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Budget and Policy Post
November 1, 2021

The 2021-22 California Spending Plan

Home- and Community-Based Services Spending Plan

Temporary Increase to Medicaid Federal Share of Cost for HCBS Programs and Services. Under the American Rescue Plan (ARP) Act of 2021, the federal government increased the federal medical assistance percentage (FMAP) by 10 percentage points for Medicaid-funded home- and community-based services (HCBS) provided from April 1, 2021 through March 31, 2022. (The FMAP represents the federal government’s share of cost for Medicaid services eligible for cost sharing.) States have discretion about whether to claim the additional funding (which we refer to throughout this post as the “increased FMAP funding”) for some or all of its HCBS expenditures during the spending period, provided they meet certain program requirements. For example, states cannot replace existing state funding for HCBS programs and services with the increased FMAP funding; rather, the increased FMAP funding must be spent on new programs that are in addition to existing state HCBS funding (this and other requirements are discussed in the next section). The 2021‑22 budget assumes that the state will draw down $3 billion in increased FMAP funding, which reflects the estimated maximum amount of federal funding California could claim from the increased FMAP.

States Required to Spend an Amount of State Funding Equivalent to the Increased FMAP Funding on New HCBS Expansions and Enhancements. The state’s decision to claim $3 billion in increased FMAP funding reduces its share of cost for existing HCBS services by an equal amount. The federal government requires states to “reinvest” these freed-up state funds on expanded, enhanced, or strengthened HCBS services (which we refer to throughout this post as “HCBS enhancements”). These HCBS enhancements must supplement and build upon existing HCBS activities in place as of April 1, 2021 in either Medicaid-funded or non-Medicaid-funded services and programs. Additionally, states are given until March 31, 2024 to fully expend the required amount of funding on HCBS enhancements. The nearby box summarizes other eligibility requirements states must meet to draw down the increased FMAP funding for HCBS programs and services.

Eligibility Requirements for States to Drawn Down Increased FMAP

To claim the increased federal medical assistance percentage (FMAP), states must adhere to the following rules:

  • Not impose stricter eligibility standards, methodologies, or procedures for home- and community-based services (HCBS) programs and services that were in place on April 1, 2021.

  • Preserve covered HCBS, including the services themselves and the amount, duration, and scope of those services, in effect as of April 1, 2021.

  • Maintain HCBS provider payments at a rate no less than those in place as of April 1, 2021 up to when the freed-up state funds resulting from the increased FMAP are fully expended on HCBS enhancements and expansions.

State Submitted HCBS Spending Plan to Federal Government for Approval. The federal government required states to submit an HCBS spending plan by June 12, 2021 (or July 12, 2021 if a state requested an extension) detailing the amount of increased FMAP funds they plan to draw down and the new HCBS enhancements they plan to implement to meet the HCBS reinvestment requirement. In June 2021, the administration released its initial HCBS spending plan, which primarily included HCBS enhancements that were additive to the Governor’s January and May Revise budgets and the Legislature’s June budget package. The Legislature’s June budget package also included a number of eligible HCBS enhancements proposals. The state’s Department of Health Care Services (DHCS) submitted the state’s final HCBS spending plan to the federal government on July 12, 2021. The submission included 28 proposed initiatives and reflected an agreement between the Legislature and administration about which initiatives to pursue. Additionally, the submission included HCBS enhancements for Medicaid-funded and non-Medicaid-funded HCBS programs and services. Because many of the proposed, new HCBS enhancements are eligible for federal Medicaid funding, the state will draw down an additional $1.6 billion based on the standard Medicaid FMAP on top of the $3 billion the state more directly receives through the increased FMAP under the ARP Act. Accordingly, under the spending plan, the state will spend $4.6 billion on HCBS enhancements over the next several years. The 2021‑22 budget created the HCBS ARP Fund to cover the cost of the HCBS enhancements (including advance funding for the anticipated federal share) until its HCBS spending plan receives federal approval and it can begin claiming the increased FMAP.

Federal Government Partially Approved State’s HCBS Spending Plan and Requested Revised Submission. On September 3, 2021, the federal government responded to the state’s proposed HCBS spending plan. As shown in Figure 1, of the 28 initiatives proposed, the federal government fully approved 13 initiatives, partially approved 14 initiatives, and denied one initiative. For the partially approved initiatives, the federal government requested the state submit additional clarifying information, primarily to confirm that the proposed activities are allowable under the federal guidance. For the denied initiative, the administration proposed using the funding to expand one of the approved initiatives. DHCS submitted a revised HCBS spending plan on September 17, 2021 addressing all of the identified issues to the federal government and is still awaiting federal approval.

Figure 1

Summary of Federal Response to State’s Initial HCBS Spending Plana

Initial HCBS Spending Plan Proposal

Federal Decision

Total Fundsb (in Millions)

Workforce: Retaining and Building Network of Home‑ and Community‑Based Direct Care Workers

In‑Home Supportive Services (IHSS) Career Pathways. Provide specialized training opportunities to IHSS providers.



IHSS HCBS Care Economy Payments. Provide one‑time $500 payments to IHSS providers that worked at least two months between March 2020 to March 2021.



Direct Care Workforce (Non‑IHSS) Training and Stipends. Provide specialized training opportunities to non‑IHSS HCBS providers.

Partially Approved


Providing Access and Transforming Health Funds for Homeless and HCBS Direct Care Providers. Expand homeless system of care and create an effective pre‑release care for justice‑involved populations.



Increasing Home‑ and Community Based Clinical Workforce. Increase the number of home‑ and community‑based clinical care providers for individuals with disabilities and aging adults.

Partially Approved


Non‑IHSS HCBS Care Economy Payments. Provide one‑time $500 payments to non‑IHSS HCBS care providers that worked at least two months between March 2020 to March 2021.

Partially Approved


Traumatic Brain Injury (TBI) Program. Expand the capacity of existing TBI sites and stand up new TBI sites.



Home‑ and Community‑Based Services Navigation

Language Access and Cultural Competencies Orientations and Translations. Provide funds to translate Department of Developmental Services (DDS) documents, coordinate and streamline interpretation and translation services, and ensure culturally appropriate translations.



CalBridge Behavioral Health Pilot Program. Hire trained behavioral health navigators in emergency departments to screen and refer patients to mental health or substance use disorder programs.

Partially Approved


Dementia Aware and Geriatric/Dementia Continuing Education. Develop a cognitive health assessment tool and provide geriatric/dementia trainings to health care providers.



No Wrong Door/Aging and Disability Resource Connections (ADRC). Support ADRC program operations, including data collection and sharing practices.



Home‑ and Community‑Based Services Transitions

Housing and Homelessness Incentive Program. Provide incentive funds to Medi‑Cal managed care plans to address homelessness and keep beneficiaries housed.

Partially Approved


Community Care Expansion Program. Acquire, rehabilitate, or construct adult and senior care facilities.

Partially Approved


Community‑Based Residential Continuum Pilots for Vulnerable, Aging, and Disabled Populations. Provide medical and supportive services to individuals residing in permanent supportive housing and congregate care settings.

Partially Approved


Eliminating Assisted Living Waiver Waitlist. Eliminate Assisted Living Waiver waitlist by increasing waiver slots by 7,000.

Partially Approved


Services: Enhancing Home‑ and Community‑Based Services Capacity and Models of Care

Developmental Services Rate Model Implementation. Implement rate models recommended by the 2019 Rate Study.

Partially Approved


Social Recreation and Camp Services for Regional Center Consumers. Provide camping services, social recreation activities, educational therapies, and nonmedical therapies for eligible individuals who have a developmental disability.



Older Adults Resiliency and Recovery. Provide funding to various older adult programs, including food assistance, legal services, employment services, and behavioral health line.

Partially Approved


Contingency Management. Implement treatment pilot for stimulant use disorder.



Coordinated Family Support Services. Create pilot to assist families in coordinating the receipt and delivery of services for DDS consumers living in the household.



Enhanced Community Integration for Children and Adolescents. Provide local grants to develop integrated community‑based social recreational activities for children with and without developmental disabilities.



Adult Family Homes for Older Adults. Create Adult Family Homes pilot that places older adults with a family.



Alzheimer’s Day Care and Resource Center. Provide dementia‑capable services at licensed Adult Day and Adult Day Health centers.

Partially Approved


Nursing Home Recovery and Innovation. Expand pilot for Small Home facilities, facilitate broadband access for nursing home facility residents, and improve facility disaster readiness.



Home‑ and Community‑Based Services Infrastructure and Support

Access to Technology for Seniors and Persons With Disabilities. Increase access to technology for older adults and adults with disabilities.

Partially Approved


Senior Nutrition Infrastructure. Provide capacity and infrastructure improvement grants to senior nutrition program vendors.

Partially Approved


Modernize Regional Center Information Technology Systems. Conduct initial planning process to update the regional center fiscal system and implement a statewide Consumer Electronic Records Management System.



Long‑Term Services and Supports (LTSS) Data Transparency. Create LTSS Data Dashboard linked with statewide nursing home and HCBS utilization, quality, demographics, and cost data.

Partially Approved




aThe state submitted its initial HCBS spending plan to the federal government on July 12, 2021. It has since resubmitted a revised plan on September 17, 2021 that addresses all of the issues identified by the federal government and is awaiting full federal approval.

bReflects total funding levels as proposed under the most recent HCBS spending plan submitted to the federal government on September 17, 2021. Per federal guidance, the state must spend all of these funds by March 31, 2024.

cThe federal government denied the $2 million Nursing Home Recovery and Innovation proposal as an eligible HCBS enhancement and expansion. Under the revised HCBS spending plan, the funding initially proposed for the Nursing Home Recovery and Innovation was added to the LTSS Data Transparency proposal.

Budget Language Allows Administration to Authorize the Expenditure of HCBS ARP Funds Throughout 2021‑22 to Implement HCBS Spending Plan Proposals. The 2021‑22 budget includes provisional language that allows the administration to administer and spend increased FMAP funds through the annual budget process or through written midyear notifications to the Legislature. Given that some of the proposed HCBS enhancements also were included in the 2021‑22 Budget Act (and thus received General Fund budget allocations), some of the increased FMAP funding will replace the General Fund amounts already allocated. The remainder of the increased FMAP funding will be used to implement the HCBS enhancements that were not included in the 2021‑22 Budget Act. Due to delays in the federal Medicaid claiming process, the 2021‑22 budget also allows the administration to issue a General Fund loan of up to $750 million to the HCBS ARP Fund, which can be used to pay for the approved HCBS enhancement activities prior to receipt of federal funds.