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. 

While self-direction may seem like a new concept to some, the care model has existed for quite some time. Self-direction emerged out of the Civil Rights Movements of the 1960s, gained traction through the 90s and early 2000s, and has continued to increase over the last two decades. In fact, 1.5 million people self-directed the LTSS they received in 2022 and 2023. This represents a 23 percent increase from 2019, or almost 300,000 more people.   But with the increasing popularity of self-direction has also come several misconceptions. In this article, we’ll set the record straight on some of the top myths surrounding self-direction. 

Myth #1: Self-direction is when people hire their family as caregivers. 

Over time, the act of hiring family members as caregivers has become more common. A report from the United States Special Committee on Aging stated, “In 2020, 53 million unpaid family caregivers – one in five Americans – provided care to an adult with health or functional needs.” 

While the role of family as caregivers is growing, it is not the only way that staff in self-direction can be hired. Many participants do choose to hire family, but just as often they hire neighbors, friends, referrals from their church or greater community, caregivers at an agency, and people they have met through posting an ad. 

Self-direction is built on participants taking full control over their hiring choices. Sometimes this includes family, but other times it does not. 

Myth #2: There is more fraud in self-direction. 

With millions of caregiver visits and recent changes to state and federal guides, the potential for fraud, waste, and abuse (FWA) in home and community-based services is a valid concern. 

However, according to a guide produced by the National Resource Center for Participant-Directed Services (NRCPDS), “Research indicates there is no increased risk of fraud within participant-directed programs. In both [self-direction and traditional agency] services, quality management systems are used to prevent fraud. Participant direction is an efficient model in its own right: By directly linking services and support to each person’s needs and preferences, it promotes expedient service delivery.” 

Additionally, financial management procedures for participant-directed services are actively being used to monitor and address potential fraud. For example, certain software providers such as HHAeXchange offer powerful Financial Management Services (FMS) engines that ensure compliant budget and authorization management, in addition to flexible and convenient EVV, billing, and claims tools. 

A report from the National Association of State Units on Aging (NASUA) and The National Council on the Aging (NCOA) noted, “People who self-direct show a strong sense of responsibility in regard to the services they use and the funds expended.” 

Myth #3: Only people who have tons of time and skill to do a lot of administrative work should self-direct. 

While most self-direction programs include “employer authority”, where the participant or a representative hires, trains, schedules, and manages their directly-hired workers, supports are in place so that all responsibility does not fall on the individual receiving care. 

The Centers for Medicare and Medicaid Services (CMS) requires that any Medicaid waiver with self-direction include a solution for FMS, a support that works as a super-charged payroll company for people who self-direct. Nearly all states and managed care organizations (MCOs) contract with an FMS entity that acts as a neutral bank handling back-office responsibilities for participants who self-direct. 

Once FMS entities help participants get established as employers, participants authorize the FMS entities to handle all payments and taxes on their behalf, including Workers’ Compensation policies. FMS entities support workers hired by the participant through the new hire process. 

Additionally, some programs allow a participant to appoint someone other than themselves to be an employer. Often this appointed person is someone close to the participant whom they trust to help with hiring decisions and staff management, such as a spouse, parent, or adult-age son or daughter. 

With robust FMS and the option to appoint someone other than the participant as an employer, self-directing is not just for those who have the time and skill to manage administration. 

Myth #4: In self-direction, people are given cash and they do whatever they want. 

Unfortunately, this myth has been part of the self-direction story for some time, and could likely be traced back to “Cash & Counseling”, the catchy but somewhat misleading title of the original grant program, which had a demonstration and replication phase starting in 1996. 

“In most programs to date, the term “cash” is a misnomer, because virtually all self-directing participants with individual budgets do not receive cash or even a check to deposit in a personal checking account,” according to a handbook produced by the Robert Wood Johnson Foundation. 

In fact, Medicaid prohibits participants from receiving cash directly in waiver programs. 

Participants have an individual budget or an authorization, with the funds in that budget generally held by an FMS provider, to be used to pay for goods and services to meet their assessed needs. The FMS entities ensure that expenses comply with program rules and that participants do not receive cash directly. 

Myth #5: Self-Direction only serves individuals with developmental or intellectual disabilities. 

Self-direction services are available to individuals of all ages and with all types of needs. Each state provides services to different populations under different waivers and each program varies in terms of the scope of the service offered. 

Self-direction currently serves: 

  • Adults with intellectual/developmental disabilities 
  • Individuals with disabilities or long-term illnesses living in an institutional setting 
  • Seniors (over 65 years of age) and adults with physical disabilities 
  • Children and Adults with physical disabilities 
  • Veterans 
  • Individuals with serious mental health conditions 
  • Individuals with a traumatic brain injury 
  • Persons who are at risk of nursing facility placement 

To learn more about the types of self-directed services offered in your state, check out the National Inventory of Self-Direction Programs from Applied Self-Direction. 

Myth #6: The self-direction program is designed specifically for in-home care only. 

While the original “Cash and Counseling” program was designed specifically for in-home care, today that is no longer the case. Some states have expanded their programs to include individuals who reside in small group homes and even assisted living residences. Other states allow relatives to serve as adult foster care providers, where the individual moves into the home of their caregiver. 

Grow Your Self-direction Program

As increased awareness is brought to the benefits (and realities) of self-direction, the expectation is that the program will continue to grow. With more consumers seeking flexibility, choice, and control in their services, it’s wise for agencies to embrace self-direction – while ensuring they have the tools and information they need for success. 

If your organization wants to build or expand a self-direction program, HHAeXchange provides robust software for HCBS providers, helping people who are aging or have disabilities thrive in their homes and communities. Our technology supports over 90 programs of all sizes and models (including Agency with Choice and Fiscal Employer Agent).  We partner with FMS and Fiscal Intermediary (FI) entities to serve MCOs and Medicaid programs across 40 states and counting. To learn more, request a demo today!