The Omnibus Budget Reconciliation Act of 1981 (August 13, 1981) allowed the Secretary of Health and Human Services the authority to waive certain existing Medicaid requirements so that states could receive federal Medicaid cost-share for “noninstitutional” services for Medicaid-eligible individuals. This Medicaid Home and Community-Based Services (HCBS) Waiver, when granted, permits states to provide community services to people with intellectual disabilities/developmental disabilities (ID/DD) who, without them, would remain in, or would be at a risk of, being placed in a Medicaid “institution” (Intermediate Care Facility for the Mentally Retarded [ICF/MR] being the primary Medicaid institution type for persons with ID/DD).
A wide variety of community services are provided in state HCBS programs, including, most often, service coordination, in-home supports, vocational and day services, and respite care. Given its flexibility, potential for supporting individualized services, and offer of federal cost-share for community services previously funded almost entirely by state monies, the HCBS program was recognized as an extremely important resource to help states expand community services and reduce or eliminate institutional care. Fiscal year (FY) 1982 was the first year in which states could apply for a Waiver in order to use the HCBS option. At the end of state FY 1982 (June 30), only 2 states (Montana and Oregon) were offering HCBS to persons with ID/DD and to only a total of 1,381 people. In the first decade of the HCBS program, there was steady growth in recipients and expenditures, from those 1,381 persons and $2.9 million in expenditures in 1982 to 62,429 recipients and $294 million in expenditures by the end of FY 1992. During this period, however, HCBS program growth was substantially restricted by regulatory requirements that states demonstrate reductions in projected ICF/MR residents and expenditures roughly equal to the increases in HCBS participants and expenditures. Beginning in the early 1990s, these requirements were considerably relaxed and then were dropped altogether in the 1994 revision of the HCBS regulations. As a result, growth in HCBS recipients and expenditures accelerated very rapidly. Between June 30, 1992, and June 30, 1997, recipients increased by 256% and expenditures by 260%. These and later changes are shown in Figures 1 and 2. Between the end of FYs 1997 and 2002, recipients increased by 71% and total expenditures by 124%. At the end of FY 2002, the Medicaid HCBS “alternative” to ICF/MR placement had 3.4 times more service recipients than did ICFs/MR and total expenditures that were 24% greater than for ICFs/MR.
Table 1 shows the changes in HCBS recipients and expenditures on a state-by-state basis at 5-year intervals between June 1987 and June 2002 (1982 was omitted because only Oregon and Montana had HCBS recipients in that fiscal year). As in so many aspects of services to persons with ID/DD, the differences among states are notable. (Source: Residential services for persons with developmental disabilities: Status and trends through 2002. Minneapolis: University of Minnesota, Research and Training Center on Community Living/ICI).