Medicaid HCBS funding expansion

Full Title:
To provide for an emergency increase in Federal funding to State Medicaid programs for expenditures on home and community-based services.

Summary#

This bill would raise the federal share of Medicaid payments for home and community-based services (HCBS) by 10 percentage points for fiscal years 2026 and 2027 for states that apply and are approved. The aim is to strengthen HCBS access and workforce by giving states extra federal funds to raise pay, expand services, and support people who were moved into or are waiting for institutional-to-home transitions. States must promise to spend the funds by September 30, 2029, and to use the money to supplement — not replace — existing state spending.

  • Main change: For approved states, the Federal Medical Assistance Percentage (FMAP) for HCBS expenditures increases by 10 percentage points for FY2026–FY2027, but the federal share cannot exceed 95%.
  • Who can get it: Any state that files an application and is certified complete by the Secretary of Health and Human Services.
  • How funds may be used: A long list of allowable uses includes higher provider pay rates, paid leave and hazard pay, training, recruitment, supplies and PPE, travel payments, family caregiver supports, assistive technology, helping people move back from institutions, and serving people on HCBS waiting lists.
  • Reporting and evaluation: States must report by December 31, 2029 on how funds were used and who was served; HHS must arrange an external evaluation and publish results.

What it means for you#

  • Medicaid beneficiaries who use HCBS: Could see better access to services, more providers available, and support to move back into the community if they were placed in institutions.
  • Home health workers and direct support professionals: Could benefit if states use funds to raise wages, add paid leave, pay overtime or hazard pay, improve scheduling and benefits, or pay for training and travel.
  • Family caregivers: Could receive supports such as pay, respite, supplies, or equipment if their state chooses those options.
  • HCBS providers and agencies: May receive higher reimbursement rates, retainer payments, or other funds to stabilize operations and hire or retain staff.
  • States and state Medicaid agencies: Must apply for the increase, outline planned activities, provide assurances about use of funds, oversee spending, and file a report by 2029. States retain flexibility over which allowed activities to implement.
  • People on HCBS waiting lists: States may use funds to serve people who are waiting for HCBS under certain waivers or demonstrations.
  • Federal government (HHS): Will evaluate statewide and national outcomes and publish findings; will certify state applications and oversee compliance.

Expenses#

No publicly available information on the bill’s total cost or a fiscal estimate is included in the bill text provided.

  • The bill increases the federal share (FMAP) for HCBS costs in FY2026 and FY2027, which would raise federal Medicaid spending for those services during those years.
  • For states that participate, this would reduce the state share of Medicaid spending on HCBS during the covered period.
  • States may have administrative and reporting costs to prepare applications, track fund use, and file required reports.
  • HHS will incur evaluation and dissemination costs (the bill requires an external evaluator and public reporting), but the bill text does not give dollar amounts.

Proponents' View#

  • The bill appears intended to increase funding for home and community-based care and strengthen the HCBS workforce by raising provider rates and funding benefits such as paid leave and hazard pay.
  • Supporters may argue this could reduce reliance on institutional care by helping people return to or remain in their homes.
  • The bill could be seen as improving access, availability, and quality of HCBS through targeted investments (training, assistive technology, recruitment).
  • The reporting and external evaluation provisions are intended to measure outcomes and share promising practices across states.

Opponents' View#

  • One concern is that the bill text does not include a fiscal estimate, so the total federal cost and budget offset are unclear from the provided material.
  • The requirement that funds “supplement, not supplant” state spending may be hard to monitor and enforce in practice.
  • The list of allowable uses is broad and includes items not typically covered by Medicaid; this breadth could raise questions about consistency across states.
  • It is unclear how the Secretary will review and verify states’ spending beyond general oversight requirements, and what penalties (if any) apply for misuse.
  • States that do not apply or that are slower to apply could benefit less, producing uneven access improvements across the country.