Understanding Medicaid Home and Community Services: A Primer, 2010 Edition. Which Authority to Use


The most common choice states face with regard to covering services in residential care settings is whether to use an HCBS waiver program, the State Plan Personal Care option, or both. The primary factor that will determine whether a state can use an HCBS waiver is whether a state’s residential care settings are permitted to serve a population that meets institutional level-of-care criteria--nursing home or ICF/ID. States that have several different types of facilities serving different populations--those who meet institutional level-of-care criteria and those who do not--may choose to use the waiver authority to finance services in one type of residential care setting and the State Plan Personal Care option in another.

For facilities serving individuals who meet nursing home level-of-care criteria, the HCBS waiver authority is advantageous in that states can broaden eligibility by using the 300 percent of SSI income rule to reach persons in the community who do not meet Medicaid’s community financial eligibility criteria. (The 300 percent rule is explained later in this chapter and in detail in Chapter 2.) The HCBS waiver also offers states considerable flexibility in defining the scope and array of services to be provided as there are no statutory definitions for services. However, since waiver services are available only to beneficiaries who meet the state’s nursing home or ICF/ID level-of-care criteria, serving people through a waiver will target a more severely impaired population than can be served through the State Plan Personal Care option.

Because states may set limits on the number of beneficiaries who can be served through waiver programs, waivers also offer the advantage of predictable costs, particularly for states concerned about utilization of a new benefit for older adults. The combination of institutional level-of-care eligibility criteria, a set number of slots, and expenditure caps that are part of the cost neutrality formula required for CMS approval will limit the number of people potentially eligible.

The Boxes below contain examples of how two states--North Carolina and Oregon--use different Medicaid authorities to provide services in residential care settings.30

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