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June 14, 2021

Home and Community-Based Services: Additional Federal and State Funding

The Centers for Medicare and Medicaid Services (CMS) has issued guidance for states to participate in a temporary 10-percent increase to the Federal Medical Assistance Percentage (FMAP) in various state Medicaid expenditures for home and community-based services (HCBS), including Medicaid managed care expenditures. This federal initiative was enacted as a component of the federal American Rescue Plan Act for financial recovery from the COVID-19 pandemic. States must use the additional federal funds to supplement, not supplant, existing state funds expended for Medicaid HCBS effective April 1, 2021. Further, participating states must provide additional state funds equivalent to the additional federal funds to enhance, expand, or strengthen HCBS.

The recently adopted New York State budget appropriates funds regarding this initiative. A state must demonstrate compliance with certain conditions from April 1, 2021, until the state funds are fully expended; not impose stricter standards, methodologies, or procedures for HCBS programs and services; preserve covered services; and maintain HCBS provider payments at a rate no less than those in place on April 1, 2021.

The federal funds percentage increase applies for expenditures beginning April 1, 2021, through March 31, 2022, and the required equivalent state funds may be used by the state through March 31, 2024, on qualifying activities. A list of state plan and waiver programs qualifying for the increased FMAP is provided, including home health, personal care, consumer directed care, school based services, rehabilitative care, long-term services and supports, and PACE services.

States can implement a variety of activities, including enhancements to HCBS services, eligibility, infrastructure, and reimbursement methodologies; states may also implement non-Medicaid activities such as initiatives to address social determinants of health and health disparities. States must submit an initial state spending plan and narrative to CMS by mid-June 2021. The Office for People With Developmental Disabilities advises on its website that it is seeking feedback to determine how the funding can best be used.

Members of Barclay Damon’s Health Care & Human Services and Health Care Controversies Practice Areas will continue to monitor any future developments regarding CMS’s guidance.

If you have any questions regarding the content of this alert, please contact; Eugene Laks, of counsel, at; Melissa Zambri and Susan Benz, co-chairs of the Health Care & Human Services Practice Area, at and, respectively; Linda Clark, Health Care Controversies Practice Area chair, at; or another member of the firm’s Health Care & Human Services or Health Care Controversies Practice Areas.


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