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Home and Community-Based Services Gets Funding Boost from ARP

The ARP increased federal matching rate by 10 percentage points for home and community-based services

June 4, 2021 – According to the Kaiser Family Foundation (KFF), the American Rescue Plan boosted the federal matching rate for Medicaid home and community-based services (HCBS) by 10 percentage points.

Home and community-based services help seniors and those with disabilities and chronic illnesses live independently. They are able to reside outside of institutions by getting assistance with daily needs. These include home health aide services, help with self-care tasks like eating and bathing, assistive technology, and supportive housing.

Negative Impact on Home and Community-Based Services from COVID-19

Though there were unmet needs for HCBS before COVID-19, the pandemic made the health disparities even worse. HCBS are often unaffordable out-of-pocket for many, making Medicaid the primary source of coverage for these services.

Home and community-based services only increased in the wake of COVID-19. New HCBS needs include expansion of covered services, COVID vaccine access, COVID education and outreach, family caregiver support costs, and provider COVID response.

The KFF noted, “The pandemic’s disproportionate impact on seniors and people with disabilities, particularly those living in congregate settings such as nursing homes, has brought heightened focus on the need for additional HCBS, and the growing elderly population in the coming years will further intensify the need for these services.”

ARP Combats HCBS Disparity

To combat this, the American Rescue Plan (ARP) increases the federal matching rate for Medicaid HCBS spending by 10 percentage points. The increase will last from April 1, 2021, through March 21, 2022, but the states can use the funds through March 31, 2024.

According to the law, states must use the funds to “implement, or supplement the implementation of, one or more activities to enhance, expand, or strengthen” Medicaid HCBS from what was offered prior to April 1, 2021.

CMS guidance on May 13, 2021, confirmed that funds must be used for home and community-based services that are “beyond what is available under the [state’s] Medicaid program as of April 1, 2021.”

Overall, KFF estimates that federal spending for home and community-based services could increase by $11.4 billion. This projection is similar to the $12.7 billion increase that Congressional Budget Office estimated.

View the entire Kaiser Family Foundation report here, including a state-by-state breakdown of the Estimated Additional Federal Dollars for Medicaid HCBS Under American Rescue Act HCBS FMAP Bump.

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