Department of Health & Human Services

Centers for Medicare & Medicaid Services

Disabled and Elderly Health Programs Group

7500 Security Boulevard, Mail Stop S2-14-26

Baltimore, Maryland 21244-1850

 

Center for Medicaid and State Operations

 

 

                                                                                                                        SMDL #02-008

 

                                                                                    May 9, 2002

 

Dear State Medicaid Director:

 

Medicaid home and community-based services (HCBS) waivers are the statutory alternative to institutional care.  Many states have found in HCBS waivers a cost-effective means to implement a comprehensive plan to provide services in the most integrated setting appropriate to the needs of individuals with disabilities.

 

However, individuals seeking a return to the community from institutions are faced with many one-time expenses, and many states are unclear about the extent to which waivers cover transition costs.  Examples of those expenses include the cost of furnishing an apartment, the expense of security deposits, utility set-up fees, etc.  Other states have expressed interest in having the waivers pay for apartment/housing rent.  This letter is designed to answer such questions.

 

Federal funding under Medicaid HCBS waivers is not available to cover the cost of rent.  States may offset rental expenses from state-only funds that augment federal HCBS resources, but federal financial participation (FFP) for such a purpose is not available for any apartment/housing rental expenses.

 

As the HHS Report for the President’s New Freedom Initiative stated, however, states may secure federal matching funds under HCBS waivers for one-time, set-up expenses for individuals who make the transition from an institution to their own home or apartment in the community, such as security deposits, that do not constitute payment for housing rent.

 

 

 

 

Page 2 – State Medicaid Director

 

States may pay the reasonable costs of community transition services, including some or all of

the following components:

 

·        Security deposits that are required to obtain a lease on an apartment or home; 

·        Essential furnishings and moving expenses required to occupy and use a community domicile;

·        Set-up fees or deposits for utility or service access (e.g. telephone, electricity, heating);

·        Health and safety assurances, such as pest eradication, allergen control or one-time cleaning prior to occupancy.

 

By reasonable costs, we mean necessary expenses in the judgment of the state for an individual to establish his or her basic living arrangement.  For example, essential furnishings in the above context would refer to necessary items for an individual to establish his or her basic living arrangement, such a bed, a table, chairs, window blinds, eating utensils, and food preparation items.  We would not consider essential furnishings to include diversional or recreational items such as televisions, cable TV access or VCRs.

 

States that choose to include community transition services in their HCBS waivers must demonstrate that this service, in combination with other services furnished under the waiver, would be cost-neutral to the Medicaid program.  (In the streamlined HCBS waiver format, this cost neutrality is demonstrated in appendix G.)  To be eligible for FFP, the service must be included in the individual’s written plan of care (service plan) and fit within the service definitions established by the state. 

 

For more than three years CMS has awarded “Nursing Facility Transition Grants” to states in which transition costs have been paid from grant funds.  Those states found that coverage of transition expenses has been manageable, cost-effective and has greatly facilitated the expeditious integration of individuals into their communities from prior institutional living arrangements.  Contacts and other relevant information about those states may be found on the CMS website.

 

Any questions concerning this letter may be referred to Mary Jean Duckett at (410) 786-3294.

 

Sincerely,

                                                                        /s/

                                                                       

Dennis G. Smith

Director

 

 

 

 

 

 

Page 3 – State Medicaid Director

 

cc:       

 

CMS Regional Administrators

 

CMS Associate Regional Administrators

   for Medicaid and State Operations

 

Lee Partridge

Director, Health Policy Unit

American Public Human Services Association

 

Joy Wilson

Director, Health Committee

National Conference of State Legislatures

 

Matt Salo

Director of Health Legislation

National Governors Association

 

Brent Ewig

Senior Director, Access Policy

Association of State and Territorial Health Officials

 

Jim Frogue

Acting Director, Health and Human Services Task Force

American Legislative Exchange Council

 

Trudi Matthews

Senior Health Policy Analyst

Council of State Governments