In a series of posts, Myers and Stauffer will highlight parts of the American Rescue Plan Act of 2021 that can have tremendous impact on delivery and financing of services by state health and human services programs.

In an update to our prior article regarding the 10 percent FMAP increase for HCBS services, we discuss some of the different options states are considering, a request for a 30-day extension, and a framework for states to use when evaluating program options. On May 13, 2021, CMS issued a state Medicaid directors letter providing guidance regarding the timing and use of the additional funding.[1] The guidance included a fast 30-day deadline for the submission of draft narrative and spending plans (June 12, 2021). Subsequent to that release, CMS has advised states that they have the option to request a 30-day extension to better consider and solicit stakeholder feedback.

Over the past month we have had an opportunity to discuss with several states their different ideas for use of the funding. Some states have pre-planned upcoming changes, such as rate increases in response to minimum wage changes or rate studies, an increase in the number of waiver slots, or the addition of a new service to strengthen community integration. The enhanced funding provides an opportunity for those states to implement these new initiatives with the increased funding and transition and to other funding sources when the enhanced FMAP period ends.

For states that do not have an initiative in the queue, a common concern is the inherent difficulty with investing in an ongoing program change that would be difficult to sustain after the funding period ends. With this limitation in mind, stakeholders have offered up recommendations to purchase equipment or other one-time commodities or to provide one-off bonus or retention payments to providers. States are naturally concerned that small rate increases intended to be short term will only provide temporary relief that will feel like a rate cut when the enhanced funding period ends and the rate reverts to the previous amount. Short term purchases that may not be part of a larger strategy or based on quality do not always feel like an investment that will have long term impact.

The time frames for submitting a spending plan are short and exacerbate the issue of determining what states should include in their spending plans. States are concerned that they have little time to consider systemic changes that would improve HCBS, such as the introduction of quality incentives and payments, without the availability of quality measures suitable for their programs. Despite the compressed timetable, this funding provides an opportunity for innovation. So how are states reconciling the need to consider long term sustainability, the desire to make long- lasting change to strengthen the HCBS system, and the short time frame to consider options? We have discussed with states that first, they should identifying the outcome desired, or the specific program gap or need. Then, they can identify potential initiatives or solutions to achieve the outcome, through discussions with other agencies in the state and with stakeholders. Next, they should consider ways to measure whether the proposed solution can impact the desired outcome, and how to apply those measures to assess results.

Using this simple framework, potential spending plan recommendations that have not been specifically tied to an outcome or have not had an outcome articulated in their support will be more obvious. It is possible that such recommendations should be further refined or expanded, or perhaps even moved down on a priority list while other recommendations that meet more of the state’s identified outcomes or goal criteria take higher priority. Using this framework will also help to develop the narrative needed for CMS as it will clearly indicate how the state is using the funding to strengthen its HCBS program.

If you would like to hear more information about how Myers and Stauffer can help with HCBS services or any other part of the American Rescue Plan, please contact us.


Contact the Contributors:

Catherine Sreckovich
Julia Kotchevar, MA
Health Care Senior Manager