The Medicaid intermediate care facilities for the “mentally retarded” (ICF/MR) and Home and Community Based Services (HCBS) programs provide federal financial assistance to states to provide long-term supports for people with intellectual or developmental disabilities. The ICF/MR program, which began in 1971, promoted substantial change in institutional care of persons with disabilities, including population reductions in large facilities and the development of community group homes. The HCBS program, which began in 1981, supported continued reductions in institutional populations and fostered explosive growth in the number of people with disabilities receiving long-term supports in small community settings or in family homes. These changes have continued through the first decade of the 21st century despite the severe economic recession of 2007 through 2009.

One component of the American Recovery and Reinvestment Act of 2009 (ARRA), generally referred to as the “stimulus package,” was assistance to states through a temporary increase in the federal medical assistance percentage (FMAP), that is, the share of Medicaid expenditures reimbursed from federal funds. Between fiscal year (FY) 2004 and FY 2008, federal contributions to the Medicaid ICF/MR and HCBS programs increased from $16.34 billion to$19.375 billion, or about $0.607 billion per year (see Figure 1). State contributions to the Medicaid ICF/MR and HCBS programs for persons with intellectual or developmental disabilities increased from$11.096 billion in FY 2004 to $14.898 billion in FY 2008, or about$0.76 billion per year. In FY 2009, with the stimulus package, FMAP increased to an average of 65.4% from an average of 56.3% in FY 2008. For the Medicaid ICF/MR and HCBS programs for persons with disabilities, this change allowed an overall increase in Medicaid expenditures from $34.273 billion in FY 2008 to$37.269 billion in FY 2009. State contributions to these programs actually decreased from $14.898 billion in FY 2008 to$12.872 billion in FY 2009. Decreased state funding was more than counterbalanced by federal contributions that increased from $19.375 billion to$24.397 billion.

Figure 1

Changes in federal and state Medicaid ICF/MR and HCBS expenditures for persons with disabilities, FY 2004–FY 2009, with projections for FY 2012 (assuming state expenditures for ICF/MR and intellectual or developmental disability waiver equal FY 2009). ICF/MR  =  intermediate care facilities for the “mentally retarded”; HCBS  =  home and community based services; FY  =  fiscal year.

Figure 1

Changes in federal and state Medicaid ICF/MR and HCBS expenditures for persons with disabilities, FY 2004–FY 2009, with projections for FY 2012 (assuming state expenditures for ICF/MR and intellectual or developmental disability waiver equal FY 2009). ICF/MR  =  intermediate care facilities for the “mentally retarded”; HCBS  =  home and community based services; FY  =  fiscal year.

The ARRA's FMAP increases permitted continued growth in Medicaid expenditures for people with intellectual or developmental disabilities, especially within the HCBS program. The substantial increase in expenditures between FY 2008 and FY 2009 (about $3 billion) contributed substantially to a$10 billion total increase between FY 2004 and FY 2009 in Medicaid ICF/MR and HCBS expenditures for persons with disabilities, from $27.436 billion in FY 2004 to$37.269 billion in FY 2009 (an overall increase of 36%). Over the same period, the total number of people with disabilities receiving ICF/MR and HCBS services increased from 519,360 in June 2004 to 635,867 in June 2009, an overall growth of 22% (see Table 1). Change in Medicaid expenditures between FY 2004 and FY 2009 varied by state from an overall reduction in total expenditures of 1% in Michigan to an overall increase of 129% in the District of Columbia. In the 10 states with the lowest growth, overall expenditures grew by less than 19%. By contrast, in the 10 states with the highest growth, total expenditures grew by more than 56%. Similar variations were observed in the total number of ICF/MR and HCBS recipients between FY 2004 and FY 2009. In 10 states, the combined average daily recipients of these programs grew by less than 10%, including decreases in 4 states. By contrast, in 10 states, the total number of ICF/MR and HCBS waiver recipients with intellectual or developmental disabilities grew by 39%, to 61%.

Table 1

Five-Year Expenditure Patterns for ICF/MR and HCBS Long-Term Supports for Persons With Disabilities

Between FY 2004 and FY 2009, total expenditures for Medicaid long-term supports for people with disabilities grew by 37% (see Figure 1). This was aided significantly in FY 2009 by increased FMAP rates. These increases are scheduled to end in FY 2011. At that point, if states continue to spend the same amount of state funds on Medicaid ICF/MR and HCBS services as in FY 2009, when the FMAP reverts back to the pre-ARRA formula (assuming a return to the pre-ARRA average FMAP rate of about 56.5%), the combined federal and state funds to support Medicaid ICF/MR and HCBS long-term supports would decline from FY 2009 expenditures of $37.269 billion to about$29.462 billion in FY 2012. Of course, many factors may intervene in the interim.

(Sources: H.R. 1—111th Congress: American Recovery and Reinvestment Act of 2009. (2009). In GovTrack.us [database of federal legislation]. Retrieved October 25, 2010, from http://www.govtrack.us/congress/bill.xpd?bill=h111-1; Lakin, K. C., Larson, S. A., Salmi, P., Scott, N., & Webster, A. (2010). Residential services for persons with developmental disabilities: Status and trends through 2009. Minneapolis: University of Minnesota, Research and Training Center on Community Living, Institute on Community Integration; Prouty, R. W., Smith, G., & Lakin, K. C. (2005). Residential services for persons with developmental disabilities: Status and trends through 2004. Minneapolis: University of Minnesota, Research and Training Center on Community Living, Institute on Community Integration.)

## Acknowledgments

Preparation of this report was supported by a grant from the Administration on Developmental Disabilities (Grant 90D0217/01) of the U.S. Department of Health and Human Services and a cooperative agreement with supplemental support from the National Institute on Disabilities and Rehabilitation Research, U.S. Department of Education (Agreement H133B080005-09) to the University of Minnesota's Research and Training Center on Community Living.

Edited by K. Charlie Lakin and David Braddock