Residential Care and Assisted Living Compendium: 2007. Limitations of Using Waiver Programs to Cover Services in Residential Care and How States Have Addressed Them

11/30/2007

A major challenge facing policymakers who support a comprehensive range of home and community services is finding the resources to expand their availability. Waiver services are not an entitlement and most waiver programs operate with a specific appropriation based on a number of budgeted “slots.” Although states may cover services in residential care settings through a waiver program, limited slots may lead to a waiting list for services. On the other hand, nursing home care is an entitlement, and its budget is likely to rise each year through rate increases. In the event of a budget deficit, non-entitlement services are the most vulnerable to budget cuts. States are addressing this issue in several ways.

  • Colorado, Oregon, Vermont and Washington have shifted resources from institutions to home and community services by creating a single appropriation for long-term care services, sometimes called a global budget.

  • Arizona, Florida, Massachusetts, Minnesota, New York, Texas, Wisconsin and states with PACE programs have capitated funding for long-term care services, which gives contracting organizations the flexibility to approve the most appropriate service for beneficiaries.

  • Kansas, Maryland, Texas, and Wisconsin have implemented a Money Follows the Person (MFP) policy, which allows funding appropriated for nursing homes to be spent on home and community services for individuals who relocate from a nursing home.

  • Illinois uses funds from its nursing home appropriation in a waiver program that provides services for residents of SLFs. The program was built on the premise that about 10 percent of nursing home residents could be served in residential care settings with access to supportive services 24-hours-a-day. Because the program is funded from the nursing home budget rather than the waiver budget, the state is able to fund all approved SLF slots and there is no waiting list.

All of these financing strategies give states a mechanism to ensure that people who can be served in the community are not required to stay in nursing homes because of a waiting list for waiver services. To create incentives for states to support nursing home residents wanting to relocate to the community, the Deficit Reduction Act of 2005 authorized a MFP Demonstration. Thirty-one states received awards from CMS to carry out the demonstration. However, to be eligible for an enhanced federal match for HCBS, individuals can not relocate to a licensed residential setting that serves more than four individuals. This restriction may limit relocation for nursing home residents who cannot live alone and do not have family members to live with. For example, since Texas began its MFP policy in 2001, 25-30 percent of the individuals who relocated moved to a residential care setting.

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