LTSS are generally provided in two settings: (1) institutional settings,  such as nursing facilities and intermediate care facilities for individuals  with intellectual disabilities; and (2) home and community settings, such  as homes or assisted living facilities. States that offer this benefit receive a 6 percentage  point increase in their federal medical assistance percentage for services  provided under this option. Medicaid Spending on LTSS

Medicaid spending on LTSS is significant, representing about 30 percent  of total Medicaid program spending in fiscal year 2016, and the  percentage of LTSS spending used for HCBS has grown over time. Selected States’ HCBS Program Structures Reflect Decisions about Populations to Cover, Whether to Limit Eligibility or Enrollment, and Managed Care Preferences

The structure of the 26 HCBS programs we reviewed in selected states  reflected decisions about which populations states wanted to cover,  whether to limit eligibility for or enrollment in HCBS programs, and  whether the state wanted to provide HCBS through managed care (i.e.,  MLTSS). Decisions about Which Populations to Cover

Four of our five selected states—Florida, Mississippi, Montana, and  Oregon—had multiple HCBS programs (21 in total) that targeted specific  populations. The fifth state, Arizona, used one program to provide HCBS  to individuals who are aged or disabled and those with intellectual or  developmental disabilities. (See appendix I for a list of the HCBS  programs and populations served in each of the selected states.) Two of the programs  were targeted to individuals with intellectual or developmental  disabilities, including a state plan benefit that provided services that  help beneficiaries develop daily living and social skills, as well as  opportunities to participate in community activities, and promote an  individual’s ability to obtain and maintain employment. Decisions about Whether to Limit Eligibility or Enrollment

All five of the selected states had at least 1 HCBS program that limited  eligibility to individuals who require an institutional level of care. Four of the selected states—Florida, Mississippi, Montana, and Oregon— had enrollment caps for 1 or more of their HCBS programs, namely all of  the 19 HCBS programs operated under 1915(c) waivers. Specifically,  Arizona and Florida used blended capitation rates, meaning that the  rate or amount the states pay MCOs to cover expected costs for each  LTSS beneficiary is the same for all beneficiaries regardless of  whether they are in a nursing home or in a home- and community- based setting. The Effects of Litigation on the Structure of HCBS Programs

Officials from two of the selected states—Oregon and Mississippi—told  us that settlements resulting from litigation have shaped the structure of  their HCBS programs for certain populations. Selected States Described Challenges Providing HCBS, Such As Workforce Issues, and Steps Taken to Respond to These Challenges

Officials from the five selected states and MCOs we interviewed  described challenges with providing HCBS, including workforce issues,  such as recruiting and retaining direct care workers; serving beneficiaries  with complex medical and behavioral health needs; and other challenges. To respond to these workforce issues, officials from Montana and  Mississippi and two MCOs reported offering higher payment rates to  providers. Officials from the selected states and MCOs we interviewed said that they  have responded to the challenge of serving HCBS beneficiaries with  complex medical or behavioral health needs by (1) supporting the  development of locations in the community to serve individuals with  specific complex needs, (2) training providers, and (3) increasing care  coordination. Limited Funding for HCBS Programs

Officials from four selected states and officials from one of the MCOs in  the fifth state told us that limits on funding for HCBS programs were a  challenge, particularly in the context of the growing number of individuals  with LTSS needs. Officials who cited HCBS funding as a challenge said that they responded  to these challenges by, among other things, providing information to their  legislatures on the projected need for HCBS to inform future funding  decisions. Other Challenges

State and MCO officials also mentioned other challenges providing  HCBS:
Affordable housing. Agency Comments

HHS provided technical comments on a draft of this report, which we  incorporated as appropriate. At that time, we will send copies of this report to the  Secretary of Health and Human Services and other interested parties. Medicaid Managed Care: Improved Oversight Needed of Payment Rates  for Long-Term Services and Supports. GAO-12-649.
Why GAO Did This Study

The need for LTSS to assist individuals with limited abilities for self-care is expected to increase, in part due to the aging of the population. Medicaid is the nation's primary payer of LTSS, with spending estimated at $167 billion in 2016. State Medicaid programs are generally required to cover LTSS provided in institutions, such as nursing homes, but coverage of the same services outside of institutions—that is, HCBS—is generally optional. In recent years there have been efforts to shift the balance of LTSS away from institutions through the expanded use of HCBS. National spending for HCBS has increased and now exceeds that for services in an institution. However, the extent to which Medicaid programs cover HCBS varies by state, as does the structure of states' HCBS programs.
GAO was asked to review the approaches states use to provide coverage for HCBS in the Medicaid program. For selected states, this report describes (1) decisions that influenced the structure of Medicaid HCBS programs, and (2) challenges providing HCBS to Medicaid beneficiaries and efforts to respond to these challenges. GAO reviewed information and conducted interviews with officials from a nongeneralizable sample of five states, which GAO selected to obtain variation in the percentage of total Medicaid LTSS expenditures used for HCBS, geography, and other factors. GAO also reviewed information and interviewed officials from four MCOs—two in each of the two selected states that used managed care to provide HCBS. The MCOs varied in enrollment size and population served.

What GAO Found

All state Medicaid programs finance coverage of long-term services and supports (LTSS), which help beneficiaries with physical, cognitive, or other limitations perform routine daily activities, such as eating, dressing, and making meals. When these services are provided in beneficiaries' homes or other community settings instead of nursing homes, the services are known as home- and community-based services (HCBS). The structure of the 26 HCBS programs we reviewed in five states—Arizona, Florida, Mississippi, Montana, and Oregon—reflected decisions about which populations to cover, whether to limit eligibility or enrollment, and whether to use managed care.
Populations: Four of the five states had multiple HCBS programs that targeted specific populations. For example, Mississippi had separate HCBS programs for aged or physically disabled individuals and individuals with intellectual or developmental disabilities. The fifth state, Arizona, had one program that targeted two specific populations.
Eligibility: All five states had at least one HCBS program that limited eligibility to beneficiaries whose needs would otherwise require care in a nursing home or other institutional setting.
Enrollment: Four of the five states limited enrollment in one or more of their HCBS programs; 19 of the 26 programs had enrollment caps, and 12 of these programs maintained a waiting list.
Managed care: Two of the five states used managed care to provide HCBS, paying managed care organizations (MCO) a fixed fee for each beneficiary rather than paying providers for each service delivered.
State and MCO officials identified several challenges providing HCBS and described their efforts to respond to them:
HCBS workforce: Officials cited challenges recruiting and retaining HCBS providers, particularly given the low wages these providers typically receive. To respond to this, officials from Mississippi, Montana, and two of the MCOs reported offering providers higher payment rates.
Complex needs: Officials described challenges serving beneficiaries with complex medical and behavioral health needs, including individuals who display aggressive or other challenging behaviors. Officials from Montana and one MCO reported responding to this challenge by providing behavioral health training for providers.
HCBS funding: State officials reported that limitations on overall HCBS funding levels posed a challenge, which they responded to by providing their state legislatures with information on the projected need for HCBS to inform future funding decisions, and leveraging other available resources, such as federal grants.
The Department of Health and Human Services provided technical comments on a draft of this report, which GAO incorporated as appropriate.