Understanding Medicaid Home and Community Services: A Primer, 2010 Edition. Evolution of Participant Direction of Medicaid HCBS


Participant direction of Medicaid home and community services began in the 1970s when a few states launched Medicaid personal assistance/attendant services programs that authorized Medicaid participants to hire, train, supervise, and dismiss their workers.6 During the 1980s and 1990s, the number of states that authorized Medicaid participants to manage their workers grew--both through the Medicaid State Plan Personal Care optional benefit and, starting in 1981, through §1915(c) home and community-based services waivers (hereafter referred to as HCBS waivers). In 1997, the Centers for Medicare & Medicaid Services (CMS) released formal guidance (discussed in more detail below) acknowledging that states could employ a “participant-directed service delivery model” for the delivery of personal care/assistance services under the Medicaid State Plan.

In 1995, the Robert Wood Johnson Foundation (RWJF) and the U.S. Department of Health and Human Services (HHS) launched the National Cash and Counseling Evaluation Demonstration.7 Its aim was to test a broader approach to participant direction that gave participants the authority to manage an individual budget and the latitude to use this budget to purchase goods and services to meet their service and support needs. The demonstration also gave participants the option of receiving allowances in cash to purchase services and supports, or have their funds deposited with an entity that would perform financial transactions under their direction.8

In the same year, RWJF also launched its Self-Determination for People with Developmental Disabilities Program.9 RWJF awarded grants to 18 states to create pilot programs that gave individuals and families a leadership role in the design of person-centered service plans along with choice and control over an individual budget to carry out the service plan. These pilots also featured the provision of independent counseling services (specifically referred to as Support Broker services) to assist participants in selecting and managing services, along with fiscal intermediaries to serve as their agents to handle employment-related tasks. The Self-Determination pilots operated within the regulatory confines of the HCBS waiver program and, therefore, did not permit individuals or their representatives to receive any benefits directly as “cash.”

In response to the favorable early evaluation results from the Cash and Counseling Demonstration, experience garnered through the Self-Determination pilots, and rapidly growing state interest in offering participant direction options, CMS launched its Independence Plus initiative in 2002, which provided guidance to the states about incorporating employer and budget authority into a waiver program.10 CMS also issued separate templates for Independence Plus programs operating under the HCBS and §1115 waiver authorities.

In 2005, CMS extensively modified its standard HCBS waiver application so that states could include a participant direction option in any HCBS waiver, eliminating the need for a separate Independence Plus waiver. The new waiver application built upon the predecessor Independence Plus waiver template and further clarified the Federal policies that apply when a participant direction option is implemented in an HCBS waiver. To date, at least 37 states have a participant direction option in one or more HCBS waivers.11 However, some states offer only the employer authority and some have experienced slow enrollment in participant direction options.

In the Deficit Reduction Act of 2005 (DRA-2005), Congress added two statutory provisions that offer states additional options to incorporate participant direction into the delivery of Medicaid HCBS without having to seek Federal waivers.12 These provisions are discussed in more detail below.13 In the space of about 10 years, Federal Medicaid policy has evolved to provide states with several options to afford Medicaid participants wide-ranging authority to direct their services and supports, including the option to direct an individual budget.

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