WASHINGTON--CMS will give states $1.75 billion over five years to allow elderly and disabled Medicaid recipients to live in the community rather than in institutions, HHS Secretary Mike Leavitt announced last week.

The agency said the monies, to be delivered through competitive grants, will help shift Medicaid from its historical emphasis on institutional long-term care services to a system that offers more choices for seniors and people with disabilities, including home and community-based services. What CMS terms a "rebalancing" initiative, called "Money Follows the Person," was included in the Deficit Reduction Act and is a part of President Bush's "New Freedom" initiative.

"With this program, people who need long-term care and prefer to live in their own homes and communities can do so," Leavitt said. "States will also get more for their money by giving the elderly and people with disabilities more control over how and where they get the Medicaid-funded long-term care services they need."

According to CMS Administrator Mark McClellan, "We've worked with advocates and states for years to end the institutional bias in Medicaid, and now we've got the best opportunity ever to do it. We need to move as quickly as possible to make that shift across Medicaid. With new federal funding, there is no longer any excuse for the status quo."

Under the program, states will receive a higher rate of federal Medicaid matching funds--between 75 to 90 percent--for beneficiaries who are moved out of nursing homes and into community settings. The funds are available not only for home health care but also for home modification costs, respite services to augment informal or unpaid caregivers, personal care and assistive devices.

Because institutional care was the norm when the Medicaid law was enacted 40 years ago, CMS said, to provide home and community-based services, states must get a waiver of normal program rules. According to HHS, waivers and demonstration programs "offer the promise of significantly lower costs per beneficiary and reductions in overall Medicaid spending" because individuals are given control over how they will get their services. But rebalancing Medicaid coverage may have some short-term costs, which the new federal program should help states to overcome.

For more information on the Money Follows the Person initiative, visit www.grants.gov. For more details about the New Freedom Initiative, visit www.cms.hhs.gov/newfreedom.

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