The American Rescue Plan Act: $11 Billion Allocated to States to Increase Home and Community-Based Services

Published in Today’s Geriatric Medicine Magazine (September 2021)

By Jason Bloome

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (ARPA), implementing a $1.9 trillion COVID-19 relief package. Part of ARPA (Sections 9817) provides qualifying states with a temporary 10 percentage point increase to the federal medical assistance percentage (FMAP) for certain Medicaid expenditures related to home and community-based services (HCBS) from April 1, 2021, through March 31, 2022.

HCBS allows Medicaid-eligible low-income older adults and people with disabilities and chronic illnesses to live independently at home or in community-based care homes (eg, assisted living homes) instead of skilled nursing facilities (SNFs). HCBS includes but is not limited to transportation services, supportive housing, preparing meals, home health aide services, and assistance with custodial care needs (eg, help with dressing, bathing, incontinence, etc).

During the COVID-19 crisis, states increasingly rely on HCBS to decompress SNFs but the trend to shift long-term services and supports (LTSS) from expensive SNFs to more affordable HCBS has been accelerating throughout the nation. The proportion of HCBS vs LTSS spending varies by states—ranging from 30% to 83%. On average, HCBS accounted for 56% of Medicaid LTSS spending—up from 48% in 2010. States that succeed in LTSS rebalancing from expensive SNF to more affordable HCBS generate Medicaid dollar savings and provide new pathways for SNF diversion/transition for the low-income older adults and disabled. Hindering states’ ability to rebalance LTSS are budgetary and enrollment limits resulting in long HCBS waitlists.

The federal government pays between 56% and 84% of a state’s Medicaid expenses, depending on the state. Under FMAP, a state that receives 60% in federal payments for their Medicaid expenditures will now receive 70%. The Centers for Medicare and Medicaid Services (CMS) mandates that states use the increased FMAP to supplement, not supplant, state funds used for HCBS. It also prohibits states from using state funds equivalent to the amount of federal funds made available by the increased FMAP to pay for HCBS that are available under their Medicaid program as of April 1, 2021.

The 10% increase in FMAP for HCBS will be added to the state’s regular Medicaid matching rate (eg, states must match the increased FMAP dollars with their own funds) to implement, supplement, strengthen, enhance, or expand HCBS programs. CMS expects states to submit an initial HCBS spending plan and commentary and to provide quarterly updates. States have until March 31, 2024, to spend the enhanced FMAP funding.

The federal government allows FMAP to be claimed by states for the following categories:

• home health and private duty nursing;
• personal care;
• case management;
• certain school-based services;
• behavioral health rehabilitative services;
• 1915c waiver services;
• 1915(i) state plan services;
• Program of All-Inclusive Care for the Elderly; and
• managed LTSS.

The Congressional Budget Office estimates the increase federal Medicaid spending through ARPA will increase HCBS spending by $11.4 billion, giving states a needed boost to create and/or strengthen pathways for nursing home diversion/transition.

— Jason Bloome is owner of Connections – Care Home Consultants, an information and referral agency for care homes for the elderly in California.