ARP Includes Significant Funding Opportunity for States to Invest in HCBS

This special, two-part piece is dedicated to Section 9817 of the American Rescue Plan, which provides funding for home and community-based services (HCBS) programs. In part one, view a guide assembled by PCG subject matter experts that outlines the options for states to reinvest the ARP’s additional HCBS FMAP funding. In part two, read the Health Policy News team’s summary of ways some states are engaging with their HCBS community while simultaneously working with CMS on spending plans in order to meet the deadlines for access to the enhanced FMAP.

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PCG Subject Matter Experts Outline Opportunities for States

By PCG Health Management Team

The American Rescue Plan Act of 2021 (ARP),1 signed into law on March 11, 2021, provides relief for Medicaid home and community-based services (HCBS) programs by providing them with scheduled, enhanced federal financing participation to offset state expenditures. Section 9817 of the Act provides enhanced federal funding for Medicaid HCBS and certain behavioral health services through a one-year, 10% increase to the share of state Medicaid spending that is paid for by the federal government. This one-year increase in federal matching funds will result in new, time-limited dollars that can be invested in certain Medicaid HCBS and behavioral health services through March 2024. The increased FMAP will be in place from April 1, 2021 to March 31, 2022, and states must spend the enhanced FMAP funding by March 31, 2024.

This means states must have submitted spending plans to the Center for Medicaid and Medicare Services (CMS) outlining their plan for use of the enhanced FMAP.

In order to assist states in the creation of spending plans, subject matter experts at PCG compiled a guide entitled “How can your state reinvest the ARP’s 10 percent enhancement to FMAP?”. Click the thumbnail on the left to access it.

The guide addresses CMS’s stated priorities for investment of ARP funds in HCBS, as well as insights from PCG’s HCBS team on ways these funds can be used to support the following areas:

  • Optimize State Funding by Increasing and Improving Access to HCBS Services and Supports
  • Create Targeted Efforts to Transition Individuals from Institutions to the Community
  • Improve Access to ARP-Approved HCBS Services
  • Technology & Infrastructure Support
  • Building Workforce Capacity in the HCBS System
  • HCBS Quality Enhancement

If you have further questions about the contents of this guide, please feel free to reach out to our team at

State Spending Plan Approaches 

By Margot Thistle

In May 2021, CMS released a letter to all state Medicaid Directors containing guidance for implementing ARP section 9817, including reporting and spending plan requirements. CMS requires any states seeking funds to submit both initial and quarterly HCBS spending plans outlining how the state will supplement its existing spending and programming.

In order to ensure the maximum impact of these funds, some states, like Massachusetts, have broken out the funding initiatives into “rounds.” Massachusetts issued a Request for Information (RFI) in April 2021 to gather public input on its proposed areas for investment (of the estimated over $400 million in potential new dollars), soliciting comment on the following four areas:

  • Topic Area 1: Access to HCBS services and supports
  • Topic Area 2: Technology and infrastructure investments to strengthen HCBS
  • Topic Area 3: Initiatives that provide opportunities to promote HCBS and emphasize high-quality, person-centered care
  • Topic Area 4: HBCS workforce development, including recruitment and retention strategies

In doing so, Massachusetts is balancing CMS’s tight timeline for spending plan submission while ensuring adequate public input—as the state plans incorporate the 271 RFI comments into its plans for HCBS investment. For example, on July 16th, leaders from Massachusetts’ Executive Office of Health and Human Services (EOHHS) met with the HCBS community to outline the initial spending plan and the next phase of investments:

  • The initial spending plan submitted to CMS in June 2021 focused on investing approximately $100M in new dollars in immediate, time-limited, across-the-board payment enhancements to stabilize the HCBS workforce. Providers will receive enhanced payments from July – December 2021, and will be required to spend at least 90% of enhanced payments to support direct care and support staffing.
  • The Round 2 spending plan addresses “new investments totaling approximately $44M in long-standing commitment to equitable rebalancing long-term services and supports and behavioral health services towards community living by diverting and/or transitioning individuals away from facility-based settings.”
  • The state is presently working on the Round 3 spending plan.

Additional examples from other state spending plans illustrate the various levels of progress that state Medicaid departments have made as they seek to maximize the impact of the increased FMAP for HCBS:

  • Virginia is in the process of gathering public input via an RFI issued in June 2021, having simultaneously submitted its initial spending plan to CMS on June 11, 2021.
  • North Carolina held a public webinar at the end of June to discuss its spending plan and is accepting feedback on effective allocation of the HCBS enhancement funds via email to

This unprecedented influx of funds targeted at strengthening HCBS services will hopefully result in sustainable and equitable long-term fund utilization. Stay tuned to the Health Policy News blog in the coming months, as we continue to track state-level developments on this topic.

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