. . would require the level of care provided” in an institutional setting such as an ICF/MR; (2) total Medicaid per capita costs for waiver program recipients are not greater than total Medicaid per capita costs for persons receiving institutional care; and (3) states properly assure quality. States Use Waivers to Expand and Change Programs for Developmentally Disabled

Through the use of waivers, states have changed long-term care nationally for persons with developmental disabilities in two ways. More people are now served through the waiver program than the ICF/MR program. States believed that they could use the waiver program to expand services while simultaneously reducing or limiting access to ICF/MR program care as a means to control growth in expenditures. Flexibility of the Waiver Program Has Allowed States to Pursue Distinct Strategies

States have used the flexibility of the waiver program to pursue distinct strategies and achieve different program results as shown in the three states we visited (see table 2). States Are Changing Their Waiver Programs to Serve More Individuals at Home

In the continuing evolution of services for persons with developmental disabilities, some states, such as Florida, Michigan, and Rhode Island, are changing the focus of waiver program services from group home care to more tailored services to meet individuals’ unique needs and preferences at home. Medicaid Costs Rose During Planned Expansion in Persons Served

Nationwide, Medicaid costs for long-term care services for persons with developmental disability rose at an average annual rate of 9 percent between 1990 and 1995 as states implemented their planned increases in the number of persons served. Most of the increase reflected increased costs for waiver program services, but increased ICF/MR program costs also were a factor. First is a cap on the number of program recipients. States have also used several management practices to help contain costs. These changes are intended to provide recipients and families with a greater choice of services within appropriate budget and safety limits. However, state officials and HCFA agree that more development of quality assurance approaches is needed. Long-Term Care: Status of Quality Assurance and Measurement in Home and Community Based Services (GAO/PEMD-94-19, Mar.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed states' experiences in utilizing the Medicaid waiver program to provide care for developmentally disabled adults in alternative settings, focusing on: (1) expanding state use of the waiver program; (2) controlling long-term care costs for developmentally disabled individuals; and (3) the strengths and limitations in states' quality assurance approaches in community settings.

What GAO Found

GAO found that: (1) based on national data and three case studies, states' use of the waiver program has changed long-term care for developmental disabled persons by providing such persons with a broader range of services that they and their families prefer; (2) the waiver program has increased the number of persons served and the use of group home settings while allowing states to close many institutional care facilities and to expand services to persons in state-financed programs; (3) states now serve more developmentally disabled persons through the waiver program than the institutional program; (4) the waiver program has allowed states to pursue distinct strategies and achieve different program results; (5) from 1990 to 1995, Medicaid costs for long-term care for developmentally disabled persons increased an average of 9 percent annually due to increased costs for waiver and institutional program services, but per capita costs and cost increases varied by state; (6) the cap on the number of program recipients and state management practices helped contain these costs; (7) changes in the Health Care Financing Administration's (HCFA) process for setting waiver program caps could increase program costs, but HCFA believes that state budget constraints could limit program growth; and (8) although states are changing their quality assurance procedures for waiver program services, such as customizing quality assurance to individual circumstances, more needs to be done to improve quality oversight mechanisms and reduce participants' risk as these mechanisms evolve.