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 the second installment of our series on the American Rescue Plan Act (ARPA) of 2021 we are focusing on opportunities for states to receive a 10 percentage point increase in federal matching funds for state expenditures on home and community based services (HCBS) made between April 2021 and March 2022. On May 13, 2021, CMS issued a state Medicaid directors letter providing guidance regarding the timing and use of the additional funding.[1] The newly issued guidance creates urgency for states and at the same time provides much needed flexibility and guidance states may not have anticipated.

Beginning on May 13, states have 30 days to submit a proposed spending plan and narrative to CMS. This is an incredibly short timeframe within which to work, but CMS did provide some assurances that they would work with states to be flexible about the proposed uses of the funding and future changes states may make to their spending plan as they engage stakeholders. Funding must be used to support activities to enhance, expand, or strengthen HCBS services and not to supplant planned expenses. While this is a great opportunity to provide a short term infusion of funding into HCBS services, at first glance the timeframe appears to be shorter than it actually is. State savings are generated this fiscal year (April 2021-March 2022), and while there is a short time frame to demonstrate you wish to participate (the 30 days referenced above), states have until 2024 to fully expend the savings generated by the increase in FMAP.

The short time frame for creating a draft spending plan does not allow a lot of time for developing ideas. Many states may find that partially developed strategies may already exist. If the state has a waiver wait list and is seeking to foster greater community integration and long-term services and supports rebalancing, this funding can provide the incentive to start the program and fund it in part until 2024. If the state has considered implementing value based purchasing, policy changes, or quality initiatives, for example, but have held off because of concerns related to implementation, this provision of the ARPA could be the opportunity to implement those changes. Providing a short term incentive to kick-start a quality initiative can help quite a bit with implementation. Generally, a change to policy or process can slow down services or require providers to make changes, all of which may have an adverse effect on productivity in the short term until everyone in the process adjusts to new or different workflows. Providing increased funding during this time where providers and program participants are learning and adapting can soften any impact made by new changes. If some work has already been completed to identify services, programs, or policies needing change, then implementation could happen on a more accelerated time frame.

Implementing quality initiatives or value based purchasing in HCBS services can be daunting. Typical measurements of health outcomes may not be relevant to services where the focus is to provide dignity, independence, and self-determination for participants. Developing and measuring HCBS outcomes that measure these types of outcomes requires an investment. Utilizing this time where additional funding is available can help states to innovate and iterate on what those outcomes might look like and how they might be measured.

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

Contact the Contributors:

Catherine Sreckovich
Julia Kotchevar, MA
Health Care Senior Manager