Associations between State Medicaid Waiver Policy Design and Use of Home and Community-Based Services (HCBS) Among Adults with Intellectual and Developmental Disabilities (I/DD)

Background: While Medicaid programs must provide institutional care and home health benefits, coverage of most types of home and community-based services (HCBS)—which include caregiver supports, day services, round-the-clock care, supported employment, and transportation to name a few examples—is voluntary. Increasingly, states use waivers to offer more robust HCBS benefits as a preferred alternative to institutional care. States have vast discretion in waiver design, which results in consequential differences in who receives services, the types of services provided, and how services are delivered.

Previous analyses of Medicaid waivers have not paid sufficient attention to differences in eligibility and service provision policies. The vast majority of the nascent causal inference literature on Medicaid waivers simply examines state- or individual-level “use” versus “non-use” of a particular waiver program, falsely assuming homogeneity in waiver design. While this paper focuses on adults with intellectual and developmental disabilities (I/DD), a heterogenous population with unique needs, findings can be broadly applied to other HCBS user groups, which include older adults and people with physical disabilities or serious mental illness.

Purpose: Guided by a novel conceptual framework, we estimate how specific state Medicaid HCBS waiver policy decisions and program design patterns are associated with use of HCBS among adults with I/DD. We predict that there are common trade-offs in waiver program design, such as more restrictive eligibility versus more generous coverage, which are associated with differences and disparities in individual-level use of Medicaid HCBS.

Methods: We first develop a novel, national policy dataset with detailed information on Medicaid HCBS 1915(c) waivers that enrolled adults with I/DD in 47 states and Washington, DC. We focus on 1915(c) waivers for two reasons: 1) they are the primary mechanism for providing comprehensive Medicaid HCBS benefits, and 2) key documents are standardized across states, limiting discretion in interpreting policy decisions and missing data. In addition to empirically identifying specific state HCBS waiver policy decisions, we use latent class analysis and cluster analysis to group states based on patterns of HCBS waiver program design priorities.

Second, we link these HCBS policy and program design variables to Medicaid claims to conduct a series of retrospective, longitudinal analyses to estimate the effects of specific state Medicaid HCBS waiver policies and program design patterns on use of HCBS from 2016-2019. We are limited to these years due to lags in the release of national Medicaid claims data and concerns regarding the generalizability of data from 2020 – 2021.

Results: We identify significant differences in state Medicaid HCBS waiver policies and program design patterns related to eligibility, benefit coverage, and service parameters. Our findings further suggest that specific state Medicaid waiver policy decisions and program design groups are associated with differences and disparities in HCBS utilization.

Conclusions and Implications: Our findings are particularly pertinent to social work, as we demonstrate how differences in state Medicaid waiver policies and design priorities shape HCBS access and use. We conclude by providing policy guidance to design more effective and equitable waiver programs in the context of state resource constraints.