Understanding Medicaid Home and Community Services: A Primer, 2010 Edition. Providing Flexible Funding Mechanisms


Many resources are needed to help individuals relocate from nursing facilities to community settings, including but not limited to subsidized accessible housing, transition funds, services and supports, and a wide range of local community resources, including transportation. To provide adequate services for individuals who are transitioning, it may be necessary to combine services from multiple funding sources, for example, HCBS waiver services, home health services, and state-funded programs. Inflexible funding streams and a lack of mechanisms to coordinate funding can pose transition barriers.

Because Medicaid-eligible residents in institutions have only a small monthly personal needs allowance, they lack the financial resources to pay for one-time transition expenses, such as security deposits for rent, utilities, and phone service, and essential furniture and household items. CMS permits coverage of these one-time transition expenses under HCBS waiver programs. The CMS HCBS waiver application defines these expenses as Community Transition Services:

Community Transition Services are non-recurring set-up expenses for individuals who are transitioning from an institutional or other provider-operated living arrangement to a living arrangement in a private residence where the person is directly responsible for his or her own living expenses.

Allowable expenses are those necessary to enable a person to establish a basic household that do not constitute room and board and may include (a) security deposits that are required to obtain a lease on an apartment or home; (b) essential household furnishings required to occupy and use a community domicile, including furniture, window coverings, food preparation items, and bed/bath linens; (c) set-up fees or deposits for utility or service access, including telephone, electricity, heating and water; (d) services necessary for the individual’s health and safety such as pest eradication and one-time cleaning prior to occupancy; (e) moving expenses; (f) necessaryhome accessibility adaptations; and, (g) activities to assess need, arrange for and procure needed resources.

Community Transition Services are furnished only to the extent that they are reasonable and necessary as determined through the service plan development process, clearly identified in the service plan, and the person is unable to meet such expense or when the services cannot be obtained from other sources. Community Transition Services do not include monthly rental or mortgage expense; food, regular utility charges; and/or household appliances or items that are intended for purely diversional/recreational purposes.

States are permitted to supplement or modify this definition to reflect the specific expenses they want to include in their waiver program and may also list expenses that are specifically excluded. While Federal law prohibits Medicaid payment for room and board, payment of a security deposit to a landlord is not considered rent. Medicaid Community Transition Services may not be used to pay for furnishing living arrangements that are owned or leased by a waiver service provider where the provision of these items and services are inherent in the service they are already providing.

One-time transition expenses for waiver participants can be billed when the individual leaves the institutional setting and becomes a waiver participant. For these expenses to be reimbursable, the individual must be reasonably expected to be eligible for and to enroll in the waiver. If for any reason the individual does not enroll in the waiver (e.g., due to death or a significant change in condition), transition expenses may be billed to Medicaid as an administrative cost.

Some states have chosen to use state funding for transition expenses. New Jersey began covering transition expenses under the Enhanced Community Options and Assisted Living waiver programs. For persons ineligible for these waivers, transition expenses can be covered through a special fund established under the State’s Systems Change NFT grant. Two other states--Ohio and Wyoming--have also appropriated funds to cover one-time transition expenses not covered by Medicaid.36

South Carolina added a nursing facility transition services package to the Elderly and Disabled waiver that covers housing and utility deposits and basic furniture and appliances. All items must be required by the service plan, and total expenditures are capped at $1,000. The State also enhanced coverage for environmental modifications for all waiver participants, and now covers bath safety items and door widening.37

Individuals who are receiving Medicaid-funded institutional services have had to spend down their assets and some may have credit issues that prevent them from obtaining phone, utility, and other services that require a good credit history. Transition coordinators need to address this potential barrier early in the planning process.

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