Americans are rejecting institutional care. A recent poll found that most Americans give nursing homes an average D+ grade for quality of care and another recent survey found that 93% of adults want to age in place.  The data is clear – people are eager to get the long-term care they need in the safety of their homes.  

Unfortunately, with the caregiver shortage and rising cost of care, many find this difficult to achieve. Self-direction offers a compelling solution to this pressing problem. Here we explorewhat self-direction is, its benefits, and why we expect this innovative model to continue growing for many years to come.  

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What is Self-Direction? 

Self-direction (also referred to as consumer direction or participant direction) is a long-term care service delivery model that broadens individual choice and control. It represents a fundamental change in the way people access Medicaid services and supports, shifting decision-making power from providers or government agencies to the program participant. 

Depending on the program, self-directing participants can have employer and/or budget authority over their care. Employer authority allows participants to hire, manage, and fire the individuals who provide their services, while budget authority gives them control over how their budget is spent on services and supports. 

What are the Benefits of Self-Direction? 

Self-direction offers significant benefits to participants if they’re willing and able to take on more responsibility. 

Independence – Self-direction enables participants to keep living in their own homes and accessing local support systems as opposed to institutional care. It might also be an option for individuals within residential facilities to move back home. 

Choice – Rather than having a homecare worker assigned by an agency, participants can select a paid caregiver themselves, which can even include a family member or friend. 

Control – Participants decide how to allocate their budget.  While budget expenditures must be for Medicaid approved goods or services and must typically increase independence, budgets can be used for items and services beyond just paying caregivers. Some participants increase their independence by installing a ramp in their home, or by purchasing a microwave to be able to independently prepare meals, instead of relying on caregivers. 

Access – The ability to hire friends or family members is especially important in rural areas where homecare workers and agencies are limited. In fact, between 2013 and 2019, the number of available home care workers for every 100 patients in need fell by nearly 12%

Cost-Effectiveness – Self-directing participants can strategically use their budget to gain the most benefit. For example, they may choose to use their budget to purchase an item for a one-time cost that allows them to use fewer hours of homecare labor ongoing. 

While there are many advantages to self-direction, a person choosing self-direction must believe it’s the right fit for them. Remaining at home might not be a long-term care option for some people. In addition, some participants might not want the level of responsibility required – particularly related to being an employer. While many safeguards and supports exist to make self-direction accessible to many, it is not the right fit for everyone. 

How Do States Administer Self-Directed Services? 

States have several options to offer self-directed Medicaid services: 

  • Home and Community-Based Services State Plan Option – 1915(i) 
  • Community First Choice – 1915(k) 
  • Self-Directed Personal Assistance Services State Plan Option – 1915(j) 
  • Home and Community-Based Services Waiver Programs – 1915(c) 
  • Demonstration Waivers – 1115 

There are different guidelines for each Medicaid funding option, including which populations can self-direct care and which services can be self-directed. However, the Centers for Medicare & Medicaid Services (CMS) has several overarching requirements: 

  • Person-Centered Planning Process– The individual participant must direct the process with assistance as requested from representatives of the individual’s choosing. The process should identify the strengths, capacities, preferences, needs, and desired measurable outcomes of the individual. 
  • Service Plan– There must be a written service plan that specifies the services and supports required to meet the preferences, choices, abilities, and needs of the individual as well as a plan for contingencies. 
  • Individualized Budget– States must describe the method for calculating the dollar values of individual budgets based on reliable costs and service utilization, define a process for adjusting the budget when changes in the participant’s service plan occur, and define a procedure to evaluate expenditures. 
  • Support Broker– A support broker (also called a counselor, consultant or service coordinator) is a type of Information & Assistance that can be available to each individual who elects the self-direction option. This person supports the individual in directing their services, and maximizing their success in the program. The counselor will assist with whatever is needed to identify potential personnel requirements, resources to meet those requirements, and the services and supports to sustain individuals as they direct their own care. 
  • Financial Management Services (FMS)– This function is required by CMS and that supports both the participant and the payer. FMS helps individuals hire employees in compliance with rules and regulations, acts as powerful fraud detection and control, supports documentation requirements, and performs payroll and other administrative duties. The FMS function also supports payers to enforce the parameters and rules of the program. 
  • Quality Assurance– Each state Medicaid agency must have a system of continuous quality assurance and improvement. The system must include activities of discovery, remediation, and quality improvement. 

What’s Driving the Immediate Growth of Self-Direction? 

Self-direction emerged out of the Civil Rights Movements of the 1960s and gained additional traction through the 90s and early 2000s, increasing in major adoption through the last decade. With a history of growth over the last 20 years, the COVID-19 pandemic accelerated this trend dramatically. Data from HHAeXchange showed a 20% increase in self-directed services for the first nine months of 2020, compared to 7.5% in prior years. 

Since the pandemic began, CMS has been encouraging states to expand or adopt self-direction in its Appendix K: Emergency Preparedness and Response Instructions for 1915(c) waivers. Regardless of whether it is a pandemic, natural disaster, or national emergency like war or foreign attacks, self-directed services are especially useful during times of crisis for three primary reasons: 

1. Limits exposure to illness

Individuals can hire family or other household members to provide services, limiting exposure to those within the same residence. Agency-based workers are more likely to serve multiple households, increasing the risk of exposure to themselves and others.

2. Addresses worker limitations

Individuals can hire from a broader pool of potential workers. This flexibility is critical due to direct care worker shortages and closures of community and day programs in the case of an emergency. 

3. Allows for purchases to meet emergency needs

A self-direction budget gives the individual flexibility in meeting unanticipated expenses, such as meal delivery and medical equipment.

The Future of Self-Direction 

We expect to see self-direction playing a larger role in the delivery of Home and Community-Based Services (HCBS) for numerous reasons. 

  • Maintaining and Growing New Enrollees – For the individuals who enrolled in self-directed services during the pandemic, many are finding it’s a good fit. They may have chosen the plan out of necessity, but quickly recognized the benefits once it was in place. We expect these participants will continue using self-directed services, and this will lead to more word-of-mouth referrals over time.
  • Movement Away from Facility-Based Care – States had been working for decades to shift away from facility-based care as the default option. Not only is institutional care more expensive for states, but Americans have consistently expressed their preference for HCBS. 
  • Growth in Consumer Empowerment – Underlying the steady growth of self-direction is the principle of consumer empowerment. Individuals now expect to be active participants in their own health care. This is especially true of baby boomers, who are redefining what it means to be an older adult in our society. As this large segment of the population ages, there will be a steady interest in self-direction. 
  • State Medicaid Budget Shortfalls – To avoid cuts as much as possible, Medicaid agencies will be looking to innovative models like self-direction to better manage costs while maintaining quality care. 

What’s Next 

The scene is set for self-direction to grow. How can HCBS providers prepare? 

To be successful, HCBS providers must collaborate closely with participants. It’s also critical to stay compliant with both CMS and individual state policies. Providers need integrated technology that will: 

  • Manage participant enrollment, progress, and key steps 
  • Create and approve participant budgets quickly and efficiently 
  • Adjudicate care worker time and other expenses to individual budgets and program rules 
  • Onboard employees 
  • Support efficient and accurate Medicaid claiming 
  • Enable participants and their family’s real-time access to key information about their services 
  • Prepare for audits and readiness reviews 

Interested in building or expanding a self-directed program? HHAeXchange provides robust software for HCBS providers, helping people who are aging or have disabilities thrive in their homes and communities.  As the national leader in self-direction software, HHAeXchange serves thousands of self-directing individuals in more than 40 states. Learn more about how we help all types of organizations build and expand their self-direction programs.