The Impact of Medicaid Home and Community Based Waivers on State Voluntary Foster Care Placement Rates

Background: In many states, intensive community-based mental health treatment for children is only funded through Medicaid coverage or involvement in the child welfare system. For non-Medicaid eligible children with significant mental health needs, the inability to obtain funding for adequate behavioral health care through private means results in children being “voluntarily” placed in the state’s child welfare system. Once in state custody, the child’s comprehensive mental health care can be funded through Medicaid coverage and child welfare funds. However, these voluntary placements can have damaging consequences for families; parents forfeit the right to participate in decision making regarding the child’s care and children experience trauma from family separation. To reduce the need for this practice, some states have adopted 1915(c) Home and Community Based Services (HCBS) Medicaid Waiver policies targeting children and youth with the most complex behavioral health needs. These policies provide Medicaid coverage for a wide array of community-based mental health services for children with significant behavioral health needs, regardless of family income levels, insurance status, or child welfare involvement. This study investigated the impact of state 1915(c) HCBS Medicaid waivers on state rates of voluntary foster care placements.

Methods: This study used ten years of data from the Children’s Bureau Adoption and Foster Care Analysis and Reporting System (AFCARS) for foster youth, 2010-2019. These data were combined with state-level policy and demographic characteristics drawn from a variety of state policy data sources. Using the AFCARS, the total number of children whose manner of removal was “voluntary” was counted for each state for each year, and both accumulated and new entry rates were calculated and merged with state-level control variables. Multilevel, fixed-effects linear regression models assessed the relationship between states’ use of a 1915(c) waiver and their total accumulated and new entry voluntary foster care placement rates. Regression models adjusted for state mental health system and demographic variables. Models grouped observations by state, included a time variable to control for natural changes in child welfare and behavioral health systems over time, and used robust standards errors to manage outcome variable heteroskedasticity.

Results: Total state voluntary foster care placements varied widely (SD=640.66), with an average of 393.5 accumulated and 162.7 new entries voluntary placements per year. Non-waiver states averaged 420.1 accumulated and 181.0 new entry voluntary placements per year, compared to 313.4 accumulated and 107.5 new entry voluntary placements per year in non-waiver states. Rates of new entry voluntary placements declined significantly throughout the 10 years of the study (β= -.040; -0.75, -0.11). Controlling for state variation in demographics and public funding for children, states’ use of a 1915(c) waiver was associated with reductions in total accumulated (β= -1.35; -2.18, -0.52) and total new entry (β= -1.22; -2.29, -0.15) voluntary placement rates.

Conclusion: HCBS Medicaid waivers targeting children with mental health needs may effectively reduce state rates of voluntary foster care placements. Additional research is needed to understand the functional or clinical gains realized by children with complex mental health needs who are served under HCBS waiver programs.