DHCS draws in “historic” federal matching funds to restructure HCBS spending

The California Department of Health Care Services (DHCS) released its spending plan for state home and community-based services (HCBS) on Thursday, making “historic” investments in community health and home-based care. 

Using the American Rescue Plan Act’s (ARPA) increased Federal Matching Assistance Percentages (FMAP) for certain HCBS, DHCS plans to bring in approximately $3 billion in federal matching funds to supplement its funding for these services. The department’s spending plan lays out 35 initiatives across different HCBS programs that aim to further the goals of both Gov. Gavin Newsom’s May Revise and the CalAIM initiative.


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The spending plan covers five broad areas of funding. Here are some notable funding allocations from each area:

Increasing HCBS direct care workforce

The plan focuses on addressing workforce shortages resulting from pandemic-induced departures by funding the recruitment of homeless services workers, intellectual and developmental disability (IDD) providers, home-based clinical direct care providers and other members of the HCBS workforce. This effort will prioritize cultural competency and embed language and communication skills into direct care workers’ training.

The plan allocates $150 million in both enhanced federal funds (EFF) and total funds to the direct care workforce (not including in-home support services (IHSS)), which the department says is the fastest-growing occupation in the state. $137 million in EFF and $275 million in total funds will go toward IHSS economy payments — one-time payments of $500 to IHSS providers who meet certain conditions.

An additional $135 million in EFF and $215 million in total funds is allocated to expanding the developmental services workforce. This includes $200 million for $500 payments to direct service professionals (DSP) and $15 million for short-term counseling, support and referral services for DSP and their families.

Improving HCBS navigation

Making HCBS access easier for underserved individuals is a central goal of the spending plan. DHCS will do so using methods including community outreach and screenings. $75 million in EFF and total funds will go toward mental health first aid in schools and back-to-school toolkits. The first aid program will teach adults how to deal with youth mental health issues, and the toolkit will give teachers, parents and students resources to respond to such issues.

DHCS is spending $50 million in EFF and total funds for the emergency department HCBS connections toolkit, which will create toolkits providing emergency departments with resources, training and information on local connections to HCBS services. The department is also spending $25 million in EFF and total funds for Alzheimer’s education. This will include funding for the Dementia Aware initiative, which creates a yearly cognitive health assessment for Medi-Cal beneficiaries. It also makes continued geriatric and dementia education available to providers.

Helping HCBS transitions

DHCS plans to help transition individuals in institutional living arrangements or homeless shelters to places like assisted living environments. This area includes a significant $1 billion in EFF and $2 billion in total funds for the Housing and Homelessness Incentive Program, in which Medical Managed Care Organizations (MCOs) can earn incentive payments for investing in housing and preventing homelessness. 85% of this money must go to program beneficiaries.

$286 million in EFF and $744 million in total funds will go toward community-based residential continuum pilots for vulnerable, aging and disabled populations. These pilots will increase the availability of medical services to individuals in home-based care settings in order to prevent severe health outcomes and reduce their cost of care. This effort will focus on the seriously mentally ill, elderly homeless individuals and individuals recently released from incarceration.

An additional $150 million in EFF and total funds will go toward affordable housing for IDD individuals. The department is also allocating $85 million in EFF and $255 million in total funds to eliminate the assisted living waiver waitlist, the length of which often disincentivizes providers from participating in the waiver program, according to DHCS. It will add 7,000 slots to the current 5,744, which will allow DHCS to provide waivers to every eligible individual who needs one. 

Enhancing HCBS capacity and models of care

DHCS aims to innovate and improve existing HCBS models of care to better meet the needs of underserved populations. $75 million in EFF and $125 million in total funds will go toward the coordinated family support service. According to DHCS, the majority of Medi-Cal-eligible individuals who live with their family are non-white, and individuals who live with their family have less access to coordinated support services. This funding aims to create a pilot service to help families receive different support services that aren’t often available to them.

$50 million in EFF and in total funds is dedicated to nursing home recovery and innovation. This will focus on post-COVID reform for nursing homes, including funding for things like in-room broadband and disaster readiness. Another $50 million in EFF and total funds will go toward enhanced community integration for children and adolescents. DHCS will support community recreational programs for children through a multi-year program in which regional centers work with community-based organizations (CBOs) and the California Department of Parks and Recreation to coordinate activities.

HCBS infrastructure and support

The department is focused on improving California’s HCBS infrastructure by strengthening current services and expanding services to serve more eligible individuals. The majority of this funding — $181 million in EFF and $256 million in total funds — is allocated to system improvement.

Of this $256 million, $45 million will go to accelerate the recruitment of service coordinators. It also contains a one-time investment of $15 million over multiple years to transform the HCBS payment system into one that is more outcome-driven. $120 million is directed to modernizing regional center IT systems and $20 million will go toward organizational change management.

Further funding to support infrastructure improvements includes $4.7 million in EFF and $9.5 million in total funds directed to addressing the digital divide for adults receiving HCBS.

The public comment period to receive stakeholder input on the spending plan ended on Monday.