Early Intervention Financing and Resources: Final Report. Appendix 1. Medicaid 1915(i) Home and Community-based Services Option


The 1915(i) home and community-based services (HCBS) state plan option presents a vehicle for states that are interested in supporting individuals with serious mental illness in attaining and sustaining competitive work. Differences in the design of the 1915(i), such as using needs-based rather than institutional level of care eligibility criteria, make it easier for states to develop services for persons with serious mental illness than under 1915(c). While the ability to offer HCBS including SEE and prevocational services via a state plan option as opposed to a 1915(c) waiver or 1115 demonstration program, has been available to states since enabling legislation as part of the Deficit Reduction Act (DRA) was enacted in 2005, few states have taken advantage of this option. This was in part due the capping of financial eligibility at 150% of the federal poverty level (FPL). Although 1915(c) waivers allow states to enroll individuals with incomes higher than 150% of the FPL, states could not use the 1915(i) for persons with incomes greater than 150% of the FPL. Also individuals with disabilities eligible for Medicaid under "Buy-In" programs with incomes greater than 150% of FPL were not able to take advantage of services such as supported employment available under 1915(i). States were also limited to a more restricted range of services than was allowed under the 1915(c) waiver program.

Section 2402 of the ACA modifies the original legislation and makes major changes and improvements to how states may amend their state plans using the 1915(i) option; including changing the issues described above that made the 1915(i) option less attractive to states. These changes became effective October 1, 2010. Modifications to the 1915(i) state plan option as part of the ACA include:2

  • Permits states to propose additional HCBS beyond those that are defined in statute in order to design benefit packages that are customized to a particular population. For example, states are now able to cover psychosocial rehabilitation, case management and community transition services that were previously not permitted under the former regulations governing 1915(i).

  • Under 1915(i) individuals up to 150% FPL do not have to meet institutional level of care in order to be eligible for the waiver; states develop criteria based on need. This allows states to offer HCBS to individuals whose needs are substantial, but not serious enough to meet institutional level of care.

  • Offers states the option of expanding eligibility to 300% of the SSI federal benefit rate (FBR) for those individuals who would otherwise be eligible for HCBS under 1915(c), (d), or (e) waiver or an 1115 demonstration program. This is a significant change from the prior iteration of 1915(i) as it allows states to create a new optional eligibility category, allowing them to extend the services available as part 1915(i) to more individuals than previously allowed.

  • Services offered under 1915(i) must be offered statewide.

  • States are now permitted to target 1915(i) benefits to certain populations (effectively waiving the comparability requirement) to allow them to design different benefit packages for different target populations. For example, states could design a benefit package to meet the needs of individuals with SPMI.

  • States are no longer allowed to limit the number of individuals who can receive services offered as part a state's 1915(i) services, SPA or create waiting lists. This important change to 1915(i) will allow more individuals to take advantage of HCBS that can assist persons in gaining and sustaining employment.

If states elect to pursue the 1915(i), it is an opportunity to provide individuals with mental illness a more comprehensive array of HCBS that could support them in attaining and sustaining competitive employment. There is no cost-neutrality requirement in the 1915(i) state plan option nor do individuals up to 150% FPL have to meet institutional level of care criteria; these functional differences in the structure of 1915(i) reduce historical barriers to states covering HCBS for individuals with serious mental illness.

TABLE A1. Comparison of 1915(i) under DRA and the ACA
    1915(i) under DRA     1915(i) as Amended by ACA  
Geography Could limit to certain geographic areas or political subdivisions. Must be available statewide.
Financial eligibility Up to 150% of FPL. Up to 300% of SSI FBR as long as the person meets criteria for an existing 1915(c) waiver or 1115 demonstration.
Non-financial eligibility   States develop needs-based criteria. States develop needs-based criteria can tighten needs-based criteria but must continue to offer services to eligible persons served under the former standards.
Targeting criteria Not allowed to target benefits to certain populations. Can target to certain populations and can have more than one benefit by target group.
Services States not permitted to propose "other services" as available under 1915(c). States permitted to propose all services available under 1915(c) including "other services".
Number served Could place caps on the number served and maintain waiting lists. Must be available to all eligible Medicaid beneficiaries without limitation.

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