Press release




More states than ever are re-directing Medicaid funds to keep more people out of institutions and living in their own communities and homes, and there are many approaches that states can use to accomplish this, the Centers for Medicare & Medicaid Services (CMS) said today in a letter to state Medicaid directors.

"There is growing evidence that states can enable more people to live in the community by giving the elderly and people with disabilities more control over how they get the Medicaid services they need," said CMS Administrator Mark B. McClellan, M.D., Ph.D. "Because the concept of money following the person's own preferences improves satisfaction and may reduce Medicaid costs too, we intend to keep taking steps to remove barriers, real or perceived."

The Medicaid program, by law, favors institutional care for elderly and disabled individuals who needed help with activities of daily living. However, only paying for institutional care means that Medicaid beneficiaries would not have access to modern options for living in the community.

President Bush has taken many steps to encourage states to provide assistance in the home or in a community-based setting, including the 2001 New Freedom Initiative and the 2002 Independence Plus Medicaid waiver program. As part of his ongoing commitment under the New Freedom Initiative, President Bush proposed legislation in his 2005 federal budget that would temporarily all states more flexibility in their Medicaid payment systems without having to seek waivers from CMS. Included in those changes was a proposal called "Money Follows the Individual" that would further promote home and community based care as an alternative to institutionalization. President Bush has authorized $1.75 billion in funding for this initiative between the years 2005-2009.

In a letter to state Medicaid directors, CMS is advising states about what actions they can currently take while Congress reviews the necessary changes in the law.

The letter to the Medicaid directors addresses several areas of confusion that may be impeding state efforts to rebalance their long-term care support systems, specifically:


Home and Community-based Services (HCBS) Waiver Capacity and Cost Neutrality: The letter indicates that states may request to amend their current home and community-based waiver programs at any time to include additional participants. States that do so are still required to demonstrate the continued cost neutrality of those programs; however, most states have found that the waiver programs continue to demonstrate aggregate cost neutrality even with the addition of waiver participants.

Backfilling of Nursing Home Beds: The letter clarifies that implementation of re-balancing strategies does not require a commitment from states to refrain from backfilling nursing facility beds.

Self-Directed Models: While CMS continues to encourage states to consider Independence Plus and Cash and Counseling, the letter clarifies that the agency also recognizes other strategies for the provision of HCBS that expand the level of individual choice and control without making major modifications to state infrastructures. The selection as to which option is best may vary depending on the level of other community supports available, or simply the inclination of the individual. The letter describes a broad range of service delivery models related to assistant services, all of which can help beneficiaries achieve the goal of personal control and community living.


The letter also gives states specific examples of successful programs that give beneficiaries more control and result in more community participation, without raising Medicaid costs. For example, the letter cites the efforts of states such as Nevada, which is completely rebalancing its long-term care services programs so that community services and supports are the primary source of support for people living with disabilities. Maine and California programs are also examples of state programs that help keep people in their home and communities.

"Individuals and families have long wanted the flexibility to control how they receive the long-term care services they need," said Dr. McClellan. "Today's guidance makes clear that there are many options available to states to achieve this important goal, and we are ready to help any state that wishes to take action."

A copy of this letter can be obtained at . More information can be obtained about the Money Follows the Person initiative at