Myth of a Medicaid Institutional Bias

The allegation of a Medicaid institutional bias for people with intellectual and developmental disabilities (I/DD) is simply not true. It is based on two false premises:  (1) that all institutional services are mandatory and all home and community-based services (HCBS) are optional, and (2) that more dollars are spent on institutional services than on HCBS services.

First, all Medicaid programs for people with MR/DD are optional – whether provided through Intermediate Care Facilities for Individuals with Intellectual Disabilities(ICFs/IID) or the HCBS program. Second, as detailed below, far more Medicaid dollars are spent on HCBS than on ICFs/IID services for people with I/DD.

How, then, did this myth come into being?  The answer is by mixing the funding sources for very different populations, (1) the elderly and physically disabled who are served through the nursing facilities (NF) program, a mandatory Medicaid program, and (2) people with I/DD, who receive funding through optional ICF/IID and HCBS programs.  By combining the dollars spent on the NF and ICF/IID programs as “institutional” funds, proponents of community funding represent that there is an institutional bias. 

When only programs for people with I/DD are separated out, it is absolutely clear that there is neither a bias in the nature of the program nor in the amounts spent for institutions. Far more Medicaid dollars are spent on HCBS than on ICFs/IID services. In the context of “rebalancing,” 38 states serve at least 80% of all individuals with I/DD in the community, and 80% of all resources spent on those with I/DD are for community support; and another 5 states come “very close.”  This is up from only 14 states in 2007.