The 2024-25 California Spending Plan

Human Services

Update on Home- and Community-Based Services (HCBS)
Spending Plan

Temporary Increase to Medicaid Federal Share of Cost for HCBS Programs and Services. Under the American Rescue Plan Act of 2021, the federal government increased the federal medical assistance percentage (FMAP) by 10 percentage points for Medicaid-funded HCBS services and programs provided from April 1, 2021 through March 31, 2022. (The FMAP represents the federal government’s share of cost for Medicaid services eligible for cost sharing.) States had discretion about whether to claim the additional funding (which we refer to throughout this post as the “increased HCBS FMAP funding”) for some or all of its HCBS expenditures during the spending period, provided they meet certain program requirements. For example, states could not replace existing state funding for HCBS programs and services with the increased HCBS FMAP funding; rather, the increased HCBS FMAP funding had to be spent on new—or enhanced—programs that are in addition to existing state HCBS funding (this and other requirements are discussed in the next section of this post). The most up-to-date estimates assume that the state would draw down $2.8 billion in increased HCBS FMAP funding, which reflects the estimated maximum amount of federal funding California could claim from the increased HCBS FMAP.

States Required to Spend an Amount of State Funding Equivalent to the Increased HCBS FMAP Funding on New HCBS Expansions and Enhancements. The state’s decision to claim increased HCBS FMAP funding reduced its share of cost for existing HCBS services by an equal amount (in California’s case, $2.8 billion). The federal government requires states to “reinvest” these freed-up state funds on expanded, enhanced, or strengthened HCBS services (which we refer to throughout this post as “HCBS enhancements”). These HCBS enhancements must supplement and build upon existing HCBS activities in place as of April 1, 2021 in either Medicaid-funded or non-Medicaid-funded services and programs. As shown in Figure 1, the state’s HCBS Spending Plan includes 26 HCBS activities. The total costs associated with the state’s HCBS Spending Plan are approximately $4.7 billion, which includes the $2.8 billion HCBS FMAP funds and an additional $1.9 billion in federal matching funds for Medicaid-eligible HCBS activities.

Reduction in In-Home Supportive Services (IHSS) Career Pathways Program. The 2024-25 budget reduces the IHSS Career Pathways program by $60 million in federal funding made available through the HCBS Spending Plan. Of these funds, $40 million will be shifted to the Department of Developmental Services Developmental Services Rate Model Implementation and $20 million to the Department of Health Care Services Eliminating Assisted Living Waiver Waitlist program, reducing General Fund expenditures by this corresponding amount. This leaves the IHSS Career Pathways Program with roughly $235 million of total funds, down from $295 million.

Budget Language Requires Administration to Provide IHSS Career Pathways Program Spending Updates. The 2024-25 budget includes supplementary report language that requires the Department of Social Services to provide information on the amount of funds expended and the remaining unspent funds for the IHSS Career Pathways Program on a monthly basis starting September 3, 2024 until the funds are fully expended. This information shall include updated outcome information on the number and trends of providers completing classes and the number and trends of claims for incentive payments. This information shall be provided in writing to legislative staff, the Legislative Analyst’s Office, and stakeholders upon request.