Report: HCBS Utilization Remains High, But Varies Drastically By State

A new report from the Kaiser Family Foundation shines further light on how popular home- and community-based services (HCBS) are in the U.S.

It also makes clear how much cheaper HCBS delivery is for states in comparison to institutional-based care. 

In 2020, Medicaid programs spent an average of $36,275 per individual on HCBS. They spent an average of $47,279 per individual on institutional long-term support services (LTSS), an over 30% difference. 

Medicaid spent far less on individuals that did not utilize LTSS at all – whether in the home, community or institution – at $4,480 per individual. The caveat there is that 40% of Medicaid enrollees are children who tend to require far less of that type of care.

Overall, Medicaid spending on individuals that utilized LTSS totaled nearly $217 billion.

“People who used Medicaid LTSS comprised 6% of Medicaid enrollment but 37% of federal and state Medicaid spending, reflecting the generally high cost of LTSS and more extensive health needs that lead to higher use of other health care services and drugs,” KFF wrote. 

Overall, KFF estimated that 4.2 million individuals utilized Medicaid LTSS delivered in home and community settings, while 1.6 million utilized Medicaid LTSS in institutional-based settings.

Broadly, LTSS encompasses a “broad range of paid and unpaid medical and personal care services that assist with activities of daily living.” Those activities of daily living include meal preparation, bathing, medication management and housekeeping, among others.

Of the 5.6 million people that used Medicaid LTSS overall in 2020, 72% – 4 million – only used HCBS. About 24% used only institutional care – 1.4 million – while 4% used both.

Those numbers varied drastically across states, however. For instance, only 45% of LTSS users in Maine used exclusively HCBS, while 94% of LTSS users used exclusively HCBS in North Carolina. 

While HCBS utilization is high, the need is likely even higher. KFF points out that the COVID-19 pandemic exacerbated workforce shortages, particularly in HCBS.

“A 2022 survey of Medicaid HCBS programs found that nearly all states reported experiencing shortages of direct care workers and many reported adopting policies to bolster the HCBS workforce, such as providing recruitment or retention bonuses and increasing provider payment rates,” KFF wrote. “Many of the HCBS initiatives were funded by extra federal funding available through the American Rescue Plan Act, but as that funding expires, states will have to find alternative funding sources if they want to maintain spending levels.”