Home- and community-based care gained more permanent standing in Medicaid
with approval by the Centers for Medicare and Medicaid Services (CMS) of the
addition of one such program to Iowa's basic Medicaid plan.
The CMS decision, announced in April and retroactive to January 1, added a
new program to Iowa Medicaid that provides "life skills"
assistance to people with disabilities, especially those with chronic mental
illness. The program is based on a pre-existing service that the state
Medicaid program used to offer through a temporary waiver but was moved out of
Medicaid after a CMS audit found it failed to meet federal criteria as a
The program, expected to include about 3,000 people initially, will offer
help with daily chores such as medicine management, grocery shopping, and
laundry skills. Employment training is also included and will feature guidance
on appropriate dress and time management. Iowa officials expect the number of
participants in the program to grow to about 4,500 over the next five
"These are the types of services that complement professional
counseling and help vulnerable people find stability," said Kevin
Concannon, director of the Iowa Department of Human Services, in a written
Although limited in scope, the CMS approval makes Iowa the first state
allowed to do away with part of the lengthy Medicaid waiver process required
by federal law for its home- and community-based program. The Medicaid waivers
are generally limited to three or five years and require states to ask for
renewals. The waiver process can take months to complete.
The state will continue to seek federal temporary waivers for seven other
aspects of its Medicaid program.
Iowa Medicaid officials expect most of the beneficiaries of the life-skills
assistance program to include participants of the previous program, called
Adult Rehabilitation Option (ARO). That program will be phased out.
Iowa Medicaid officials estimate the new program will cost $46.6 million,
which includes $29.6 million in federal funds and $16.9 million in state
funds. The cost is about $3 million more than the previous program.
Mental health advocates applauded the change, although they are waiting to
see if the new program will reach the majority of potential beneficiaries in
"We're hopeful that it will have an impact on deinstitutionalization
and pick up more people with severe and persistent mental illness," said
Margaret Stout, executive director of NAMI-Iowa, in an interview with
Stout said the ARO program is significant because it is one of the few
state health programs for residents who have severe and persistent mental
illness. Several others are aimed at those who have less-serious mental
disorders, she said. ARO helps participants avoid crisis situations that can
lead to psychiatric hospitalization or other high-cost out-of-home
The new program was made possible by the Deficit Reduction Act of 2005
(DRA), which Congress approved and President Bush signed into law early last
year. The law gives state Medicaid officials greater latitude to amend their
programs to increase cost-sharing and premiums or to reduce benefits. States
that amended their programs last year under the DRA, such as West Virginia,
Kentucky, and Florida, have drawn criticism from mental health advocates for
changes that placed a heavier program compliance burden on beneficiaries with
mental illness than they are often able to meet (Psychiatric News,
June 2, 2006).
The Iowa changes appear more limited and haven't generated controversy.
"Stopping the burdensome cycle of continually having to request
federal government permission to offer a benefit that is good for people and
programs will be a huge relief for states and beneficiaries," according
to a statement by Health and Human Services Secretary Mike Leavitt.
The change also is possible under a DRA provision that allows states to
provide home- and community-based care to those who may not yet be at risk for
immediate institutionalization. The DRA also allows states to empower Medicaid
beneficiaries to make their own choices regarding the kind of services they
need and from whom they will receive them.
"We expect many states to follow Iowa's lead in taking advantage of
the DRA's provision that grants new freedom to state Medicaid programs and the
people who depend upon them," said Leslie Norwalk, CMS's acting
The changes follow the 1999 Olmstead v. L.C. decision by the U.S.
Supreme Court, which increased state responsibility to provide a range of
home- and community-based service options. The court ruled that the Americans
With Disabilities Act required states to provide care for people with
disabilities in community settings when appropriate. As a result, the federal
government and the states have changed some policies and programs to increase
access to home- and community-based services.