The Affordable Care Act's “community first choice” option: Effect on long‐term care expenditures

OBJECTIVE: To empirically assess the effect of adopting Affordable Care Act's Community First Choice (CFC) option on overall state home and community‐based services (HCBS) expenditures as well as distribution of HCBS expenditures across different HCBS mechanisms. We also explore the heterogeneous effect of CFC across adopting states. DATA SOURCE: We used data from the Medicaid Long Term Services and Support (LTSS) expenditure reports prepared by Truven Analytics and Mathematica for the Centers for Medicare & Medicaid Services from 2008–2018 for all 48 states and the District of Columbia. STUDY DESIGN: An event‐study difference‐in‐differences model was used to estimate the effect of CFC on HCBS expenditures using Medicaid LTSS expenditure reports from 2008–2018. We also employ the synthetic control method to unmask heterogeneity across CFC adopting states using data from 2008–2018. DATA COLLECTION/EXTRACTION METHODS: Not applicable. PRINCIPAL FINDINGS: Overall, CFC was not associated with a change in HCBS expenditures per capita or HCBS expenditures as a proportion of LTSS expenditures. However, there appears to be an increase in HCBS expenditures among states that were institutionally‐oriented prior to CFC adoption. Additionally, CFC adoption was associated with an overall decrease in expenditures in alternative HCBS mechanisms (Personal Care Services State Plan Option and 1915(c) waivers), suggesting potential substitution across overlapping programs. CONCLUSION: Results indicate heterogeneity across states adopting CFC. More institutionally‐oriented states appear to use CFC to expand HCBS. In contrast, more HCBS‐oriented states appear to employ CFC to strategically restructure their overall portfolio and processes.