ND health officials ask lawmakers for targeted raises, HCBS growth funding amid DOJ settlement work

North Dakota health officials on Oct. 12 told the legislative Appropriations Committee the state must fund growth in home- and community-based services (HCBS) and raise some provider rates to meet a Department of Justice settlement and the rising needs of older adults and people with disabilities.

Sarah Eaker, executive director of the Division of Medical Services, and Nancy Nicholas Meyer, director of Adult and Aging Services, said the department is in year five of an eight-year settlement with the U.S. Department of Justice that requires the state to divert people from nursing homes, transition residents back to the community, and secure housing for recipients. "We meet with them twice a month, and we provide semi-annual and annual reports," Nancy Nicholas Meyer said.

The department asked legislators to include a cost-to-continue for HCBS growth that had been omitted from an earlier submission, and to approve targeted rate increases. Nancy Nicholas Meyer described a $5.3 million request for a targeted rate increase aimed at qualified service providers (QSPs) and certain HCBS services; Sarah Eaker described a separate $2.4 million request to rebase home-health rates and align private-duty nursing with home-health reimbursement. The house budget left the HCBS targeted package in its version of the bill, department staff said.

Why it matters: The department said North Dakota is serving more people with complex medical and behavioral-health needs in the community. Eaker noted nursing facility costs remain the highest single cost within long-term care, but utilization of nursing facilities has fallen since 2020 while HCBS utilization and expenditures have risen. Meyer said some HCBS waiver participants now require higher-acuity care that previously would have been limited to institutional settings; those high-acuity cases drive a disproportionate share of cost. "Sixteen percent of our participants account for 40 percent of the cost of care," Meyer said.

Key program and eligibility details discussed include a separate financial eligibility structure for state-funded service payments to the elderly and disabled (SPED), a Medicaid financial-eligibility path that includes a five-year asset "look back," and a personal-needs allowance that department staff said currently would increase by $14.85 under a bill cited to the committee. Department staff said the asset limit for long-term care Medicaid eligibility remains $3,000 for a single person and $6,000 for a married couple when both spouses are institutionalized; a community spouse may retain additional resources under spousal-impoverishment rules.

Meyer said the DOJ settlement benchmarks set numeric diversion and transition goals and that the state has met most benchmarks except the requirement to transition some nursing-home residents back to the community within 120 days of request, which the department described as hard to meet in all cases because transitions require extensive planning. "We have been meeting all of the benchmarks with the exception of transitioning people out of a nursing home within 120 days of them asking," Meyer said.

On staffing and provider pay, the department described large increases in QSP and agency enrollment (three hundred thirty-four new QSPs and 45 new agencies in one year) and said compensation is a primary retention driver. The executive budget proposed a 1.5% and 1.5% inflationary increase for providers; the house increased that to 2% in engrossed language. For QSPs, Eaker said the executive request included a 1.5/1.5 increase and that the house applied a 2% increase across provider contracts, which may affect how much of that adjustment reaches direct-care wages depending on each provider's cost mix.

The department described several HCBS service categories that account for rising costs: an adult residential/memory-care program (average state cost cited at about $29,333 per year plus rent), residential habilitation and community supports for high-acuity recipients (average cost cited at about $121,290 per year for intensive 24-hour supports), and the broader HCBS waiver population (average figures cited in presentation slides). Meyer and Eaker told legislators that, on average, some waiver participants cost roughly $70,917 annually while a nursing-home placement for an equivalent individual averaged about $135,000 — figures the department used to argue that, overall, HCBS can be less costly while honoring individuals' preferences to remain in the community.

The department also flagged programmatic and federal compliance risks related to basic care, assisted-living and adult-residential licensing. Sarah Eaker said North Dakota is the only state that currently reimburses basic care (a facility-based setting) as a facility-based personal-care service, and that basic care settings do not meet the federal Home and Community-Based Services (HCBS) settings rule — a mismatch the department said may create federal funding and DOJ risk. Eaker outlined a multi-year plan to streamline licensure, move toward HCBS-focused regulations, and develop a new funding model that would allow more facilities to participate in HCBS waivers.

What is pending: The department requested the legislature fund the HCBS cost-to-continue, the QSP/HCBS targeted rate increase ($~5.3 million), and the home-health/private-duty nursing rebasing ($~2.4 million). Committee members asked for follow-up data — including counts of waiver participants by cost category and details on state recovery collections from estates — which the department agreed to provide.

Ending note: Department leaders framed the requests as targeted investments intended to expand community alternatives to institutional care while addressing provider shortages and improving quality. "When we think about bending the cost curve, finding better outcomes and lower costs over time, really look to an increased focus on value-based care," Eaker said.