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entitled 'Long-Term Care: Federal Oversight of Growing Medicaid Home 
and Community-Based Waivers Should Be Strengthened' which was released 
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Report to Congressional Requesters:

United States General Accounting Office:

GAO:

June 2003:

LONG-TERM CARE:

Federal Oversight of Growing Medicaid Home and Community-Based Waivers 
Should Be Strengthened:

Quality Assurance in Medicaid Waiver Services:

GAO-03-576:

GAO Highlights:

Highlights of GAO-03-576, a report to congressional requesters 

Why GAO Did This Study:

Home and community-based settings have become a growing part of 
states’ Medicaid long-term care programs, serving as an alternative to 
care in institutional settings, such as nursing homes. To cover such 
services, however, states often obtain waivers from certain federal 
statutory requirements. GAO was asked to review (1) trends in states’ 
use of Medicaid home and community-based service (HCBS) waivers, 
particularly for the elderly, (2) state quality assurance approaches, 
including available data on the quality of care provided to elderly 
individuals through waivers, and (3) the adequacy of federal oversight 
of state waivers. 

What GAO Found:

From 1991 through 2001, Medicaid long-term care spending more than 
doubled to over $75 billion, while the proportion spent on 
institutional care declined. Over a similar time period, HCBS waivers 
grew from 5 percent to 19 percent of such expenditures—from $1.6 
billion to $14.4 billion—and the number of waivers, participants, and 
average state per capita spending also grew significantly. Since 1992, 
the number of waivers increased by almost 70 percent to 263 in June 
2002, and the number of beneficiaries, as of 1999, had nearly tripled 
to almost 700,000, of which 55 percent were elderly. 

In the absence of specific federal requirements for HCBS quality 
assurance systems, states provide limited information to the Centers 
for Medicare & Medicaid Services (CMS), the federal agency that 
administers the Medicaid program, on how they assure quality of care 
in their waiver programs for the elderly. States’ waiver applications 
and annual reports for waivers for the elderly often contained little 
or no information on state mechanisms for assuring quality in waivers, 
thus limiting information available to CMS that should be considered 
before approving or renewing waivers. GAO’s analysis of available CMS 
and state waiver oversight reports for waivers serving the elderly 
identified oversight weaknesses and quality of care problems. More 
than 70 percent of the waivers for the elderly that GAO reviewed 
documented one or more quality-of-care problems. The most common 
problems included failure to provide necessary services, weaknesses in 
plans of care, and inadequate case management. The full extent of such 
problems is unknown because many state waivers lacked a recent CMS 
review, as required, or the annual state waiver report lacked the 
relevant information.

CMS has not developed detailed state guidance on appropriate quality 
assurance approaches as part of initial waiver approval. Although CMS 
oversight has identified some quality problems in waivers, CMS does 
not adequately monitor state waivers and the quality of beneficiary 
care. The 10 CMS regional offices are responsible for ongoing 
monitoring for HCBS waivers. However, CMS does not hold these offices 
accountable for completing periodic waiver reviews, nor does it hold 
states accountable for submitting annual reports on the status of 
waiver quality. Consequently, CMS is not fully complying with 
statutory and regulatory requirements when it renews waivers. As of 
June 2002, almost one-fifth of waivers in place for 3 years or more 
had either never been reviewed or were renewed without a review; for 
an additional 16 percent of waivers, reports detailing the review 
results were never finalized. Regional office personnel explained that 
limited staff resources and travel funds often impede the timing and 
scope of reviews. While regional office reviews include record reviews 
for a sample of waiver beneficiaries, they do not always include 
beneficiary interviews. The reviews also varied considerably in the 
number of beneficiary records reviewed and their method of determining 
the sample. 

What GAO Recommends:

GAO is recommending that the Administrator of CMS take steps to (1) 
better ensure that state quality assurance efforts are adequate to 
protect the health and welfare of HCBS waiver beneficiaries, and 
(2) strengthen federal oversight of the growing HCBS waiver programs. 
Although CMS raised certain concerns about aspects of the report, such 
as the respective state and federal roles in quality assurance and the 
potential need for additional federal oversight resources, CMS 
generally concurred with the recommendations.

www.gao.gov/cgi-bin/getrpt?GAO-03-576.

To view the full product, including the scope and methodology, click 
on the link above. For more information, contact Kathryn G. Allen at 
(202) 512-7118.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

Waivers Are Vehicle for Dramatic Growth in Medicaid Home and Community-
Based Services:

Information on State Quality Assurance Approaches for Waivers Serving 
the Elderly Is Limited, but Quality Concerns Have Been Identified:

CMS Guidance to States and Oversight Of HCBS Waivers Are Inadequate to 
Ensure Quality Care:

Conclusions:

Recommendations for Executive Action:

Agency and State Comments and Our Evaluation:

Appendix I: Scope and Methodology:

Appendix II: Suggested CMS Definitions of Home and Community-Based 
Services in Waivers Serving the Elderly:

Appendix III: Medicaid Long-Term Care Expenditures, by Type and State, 
Fiscal Year 2001:

Appendix IV: Number of Beneficiaries Served by HCBS Waivers for the 
Elderly and in Nursing Homes, by State, 1999:

Appendix V: Number of HCBS Waivers for the Elderly, Beneficiaries, 
Expenditures, and per Beneficiary Expenditures by State, 1999:

Appendix VI: CMS HCBS Quality Initiatives:

Appendix VII: Beneficiary Samples for and Duration of Regional Office 
Reviews of 15 State Waivers Serving the Elderly:

Appendix VIII: Comments from the Centers for Medicare & Medicaid 
Services:

Tables:

Table 1: States with Highest and Lowest per Beneficiary Expenditures 
for State HCBS Waivers Serving the Elderly, 1999:

Table 2: Quality Assurance Mechanisms States Reported Using in HCBS 
Waivers Serving the Elderly:

Table 3: Quality Assurance Mechanisms Frequently Cited in Waiver 
Applications and Current Annual State Reports for HCBS Waivers Serving 
the Elderly:

Table 4: Frequently Cited Quality-of-Care Problems Identified by CMS 
Regional Offices or States in HCBS Waivers Serving the Elderly:

Table 5: HCBS Waivers That Had 10 Years or More Elapse without Ever 
Having a Regional Office Review or without a Review Prior to the Last 
Waiver Renewal, as of June 2002:

Table 6: Status of CMS and State Monitoring for the 15 Largest HCBS 
Waivers Serving the Elderly:

Table 7: Number and Specialty of CMS Regional Office Staff Assigned to 
Oversee HCBS Waivers:

Table 8: Services States May Include in Their Medicaid Home and 
Community-Based Services Waiver:

Figure:

Figure 1: Percentage Distribution of Medicaid Long-Term Care 
Expenditures, Fiscal Years 1991 and 2001:

Abbreviations:

CMS: Centers for Medicare & Medicaid Services: 

FTE: full-time equivalent:  

HCBS: home and community-based services:  

HCFA: Health Care Financing Administration:  

HHS: Department of Health and Human Services:  

ICF/MR: intermediate care facility for the mentally retarded:

United States General Accounting Office:

Washington, DC 20548:

June 20, 2003:

The Honorable Charles E. Grassley 
Chairman 
Committee on Finance 
United States Senate:

The Honorable John B. Breaux 
Ranking Minority Member 
Special Committee on Aging 
United States Senate:

Over the last decade, states have increased their support for long-term 
care services in individuals' homes or in other community-based 
settings--such as adult day care, adult foster care homes, and assisted 
living facilities--as an alternative to care in nursing homes and other 
institutions. For many vulnerable elderly and nonelderly individuals 
with physical, developmental, or cognitive disabilities, these 
alternative settings and services are seen as preferable to 
institutional care. Most state funding of long-term care is through 
Medicaid, the federal-state health care program for certain low-income 
individuals. Medicaid home and community-based services (HCBS) waivers, 
authorized under section 1915(c) of the Social Security Act, are the 
primary means by which states provide noninstitutional long-term 
care.[Footnote 1] Waivers allow states to limit the availability of 
services geographically, target specific populations or conditions, 
control the number of individuals served, and cap overall expenditures-
-actions not usually allowed under the Medicaid statute. The Centers 
for Medicare & Medicaid Services (CMS)--the federal agency that manages 
Medicaid--reviews and approves states' requests for these waivers and 
also is responsible for ensuring that states have necessary safeguards 
to protect the health and welfare of individuals receiving services 
through waiver programs.[Footnote 2]

Despite the growing use of HCBS waivers, concerns have been raised 
about the quality of care provided through waivers serving both elderly 
and nonelderly populations. Newspaper exposés and some state audit 
reports have chronicled serious health and welfare concerns in waiver 
programs across the country. Because of continued growth in the numbers 
of people served through HCBS waiver programs and concerns about the 
quality of care, you asked us to review (1) trends in states' use of 
such waivers, particularly for the elderly, (2) state quality assurance 
approaches for waivers serving the elderly, including available data on 
the quality of care provided to beneficiaries, and (3) the adequacy of 
CMS's oversight of state waiver programs for the elderly as well as 
those for other target populations.

To identify trends in states' use of waivers, we analyzed CMS and state 
reports that contained data on waiver beneficiaries, expenditures, and 
services. To identify those waivers that serve the elderly, we compiled 
a list of HCBS waivers with "the aged" or "aged and disabled" as their 
target populations. Throughout this report, we refer to this universe 
of waivers as those "serving the elderly." To assess state quality 
assurance activities for waivers serving the elderly, we analyzed (1) 
data on quality assurance approaches from state waiver applications and 
their most recent annual reports to CMS, (2) the oversight findings 
reported by states in their annual waiver reports, and (3) CMS regional 
office waiver reviews and state audits of waivers completed from 
October 1998 through May 2002.[Footnote 3] For a more in-depth 
perspective on states' quality assurance approaches for waivers serving 
the elderly, we conducted structured interviews with state officials 
and staff in South Carolina, Texas, and Washington. We selected these 
states because they operate some of the largest HCBS waivers for the 
elderly that have been in effect for 5 years or longer. We did not 
attempt to assess the effectiveness of their quality assurance 
approaches. To determine the adequacy of CMS oversight of state waiver 
programs for the elderly as well as those for other target populations, 
we obtained relevant data from officials at CMS headquarters and 
conducted structured interviews with all 10 CMS regional offices on 
their waiver review activities and staffing as of June 2002. See 
appendix I for a detailed discussion of our scope and methodology. We 
conducted our review from November 2001 through June 2003 in accordance 
with generally accepted government auditing standards.

Results in Brief:

Total Medicaid spending for long-term care increased from $33.8 billion 
in fiscal year 1991 to $75.3 billion in fiscal year 2001, with a 
growing share spent on services through home and community-based 
waivers as an alternative to care in institutions such as nursing 
homes. Expenditures for services through HCBS waivers increased from 
$1.6 billion in fiscal year 1991 to $14.4 billion in fiscal year 2001, 
growing from 5 percent of all Medicaid long-term care spending in 
fiscal year 1991 to 19 percent in fiscal year 2001. Over roughly the 
same time period, the number of HCBS waivers increased from 155 to 263, 
with 77 serving the elderly as of June 2002. Every state except Arizona 
operates at least one waiver for the elderly. From 1992 to 1999, the 
total number of persons served through waivers nationwide nearly 
tripled to 688,152 and the number of beneficiaries served by waivers 
for the elderly more than doubled to 377,083. In two states, Oregon and 
Washington, HCBS waiver services have replaced nursing homes as the 
dominant means of providing long-term care to the elderly under 
Medicaid. Nationally, average Medicaid expenditures per beneficiary in 
waivers serving the elderly increased from $3,622 in 1992 to $5,567 in 
1999; average spending per beneficiary in 1999 ranged from $1,208 in 
New York to $15,065 in Hawaii, reflecting differences in the type and 
amount of services provided under different waivers.

No nationwide data are available on states' quality assurance 
approaches or the status of quality of care for beneficiaries served by 
waivers for the elderly, but concerns have been identified about the 
quality of care provided under many of these waivers. Because CMS has 
not provided detailed guidance to states on federal requirements for 
HCBS quality assurance systems, the information available to CMS that 
should be considered before approving or renewing waivers is limited. 
Thus, state waiver applications and annual waiver reports that we 
reviewed for waivers serving the elderly often contained little or no 
information on state quality assurance approaches. For example, 11 
applications for the 15 largest waivers serving the elderly identified 
three or fewer specific quality assurance approaches, and none 
mentioned important approaches such as complaint systems or enforcement 
tools. Moreover, 18 of 52 state annual waiver reports that we reviewed 
contained no information on approaches used to help ensure quality. 
Where information was provided, the most frequently cited quality 
assurance approaches included (1) audits or reviews of case management 
agencies, (2) state agency reviews of waiver providers or direct-care 
staff, and (3) state licensure, certification, or standards for some 
waiver providers. Although CMS regional office and state reviews 
identified few if any specific cases of harm to waiver beneficiaries, 
the reviews for the majority of waivers serving the elderly with 
available relevant detail had one or more problems related to quality 
of care. Among the most commonly cited problems were (1) failure to 
provide authorized or necessary services, (2) inadequate assessment or 
documentation of beneficiaries' care needs in the plan of care, and (3) 
inadequate case management. For example, one recent CMS regional office 
review found that more than one-fourth of a state's waiver 
beneficiaries had received none of their authorized personal care 
services. However, the consequences for the beneficiaries were not 
identified in this review. Since many state waiver programs did not 
have a recent CMS review, as required, or the annual state waiver 
report lacked the relevant information, the extent of quality-of-care 
problems is unknown.

CMS guidance to states and oversight of HCBS waivers is inadequate to 
ensure quality of care for waiver beneficiaries. CMS has not developed 
detailed guidance for states on appropriate quality assurance 
mechanisms as part of the waiver approval process, and initiatives 
under way to generate information on state quality assurance approaches 
do not address this problem. In addition, the agency has not fully 
complied with the statutory and regulatory requirements that condition 
the renewal of HCBS waivers on (1) states submitting required annual 
reports that include information on state quality assurance approaches 
and deficiencies identified through state monitoring and (2) CMS's 
conducting and documenting periodic waiver reviews to determine whether 
states satisfied requirements for protecting the health and welfare of 
waiver beneficiaries. Many state annual waiver reports submitted to CMS 
regional offices for waivers serving the elderly were not timely and 
lacked required information on quality assurance and state monitoring. 
As of June 2002, 228 HCBS waivers for all target populations had been 
in place for 3 years or longer and should have been reviewed by CMS 
regional offices. However, 42 waivers serving approximately 132,000 
beneficiaries either had never been reviewed or were renewed without a 
review. For 36 additional waivers, reviews were conducted, but the 
reports summarizing the findings were never finalized, raising a 
question as to whether any weaknesses were identified and, if so, had 
been corrected. CMS regional office personnel informed us that limited 
staff and travel resources impeded the timing and scope of reviews. 
While regions' reviews included an examination of beneficiary records, 
we found that the reviews varied considerably in the number of 
beneficiary records reviewed and their method of determining the 
sample, raising a question about the extent to which findings could be 
generalized. In addition, they did not always include beneficiary 
interviews. Although updated in 2001, CMS guidance for conducting 
waiver reviews does not address key operational issues such as an 
adequate sample size or the sampling methodology to provide a basis for 
generalizing review findings.

To better ensure that state quality assurance efforts are adequate to 
protect the health and welfare of HCBS waiver beneficiaries and to 
strengthen federal oversight, we are recommending that the CMS 
Administrator (1) establish more detailed criteria regarding the 
necessary components of an HCBS waiver quality assurance system, (2) 
require states to submit more specific information about their quality 
assurance approaches prior to waiver approval, (3) ensure that states 
provide sufficient and timely information in their annual waiver 
reports on their efforts to monitor quality, (4) develop guidance on 
the scope and methodology for federal reviews of state waiver programs, 
and (5) ensure allocation of sufficient resources for conducting 
thorough and timely reviews of quality in HCBS waivers and hold 
regional offices accountable for completing such reviews. Although CMS 
raised certain concerns about aspects of our report, such as the 
respective state and federal roles in quality assurance and the 
potential need for additional federal oversight resources, the agency 
generally concurred with our recommendations.

Background:

The jointly funded federal-state Medicaid program is the primary source 
of financing for long-term care services.[Footnote 4] About one-third 
of the total $228 billion in Medicaid spending in fiscal year 2001 was 
for long-term care in both institutional and community-based settings. 
States administer this program within broad federal rules and according 
to a state plan approved by CMS, the federal agency that oversees and 
administers Medicaid. Some services, such as nursing home care and home 
health care, are mandatory services that must be covered in any state 
that participates in Medicaid. Other services, such as personal care, 
are optional, which a state may choose to include in its state Medicaid 
plan but which then must be offered to all individuals statewide who 
meet its Medicaid eligibility criteria. States may also apply to CMS 
for a section 1915(c) waiver to provide home and community-based 
services as an alternative to institutional care in a hospital, nursing 
home, or intermediate care facility for the mentally retarded (ICF/
MR).[Footnote 5] If approved, HCBS waivers allow states to limit the 
availability of services geographically, to target services to specific 
populations or conditions, or to limit the number of persons served, 
actions not generally allowed for state plan services. States often 
operate multiple waivers serving different population groups, such as 
the elderly, persons with mental retardation or developmental 
disabilities, persons with physical disabilities, and children with 
special care needs.

States determine the types of long-term care services they wish to 
offer under an HCBS waiver. Waivers may offer a variety of skilled 
services to only a few individuals with a particular condition, such as 
persons with traumatic brain injury, or they may offer only a few 
unskilled services to a large number of people, such as the aged or 
disabled.[Footnote 6] The wide variety of services that may be 
available under waivers includes home modification, such as installing 
a wheelchair ramp, transportation, chore services, respite care, 
nursing services, personal care services, and caregiver training for 
family members. CMS's waiver application form for states includes a 
list of home and community-based services with suggested definitions. 
States are free to include as many or as few of these as they wish, to 
include additional services, or to include different definitions of 
services from those supplied with the form. See appendix II for a list 
of services provided through the HCBS waivers serving the elderly and 
CMS's suggested definitions of these services.

To be eligible for waiver services, an individual must meet the state's 
criteria for needing the level of care provided in an institution, such 
as a nursing home, and be able to receive care in the community at a 
cost generally not exceeding the cost of institutional care.[Footnote 
7] States are responsible for determining the specific financial and 
functional eligibility criteria used, conducting the necessary 
screening and assessment, and arranging for services to be provided. 
Factors that states use in assessing functional eligibility for nursing 
home care and for waiver services include the individuals' medical 
condition and their degree of physical or mental impairment. Other 
factors that states generally consider, and which may affect the 
states' ability to provide care in the community at a cost not 
exceeding that of institutional care or to adequately protect 
beneficiaries' health and welfare, include the mix of services needed 
by the individual, the availability of needed services, the cost of 
services, the need for home modification, and the availability of 
family members or other caregivers.[Footnote 8]

In order to receive federal funds for waiver services, a state must 
submit an application to the Secretary of Health and Human Services 
(HHS) that identifies the target population, specifies the number of 
persons that will be served, and lists the services to be included. In 
addition, states are required to provide certain assurances that 
necessary safeguards have been taken to assure financial accountability 
and to protect the health and welfare of beneficiaries under the 
waiver.[Footnote 9] Federal regulations specify that the state's 
safeguards for the health and welfare of beneficiaries must include (1) 
adequate standards for all providers of waiver services and (2) 
assurance that any state licensure or certification requirements for 
providers of waiver services are met.[Footnote 10] CMS requires that a 
state's waiver application include documentation regarding the 
standards applicable for each service provider. If the only requirement 
for a particular provider is licensure or certification, the state must 
provide a citation to the applicable state statute or regulation. If 
other requirements apply, the state must specify the applicable 
standards that providers must meet and explain how the provider 
standards will ensure beneficiaries' welfare. Finally, states must 
annually report on, among other things, how they implement, monitor, 
and enforce their health and welfare standards and the waiver's impact 
on the health and welfare of beneficiaries.

Initial waiver applications and amendments to initial waivers are 
reviewed and approved by CMS headquarters. CMS's 10 regional offices 
have primary responsibility for reviewing and approving applications to 
renew waivers and amendments to renewed waivers. If CMS determines that 
a waiver application meets program requirements, including sufficient 
documentation to indicate that necessary safeguards are in place to 
protect the health and welfare of waiver beneficiaries, it will approve 
an initial waiver for a 3-year period. Subsequently, waivers may be 
extended for additional 5-year periods.

Section 1915(c)(3) of the Social Security Act provides that, upon 
request of a state, HCBS waivers may be extended, unless the Secretary 
of HHS determines that the assurances provided during the preceding 
term have not been met.[Footnote 11] Among the assurances that the 
state makes are that necessary safeguards have been taken to protect 
the health and welfare of waiver participants and that the state will 
submit annual reports on the impact of the waiver on the type and 
amount of medical assistance provided under the state Medicaid plan and 
on the health and welfare of recipients. Regulations implementing 
section 1915(c) provide that an extension of a waiver will be granted 
unless (1) CMS's review of the prior waiver period shows that the 
assurances the state made were not met and (2) the state fails to 
provide adequate documentation and assurances to justify an 
extension.[Footnote 12] In its explanation of this regulation, HCFA 
indicated that a review of the prior period is an indispensable part of 
the renewal process.[Footnote 13]

Reviews of waiver programs for which a renewal has been requested are, 
therefore, expected to occur at some point during the initial 3-year 
period, and at least once during each renewal cycle. CMS guidance on 
the reviews calls for on-site visits that include an examination of 
beneficiary and provider records as well as interviews with state 
officials. If a state's efforts to protect the health and welfare of 
waiver beneficiaries are determined to be inadequate, CMS officials 
told us that the agency can either bar the state from enrolling any new 
waiver beneficiaries until corrective actions are taken or terminate 
the waiver.

According to a recent CMS-sponsored review, oversight of waivers is 
often decentralized and fragmented among a variety of agencies and 
levels of government, and rarely does a single entity have 
accountability for the overall quality of care provided to waiver 
beneficiaries.[Footnote 14] Some waiver service providers are regulated 
by state licensing agencies, some are certified by private 
accreditation organizations, and others operate under terms of a 
contract or other agreement with a state agency. While the state 
Medicaid agency is ultimately accountable to the federal government for 
compliance with the requirements of the waivers, it may delegate 
administration of the waivers to state units on aging, mental health 
departments, or other departments or agencies with jurisdiction over a 
specific population or service. About one-third of waivers for the 
elderly are administered by an agency or department other than the 
Medicaid agency, most often the state unit on aging.[Footnote 15] These 
agencies may then contract with local networks, agencies, or providers 
to provide or arrange for beneficiary services.

Waivers Are Vehicle for Dramatic Growth in Medicaid Home and Community-
Based Services:

Medicaid-covered HCBS services have become a growing component of state 
long-term care systems, with most of the growth accounted for by 
substantial increases in the number of HCBS waivers and the 
beneficiaries served through waivers. In a few states, these waivers 
are beginning to replace nursing homes as the dominant means for 
providing long-term care to the elderly under Medicaid. Over the past 
10 years, total Medicaid long-term care spending has more than doubled-
-from $33.8 billion in fiscal year 1991 to $75.3 billion in fiscal year 
2001. However, the share of spending for institutional care declined 
from 86 to 71 percent, while the share spent for home and community-
based care grew from 14 to 29 percent.

Most of the growth in home and community-based care spending under 
Medicaid can be accounted for by HCBS waivers. Total Medicaid home and 
community-based care spending grew from $4.8 billion in fiscal year 
1991 to $22.2 billion in fiscal year 2001, while spending for waiver 
services grew from $1.6 billion in fiscal year 1991 to $14.4 billion in 
fiscal year 2001. As shown in figure 1, waiver spending grew from 5 
percent of all Medicaid long-term care spending in fiscal year 1991 to 
19 percent in fiscal year 2001. In all but two states--California and 
New York--and the District of Columbia, over one-half of Medicaid home 
and community-based services spending in fiscal year 2001 was through 
waivers, with a much smaller portion going to nonwaiver mandatory home 
health care or state plan optional personal care services.[Footnote 16] 
See appendix III for a summary of Medicaid long-term care expenditures 
by type and state.

Figure 1: Percentage Distribution of Medicaid Long-Term Care 
Expenditures, Fiscal Years 1991 and 2001:

[See PDF for image]

Note: GAO analysis of HCFA Form 64 data as reported by Brian Burwell, 
Steve Eiken, and Kate Sredl in Medicaid Long Term Care Expenditures in 
FY 2001 (The MEDSTAT Group, May 10, 2002). The figure includes data 
from 49 states and the District of Columbia.

[End of figure]

Both the number and size of HCBS waivers have grown considerably over 
the past 20 years. Every state except Arizona operates at least one 
such waiver for the elderly.[Footnote 17] In 1982, the first year of 
the waiver program, 6 states operated HCBS waivers. By 1992, 48 states 
operated a total of 155 HCBS waivers. As of June 2002, 49 states and 
the District of Columbia operated a total of 263 HCBS waivers, with 77 
serving the elderly. The average waiver for the elderly served 3,305 
Medicaid beneficiaries in 1992 and 5,892 beneficiaries in 
1999.[Footnote 18] In 1999, 15 states served more than 10,000 persons 
in their waivers for the elderly, an increase from only 4 states in 
1992.

The total number of HCBS waiver beneficiaries--elderly and nonelderly-
-nationwide nearly tripled from 235,580 in 1992 to 688,152 in 1999, the 
most recent year for which data were available. The number of 
beneficiaries served in waivers for the elderly more than doubled from 
155,349 in 1992 to 377,083 in 1999. Over this same period, the number 
of Medicaid beneficiaries who used some nursing home care during the 
year grew by only 2.5 percent from 1.57 million to 1.61 million 
beneficiaries. By 1999, waivers for the elderly were serving 19 percent 
of all Medicaid beneficiaries served either in a nursing home or 
through an HCBS waiver for the elderly, an increase from 9 percent in 
1992.[Footnote 19] In two states, Oregon and Washington, more elderly 
and disabled Medicaid beneficiaries were served in HCBS waivers in 1999 
than were served in nursing homes. Appendix IV includes the number of 
Medicaid beneficiaries served by HCBS waivers for the elderly and in 
nursing homes in each state.

In 1999, the average per beneficiary expenditure in HCBS waivers 
serving the elderly was $5,567, an increase from $3,622 in 
1992.[Footnote 20] However, the average per beneficiary expenditure for 
such waivers varied widely across states, reflecting differences in the 
type, number, and amount of services provided under waivers in 
different states. As shown in table 1, among those states with waivers 
serving the elderly in 1999, per beneficiary expenditures ranged from 
an average of $15,065 in Hawaii to $1,208 in New York. In Hawaii, one 
such waiver that provided an average of 85 hours of personal assistance 
services per month to 91 percent of beneficiaries of that waiver had an 
average cost of $10,893 per beneficiary. A second Hawaii waiver that 
provided adult foster care, residential care, or assisted living for 
waiver beneficiaries had an average cost of $16,958 per beneficiary. In 
contrast, New York's waiver for the elderly did not include personal 
care or residential services; the primary benefits included social work 
services, personal emergency response systems, and home-delivered 
meals. Appendix V provides summary information on states' HCBS waivers 
for the elderly, including per beneficiary expenditures.

Table 1: States with Highest and Lowest per Beneficiary Expenditures 
for State HCBS Waivers Serving the Elderly, 1999:

United States; Average expenditures per beneficiary: $5,567; 
Number of beneficiaries: 377,083.

States with highest per beneficiary waiver spending:

State: Hawaii; Average expenditures per beneficiary: 15,065; Number of 
beneficiaries: 923.

State: New Mexico; Average expenditures per beneficiary: 14,151; Number 
of beneficiaries: 1,404.

State: North Carolina; Average expenditures per beneficiary: 13,778; 
Number of beneficiaries: 11,159.

State: Alaska; Average expenditures per beneficiary: 12,015; Number of 
beneficiaries: 712.

State: West Virginia; Average expenditures per beneficiary: 11,213; 
Number of beneficiaries: 3,470.

States with lowest per beneficiary waiver spending: 

State: Michigan; Average expenditures per beneficiary: 2,632; Number of 
beneficiaries: 6,328.

State: Iowa; Average expenditures per beneficiary: 2,517; Number of 
beneficiaries: 3,994.

State: Missouri; Average expenditures per beneficiary: 2,224; Number of 
beneficiaries: 20,821.

State: Massachusetts; Average expenditures per beneficiary: 1,919; 
Number of beneficiaries: 5,132.

State: New York; Average expenditures per beneficiary: 1,208; Number of 
beneficiaries: 19,732.

Source: CMS.

Notes: GAO analysis of annual state waiver report data (HCFA Form 372) 
as reported by Charlene Harrington in Medicaid 1915(c) Home and 
Community-Based Waivers: Program Data, 1992-1999 (San Francisco, 
Calif.: University of California, San Francisco, August 2001).

[End of table]

All states in this table except Hawaii operated one waiver serving the 
elderly in 1999. Hawaii operated two waivers, one that served 288 
beneficiaries at a cost of $10,893 per beneficiary and a second that 
served 635 beneficiaries at a cost of $16,958 per beneficiary.

Information on State Quality Assurance Approaches for Waivers Serving 
the Elderly Is Limited, but Quality Concerns Have Been Identified:

No comprehensive nationwide data are available on states' quality 
assurance systems for or the quality of care provided through HCBS 
waivers, including those serving the elderly. In the absence of 
detailed federal requirements for HCBS quality assurance systems, 
states' waiver applications and annual reports often contained little 
or no information on the mechanisms used to ensure quality, raising a 
question as to whether CMS had adequate information to approve or renew 
some waivers. More than half of the waivers serving the elderly for 
which we were able to obtain a CMS waiver oversight report, an annual 
state waiver report, or a state audit report identified oversight 
weaknesses and quality-of-care problems. Frequently cited quality-of-
care problems included (1) failure to provide authorized or necessary 
services, (2) inadequate assessment or documentation of beneficiaries' 
care needs in the plan of care, and (3) inadequate case management. We 
were unable to analyze over one-third of waivers serving the elderly 
because they lacked a recent regional office review, the annual state 
waiver report lacked the relevant information, or they were too new to 
have annual state reports.

States Use a Variety of Waiver Quality Assurance Approaches in Waivers 
Serving the Elderly, Yet Some States Provide Limited or Incomplete 
Information to CMS:

Although the state waiver applications and annual waiver reports we 
reviewed for waivers serving the elderly identified more than a dozen 
quality assurance approaches, many contained little or no information 
about how states ensure quality.[Footnote 21] For example, 11 
applications for the 15 largest waivers serving the elderly identified 
three or fewer quality assurance mechanisms and none of these 11 
waivers mentioned important approaches, including complaint systems or 
sanctions. Eighteen of 52 state annual waiver reports that we reviewed 
contained no information on the mechanisms used to help ensure quality. 
Moreover, when waiver applications and annual waiver reports did 
contain some information, the information was often incomplete. Our 
work in South Carolina, Texas, and Washington identified additional 
quality assurance mechanisms that were not listed in their waiver 
applications or annual reports, suggesting that such documents may 
understate the nature and extent of their oversight approaches. As a 
result, CMS's understanding of how these states ensure quality in the 
waivers may be incomplete.

States Use a Variety of Quality Assurance Mechanisms:

Information provided to CMS in state waiver applications and annual 
reports identified a variety of mechanisms used to protect the health 
and welfare of beneficiaries in waivers serving the elderly. Table 2 
describes 14 quality assurance approaches that states reported using in 
HCBS waivers for the elderly. Some of these approaches focus on the 
waiver beneficiary, such as case management or beneficiary satisfaction 
surveys. Other approaches are focused on providers, including licensure 
and inspections, corrective action plans, sanctions, and program 
manuals. States may require that certain providers be licensed or 
certified or meet other requirements contained in state laws or 
regulations. Such providers are generally subject to periodic 
inspections that may include a review of beneficiary records to 
determine whether the records meet program standards. A third set of 
quality assurance approaches focuses on waiver program operations, 
including internal or external evaluations of the waiver program, 
supervisory reviews of waiver beneficiary assessments and plans of 
care, and audits or reviews of case management agencies.

Table 2: Quality Assurance Mechanisms States Reported Using in HCBS 
Waivers Serving the Elderly:

Quality assurance mechanism: Beneficiary-oriented mechanisms:

Quality assurance mechanism: Case management; Description: 
Case management includes assessing 
the beneficiary's needs, developing the plan of care, arranging for the 
delivery of services, monitoring the beneficiary, and conducting 
periodic reassessments of the beneficiary's needs and modifying the 
plan of care as needed.

Quality assurance mechanism: Beneficiary satisfaction surveys or 
interviews; Description: A survey 
instrument or other tool is used to measure waiver beneficiaries' views 
about their waiver services and the extent to which services are 
meeting their long-term care needs.

Quality assurance mechanism: On-site visits of beneficiaries; 
Description: On-site visits may be 
conducted by program officials other than the beneficiary's case 
manager to observe services being provided and gather information about 
the care provided.

Quality assurance mechanism: Complaint systems; Description: 
Systems to accept, investigate, and 
track the status of waiver beneficiaries' or others' complaints 
regarding the waiver program.

Quality assurance mechanism: Provider-oriented mechanisms:

Quality assurance mechanism: Licensure, certification, or other state 
standards; Description: States 
require that certain providers be licensed, certified, or meet other 
requirements contained in state law or regulation. Providers are 
generally subject to periodic inspections that include a review of 
beneficiary records to determine if they meet program standards.

Quality assurance mechanism: Provider or direct care staff reviews or 
audits; Description: State program 
officials conduct reviews of waiver providers or individual caregivers 
to determine whether waiver-specific requirements were met. Such 
reviews involve reviews of beneficiary records and other provider 
documentation as well as individual beneficiary interviews.

Quality assurance mechanism: Corrective action plans; Description: 
List of actions that the provider 
agrees to take to return to compliance with federal or state 
standards.

Quality assurance mechanism: Sanctions and penalties; Description: 
Depending on the severity of the 
violation, actions available to penalize the provider for not complying 
with federal or state standards.

Quality assurance mechanism: Training and technical assistance; 
Description: Ongoing, continuing 
education for case managers and waiver providers to ensure competency 
in delivering and monitoring the care of waiver beneficiaries.

Quality assurance mechanism: Program manuals; Description: 
Distribution of rules, policies, 
procedures, or standards to waiver providers.

Quality assurance mechanism: Program-oriented mechanisms:

Quality assurance mechanism: Case management agency review or audit; 
Description: Reviews of agencies 
responsible for case management of the HCBS waiver, including a review 
of a sample of case managers' records to ensure timeliness and 
completeness.

Quality assurance mechanism: Supervisory review of beneficiary 
assessments or plans of care; Description: Beneficiary-oriented 
mechanisms: Review conducted by case managers' supervisors or at the 
state level of documents related to waiver beneficiaries' assessed 
needs and identified services.

Quality assurance mechanism: Analysis of automated waiver program data; 
Description: Review or monitoring of 
electronic version of client data, such as assessments, reassessments, 
and care plans.

Quality assurance mechanism: Internal or external evaluation of waiver 
program; Description: Program review 
of the procedures for waiver beneficiary assessments, development of 
plans of care, and delivery of waiver services; review may be conducted 
by state agency officials or by contractor.

Source: CMS.

Note: GAO analysis of the most recent waiver application for the 15 
largest HCBS waivers serving the elderly and the most recent annual 
state reports for 52 waivers serving the elderly submitted to CMS 
regional offices as of July 2002.

[End of table]

States Provide CMS Limited Information about Their Quality Assurance 
Approaches:

Because CMS has not provided detailed guidance to states on federal 
requirements for HCBS quality assurance systems, the waiver 
applications and annual reports submitted by states to CMS for waivers 
serving the elderly often contained little or no information on state 
mechanisms for ensuring quality, raising a question as to whether CMS 
had adequate information to approve or renew some waivers.

* Waiver applications. Our review of the most current waiver 
applications for the 15 largest waivers serving the elderly found that 
many states provided CMS limited information about how they plan to 
protect the health and welfare of beneficiaries.[Footnote 22] Eleven of 
the 15 states cited three or fewer quality assurance mechanisms. For 
example, New York's application only contained information about the 
state licensure and certification requirements for its waiver services. 
None of these 11 applications included well-recognized quality 
assurance tools such as complaint systems, corrective action plans, 
sanctions, or beneficiary satisfaction surveys. The remaining 4 states 
each identified six to eight quality assurance approaches, including at 
least one of these four important tools. As shown in table 3, the two 
mechanisms most frequently cited by states were (1) licensure for some 
HCBS waiver providers, such as home health agencies and residential 
care providers, and (2) case management.

Table 3: Quality Assurance Mechanisms Frequently Cited in Waiver 
Applications and Current Annual State Reports for HCBS Waivers Serving 
the Elderly:

Quality assurance mechanism: Case management agency reviews or audits; 
Waiver application: number of states citing mechanism (n=15 largest 
state waivers for the elderly): 8; Annual state report: number of 
states citing mechanism[A]: (n=40 states): 30.

Quality assurance mechanism: Waiver provider or direct-care staff 
reviews or audits; Waiver application: number of states citing 
mechanism (n=15 largest state waivers for the elderly): 1; Annual state 
report: number of states citing mechanism[A]: (n=40 states): 24.

Quality assurance mechanism: Licensure, certification, or other state 
standards; Waiver application: number of states citing mechanism (n=15 
largest state waivers for the elderly): 15; Annual state report: number 
of states citing mechanism[A]: (n=40 states): 22.

Quality assurance mechanism: Waiver beneficiary satisfaction surveys or 
interviews; Waiver application: number of states citing mechanism (n=15 
largest state waivers for the elderly): 2; Annual state report: number 
of states citing mechanism[A]: (n=40 states): 21.

Quality assurance mechanism: Case management; Waiver application: 
number of states citing mechanism (n=15 largest state waivers for the 
elderly): 12; Annual state report: number of states citing 
mechanism[A]: (n=40 states): 20.

Quality assurance mechanism: Training and technical assistance; Waiver 
application: number of states citing mechanism (n=15 largest state 
waivers for the elderly): 0; Annual state report: number of states 
citing mechanism[A]: (n=40 states): 20.

Quality assurance mechanism: On-site visits of waiver beneficiaries; 
Waiver application: number of states citing mechanism (n=15 largest 
state waivers for the elderly): 1; Annual state report: number of 
states citing mechanism[A]: (n=40 states): 16.

Quality assurance mechanism: Complaint systems; Waiver application: 
number of states citing mechanism (n=15 largest state waivers for the 
elderly): 1; Annual state report: number of states citing mechanism[A]: 
(n=40 states): 13.

Quality assurance mechanism: Supervisory review of waiver beneficiary 
assessments or plans of care; Waiver application: number of states 
citing mechanism (n=15 largest state waivers for the elderly): 7; 
Annual state report: number of states citing mechanism[A]: (n=40 
states): 11.

Quality assurance mechanism: Corrective action plans; Waiver 
application: number of states citing mechanism (n=15 largest state 
waivers for the elderly): 2; Annual state report: number of states 
citing mechanism[A]: (n=40 states): 9.

Quality assurance mechanism: Sanctions and penalties; Waiver 
application: number of states citing mechanism (n=15 largest state 
waivers for the elderly): 1; Annual state report: number of states 
citing mechanism[A]: (n=40 states): 7.

Quality assurance mechanism: Analysis of automated waiver program data; 
Waiver application: number of states citing mechanism (n=15 largest 
state waivers for the elderly): 1; Annual state report: number of 
states citing mechanism[A]: (n=40 states): 4.

Quality assurance mechanism: Internal or external evaluations of waiver 
program; Waiver application: number of states citing mechanism (n=15 
largest state waivers for the elderly): 0; Annual state report: number 
of states citing mechanism[A]: (n=40 states): 4.

Quality assurance mechanism: Waiver program manuals; Waiver 
application: number of states citing mechanism (n=15 largest state 
waivers for the elderly): 0; Annual state report: number of states 
citing mechanism[A]: (n=40 states): 4.

Source: CMS.

Note: GAO analysis of the most recent waiver application for the 15 
largest HCBS waivers serving the elderly and the most recent annual 
state reports for 52 waivers serving the elderly submitted to CMS 
regional offices as of July 2002.

[A] We reviewed 70 annual state waiver reports from 49 states and the 
District of Columbia. Fifty-two of these annual reports from 40 states 
contained some information about states' monitoring processes for HCBS 
waivers serving the elderly. States may have more than one HCBS waiver 
serving the elderly.

[End of table]

* Annual waiver reports. Compared to waiver applications, annual state 
waiver reports identified more quality assurance mechanisms for waivers 
serving the elderly. The quality assurance mechanisms states' annual 
reports cited most frequently included (1) audits of case management 
agencies, (2) reviews of provider or direct-care staff, (3) licensure 
and certification of providers, (4) beneficiary satisfaction surveys or 
interviews, (5) case management, and (6) training and technical 
assistance. As shown in table 3, these six mechanisms were mentioned by 
at least half of the 40 states that provided such information.[Footnote 
23] However, as was the case with most of the 15 waiver applications we 
reviewed, complaint systems, corrective action plans, and sanctions 
were identified less frequently. For example, only 13 of the 40 states 
identified complaint systems for waivers serving elderly beneficiaries 
as a monitoring tool in their annual waiver reports.[Footnote 24] 
Responding to beneficiary complaints is a key element in protecting 
vulnerable nursing home residents and home health beneficiaries. 
Moreover, 18 of the elderly waiver reports (26 percent) from 12 states 
did not include a description of the process for monitoring the 
standards and safeguards under the waiver, as required on the reporting 
form.

State officials in South Carolina, Texas, and Washington informed us 
they use a wider range of quality assurance mechanisms in their waiver 
programs than were described in either their waiver application or 
their annual state waiver report. Officials in Washington informed us 
they use 12 of the 14 mechanisms identified in table 3, yet they 
included only 2 of these on their application and 3 in their most 
recent annual report. For example, Washington operates a complaint 
system for waiver providers but did not refer to this approach in its 
waiver application or annual report. On the other hand, only Washington 
included reviews or audits of case managers or case management agencies 
in its application or annual report, yet all three states provided 
information on their use of this quality assurance tool during our 
interviews. States' formal reports to CMS on their quality assurance 
mechanisms may therefore understate the nature and extent of their 
oversight approaches.

State Oversight and Quality Issues in Waivers Serving the Elderly Have 
Been Identified by CMS Regional Offices and States:

Although information on the quality of care provided in the 79 waiver 
programs serving the elderly is limited, state oversight problems were 
identified by CMS regional offices or states in 15 of 23 waivers and 
quality-of-care problems in 36 of 51waivers that we were able to 
examine.[Footnote 25] We were unable to analyze findings related to 28 
waivers serving the elderly for various reasons: they lacked a current 
regional office review or a waiver review report was never 
finalized,[Footnote 26] the annual state waiver report lacked the 
relevant information, or the waivers were too new to have an annual 
state report. Because of incomplete information and the absence of 
current reviews for many of the active waivers, the extent of quality-
of-care problems is unknown.

State Oversight Weaknesses:

CMS regional office reviews or state audits identified weaknesses in 
state oversight for waivers serving the elderly in 15 of the 23 waivers 
we examined. In some cases, the waiver programs did not have essential 
oversight systems or processes in place. For example, in the case of a 
Virginia assisted living waiver that had over 1,250 beneficiaries, the 
Philadelphia regional office found several state oversight problems, 
including (1) no system in place to track the completion of the 
required annual resident assessments, (2) insufficient monitoring to 
ensure that beneficiaries were cared for in settings able to meet their 
needs, (3) insufficient monitoring to ensure that state standards were 
met for basic facility safety and hygiene, and (4) failure to inspect 
medication administration records sufficiently to ensure that 
medication was being dispensed safely and by qualified staff. The 
regional office identified serious lapses in Virginia's oversight of 
the waiver and the protection of beneficiaries, resulting in both 
medical and physical neglect of waiver beneficiaries. On the basis of 
the regional office review findings, HCFA allowed the waiver to expire 
in March 2000. In other cases, states may have had an oversight system 
or process in place, but they were determined to be inadequate. Five 
state audit agency reports we reviewed identified inadequate monitoring 
systems in state waiver programs. For example, Connecticut had a policy 
in place for monitoring and evaluating its HCBS waiver program, but, 
from January 2000 through March 2001 it conducted no quality assurance 
reviews of the agencies it contracted with to coordinate and manage 
services for waiver beneficiaries.

Quality-of-Care Related Problems:

CMS regional office reviews and states' annual waiver reports 
identified quality-of-care related problems in 36 of 51 HCBS waiver 
programs for the elderly that we were able to examine. Specifically, 
they found weaknesses in the delivery of key elements of home and 
community-based services that could affect waiver beneficiaries' health 
and welfare (see table 4). Typically, the reports did not provide 
sufficient detail to demonstrate the impact of these weaknesses on 
waiver beneficiaries. Consequently, few, if any, specific cases of 
beneficiary harm were identified.

Table 4: Frequently Cited Quality-of-Care Problems Identified by CMS 
Regional Offices or States in HCBS Waivers Serving the Elderly:

Problem area: Provision of authorized or necessary services; Example: 
Beneficiary not receiving services identified as being needed; Number 
of 51 waivers in which problem was identified: 20.

Problem area: Plan of care; Example: Beneficiary's care needs not 
addressed in plan of care; Number of 51 waivers in which problem was 
identified: 20.

Problem area: Case management; Example: Case manager for HCBS waiver 
program not providing ongoing assessment and monitoring of waiver 
beneficiaries or inadequate follow-up of changes in beneficiaries' care 
needs; Number of 51 waivers in which problem was identified: 20.

Problem area: Staffing; Example: Insufficient number of staff to 
provide adequate care or staff not having appropriate credentials or 
training to provide care; Number of 51 waivers in which problem was 
identified: 12.

Problem area: Assessment; Example: Beneficiary's needs not assessed or 
reassessment not completed in a timely manner; Number of 51 waivers in 
which problem was identified: 11.

Problem area: Documentation of service delivery; Example: Incomplete 
record of waiver services provided to beneficiary; Number of 51 
waivers in which problem was identified: 8.

Problem area: Training; Example: Case managers identified as needing 
additional training on Medicaid eligibility; Number of 51 waivers in 
which problem was identified: 8.

Problem area: Quality assurance or quality of care; Example: HCBS 
waiver program lacked a formal quality assurance system; poor quality 
of care or services were identified; Number of 51 waivers in which 
problem was identified: 7.

Problem area: Medication; Example: Unable to document that facilities 
providing care to waiver beneficiaries dispensed medication safely and 
by qualified staff; Number of 51 waivers in which problem was 
identified: 4.

Source: CMS.

Notes: GAO analysis of CMS regional office final waiver review reports 
for HCBS waivers serving the elderly issued from October 1998 to May 
2002 and the most recent annual state waiver reports for 51 waivers 
serving the elderly.

[End of table]

Fifteen waivers serving the elderly had no problems identified in their 
regional office reviews or annual state reports; the remaining 36 
waivers had problems related to quality of care. When both the CMS 
regional office and the state identified a waiver as having the same 
type of problem, we counted that problem only once.

The most frequently identified quality-of-care problems in waivers 
serving the elderly involved failure to provide authorized or necessary 
services, inadequate assessment or documentation of beneficiaries' care 
needs in the plan of care, and inadequate case management.

* Provision of authorized or necessary services. Identified problems 
included (1) services identified in plans of care not rendered, (2) 
inadequate nutrition provided to waiver beneficiaries, and (3) 
discontinuation of services without adequate notice to beneficiaries. 
For example, CMS's Dallas regional office found that significant 
numbers of Oklahoma waiver beneficiaries did not receive personal care 
services from their direct-care provider--4,303 beneficiaries (27 
percent) received none of their authorized personal care services and 
7,773 beneficiaries (49 percent) received only half of their authorized 
services. While the consequences for beneficiaries were not identified 
in this review, failure to provide authorized needed services may 
result in harm and could affect the continued ability of beneficiaries 
to be cared for at home.

* Plan of care. Issues included plans of care that (1) insufficiently 
addressed the needs of waiver beneficiaries, (2) were not completed or 
updated appropriately, and (3) were missing from beneficiaries' files. 
In the review of one of the Florida waivers, CMS's Atlanta regional 
office staff found several instances where needs identified through 
individual assessments, including significant changes in waiver 
beneficiaries' conditions, were not addressed in the plan of care, a 
situation that could lead to beneficiaries not receiving the necessary 
services. Without an appropriate plan of care to direct the type and 
amount of services to be delivered, the waiver beneficiary may not 
receive an adequate level of care.

* Case management. Examples of case management problems included case 
managers who (1) were unaware of beneficiaries having lapses in 
delivery of care, (2) were not always aware of procedures or protocols 
for reporting abuse, neglect, or exploitation, (3) failed to complete 
resident assessments--service plans were either incomplete or 
inappropriate, and updates to plans of care were late, or (4) did not 
always appear to have a clear understanding of service definitions or 
requirements of the waiver or Medicaid program.

CMS Guidance to States and Oversight Of HCBS Waivers Are Inadequate to 
Ensure Quality Care:

CMS has not developed detailed guidance for states on appropriate 
quality assurance approaches as part of the initial waiver approval 
process. Moreover, although CMS oversight has identified some quality 
problems, it does not adequately monitor HCBS waiver programs or the 
quality of care provided to waiver beneficiaries for waivers serving 
the elderly as well as those serving other target populations.[Footnote 
27] CMS does not hold its regional offices accountable for conducting 
and documenting periodic waiver reviews, nor does CMS hold states 
accountable for submitting annual reports on the status of quality in 
their waivers. As of June 2002, about one-fifth of the 228 waivers in 
place for 3 years or more had either never been reviewed or were 
renewed without a review.[Footnote 28] We found that the reviews varied 
considerably in the number of beneficiary records examined and the 
method of determining the sample, potentially limiting the 
generalizability of findings. According to CMS regional office staff, 
the allocation of staff resources and travel funding levels have at 
times impeded the scope and timing of their reviews. In addition, some 
regional office staff told us that limited travel funds have resulted 
in the substitution of more limited desk reviews for on-site visits and 
in the conduct of reviews with one staff member when two would have 
been preferable.

CMS Lacks Detailed Guidance for States on the Necessary Components of a 
Quality Assurance System:

CMS has a number of initiatives under way to generate information and 
dialogue on quality assurance approaches, but the agency's initiatives 
stop short of (1) requiring states to submit detailed information on 
their quality assurance approaches when applying for a waiver or (2) 
stipulating the necessary components for an acceptable quality 
assurance system. CMS recognizes that insufficient attention has been 
given to the various mechanisms that states could and should use to 
monitor quality in their waiver programs. As described in appendix VI, 
the initiatives CMS has under way include identification of strategies 
that states are currently using to monitor and improve quality in home 
and community-based care, distribution of a guide on quality 
improvement and assessment mechanisms for states and regional offices, 
and provision of a variety of technical assistance and resources to 
states. The agency also has implemented a new HCBS waiver quality 
review protocol for use by regional offices in assessing whether state 
waivers should be renewed.[Footnote 29] Regional office staff told us 
that some states have begun to modify their approaches to quality 
assurance in HCBS waivers based on the use of the new waiver review 
protocol. For example, Washington officials established a new quality 
assurance unit within the agency that oversees its waiver for the 
elderly. In May 2002, CMS also introduced a voluntary application 
template for its new consumer-directed HCBS waiver that asks for a 
detailed description of states' quality assurance and improvement 
programs, including (1) the frequency of quality assurance activities, 
(2) the dimensions monitored, (3) the qualifications of quality 
assurance staff, (4) the process for identifying problems, including 
sampling methodologies, (5) provisions for addressing problems in a 
timely manner, and (6) the system for handling critical incidents or 
events. While these CMS activities are intended to facilitate the 
development of HCBS-related quality assurance approaches, they do not 
constitute a consistent set of minimum requirements and guidance for 
states' use to obtain approval for their HCBS programs.

CMS Is Not Holding Regional Offices or States Accountable for Oversight 
of HCBS Waiver Quality:

In addition to the lack of detailed guidance for states, CMS is not 
holding its own regional offices or states accountable for oversight of 
the quality of care provided to individuals served under HCBS waivers. 
CMS regional offices are expected to conduct periodic waiver reviews to 
determine whether states are protecting the health and welfare of 
waiver beneficiaries. Annual state reports are required by statute, and 
CMS regulations indicate that they are intended to play a key role in 
determining whether a waiver should be renewed.[Footnote 30] We found 
that regional offices are neither conducting waiver reviews prior to 
renewal nor obtaining complete annual state reports in a timely manner. 
As a result, CMS has not fully complied with the statutory and 
regulatory requirements that condition the renewal of HCBS waivers on 
states fulfilling their assurances that necessary safeguards are in 
place to protect the health and welfare of waiver beneficiaries.

CMS Regional Offices Often Are Not Conducting Timely Reviews of State 
HCBS Waivers:

Most CMS regional offices have not conducted timely reviews of the 
state agencies administering waivers serving the elderly and other 
target populations or completed reports to document the results of 
their reviews. Periodic on-site reviews are used to determine, among 
other things, whether a state is ensuring the health and welfare of 
waiver beneficiaries. Guidance from CMS headquarters instructs the 
regional offices to conduct reviews before the first renewal of a 
waiver at the end of 3 years and within 5 years for subsequent waiver 
renewals.

Eighteen percent of all HCBS waivers (42 of 228) that have been in 
place for 3 years or more as of June 2002 either have never been 
reviewed by the regional offices or had not been reviewed prior to 
their last waiver renewal. Approximately 132,000 beneficiaries were 
served by these 42 waivers in 1999. Fourteen of the 42 waivers--serving 
approximately 37,000 waiver beneficiaries in 1999--have had 10 or more 
years elapse without a regional office review (see table 5). CMS's 
Dallas regional office was responsible for 9 of these 14 waivers. Over 
a 10-year period, a regional office should have conducted at least two 
reviews for each waiver. The New Mexico AIDS Waiver, initially approved 
in June 1987, has been in place the longest without ever being 
reviewed--15 years. CMS officials were aware that regional offices had 
not reviewed some waivers but were unaware of the extent of the 
problem.

Table 5: HCBS Waivers That Had 10 Years or More Elapse without Ever 
Having a Regional Office Review or without a Review Prior to the Last 
Waiver Renewal, as of June 2002:

[See PDF for image]

Source: CMS.

Note: GAO analysis of data provided by CMS, June 2002.

[A] The number of HCBS waiver beneficiaries is based on 1999 HCFA Form 
372 data. See Harrington, Aug. 2001.

[B] Author's estimate. See Harrington, Aug. 2001.

[End of table]


As of June 2002, based on an analysis of the most recent regional 
office review that occurred prior to October 2001 for each of the 
waivers, we found that 23 percent of the review reports (36 of 158) in 
over half of the regional offices had not been finalized.[Footnote 31] 
CMS requires its regional offices to prepare a final report on each 
HCBS review to document their findings, recommendations, and the state 
response. Without such a final report, there is no formal document to 
indicate whether a state has fulfilled the required assurances, 
including those related to the health and welfare of waiver 
beneficiaries. The New York regional office did not finalize 11 of its 
12 reviews, dating back to 1998, and the San Francisco regional office 
did not finalize 7 of its 13 reviews, 1 of which was for a review that 
occurred in 1990. Without a final report documenting the review 
results, CMS cannot be assured that, if problems were identified, they 
were appropriately addressed.

CMS Does Not Obtain Timely and Complete State Annual Waiver Reports:

Many state annual waiver reports submitted to CMS regional offices are 
neither timely nor complete. During the interval between regional 
office reviews, the required annual state waiver reports provide key 
information on how states monitor beneficiaries' quality of care and on 
any quality-of-care related problems. According to regional office 
officials, states routinely fail to submit these annual reports within 
the required time frame--within 6 months after the period covered. In 
August 2000, officials in CMS's Philadelphia regional office reported 
that they had current annual state reports for less than half (11 of 
28) of the waiver programs in their region. Our review of the most 
recent annual state reports for 70 of 79 HCBS waivers serving the 
elderly confirmed that producing these reports remains a problem: (1) 
reports for more than a third of the waivers were at least 1 year late-
-the most recent report from one of Louisiana's HCBS waivers was for 
calendar year 1997, (2) reports for approximately one-fourth of the 
waivers provided no information on whether deficiencies had been 
identified through the monitoring processes,[Footnote 32] and (3) five 
reports indicated that deficiencies had been identified but provided no 
additional information about the nature of or response to the problems. 
[Footnote 33] CMS headquarters has no central repository for annual 
state reports but is in the process of establishing a centralized 
database for state report information sometime in 2003, a development 
that could facilitate ongoing monitoring of the timeliness and 
completeness of these reports.

Extent of Oversight Weaknesses Evident in 15 Largest Waivers Serving 
the Elderly:

Our analysis of CMS's oversight activities for the 15 largest HCBS 
waivers serving the elderly demonstrates the extent of oversight 
weaknesses. Overall, 8 of the 10 CMS regional offices provided 
inadequate oversight for 13 of these 15 largest state waivers for the 
elderly, which, in 1999, served about 215,000 beneficiaries--over half 
(57 percent) of the total elderly waiver beneficiary population at that 
time (see table 6). We found that:

* Four of the 15 HCBS waivers were not reviewed in a timely manner by 
the CMS regional office--none of the 4 had reviews for 8 or more years 
and yet were renewed.[Footnote 34]

* Four of the 15 waivers had no waiver review final report completed by 
the regional office. Two of the reviews occurred in 1999, and for the 
remaining 2 waivers the regional office could not tell us the date of 
the reviews or whether a final report was available.

* Four of the 15 waivers lacked a timely annual state report to the 
regional office. As of April 2002, the most recent annual report for 
these 4 waivers was either for the waiver period ending August 1999 (1 
waiver) or September 2000 (3 waivers).

* Seven of the 15 waivers had annual state reports that were incomplete 
because they either lacked information on their quality assurance 
mechanisms or on whether deficiencies had been identified.

Table 6: Status of CMS and State Monitoring for the 15 Largest HCBS 
Waivers Serving the Elderly:

New York regional office:

State: New York; Number of waiver beneficiaries[A]: 19,732; CMS waiver 
review not timely or report not finalized: Yes; Annual state report not 
timely or documentation insufficient[B]: Yes.

Philadelphia regional office:

State: Virginia; Number of waiver beneficiaries[A]: 10,514; CMS waiver 
review not timely or report not finalized: No; Annual state report 
not timely or documentation insufficient[B]: Yes.

Atlanta regional office:

State: South Carolina; Number of waiver beneficiaries[A]: 14,361; CMS 
waiver review not timely or report not finalized: Yes[C]; Annual state 
report not timely or documentation insufficient[B]: Yes.

State: Georgia; Number of waiver beneficiaries[A]: 14,018; CMS waiver 
review not timely or report not finalized: No; Annual state report 
not timely or documentation insufficient[B]: Yes.

State: Florida; Number of waiver beneficiaries[A]: 13,762; CMS waiver 
review not timely or report not finalized: No; Annual state report 
not timely or documentation insufficient[B]: Yes.

State: Kentucky; Number of waiver beneficiaries[A]: 13,339; CMS waiver 
review not timely or report not finalized: No; Annual state report 
not timely or documentation insufficient[B]: Yes.

State: North Carolina; Number of waiver beneficiaries[A]: 11,159; CMS 
waiver review not timely or report not finalized: Yes[C]; Annual state 
report not timely or documentation insufficient[B]: Yes.

Chicago regional office:

State: Ohio; Number of waiver beneficiaries[A]: 26,135; CMS waiver 
review not timely or report not finalized: No; Annual state report 
not timely or documentation insufficient[B]: No.

State: Illinois; Number of waiver beneficiaries[A]: 17,396[D]; CMS 
waiver review not timely or report not finalized: Yes; Annual state 
report not timely or documentation insufficient[B]: Yes.

State: Wisconsin; Number of waiver beneficiaries[A]: 13,900; CMS waiver 
review not timely or report not finalized: Yes; Annual state report not 
timely or documentation insufficient[B]: No.

Dallas regional office:

State: Texas; Number of waiver beneficiaries[A]: 27,978; CMS waiver 
review not timely or report not finalized: Yes; Annual state report not 
timely or documentation insufficient[B]: Yes.

Kansas City regional office:

State: Missouri; Number of waiver beneficiaries[A]: 20,821; CMS waiver 
review not timely or report not finalized: Yes; Annual state report not 
timely or documentation insufficient[B]: No.

Denver regional office:

State: Colorado; Number of waiver beneficiaries[A]: 11,481; CMS waiver 
review not timely or report not finalized: Yes; Annual state report not 
timely or documentation insufficient[B]: No.

Seattle regional office: 

State: Oregon; Number of waiver beneficiaries[A]: 26,410; CMS waiver 
review not timely or report not finalized: No; Annual state report 
not timely or documentation insufficient[B]: Yes.

State: Washington; Number of waiver beneficiaries[A]: 25,718; CMS 
waiver review not timely or report not finalized: No; Annual state 
report not timely or documentation insufficient[B]: No.

Source: CMS.

Note: GAO analysis of data provided by CMS, June 2002 and the most 
recent annual state waiver reports. The 15 largest HCBS waivers serving 
the elderly are based on the number of beneficiaries.

[A] The number of HCBS waiver beneficiaries is based on 1999 HCFA Form 
372 data. See Harrington, Aug. 2001.

[B] The annual report is required by statute and CMS directs states to 
(1) submit such reports within 6 months after the period covered, and 
(2) include information on how the state implements, monitors, and 
enforces its health and welfare standards and the waiver's impact on 
the health and welfare of beneficiaries.

[C] The CMS regional office could not provide the date that the last 
waiver review was conducted or specify whether a report had been 
finalized.

[D] Author's estimate. See Harrington, Aug, 2001.

[End of table]

Scope and Duration of Regional Office Waiver Reviews Are Limited:

The limited scope and duration of periodic regional office waiver 
reviews raise a question about the confidence that can be placed in 
findings about the health and welfare of waiver beneficiaries. CMS 
regional offices conduct reviews using guidance provided by 
headquarters. The guidance instructs regional office staff to review 
beneficiary records; interview waiver beneficiaries, primary direct-
care staff of waiver providers, and case managers; and observe waiver 
beneficiaries and the interaction between the beneficiary and direct-
care staff. This guidance was updated in January 2001 when use of the 
new HCBS waiver quality review protocol became mandatory. However, the 
new protocol does not address important operational issues such as:

* an adequate sample size or sampling methodology for the beneficiary 
record reviews and interviews to provide a basis for generalizing the 
review findings;

* whether the sample should be stratified according to the different 
groups served under the waiver (i.e., for a waiver serving both the 
elderly and the disabled, selecting a stratified sample based on the 
proportion of persons aged 65 and over and those aged 18 to 64 with 
disabilities); and:

* the appropriate duration of an on-site review, taking into 
consideration the number of sites and beneficiaries covered in the 
waiver.

Our analysis of regional office review reports for 21 HCBS waivers 
serving the elderly found that the reviews varied considerably in the 
number of beneficiary records evaluated and their method of determining 
the sample, potentially limiting their ability to generalize findings 
from the sample to the universe of waiver beneficiaries.[Footnote 35] 
Specifically, we found a wide range of sample sizes in 15 of the 21 
regional office reviews that included such information. The sample 
sizes for record reviews ranged from 14 beneficiaries (of 73 served) in 
the Boston regional office review of the Vermont waiver to 100 
beneficiaries (of 24,000 served) in the Seattle regional office review 
of the Washington waiver. (See app. VII for a summary of the sample 
sizes in the regional office reviews.) Eleven of the 15 CMS waiver 
review reports included information on the specific number of 
beneficiaries interviewed or observed during the review; however, we 
could not determine whether beneficiary interviews or observations had 
been conducted in other waiver reviews. The method by which the 
beneficiary record review samples were selected varied, with some 
regional offices using randomized sampling methods, some basing their 
sample on geographic location, and others reporting no method of sample 
selection.

For most of these same 15 waivers serving the elderly, we found that 
the regional staff typically spent 5 days conducting the waiver review-
-regardless of the number of waiver beneficiary records sampled or the 
overall size of the waiver. However, the Seattle regional office staff 
conducted only three reviews in the past 4 years, targeting its largest 
HCBS waivers. For example, the regional office has spent 3 to 4 weeks 
per waiver for the on-site portion of the review and another week for 
state agency interviews and review of documents. Generally, the number 
of beneficiary records reviewed and beneficiaries interviewed is 
dependent on (1) the number of days allocated to the waiver review by a 
regional office and (2) the number of regional office staff members 
available.

Limited Regional Office Resources Available for Oversight of HCBS 
Waivers:

The limited number of assigned staff and available clinical 
specialists, coupled with insufficient travel funds allocated to 
regional office oversight of HCBS waivers, have contributed to the 
timeliness and scope problems we identified. According to regional 
offices, the level of attention given to HCBS waiver oversight, 
including periodic reviews when waivers come up for renewal, is at the 
discretion of regional office management and competes with other 
workload priorities.[Footnote 36] In August 2000, some regional office 
officials formally communicated to HCFA headquarters their concern that 
the agency was not devoting sufficient resources to properly monitor 
the quality of HCBS waiver programs. Regional office officials 
responsible for waiver oversight told us that the number of staff 
available for waiver oversight has not kept pace with the growth in the 
number of waivers and beneficiaries served and that resource issues 
remain a key challenge for waiver oversight.

We found that CMS regional offices differed substantially in the number 
of staff assigned to waiver oversight and the extent to which staff 
with clinical or program expertise were assigned to waiver oversight. 
According to Dallas, Denver, and Philadelphia regional office staff, 
the level of resources allocated by the regional offices for such 
reviews dictated the number of waiver beneficiary records reviewed or 
beneficiary interviews conducted. Six of the 10 regional offices had 
two or fewer full-time-equivalent (FTE) staff assigned to monitoring 
HCBS waivers (see table 7).[Footnote 37] Moreover, we found that the 
number of regional office staff assigned to monitoring HCBS waivers 
bore little relationship to the waiver workload. For example, the 
Chicago regional office had six FTE staff to monitor 34 HCBS waivers 
with 131,902 waiver beneficiaries, while the Dallas regional office had 
one-and-a-half FTE staff for 28 HCBS waivers with 63,614 waiver 
beneficiaries. Until a few years ago, one person in the Philadelphia 
regional office was assigned to oversee HCBS waivers--despite growth in 
the number and size of the region's HCBS waivers over the past 
decade.[Footnote 38]

Table 7: Number and Specialty of CMS Regional Office Staff Assigned to 
Oversee HCBS Waivers:

CMS regional office: Boston; Number of HCBS waivers (number of waivers 
for the elderly ): 26 (9); Number of HCBS waiver beneficiaries[A] 
(number of elderly waiver beneficiaries): 45,390 (20,190); Number of 
FTE staff assigned to oversee waivers: 1; Specialist staff assigned to 
oversee waivers: No.

CMS regional office: New York; Number of HCBS waivers (number of 
waivers for the elderly ): 15 (3); Number of HCBS waiver 
beneficiaries[A] (number of elderly waiver beneficiaries): 69,390 
(24,319); Number of FTE staff assigned to oversee waivers: <2[B]; 
Specialist staff assigned to oversee waivers: No.

CMS regional office: Philadelphia; Number of HCBS waivers (number of 
waivers for the elderly ): 33 (8); Number of HCBS waiver 
beneficiaries[A] (number of elderly waiver beneficiaries): 48,537 
(18,554); Number of FTE staff assigned to oversee waivers: 4.1; 
Specialist staff assigned to oversee waivers: No.

CMS regional office: Atlanta; Number of HCBS waivers (number of waivers 
for the elderly ): 43 (15); Number of HCBS waiver beneficiaries[A] 
(number of elderly waiver beneficiaries): 122,120 (78,669); Number of 
FTE staff assigned to oversee waivers: <3.5[B]; Specialist staff 
assigned to oversee waivers: Yes[C].

CMS regional office: Chicago; Number of HCBS waivers (number of waivers 
for the elderly ): 34 (10); Number of HCBS waiver beneficiaries[A] 
(number of elderly waiver beneficiaries): 131,902 (73,935); Number of 
FTE staff assigned to oversee waivers: 6; Specialist staff assigned to 
oversee waivers: No.

CMS regional office: Dallas; Number of HCBS waivers (number of waivers 
for the elderly ): 28 (9); Number of HCBS waiver beneficiaries[A] 
(number of elderly waiver beneficiaries): 63,614 (47,454); Number of 
FTE staff assigned to oversee waivers: 1.5; Specialist staff assigned 
to oversee waivers: No.

CMS regional office: Kansas City; Number of HCBS waivers (number of 
waivers for the elderly ): 23 (4); Number of HCBS waiver 
beneficiaries[A] (number of elderly waiver beneficiaries): 59,253 
(33,873); Number of FTE staff assigned to oversee waivers: 1.4; 
Specialist staff assigned to oversee waivers: Yes[D].

CMS regional office: Denver; Number of HCBS waivers (number of waivers 
for the elderly ): 29 (7); Number of HCBS waiver beneficiaries[A] 
(number of elderly waiver beneficiaries): 32,866 (15,420); Number of 
FTE staff assigned to oversee waivers: 4; Specialist staff assigned to 
oversee waivers: Yes[E].

CMS regional office: San Francisco; Number of HCBS waivers (number of 
waivers for the elderly ): 15 (6); Number of HCBS waiver 
beneficiaries[A] (number of elderly waiver beneficiaries): 51,068 
(10,829); Number of FTE staff assigned to oversee waivers: 2; 
Specialist staff assigned to oversee waivers: No.

CMS regional office: Seattle; Number of HCBS waivers (number of waivers 
for the elderly ): 17 (6); Number of HCBS waiver beneficiaries[A] 
(number of elderly waiver beneficiaries): 64,012 (53,840); Number of 
FTE staff assigned to oversee waivers: .4; Specialist staff assigned to 
oversee waivers: No.

Source: CMS.

Note: GAO analysis of data provided by CMS, June 2002.

[A] The number of HCBS waiver beneficiaries is based on 1999 HCFA form 
372 data. See Harrington, Aug. 2001.

[B] Staff are not working full-time on HCBS waivers.

[C] One qualified mental retardation professional and one qualified 
mental health professional.

[D] One individual who is both a registered nurse and a qualified 
mental retardation professional.

[E] One registered nurse and one part-time qualified mental retardation 
professional.

[End of table]

As shown in table 7, 3 of the 10 regional offices had specialists 
assigned to waiver oversight, such as registered nurses or qualified 
mental retardation professionals.[Footnote 39] When asked to identify 
one of the greatest improvements that could be made in federal waiver 
oversight, 3 of the 10 regional offices identified the direct 
assignment of specialist staff. CMS's waiver review protocol specifies 
that the participation of clinical and other specialist staff is 
important to assessing issues related to beneficiaries' health and 
welfare. However, many regional offices indicated that they had to 
"borrow" specialist staff from other departments within the region in 
order to conduct their waiver reviews. The Seattle and Boston regional 
offices provide contrasting examples of the role played by regional 
office management in obtaining clinical staff to conduct reviews. 
According to Seattle regional office staff, it has been a challenge to 
obtain specialist staff on the waiver review teams. For 4 to 5 years, 
the region did not conduct any HCBS waiver reviews. In the past 4 
years, it has only conducted three reviews--regardless of the number of 
waivers due for review. The region has four waivers that have never 
been reviewed, two dating back to 1989. According to the staff, the 
prior regional administrator did not target resources for HCBS waiver 
reviews, and it was difficult to obtain clinical and other specialist 
staff from other departments to assist in conducting reviews. Although 
it has no specialist staff assigned to waivers, Boston regional office 
officials informed us that conducting HCBS waiver reviews has been a 
management priority, as evidenced by the fact that the region always 
includes a registered nurse or other relevant specialist on the review 
team. We noted that the Boston regional office has conducted timely 
reviews of all of its waivers.

When asked to identify the greatest challenges related to HCBS waiver 
oversight, 4 of the 10 CMS regional offices identified insufficient 
travel funding. Regional office staff indicated that there appears to 
be no correlation between the amount of travel dollars made available 
by the regional offices for the reviews and the review schedule set 
forth by CMS headquarters. Moreover, they told us that they had to 
compete for limited travel resources with the regional office staff 
responsible for overseeing nursing homes. Regional office responses to 
inadequate travel funds have included (1) conducting a "desk review" 
without visiting state agency officials, providers, and waiver 
beneficiaries, (2) limiting the number of days allotted for the review, 
(3) reducing the number of staff assigned to conduct the review, or (4) 
not reviewing a particular waiver at all. In the New York regional 
office, a lack of travel funds led to desk reviews for 9 of 15 waivers. 
According to the Philadelphia regional office's final report for a 
Virginia HCBS waiver, some cases that should have been pursued were not 
reviewed because only 1 week had been allotted for fieldwork, and 2 of 
the 18 cases selected for field review were dropped because there was 
insufficient time to conduct the review. In 2001, the Chicago regional 
office conducted a limited on-site review of a Michigan HCBS waiver 
serving over 6,000 beneficiaries. During the review, three case files 
were examined and one beneficiary was interviewed. According to Denver 
regional office officials, travel budget problems have meant that the 
reviews are conducted by one staff member when two would be preferable.

Conclusions:

HCBS waivers give states considerable flexibility to establish 
customized programs offering long-term care services for specific 
populations, such as elderly persons, persons with mental retardation, 
or children with special needs. While maintaining this flexibility is 
important, insufficient emphasis has been placed on balancing 
flexibility with measures to ensure accountability. At present, states 
may obtain a waiver serving the elderly with a limited explanation of 
how they plan to monitor quality, and CMS has not held states 
accountable for submitting complete and timely annual waiver reports 
detailing their quality assurance activities. Moreover, CMS has not 
fully complied with the statutory and regulatory requirements that 
condition the renewal of HCBS waivers on whether the state has 
fulfilled its assurances that necessary safeguards are in place to 
protect the health and welfare of waiver beneficiaries. The current 
size and likely future growth in HCBS waiver programs that serve a 
vulnerable population--particularly elderly individuals eligible for 
nursing home placement--make it even more essential for states to have 
appropriate mechanisms in place to monitor the quality of care.

While CMS requires periodic reviews of state waiver programs to help 
ensure that beneficiaries' health and welfare are adequately protected, 
many have been renewed without such a review. In addition, guidance on 
how these waiver reviews should be conducted does not address important 
operational issues such as sample size and sampling methodology. 
Consequently, there is little relationship among the amount of time 
spent on-site conducting waiver reviews, the number of beneficiary 
records reviewed, and the number of beneficiaries served. CMS expects 
its regional offices to interview and observe waiver beneficiaries to 
obtain a first-hand perspective on care delivery and the adequacy of 
case management, but beneficiary interviews are not a component of all 
regional office reviews. Moreover, staff resources and travel funds 
currently allocated to conduct waiver reviews are insufficient. Without 
necessary attention from CMS, these guidance and resource issues will 
only be exacerbated by the expected future growth in the number of 
persons served through HCBS waiver programs. CMS has a number of 
initiatives directed towards improving quality and quality assurance 
for home and community-based waiver programs. They do not, however, 
address the specific oversight weaknesses we have identified in this 
report, such as the lack of detailed criteria or guidance for states 
regarding the necessary components of a quality assurance system to 
help ensure the health and welfare of waiver beneficiaries.

Recommendations for Executive Action:

To ensure that state quality assurance efforts are adequate to protect 
the health and welfare of HCBS waiver beneficiaries, we recommend that 
the Administrator of CMS:

* develop and provide states with more detailed criteria regarding the 
necessary components of an HCBS waiver quality assurance system,

* require states to submit more specific information about their 
quality assurance approaches prior to waiver approval, and:

* ensure that states provide sufficient and timely information in their 
annual waiver reports on their efforts to monitor quality.

To strengthen federal oversight of the growing HCBS waiver programs and 
to ensure the health and welfare of HCBS waiver beneficiaries, we 
recommend that the Administrator:

* ensure allocation of sufficient resources and hold regional offices 
accountable for conducting thorough and timely reviews of the status of 
quality in HCBS waiver programs, and:

* develop guidance on the scope and methodology for federal reviews of 
state waiver programs, including a sampling methodology that provides 
confidence in the generalizability of the review results.

Agency and State Comments and Our Evaluation:

We provided a draft of this report to CMS and South Carolina, Texas, 
and Washington, the three states in which we obtained a more in-depth 
perspective on states' quality assurance approaches. (CMS's comments 
are reproduced in app. VIII.) CMS affirmed its commitment to its 
ongoing responsibility, in partnership with the states, to ensure and 
improve quality in HCBS waivers. The agency stated that the federal 
focus should be on assisting states in the design of HCBS programs, 
respecting the assurances made by states, improving the ability of 
states to remedy identified problems, providing assistance to states to 
improve the quality of services, and thereby assisting people to live 
in their own homes in communities of their choice. CMS generally 
concurred with our recommendations to improve state and federal 
accountability for quality assurance in HCBS waivers but raised 
concerns about our definition of quality, how best to ensure quality in 
state waiver programs, the appropriate state and federal oversight 
roles, and the resources and guidance required to carry out federal 
quality oversight.

Definition of Quality:

CMS stated that the draft report's definition of quality in waivers was 
too narrow because it ignored a wide variety of activities used to 
promote quality. Furthermore, CMS cited the availability of a broad 
array of waiver services with choice over how, where, and by whom 
services are delivered as important to beneficiaries' quality of life. 
According to CMS, growth in the number of persons served by HCBS 
waivers was evidence of beneficiary satisfaction. (See CMS's "General 
Comments," 2 and 3.):

Rather than defining quality ourselves, we reported the approaches 
states used to assure quality in their waiver programs. By analyzing 
state applications for waivers serving the elderly and state annual 
waiver reports, we identified a broad array of state quality assurance 
activities, including licensing and certification of providers and 
beneficiary satisfaction surveys (see tables 2 and 3). We disagree with 
CMS's assertion that beneficiaries' preference for services that allow 
them to remain in the community can be equated with satisfaction for 
the services delivered. Even assuming that beneficiary satisfaction 
alone is a reliable indicator of quality, CMS offered no empirical 
evidence to support its position. Only about half of the state annual 
waiver reports we reviewed indicated that states measured beneficiary 
satisfaction with services. Moreover, our review of quality-of-care 
problems identified in waiver programs serving the elderly demonstrated 
that failure to provide needed or authorized services was a frequently 
cited problem. For example, as we noted in the draft report, a CMS 
review found that 27 percent of beneficiaries served by one state's 
HCBS waiver for the elderly did not receive any of their authorized 
personal care services, and 49 percent received only half.

Quality Assurance Approaches:

CMS commented that the draft report failed to recognize that HCBS 
programs require a different approach to quality than their 
institutional alternatives and "leaves the distinct impression that the 
most effective way to assure and improve quality is through the process 
of inspection and monitoring." CMS asserted that design of an HCBS 
waiver, as opposed to monitoring its implementation, is the most 
important contributor to quality, and the agency's recent efforts have 
focused on working with states to improve design decisions and design 
options. (See CMS's "General Comments," 4 and 7.):

We disagree with CMS's characterization of our findings. Our report 
recognizes the importance of maintaining states' considerable 
flexibility in ensuring quality in HCBS waivers but concludes that 
insufficient emphasis has been placed on balancing this flexibility 
with measures to ensure the accountability called for by both statute 
and regulations. Contrary to CMS's comments, we did not recommend an 
additional or increased federal oversight role or the adoption of 
oversight systems such as those used for institutional providers. Our 
analysis and conclusions were based on the criteria established in both 
statute and regulations that entail federal oversight of waivers and 
that condition federal approval and renewal of waivers on states' 
demonstrating to CMS that they have established and are fulfilling 
assurances to protect the health and welfare of waiver beneficiaries. 
We found that CMS currently receives too little information from states 
about their quality assurance approaches to hold them accountable, 
raising a question as to whether the agency has adequate information to 
approve or renew some waivers. While we agree that waiver design is 
important to ensuring quality, a state's implementation of its quality 
assurance approaches is equally, if not more, important. In its 
protocol for reviewing states' HCBS waivers, CMS gives equal emphasis 
to both the design and implementation of quality assurance mechanisms. 
Despite its concerns, CMS generally concurred with our recommendation 
to develop and provide states with more detailed criteria regarding the 
necessary components of an HCBS waiver quality assurance system. CMS 
cited its current effort to provide such guidance and indicated that it 
would work to more clearly define its criteria and expectations for 
quality.

State and Federal Roles in Ensuring Quality:

CMS commented that "the report lends itself to the conclusion that the 
federal government ought to be the primary source of quality monitoring 
and improvement, and fails to recognize that the federal statutes 
convey respect for state authority and competence in the administration 
of HCBS programs." (See CMS's "General Comments," 6.) We agree that the 
states and the federal government have distinct quality monitoring 
roles but believe that CMS has mischaracterized our description of 
those roles as defined in statute and regulations. In addition, we 
believe that CMS has understated the importance of federal oversight.

The report describes states' statutory and regulatory responsibility to 
(1) include information in their waiver applications on their 
approaches for protecting the health and welfare of HCBS beneficiaries 
and (2) report annually on state quality assurance approaches and 
deficiencies identified through state monitoring. We reported that 
waiver applications contained limited information on state quality 
assurance approaches and that many state annual waiver reports were 
neither timely nor complete. Eleven of the 15 applications for the 
largest waivers serving the elderly included none of the following 
well-recognized quality assurance tools: complaint systems, corrective 
action plans, sanctions, or beneficiary satisfaction surveys. Annual 
reports for more than a third of 70 waivers serving the elderly were at 
least 1 year late, and one-quarter of such reports did not indicate 
whether deficiencies had been identified, as required. CMS acknowledged 
the need for more comprehensive information from states at the time of 
application and at subsequent renewals. Consistent with our 
recommendation, CMS agreed to revise and improve the application 
process and annual state waiver report to include more information on 
states' quality approaches and activities.

The report also describes CMS's statutory responsibility for ensuring 
that states adequately implement their quality assurance approaches--a 
responsibility operationalized in policy guidance to the agency's 
regional offices. Waiver reviews are expected to occur at least once 
during the initial 3-year waiver period and during each 5-year renewal 
cycle. We did not propose an expanded federal quality assurance role. 
We reported that, in some cases, CMS had an insufficient basis for 
determining that states had met the required assurances for protecting 
beneficiaries' health and welfare. As of June 2002, almost one-fifth of 
all HCBS waivers in place for 3 years or more had either never been 
reviewed or were renewed without a review; 14 of these waivers had 10 
or more years elapse without a regional office review. Some CMS waiver 
reviews have uncovered serious state oversight weaknesses as well as 
quality-of-care problems. For example, the review of one state's waiver 
found both medical and physical neglect of beneficiaries because of 
serious lapses in state oversight, resulting in a decision to let the 
waiver expire. The full extent of such problems is unknown because many 
state waivers lacked a recent CMS review. CMS did not comment directly 
on our conclusion that the agency is not fully complying with statutory 
and regulatory requirements when it renews waivers. The agency 
suggested it would be far more efficient and equally effective for 
federal waiver reviews to focus on only one waiver in cases where there 
are multiple waivers in a state serving subsets of the same target 
group and using the same quality assurance system; however, CMS's own 
guidance to its regional offices calls for each waiver to receive at 
least one full review during a given waiver cycle, with each waiver 
receiving at least some level of review.[Footnote 40]

Resources and Guidance for Federal Oversight:

CMS commented that the draft report's recommendations to hold regional 
offices accountable for conducting thorough and timely reviews of 
quality in HCBS waiver programs, including a sampling methodology that 
provides confidence in the generalizability of the review results, 
would require a huge new investment or redirection of federal 
resources. Specifically, CMS commented that the report "does not 
address the significant resources that would need to be found or 
redirected to implement its recommendations" and "fails to acknowledge 
the lack of appropriated funds for HCBS quality." The agency stated 
that such funds would have to come from CMS's operating budget. CMS 
also pointed out that it had already taken steps organizationally to 
ensure that enough resources are devoted to quality and that they are 
appropriately positioned within CMS. (See CMS's "General Comments," 5, 
8, and 9.):

CMS's existing waiver review protocol directs regional offices to 
select a sample of waiver beneficiaries for activities such as 
interviews and observations, but it does not adequately address 
sampling methodology. We found that sample selection methods varied 
with some regional offices selecting random samples, some basing their 
sample on geographic location, and others reporting no methodology for 
sample selection. Given that the regional offices are already 
generalizing their findings to the waiver program as a whole, we 
believe explicit and uniform sample selection guidance is imperative. 
At the same time, we believe that, as CMS suggested, samples may 
appropriately be targeted to certain types of participants or services 
so that, over time, greater assurances are provided about the quality 
of care. In response to our recommendation to develop guidance on the 
scope and methodology for federal reviews of state waiver programs, CMS 
said it is committed to developing additional policy guidance.

We did not recommend significant increases in appropriated funds for 
conducting waiver reviews. Rather, our draft report recommended that 
CMS ensure allocation of sufficient resources and hold regional offices 
accountable for conducting thorough and timely reviews of the status of 
quality in HCBS waiver programs. The CMS Administrator is responsible 
for assessing whether existing funding levels are adequate to satisfy 
statutory and regulatory requirements, including periodic regional 
office review of the states' assurances. The Administrator may indeed 
conclude that, to carry out these oversight responsibilities for the 
growing numbers of frail beneficiaries who prefer and rely on these 
services, there may be a need to reallocate existing funds or to 
request additional funds. CMS also noted that it had recently 
redeployed and reorganized headquarters staff to incorporate the 
quality function into each program area, including the operational unit 
that oversees HCBS waivers. Despite CMS's concerns about the need for 
significant funding increases, the agency noted the importance of 
further investments to advance both state and federal capability to 
assure quality in waiver programs.

Additional CMS Comments:

CMS commented that the draft report had numerous technical 
inaccuracies, but cited only one and provided no additional examples or 
technical comments to accompany its written response (CMS's "General 
Comments," 1). Although CMS stated that our characterization of federal 
requirements concerning waiver renewals was inaccurate, its suggested 
changes and our report language were essentially the same. To avoid any 
confusion, however, we have added the statute's specific language to 
the background section of the report. CMS further commented that our 
report should recognize that the Congress created an enforcement 
mechanism that places great reliance on a system of assurances. Our 
draft report made that point while also describing CMS's 
responsibility, as specified in its implementing regulations, to 
determine that each state has met all the assurances set forth in its 
waiver application before renewing a waiver.

CMS stated that the draft report failed to acknowledge the steps it has 
already taken to ensure quality. (CMS's "General Comments," 10.) To the 
contrary, the draft report described each of the efforts CMS referred 
to as under way to monitor and improve HCBS quality and addressed each 
activity: the waiver review protocol, the HCBS quality framework, the 
development of tools to assist states, development of the Independence 
Plus template, and the national technical assistance contractor. 
However, we found that CMS's waiver review protocol does not address 
key issues relating to the scope and methodology of federal oversight 
reviews. Moreover, the use of the Independence Plus template, which 
requires more specific information on states' quality assurance 
approaches, is voluntary rather than mandatory.

State Comments:

In its written comments, Texas stated that it supports proper federal 
oversight of HCBS waivers but stressed the need to maintain flexibility 
in designing waivers to meet the unique needs of residents requiring 
community care. The state believes that such flexibility should not be 
lost in establishing more specific quality assurance criteria.

As arranged with your offices, unless you publicly announce its 
contents earlier, we plan no further distribution of this report until 
30 days after its issue date. At that time, we will send copies of this 
report to the Administrator of the Centers for Medicare & Medicaid 
Services and appropriate congressional committees. We also will make 
copies available to others upon request. In addition, the report will 
be available at no charge on the GAO Web site at http://www.gao.gov.

Please contact me at (202) 512-7118 or Walter Ochinko at (202) 512-7157 
if you have questions about this report. Other contributors to this 
report included Eric Anderson, Connie Peebles Barrow, and Kevin Milne.

Kathryn G. Allen 
Director, Health Care--Medicaid and Private Health Insurance Issues:

Signed by Kathryn G. Allen:

[End of section]

Appendix I: Scope and Methodology:

This appendix describes our scope and methodology, following the order 
that our results are presented in the report.

Data on HCBS Waivers. To identify the universe of state HCBS waivers as 
of June 2002, we asked the CMS regional offices to identify each 
waiver, including the target population and the waiver start date. The 
regional offices identified a total of 263 waivers. Using this 
information and other data, we identified 77 waivers serving the 
elderly. To identify trends in Medicaid long-term care and Medicaid 
waiver spending, we analyzed data covering fiscal years 1991 through 
2001 from HCFA reports (HCFA Form 64) compiled by The MEDSTAT Group. To 
identify trends in the overall number of Medicaid waiver beneficiaries, 
number of elderly waiver beneficiaries, average waiver size, and 
average per beneficiary expenditures for waivers serving the elderly, 
we analyzed data from state annual waiver reports (HCFA Form 372) 
covering fiscal years 1992 through 1999 in a database compiled by 
researchers at the University of California, San Francisco.[Footnote 
41]

State Quality Assurance Mechanisms. In the absence of comprehensive, 
readily available information on HCBS quality assurance mechanisms that 
states use, we analyzed the information available in a subset of state 
waiver applications and annual state waiver reports for waivers serving 
the elderly. Specifically, we analyzed (1) initial and/or renewal 
applications for the 15 largest waivers serving the elderly as of 1999 
and (2) annual state waiver reports from 70 of the 79 waivers serving 
the elderly.[Footnote 42] The waiver applications are used by CMS, in 
part, to assess whether the quality assurance mechanisms in place 
warrant waiver approval. The annual waiver reports are required to 
provide a description of the process for monitoring the standards and 
safeguards under the waiver and the results of state monitoring. Of the 
70 state annual waiver reports that we analyzed, 52 contained some 
information about states' monitoring processes. Eight of the remaining 
9 annual waiver reports were new waivers for which the state had not 
yet submitted an annual report, and for 1 waiver, a regional office did 
not provide a copy of the annual state report.

State Oversight and Quality of Care. To assess state oversight issues 
in waivers serving the elderly, we examined regional office waiver 
review reports for 21 waivers and state audit reports related to 5 
waivers, the only reports we were able to analyze, for a total of 23 
discrete waivers.[Footnote 43] To assess quality-of-care problems in 
waivers serving the elderly, we reviewed 51 waivers for which we were 
able to analyze regional office final reports and annual state reports. 
Regional office waiver review reports identified problems in 19 
waivers, and annual state reports identified problems in 22 waivers, 
for a total of 36 discrete waivers.[Footnote 44] These reports 
identified no quality-of-care problems in the remaining 15 waivers. We 
were unable to analyze findings from 28 additional waivers because they 
either (1) lacked a recent regional office waiver review completed 
during the period of October 1998 through May 2002 or an annual state 
waiver report, (2) the annual state waiver report did not address 
whether deficiencies had been identified, or provided no information on 
the deficiencies found, or (3) the waivers were too new to have had a 
regional office review or to provide an annual state report.[Footnote 
45]

CMS Oversight. To determine the adequacy of CMS regional office 
oversight of states' waiver programs, we asked all 10 CMS regional 
offices to provide the following information for each of the waivers 
for which they were responsible, including both waivers for the elderly 
as well as those serving other target populations: (1) the waiver start 
date, (2) the current waiver time period, (3) the fiscal year the 
waiver was last reviewed, and (4) whether or not the waiver review 
report was finalized. Of the 263 waivers, 228 had been in place for 3 
years or more and therefore should have had a regional office review. 
The other 35 waivers were less than 3 years old and would not have yet 
qualified for a review as of June 2002. For information on sample sizes 
and duration of the reviews, we analyzed CMS's HCBS waiver review final 
reports for waivers serving the elderly that were issued during the 
period of October 1998 through May 2002. Fifteen of the 21 waiver 
review reports that we received included information on the number of 
waiver beneficiary records reviewed and on the duration of the reviews. 
Some review reports also provided the number of beneficiaries that were 
interviewed or observed. We also discussed regional office oversight 
activities with CMS headquarters' staff.

[End of section]

Appendix II: Suggested CMS Definitions of Home and Community-Based 
Services in Waivers Serving the Elderly:

Table 8 contains a list of services provided through the HCBS waivers 
serving the elderly and the suggested CMS definitions. However, states 
may provide alternative definitions in their waiver applications.

Table 8: Services States May Include in Their Medicaid Home and 
Community-Based Services Waiver:

HCBS waiver service: Case management; Suggested CMS definition: 
Services that will assist individuals who receive waiver services in 
gaining access to needed waiver and other state plan services, as well 
as needed medical, social, educational, and other services, regardless 
of the funding source for the services to which access is gained.

HCBS waiver service: Homemaker services; Suggested CMS definition: 
Services consisting of general household activities (e.g., meal 
preparation and routine household care) provided by a trained 
homemaker, when the individual regularly responsible for these 
activities is temporarily absent or unable to manage the home and care 
for him-or herself or others in the home.

HCBS waiver service: Personal care services; Suggested CMS definition: 
Assistance with activities of daily living, such as eating, bathing, 
dressing, or personal hygiene. This service may include assistance with 
preparation of meals, but does not include the cost of the meals 
themselves.

HCBS waiver service: Respite care services; Suggested CMS definition: 
Services provided to individuals unable to care for themselves; 
furnished on a short-term basis because of the absence of or need for 
relief for those persons normally providing the care. These services 
may be provided in such locations as a nursing home, hospital, or 
waiver beneficiary's home.

HCBS waiver service: Adult day health services; Suggested CMS 
definition: Services furnished 4 or more hours per day on a regularly 
scheduled basis, for 1 or more days per week, in an outpatient setting, 
encompassing both health and social services needed to ensure the 
optimal functioning of the individual. Meals provided as part of these 
services do not constitute a "full nutritional regimen" (three meals 
per day). Physical, occupational, and speech therapies indicated in the 
individual's plan of care will be furnished as component parts of this 
service.

HCBS waiver service: Environmental accessibility adaptations; 
Suggested CMS definition: Those physical adaptations to the home, 
required by the individual's plan of care, that are necessary to ensure 
the health, welfare, and safety of the individual or that enable the 
individual to function with greater independence in the home, and 
without which the individual would require institutionalization. 
Adaptations may include installation of ramps and grab-bars, widening 
of doorways, modification of bathroom facilities, or installation of 
specialized electric and plumbing systems necessary to accommodate the 
medical equipment and supplies that are necessary for the welfare of 
the individual.

HCBS waiver service: Skilled nursing services; Suggested CMS 
definition: Services listed in the plan of care that are within the 
scope of the state's Nurse Practice Act and are provided by a 
registered professional nurse or licensed practical or vocational nurse 
under the supervision of a registered nurse licensed to practice in the 
state.

HCBS waiver service: Transportation; Suggested CMS definition: Service 
offered to enable individuals served on the waiver to gain access to 
waiver and other community services, activities, and resources 
specified by the plan of care.

HCBS waiver service: Specialized medical equipment and supplies; 
Suggested CMS definition: Specialized medical equipment and supplies 
include devices, controls, or appliances, specified in the plan of 
care, that enable individuals to increase their abilities to perform 
activities of daily living or to perceive, control, or communicate with 
the environment in which they live.

HCBS waiver service: Chore services; Suggested CMS definition: Services 
needed to maintain the home in a clean, sanitary, and safe environment. 
These services include heavy household chores such as washing floors, 
windows, and walls, tacking down loose rugs and tiles, and moving heavy 
items of furniture in order to provide safe entry and exit.

HCBS waiver service: Personal emergency response systems; Suggested CMS 
definition: Electronic devices that enable certain individuals at high 
risk of institutionalization to secure help in an emergency. The 
individual may also wear a portable "help" button to allow for 
mobility. The system is connected to the person's telephone and, once a 
"help" button is activated, the telephone is programmed to signal a 
response center staffed by trained professionals.

HCBS waiver service: Adult companion services; Suggested CMS 
definition: Nonmedical care, supervision, and socialization provided to 
a functionally impaired adult. Companions may assist or supervise the 
individual with such tasks as meal preparation, laundry, and shopping 
but do not perform these activities as discrete services.

HCBS waiver service: Attendant care services; Suggested CMS definition: 
Hands-on care, of both a supportive and health-related nature, specific 
to the needs of a medically stable, physically handicapped individual. 
Supportive services are those that substitute for the absence, loss, 
diminution, or impairment of a physical or cognitive function.

HCBS waiver service: Adult foster care services; Suggested CMS 
definition: Personal care and services; homemaker, chore, attendant 
care, and companion services; and medication oversight (to the extent 
permitted under state law) provided in a licensed (where applicable) 
private home by a principal care provider who lives in the home. Adult 
foster care is furnished to adults who receive these services in 
conjunction with residing in the home. Typically, there is a limit to 
the total number of individuals living in the home.

HCBS waiver service: Assisted living services; Suggested CMS 
definition: Personal care and services, homemaker, chore, attendant 
care, and companion services; medication oversight (to the extent 
permitted under state law); and therapeutic social and recreational 
programming, provided in a home-like environment in a licensed (where 
applicable) community care facility, in conjunction with residing in 
the facility. This service includes 24-hour on-site response staff to 
meet scheduled or unpredictable needs in a way that promotes maximum 
dignity and independence, and to provide supervision, safety, and 
security.

HCBS waiver service: Private duty nursing; Suggested CMS definition: 
Individual and continuous care (in contrast to part-time or 
intermittent care) provided by licensed nurses within the scope of 
state law. These services are provided to an individual at home.

HCBS waiver service: Extended state plan services; Suggested CMS 
definition: Includes physician services, home health care services, 
physical therapy services, occupational therapy services, speech, 
hearing and language services, and prescribed drugs--services available 
through the approved state plan but without limitations on amount, 
duration, and scope.

Source: CMS.

Note: Definitions contained in current streamlined Medicaid 1915(c) 
waiver application format, OMB form 0938 0449.

[End of table]

[End of section]

Appendix III: Medicaid Long-Term Care Expenditures, by Type and State, 
Fiscal Year 2001:

Table 9: 

Percent of expenditures by service or setting: State: $927: [Empty].

State: Alabama; Medicaid long-term care expenditures (in millions): 
$927; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 73%; Percent of expenditures by service or 
setting: Institution[A] care: ICF/MR: 7%; Percent of expenditures by 
service or 
setting: Home and community-based care: HCBS waivers: 17%; Percent of 
expenditures by service or setting: Home and community-based care: 
Personal care[A]: 0%; Percent of expenditures by service or setting: 
Home and community-based care: Home health[B]: 4%.

State: Alaska; Medicaid long-term care expenditures (in millions): 156; 
Percent of expenditures by service or setting: Institution[A] care: 
Nursing homes: 46; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 0; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 48; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 5; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 0.

State: Arizona; Medicaid long-term care expenditures (in millions): 15; 
Percent of expenditures by service or setting: Institution[A] care: 
Nursing homes: n.a; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: n.a; Percent of expenditures by service 
or setting: 
Home and community-based care: HCBS waivers: n.a; Percent of 
expenditures by service or setting: Home and community-based care: 
Personal care[A]: n.a; Percent of expenditures by service or setting: 
Home and community-based care: Home health[B]: n.a.

State: Arkansas; Medicaid long-term care expenditures (in millions): 
647; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 57; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 15; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 15; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 
10; Percent of expenditures by service or setting: Home and community-
based care: Home health[B]: 4.

State: California; Medicaid long-term care expenditures (in millions): 
5,066; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 51; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 8; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 10; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 
27; Percent of expenditures by service or setting: Home and community-
based care: Home health[B]: 3.

State: Colorado; Medicaid long-term care expenditures (in millions): 
768; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 47; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 2; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 42; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 10.

State: Connecticut; Medicaid long-term care expenditures (in millions): 
1,842; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 56; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 13; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 23; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 8.

State: Delaware; Medicaid long-term care expenditures (in millions): 
195; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 57; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 16; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 24; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 3.

State: District of Columbia; Medicaid long-term care expenditures (in 
millions): 253; Percent of expenditures by service or setting: 
Institution[A] care: Nursing homes: 63; Percent of expenditures by 
service or setting: Institution[A] care: ICF/MR: 31; Percent of 
expenditures by 
service or setting: Home and community-based care: HCBS waivers: 1; 
Percent of expenditures by service or setting: Home and community-based 
care: Personal care[A]: 0; Percent of expenditures by service or 
setting: Home and community-based care: Home health[B]: 6.

State: Florida; Medicaid long-term care expenditures (in millions): 
2,648; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 64; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 11; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 21; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 1; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 3.

State: Georgia; Medicaid long-term care expenditures (in millions): 
1,099; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 69; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 10; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 16; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 4.

State: Hawaii; Medicaid long-term care expenditures (in millions): 210; 
Percent of expenditures by service or setting: Institution[A] care: 
Nursing homes: 71; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 4; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 25; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 1.

State: Idaho; Medicaid long-term care expenditures (in millions): 258; 
Percent of expenditures by service or setting: Institution[A] care: 
Nursing homes: 46; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 24; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 23; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 5; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 3.

State: Illinois; Medicaid long-term care expenditures (in millions): 
2,533; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 59; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 26; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 14; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 1.

State: Indiana; Medicaid long-term care expenditures (in millions): 
1,307; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 63; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 23; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 11; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 4.

State: Iowa; Medicaid long-term care expenditures (in millions): 756; 
Percent of expenditures by service or setting: Institution[A] care: 
Nursing homes: 49; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 27; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 17; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 6.

State: Kansas; Medicaid long-term care expenditures (in millions): 887; 
Percent of expenditures by service or setting: Institution[A] care: 
Nursing homes: 54; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 8; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 34; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 1; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 3.

State: Kentucky; Medicaid long-term care expenditures (in millions): 
935; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 60; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 10; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 17; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 13.

State: Louisiana; Medicaid long-term care expenditures (in millions): 
1,677; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 69; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 21; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 8; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 1.

State: Maine; Medicaid long-term care expenditures (in millions): 411; 
Percent of expenditures by service or setting: Institution[A] care: 
Nursing homes: 49; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 11; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 37; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 1; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 2.

State: Maryland; Medicaid long-term care expenditures (in millions): 
1,061; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 66; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 6; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 20; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 3; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 6.

State: Massachusetts; Medicaid long-term care expenditures (in 
millions): 2,450; Percent of expenditures by service or setting: 
Institution[A] care: Nursing homes: 58; Percent of expenditures by 
service or setting: Institution[A] care: ICF/MR: 9; Percent of 
expenditures by 
service or setting: Home and community-based care: HCBS waivers: 21; 
Percent of expenditures by service or setting: Home and community-based 
care: Personal care[A]: 10; Percent of expenditures by service or 
setting: Home and community-based care: Home health[B]: 3.

State: Michigan; Medicaid long-term care expenditures (in millions): 
2,385; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 73; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 1; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 17; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 8; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 1.

State: Minnesota; Medicaid long-term care expenditures (in millions): 
1,916; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 47; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 11; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 32; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 7; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 3.

State: Mississippi; Medicaid long-term care expenditures (in millions): 
646; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 64; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 26; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 8; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 2.

State: Missouri; Medicaid long-term care expenditures (in millions): 
1,677; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 62; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 11; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 18; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 9; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 0.

State: Montana; Medicaid long-term care expenditures (in millions): 
215; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 52; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 10; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 27; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 
11; Percent of expenditures by service or setting: Home and community-
based care: Home health[B]: 0.

State: Nebraska; Medicaid long-term care expenditures (in millions): 
579; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 64; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 8; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 23; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 1; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 3.

State: Nevada; Medicaid long-term care expenditures (in millions): 162; 
Percent of expenditures by service or setting: Institution[A] care: 
Nursing homes: 57; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 18; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 17; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 4; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 4.

State: New Hampshire; Medicaid long-term care expenditures (in 
millions): 358; Percent of expenditures by service or setting: 
Institution[A] care: Nursing homes: 59; Percent of expenditures by 
service or setting: Institution[A] care: ICF/MR: 1; Percent of 
expenditures by 
service or setting: Home and community-based care: HCBS waivers: 38; 
Percent of expenditures by service or setting: Home and community-based 
care: Personal care[A]: 1; Percent of expenditures by service or 
setting: Home and community-based care: Home health[B]: 1.

State: New Jersey; Medicaid long-term care expenditures (in millions): 
3,192; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 69; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 13; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 10; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 6; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 2.

State: New Mexico; Medicaid long-term care expenditures (in millions): 
410; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 40; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 4; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 39; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 
16; Percent of expenditures by service or setting: Home and community-
based care: Home health[B]: 0.

State: New York; Medicaid long-term care expenditures (in millions): 
13,469; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 47; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 16; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 15; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 
14; Percent of expenditures by service or setting: Home and community-
based care: Home health[B]: 8.

State: North Carolina; Medicaid long-term care expenditures (in 
millions): 2,037; Percent of expenditures by service or setting: 
Institution[A] care: Nursing homes: 43; Percent of expenditures by 
service or setting: Institution[A] care: ICF/MR: 20; Percent of 
expenditures by 
service or setting: Home and community-based care: HCBS waivers: 22; 
Percent of expenditures by service or setting: Home and community-based 
care: Personal care[A]: 11; Percent of expenditures by service or 
setting: Home and community-based care: Home health[B]: 4.

State: North Dakota; Medicaid long-term care expenditures (in 
millions): 251; Percent of expenditures by service or setting: 
Institution[A] care: Nursing homes: 60; Percent of expenditures by 
service or setting: Institution[A] care: ICF/MR: 19; Percent of 
expenditures by 
service or setting: Home and community-based care: HCBS waivers: 20; 
Percent of expenditures by service or setting: Home and community-based 
care: Personal care[A]: 0; Percent of expenditures by service or 
setting: Home and community-based care: Home health[B]: 1.

State: Ohio; Medicaid long-term care expenditures (in millions): 3,643; 
Percent of expenditures by service or setting: Institution[A] care: 
Nursing homes: 64; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 22; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 13; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 2.

State: Oklahoma; Medicaid long-term care expenditures (in millions): 
811; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 53; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 14; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 29; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 5; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 0.

State: Oregon; Medicaid long-term care expenditures (in millions): 
1,058; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 51; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 1; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 45; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 3; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 0.

State: Pennsylvania; Medicaid long-term care expenditures (in 
millions): 5,114; Percent of expenditures by service or setting: 
Institution[A] care: Nursing homes: 72; Percent of expenditures by 
service or setting: Institution[A] care: ICF/MR: 10; Percent of 
expenditures by 
service or setting: Home and community-based care: HCBS waivers: 17; 
Percent of expenditures by service or setting: Home and community-based 
care: Personal care[A]: 0; Percent of expenditures by service or 
setting: Home and community-based care: Home health[B]: 1.

State: Rhode Island; Medicaid long-term care expenditures (in 
millions): 420; Percent of expenditures by service or setting: 
Institution[A] care: Nursing homes: 58; Percent of expenditures by 
service or setting: Institution[A] care: ICF/MR: 2; Percent of 
expenditures by 
service or setting: Home and community-based care: HCBS waivers: 39; 
Percent of expenditures by service or setting: Home and community-based 
care: Personal care[A]: 0; Percent of expenditures by service or 
setting: Home and community-based care: Home health[B]: 1.

State: South Carolina; Medicaid long-term care expenditures (in 
millions): 789; Percent of expenditures by service or setting: 
Institution[A] care: Nursing homes: 47; Percent of expenditures by 
service or setting: Institution[A] care: ICF/MR: 21; Percent of 
expenditures by 
service or setting: Home and community-based care: HCBS waivers: 28; 
Percent of expenditures by service or setting: Home and community-based 
care: Personal care[A]: 0; Percent of expenditures by service or 
setting: Home and community-based care: Home health[B]: 3.

State: South Dakota; Medicaid long-term care expenditures (in 
millions): 237; Percent of expenditures by service or setting: 
Institution[A] care: Nursing homes: 66; Percent of expenditures by 
service or setting: Institution[A] care: ICF/MR: 8; Percent of 
expenditures by 
service or setting: Home and community-based care: HCBS waivers: 25; 
Percent of expenditures by service or setting: Home and community-based 
care: Personal care[A]: 0; Percent of expenditures by service or 
setting: Home and community-based care: Home health[B]: 1.

State: Tennessee; Medicaid long-term care expenditures (in millions): 
1,203; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 65; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 19; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 15; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 0.

State: Texas; Medicaid long-term care expenditures (in millions): 
3,288; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 49; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 22; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 21; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 8; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 0.

State: Utah; Medicaid long-term care expenditures (in millions): 241; 
Percent of expenditures by service or setting: Institution[A] care: 
Nursing homes: 38; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 23; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 37; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 1.

State: Vermont; Medicaid long-term care expenditures (in millions): 
191; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 44; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 1; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 49; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 2; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 3.

State: Virginia; Medicaid long-term care expenditures (in millions): 
1,010; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 52; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 19; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 29; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 0.

State: Washington; Medicaid long-term care expenditures (in millions): 
1,427; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 43; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 9; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 36; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 
11; Percent of expenditures by service or setting: Home and community-
based care: Home health[B]: 1.

State: West Virginia; Medicaid long-term care expenditures (in 
millions): 531; Percent of expenditures by service or setting: 
Institution[A] care: Nursing homes: 55; Percent of expenditures by 
service or setting: Institution[A] care: ICF/MR: 9; Percent of 
expenditures by 
service or setting: Home and community-based care: HCBS waivers: 28; 
Percent of expenditures by service or setting: Home and community-based 
care: Personal care[A]: 5; Percent of expenditures by service or 
setting: Home and community-based care: Home health[B]: 4.

State: Wisconsin; Medicaid long-term care expenditures (in millions): 
1,813; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 53; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 11; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 27; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 6; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 3.

State: Wyoming; Medicaid long-term care expenditures (in millions): 
113; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 35; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 13; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 48; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 0; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 4.

State: U.S. Total; Medicaid long-term care expenditures (in millions): 
75,288; Percent of expenditures by service or setting: Institution[A] 
care: Nursing homes: 57; Percent of expenditures by service or setting: 
Institution[A] care: ICF/MR: 14; Percent of expenditures by service or 
setting: Home 
and community-based care: HCBS waivers: 19; Percent of expenditures by 
service or setting: Home and community-based care: Personal care[A]: 7; 
Percent of expenditures by service or setting: Home and community-based 
care: Home health[B]: 3.

Source: CMS.

Notes: GAO analysis of HCFA Form 64 data as reported by Brian Burwell, 
Steve Eiken, and Kate Sredl in Medicaid Long Term Care Expenditures in 
FY 2001, The MEDSTAT Group, May 10, 2002. Arizona does not have any 
HCBS waivers as it operates its Medicaid program as a demonstration 
project under a section 1115 waiver. Percentages in table may not add 
to 100 due to rounding.

[A] Personal care is an optional Medicaid state plan service.

[B] Home health care is a mandatory Medicaid state plan service.

[End of table]

[End of section]

Appendix IV: Number of Beneficiaries Served by HCBS Waivers for the 
Elderly and in Nursing Homes, by State, 1999:

Table 10: :
State: Alabama; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 5,826; Number of Medicaid beneficiaries: 
Served in nursing homes: 24,576; Percent of beneficiaries served by 
waivers for the elderly: 19.2%.

State: Alaska; Number of Medicaid beneficiaries: Served by HCBS waivers 
for the elderly: 712; Number of Medicaid beneficiaries: Served in 
nursing homes: 929; Percent of beneficiaries served by waivers for the 
elderly: 43.4.

State: Arizona[A]; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: not applicable; Number of Medicaid 
beneficiaries: Served in nursing homes: not applicable; Percent of 
beneficiaries served by waivers for the elderly: not applicable.

State: Arkansas; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 8,158; Number of Medicaid beneficiaries: 
Served in nursing homes: 20,699; Percent of beneficiaries served by 
waivers for the elderly: 28.3.

State: California; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 8,671[B]; Number of Medicaid beneficiaries: 
Served in nursing homes: 117,843; Percent of beneficiaries served by 
waivers for the elderly: 6.9.

State: Colorado; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 11,481; Number of Medicaid beneficiaries: 
Served in nursing homes: 18,918; Percent of beneficiaries served by 
waivers for the elderly: 37.8.

State: Connecticut; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 8,978; Number of Medicaid beneficiaries: 
Served in nursing homes: 38,862; Percent of beneficiaries served by 
waivers for the elderly: 18.8.

State: Delaware; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 734; Number of Medicaid beneficiaries: Served 
in nursing homes: 3,109; Percent of beneficiaries served by waivers for 
the elderly: 19.1.

State: District of Columbia[C]; Number of Medicaid beneficiaries: 
Served by HCBS waivers for the elderly: not applicable; Number of 
Medicaid beneficiaries: Served in nursing homes: 4,359; Percent of 
beneficiaries served by waivers for the elderly: not applicable.

State: Florida; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 16,915; Number of Medicaid beneficiaries: 
Served in nursing homes: 91,985; Percent of beneficiaries served by 
waivers for the elderly: 15.5.

State: Georgia; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 14,018; Number of Medicaid beneficiaries: 
Served in nursing homes: 39,720; Percent of beneficiaries served by 
waivers for the elderly: 26.1.

State: Hawaii; Number of Medicaid beneficiaries: Served by HCBS waivers 
for the elderly: 923; Number of Medicaid beneficiaries: Served in 
nursing homes: 4,274; Percent of beneficiaries served by waivers for 
the elderly: 17.8.

State: Idaho; Number of Medicaid beneficiaries: Served by HCBS waivers 
for the elderly: 1,000; Number of Medicaid beneficiaries: Served in 
nursing homes: 5,014; Percent of beneficiaries served by waivers for 
the elderly: 16.6.

State: Illinois; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 17,396; Number of Medicaid beneficiaries: 
Served in nursing homes: 81,791; Percent of beneficiaries served by 
waivers for the elderly: 17.5.

State: Indiana; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 2,338; Number of Medicaid beneficiaries: 
Served in nursing homes: 47,988; Percent of beneficiaries served by 
waivers for the elderly: 4.6.

State: Iowa; Number of Medicaid beneficiaries: Served by HCBS waivers 
for the elderly: 3,994; Number of Medicaid beneficiaries: Served in 
nursing homes: 21,882; Percent of beneficiaries served by waivers for 
the elderly: 15.4.

State: Kansas; Number of Medicaid beneficiaries: Served by HCBS waivers 
for the elderly: 6,701; Number of Medicaid beneficiaries: Served in 
nursing homes: 17,644; Percent of beneficiaries served by waivers for 
the elderly: 27.5.

State: Kentucky; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 13,339; Number of Medicaid beneficiaries: 
Served in nursing homes: 27,739; Percent of beneficiaries served by 
waivers for the elderly: 32.5.

State: Louisiana; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 872; Number of Medicaid beneficiaries: Served 
in nursing homes: 35,508; Percent of beneficiaries served by waivers 
for the elderly: 2.4.

State: Maine; Number of Medicaid beneficiaries: Served by HCBS waivers 
for the elderly: 1,395; Number of Medicaid beneficiaries: Served in 
nursing homes: 9,236; Percent of beneficiaries served by waivers for 
the elderly: 13.1.

State: Maryland; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 132; Number of Medicaid beneficiaries: Served 
in nursing homes: 27,920; Percent of beneficiaries served by waivers 
for the elderly: 0.5.

State: Massachusetts; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 5,132; Number of Medicaid beneficiaries: 
Served in nursing homes: 60,044; Percent of beneficiaries served by 
waivers for the elderly: 7.9.

State: Michigan; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 6,328; Number of Medicaid beneficiaries: 
Served in nursing homes: 44,180; Percent of beneficiaries served by 
waivers for the elderly: 12.5.

State: Minnesota; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 7,838; Number of Medicaid beneficiaries: 
Served in nursing homes: 38,925; Percent of beneficiaries served by 
waivers for the elderly: 16.8.

State: Mississippi; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 2,540; Number of Medicaid beneficiaries: 
Served in nursing homes: 23,909; Percent of beneficiaries served by 
waivers for the elderly: 9.6.

State: Missouri; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 20,821; Number of Medicaid beneficiaries: 
Served in nursing homes: 39,762; Percent of beneficiaries served by 
waivers for the elderly: 34.4.

State: Montana; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 1,514; Number of Medicaid beneficiaries: 
Served in nursing homes: 5,549; Percent of beneficiaries served by 
waivers for the elderly: 21.4.

State: Nebraska; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 2,357; Number of Medicaid beneficiaries: 
Served in nursing homes: 16,487; Percent of beneficiaries served by 
waivers for the elderly: 12.5.

State: New Hampshire; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 1,367; Number of Medicaid beneficiaries: 
Served in nursing homes: 7,147; Percent of beneficiaries served by 
waivers for the elderly: 16.1.

State: New Jersey; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 4,587[B]; Number of Medicaid beneficiaries: 
Served in nursing homes: 51,747; Percent of beneficiaries served by 
waivers for the elderly: 8.1.

State: New Mexico; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 1,404; Number of Medicaid beneficiaries: 
Served in nursing homes: 7,074; Percent of beneficiaries served by 
waivers for the elderly: 16.6.

State: Nevada; Number of Medicaid beneficiaries: Served by HCBS waivers 
for the elderly: 1,235; Number of Medicaid beneficiaries: Served in 
nursing homes: 3,821; Percent of beneficiaries served by waivers for 
the elderly: 24.4.

State: New York; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 19,732; Number of Medicaid beneficiaries: 
Served in nursing homes: 139,509; Percent of beneficiaries served by 
waivers for the elderly: 12.4.

State: North Carolina; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 11,159; Number of Medicaid beneficiaries: 
Served in nursing homes: 42,382; Percent of beneficiaries served by 
waivers for the elderly: 20.8.

State: North Dakota; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 347; Number of Medicaid beneficiaries: Served 
in nursing homes: 5,570; Percent of beneficiaries served by waivers for 
the elderly: 5.9.

State: Ohio; Number of Medicaid beneficiaries: Served by HCBS waivers 
for the elderly: 26,135[B]; Number of Medicaid beneficiaries: Served in 
nursing homes: 92,133; Percent of beneficiaries served by waivers for 
the elderly: 22.1.

State: Oklahoma; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 9,042; Number of Medicaid beneficiaries: 
Served in nursing homes: 25,758; Percent of beneficiaries served by 
waivers for the elderly: 26.0.

State: Oregon; Number of Medicaid beneficiaries: Served by HCBS waivers 
for the elderly: 26,410; Number of Medicaid beneficiaries: Served in 
nursing homes: 12,031; Percent of beneficiaries served by waivers for 
the elderly: 68.7.

State: Pennsylvania; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 2,383; Number of Medicaid beneficiaries: 
Served in nursing homes: 72,481; Percent of beneficiaries served by 
waivers for the elderly: 3.2.

State: Rhode Island; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 2,304; Number of Medicaid beneficiaries: 
Served in nursing homes: 13,297; Percent of beneficiaries served by 
waivers for the elderly: 14.8.

State: South Carolina; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 14,361; Number of Medicaid beneficiaries: 
Served in nursing homes: 17,458; Percent of beneficiaries served by 
waivers for the elderly: 45.1.

State: South Dakota; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 522; Number of Medicaid beneficiaries: Served 
in nursing homes: 5,950; Percent of beneficiaries served by waivers for 
the elderly: 8.1.

State: Tennessee; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 511; Number of Medicaid beneficiaries: Served 
in nursing homes: 37,311; Percent of beneficiaries served by waivers 
for the elderly: 1.4.

State: Texas; Number of Medicaid beneficiaries: Served by HCBS waivers 
for the elderly: 27,978; Number of Medicaid beneficiaries: Served in 
nursing homes: 95,812; Percent of beneficiaries served by waivers for 
the elderly: 22.6.

State: Utah; Number of Medicaid beneficiaries: Served by HCBS waivers 
for the elderly: 574; Number of Medicaid beneficiaries: Served in 
nursing homes: 5,513; Percent of beneficiaries served by waivers for 
the elderly: 9.4.

State: Vermont; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 1,014; Number of Medicaid beneficiaries: 
Served in nursing homes: 3,745; Percent of beneficiaries served by 
waivers for the elderly: 21.3.

State: Virginia; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 11,835; Number of Medicaid beneficiaries: 
Served in nursing homes: 27,746; Percent of beneficiaries served by 
waivers for the elderly: 29.9.

State: Washington; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 25,718; Number of Medicaid beneficiaries: 
Served in nursing homes: 24,620; Percent of beneficiaries served by 
waivers for the elderly: 51.1.

State: West Virginia; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 3,470; Number of Medicaid beneficiaries: 
Served in nursing homes: 11,788; Percent of beneficiaries served by 
waivers for the elderly: 22.7.

State: Wisconsin; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 13,900; Number of Medicaid beneficiaries: 
Served in nursing homes: 41,341; Percent of beneficiaries served by 
waivers for the elderly: 25.2.

State: Wyoming; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 982; Number of Medicaid beneficiaries: Served 
in nursing homes: 2,609; Percent of beneficiaries served by waivers for 
the elderly: 27.3.

State: Total U.S; Number of Medicaid beneficiaries: Served by HCBS 
waivers for the elderly: 377,083; Number of Medicaid beneficiaries: 
Served in nursing homes: 1,616,663; Percent of beneficiaries served by 
waivers for the elderly: 18.9%.

Source: CMS.

Notes: GAO analysis of (1) annual state waiver report data (HCFA Form 
372) as reported by Harrington, Aug. 2001, and (2) data on 
beneficiaries in nursing homes from Centers for Medicare & Medicaid 
Services, MSIS Statistical Report for Fiscal Year 1999.

[A] Arizona does not have any HCBS waivers for the elderly as it 
operates its Medicaid program as a demonstration project under a 
section 1115 waiver.

[B] Author's estimate. See Harrington, Aug. 2001.

[C] In 1999, the District of Columbia did not have any HCBS waivers for 
the elderly in operation.

[End of table]

[End of section]

Appendix V: Number of HCBS Waivers for the Elderly, Beneficiaries, 
Expenditures, and per Beneficiary Expenditures by State, 1999:

Table 11: :

State: Alabama; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 5,826; Total 
expenditures: $37,488,861; Average expenditures per beneficiary: 
$6,435.

State: Alaska; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 712; Total 
expenditures: 8,554,566; Average expenditures per beneficiary: 12,015.

State: Arizona[A]; Number of HCBS waivers for the elderly: 0; Number of 
beneficiaries served by waivers for the elderly: not applicable; Total 
expenditures: not applicable; Average expenditures per beneficiary: not 
applicable.

State: Arkansas; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 8,158; Total 
expenditures: 24,788,949; Average expenditures per beneficiary: 3,039.

State: California[B]; Number of HCBS waivers for the elderly: 3; Number 
of beneficiaries served by waivers for the elderly: 8,671; Total 
expenditures: 26,128,332; Average expenditures per beneficiary: 3,013.

State: Colorado; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 11,481; Total 
expenditures: 57,968,202; Average expenditures per beneficiary: 5,049.

State: Connecticut; Number of HCBS waivers for the elderly: 1; Number 
of beneficiaries served by waivers for the elderly: 8,978; Total 
expenditures: 54,432,244; Average expenditures per beneficiary: 6,063.

State: Delaware; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 734; Total 
expenditures: 6,528,330; Average expenditures per beneficiary: 8,894.

State: District of Columbia[C]; Number of HCBS waivers for the elderly: 
0; Number of beneficiaries served by waivers for the elderly: not 
applicable; Total expenditures: not applicable; Average expenditures 
per beneficiary: not applicable.

State: Florida; Number of HCBS waivers for the elderly: 4; Number of 
beneficiaries served by waivers for the elderly: 16,915; Total 
expenditures: 80,073,234; Average expenditures per beneficiary: 4,734.

State: Georgia; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 14,018; Total 
expenditures: 48,483,972; Average expenditures per beneficiary: 3,459.

State: Hawaii; Number of HCBS waivers for the elderly: 2; Number of 
beneficiaries served by waivers for the elderly: 923; Total 
expenditures: 13,905,438; Average expenditures per beneficiary: 
15,065.

State: Idaho; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 1,000; Total 
expenditures: 6,300,645; Average expenditures per beneficiary: 6,301.

State: Illinois; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 17,396; Total 
expenditures: 46,272,565; Average expenditures per beneficiary: 2,660.

State: Indiana; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 2,338; Total 
expenditures: 15,477,320; Average expenditures per beneficiary: 6,620.

State: Iowa; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 3,994; Total 
expenditures: 10,052,900; Average expenditures per beneficiary: 2,517.

State: Kansas; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 6,701; Total 
expenditures: 40,359,505; Average expenditures per beneficiary: 6,023.

State: Kentucky; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 13,339; Total 
expenditures: 44,471,778; Average expenditures per beneficiary: 3,334.

State: Louisiana; Number of HCBS waivers for the elderly: 3; Number of 
beneficiaries served by waivers for the elderly: 872; Total 
expenditures: 8,402,786; Average expenditures per beneficiary: 9,636.

State: Maine; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 1,395; Total 
expenditures: 14,751,242; Average expenditures per beneficiary: 
10,574.

State: Maryland; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 132; Total 
expenditures: 678,589; Average expenditures per beneficiary: 5,141.

State: Massachusetts; Number of HCBS waivers for the elderly: 1; Number 
of beneficiaries served by waivers for the elderly: 5,132; Total 
expenditures: 9,849,893; Average expenditures per beneficiary: 1,919.

State: Michigan; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 6,328; Total 
expenditures: 16,655,463; Average expenditures per beneficiary: 2,632.

State: Minnesota; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 7,838; Total 
expenditures: 34,845,022; Average expenditures per beneficiary: 4,446.

State: Mississippi; Number of HCBS waivers for the elderly: 1; Number 
of beneficiaries served by waivers for the elderly: 2,540; Total 
expenditures: 11,645,303; Average expenditures per beneficiary: 4,585.

State: Missouri; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 20,821; Total 
expenditures: 46,311,315; Average expenditures per beneficiary: 2,224.

State: Montana; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 1,514; Total 
expenditures: 14,454,089; Average expenditures per beneficiary: 9,547.

State: Nebraska; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 2,357; Total 
expenditures: 13,813,410; Average expenditures per beneficiary: 5,861.

State: New Hampshire; Number of HCBS waivers for the elderly: 1; Number 
of beneficiaries served by waivers for the elderly: 1,367; Total 
expenditures: 11,977,955; Average expenditures per beneficiary: 8,762.

State: New Jersey[B]; Number of HCBS waivers for the elderly: 2; Number 
of beneficiaries served by waivers for the elderly: 4,587; Total 
expenditures: 46,294,225; Average expenditures per beneficiary: 
10,092.

State: New Mexico; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 1,404; Total 
expenditures: 19,868,387; Average expenditures per beneficiary: 
14,151.

State: Nevada; Number of HCBS waivers for the elderly: 2; Number of 
beneficiaries served by waivers for the elderly: 1,235; Total 
expenditures: 5,179,673; Average expenditures per beneficiary: 4,194.

State: New York; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 19,732; Total 
expenditures: 23,845,013; Average expenditures per beneficiary: 1,208.

State: North Carolina; Number of HCBS waivers for the elderly: 1; 
Number of beneficiaries served by waivers for the elderly: 11,159; 
Total expenditures: 153,752,548; Average expenditures per beneficiary: 
13,778.

State: North Dakota; Number of HCBS waivers for the elderly: 1; Number 
of beneficiaries served by waivers for the elderly: 347; Total 
expenditures: 3,328,323; Average expenditures per beneficiary: 9,592.

State: Ohio[B]; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 26,135; Total 
expenditures: 134,200,340; Average expenditures per beneficiary: 
5,135.

State: Oklahoma; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 9,042; Total 
expenditures: 34,905,750; Average expenditures per beneficiary: 3,860.

State: Oregon; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 26,410; Total 
expenditures: 168,138,603; Average expenditures per beneficiary: 
6,366.

State: Pennsylvania; Number of HCBS waivers for the elderly: 1; Number 
of beneficiaries served by waivers for the elderly: 2,383; Total 
expenditures: 13,752,684; Average expenditures per beneficiary: 5,771.

State: Rhode Island; Number of HCBS waivers for the elderly: 2; Number 
of beneficiaries served by waivers for the elderly: 2,304; Total 
expenditures: 11,650,696; Average expenditures per beneficiary: 5,057.

State: South Carolina; Number of HCBS waivers for the elderly: 1; 
Number of beneficiaries served by waivers for the elderly: 14,361; 
Total expenditures: 63,652,223; Average expenditures per beneficiary: 
4,432.

State: South Dakota; Number of HCBS waivers for the elderly: 1; Number 
of beneficiaries served by waivers for the elderly: 522; Total 
expenditures: 1,376,800; Average expenditures per beneficiary: 2,638.

State: Tennessee; Number of HCBS waivers for the elderly: 2; Number of 
beneficiaries served by waivers for the elderly: 511; Total 
expenditures: 4,536,477; Average expenditures per beneficiary: 8,878.

State: Texas; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 27,978; Total 
expenditures: 266,376,586; Average expenditures per beneficiary: 
9,521.

State: Utah; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 574; Total 
expenditures: 1,672,476; Average expenditures per beneficiary: 2,914.

State: Vermont; Number of HCBS waivers for the elderly: 2; Number of 
beneficiaries served by waivers for the elderly: 1,014; Total 
expenditures: 8,988,080; Average expenditures per beneficiary: 8,864.

State: Virginia; Number of HCBS waivers for the elderly: 3; Number of 
beneficiaries served by waivers for the elderly: 11,835; Total 
expenditures: 80,772,354; Average expenditures per beneficiary: 6,825.

State: Washington; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 25,718; Total 
expenditures: 194,129,285; Average expenditures per beneficiary: 
7,548.

State: West Virginia; Number of HCBS waivers for the elderly: 1; Number 
of beneficiaries served by waivers for the elderly: 3,470; Total 
expenditures: 38,908,487; Average expenditures per beneficiary: 
11,213.

State: Wisconsin; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 13,900; Total 
expenditures: 114,878,732; Average expenditures per beneficiary: 
8,265.

State: Wyoming; Number of HCBS waivers for the elderly: 1; Number of 
beneficiaries served by waivers for the elderly: 982; Total 
expenditures: 4,420,108; Average expenditures per beneficiary: 4,501.

State: U.S. Total; Number of HCBS waivers for the elderly: 64; Number 
of beneficiaries served by waivers for the elderly: 377,083; Total 
expenditures: $2,099,299,758; Average expenditures per beneficiary: 
$5,567.

Source: CMS.

Note: GAO analysis of annual state waiver report data (HCFA Form 372). 
See Harrington, Aug. 2001.

[A] Arizona does not have any HCBS waivers for the elderly as it 
operates its Medicaid program as a demonstration project under a 
section 1115 waiver.

[B] With the exception of the number of waivers for the elderly, the 
data for this state are based on author's estimates. See Harrington, 
Aug. 2001.

[C] In 1999, the District of Columbia did not have any HCBS waivers for 
the elderly in operation.

[End of table]

[End of section]

Appendix VI: CMS HCBS Quality Initiatives:

CMS has undertaken a series of initiatives to generate information and 
dialogue on existing systems of quality assurance in HCBS waivers and 
to provide a range of assistance to states in this area. Approximately 
$1 million was budgeted for these HCBS quality initiatives in fiscal 
year 2001 and $3.4 million in fiscal year 2002. Through its HCBS 
quality initiatives, CMS intends to more closely assess the status of 
quality assurance efforts currently in place and to provide direct 
assistance to states in this area. CMS's initiatives include (1) 
developing a conceptual framework for defining and measuring quality, 
(2) creating tools for states to adapt and use in assessing quality, 
such as model consumer experience surveys, and (3) providing technical 
assistance and resources for quality assurance and improvement. These 
initiatives, while important, do not address the lack of detailed 
requirements for states on the necessary components of an acceptable 
quality assurance system or the weaknesses in regional office oversight 
of state HCBS waivers that we identified elsewhere in this report.

Quality Framework and Expectations. CMS sponsored the development of a 
framework for quality in home and community-based services that focuses 
on outcomes in several key areas including beneficiary access to care, 
safety, satisfaction, and meeting beneficiary needs and 
preferences.[Footnote 46] The next phase involves identifying 
strategies that states are currently using to monitor and improve 
quality within these key areas. While the expectations contained in the 
quality framework have not been specified in CMS regulations, they are 
reflected in the application template for CMS's new consumer-directed 
HCBS waiver, Independence Plus.[Footnote 47] States' use of the 
template for the Independence Plus waiver is voluntary. The template 
asks states for a detailed description of their quality assurance and 
improvement programs--something not currently required as part of the 
general HCBS waiver application. Guidance for using the template notes 
that the description should include (1) information on the frequency of 
quality assurance activities, (2) the dimensions that will be 
monitored, (3) the qualifications of persons conducting quality 
assurance activities,

(4) the process for identifying problems, including sampling 
methodologies, (5) provisions for assuring that problems are addressed 
in a timely manner, and (6) the system to receive, review, and act on 
critical incidents or events.

Quality Assurance Mechanisms. CMS is also developing quality assessment 
and improvement mechanisms for states. For example, to develop a guide 
for states and CMS regional offices, a contractor reviewed the 
literature on quality measurement and improvement in home and 
community-based care, convened an expert panel, and conducted 
interviews with state officials. As of April 2003, the guide was 
undergoing final clearance within CMS. It is expected to include (1) 
benchmarks for effective quality assurance programs in home and 
community-based care, (2) a discussion of the knowledge and mechanisms 
needed to design, implement, and assess quality activities in home and 
community-based care, and (3) suggestions for addressing limitations 
and problems in assuring quality in home and community-based care. 
Another contractor has developed and field-tested consumer experience 
surveys for use in waiver programs for the elderly and for persons with 
developmental disabilities. This contractor is also developing a set of 
performance indicators for states to use in guiding development and 
assessing quality in new self-directed HCBS waivers.

Technical Assistance and Resources. Other CMS efforts focus on 
providing technical assistance and resources to states. One contractor 
has assembled a team of professionals with expertise in home and 
community-based services that can serve as a resource for both states 
and the CMS regional offices.[Footnote 48] Services available from 
these teams are expected to include conducting targeted reviews of 
waiver programs; providing suggestions to states regarding their 
quality assurance activities; consulting with CMS staff regarding 
quality aspects of specific waivers; and providing resource materials 
on quality assurance monitoring and improvement tools. This contractor 
is also assessing the types of data currently gathered by a sample of 
states that is, or could be, used for quality measurement and 
improvement; compiling information on selected data-driven state 
quality efforts; and providing technical assistance to the states. 
Finally, CMS sponsored a national conference on HCBS quality
measurement and improvement in May 2002. This day-and-a-half-long 
conference--attended by state officials, CMS staff, and others--offered 
training and information on strategies and techniques for quality 
assurance and improvement in home and community-based care.

[End of section]

Appendix VII: Beneficiary Samples for and Duration of Regional Office 
Reviews of 15 State Waivers Serving the Elderly:

Table 12: 

Boston regional office:

State: Connecticut; Target population: Elderly; Number of waiver 
beneficiaries: 7,300; Beneficiary samples[A]: Record reviews: 21; 
Beneficiary samples[A]: Interviews or observation: 21; Duration of on-
site review (days): 5.

State: Vermont; Target population: Residential care; Number of waiver 
beneficiaries: 73; Beneficiary samples[A]: Record reviews: 14; 
Beneficiary samples[A]: Interviews or observation: 14; Duration of on-
site review (days): 5.

Philadelphia regional office:

State: Virginia; Target population: Consumer-directed personal 
attendant services; Number of waiver beneficiaries: 99; Beneficiary 
samples[A]: Record reviews: 15; Beneficiary samples[A]: Interviews or 
observation: [B]; Duration of on-site review (days): [C].

State: Virginia; Target population: Elderly and persons with 
disabilities; Number of waiver beneficiaries: 9,000; Beneficiary 
samples[A]: Record reviews: 20; Beneficiary samples[A]: Interviews or 
observation: [B]; Duration of on-site review (days): 5.

State: Virginia; Target population: Assisted living waiver; Number of 
waiver beneficiaries: 1,166; Beneficiary samples[A]: Record reviews: 
39; Beneficiary samples[A]: Interviews or observation: 20; Duration of 
on-site review (days): 5.

Dallas regional office:

State: Oklahoma; Target population: Elderly and persons with 
disabilities; Number of waiver beneficiaries: 10,000; Beneficiary 
samples[A]: Record reviews: 40; Beneficiary samples[A]: Interviews or 
observation: 5; Duration of on-site review (days): 5.

Kansas City regional office:

State: Kansas; Target population: Frail elderly; Number of waiver 
beneficiaries: 4,500; Beneficiary samples[A]: Record reviews: 17; 
Beneficiary samples[A]: Interviews or observation: 11; Duration of on-
site review (days): 4.

State: Nebraska; Target population: Elderly and adults and children 
with disabilities; Number of waiver beneficiaries: 2,357; Beneficiary 
samples[A]: Record reviews: 25; Beneficiary samples[A]: Interviews or 
observation: 14; Duration of on-site review (days): 4.

Denver regional office:

State: Montana; Target population: Elderly and persons with physical 
disabilities; Number of waiver beneficiaries: 1,514; Beneficiary 
samples[A]: Record reviews: 36; Beneficiary samples[A]: Interviews or 
observation: 18; Duration of on-site review (days): 5.

State: North Dakota; Target population: Elderly and persons with 
disabilities; Number of waiver beneficiaries: 390; Beneficiary 
samples[A]: Record reviews: 36; Beneficiary samples[A]: Interviews or 
observation: 17; Duration of on-site review (days): 5.

State: South Dakota; Target population: Elderly; Number of waiver 
beneficiaries: 638; Beneficiary samples[A]: Record reviews: 28; 
Beneficiary samples[A]: Interviews or observation: 17; Duration of on-
site review (days): 5.

State: Wyoming; Target population: Elderly and persons with physical 
disabilities; Number of waiver beneficiaries: 850; Beneficiary 
samples[A]: Record reviews: 38; Beneficiary samples[A]: Interviews or 
observation: 22; Duration of on-site review (days): 5.

San Francisco regional office:

State: California; Target population: Disabled, frail, and elderly; 
Number of waiver beneficiaries: 16,335; Beneficiary samples[A]: Record 
reviews: 19; Beneficiary samples[A]: Interviews or observation: 10; 
Duration of on-site review (days): 10.

Seattle regional office:

State: Oregon; Target population: Elderly and persons with 
disabilities; Number of waiver beneficiaries: 36,000; Beneficiary 
samples[A]: Record reviews: 52; Beneficiary samples[A]: Interviews or 
observation: [B]; Duration of on-site review (days): 22.5.

State: Washington; Target population: Elderly and persons with 
disabilities; Number of waiver beneficiaries: 24,000; Beneficiary 
samples[A]: Record reviews: 100; Beneficiary samples[A]: Interviews or 
observation: [B]; Duration of on-site review (days): 22.5.

State: Average: Number of waiver 
beneficiaries: 7,615; Beneficiary samples[A]: Record reviews: 33; 
Beneficiary samples[A]: Interviews or observation: 15; Duration of on-
site review (days): 8.

Source: CMS.

Note: GAO analysis of CMS regional office final waiver review reports 
for HCBS waivers serving the elderly that included information on 
sample size for beneficiary record reviews or interviews, issued from 
October 1998 to May 2002.

[A] Fifteen of the 21 CMS regional office waiver review reports for 
HCBS waivers serving the elderly included information on sample size of 
the regional office reviews of waiver beneficiary records. This 
appendix provides a summary of the 15 waiver review reports that 
included this information. The number of waiver beneficiaries is based 
on those reported in the regional offices' waiver review reports. To 
the extent that the information was included in the waiver review 
reports, we have provided details on the number of beneficiaries 
interviewed or observed during the reviews.

[B] The regional office review contained no information on beneficiary 
interviews or observations.

[C] This waiver review was conducted at the regional office rather than 
on-site at the relevant state agencies.

[End of table]

[End of section]

Appendix VIII: Comments from the Centers for Medicare & Medicaid 
Services:

DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services:

Administrator Washington, DC 20201:

DATE: JUN 13 2003:

TO: Kathryn G. Allen:

Director, Health Care-Medicaid and Private Health Care Issues:

FROM: Thomas A. Scully Administrator:

SUBJECT: GAO Draft Report, Long-Term Care: Federal Oversight of Growing 
Medicaid Home and Communitv-Based Waivers Should Be Strengthened, 
(GAO-03-576):

We appreciate the opportunity to review and comment on the above-
referenced draft report and its recommendations. The Administration has 
undertaken a number of quality initiatives, including initiatives in 
the area of home and community-based services (HCBS). We take the issue 
of quality in home and community-based services (HOBS) very seriously, 
but have significant concerns with the draft report's assumptions, 
focus, technical accuracy, and recommendations.

Attached are our specific comments to the report. We look forward to 
working with GAO on this and other issues in the future.

Attachment:

The Centers for Medicare & Medicaid Services' Comments to GAO's Draft 
Report. Long-Term Care: Federal Oversight of Growin Medicaid Home and 
Community-Based Waivers Should Be Strengthened (GAO-03-576):

General Comments:

1. The draft report has numerous technical inaccuracies or 
mischaracterizations of CMS' efforts. The most significant was the 
inaccurate statement on page 8 where the report states that, "HCBS 
waivers may be extended." In fact, section 1915(c) of the Social 
Security Act (the Act) gives the Secretary of HHS the authority to 
approve and extend waivers, at the request of the state. The Act says 
that the Secretary shall approve and extend waivers (unless assurances 
have not been met). Congress obviously places great weight on the state 
assurances. In so doing, Congress conveys deference to the states that 
are closest to those being served. We therefore believe the GAO report 
itself should recognize that Congress created an enforcement mechanism 
that places great reliance on a system of assurances.

2. The draft report failed to recognize that the states, families, and 
individuals who are aged or have a disability are greatly satisfied 
with the current programs, as evidenced by the considerable expansion 
in the number of people who have elected to be served under state HCBS 
programs. We are disappointed that the report failed to acknowledge the 
positive and vital contribution that Medicaid HCBS waiver programs make 
to the quality of life of persons who are at risk of more costly and 
more restrictive institutional care. We note, for example, that a 
recent AARP survey of elderly individuals found that "spending time 
with family and friends tops the list of important activities for 
maintaining one's quality of life (96%); second is religious or 
spiritual activities (82%)..." HCBS waivers allow individuals to remain 
with their families and in their communities where they may continue 
these activities that are so critical to their quality of life. No 
doubt these are the major reasons why Medicaid HCBS waiver programs 
have become the service program of choice for more than 800,000 
vulnerable persons. We do not believe that the report appropriately 
acknowledges this fact. The report also ignores the wide variety of 
activities at the state and community levels to promote quality, 
including the licensing and credentialing of professionals.

3. The report is narrow in its definition of and focus on quality. 
Families and individuals participating in HCBS waivers inform us that 
some of the most important factors associated with quality are: 
availability of a flexible array of supports and services that can be 
tailored to each individual's needs and preferences; choice and control 
over how, where and by whom such services are delivered; access and 
timeliness of services in the community; and ability to maintain 
relationships with families and friends. In short, the report overlooks 
the centrality of these quality concepts relating to flexibility and 
timeliness--and focuses instead on a narrow and regulatory approach to 
quality. We believe choice and access are among the most important 
quality indicators. The "cash and counseling" waivers have demonstrated 
that fact. Putting individuals and their families in control of the 
resources spent on their behalf promotes choice and access.

4. The report leaves the distinct impression that the most effective 
way to assure and improve quality is through the process of inspection 
and monitoring. This assumption fails to recognize the pioneering work 
of the Institute of Medicine (e.g., IOM, Crossing the Quality Chasm, 
2001) or the established literature of Edwards Deming and others. The 
Institute on Medicine report addressed quality in the fields of both 
acute and long-term health care when it wrote: "...care must be 
delivered by systems that are carefully and consciously designed to 
provide care that is safe, effective, patient-centered, timely, 
efficient, and equitable. Such systems must be designed to serve the 
needs of patients, and to ensure that they are truly informed, retain 
control and participate in care delivery whenever possible, and receive 
care that is respectful of their values and preferences." W. Edwards 
Deming put these concepts forward more succinctly in his "14 Points:":

"Cease dependence on inspection to achieve quality. Eliminate the need 
for inspection on a mass basis by building quality into the product in 
the first place.":

The design of an HCBS waiver is therefore the most important 
contributor to quality. This observation accounts for the fact that 
recent CMS efforts to improve quality have focused on working with 
states to improve design decisions and design options. One example is 
the recent Independence Plus waiver template, a design option for 
states that increases choice and control by HCBS waiver participants. 
This template not only includes more specific expectations for quality 
assurance systems, but also more fundamentally builds quality upon the 
foundation of individual choice, control, and responsiveness. Another 
example is the recent State Medicaid Director Letter (#01-006) 
emphasizing the need to ensure adequacy of HCBS services. A third 
example is the recent provision of $125 million in "Real Choice Systems 
Change" grants to states to improve fundamental capability of 
community-based systems. These efforts to improve design of HCBS 
programs promise greater improvement in quality than any proliferation 
of Federal monitoring reports.

5. The report fails to note the steps CMS has already taken 
organizationally to ensure quality is built into all of our program 
areas, including HCBS waivers. While design is the most important 
factor for quality, we also note that CMS is not minimizing the need 
for a quality focus or, specifically, for quality reviews of HCBS 
waivers. In fact, we have recently enhanced both. We note that the 
Center for Medicaid State Operations (CMSO) has recently redeployed 
staff and reorganized to incorporate the quality function into each 
program area. Previously, quality was a stand-alone function grouped 
less appropriately with financing and data systems. By redeploying 
staff from the stand-alone group, we have ensured that a concern for 
quality is incorporated into each of our program components, including 
the one that oversees the HCBS waiver programs.

Given that program design is the most important contributor to quality, 
given that we have already taken steps organizationally to ensure that 
enough resources are devoted to quality and that they are appropriately 
positioned within CMS, we have serious concerns that additional 
monitoring could detract from both the design and design improvement 
work that we undertake with the states.

6. The report lends itself to the conclusion that the Federal government 
ought to be the primary source of quality monitoring and improvement, 
and fails to recognize that the Federal statutes convey respect for 
state authority and competence in the administration of HOBS programs. 
Federal statutes locate the responsibility for quality assurance with 
the states. Section 1915(c) of the Act requires that states provide an 
assurance that the health and welfare of waiver participants will be 
protected. The CMS approves no waiver that fails to contain such an 
assurance. We therefore maintain that the proper role of Federal 
reviews is not to substitute, replicate, or in any other way duplicate 
state quality assurance mechanisms. Instead, the purpose of Federal 
information gathering and review is to identify any issues with the 
state quality assurance and quality improvement systems. Review of 
state systems may also be conducted by means other than by Federal 
staff, such as peer reviews and contract review.

These differences in the proper role of Federal review have broad 
implications that place us at odds with some of the conclusions in the 
GAO draft report. For example, the draft faults CMS for not undertaking 
"...sampling methodology to provide a basis for generalizing review 
findings." However, it may be more important for CMS to target small 
(unrepresentative) samples in specific areas of concern, and then 
engage the states to examine a representative sample for the purpose of 
determining the extent of any problems identified.

The draft report similarly criticizes CMS for not conducting a review 
of every waiver. Yet many states have multiple waivers serving subsets 
of the same target group, all served by the same state quality 
assurance system. If the purpose of federal review is to focus on state 
quality assurance systems, and multiple state waivers are served by the 
same system, it would be far more efficient while equally effective for 
federal review to focus on just one of the waivers through the protocol 
review process and monitor the requirements of waivers through other 
means. Such considerations are important in a world of scarce 
resources.

7. The draft report fails to recognize that HCBS programs are 
significantly different in intent and focus than the institutions for 
which they are alternatives, thus requiring a different approach to 
quality. The HCBS programs are intended to allow people to live in 
their own homes or with families. The major services, such as personal 
assistance and respite, are delivered in a person's own home. We are 
hesitant to embrace a strategy that would have Federal inspectors 
marching through a "representative sample" of waiver participants' 
private homes. We believe a better strategy is to give individuals 
greater control over the management of resources.

8. The draft report fails to acknowledge the lack of appropriated funds 
for HCBS quality. The conclusions and recommendations would require a 
huge new investment of Federal
resources. While the report notes that "limited regional resources" 
affect CMS' oversight capabilities, it does not acknowledge the 
magnitude of the resource issue in a comparative sense. In particular, 
the report fails to acknowledge that financial resources for assuring 
quality in nursing homes and ICF/MR facilities have a line-item 
appropriation, with an estimated $170 million (Federal share) devoted 
to facility survey and certification. There is no line-item 
appropriation for HCBS quality, so the resources spent on assuring 
quality must come from the operating budget. While new investments will 
be required, we would argue that the most effective deployment of 
resources would not be made in the duplicative, retrospective review 
process advocated by the report.

9. The draft report does not address the significant resources that 
would need to be found or redirected to implement its recommendations. 
While CMS is criticized for not conducting a review of every waiver, 
there is no acknowledgement that, given the volume of HCBS waivers, 
conducting a review of every HCBS waiver by means of a statistically 
valid sampling of waiver participants would require hundreds of 
additional Federal staff. Omitting reference to the scale of the 
additional staffing necessary to implement this recommendation is 
especially troubling when we believe, as stated above, it is actually 
program design that is the more important determinant of quality 
outcomes for HCBS waiver participants. Thus, the report neglects the 
extent to which additional staffing resources would be necessary to 
implement a narrow, regulatory approach to quality, when additional 
staffing could be more appropriately redirected to support the more 
comprehensive approach to quality (i.e., one that focuses on program 
design and on the ability to remedy identified problems).

10. The report fails to acknowledge CMS' efforts to assist states with 
HCBS quality. To illustrate our work in HCBS quality, we provide below 
a list of some of the activities, products, tools, and technical 
assistance to states that we have recently implemented:

Development of the HCBS Protocol a mandatory review protocol for CMS 
regional offices to use when conducting waiver reviews. The CMS 
required mandatory use of the Protocol in January 2001 to assure 
consistency in the Federal review process. The Protocol is also used by 
states voluntarily to guide them in their development of quality 
assurance/improvement systems.

Development and Dissemination of the HCBS Quality Framework, a common 
frame of reference for designing H CBS waivers, with quality built into 
the design.

Development of Tools to Assist States in the development of quality 
approaches, including the Participant Experience Survey and HCBS 
Quality Work Book.

Development of the Independence Plus template, with specific 
requirements to assure quality.

National Technical Assistance Contractor, a contract with nationally 
recognized organizations that provide technical assistance to states on 
a variety of quality issues.

The contractors provide assistance to states in development of their 
quality improvement systems, problem remediation, analysis of quality 
issues, and other technical assistance activities. To date, 15 states 
have utilized the expertise and resources of the national contractor.

In summary, CMS is committed to its on-going responsibility, in 
partnership with the states, to assure and improve quality in HOBS 
waivers. However, we strongly believe that the focus should be on 
assisting states in the design of HCBS programs, respecting the 
assurances made by states, improving the ability of states to remedy 
identified problems, providing assistance to states to improve the 
quality of services, and thereby assisting people to live in their own 
homes in communities of their choice.

GAO Recommendation:

To ensure that state quality assurance efforts are adequate to protect 
the health and welfare of HCBS waiver beneficiaries, we recommend that 
the Administrator of CMS:

* develop and provide states with more detailed criteria regarding the 
necessary components of an HCBS waiver quality assurance system.

CMS Response:

The CMS has provided guidance to both states and CMS regional offices 
on the necessary components of a waiver quality assurance system, 
through documents such as the Framework and the Protocol. As with any 
continuous quality improvement process, we recognize the need for on-
going guidance. Toward that end, CMS has already conducted and/or plans 
to conduct numerous technical assistance sessions for both states and 
regional offices throughout 2003 and 2004. We question the need and 
advisability of prescribing uniform, detailed Federal criteria for more 
than 270 waivers that cover populations as diverse as HlV/AIDS and the 
frail elderly, and can serve caseloads ranging from 100 to more than 
30,000.

However, we will work in consultation with our state partners to define 
more clearly our broad criteria and expectations for quality through 
the further refinement of the Quality Framework.

GAO Recommendation:

To ensure that state quality assurance efforts are adequate to protect 
the health and welfare of HCBS waiver beneficiaries, we recommend that 
the Administrator of CMS:

* require states to submit more specific information about their quality 
assurance approaches prior to waiver approval; and:

* ensure that states provide sufficient and timely information in their 
annual waiver reports on their efforts to monitor quality.

CMS Response:

We recognize the need for more comprehensive information from states at 
the time of application and at subsequent renewals. We view this as an 
effective, appropriate, and economical Federal
role. The CMS acknowledged this need when it developed the Quality 
Framework and required submission of a quality assurance and 
improvement plan as part of Independence Plus applications.

The CMS is committed to working with our regional offices and state 
partners to receive and review information about quality as part of the 
waiver approval, renewal, and annual reporting process. Toward that 
end, CMS will revise and improve the application process and annual 
state waiver report to include quality information from the state's 
quality program.

GAO Recommendation:

To strengthen Federal oversight of the growing HCBS waiver programs and 
to ensure the health and welfare of HCBS waiver beneficiaries, we 
recommend that the Administrator:

* ensure allocation of sufficient resources and hold regional offices 
accountable for conducting thorough reviews of the status of quality in 
HCBS waiver programs; and:

* develop guidance on the scope and methodology for Federal reviews of 
state waiver programs, including a sampling methodology that provides 
confidence in the generalizability of the review results.

CMS Response:

We would remind GAO that there is no line-item appropriation for HCBS 
quality as there is for institutional quality, and any additional 
resources targeted to the Federal quality assurance or quality 
improvement efforts must be taken from CMS operating funds for 
administration ofthe waivers.

The GAO's recommendation regarding sampling methodology has serious 
cost implications. We question whether the allocation of scarce 
resources for what could be scores or hundreds of additional Federal 
employees to conduct reviews with representative samples is the best 
use of operating funds. We have therefore advised our regional offices 
to use the samples they conduct to gain greater familiarity with the 
states' waiver operations, or target areas of concern, and not to 
consider them representative samples.

While we may disagree with the draft GAO recommendations on certain 
methodologies that might be taken to assure quality in home and 
community-based services, we have no disagreement on the importance of 
doing so, or on the advisability of making further investments to 
advance both state and Federal capability for both quality assurance 
and quality improvement systems. The CMS is committed to developing 
additional policy guidance for regional offices on the scope and 
frequency of Federal reviews and to examine other models for quality 
assurance and improvement.

[End of section]

FOOTNOTES

[1] 42 U.S.C. 1396n(c)(2000).

[2] Until June 2001, CMS was known as the Health Care Financing 
Administration (HCFA). In this report, we continue to refer to HCFA 
when our findings apply to the organizational structure and operations 
associated with that name. 

[3] Our analysis of regional office waiver reviews is based on final 
reports. Reviews that did not have a final report were not included in 
our analysis.

[4] While the purpose of Medicaid is to cover health care and long-term 
care for low-income persons, including persons who are aged, blind, or 
disabled, it has become a significant means of funding long-term care 
for many middle-income persons as well. Many of these persons qualify 
for Medicaid benefits after a period of "spend-down," during which they 
deplete their own resources to pay for services.

[5] Federal statutory requirements for Medicaid that may be waived 
include (1) statewideness, which requires that services be available 
throughout the state, (2) comparability, which requires that all 
services be available to all eligible individuals, and (3) income and 
resource rules, which require states to use a single income and 
resource standard when determining eligibility for Medicaid, with the 
exception of institutional care. A waiver of this last requirement 
allows states to use more generous institutional eligibility criteria 
when determining financial eligibility for waiver services, thus 
extending eligibility to individuals in the community who would not 
otherwise qualify for Medicaid.

[6] A recent summary by the National Association of State Medicaid 
Directors identified 75 discretely defined services in HCBS waiver 
applications as of June 2000. Individual waivers included as few as one 
service to as many as 25. 

[7] The average cost of community care under a waiver cannot exceed the 
average cost of care in an institution.

[8] For example, a person who requires 24-hour care and supervision and 
has no family or other support in the community may exceed the limits 
of what the waiver program allows in terms of personal care services. 
However, the same person who lives with a family caregiver might be 
eligible to receive several hours of personal care services each day as 
well as occasional respite care and caregiver training for the family. 

[9] A state must provide several additional assurances, including the 
following: (1) the state will provide for an evaluation of the need for 
services for individuals, (2) beneficiaries will be informed of 
available alternatives to the waiver and provided a choice, (3) the 
average per capita expenditures for waiver beneficiaries will not 
exceed the amount that the state estimates would have been spent in the 
absence of the waiver, (4) absent the waiver, beneficiaries would 
receive the appropriate institutional care that they need, and (5) the 
state will provide information to CMS annually on the impact of the 
waiver.

[10] See, 42 CFR 441.302(a).

[11] 42 U.S.C. 1396n(c)(3). Section 1915(c)(3) states "A waiver under 
this subsection [1915(c)] shall be for an initial term of three years 
and, upon the request of a State, shall be extended for additional 
five-year periods unless the Secretary determines that for the previous 
waiver period the assurances provided under paragraph (2) have not been 
met."

[12] 42 CFR 441.304(a).

[13] See, 59 Fed. Reg. 37702, 37712 (1994) and 53 Fed. Reg. 19950 
(1988). 

[14] Maureen Booth and others, Literature Review: Quality Management 
and Improvement Practices for Home and Community-Based Care (Portland, 
Me.: University of Southern Maine, Edmund S. Muskie School of Public 
Service, Jan. 10, 2002).

[15] Data gathered by the National Association of State Medicaid 
Directors identified the location of waiver administration for 56 HCBS 
waivers for the elderly as of March 18, 2002. Thirty-eight of these 
were administered either directly by the Medicaid agency or within the 
same department that houses the Medicaid agency. 

[16] California and New York fund most of their Medicaid home and 
community-based services using the state plan personal care services 
option and home health benefit. The District of Columbia funds most of 
its Medicaid home and community-based care using the home health 
benefit. 

[17] Arizona operates its Medicaid program as a demonstration project 
under a section 1115 waiver, which includes long-term care as well as 
acute health care services. Under section 1115 of the Social Security 
Act, the Secretary of HHS has broad authority to authorize 
experimental, pilot, or demonstration projects that are likely to 
promote objectives of certain federal programs, including Medicaid.

[18] Waiver beneficiary and expenditure data used in this analysis do 
not cover the same time periods. Waiver expenditure data are available 
through 2001. Data on waiver beneficiaries and services are available 
only through 1999. A CMS contractor recently developed a database for 
HCBS waivers. It is scheduled for installation at CMS in 2003, and it 
will include waiver beneficiary, service, and expenditure data from 
annual state reports. 

[19] The shift from institutional care to home and community-based 
services under Medicaid has been most significant for persons with 
mental retardation or developmental disabilities. In 1992, 28 percent 
of such beneficiaries who qualified for institutional care were served 
under HCBS waivers, and by 1999, that proportion had grown to 68 
percent. 

[20] These average expenditures do not include expenditures for 
nonwaiver Medicaid services for these beneficiaries. In addition to 
waiver services, waiver beneficiaries are eligible for the full range 
of regular Medicaid state plan services. The overall cost to Medicaid 
for waiver beneficiaries will be higher than the amounts reported here, 
which only include those services provided under the waiver. In 
addition, Medicaid covers the cost of room and board for beneficiaries 
in nursing homes and other institutions, a benefit not generally 
covered for those receiving services under the waiver.

[21] CMS uses the waiver applications, in part, to assess whether the 
proposed quality assurance mechanisms are sufficient to warrant waiver 
approval. HCFA Form 372, referred to in this report as the annual state 
waiver report, is a key source of information on how states have 
ensured quality until states renew their waivers. In addition to 
service use and spending data, the annual state waiver report includes 
information about the state's process for monitoring waiver standards 
and safeguards and the findings of those monitoring processes--
specifically, any deficiencies that were detected during the period 
covered by the report.

[22] We reviewed waiver applications for the 15 largest state waivers 
for the elderly based on the number of beneficiaries. These waivers 
were from the following states: Colorado, Florida, Georgia, Illinois, 
Kentucky, Missouri, New York, North Carolina, Ohio, Oregon, South 
Carolina, Texas, Virginia, Washington, and Wisconsin. In 1999, these 
waivers ranged in size from 10,514 beneficiaries in Virginia to 27,978 
beneficiaries in Texas. 

[23] As of June 2002, there were 77 waivers serving the elderly. 
However, our analysis includes 2 additional waivers for the elderly 
that had been terminated or not renewed as of that date because the 
states were able to provide us with their most recent annual report. 

[24] Only 1 of the 15 waiver applications we reviewed indicated that 
the state had a complaint system for the providers under its waiver. 
For a discussion of the role of complaint systems, see U.S. General 
Accounting Office, Nursing Homes: Sustained Efforts Are Essential to 
Realize Potential of the Quality Initiatives, GAO/HEHS-00-197 
(Washington, D.C.: Sept. 28, 2000) and U.S. General Accounting Office, 
Medicare Home Health Agencies: Weaknesses in Federal and State 
Oversight Mask Potential Quality Issues, GAO-02-382 (Washington, D.C.: 
July 19, 2002). 

[25] Our analysis of state oversight issues is based on 23 discrete 
waivers that had either a regional office review or a state audit. 
State auditors are responsible for reviewing state programs and may 
include Medicaid HCBS waiver programs as a part of these audits. Annual 
state waiver reports do not address state oversight weaknesses. Our 
analysis of quality-of-care issues is based on 51 discrete waivers that 
had either a regional office review or an annual state report. As of 
June 2002, there were 77 waivers serving the elderly. However, our 
analysis of state oversight and quality-of-care problems included 2 
additional waivers for the elderly that had been terminated or not 
renewed as of that date because they had had a regional office review 
during the October 1998 through May 2002 time period we examined. 

[26] Regional office review reports that did not have a final report 
were not included in our analysis.

[27] Because CMS regional offices have responsibility for oversight of 
all HCBS waivers, including those serving the elderly, our analysis 
included all HCBS waivers as of June 2002.

[28] As of June 2002, CMS regional offices had oversight responsibility 
for 263 HCBS waivers. These waivers included other population groups as 
well as those serving the elderly. Of this total, 228 had been in place 
for 3 years or more and should have had a regional office review; 70 of 
these 228 waivers served the elderly. Nine waivers serving the elderly 
had not been in place for 3 years or more and therefore were not 
included in this analysis.

[29] This protocol was developed to provide a standardized and 
comprehensive set of procedures for regional office staff to follow 
when conducting periodic waiver reviews. See Department of Health and 
Human Services, HCFA, HCFA Regional Office Protocol for Conducting Full 
Reviews of State Medicaid Home and Community-Based Services Waiver 
Programs (Washington, D.C.: Department of Health and Human Services, 
Dec. 20, 2000). 

[30] See, 50 Fed. Reg. 10013, 10016-17 (1985).

[31] In our analysis, we included only those reviews that had taken 
place prior to October 2001, allowing 9 months from the time the 
regional office conducted the waiver review to final report issuance--
from October 2001 to June 2002. CMS allows up to 4 months from the time 
the regional office completes all waiver review activities to issuance 
of a final report documenting the review findings. 

[32] As noted earlier, about one-quarter of annual state reports for 
waivers serving the elderly did not include information requested 
concerning the approaches used to monitor quality assurance.

[33] Eight of the remaining 9 waivers were new and had not yet had an 
annual report submitted. The CMS Atlanta regional office did not 
provide a current annual report for 1 waiver. As of June 2002, there 
were 77 waivers serving the elderly. However, our analysis includes 2 
additional waivers for the elderly that had been terminated or not 
renewed as of that date because the state was able to provide us with 
their most recent annual report. 

[34] These 4 waivers are a subset of the 42 HCBS waivers in place for 3 
years or more that either were never reviewed by the regional offices 
or were not reviewed prior to their last renewal.

[35] We requested that regional offices provide us with final reports 
for HCBS waivers serving the elderly issued from October 1998 to May 
2002. Eight of the 21 reviews we analyzed were completed after CMS's 
new HCBS waiver quality review protocol was implemented. 

[36] Headquarters officials are responsible for establishing waiver 
policy and the 10 regional offices have responsibility for waiver 
oversight. Both headquarters and the regional offices answer separately 
to the Administrator without any formal reporting links. In earlier 
work, we reported that these organizational reporting lines complicated 
coordination and communication, weakened oversight, and blurred 
accountability when problems arose. See U.S. General Accounting Office, 
Medicare Contractors: Further Improvement Needed in Headquarters and 
Regional Office Oversight, GAO/HEHS-00-46 (Washington, D.C.: Mar. 23, 
2000) and U.S. General Accounting Office, Nursing Homes: Sustained 
Efforts Are Essential to Realize Potential of the Quality Initiatives, 
GAO/HEHS-00-197 (Washington, D.C.: Sept. 28, 2000).

[37] We asked the regional offices to distinguish between staff 
assigned to HCBS waiver oversight and staff who may be temporarily 
assigned, such as those borrowed from another division for their 
specific expertise. 

[38] In 1992, the Philadelphia regional office was responsible for 
oversight of 16 waivers serving approximately 17,000 waiver 
beneficiaries. By 1999, the regional office had responsibility for 23 
waivers serving over 48,500 waiver beneficiaries. As of 2002, the 
regional office's total number of waivers had grown to 33. Since early 
2000, this regional office has hired or reassigned approximately three 
additional staff to focus on waiver oversight. 

[39] Two of these three regions indicated that they had intentionally 
hired someone with a clinical specialty for waiver reviews. 

[40] The only exceptions mentioned in CMS guidance apply to model 
waivers and those waivers serving fewer than 200 participants when the 
regional office determines there is a high probability that no 
significant quality problems exist by (1) combining the review of a 
smaller waiver with a larger waiver in the same state or (2) conducting 
an initial mini-review with the understanding that a more extensive 
review could follow if quality assurance problems are detected during 
the mini-review.

[41] See Harrington, Aug. 2001. Researchers collected HCFA Form 372 
reports for most HCBS waivers from 1992 through 1999. In some cases, 
where the annual reports were not available, state officials provided 
estimates of the relevant data. In other cases, where annual reports 
were not available and where state officials were unable to provide an 
estimate, University researchers developed their own estimates for the 
missing data on the basis of trend information for the particular 
waiver. For 1992, participant and expenditure data were estimated for 
21 of 155 HCBS waivers; 8 of these were waivers serving the elderly. 
For 1999, participant and expenditure data were estimated for 20 of 214 
HCBS waivers; 3 of these were waivers serving the elderly. Where 
participant or expenditure data for individual states are based on such 
estimates, we have indicated so in the text. In addition, based on 
information provided by CMS, we identified 7 of the 238 waivers in this 
database that had been misclassified. Four waivers listed as serving 
the aged or aged and disabled actually served other population groups; 
and 3 waivers listed as serving other population groups served either 
the aged or aged and disabled. Our analyses reflect the actual target 
populations for these 7 waivers. 

[42] As of June 2002, there were 77 waivers serving the elderly. 
However, our analysis of quality-of-care problems includes 2 additional 
waivers serving the elderly that had been terminated or not renewed as 
of that date because they had had a regional office review during the 
October 1998 through May 2002 time period we examined. 

[43] Five state audit agencies--Connecticut, Delaware, Kansas, 
Louisiana, and Montana--provided audit reports of waiver programs 
serving the elderly. Three of the regional office reviews and three of 
the state audit reports covered the same waivers.

[44] Five of the regional office reviews and five of the annual state 
reports in which problems were identified covered the same waivers. 

[45] As of June 2002, there were 77 waivers serving the elderly. 
However, our analysis of state oversight and quality-of-care problems 
includes 2 additional waivers for the elderly that had been terminated 
or not renewed as of that date because they had had a regional office 
review during the October 1998 through May 2002 time period we 
examined. 

[46] The quality framework was developed with input from a variety of 
organizations and individuals including national aging and 
developmental disabilities organizations, CMS officials from 
headquarters and regional offices, and state directors for Medicaid, 
aging and developmental disabilities. 

[47] Independence Plus is CMS's new demonstration program for family or 
individual-directed community-based services. Under this consumer-
directed care model, beneficiaries are provided greater decision-making 
authority regarding their service needs, their provider of services, 
and how quality of care will be assessed.

[48] The MEDSTAT Group is managing the overall contract with CMS. 



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