Managed care for long-term services working for states

Using section 1115 waivers to provide Medicaid managed long-term services and support (LTSS) allows states to expand access to home- and community-based services (HCBS) to beneficiaries at risk of institutionalization. The Kaiser Family Foundation (KFF) surveyed enrollment, spending, and program policies for the 11 states using managed LTSS in 2015, and found that while states used these waivers in an effort to improve administration efficiencies, most of the states did not pursue this method in an attempt to make costs more predictable.

Managed care

States that use managed care for LTSS contract with private health plans, paying these plans a set monthly rate per member. Spending on LTSS as a percentage of all Medicare spending is growing quickly, from 5 percent in 2009 to 15 percent in 2014. In response to this growth, CMS included LTSS provisions in recent revisions to Medicaid managed care regulations (see Final rule modernizes Medicaid managed care, April 26, 2016). States using this payment method are now required to identify and comprehensively assess enrollees with LTSS needs and create stakeholder advisory groups to oversee LTSS programs, while plans must comply with person-centered planning regulations. Even in light of these new responsibilities, states are using managed care to authorize HCBS for multiple populations and add in other Medicaid initiatives in order to streamline coordination.


The KFF analysis revealed some differences in states’ approaches and results in using managed care for LTSS. Most waivers expand financial eligibility for HCBS, while six of the states expand eligibility for HCBS to those who are “at risk” of institutionalization, attempting to prevent the need for costly future services by allowing beneficiaries to remain in their homes. The majority of LTSS waiver beneficiaries in the nine states reporting enrollment by setting were served in the community, but three of 11 states reported an HCBS waiting list. Almost all states require plans to cover a wide range of benefits, including nursing facilities, acute and primary care, and behavioral health services.


The KFF noted that states’ concerns about implementation could inform policymakers considering these programs in the future. In particular, the growing number of seniors and beneficiaries with disabilities, combined with the shortage of LTSS workers, has caused apprehension about keeping up with the pace of needed services. Despite this looming issue, the KFF believes that states will continue to choose managed care to provide LTSS.

Medicaid long-term services and supports benefit vital to many seniors

Medicaid provides vital services to seniors in need of expensive long-term services and supports (LTSS). Seniors must have low income and few assets to qualify, and states have some control over benefit package design. Still, Medicaid programs spend considerable billions of dollars on LTSS care for seniors each year.

Coverage and spending

Medicaid programs must provide nursing facility and home health services, but other LTSS are optional. This includes home- and community-based services (HCBS), such as homemakers, home health aides, personal care, case management, and home delivered meals. States have shifted to providing services in home and community settings as much as possible, as opposed to institutional care.

The Kaiser Family Foundation (KFF) noted that in fiscal year (FY) 2011, Medicaid programs spent over $80 billion on full-benefit seniors, and $55.8 billion of this amount went to LTSS. The percentage of LTSS spending varied by state, based on factors such as the amount of services provided and the share of elderly beneficiaries in that location. The services are not cheap: the median annual cost for nursing facility care is $90,000, with adult day health care costing nearly $20,000 a year.

Policy concerns

The amount of people needing LTSS in the next two decades is estimated to grow significantly, and 70 percent of the population turning 65 right now is likely to use LTSS at some point. Many Americans erroneously believe that Medicare will cover this benefit for them, and are unprepared to pay for LTSS themselves. The KFF report indicated that there is interest in streamlining the HCBS benefit to make it easier on both state programs and senior enrollees as the baby boomer generation continues to age.