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DOH Develops Spending Plan for Enhanced HCBS FMAP Funds

The Department of Health (DOH) held a series of meetings with the various associations last week to discuss the allocation and uses of the 10 percentage point increase in the Federal Medical Assistance Percentage (FMAP) for home and community-based services (HCBS) enacted as part of the American Rescue Plan. DOH estimates that, if maximized, this increase will yield up to $2 billion, which if reinvested before March 31, 2022 can draw down additional federal match, thereby doubling its impact.

The May 13th Centers for Medicare and Medicaid Services (CMS) letter to states outlining the permitted uses and claiming of the HCBS FMAP funds is available here. The federal guidance requires DOH to submit a plan for its FMAP funds to CMS within 30 days (approximately June 13th), but CMS has offered states the opportunity to request an extension of up to 30 days. It appears that the State will seek an extension, but it is unclear whether it will seek the entire 30 days. LeadingAge NY plans to submit written recommendations to DOH by the end of this week.

The increased federal share must be used to supplement existing state funds for claims paid for qualifying Medicaid HCBS through March 31, 2022, retroactive to April 1, 2021. States must use the “state funds equivalent” to the “amount of federal funds attributable to the increased FMAP to implement or supplement the implementation of one or more activities to enhance, expand, or strengthen HCBS under the Medicaid program” (emphasis added). States will be permitted to use the state funds equivalent to the amount of federal funds attributable to the increased FMAP through March 31, 2024.

DOH described the principles that will guide its allocation and uses of funds:

  • Allocation of funds will be based on the HCBS program that generated the enhanced match (e.g., Office for People with Developmental Disabilities (OPWDD), Office of Mental Health (OMH), Office of Addiction Services and Supports (OASAS), DOH programs)
  • Maximization of federal match
    • Matchable expenditures will get preference
    • Uses that enable funds to be spent quickly will be preferred
  • Sustainability
    • E.g., upfront investments in systems capacity and workforce capacity
    • Limited duration proposals that can support sustainability will be preferred
      • E.g., would resist a built-in rate increase that would have to be unwound
  • Address risks and challenges in the HCBS system
    • E.g., access issues
  • Medicaid Redesign Team II (MRT II) and State Fiscal Year (SFY) 2021-22 budget realignment – consistency with those policies
  • COVID-19 experience – challenges exacerbated by COVID-19
    • E.g., supporting ongoing personal protective equipment (PPE) needs
  • Pushing the money out quickly through existing channels that do not require prolonged CMS approvals

States must meet certain program requirements to qualify for the funds and in using the funds:

  • Not impose stricter eligibility requirements or procedures:
    • Notably, due to maintenance of effort (MOE) requirements, DOH will not be implementing the 30-month lookback on transfers of assets before March 31, 2022. It believes that its state plan amendment (SPA) approved on April 1, 2021 will grandfather the minimum needs activities of daily living (ADL) and independent assessment (IA) provisions of the MRT II and that it will be allowed to implement those provisions without violating MOE requirements. It is confirming this with CMS. However, the SPA only pertains to fee-for-service (FFS) personal care and Consumer Directed Personal Assistance Services (CDPAS); eligibility for Managed Long Term Care (MLTC) is covered by an 1115 waiver amendment that is still pending. Thus, it is unclear whether the IA and minimum needs provisions can be implemented prior to the receipt of the enhanced FMAP funds.
  • Preserve covered HCBS, including the services themselves and the amount, duration, and scope of those services, in effect as of April 1, 2021; and
  • Maintain HCBS provider payments at a rate no less than those in place as of April 1, 2021.

The enhanced FMAP and the state funds equivalent may be used for any of the traditional HCBS services as set forth in Appendix B of the CMS guidance. States may use the funds for a variety of different purposes outlined in Appendix C, including, for example, specialized payment such as hazard pay, overtime and shift differential pay for home health workers and direct care workers, various leave benefits, workforce recruitment, specialized equipment such as PPE and testing supplies for agencies employing home health and direct care workers, assistive technologies to mitigate isolation, and more.

In addition, states may use the funds for “capacity building” and rebalancing as outlined in Appendix D. These activities include, for example, quality improvement activities, enhanced care coordination using technology, integrating Medicare and Medicaid data and developing integrated care models, providing respite for family caregivers, assisting managed care plans or providers to develop partnerships with community-based organizations, and strengthening person-centered planning. It is not clear whether all of the activities set forth in Appendices C and D would be matchable at the maximum rate or would be capable of implementation on a timeline that would enable the maximization of federal funds.

Home care and waiver representatives on DOH calls overwhelmingly stressed the importance of direct payments for wages as well as funding to assist in workforce recruitment and retention. The State has indicated that it is interested in distributing as much of the funding through MLTC payments as possible in order to avoid prolonged federal SPA approval processes. Plan participants on the call stressed the need to avoid the problems associated with other pass-throughs, including burdensome reporting, reconciliation and audit requirements, and contract negotiation challenges. Provider participants stressed the need for transparency to ensure that funding flows down to workers.

The State appears to be interested in supporting workforce development and has mentioned using the Workforce Investment Organizations (WIOs) as a platform for training. LeadingAge NY has stressed to DOH (in the past and again this past week) that we need to invest in recruiting more people into the long term care field, not just enhance the skills of existing workers.

Please let us know as soon as possible, but no later than COB on Thurs., June 3rd, how funds might be used to support members.

Contact: Karen Lipson, klipson@leadingageny.org, or Meg Everett, meverett@leadingageny.org. Both can be reached at 518-867-8383.