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LIFE Account Options
The Centers for Medicaid & Medicare Services (CMS) have a number of options for states to enhance the independence of people with disabilities, as well as test methods to save both the states and Federal Government money. Additionally, changes from the Deficit Reduction Act of 2005 (enacted on Feb 8, 2006) have created the potential for more alternatives. Between 1999 and 2003, the fastest-growing Medicaid population was non-disabled adults. While total Medicaid eligibles grew 35 percent in this period, non-disabled adults grew 69 percent nationally. More than $100 billion of Medicaid spending is currently delivered through waivers and demonstrationsi. Some of these waiver programs present opportunities for people with disabilities to become more self-sufficient and possibly build assets.
As stated in the EQUITY September '06 Feature article, states currently have six options for developing consumer-directed home and community-based programs that could accommodate LIFE Accounts: Section 1915(b) waivers, Section 1937 programs, Section 1115 Demonstrations, Section 1915(c) waivers, Section 1915(i) waivers and Section 1915(j) waiversii.
The final regulations regarding changes from the Deficit Reduction Act for Section 1937 and Sections 1915 (i) and (j) have yet to be issued and are expected by the end of 2006. The following includes detail about Section 1915 (b) & (c) waivers and Section 1115 Demonstration projects.
Section 1915(b) Managed Care/Freedom of Choice Waivers
Section 1915(b) of the Social Security Act provides the Secretary of
Health and Human Services authority to grant waivers that allow states
to implement managed care delivery systems, or otherwise limit
individuals' choice of provider under Medicaid.
States may request Section 1915(b) waiver authority to operate programs that impact the delivery system of some or all of the individuals eligible for Medicaid in a state by
- mandatory enrollment of beneficiaries into managed care programs (although states have the option, through the Balanced Budget Act of 1997 to enroll certain beneficiaries into mandatory managed care via a State Plan Amendment), or
- creating a "carve out" delivery system for specialty care, such as behavioral health care.
Section 1915(b) waiver programs do not have to be operated statewide. They may not be used to expand eligibility to individuals not eligible under the approved Medicaid state plan. States also have the option to use savings achieved by using managed care to provide additional services to Medicaid beneficiaries not typically provided under the state plan.
A Section 1915(b) waiver program cannot negatively impact beneficiary access, quality of care of services, and must be cost effective (cannot cost more than what the Medicaid program would have cost without the waiver). Section 1915(b) waivers do not carry the evaluation requirements necessary for Section 1115 waivers, but an independent assessment is due for the first two waiver periods.
States with various forms of 1915(b):
Alabama, Alaska,
Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho,
Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota,
Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New
Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon,
Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia,
Washington, West Virginia, and Wisconsiniii.
Section 1115 Demonstrations
Section 1115 of the Social Security Act provides the Secretary of
Health and Human Services broad authority to authorize experimental,
pilot, or demonstration projects likely to assist in promoting the
objectives of the Medicaid statute. Flexibility under Section 1115 is
sufficiently broad to allow states to test substantially new ideas of
policy merit. These projects are intended to demonstrate and evaluate a
policy or approach has not been demonstrated on a widespread basis.
Some states expand eligibility to individuals not otherwise eligible
under the Medicaid program, provide services that are not typically
covered, or use innovative service delivery systems.
Projects are generally approved to operate for a five-year period, and states may submit renewal requests to continue the project for additional periods of time. Demonstrations must be "budget neutral" over the life of the project, meaning they cannot be expected to cost the Federal government more than it would cost without the waiver.
States with various forms of 1115: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyomingiv
The Section 1915(c) HCBS Waiver
The home and community-based services (HCBS) waiver programs,
authorized under Section 1915(c) of the Social Security Act, are the
Medicaid alternative to providing long-term care in institutional
settings. Because the statutory authority makes the Section 1915(c)
waivers available only as an alternative to institutionalization, this
requirement may not be waived. Under this authority, states may provide
an array of services as long as these services are required to keep a
person from being institutionalized in a hospital, nursing facility or
intermediate care facility for the mentally retarded (ICF/MR).
The Section 1915(c) authority gives states flexibility to design HCBS waiver programs that target specific populations; commonly targeted groups have included the elderly, persons with physical disabilities, developmental disabilities, mental retardation or mental illness. States may also design HCBS waiver programs to target populations that share a specific illness or condition, such as technology-dependent children, individuals with AIDS, or persons with acquired or traumatic brain injury. This targeting is accomplished through a waiver of the comparability requirements in the Medicaid statutev.
States may offer a variety of services to participants under a 1915(c) waiver program and are not limited as to the number of services that can be provided. They may use an HCBS waiver program to provide a combination of traditional medical services (i.e., dental services, skilled nursing services, etc.) with non-medical services (i.e., respite, case management, environmental modifications, etc.). There are no specific services that must be offered in a Section 1915(c) waiver program. The number of services that can be offered under a single waiver program is not limited as long as the waiver is cost neutral in the aggregate and the services offered are necessary to avoid institutionalization.
The States with various forms of 1915(c):
Alabama, Alaska,
Arkansas, California, Colorado, Connecticut, Delaware, District of
Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa,
Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan,
Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New
Hampshire, New Jersey, New Mexico, New York, North Carolina, North
Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South
Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington,
West Virginia, Wisconsin, Wyomingvi.
The following chart summarizes a comparison of Section 1115 waivers and Section 1915(c) waiversvii:
| §1915(c) Waivers versus §1115 Demonstrations | ||
|---|---|---|
| Issue | Section 1915(c) HCBS Waiver Authority | Section 1115 Demonstration Authority |
| Requirements that may be waived | Statewideness Comparability of services Community income and resource rules for the medically needy | The Secretary may waive provisions of Section 1902 of the Social Security Act if it is likely to assist in promoting the objectives of the Medicaid program. |
| Cash Allowance | Participant does not manage a cash allowance directly. | Participant may manage a cash allowance directly. |
| Hiring Legally Responsible Individuals (Spouse, parents of minor children, legal guardians) | Participant may hire legally responsible individuals if certain requirements are met. | The Secretary may approve programs in which a participant may hire legally responsible individuals. |
| Provider Agreements | Provider Agreements must be executed (delegation to a provider agency is permitted). | Not required |
| Direct Payment to Providers | Direct Payment by the Medicaid agency (or eligible entity) to providers is required (delegation to a provider agency is permitted). | Not required |
| Payment for Services | Reimbursement occurs after service delivery. | Funds are available prior to service delivery. |
| Level of Care | Individuals meeting institutional level of care only | Institutional level of care is not required. |
| Combining Populations | Combining populations is limited to:
1) Aged/Disabled 2) Mentally Retarded or Developmentally Disabled 3) Mentally Ill 4) Any subgroup of the above. |
Generally, states may combine populations or include new or expanded populations. |
| Review Process | Application and/or Amendment must be approved by CMS. | Application/Amendment must be approved by CMS and an External Federal Review Team. CMS conducts a readiness review site visit. |
| Length of Approval | Waivers are approved for 3 years and renewed in 5-year increments. | Demonstrations are approved for 5 years and renewed in 5-year increments. |
| Financial Reporting | Waiver must be cost neutral (waiver costs compared to institutional | Demonstration must be budget neutral over the life of the project, and may cost no more than what CMS would |
| costs of same individuals). | have paid without the demonstration. | |
| Combine Service Definitions | May not combine dissimilar services into one service unit. | May combine dissimilar services into one service unit. |
| Program Evaluation | Not required. | Required. |
| COMPARISON OF 1915(i) and 1915(j) Deficit Reduction Act of 2005 (DRA), P.L. 109-171 | ||
|---|---|---|
| Issue | Section 1915(i) State Plan Authority | Section 1915(j) State Plan Authority |
| Requirements that may be Waived | Statewideness Community income and resource rules for the medically needy | Statewideness Comparability |
| Effective Date | 1/1/07 | 1/1/07 |
| Cash Allowance | Cash Allowance is not in the statutory list of permissible services. | CMS decision pending |
| Hiring Legally Responsible Individuals (Spouse, parents of minor children, legal guardians) | Participant may hire legally responsible individuals if state elects to allow. | Participant may hire legally responsible individuals if state elects to allow. |
| Provider Agreements | Provider Agreements must be executed (delegation to a provider agency is permitted). Participant may hire legally responsible individuals if state elects to allow. | Provider Agreements must be executed (delegation to a provider agency is permitted). |
| Direct Payment to Providers | Direct Payment by the Medicaid agency (or eligible entity) to providers is required (delegation to a provider agency is permitted). | Direct Payment by the Medicaid agency (or eligible entity) to providers is required (delegation to a provider agency is permitted). |
| Payment for Services | Reimbursement occurs after service delivery. | Reimbursement occurs after service delivery. |
| Level of Care | Less stringent than institutional level of care | Individuals meeting institutional level of care only. |
| and impacts state institutional rules. | ||
| Combining Populations | Generally, states may combine populations or include new or expanded populations because there is no waiver of comparability but financial restrictions apply to all. (150% FPL limit) | Possible |
| Review Process | State Plan Amendment must be approved by CMS. | State Plan Amendment must be approved by CMS. |
| Length of Approval | One-time approval | One-time approval but annual report and triennial report on impact to health and welfare required |
| Financial Reporting | Part of annual report - aggregate expenditures Financial accountability assurance | Part of annual report - aggregate expenditures Financial accountability assurance |
| Combine Service Definitions | May not combine dissimilar services into one service unit | May combine dissimilar services into one service unit |
| Program Evaluation | Not required | Not required |
| Maintenance of Effort (MOE) Required | No | No, but state must have alternative PCA program or HCBS waiver available. |
| Self-direction option | Yes | Yes |
| Other | PAS may not be provided in a setting that is owned operated or controlled by provider that is not related to participant. | |
| FFP restriction | Fiscal management entity costs are limited to applicable administrative rate. | |
iRoadmap to Medicaid Reform: New Options to Improve and Expand Insurance Coverage for Acute Care Needs. March 31, 2006. Centers For Medicaid & Medicare Services.
iiIn theory a state could also use a state plan personal assistance program but this option is not presented here because it lacks in flexibility in comparison with the other options.
iiiInformation about waivers and demonstrations, including which states have certain waiver and demonstration projects was found at the Centers for Medicare & Medicaid website. More details about the various forms of these projects can be derived by searching by state and/or waiver and demonstration numbers at the CMS site: http://www.cms.hhs.gov/MedicaidStWaivProgDemoPGI/01_Overview.asp
ivSee CMS website for more information: http://www.cms.hhs.gov/MedicaidStWaivProgDemoPGI/01_Overview.asp
v42 U.S.C. §1396a.
viSee CMS website for more information: http://www.cms.hhs.gov/MedicaidStWaivProgDemoPGI/01_Overview.asp
viiBezanson, L., & Crisp, S.(forthcoming) Medicaid Options for Model LIFE Account Programs. Independent Living Research Utilization Community Living Partnership. July 2006.