Medicaid: States' Plans to Pursue New and Revised Options for Home- and Community-Based Services
Published: 2012-06-13T00:00:00

Fast Facts:

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

section_title: Letter
paragraphs: For many individuals with physical, developmental, or cognitive  disabilities, receiving care in the community through home- and  community-based services, such as adult day care, home health, or  personal care, is preferable to receiving care in a nursing home or other  institutional setting. Increasing the availability of home- and community- based services is also important to states’ ability to comply with the  Supreme Court’s 1999 decision in Olmstead v. L.C., known as the  Olmstead decision, in which the Court held that unjustified  institutionalization of a person based on disability violates Title II of the  Americans with Disabilities Act.
Medicaid—the joint federal-state financing program for health care  services for certain low-income individuals—is the nation’s primary payer  of long-term services and supports, including home- and community- based services. While states are required to cover institutional care as  part of Medicaid, coverage for most home- and community-based  services is optional. State spending on home- and community-based  services as a percentage of total spending on long-term services and  supports varies widely, from less than 20 percent in one state to over   70 percent in others.tools to make home- and community-based services available to eligible  elderly individuals and nonelderly individuals with disabilities, and the  Patient Protection and Affordable Care Act (PPACA) further expanded  these opportunities. PPACA created two new options and revised two  existing options for Medicaid home- and community-based services:  Community First Choice, the Balancing Incentive Program, Money  Follows the Person, and the 1915(i) state plan option, respectively.
The Medicaid program provides states with several  The availability of home- and community-based services can enable  individuals with disabilities to remain in their homes, maintain their  independence, and participate in community life to the fullest extent  possible. You asked about how the four Medicaid home- and community- based services options in PPACA could potentially affect access to  services and the status of their implementation. Our review examined the  following questions:  1.  How are the four Medicaid home- and community-based services  options in PPACA structured to increase the availability of services? 2.  What is known about states’ plans to use the PPACA Medicaid home-  and community-based services options?  3.  What factors affect states’ decisions regarding implementing Medicaid  home- and community-based services options under PPACA?
To determine how the four Medicaid home- and community-based  services options in PPACA are structured to increase the availability of  services, we reviewed relevant federal statutes and regulations,  examined guidance and other documents issued by the Centers for  Medicare & Medicaid Services (CMS), and interviewed CMS officials  responsible for overseeing Medicaid programs covering home- and  community-based services.
To determine what is known about states’ plans to use the PPACA  Medicaid home- and community-based services options, we interviewed  program officials at CMS responsible for each of the four options and  obtained copies of proposed and approved state applications for the  Balancing Incentive Program, state plan amendments for Community  First Choice and the 1915(i) state plan option, and state operational  protocols for Money Follows the Person that states had submitted for  these options to CMS.
To understand the factors affecting states’ decisions on implementing the  Medicaid home- and community-based services options in PPACA, we  conducted interviews with state Medicaid and other state agency officials  in 10 states: Florida, Maine, Michigan, Mississippi, Montana, Nevada,  New Jersey, New Mexico, Oklahoma, and Oregon. The states were  judgmentally selected by stratifying all states and the District of Columbia  on their percentage of Medicaid long-term services and supports  spending on home- and community-based services and then identifying  10 states that reflected the range of state spending on home- and  community-based services. We conducted the state interviews between  November 2011 and February 2012. To supplement the state interviews,  we also conducted interviews with officials from several state associations  and health policy organizations that track Medicaid home- and  community-based services issues, including the National Association of  States United for Aging and Disabilities, National Academy for State  Health Policy, National Association of Medicaid Directors, National  Association of State Directors of Developmental Disabilities Services, and  the National Association of State Mental Health Program Directors.
We conducted this performance audit from October 2011 to May 2012 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Long-term services and supports (LTSS) include many types of health  and health-related services for individuals of all ages who have limited  ability to care for themselves because of physical, cognitive, or mental  disabilities or conditions. Individuals needing LTSS have varying degrees  of difficulty performing activities of daily living (ADL), such as bathing,  dressing, toileting, and eating, without assistance. They may also have  difficulties with instrumental activities of daily living (IADL), such as  preparing meals, housekeeping, using the telephone, and managing  money. Assistance for such needs takes many forms and takes place in  varied settings, including care provided in institutional settings, such as  nursing homes; services provided in community-based settings, such as  adult foster care; and in-home care. Home- and community-based  services (HCBS) cover a wide range of services and supports to help  individuals remain in their homes or live in a community setting, such as  personal care services to provide assistance with ADLs or IADLs,  assistive devices, respite care for care givers, and case management  services to coordinate services and supports that may be provided from  multiple sources.
subsections: section_title: Medicaid Financing and Eligibility
paragraphs: While a variety of sources are used to pay for LTSS, Medicaid is the  largest. States and the federal government share responsibility for  Medicaid costs. In general, state Medicaid spending for medical  assistance is matched by the federal government, at a rate that is based  in part on each state’s per capita income according to a formula  established by law. The federal share of Medicaid expenditures, known  as the federal medical assistance percentage (FMAP), typically ranges  from 50 to 83 percent. Although Medicaid is jointly financed by the states  and the federal government, it is directly administered by the states, with  oversight from CMS, within the Department of Health and Human  Services (HHS).
For the most part, individuals who qualify for and receive Medicaid  coverage of LTSS are age 65 or older, disabled, or blind. Such individuals  typically qualify for Medicaid coverage of LTSS on the basis of their  eligibility for the federal Supplemental Security Income (SSI) program, a  means-tested income assistance program that provides cash benefits to  individuals who meet certain disability criteria and have low levels of  income and assets. States may also require individuals to meet state- defined level-of-care criteria for Medicaid coverage of certain LTSS.  These criteria, which generally include some measures of an individual’s  functional limits, help states manage overall service utilization and  therefore costs.
section_title: Medicaid Spending for HCBS Relative to Institutional Care
paragraphs: For decades, the majority of Medicaid LTSS expenditures have been for  care provided in institutional settings, but Medicaid spending for HCBS  has been steadily increasing as states invest more resources in  alternatives to institutional care. Under Medicaid, coverage of certain  institutional services is mandatory, while coverage of nearly all HCBS is  optional for states. Since the Medicaid program was first established in  1965, states have been required to cover nursing facility care for all  Medicaid beneficiaries age 21 and older. States may also offer other  types of institutional care under their Medicaid programs, including care  provided in intermediate-care facilities for individuals with intellectual  disabilities and care provided for individuals age 65 or older and certain  individuals under age 22 in institutions for mental diseases. Medicaid  initially provided limited coverage for care provided in community settings  or in the home, but numerous changes to federal Medicaid law since the  program’s inception have expanded states’ options for covering HCBS.  States have taken advantage of the new options, and since 1995,  Medicaid spending for HCBS has steadily increased by 1 to 3 percentage  points each year. In fiscal year 2009, total Medicaid expenditures for  LTSS were $127.1 billion. Of this amount, about $55.9 billion was for  HCBS, which was about 44 percent of all Medicaid LTSS spending that  year, up from 18 percent in 1995.
States’ ability to leverage federal Medicaid funding for the provision of  HCBS can help them achieve compliance with the Olmstead decision,  which outlined the scope and nature of states’ obligations to provide  HCBS for individuals with disabilities; however, state spending on HCBS  as a percentage of total LTSS spending varies widely. States have  considerable flexibility in designing their Medicaid programs. Within broad  federal guidelines, each state establishes its own eligibility standards;  determines the type, amount, duration, and scope of covered services;  and sets provider payment rates. In 2009, state spending on HCBS as a  percentage of total LTSS spending ranged from 14.4 percent in  Mississippi to 83.2 percent in New Mexico. (See fig. 1.)
States have covered HCBS through a wide and complex range of options  within Medicaid, including through state plan benefits and through  waivers. A state Medicaid plan defines how the state will operate its  Medicaid program, including which populations and services are covered.  States are required by federal Medicaid law to cover certain mandatory  benefits in their state Medicaid plan. For example, all states are required  to offer the Home Health benefit to all individuals entitled to nursing  facility coverage under the state’s Medicaid plan. Services that may be  covered under this benefit include nursing, home health aides, medical  equipment, and therapeutic services. States may also elect to cover other  HCBS through optional benefits. For example, states have the option to  offer the Personal Care benefit, which covers assistance with ADLs and  IADLs, furnished either at home or in another location. According to a  recent study, 33 states and the District of Columbia offered the Personal  Care benefit in 2008. Changes a state wishes to make to its state  Medicaid plan, including adding an optional state plan benefit, must be  submitted to CMS for review and approval in the form of a proposed state  plan amendment. With certain exceptions, services provided through  state plan benefits (both mandatory and optional) must (1) be sufficient in  amount, duration, and scope to reasonably achieve their purposes; (2) be  comparable in availability among different groups of enrollees; (3) be  offered statewide; and (4) allow beneficiaries freedom of choice among  health care providers or managed care entities participating in Medicaid.
States have also covered HCBS for Medicaid beneficiaries through  waivers. Waivers can allow states to provide services not otherwise  covered by Medicaid to designated populations who may or may not  otherwise be eligible for Medicaid services. If approved, a waiver may  allow a state to limit the availability of services geographically, target  services to specific populations or conditions, control the number of  individuals served, and cap overall expenditures—actions that are  generally not otherwise allowed under the federal Medicaid law, but which  may enable states to control costs. States must submit their waiver  requests to CMS for approval. The 1915(c) waiver, authorized under  section 1915(c) of the Social Security Act, is the primary means by which  states provide HCBS for Medicaid beneficiaries and accounts for the  large majority of state Medicaid HCBS expenditures. Under 1915(c)  waivers, states may cover a broad range of services to participants, as  long as these services are required to prevent institutionalization; thus to  be eligible, individuals must meet the state’s level-of-care criteria for  institutional care. Included among the services that may be provided are  homemaker/home health aide, personal care, adult day health, and other  services as approved by the Secretary of HHS. States can have multiple  1915(c) waivers that target different populations, for example, one for  individuals with developmental disabilities and another for individuals with  physical disabilities. In fiscal year 2010, 47 states and the District of  Columbia operated 318 1915(c) waiver programs, expending over   $35 billion, according to a study using CMS data.
section_title: Medicaid HCBS Options Created or Amended by PPACA
paragraphs: PPACA created two new Medicaid options for states to cover HCBS— Community First Choice and the Balancing Incentive Program—and  amended two existing Medicaid HCBS options—the 1915(i) state plan  option and Money Follows the Person.
Community First Choice is a new optional state plan benefit created  by PPACA to finance home- and community-based attendant and  other services for Medicaid beneficiaries. Community First Choice  became effective October 1, 2011.
The Balancing Incentive Program is a new time-limited program  established by PPACA to help increase access to HCBS for  beneficiaries.October 1, 2011, and expires September 30, 2015.
The Balancing Incentive Program became effective
The 1915(i) state plan option was established by the Deficit Reduction  Act of 2005 as a new optional state plan benefit under section 1915(i)  of the Social Security Act. The 1915(i) state plan option provides  states with a way to offer beneficiaries a comprehensive package of  HCBS under a state plan option. One important distinction from  1915(c) waivers is that individuals qualifying for services under the  1915(i) state plan option do not need to meet the state’s institutional  level of care criteria to receive HCBS. However, a state that offers  services under the 1915(i) state plan option must establish needs- based criteria for determining eligibility for services under the option  that are less stringent than the state’s criteria for determining eligibility  for institutional care. Five states—Colorado, Iowa, Nevada,  Washington, and Wisconsin—had offered 1915(i) prior to the changes  to the option made by PPACA. These revisions included expansions  to the scope of covered services and eligibility requirements, among  other changes, and became effective October 1, 2010.
Money Follows the Person was established by the Deficit Reduction  Act of 2005 as a demonstration grant program to support states’  transition of eligible individuals who want to move from institutional  settings back to the community. Each state’s Money Follows the  Person program consists of a transition program, to identify Medicaid  beneficiaries living in institutions who wish to live in the community  and help them do so, and a rebalancing program for states to make  systemwide changes to support Medicaid beneficiaries with  disabilities living and receiving services in the community. A total of  $1.75 billion in federal funds was appropriated for Money Follows the  Person for fiscal years 2007 through 2011, and CMS awarded Money  Follows the Person grants to 30 states and the District of Columbia in  2007. PPACA extended the program through 2016 and provided  additional funding to continue the demonstration. The changes made  by PPACA, which included an expansion of the eligibility  requirements, became effective April 22, 2010.
section_title: Four PPACA Options Provide States with New Incentives and Flexibilities for Offering HCBS
paragraphs: The four PPACA options include new incentives and flexibilities to help  states increase the availability of HCBS for Medicaid beneficiaries. Three  of the options—Community First Choice, Balancing Incentive Program,  and Money Follows the Person—provide states with financial incentives  in the form of enhanced federal matching funds for HCBS. All four options  allow states flexibility in designing their coverage of services and  implementing HCBS. For example, the revised 1915(i) state plan option  allows states to design benefit packages to meet the needs of particular  groups. In addition, three of the options have maintenance of effort or  eligibility requirements that require states to sustain or increase HCBS  expenditures or maintain existing eligibility standards, methodologies, or  procedures as a condition of receiving enhanced federal funding, which  should help to ensure that the options increase the availability of services.  These options also include evaluation components or data reporting  requirements that may help discern the extent to which the options have  increased the availability of HCBS for beneficiaries. For a summary of  specific features of the four options, see appendix I.
Community First Choice provides incentives for states to finance  attendant and other services. Community First Choice provides states  with a 6 percentage point increase in their FMAP for home- and  community-based attendant and other services provided to beneficiaries.  Under the benefit, states must cover services to help individuals  accomplish ADLs and IADLs and health-related tasks and services to  support the acquisition or maintenance of skills necessary for individuals  to accomplish ADLs and IADLs.must also cover back-up systems, such as personal emergency response  systems, pagers, or other mobile electronic devices, to ensure continuity  of services in the event that providers of services and supports are not  available. States must also cover voluntary training for individuals on how  to select, manage, and dismiss their personal attendants. Community  First Choice also allows states the flexibility of covering transition costs,  such as rent and utility deposits, and other expenditures that allow for  greater independence, such as nonmedical transportation services.
Beyond personal care services, states  PPACA included several requirements for Community First Choice.  Structured as a state plan benefit, Community First Choice does not allow  states to set ceilings on the number of people who can receive services  and requires services to be offered statewide. Further, unlike other HCBS  options that states may use to cover personal care services, such as  1915(c) waivers and the 1915(i) state plan option, which allow states  significant flexibility to restrict the type of services available, Community  First Choice requires states to provide a specified set of HCBS. CMS  described Community First Choice as a “robust” service package. Also,  states offering Community First Choice must adhere to maintenance of  effort requirements. Specifically, for the first full fiscal year the option is  implemented, participating states must maintain or exceed the preceding  year’s level of expenditures for personal care services. Additionally, data  reporting requirements included in the law may shed some light on the  extent to which states are covering additional individuals as a result of the  option. States that offer Community First Choice must report the number  of individuals who received services under the option the preceding fiscal  year and whether they had been previously served under the state plan or  waivers, such as the personal care benefit, 1915(c) waivers, and 1915(i)  state plan benefit. PPACA also requires the Secretary of HHS to conduct  an evaluation of Community First Choice to determine (1) the  effectiveness of the provision of services in allowing individuals to lead  independent lives, (2) the impact of the services on individuals’ physical  and emotional health, and (3) the cost of services provided under the  option compared with the cost of institutional care.
Balancing Incentive Program incentivizes certain states to rebalance their  LTSS systems toward home- and community-based care. The Balancing  Incentive Program offers a targeted increase in FMAP to states in which  less than 50 percent of LTSS expenditures are for HCBS and that  undertake certain structural reforms to their Medicaid programs to  increase access to HCBS. Under the program, states that spent under  25 percent of the LTSS expenditures on HCBS in fiscal year 2009 qualify  for a 5 percentage point increase in their FMAP for state HCBS  expenditures, and states that spent between 25 and 50 percent are   Participating states are  eligible for a 2 percentage point increase.required to make three structural changes to their LTSS programs to help  increase access to HCBS. They must establish (1) a “no wrong door/  single-entry point system” to enable consumers to access all long-term  services and supports; (2) conflict-free case management services in  which the persons responsible for assessing the need for services and  developing plans of care are not related to or financially responsible for  the individual, or are not a provider of services for the individual; and (3) a  standardized assessment instrument to determine eligibility for HCBS.  States receiving a 5 percentage point increase in FMAP must achieve a  rebalancing benchmark of 25 percent of total Medicaid LTSS  expenditures for HCBS by the program’s end, September 30, 2015; and  similarly, states receiving a 2 percentage point increase in FMAP must  achieve a rebalancing benchmark of 50 percent by then. PPACA set a  limit of $3 billion in enhanced FMAP payments for the Balancing Incentive  Program; funds from enhanced FMAP must be used to provide new or  expanded offerings of HCBS. States participating in the Balancing  Incentive Program must meet maintenance of eligibility requirements that  prohibit the state from applying methodologies or procedures for  determining eligibility for HCBS that are more restrictive than the eligibility  methodologies or procedures in effect on December 31, 2010. In addition,  states must collect data on services, quality, and outcomes and inform  CMS on a quarterly basis how they are collecting these data. Outcome  measures to be collected include measures of beneficiary and family  caregiver experience with providers and satisfaction with services; and  measures for achieving desired outcomes appropriate to a specific  beneficiary, including employment, participation in community life, health  stability, and prevention of loss in function.
PPACA revisions to 1915(i) state plan option provide increased flexibility  to offer new services to targeted populations. While several features of  the 1915(i) state plan option remain the same—including its availability to  individuals not needing an institutional level of care and its lack of an  enhanced matching rate—PPACA made several changes to the option  that provide states with increased flexibility in designing their benefit  packages. First, PPACA expanded the range of services previously  available under the 1915(i) benefit. Formerly, states that offered the  1915(i) could cover only those services explicitly identified in the statute,  which among other services included homemaker/health aide, case  management, personal care, and respite care. PPACA revised the option  to allow states to offer services not specifically identified in the law if  approved by CMS, as they are able to do under 1915(c) waivers. Second,  as a result of the changes in PPACA, states are able to offer HCBS to  specific, targeted populations. States may offer 1915(i) service packages  that differ in type, amount, duration, or scope to specific population  groups, either through one service package or through multiple 1915(i)  service packages. For example, a state could have one 1915(i) benefit  package specifically for individuals with chronic mental illness and  another for children with autism. Third, PPACA expanded income  eligibility for the option by allowing states to offer the benefit to individuals  with incomes up to 300 percent of the SSI benefit rate if they are also  eligible for HCBS under certain waivers, which may require the individual  to meet the state’s institutional level of care criteria. The law also  allows states to expand Medicaid eligibility to individuals with income up  to 150 percent of the federal poverty level who are eligible to receive  HCBS under the 1915(i) state plan option. Although PPACA provided new  flexibility to states under the 1915(i) option, the law also eliminated the  ability states had previously under 1915(i) to limit the number of  individuals who could receive services and to offer services in selected  geographic areas. States that offer 1915(i) are required to report the  number of individuals projected to be served under the option.
PPACA extension of Money Follows the Person included additional  funding and some new flexibility. PPACA extended the Money Follows  the Person demonstration program, which was scheduled to expire   in 2011, for 5 years through fiscal year 2016. PPACA appropriated   $450 million for the program annually for each of fiscal years 2012  through 2016, for a total of $2.25 billion. Most features of the  demonstration program were unchanged by PPACA, including the  program’s enhanced FMAP of up to 90 percent for certain services for   12 months for each Medicaid beneficiary transitioned. One change  PPACA did make was to relax one of the eligibility requirements for  Money Follows the Person. Under the original program, an individual had  to reside for not less than 6 months but no more than 2 years in an  inpatient facility, such as a nursing facility, to be eligible to receive  services. PPACA shortened the minimum number of days from 6 months  to 90 consecutive days. Some of the initial Money Follows the Person  grantees reported that the 6-month institutional residency requirement  was a barrier to recruitment because many candidates interested in  transitioning had not been institutionalized long enough to qualify and  individuals who do meet the requirement often have complex medical or  mental health needs that make it more difficult to serve them in the  community. Some states have transition programs that have less  stringent institutional residency requirements. The reduction in the  institutional residency requirement in Money Follows the Person may  potentially increase the number of individuals who can be transitioned  through the program. PPACA made no changes to a maintenance of  effort requirement included in the original demonstration. Under the  program, a state’s expenditures for HCBS in each year of the  demonstration must not be less than such expenditures for fiscal year  2005, or for the fiscal year preceding the first year of the demonstration,  whichever is greater.
PPACA also extended the national evaluation of Money Follows the  Person, which was designed to assess whether the demonstration had  met its goals to increase the number of institutionalized Medicaid  beneficiaries who can be transitioned to the community and to rebalance  states’ LTSS systems. The Deficit Reduction Act of 2005 allowed up to  $1.1 million of the funds appropriated for Money Follows the Person each  fiscal year to be used for the evaluation through 2011; PPACA extended  the program’s evaluation and the funding for it through 2016. See  appendix II for more information on the national evaluation of the program  and the results to date.
section_title: Since PPACA’s Enactment, 13 States Applied for and Received New Money Follows the Person Grants, and States Have Begun to Apply for the Other Three Options
paragraphs: Thirteen of the 20 states that had not previously received Money Follows  the Person grants applied for and received new grants made available as  a result of funds appropriated in PPACA. In addition, states were  beginning to apply and applications had been approved for the other  three PPACA HCBS options.
subsections: section_title: Since PPACA’s Enactment, 13 New States Applied for and Received Grants for Money Follows the Person
paragraphs: In February 2011, CMS awarded Money Follows the Person grants to   13 of the 20 states that had not previously received Money Follows the   A total of $621 million was  Person grants under the original program.awarded to these 13 states and will be available to these states through  fiscal year 2016. The amounts awarded varied from a low of  approximately $6.5 million for Idaho to a high of approximately   $187 million for Minnesota.
By April 2012, most of the 13 states were making some progress  implementing their Money Follows the Person programs, as evidenced by  CMS’s approval to allow the states to begin enrolling and transitioning  individuals to their homes or the community. When applying for Money  Follows the Person grants, states must submit operational protocols to  CMS that detail how the states plan to implement their programs. Once  CMS has approved a state’s operational protocol, the state can begin  enrolling and transitioning individuals from institutions to the community.  As of April 2012, CMS had approved operational protocols for 11 of the  13 states.not long after their grants were awarded in February 2011 and thus could   Some states received approval of their operational protocols  begin transitioning individuals at that time, while others received approval  much later. See table 1 for information on the amounts awarded to the 13  states and the dates on which these states could begin transitioning  individuals.
The 11 states with approved operational protocols planned to transition  approximately 8,800 individuals from institutions to their homes or  communities between 2011 and 2016. Individual states projected  transitioning from 122 individuals (Maine) to 2,225 individuals  (Tennessee) during the course of the demonstration. The 11 states  planned to target a variety of populations to transition, including  individuals age 65 or older and individuals with physical disabilities,  developmental or intellectual disabilities, or mental illness. About half of  the individuals the states planned to transition are age 65 or older, but  most states planned to target three or more populations. For example,  Maine planned to transition older adults; adults with physical disabilities;  and persons with any complex combination of medical, behavioral, and  cognitive impairment. (See table 2.)
These 11 states with approved operational protocols planned to provide a  broad range of Money Follows the Person demonstration services— program-specific services provided only to Money Follows the Person  participants and not to other Medicaid beneficiaries—to help individuals  transition to home- and community-based settings.Nevada planned to offer transition navigation, community transition  services, environmental accessibility adaptation, housing coordination,  and personal emergency response systems. Idaho planned to provide  community transition services and transition management services. (See  appendix III for information on the demonstration and supplemental  Money Follows the Person services that states planned to provide.)
While many states’ operational protocols were approved in 2011, some  had not planned to transition, or did not start transitioning, individuals to  the community until 2012. During the original Money Follows the Person  demonstration, it took longer than states had planned to build the  necessary infrastructure for their programs, including establishing  channels of coordination across state agencies, garnering community and  provider support, and building data reporting and quality assurance  systems. Additionally, transitioning individuals out of institutions was more  complex than many states had anticipated, in part due to the scarcity of  appropriate housing options and the complex needs of the population.  According to CMS officials, 4 of the 13 states that had been awarded  grants in 2011 had completed 215 transitions as of March 2012.
In February 2012, CMS announced that it would award additional Money  Follows the Person grants, open to the seven states that had not  previously received a grant. The agency issued two solicitations—one for a planning grant, to help states prepare their grant application  (including a draft operational protocol), and the other for the actual  demonstration. CMS officials reported that three states (Alabama,  Montana, and South Dakota) of these seven had applied and been  awarded planning grants.
CMS provides states with technical assistance for Money Follows the  Person through an online technical assistance website. provided guidance to states on the extension of the demonstration in a  June 2010 State Medicaid Directors’ Letter.
section_title: States Have Begun to Apply for the Other Three PPACA Options
paragraphs: As of April 2012, states have begun to apply for the newly established  Community First Choice, the Balancing Incentive Program and the  revised 1915(i) option, and applications have been approved for the  Balancing Incentive Program and 1915(i) options.
As of April 2012—6 months after the option first became effective and  before CMS had issued final program guidance—one state, California,  has applied for Community First Choice. According to California’s  application, the state plans to provide services required under the statute  related to assistance with ADLs, IADLs, and health-related tasks.  California’s application indicated that the state had proposed to transition  eligible individuals from the state plan personal care benefit to the  Community First Choice program. CMS officials told us that, at least  initially, California planned to maintain its state plan personal care  services program, which would allow individuals to receive personal care  services if they decide not to receive such services under the Community  First Choice option. As of April 2012, California’s proposed state plan  amendment had not been approved by CMS and thus could change as a  result of the review process.
The Money Follows the Person technical assistance website is http://www.mfp-tac.com/.
Community First Choice option. States have asked CMS questions  pertaining to program eligibility, data collection, and quality improvement  requirements, among others. Additionally, some states have had  questions about replacing their state plan personal care services benefit  with Community First Choice. For example, Maryland is interested in  consolidating personal care services available under three existing state  Medicaid programs—the state plan personal care benefit and two waiver  programs—under Community First Choice.
CMS officials said that states may have been waiting for the final rule  before applying for Community First Choice. CMS issued a proposed rule  for Community First Choice in February 2011. Although the Community  First Choice option became effective on October 1, 2011, CMS only  recently published a final rule implementing the program on May 7,  2012.states, there is no deadline for states to apply for it.
Since Community First Choice is a permanent Medicaid option for  As of April 2012—6 months after the program first became effective and  16 months before the application deadline—two states had applied for  and received CMS approval to participate in the Balancing Incentive  Program. One of the states approved, New Hampshire, was awarded the  full amount of enhanced matching funds it requested from CMS for the  program—$26.5 million. The requested amount was based on total  projected community-based LTSS expenditures of $1.32 billion from  January 1, 2012, through September 30, 2015. In fiscal year 2009, New  Hampshire spent 41.2 percent of its LTSS expenditures on HCBS, and  the state expects to get to 50 percent by September 30, 2015. The state  plans to use the Balancing Incentive Program funds to support the design  and implementation of LTSS enhancements, help develop a community  infrastructure across the state, and strengthen the community-based  network of services across the continuum of care and populations in New  Hampshire. Another state, Maryland, was awarded $106.34 million in  enhanced matching funds for its Balancing Incentive Program, based on  the state’s total projected HCBS expenditures. Maryland plans to use the  Balancing Incentive Program funds to further expand community capacity.  Specifically, the state plans to use the funds to improve provider payment  rates for personal care providers. As of April 2012, two additional states— Georgia and Missouri—had also applied for grants under the program.  Other states have expressed interest in the Balancing Incentive Program.  According to CMS, a dozen additional states have requested technical  assistance, in particular regarding CMS’s expectations for the required  LTSS structural changes. The Balancing Incentive Program became  effective October 1, 2011, and states have until August 1, 2014, to apply  or until the $3 billion in authorized funds have been expended, whichever  is earlier. CMS has provided several types of guidance to states about the  Balancing Incentive Program, including a letter to state Medicaid  directors, an implementation manual, and a technical assistance  website.
As of April 2012—18 months after PPACA’s changes to the option  became effective—three states had submitted state plan amendments  and received CMS approval to offer the revised 1915(i) state plan option.  Under the approved amendments, the three states—Idaho, Oregon, and  Louisiana—plan to target children with developmental disabilities or  individuals with mental illness.
Idaho’s 1915(i) program became effective in July 2011, and the state  plans to add HCBS services for children with developmental disabilities.  To be eligible, a child must require assistance due to substantial  limitations in three or more major life care activities and have a need for  interdisciplinary services because of a delay in developing age- appropriate skills. The state plans to serve approximately 3,200  individuals during the first year of its program.
Oregon’s 1915(i) program will become effective in June 2012, and the  state plans to provide home- and community-based habilitation services,  as well as home- and community-based psychosocial rehabilitation  services for individuals with chronic mental illness. Eligibility is limited to  individuals who need assistance for at least 1 hour per day to perform two  personal care services and who are not eligible for such services under  the state’s 1915(c) waiver. Oregon plans to serve approximately 3,000  individuals during the first year of its program (June 1, 2012, through   May 31, 2013).
Louisiana’s 1915(i) program became effective on March 1, 2012, and the  state plans to provide psychosocial services to adults with mental illness,  including adults with acute stabilization needs, serious mental illness, and  major mental disorders. The state plans to limit the option to adults who  exhibit at least a moderate level of risk of harm to self and others and  moderate levels of need based on a standardized assessment tool. The  state plans to provide such services under the 1915(i) option to a much  higher number of individuals than either Idaho or Oregon—55,000 during  the first year of its program.
In addition to the states with approved 1915(i) state plan amendments,  four states—California, Connecticut, Florida, and North Carolina— currently have 1915(i) applications under review with CMS, according to  officials. Proposals in California and Florida—which had not been  approved by CMS, as of May 2012, and thus could change as a result of  the review process—showed varying plans for targeted groups and  services proposed, as the following examples illustrate.
Florida proposed to provide various types of family therapy services to  redirect troubled youth away from residential placements and into  treatment options that will allow them to live at home. The state plans  to serve 597 children in the first year.
California has submitted two 1915(i) state plan amendments. The first  proposes to target infants and toddlers with developmental delays and  would provide a 1-day session with families to prepare the children for  school or other appropriate facilities, which is currently funded with  state-only funds. California anticipates serving 3,800 in the first year.  The second proposes to target developmentally disabled individuals  with a need for habilitation services. Services to be provided would  include community living arrangement services, respite care, and day  services. The state anticipates serving 42,000 in the first year.
The changes made by PPACA to section 1915(i) became effective  October 1, 2010. CMS provided guidance to states about the changes in  an August 2010 letter to state Medicaid directors. CMS published a  proposed rule for the 1915(i) state plan option on May 3, 2012.
section_title: States Are Factoring Potential Effect on State Budgets, Staff Availability, and Interaction with Existing Reform Efforts into Their Decisions
paragraphs: Medicaid officials in the states we selected for our study reported being  attracted to the enhanced federal matching funds available under three of  the PPACA options, but also expressed concern about the potential effect  on budgets given continuing fiscal challenges at the state level. Further,  Medicaid officials cited limited staff availability to research or implement  these options. Officials were also considering broader Medicaid reforms  occurring in the state and the potential interaction with existing HCBS.
subsections: section_title: States Are Attracted by Increased Funding but Concerned about Their Ability to Contribute State Share
paragraphs: Officials from the 10 states we contacted for our study reported they are  considering the new HCBS options with an eye to how they might affect  their state’s budget. States, in general, continue to experience fiscal  challenges, and the state officials we talked with noted that while they are  attracted by the enhanced federal matching funds that come with  Community First Choice and the Balancing Incentive Program especially,  there were limits as to how much the state can contribute. Officials from 8  of the 10 states we selected reported that state budget considerations  were either a general concern when evaluating any potential new HCBS  option or a specific concern regarding Community First Choice or the  Balancing Incentive Program. A state official in Mississippi noted that her  first consideration of a new Medicaid option is how much the federal  government is providing in funding and for how long. She said that she  needs to determine what the cost will be to the state now, and if  applicable, what the cost to the state would be once the enhanced federal  matching rate ends. Regarding the Balancing Incentive Program, Nevada  officials similarly reported that while the state is eligible for the 2 percent  enhanced federal match, it does not have the money to build the  infrastructure, quality assurance system, and financial tracking system  called for by the program.
Although the enhanced federal matching rate in Community First Choice  was attractive to several states, they also noted potential financial risk  caused by the inability to limit the program’s enrollment or utilization.  Officials in half of the states we interviewed noted concerns about a  potential inability to control expenditures in Community First Choice given  the requirement that the option be offered statewide and the prohibition  on state enrollment and utilization caps. Mississippi officials reported that  their main problem with pursuing the option is the inability to limit potential  state expenditures. Officials from the National Association of State  Directors of Developmental Disabilities Services reported that the fact that  there is no way for states to cap Community First Choice deters states  from taking up the option. States wonder how to keep such a program  within their budgets if they cannot limit either enrollment or utilization. In  contrast, more than half of the state officials we interviewed found the  1915(i) state plan option attractive because of the ability to limit the  provision of services to specific populations, thus providing the state with  the opportunity to limit state financial exposure.
In considering the options that would provide the most federal funding  possible, officials from a few states told us that when they initially looked  at Community First Choice it was to replace existing state options that do  not qualify for enhanced federal matching rates. Oregon officials noted  that if they chose to use Community First Choice, which provides a 6  percent enhanced federal matching rate, it would be as a replacement for  one of the state’s existing 1915(c) waivers. Expenditures under 1915(c)  waivers qualify for the standard federal matching rate. However, the state  officials did not think that the Community First Choice option would allow  them to cover all the services in their 1915(c) waiver, which would then  require the state to cover these services with state-only funds or drop  them altogether. Officials from Nevada similarly reported that they initially  considered using Community First Choice as a replacement for the  state’s existing self-directed personal care state plan option. While the  state has not ruled out taking up Community First Choice, the officials  thought that the administrative requirements included in Community First  Choice, specifically the requirements for backup systems and the  establishment of a Development and Implementation Council to engage  stakeholders, as well as the additional reporting requirements, meant  that Community First Choice would not be a cost-effective replacement  for its existing self-directed personal care option.
section_title: Limited Staff Resources and Competing Priorities Pose Barriers to States’ Pursuing New Options
paragraphs: According to state officials, staffing shortages in a number of states have  made it difficult for states to review all the new HCBS options in depth or  put together the teams needed to assemble applications and implement  the options. Officials from New Mexico told us that they previously had a  hiring freeze and have a current staff vacancy rate of about 9 percent.  They said their current staff of 190 runs a $4 billion Medicaid program,  which already included a personal care option, a Money Follows the  Person program, and a managed care program for LTSS. The officials  said that if they decided to pursue, for instance, the Community First  Choice option, they would have to use these same staff to implement and  oversee the program, including writing the state plan amendment,  obtaining public input, and shepherding the amendment through the CMS  approval process. According to the New Mexico officials, the current staff  already has too much work. Officials in Maine told us that the state  recently offered retirement incentives to staff as a cost-saving measure.  Under the retirement incentive policy, positions that are open because of  the incentive cannot be filled for 2 years. The state is also under a hiring  freeze. Officials from the National Association of Medicaid Directors  reported that state Medicaid programs are running with a fraction of their  prior staff. Given this, officials from the association said states may not  even have enough staff to put together an application.
State officials also reported that the time involved in making other  changes to their state Medicaid programs as a result of PPACA has  prevented their staff from doing in-depth research on the new HCBS  options. Officials from two states specifically said they had not had  enough time to research the opportunities in full as a result of their other  work. Nevada officials, for instance, noted that staff is working on  developing the Health Home state plan option in PPACA, which allows  states to provide for care coordination for persons with chronic conditions  or serious mental illness, and is making other PPACA-required changes  to its Medicaid program. The officials reported prioritizing all the state  requirements in PPACA and said the Balancing Incentive Program keeps  dropping down the list. Similarly, officials in Montana said the HCBS  options were a lot to consider at the same time states are facing many  other changes as a result of PPACA, including accommodating a large  number of new individuals expected to become eligible for Medicaid.National Association of Medicaid Directors officials reported that PPACA  contained both state mandates and options and that therefore states  needed to triage where they invest staff resources. They also noted that  they would expect states to invest resources in mandated changes rather  than the optional changes, such as the new HCBS options.
section_title: Planned Changes to State Medicaid Programs and Potential Interaction of Options with Existing HCBS Programs Factor into States’ Decisions
paragraphs: Officials in several of the states we interviewed reported putting off  decisions about the HCBS options in PPACA until they completed major  reforms to their Medicaid programs. Four of the 10 states we contacted  reported being in the midst of or planning for broad Medicaid reforms.  This situation is consistent with national trends. One national survey of  states found that 11 were planning to implement a managed care system   New Jersey,  for long-term services and supports in either 2012 or 2013.for example, was in the midst of planning for the transition of its Medicaid  program, including LTSS, to managed care. Under the proposal  submitted to CMS, managed care organizations would take over  responsibility for care, including HCBS and nursing home care, for  individuals who are enrolled in one of several of the state’s HCBS  waivers, who require a nursing home-level of care, or who reside in a  nursing home. The managed care organizations would be required to  develop and implement an annual person-centered plan of care and  individual service agreement for each individual requiring LTSS and  would have authority to place an individual in the most cost-effective  setting, whether a home- or community-based setting or a nursing  home. The managed care organization, however, would also be  expected to emphasize services that are provided in members’ homes  and communities in order to prevent or delay institutionalization whenever  possible. At the time we spoke with New Jersey officials, the state was  awaiting CMS’s decision on the proposal. Given the planned transition of  LTSS to managed care, the New Jersey officials did not think applying for  the 1915(i) option at this time made sense, and their decision on whether  to apply for Community First Choice would depend on how their managed  care system looked if approved by CMS. Similarly, Florida was also  moving to statewide Medicaid managed care. Officials in the state told us  that they had not explored the Balancing Incentive Program or  Community First Choice because the state Medicaid agency’s primary  focus has been on the transition to statewide managed care and the time  and resources they have devoted to the transition have prevented them  from exploring the new HCBS options.
States also factored in how easily the new HCBS options would fit in with  their existing HCBS programs, according to state officials. States that  decided to take up some of the new HCBS options reported doing so  because they complemented existing HCBS options. Four of the five  states we interviewed that received the Money Follows the Person grant  following the initial post-PPACA solicitation told us the state had an  existing transition program to move individuals from institutions into the  community. Each of these states told us that Money Follows the Person would be a supplement to their existing programs and would provide the  state with additional federal funds. Officials from Nevada, for example,  told us that while the state had an existing state-funded community  transition program, they thought the Money Follows the Person program  would give the state the opportunity to target more difficult populations  that could still benefit from community placement. The state plans to use  the Money Follows the Person rebalancing fund to integrate the state’s  various HCBS case management systems and expand outreach.  Similarly, New Jersey state officials told us they planned to apply for the  Balancing Incentive Program because it fit in well with the state’s existing  efforts to rebalance LTSS funding toward HCBS. The state officials told  us that, in part, the state’s move to a managed care model reflects an  effort to increase the availability of HCBS in the state. Because the  managed care organizations assume financial risk, the state officials  believed the organizations would have an incentive to increase HCBS  placements, which are generally less costly than institutional placements.
State officials said one reason states were interested in taking up the  1915(i) state plan option is that it offers the opportunity to provide  services to people who could not necessarily be served under other  HCBS options. Officials in both Oregon and Montana said they were  looking at the 1915(i) state plan option to provide a set of services for  adults with serious mental illness or children with serious emotional  disorders who cannot be targeted under a 1915(c) waiver either because  of its cost neutrality requirement or because the individuals do not meet  an institutional level of care.
While the selected states were more likely to find the new HCBS options  attractive if they complemented existing options or offered the opportunity  to serve new populations, state officials also noted the complexity of  layering new HCBS options on top of their state’s existing HCBS system.  Nevada officials told us that each waiver and each program the state  operates is its own silo, with each requiring its own reporting structure,  provider enrollment system, and quality assurance system. As such, the  Nevada officials told us that they were already reporting to CMS on four  1915(c) waivers, the personal care state plan option, and a 1915(i) state  plan option. Each of those, according to the Nevada officials, came with  its own set of requirements. Mississippi officials said that, when looking at  how the four PPACA HCBS options relate to each other, as well as to  existing HCBS options, it becomes hard not only for state staff, but also  for providers and beneficiaries, to work out the differences in all the  different programs. They said they would like CMS to send out guidance  about how states could use these different options together, instead of  issuing guidance on each option separately.
CMS officials told us they have recently undertaken a number of  initiatives to help states coordinate and align the different Medicaid HCBS  options. While the CMS officials noted a number of efforts to align the  options, they also noted a natural trade-off between giving states  maximum flexibility and simplifying the number of different HCBS options  available to states. In February 2011, CMS established Medicaid State  Technical Assistance Teams (MSTAT), which consist of CMS staff with  knowledge of Medicaid financing, eligibility, coverage, waivers, and state- specific issues. The teams work with individual states to assist in any  area a state has identified or to help states identify specific program areas  that may yield efficiencies. According to CMS, as of April 2012, 27 states  have used MSTATs, and a majority of those have included at least some  discussion of the various HCBS options. In addition to the MSTATs, CMS  officials told us they offer technical assistance to states in several areas.  For example, there is a specific technical assistance provider that can  help states build quality measurement into their systems that can work  across the different options. CMS staff also has presented information  during all-state conference calls and at an annual HCBS conference to  help states learn about the different options and how they can work  together. CMS recently formed a work group consisting of representatives  from the National Association of Medicaid Directors, the National  Association of States United for Aging and Disabilities, and the National  Association of State Directors of Developmental Disabilities Services, as  well as officials from 10 states, including 14 HCBS waiver administrators,  to focus in part on developing quality in a systems approach as opposed  to within individual 1915(c) waivers. In addition, in April 2012, HHS  announced the establishment of a new agency—the Administration for  Community Living—which will combine the efforts of several HHS  agencies for the purpose of enhancing and strengthening HHS’s efforts to  support seniors and people with disabilities and ensuring consistency and  coordination in community living policy across the federal government.
section_title: Concluding Observations
paragraphs: In the 13 years since the Olmstead decision, states have continued to  make progress rebalancing their LTSS systems toward more HCBS,  increasing opportunities for individuals who need LTSS to live more  independent lives in the community. The four Medicaid HCBS options  established or revised by PPACA add to the array of options states have  to consider in designing their coverage of services for beneficiaries. Some  states that are further along in rebalancing their provision of LTSS may  have less need to utilize these new options. Other states have further to  go in determining whether and how to incorporate these options into their  existing programs and have many factors to weigh, including their state  budgets and the coverage and flexibility the options provide to reach their  rebalancing goals. The complexities of the Medicaid HCBS options  available and the changing factors affecting states’ planning underscore  the importance of ongoing federal technical assistance to help states  navigate various HCBS options as they seek to ensure appropriate  availability of HCBS.
section_title: Agency Comments
paragraphs: We provided a draft of this report to HHS for review. HHS had no general  comments on the report but provided technical comments, which we  incorporated as appropriate.
As arranged with your offices, unless you publicly announce the contents  of this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Secretary of Health  and Human Services, the Administrator of the Centers for Medicare &  Medicaid Services, and appropriate congressional committees. In  addition, the report will be available at no charge on the GAO website at  http://www.gao.gov.
If you or your staffs have any questions about this report, please contact  me at (202) 512-7114 or at iritanik@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix IV.
section_title: Appendix I: Medicaid Options for Home- and Community-Based Services in the Patient Protection and Affordable Care Act
paragraphs: The Patient Protection and Affordable Care Act (PPACA) created two  new options—Community First Choice and the Balancing Incentive  Program—and amended two existing options—1915(i) state plan option  and Money Follows the Person—for states to cover home- and  community-based services (HCBS) for Medicaid beneficiaries. Table 3  summarizes components of the four options.
section_title: Appendix II: Description of Money Follows the Person Evaluation Findings
paragraphs: In 2005, Money Follows the Person was established as a demonstration  grant program to support states’ transition of eligible individuals who want  to move from institutional settings—such as nursing homes or  intermediate care facilities for the intellectually disabled—back to their  homes or the community. The Centers for Medicare & Medicaid Services  (CMS) awarded Money Follows the Person grants to 30 states and the  District of Columbia as part of the original round of funding in 2007. The  Patient Protection and Affordable Care Act extended the demonstration  through 2016 and provided additional funding to support the original  Money Follows the Person state grantees and to award grants to  additional states. While these newer grantees are just beginning to  implement their Money Follows the Person programs, the national  evaluation contractor has released results from the original round of  grantees.
According to CMS officials, results from the Money Follows the Person  evaluation show that since the program’s inception in 2007, participating  states had transitioned over 20,000 individuals to the community as of  December 31, 2011. Some states were initially slow to transition  individuals to the community through the Money Follows the Person  program because they encountered problems or delays in meeting  federal planning and data reporting requirements and challenges  identifying affordable and accessible housing. experience transitioning individuals to the community through existing  transition programs generally were able to complete more transitions than  states without such programs, in part due to availability of staff with  transition experience. Over time, the number of transitions per year has  been steadily increasing, with cumulative transitions totaling nearly 1,500  in 2008, 5,700 in 2009, and 12,000 in 2010.
N. Denny-Brown, and D. Lipson, “Early Implementation Experiences of State MFP  Programs,” The National Evaluation of the Money Follows the Person (MFP)  Demonstration Grant Program, Reports from the Field, no. 3, Mathematica Policy  Research, Inc. (Cambridge, Mass.: November 2009).
The original 30 grantees used the Money Follows the Person program   to transition different kinds of institutional residents. Approximately   37 percent of individuals transitioned through June 2011 were under   age 65 and had physical disabilities, 34 percent were elderly, 25 percent  had intellectual disabilities, and the remainder had other characteristics or  conditions that were unknown. According to the national Money Follows  the Person evaluation contractor, the percentage of total transitions by  elderly individuals and individuals under age 65 with physical disabilities  has been increasing since 2008, while the percentage of transitions by  individuals with intellectual disabilities has decreased during the same  time frame.ongoing initiatives to move individuals with intellectual disabilities out of  intermediate care facilities for the intellectually disabled at the start of the  demonstration. Therefore, individuals with intellectual disabilities were  some of the first to start transitioning. Since then, more individuals in the  other target populations have begun transitioning.
The evaluation contractor noted that many states had  The large majority of individuals who have transitioned to the community  through the Money Follows the Person program remained in the  community for at least 1 year after their transition. For individuals for  whom, as of 2010, more than 1 year had passed since their transitions  (4,746 participants), 85 percent remained in the community more than   1 year after their transition, 9 percent had been reinstitutionalized in a  nursing home or other institutional setting for stays of 30 days or more,  and 6 percent had died. Those who did return to an institution tended to do so in the first 6 months, most likely in the first 3 months.
The annual per-person HCBS costs of Money Follow the Person  participants were nearly $40,000 during the first year of community  living. Costs were generally the least for the elderly, about $20,000 per  year, and the highest for those with intellectual disabilities, about $75,000  per year. Across all populations, monthly HCBS costs were significantly  higher during the first month after an individual’s transition. Monthly  expenditures during the first 30 days after the initial transition were, on  average, more than 50 percent higher than those for the remainder of the  year. Many of these costs include services specific to the transition—such  as transition planning and coordination—which are only needed in the  short term. The costs incurred after the first 30 days are more likely to  reflect the costs associated with ongoing care needed for individuals to  remain in the community for the long term. Overall, early evaluation  results indicated that average annual spending on HCBS for Money  Follows the Person program participants was about one-third lower than  average annual Medicaid spending on institutional care for elderly  individuals in nursing homes. The evaluation noted that further analyses,  which take into account total health care costs, including hospitalizations  and emergency room visits, would be needed before the cost- effectiveness of the program could be determined.
section_title: Appendix III: Money Follows the Person Planned Demonstration and Supplemental Services in States Awarded Grants in 2011
paragraphs: Under the Money Follows the Person demonstration program,  participating states can cover demonstration and supplemental home-  and community-based services (HCBS), in addition to HCBS available to  other beneficiaries under the state Medicaid plan or through waivers.   Demonstration HCBS are services specific to Money Follows the Person,  provided only to participants in the demonstration and not to other  Medicaid beneficiaries, and are covered only during a participant’s 12- month transition period. Enhanced matching funds are available for  demonstration HCBS. Supplemental HCBS are services essential for  successful transition to the community, are expected to be required only  during the transition period or to be a one-time cost to the program, and  are typically not Medicaid-covered services. Supplemental HCBS are  reimbursed at the state’s regular Medicaid matching rate. Table 4  provides information on the 13 states awarded Money Follows the Person  grants in 2011, including the names of the demonstration programs and  information on the demonstration and supplemental services that the  states planned to provide.
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Catina Bradley, Assistant  Director; Lori Achman; Sandra C. George; Jawaria Gilani; Linda McIver;  and Roseanne Price made key contributions to this report.