The American Rescue Plan of 2021 (ARP) – signed into law on March 11, 2021 – provides states with a one-year, 10 percentage-point increase to the federal medical assistance percentage (FMAP) for Medicaid expenditures on home and community-based services (HCBS) for children and adults. This increase provides states with a critical opportunity to address both emerging and long-standing challenges in state long term care systems – systems that have been heavily impacted by the COVID-19 pandemic in the last 14 months. The Center for Medicare & Medicaid Services (CMS) issued a letter to State Medicaid Directors on May 13, providing additional guidance to states on how they can use this new funding.
Highlights from CMS guidance:
- The increased FMAP must be used to supplement, not replace, existing state funds spent on Medicaid HCBS in effect as of April 1, 2021.
- State funds equivalent to the amount of the increased FMAP can be used to facilitate activities that enhance, expand, or strengthen Medicaid HCBS.
- States are prohibited from imposing stricter eligibility requirements for HCBS programs and services than were in place on April 1, 2021, and may not eliminate covered services or reduce the amount, duration, or scope of those services during this period.
- CMS will not apply penalties or non-compliance restrictions to states once the authority for temporary changes to HCBS eligibility, coverage and/or payment rates (e.g., Appendix K waivers and disaster relief state plan amendments) has expired or if the state needs to implement changes to comply with federal requirements
- CMS will work with states making programmatic changes to revise cost effectiveness projections appropriately and determine the feasibility of their budget neutrality models.
While the enhanced FMAP increases federal funding for specific services, the impact of the 10% bump could have broader implications for state HCBS systems. States may use state dollars freed up by the enhanced match to “enhance, expand, or strengthen” Medicaid HCBS in myriad ways. State context and specific priorities will drive these investments, which could include:
- Bolstering workforce: COVID-19 has highlighted the need to better support the long-term care workforce. States can target resources to increase wages and benefits, facilitate vaccinations and other COVID protections, and invest in training and career pathway strategies to grow and sustain a diverse LTC workforce, including peers and community health workers.
- Addressing equity: Expanding access to HCBS services in underserved communities and communities of color is a critical priority across states: policy makers may choose to enhance cultural and linguistic capacity, assess and address equity through existing No Wrong Door Systems, and invest in community-based organizations that are located in and serve communities especially hard hit by the COVID pandemic.
- Supporting family caregivers: Families can be critical to keeping adults and children and youth with special health care needs (CYSHCN) at home or in community settings. States may want to increase services and supports for families, including respite; establish or strengthen family caregiver assessment and outreach; build greater cultural and linguistic capacity; enhance Medicaid self-direction programs that pay families and others to provide Medicaid services, and facilitate wider use of innovative technology.
- Investing in behavioral health recovery: The higher match rate is also available for services to support people in recovery from mental illness and substance use disorders. Enhancements could include strengthening community-based interventions that help people remain in housing or stay employed; building cross-system reentry capacity with state prisons or local jails; developing diverse peer support capacity for people with behavioral health disorders; improving transitions for youth with behavioral health needs, and promoting access to recovery options for children, youth, and adults in underserved areas.
Additional considerations for states
States will have to quickly identify priorities and focus areas, identify services available for the enhanced FMAP, and submit plans and budgets within a very narrow timetable. Other issues to consider:
Sustainability: The enhanced FMAP is only available for one year; additional state funds that result from the enhanced match are available to support HCBS activities through March 31, 2024. States that opt to expand access to HCBS will want to plan for sustainability of services, both after the initial one-year FMAP bump, and through 2024 when all additional resources need to be spent.
Waiver/SPA rules still apply: States may add new services to maximize impact of the FMAP bump, but may need to submit a waiver or state plan amendment to do so. CMS will work with states to ensure state compliance with cost neutrality and budgeting rules.
State planning and initiatives: States may already have legislative and other state policy initiatives in the works that impact their HCBS systems. These ongoing or upcoming initiatives may benefit from ARP funding and can be incorporated into state submissions.
The American Rescue Plan funding represents an important opportunity for state policy makers to address long-standing challenges in HCBS systems related to access, rebalancing, health equity, workforce, and other issues. Initial state plans are due to CMS within 30 days of May 13th. CMS indicates it will publicly post state plans; NASHP will track these plans as they are posted and share information on emerging themes.