As Wenzlow et al. (2011) argue, no single measure fully captures LTSS system performance in terms of the breadth of the population covered, and the breadth and intensity of services provided. For this reason, we used a combination of measures to capture variation in system performance across states, including the:
Percentage of Medicaid LTSS expenditures allocated to HCBS.
Percentage of LTSS users receiving HCBS.
Ratio of per-recipient spending on HCBS to spending on institutional care.
Although the first two measures are commonly used indicators of the degree to which states have balanced their LTSS systems toward HCBS use and spending relative to institutional care, each is limited, to some degree, and therefore should be interpreted with some caution. The share of LTSS expenditures allocated to HCBS is expected to increase as community care becomes a more frequently used component of LTSS. However, variation in expenditures can arise both from variation in the number served and from variation in payment rates. Thus, a state that increased its payments to institutional providers, perhaps as a result of imposing new minimum staffing standards, would show a decline in the percentage of LTSS expenditures allocated to HCBS, even though one might argue that overall balance had not changed or that this policy change is beneficial for people who need LTSS.
The percentage of LTSS users who receive HCBS is a similarly imperfect measure of differences across states. HCBS users are far more heterogeneous in their care needs than are users of institutional care. Some may be as impaired as those in nursing homes or ICFs/IID. Others may simply be people who received a few home health visits at some point during a year. States that allow many users to access HCBS, but impose limits on its quantity, might show a high value for the percentage of LTSS users who receive HCBS. In those states, much of HCBS is provided in amounts too low to substitute for institutional care. As a result of the problems just noted, it would appear reasonable to look to states with high values for both measures when seeking to identify those that had most successfully transitioned to a high level of community LTSS. The third measure captures the extent to which state spending on HCBS per user is similar to state spending on institutional care.
This may be a proxy indicator -- although an imperfect one -- for generosity of HCBS coverage. (It is imperfect as a measure of coverage generosity because states that provide predominantly agency-delivered aide services typically pay a higher hourly rate than states that rely primarily on consumer-directed independent providers; it thus could mix price and quantity effects.) In any case, consumer advocates have long argued that "money should follow the person" (not the provider), by which they mean that state Medicaid programs should be willing to spend as much on HCBS as they would be willing to spend on institutional care for someone with comparable disabilities. However, because HCBS users tend to be less severely disabled than nursing home residents, and nursing home care also encompasses room and board in addition to the cost of providing functional assistance, a ratio of per-user cost of HCBS to per-user cost of ILTC approaching 1:1 might raise the question of whether the average level of spending on HCBS per user could make it difficult for the state to afford to serve all Medicaid beneficiaries who qualify for HCBS coverage. An exceptionally high ratio of per-user spending on HCBS compared to per-user spending on ILTC might be associated with more restrictive level-of-care need criteria for coverage of both HCBS and institutional care and/or with HCBS waiver enrollment caps that have required establishing waiting lists.