Memorandum

This letter and attachments will provide information to assist states and individuals to use the live-in care provision. Specifically, examples will be given to demonstrate how to apply for this amendment to an HCB wavier and how to set up guidelines to meet the Health Care Financing Administrationšs (HCFA) criteria for administering the provision.

The live-in care provision can be found in section 1915(c) (1) of the Social Security Act. This provision was added in 1990. Regulations implementing this provision are found in 42 CFR 441.310 (2) (ii) which provides: "For waivers that allow personal caregivers as providers of approved waiver services, a portion of the rent and food of the personal caregiver may be reasonably attributed to the unrelated caregiver who resides in the same household with the waiver recipient." In order to use this provision states must include unrelated live-in personal caregivers as providers of an approved waiver service and choose to include for the caregiver's rent and food expenses as part of the waiver service payment.

In October, 1994, the Commissioner of the Administration on Developmental Disabilities, Bob Williams, convened a meeting with Robert Wardwell, then, Director of the Division of Coverage Policy in the Medicaid Bureau and Mary Jean Duckett, Chief of the Home and Community Based Waiver and staff of National Home of Your Own Alliance to discuss ways in which a Medicaid Home and Community-based Services waiver could open the mortgage market for home ownership by people with developmental disabilities.

At this meeting the live-in care provision was discussed in detail. Following the meeting, we drafted a letter (see attachment #1) asking HCFA to clarify guidelines and procedures states would need to follow in making application for this amendment. HCFA responded to the request in December, 1994 (see attachment # 2) in a letter which stated that guidelines would be provided to states in HCFA's State Medicaid Manual, section 4442.3, page 4-450 under item number 12. This section taken from the HCFA letter follows:

1. Room and board may now include an amount established under a method determined by the State to reflect a portion of costs of rent and food attributable to an unrelated personal caregiver who is residing in the same household with an individual who, but for the assistance of such caregiver would require admission to a hospital, NF or ICF/MR.

2. Unrelated is defined as someone who is unrelated by blood or marriage to any degree.

3. A caregiver is someone who is providing a covered waiver service as defined in the waiver package.

4. Estimates of the costs of services provided must differentiate between service costs and room and board costs of the caregiver. (As indicated in section 4442.8.A.1.a of the State Medicaid Manual, these estimates must be reasonably estimated and documented by the agency.)

5. FFP for live-in caregivers is not available in situations in which the recipient lives in the caregiver's home or a residence owned or leased by the provider of Medicaid services.

To summarize:

A state may claim the room and board costs that arise when a caregiver lives with a waiver participant. For Medicaid, it is important to distinguish between live-in caregivers and "roommates" or companions. In other words, the authority to claim room and board costs only exists when someone who is providing a service to the participant resides with the individual in order to meet that wavier participant's need for assistance.

The state determines what portion of the rent or mortgage expense is attributable to the live-in caregiver. The state must document how these costs were determined; these determinations are subject to review and approval by HCFA.

For states whose waivers are due for renewal or who are submitting a new wavier, HCFA has included this provision in the Section 1915(c), Waiver Format application (see attachment #3). Relevant sections include number 15 and appendix G-4.

In order to employ this option, states must amend their waiver. As stated in the December letter from HCFA, instructions for amending HCB waivers can be found in section 4445, page 4-484 of the State Medicaid Manual. The mechanics of an amendment process are relatively straightforward. Basically, the state must write a letter to its regional office asking for approval to include the live-in caregiver room and board component to its wavier, explaining how will be used.

The letter should:

Designate the waiver service(s) in which the live-in caregiver option would be employed.

Specify how the cost of room and board for live-in-care givers were determined (typically states use an average cost).

Revise the computation of factor D to include the costs of rent and food attributable to the live-in-care giver.

Adjust the "cost-neutrality" formula to reflect the additional estimated costs of employing this option.

Currently, the states of Oregon, Missouri, and New Hampshire have included the live-in care provision as part of their HCB waiver.

An important question which arose following the inception of this provision was the effect the provision would have, if any, on a waiver recipient's income as defined by Social Security. In December, 1994, a review of Social Security regulations was made by Robert White, Assistant District Manager of the Social Security Administration Office in Portsmouth, NH (see attachment #4). Basically, Mr. Whitešs opinion was that, "the payment of Medicaid waiver funds to pay for food and/or shelter of an unrelated live-in caregiver providing services to an SSI recipient in the SSI recipient's household would not be considered income chargeable or countable to the SSI recipient unless payment exceeded the true cost of the caregiver's food and shelter." In his letter, Mr. White specifically stated that this was only his opinion as someone who administers SSI and that a policy ruling would need to originate from the Social Security offices in Baltimore.

HCFA requested a ruling from the Social Security Administration in Baltimore to determine the circumstances under which the room and board expenses of a live-in caregiver would not be considered income for the SSI/Medicaid recipient. On March 29, 1996, a letter was received from HCFA which documented the circumstances under which room and board of a live-in caregiver would not be considered income (see attachment #5). This letter states that, "under Medicaid and SSI rules, for payment not to be considered income to the recipient, payment for the portion of the costs of rent and food attributable to an unrelated personal caregiver must be made directly to the Medicaid recipient. The method for determining what is the portion of costs of rent and food is left to the State, with HCFA's approval. Regardless, the personal caregiver must be paid directly for the service component and the recipient must be paid for the rent and food attributable to the live-in personal caregiver."

HCFA's March letter seems to clarify the issue of whether Medicaid waiver funds used for payment of room and board for an unrelated live-in would be considered income chargeable or countable to the SSI recipient. Unfortunately, it also raises all the issues inherent in getting money directly to individuals. Anytime money is given directly to an individual, federal regulations governing wage and hour, workmen's compensation, and Social Security may be applied.

We see two distinct options for moving forward in setting up guidelines for implementation of the provision for individual Medicaid recipients.

1) The person (or his or her legal guardian/representative) receives the room and board payment directly.

Once the person or his or her legal guardian/representative receives the payment they can then decide how to pay the expenses related to the live-in caregivers food and shelter. He or she can write a check to the lender or landlord, or to a third party who then makes the payment to the lender or landlord. He or she can provide for making the mortgage payment by direct funds transfer out of his or her checking account. Using this option may create some obligations for the individual under federal and/or state regulations governing wage and hour, workmen's compensation, and Social Security because the funds may be considered payment (in-kind or direct) for services rendered by the live-in caregiver.

2)An enrolled Medicaid provider agency receives the waiver funds for the room and board of an unrelated live-in caregiver on behalf of the individual. These funds would need to be separate from funds received by enrolled Medicaid provider agency to pay the live-in caregiver for the service component. The enrolled Medicaid provider agency would need to have an agreement with the individual waiver recipient to utilize the room and board payment for the expenses attributed to live-in caregiver for the rent and mortgages payments.

Essentially, the enrolled Medicaid provider agency (the option used in most states) will pay the individual waiver recipient's food and shelter expenses related to the live-in caregiver. This payment can be made directly to the lender, landlord, or third party as specified by the individual. Under this option, the funds would be paid by the enrolled Medicaid provider agency, therefore, all liability for federal or state regulations related to wage and hour, workmen's compensation, and Social Security appears to be that of the enrolled Medicaid provider agency.

The live-in care provision makes it possible for states and their provider agencies to reallocate their resources, allowing available funds to be used to assist Medicaid recipients to secure homes of their own. In facilitating this reallocation, states avail themselves of a cost-neutral way to assist people whose options would otherwise be limited to institutional settings.

If we can provide you with any additional information which could be helpful as you apply for and implement the live-in care provision, please do not hesitate to contact us. We believe the use of the this provision will afford many more individuals with disabilities an opportunity to have their own homes.