State Residential Care and Assisted Living Policy: 2004. Differences Between State Plan and Waiver Services

03/31/2005

HCBS waivers and state plan services differ in several important ways. First, waiver services are available only to beneficiaries who meet the state's nursing home level of care criteria; that is, they would be eligible for Medicaid payments in a nursing home if they applied. Nursing home eligibility is not required for beneficiaries using state plan services.

Second, states may set limits on the number of beneficiaries that can be served through waiver programs. The limits are defined as expenditure caps that are part of the cost neutrality formula required for CMS approval. Waivers are only approved if the state demonstrates that Medicaid long-term care expenditures under the waiver will not exceed expenditures that would have been made in the absence of the waiver. States do not receive federal reimbursements for any waiver expenditures that exceed the amount stated in the cost neutrality calculation. In contrast, state plan services are an entitlement, meaning that all beneficiaries who meet the eligibility criteria must be served. Federal funding matches state expenditures without any cap.

Perhaps the most significant difference between the two options is the ability under HCBS waivers to use a more generous eligibility standard. HCBS programs allow states to use the special income level, an optional eligibility category that allows states to set eligibility at up to 300 percent of the federal Supplemental Security Income (SSI) benefit ($1,692 in 2004). To cover beneficiaries through this option under the waiver, it must also be available to individuals in a nursing home. The higher eligibility standard in the waiver programs is designed to "level the playing field" between institutional and non-institutional services.

In contrast, to be eligible for personal care under the state plan, individuals must meet usual community-based eligibility standards, which (depending on the state) are: (1) the SSI level of income ($564 in 2004) up to 100 percent of the federal poverty level, or (2) the state's medically needy income standard.26 Table 1-10 summarizes the major differences between waiver services and state plan services.

Although the majority of states use Medicaid to cover services in residential care settings, the number of Medicaid beneficiaries who receive such services is considerably lower than might be expected because many states limit the number of people served under waivers. States using personal care under the state plan to cover services have higher participation rates than states using the waiver because state plan services cannot be capped.

Roughly 20 percent of all Medicaid beneficiaries living in residential care settings are in North Carolina, and another 25 percent are in Missouri and New York. These states cover services under the state plan. Waiver participation, while lower, has risen in many states over the past 2 years. Participation rose in New Jersey from 119 in 1998 to 1,500 in 2002 and 2,195 in 2004. Oregon reported that the number served rose from about 1,500 in 1998 to 3,600 in 2002 and 3,731 in 2004. Other states with relatively high waiver participation rates include Arizona (3,067), Colorado (3,804), both Georgia and Texas served 2,851 each, Florida serves 4,167 in its waiver program and 14,000 through the state plan.

  Issue     State Plan Service     1915(c) Waiver Services  
TABLE 1-10. Differences Between State Plan and Waiver Services
Entitlement States must provide services to all beneficiaries who qualify for Medicaid States may limit spending for waiver services
Scope Must be available in the same amount, scope, and duration to all beneficiaries across the state May be limited to specific geographic areas or groups of beneficiaries
Duplication Provided in accordance with state plan May not duplicate services available in the plan; may have different limits, definitions, or providers than state plan
Service Criteria   Must meet requirements of the state plan program to receive the service Must meet the state's nursing home level of care criteria
Income Must be SSI eligible or meet the state's community eligibility standard for Medicaid State may set eligibility up to 300 percent ($1,692) of the monthly federal SSI payment standard ($564)
Approval Period Continuous unless amended by the appropriate state agency Initial waivers approved for 3 years; 5 years for renewals

States do not report this information by age or type of disability. The vast majority served are age 65 and older but some may be under age 65. Some may have serious mental illness, acquired brain injuries, mental retardation, or other developmental disabilities. Whatever their age or diagnosis, to be eligible for Medicaid coverage all must meet either the state's nursing home level of care criteria for waiver services, or the state's service criteria for Medicaid state plan personal care services.

Participation figures are under-reported since a few states do not track and report the number of Medicaid beneficiaries by home or community settings. A few states reported the annual unduplicated number of Medicaid beneficiaries served in residential care settings, but most reported the number of people for a given month. Based on available data, participation is estimated to have grown from 58,544 beneficiaries in 2000, to about 102,000 beneficiaries in 2002, and 121,282 in 2004.

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