Understanding Medicaid Home and Community Services: A Primer, 2010 Edition. Lessons from the Transitioning Experience with ICFs/ID


Medicaid funding for home and community services and supports for persons with developmental disabilities, particularly through HCBS waiver programs, has played a pivotal role in enabling a substantial majority of states to reduce (or in some cases, end completely) long-term care service delivery in large state institutions.4 Between 1970 and 2008, 40 states closed or initiated plans to close more than 140 large public institutions.5 Alaska and Oregon have closed all of their state and non-state ICF/ID programs and Vermont supports a single private facility of six residents. Additionally, many states ceased sponsoring additional ICF/ID development.


In the developmental disabilities service system, ICFs/ID that serve a small number of residents--from 15 to as few as 4--are called community ICFs/ID, and the term “institution” is used only for ICFs/ID with 16 or more residents. However, for Medicaid purposes, ICFs/ID are considered to be institutions, irrespective of the number of people they serve.

Not all institutions that serve persons with developmental disabilities are ICFs/ID. Prior to coverage of ICFs/ID under Medicaid in the early 1970s, institutions were exclusively state funded. While states converted virtually all of these institutions to ICFs/ID to take advantage of Federal funding, a few privately funded institutions may still be operating, as well as former ICFs/ID that have lost their certification and are not receiving Federal finding.

By the end of 2009, 10 states and the District of Columbia had closed all of their large public institutions for people with developmental disabilities.6 In the private sector as well, the number of residents of both large and small ICFs/ID nationwide has declined steadily since 1997. The decline in ICF/ID utilization began about the same time that the number of people with developmental disabilities participating in HCBS waiver programs began to grow very rapidly. Between 1992 and 2007, the number of individuals participating in HCBS waiver programs for people with developmental disabilities grew by 703 percent.7 A major reason for the increased use of HCBS waivers is the flexibility they afford states to offer services and supports that can accommodate individuals with a wide range of different needs in a targeted fashion without resorting to institutionalization.

The successful transitioning of people with developmental disabilities from institutions to the community demonstrates that waiver services can be cost-effective substitutes for institutional services for this population.8 States that have been especially successful in closing large public facilities and reducing reliance on ICFs/ID have taken many other important steps to ensure that the needs of individuals with developmental disabilities can be met in the home and community. Many of these steps are equally applicable to beneficiaries with other disabilities being transitioned from nursing homes and other institutions. These steps are

  • Developing community-based crisis and quick-response capabilities. In many states, institutions provide backup services and supports for persons who are in crisis and need emergency services. In the 10 states that have closed all of their public institutions (as well as the District of Columbia), each has addressed the need for emergency support in different ways. Maine established crisis response teams, resource coordinators, and emergency placement beds in small settings in each of its three regions as part of the initiative to close its Pineland Center facility, which had functioned as a “crisis-placement” facility. By providing resources in the community to respond to crises and working out permanent solutions for the individual, a prime rationale for operating Pineland was eliminated. Vermont established the Vermont Crisis Intervention Network in 1992 to provide community-based emergency support and assistance statewide. New Mexico and Hawaii developed similar programs using the same organizational model. The development of an effective crisis response capability was instrumental in Oregon’s closing its Fairview facility in February 2000 and the Eastern Oregon Training Center in 2009.

  • Expanding community services to meet the needs of individuals with multiple disabilities and challenging conditions who require particularly intensive support and assistance. People with significant needs are often described as “requiring” institutional services. States that have closed their institutional programs have demonstrated that people with even the most intensive support requirements can lead productive and successful lives in home and community settings when afforded person-centered services and supports tailored to their strengths and needs.9 Many states have found that the costs of community services for people being transitioned from institutional services can be higher on average than the costs of waiver services furnished to persons who have not been institutionalized. This cost differential may result because as institutional populations have declined, the proportion of institutionalized residents with significant and multiple disabilities has increased, and these individuals require more intensive services wherever they are served--in an institution or the community. To ensure sufficient capacity to support these individuals, many states must enhance the infrastructure of community agencies.10

  • Providing higher than average funding allocations for individuals transitioning to the community. States have taken steps to provide needed services and supports in community settings by permitting the development of HCBS waiver service plans that allow an individual’s costs to rise above the average for institutions in that state. This allows states to decide on the plausibility of transitioning for a particular individual, without forcing individuals de facto to seek institutional care simply because of an individual expenditure limit or cap.11

  • Developing waivers targeting specific populations and groups. Although most states accommodate transitioning individuals from institutional settings through their existing HCBS waiver programs, a limited number operate distinct HCBS waiver programs for people transitioning from institutional settings. Georgia created a special HCBS waiver program for individuals who transitioned to the community during the State’s closure of its 320-bed, Atlanta-based Brook Run facility in 1997. Closure of this facility resulted in cost savings that enabled Georgia to provide waiver services to 180 individuals in addition to the persons transitioned from Brook Run. The Washington State Division of Developmental Disabilities developed and implemented five separate waiver programs designed to support individuals at differing levels of need. Four types of waivers--Basic, Basic Plus, Core, and Community Protection--furnish a variety of supports at increasing intensity. A fifth provides intensive in-home behavioral support to children with significant needs.

  • Developing specialized “supports” waivers. An increasing number of states to date have developed and implemented distinctive HCBS waiver programs--called supports waivers--which offer a limited menu of specific services that operate in tandem with previously existing comprehensive waiver programs. Designed to limit Medicaid costs by preventing out-of-home placement in 24-hour residential programs or ICFs/ID, these waivers offer a variety of flexible in-home supports. Supports waivers impose specific expenditure limits on the amount of services provided and per-person costs are significantly less than those found in comprehensive waivers. Supports waivers typically emphasize participant direction and are intended to promote the use of non-traditional, “natural supports” provided by family, friends, and neighbors.12 (See Chapter 4 for additional information about supports waivers.)

  • Expanding supports offered to individuals and families. Family support services are crucial for preventing unnecessary out-of-home placements and are used by many states to reduce reliance on institutional services. In addition to supports waivers, states furnish assistance to families through state general fund programs and the provision of cash subsidies or stipends. As a result of these and other efforts, increasing numbers of individuals with developmental disabilities are able to avoid institutional placement by receiving the assistance they need in the home of a family member. In 2007, the majority (55.8 percent) of persons with developmental disabilities receiving publicly funded services lived in the home of a family member.13 Michigan, for example, reduced the number of individuals served in large public facilities from over 6,000 in 1977 to fewer than 300 in 1998--in large part by implementing and sustaining family support programs.

  • Developing strong and locally centered community service systems. In developmental disabilities services, creating a strong infrastructure at the community level has proven to have a significant impact on the ability to avoid institutionalization and promote quality services. An important component of Michigan’s transition activities was its strengthening of the State’s network of local governmental Community Mental Health Service Programs through its Section (§)1915(b)(c) managed care waiver program. As part of its overall plan to close its Brandon facility, Vermont placed major emphasis on upgrading the skills of its community workforce and maintains a strong program to train community workers. In Kansas, the state developmental disabilities authority and the State’s University Affiliated Program forged a partnership to improve the training and skills of the community workforce--a step that was instrumental in enabling the State to transition many institutional residents to the community.

  • Expanding investments in quality assurance and quality improvement capabilities. The Medicaid HCBS waiver application requires each state to submit a comprehensive quality management strategy outlining the approaches the state intends to use to assess, improve, and safeguard the health and welfare of waiver program participants.14 Several states are responding by improving current practice through the utilization of standardized outcome measurement tools such as the National Core Indicators (NCI), which permit state-to-state comparisons, or other instruments such as the Participant Experience Survey. Pennsylvania launched a comprehensive quality measurement system for community-based services, which relies on information obtained from individuals receiving support and their families. The data are collected by individuals who have no connection to entities delivering services. The Independent Monitoring for Quality project combines both state-specific and the NCI national outcome measurement tools. (See the appendix for an overview of CMS requirements for quality management and improvement systems.)

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