-being of self-directed participants and assess the 

probability of such occurrences; 

• A procedure for discussing the implications of potential risky situations with 

self-directed participants;

• A plan to reduce or eliminate the possibility of potentially harmful situations 

and a plan for responding promptly if they occur; 

• A process for protecting the rights of self-directed participants to assume risk 

and honor their decisions; and

• A system for monitoring implementation of risk management provisions 

contained in the individual service plans of self-directed participants. 

CMS, in collaboration with the HHS Administration on Community Living, should 

underwrite the cost of a series of longitudinal studies of the components of effective 

risk management planning and execution for people with disabilities who are 

receiving community-based long-term services and supports. Among the subjects 

that should be examined as part of these studies are the instruments used in 

assessing risk among various subgroups of people with disabilities and capacity to 

pinpoint potentially harmful situations. In addition, attention should be directed toward 

avoiding the imposition by provider agencies of unjustified restrictions on individual 

choice and control and ensuring that participants have appropriate avenues to appeal 

such restrictions. 
53

ISSUE #5: Financial Management Services

Medicaid law prohibits direct cash payments to recipients of HCBS waiver 

services and most state plan services.68 As a result, FMS have become virtually 

ubiquitous in Medicaid-financed self-directed services.

A state may employ various FMS models, as explained in the Handbook for Developing 

Self-Direction Programs and Policies.69 A state’s FMS design, operation, and oversight 

choices can have significant consequences for individuals who choose to self-direct their 

services, including potential violations of employment laws and serious disruptions in 

services and supports. 

RECOMMENDED SOLUTION #5: States should carefully analyze alternative 

FMS models as they design support systems for Medicaid beneficiaries who 

choose to self-direct their services and supports. Such reviews should also 

examine the experiences of other states that have alternative approaches to 

organizing and delivering FMS. In addition, CMS should continue to offer states 

technical assistance in designing FMS programs through the National HCBS 

Quality Enterprise. 

ISSUE #6: Costs and Outcomes

Large gaps exist in our understanding of the relationship between public 

expenditures and individual outcomes in both self-directed and agency-directed 

community services. 

RECOMMENDED SOLUTION #6: The HHS ACL should spearhead a 

departmentwide effort to initiate a series of longitudinal studies of the costs and 

benefits of self-directed HCBS for people with long-term support needs. The 

primary purpose of these studies should be to elucidate the relationships among

program design elements, service costs, and measurable outcomes for identified 

subgroups of LTSS users, thereby creating an empirical foundation for evidence-
54

based practices in formulating and financing self-direction programs for frail 

elders, nonelderly adults with physical disabilities, children with severe chronic 

disabilities and illnesses, people with I/DD, people with severe and persistent 

mental illnesses, and people with traumatic brain injuries. ACL should draw upon 

the expertise and resources of the following other department units in designing 

and financing these projects: CMS; the Substance Abuse and Mental Health 

Administration; the Health Resources and Services Administration; the Agency for 

Healthcare Research and Quality; the National Institutes of Health; and the 

Centers for Disease Control and Prevention. 
55

Endnotes 

1. Centers for Medicare and Medicaid Services, Application for a Section 1915(c) Home 

and Community-Based Waiver [Version 3.5]: Instructions, Technical Guide and Review 

Criteria (Baltimore: CMS, January 2008), p. 176.

2. O’Keeffe, J., S. Crisp, P. Doty, S. Flanagan, G. Smith, et al., Developing and 

Implementing Self-Direction Programs and Policies: A Handbook, National Resource 

Center on Participant-Directed Services, May 2010, pp. 5-1 and 5-2. 

(http://www.bc.edu/content/bc/schools/gssw/nrcpds/tools/handbook.html).

3. Ibid.

4. Moseley, C., Having It Your Way: Understanding State Individual Budgeting Strategies

(Alexandria, VA: National Association of State Directors of Developmental Disabilities 

Services, 2003). 

5. Ibid.; O’Keeffe et al, 2010. 

6. Kimmich, M., J. Agosta, J. Fortune, D. Smith, K. Melda, K. Auerbach, and S. Taub, 

Developing Individual Budgets and Reimbursement Levels Using the Supports Intensity 

Scale, prepared by the Human Services Research Institute for the Independent Living 

Research Utilization Program, April 2009. 

7. CMS, January 2008, pp. 118–120.

8. California In-Home Supportive Services Consumer Alliance, “The History of In-Home 

Support Services and Public Authorities in California” (http://cicaihss.org/ihss-publicauthority-history).

9. California Department of Social Services, “In Home Supportive Services (IHSS): Paid 

Cases – July 2006-May 2012” (http://www.cdss.ca.gov/research/res/pdf/daptrends/IHSS.pdf). 

10. Robert Wood Johnson Foundation (RWJF), “Independent Choices: Enhancing 

Consumer Direction for People with Disabilities – An RWJF National Program,” National 

Program Results Report, June 22, 2004 (http://www.rwjf.org/pr/product.jsp?id=17393). 

11. RWJF, “Self-Determination for Persons with Developmental Disabilities: An RWJF 

National Program,” Program Results Report, January 20, 2004; updated October 25, 

2007 (http://www.rwjf.org/pr/product.jsp?id=17885). 

12. Smith, G., and R. M. Gettings, The HCB Waiver and CSLA Programs: An Update on 

Medicaid’s Role in Supporting People with Developmental Disabilities in the Community

(Alexandria, VA: National Association of State Directors of Developmental Disabilities 

Services, Inc., October 1994). 
56

13. Mathematica Policy Research, Choosing Independence: An Overview of the Cash & 

Counseling Model of Self-Directed Personal Assistance Services (Princeton, NJ: RWJF, 

2006). 

14. For details on this program, see http://flsdc.org/. 

15. Section 1905(a)(24) of the Social Security Act, as added by Section 13601(a)(5) of 

the Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66). Prior to the passage of 

P.L. 103-66, the provision of personal care services was authorized under the general 

statutory authority granted to the Secretary of HHS to administratively recognize other 

types of Medicaid-reimbursable services. 

16. Federal Register, Vol. 62, No. 176 (September 11, 1997), pp. 47896–47903. 

17. CMS, State Medicaid Manual, Section 4480.

18. Eiken, S., K. Sredl, B. Burwell, and L. Gold, “Medicaid Expenditures for Long-Term 

Services and Support: 2011 Update,” Thomson Reuters (October 31, 2011). 

19. CMS, “Independence Plus: A Demonstration Program for Family and Individual 

Directed Community Services Waiver, Section 1915(c) of the Social Security Act,” as 

transmitted by State Medicaid Directors Letter #02-009 (May 9, 2002). 

20. Ibid.

21. CMS, Application for Section 1915(c) Home and Community-Based Waiver (Version 

3.5): Instructions, Technical Guide and Review Criteria, Appendix D, ParticipantCentered Planning and Service Delivery, and Appendix E, Participant Direction of 

Services, Ibid., pp. 178–218.

22. Ibid., Appendix E, pp. 190–191. 

23. Kaiser Commission on Medicaid and the Uninsured (KCMU), “Medicaid Home and 

Community-Based Service Program: Data Update” (Washington, DC: KCMU, February 

2011). 

24. Adapted from information on Medicaid.gov Web site at 

http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Long-TermServices-and-Support/Home-and-Community-Based-Services/Self-Directed-PersonalAssistant-Services-1915-j.html. 

25. U.S. Government Accountability Office (GAO), Medicaid: States’ Plans to Pursue 

New and Revised Options for Home and Community-Based Services, GAO-12-649

(Washington, DC: GAO, June 2012). 

26. Federal Medicaid law prohibits payments for inpatient care in “institutions for mental 

diseases” and consequently people with psychiatric disabilities living in the community 

are not eligible to receive home and community-based waiver services because, in the 
57

absence of such services, they would not be in need of Medicaid-reimbursable 

institutional services, as required under Section 1915(c) of the Social Security Act. 

27. CMS, State Medicaid Directors’ Letter No. 10-013, Subject: “Improving Access to 

Home and Community-Based Services,” Center for Medicaid, CHIP and Survey and 

Certification (August 6, 2010). 

28. Federal Register, Vol. 77, No. 88 (May 7, 2012). 

29. Barth, S.M., and A. Lind, “Balancing Incentive Program: Strengthening Medicaid 

Community-Based Long-Term Services and Supports,” Technical Assistance Brief 

(Princeton, NJ: Center for Health Care Strategies, Inc., September 2012).

30. Federal Register, Vol. 73, No. 193 (October 3, 2008), p. 57853.

31. Federal Register, Vol. 77, No. 86, (May 3, 2012), pp. 26361–26406, 26827–26903.

32. Adapted from information on the Medicaid.gov Web site at 

http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/DeliverySystems/Self-Directed-Services.html. 

33. Ibid., Section 1915(c) HCBS Waiver Technical Guide, p. 176.

34. Moseley, C., “Balancing Safety and Freedom in Consumer-Directed Systems of 

Support” (Durham, NH: University of New Hampshire, National Program Office on SelfDetermination, Institute on Disability, June 2001). 

35. Ibid., p. 21. 

36. Head, M., and J. Conroy, “Outcomes of Self-Determination in Michigan: Quality and 

Costs,” in R. Stancliffe and K.C. Lakin (eds.), Costs and Outcomes of Community 

Services for People with Intellectual Disabilities (Baltimore, MD: Paul Brookes Publishing 

Co., 2005), pp. 219–240.

37. Brown, R., B. L. Carlson, S. Dale, L. Foster, B. Phillips, and J. Schore, Cash & 

Counseling: Improving the Lives of Medicaid Beneficiaries Who Need Personal Care or 

Home and Community-Based Services, (Princeton, NJ: Mathematica Policy Research, 

August 2007), pp. 54–71.

38. Doty, P., K. Mahoney, and M. Sciegaj, “New State Strategies to Meet Long-Term 

Care Needs,” Health Affairs, Vol. 29, No. 1 (2010), pp. 49–56.

39. Walker, P., “Implementation of Consumer-Directed Services for Persons with 

Intellectual or Developmental Disabilities: A National Study,” Policy Research Brief, Vol. 

20, No. 1 (Minneapolis: Research and Training Center on Community of Living, Institute 

on Community Integration, University of Minnesota, January 2009).

40. Ibid., pp. 6–9. 
58

41. Saucier, P., J. Kasten, B. Burwell, and L. Gold, “The Growth of Managed Long-Term 

Services and Supports (MLTSS) Programs: A 2012 Update,” Truven Health Analytics for 

CMS (July 2012), pp. 6–24.

42. Congressional Budget Office (CBO), An Update to the Budget and Economic 

Outlook: Fiscal Years 2012 to 2022 (Washington, DC: CBO, August 2012), pp. 15, 56.

43. Adapted from information appearing on the Wisconsin Department of Health 

Services IRIS Web site, http://www.dhs.wisconsin.gov/bdds/IRIS/index.htm. 

44. Wisconsin Department of Health Services, “2011–2013: Long Term Care 

Sustainability – IRIS and Self-Directed Supports” (January 9, 2012),

http://www.dhs.wisconsin.gov/ltcreform/. 

45. Wisconsin Legislative Audit Bureau, Family Care: An Evaluation, Report No. 11-5 

(April 2011), http://legis.wisconsin.gov/lab/reports/11-5full.pdf. 

46. Wisconsin Department of Health Services, “Wisconsin’s Family Care Program – 

Lifting the Temporary Caps and Putting the Program on the Path to Long Term 

Sustainability” (April 17, 2012), http://www.dhs.wisconsin.gov/ltcare/update-041712.pdf. 

47. Wisconsin Department of Health Services, “Long Term Sustainability – IRIS and SelfDirected Supports.” 

48. Bogart, V. J., “Consumer Directed Assistance Program Offers Greater Autonomy to 

Recipients of Home Care,” Journal of the New York State Bar Association, Vol. 75, No. 1

(January 2003), pp. 8–9.

49. Testimony by Jason A. Helgerson, Medicaid Director, New York State Department of 

Health, before the Aging Committee, U.S. Senate, July 18, 2012.

50. Letter from Valarie J. Bogart, Selfhelp Community Services, Inc., to Jason 

Helgerson, Director of the Medicaid Program, New York State Department of Health 

Services (May 2, 2011); letter from The Legal Aid Society, the New York Lawyers for the 

Public Interest and the Benjamin N. Cardozo School of Law to Victoria Wachino, Director 

of Family and Children’s Health Program Group, CMS (December 27, 2011). 

51. Individuals enrolled in the Assisted Living Program, Nursing Home Transition and 

Diversion waiver, as well as the Traumatic Brain Injury waiver, also are exempted from 

mandatory enrollment in MLTC plans.

52. New York State Department of Health, New York Medicaid Redesign Team (MRT) 

Waiver Amendment: Achieving the Triple Aim, a proposal to CMS on August 6, 2012. 

53. Office of People with Developmental Disabilities, People First Demonstration Waiver: 

New York’s Response to Centers for Medicare and Medicaid Services’ Request for 

Additional Information, April 2012.
59

54. “2011 Annual Report of the National Resource Center for Participant-Directed 

Services” (Chestnut Hill, MA: Boston College, 2011). 

55. Note that the denominator in this comparison is based on the total number of people

with functional disabilities as reported in the 2009 American Community Survey, a 

considerably larger number than those who qualify for Medicaid benefits on the basis of 

disability.

56. Reinhard, S., E. Kassner, A. Houser, and R. Mollica, Raising Expectations: A State 

Scorecard on Long-Term Services and Supports for Older Adults, People with 

Disabilities, and Family Caregivers, AARP and The Scan Foundation (September 2011). 

57. When an individual chooses an organization—often a traditional community provider

agency—to serve as co-employer of his/her personal care worker, the arrangement is 

referred to as an Agency with Choice model (i.e., the individual and the selected 

organization share responsibility for hiring, training, supervising, and dismissing personal 

support workers, with the organization handling payroll and other administrative tasks on 

the individual’s behalf). 

58. Application for Section 1915(c) Home and Community-Based Waiver (Version 3.5): 

Instructions, Technical Guide and Review Criteria, Ibid., p. 213.

59. Ibid., p. 214. 

60. National Resource Center for Participant-Directed Services, “Guiding Principles: For 

Partnerships with Unions and Emerging Worker Organizations When Individuals Direct 

Their Own Services and Supports” (Chestnut Hill, MA: Boston College, November 26, 

2011) http://web.bc.edu/libtools/details.php?entryid=271. 

61. Information obtained from the Web site of the Oregon Home Care Commission, 

http://www.oregon.gov/dhs/spd/pages/adv/hcc/index.aspx. 

62. Ibid.

63. Information obtained from the Web site of SEIU Local 503, 

http://www.oregon.gov/dhs/spd/pages/adv/hcc/index.aspx. 

64. Oregon Administrative Code, Department of Human Services, Seniors and People 

with Disabilities Division, Division 31, Section 411 (Homecare Workers Enrolled in the 

Client-Employed Provider Program). 

65. SEIU Web site, Ibid. 

66. Mission Analytics Group in collaboration with the Human Services Research Institute 

and Acumen LLP, The Balanced Incentive Program: Implementation Manual, prepared 

under contract with CMS (October 2011), pp. 27–29 (http://www.medicaid.gov/MedicaidCHIP-Program-Information/By-Topics/Long-Term-Services-and-Support/Balancing/

Balancing-Incentive-Program.html). 
60

67. Ibid., O’Keeffe et al., p. 8-7.

68. States may request authority to make cash payments under a Section 1115 

waiver/demonstration program. In addition, states may elect to cash out benefits to selfdirecting individuals under an optional Section 1915(j) state plan program for furnishing 

PAS. However, the cash assistance option is rarely used in Medicaid-funded selfdirection programs, primarily because very few participants are willing to assume the 

complex financial management tasks involved.

69. Ibid., O’Keeffe et al., pp. 7.3–7.5.

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