The Community First Choice Option is intended to nudge state Medicaid policy away from default institutionalization and toward encouraging home/community-based care. Much like the private option, the CFCO incentivizes states to make the shift by offering a more generous federal match rate on Medicaid dollars associated with the disabled and elderly. Arkansas, being a relatively poor state, already receives a generous federal match rate on its Medicaid spending — a 70/30 match. That is, of every Medicaid dollar spent in Arkansas, 70 cents comes from D.C. and 30 cents comes from the state budget. Adopting the CFCO would bump up the federal match by 6 points, meaning the state share would decline to 24 cents.
"We get the extra 6 percentage points on the 4,100 people we've been serving [with the existing developmental disability waiver], as well as everyone in elderly adults and physical disabilities — that's a lot," said Dr. Charlie Green of the state Department of Human Services. There are 7,300 elderly persons and 2,700 physically disabled adults currently on home/community-based waivers who would otherwise likely be in nursing homes. Those extra 6 cents on every dollar add up quickly.
It's true that the state's higher match rate will be offset somewhat by the additional cost of paying for 3,000 families on the developmentally disabled waiting list. Those families currently do not receive long-term Medicaid at all — although they are entitled to receive it. Still, the cost of home/community-based services is one-half to one-third the cost of institutional care. Even with those 3,000 additional clients, DHS estimates that the CFCO's extra match would save $365 million out of state general revenue over a 12-year period.