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Medicaid policy has continued to evolve over the last 10 years to better support options for community living by people of all ages with disabilities and/or chronic health conditions. The Deficit Reduction Act of 2005 and the Patient Protection and Affordable Care Act of 2010 both created new options for states to provide home and community services without having to secure a federal waiver. In addition, the Centers for Medicare & Medicaid Services (CMS) has made numerous changes to the program to make it easier for individuals to live in the community, such as authorizing coverage of one-time transition expenses for home and community-based services (HCBS) waiver participants.

In this Primer, the term persons with disabilities includes persons of all ages--young children, adolescents, and working age or older adults--with all types of disabilities due to physical and mental impairments and/or chronic illnesses. Because the Primers focus is on Medicaid home and community services, the term people with disabilities refers primarily to those individuals who need long-term care services. However, not all persons with disabilities need these services.

The remainder of this chapter presents a brief overview of the Medicaid law, regulations, and policies that give states the flexibility to create comprehensive home and community service systems for people of all ages with all types of physical and mental impairments and/or chronic health conditions. To provide context for the discussion, Table 1-1 lists the major relevant provisions of Medicaid law. This chronological summary illustrates the historical expansion of Medicaid long-term care services away from a primary focus on institutional care.

The Rehabilitation option is not generally used to furnish long-term care to individuals with disabilities or chronic health conditions other than mental illness. During the 1970s and 1980s, a few states secured approval to cover daytime services for persons with developmental disabilities under either the Clinic or the Rehabilitation option. However, CMS ultimately ruled that the services being furnished were habilitative rather than rehabilitative and consequently could not be covered under either option by additional states. The main basis for the ruling was that habilitative services could only be furnished to residents of ICFs/ID under the Medicaid State Plan or through an HCBS waiver program for individuals otherwise eligible for ICF/ID services. States with existing programs serving individuals with intellectual disabilities and other developmental disabilities were grandfathered under the Omnibus Reconciliation Act (OBRA) of 1989.

Under the 1915(c) waiver authority, states can provide services not usually covered by the Medicaid program, as long as these services are required to prevent institutionalization. Services covered under waiver programs include case management, homemaker, home health aide, personal care, adult day health, habilitation, respite care, and such other services requested by the state as the Secretary of Health and Human Services (HHS) may approve. Services for individuals with a chronic mental illness were added in the late 1980s: day treatment or other partial hospitalization services, psychosocial rehabilitation services, and clinic services (whether or not furnished in a facility).

In the next several decades, as already noted, the U.S. population will age dramatically. Even if disability rates among older persons decline, more people will need long-term care services than at any other time in our nations history. Institutional care is costly. Given the projected demand for long-term care, it is advisable for states to continue working to create comprehensive long-term care service systems that will enable people with disabilities and/or chronic health conditions--whatever their age or the severity of their condition--to live in their homes


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