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Paying Family Caregivers through the Medicaid Program

Paying Family Caregivers through the Medicaid Program

The information in this article was taken from:
National Academy for State Health Policy,
By Salom Teshale, Wendy Fox-Grage and Kitty Purington

The programs described below are often administered by state aging services and local area agencies on aging. By contacting your local area agency on aging, you should be able to find access to these programs in your state.


COVID-19 has upended states' long-term services and supports (LTSS) systems and strained congregate care facilities. A recent report suggests virtually all states have seen a significant drop in skilled nursing facility occupancy rates. The increasing demand for home-based care is exacerbating underlying challenges, such as long-standing LTSS direct care workforce shortages and gaps in meeting the needs of communities of color and speakers of different languages. To address these challenges, states are exploring how Medicaid options can support enrollees with long-term care needs through consumer direction programs (also called consumer-directed care programs, participant direction programs, or self-direction programs) that allow family members to be paid for providing care.

States have developed and expanded consumer direction programs over the past decades. Given increasing interest in home-and community-based care over institutional care, consumer direction programs are a growing option to offer older adults and people with disabilities an alternative to institutionalization. This report highlights three states' self-directed care programs that include older adults and people with physical disabilities.

Medicaid-funded consumer direction programs allow enrollees to directly hire people, including some family members, to provide personal care, such as bathing, dressing, and toileting.

According to the National Council on Disability, consideration of consumer-directed personal care options began in the late 1960s and 1970s with calls for increased autonomy and independence by and for people with disabilities. While early pilot programs focused on people with disabilities, the model - and its core values of autonomy and dignity - has since been applied to programs for older adults. Findings from the Cash and Counseling Demonstration Program suggest consumer-directed programs can improve quality of life and health outcomes and can help meet participant needs without increasing Medicaid fraud. While small-scale studies have shown savings, states can also incorporate cost-containment mechanisms into these models through waiver enrollment or spending caps, or reimbursement methodologies that limit consumer- directed care payment to a percentage of agency rates.

States are increasingly using consumer-directed models; according to Applied Self-Direction, all 50 states and Washington, DC have at least one consumer direction LTSS option. Several federal initiatives and CMS guidance beginning in the early 2000s, the Deficit Reduction Act of 2005, and creation of the Community First Choice state plan option under the Affordable Care Act have expanded states' ability to provide these programs. This trend is likely to continue as states:

  • Seek to address issues raised by the COVID-19 pandemic;
  • Promote equity and access to services in underserved communities; and
  • Address growing work force shortages.

Modifying or expanding consumer-directed programs can be an important strategy.

How States Can Develop Consumer-Directed Programs

States have multiple decision points when developing a Medicaid consumer-directed program. Medicaid Authority: States can use various Medicaid authorities to support consumer-directed options that allow family members to receive reimbursement for providing care. Policymakers have many factors to consider when designing these waivers and/or state plan amendments, such as whether to expand Medicaid eligibility, whether to target specific populations or geographic areas, and what services and supports should be provided.

The majority of states operate consumer-directed programs through the Medicaid 1915(c) home- and community-based waiver (HCBS) authority. Using 1915(c) waivers, states can modify eligibility requirements, target services to particular areas of the state, and/or limit or tailor services to certain populations, such as older adults or adults with physical disabilities who are at risk of institutionalization. States can, depending on the authority, add self-direction options for different services into a single waiver.

Enrollee authority: States can determine how care recipients manage their budgets, caregivers, and services:

  • Employer authority permits recipients to directly recruit and manage their service providers. Employer authority is integral to the consumer direction model. Depending on the authority, states have some flexibility to determine which employer responsibilities can be consumer- directed.
  • Budget authority allows enrollees to manage their budgets and purchase other goods and services. States also have flexibility in determining what types of goods and services can be purchased under budget authority.

Enrollee Supports

States are required to provide supports for enrollees in managing the consumer-direction process, which can include training and assistance, information about responsibilities, or access to financial management services. For example, Virginia's 1915(c) waivers include a "services facilitator" to support individuals in managing consumer-directed services.

Definition Of "Family"

States have discretion to determine who may provide HCBS under consumer direction. Under most authorities, states have flexibility to allow services to be provided by family members, including "legally responsible individuals" such as spouses or parents of minor children under specific circumstances. Within the 1915(c) waiver, for example, states have the option to allow relatives to provide waiver services, and/or allow legally responsible individuals, such as spouses and parents of minor children, to provide personal care services.

When delivering personal care-related services, the legally responsible person must be providing care that is beyond the care normally expected of a spouse or parent. In defining family for reimbursement, the state plan personal care option is the exception: legally responsible individuals may not be paid under this authority to provide personal care services.

Training and Workforce Requirements

State Medicaid agencies often require background checks or certification requirements for caregivers.

  • States vary in the specifics of the training requirements for caregivers hired under consumer direction. Florida does not require licensing or certification to provide personal care, homemaker, or adult companion services, but does require licensure for attendant care.
  • States can, through legislation, specify the types of tasks that can be delegated by a nurse to an unlicensed caregiver who receives training, as in the example of Virginia's regulations on nurse delegation. The AARP 2020 LTSS Scorecard found that 26 states allow nurses to delegate at least 14 health maintenance tasks to be performed by a direct care aide, such as medication administration, respiratory care, tube feeding/gastric care, and/or bladder regimen and skin/appliance care-related tasks.

Use of Representatives

Participants can choose to have a representative assist them with managing their consumer-directed services. Individuals may appoint a family member as a representative, but that family member cannot be paid to be the participant's representative or provide paid care to the participant. (Note: Due to the COVID-19 emergency, emergency flexibilities may allow states to waive certain requirements during the public health emergency. For example, West Virginia' s Appendix K for its 1915[c] waivers allows legal representatives to receive payment for certain personal care-related services under specific circumstances during the emergency.)