OLR Research Report

January 5, 2007




By: Helga Niesz, Principal Analyst

You asked for information on the Vermont Choices for Care program.


Vermont's Choices for Care is the name of an 1115 Medicaid waiver demonstration program that began operating in October 2005. The waiver caps federal funding over five years but gives the state more flexibility in how it spends the money. In effect, it turns federal Medicaid funding for long-term care (the waiver now includes both nursing home care and home care) into a block grant for the state. (The state also has an 1115 waiver which provides a federal block grant for its Medicaid acute care program, also begun in October 2005.)

The Choices for Care program provides long-term care to eligible people over age 65 and people with physical disabilities age 18 or older. Under regular Medicaid, federal law requires that anyone functionally and financially eligible for nursing home care is entitled to receive coverage for their care in a nursing home; but there is no such federal entitlement to home care. Vermont, like other states, previously provided home care through a Medicaid waiver in which it limited the number of people eligible for the program and could also waive certain other customary Medicaid requirements. This resulted in considerable waiting lists for the home and community programs.

Under the 1115 waiver, certain Medicaid-eligible people (those in the designated highest need group) are now entitled to choose either nursing home care or home- and community-based care without a limit on the total number of participants. But the state also created two other groups (high needs and moderate needs) who receive services only to the extent funds are available. If funds are available, they can choose either setting depending on their needs, but if funds are not available, they are put on a waiting list.


Since 1996, Vermont has taken a number of steps toward rebalancing its long-term care system to place more emphasis on home and community care and less on institutional care such as nursing homes and to give people more choice in where and how they receive long-term care services. In FY 96, Vermont spent only 12% of its public long-term care funding on home- and community-based care and 88% on nursing home care. A decade later, in FY 05, the state spent 32% of its long-term care money on home- and community-based care and 68% on nursing home care.

In June 2005, Vermont received approval from the federal Centers for Medicare and Medicaid (CMS) for an 1115 Research and Demonstration Program for Long-Term Care waiver that enables Medicaid recipients with the highest need for care to have equal choice and access between home- and community-based services and institutional settings such as nursing homes. It was the first state in the country to be approved.

In October 2005, Vermont launched the Choices for Care program under the waiver. People who were already receiving long- term care Medicaid services when Choices for Care started (including nursing home care, home- and community-based services, and enhanced residential care home (ERC) services) were automatically enrolled into this new program. The program allows eligible individuals to choose the setting in which they will receive their Medicaid long-term care services. The goal is to shift more long-term care expenditures to a less costly environment and serve more people in the setting they choose.

The Choices for Care program seeks to provide choice and equal access, serve more people, manage the costs of long-term care, create a balanced system, and prevent institutionalization. The program will allow Vermont to serve more people than it would have otherwise while managing the system within the available funds so as to avoid creating a

“runaway” entitlement. The theory is that, if given the choice, more consumers will choose home-based alternatives, which are on average less expensive than nursing homes. This would allow Vermont to serve more people for the same amount of money.

Vermont is aiming for a balanced system where 40% of people receiving Medicaid Choices for Care services receive services through the home- and community-based system and no more than 60% receive services in nursing homes. The 60/40 balance has been achieved in seven of Vermont's 14 counties. Once this goal is achieved for the whole state, it intends to begin planning for a more equal “50/50” balance.

Total long-term care spending under the waiver is capped at $1.236 billion over five years.



All Medicaid recipients previously in nursing homes and home- and community-based care were automatically enrolled in Choices for Care and continue to receive services. The Department of Disabilities, Aging and Independent Living (DAIL), which administers the program, created three beneficiary groups:

1. A highest need group entitled to either nursing facility or home and community-based services (HCBS) care. The functional eligibility threshold is higher than it was under the previous programs.

2. A high needs group that receives services as funds are available but is not automatically entitled to services.

3. A moderate needs group that includes people who do not meet nursing facility or HCBS waiver criteria but are at risk of admission to a nursing home and also receive services only if funding is available.

People must also be financially eligible for long-term care Medicaid.

The state hired 12 long-term care clinical coordinators to conduct clinical assessments for program eligibility and help to improve program efficiencies and create cost-effective service plans. They are located regionally, often co-locating in Department for Children and Families offices as a way of streamlining the long-term care Medicaid application process.


Choices for Care pays for long-term care and support for older Vermonters and younger people with physical disabilities. The program helps people with everyday activities at home and in enhanced residential care settings and nursing homes. Long-term care services include hands-on assistance with eating, bathing, toilet use, dressing, and transferring from bed to chair; assistance with tasks such as meal preparation, household chores, and medication management; and increasing or maintaining independence. The new program replaced the state's previous home- and community-based and enhanced residential care waivers as of October 1, 2005 and added care in nursing homes.

Services in different settings include:

Home-Based Supports: Services are available to help eligible individuals remain in their own homes.


Enhanced Residential Care (ERC) and Assisted Living: Services are provided in authorized licensed Level III residential care facilities and assisted living residences to people whose needs are greater than what is regularly available in these facilities. The majority of licensed Level III residential care homes (59%) are ERC providers participating in the Choices for Care Program. Assisted living residences are a relatively new option in Vermont. Regulations for them were first issued in 2003. Currently, there are only six licensed assisted living residences in Vermont, with a total capacity to serve 293 people (seven more are being planned).


Nursing Facility Services: Licensed nursing homes provide 24-hour care, including medical care and help with activities of daily living.

Cash and Counseling: Cash and Counseling, a consumer-directed service, was approved by CMS as an alternative for care delivery under the Choices for Care waiver. It allows people to convert their plans of care for home-based services into a dollar allowance. Working with a consultant for guidance and information, people develop a spending plan for that allowance. The program also permits a small amount of the allowance to be distributed to people in cash, if that is the most effective way to maintain their health and well being in their home.

Program for All-Inclusive Care for the Elderly (PACE): PACE is a health care system for frail individuals 55 years and older that addresses all acute, primary, and long-term care needs of the individual. Care is provided or coordinated by an interdisciplinary team, and services are financed through a combined Medicare and Medicaid rate.

This information comes from the DAIL 2005 Annual Report, available at


Currently over 4,000 people are participating in Choices for Care. In December 2006, 99 people were on the Choices for Care waiting list.

Since October 2005, the number of Medicaid recipients served in nursing homes has fallen, while the number of people served in the home and community settings has increased. DAIL statistics show that between October 2005 and December 2006 the number of:

1. Medicaid recipients in nursing homes decreased by 126 (from 2,286 to 2,160);

2. Medicaid recipients receiving home- and community-based services (for the highest and high needs groups) increased by 167 (from 988 to 1,155);

3. Medicaid recipients receiving ERC services rose by 76 (from 173 to 249); and

4. people in the moderate needs group receiving home- and community-based services increased from zero to 523.

In FY 06, about 74% of Vermont's long-term care expenditures (over $103.6 million) went to nursing homes, 24% ($33 million) went to home- and community-based services settings, and 2% ($3.3 million) went to enhanced residential care.

The average approved monthly cost of HCBS highest/high need group plans of care was $3,386. The average approved cost for ERC Highest/High need group plans of care was $1,861.

The program's consumer- or surrogate-directed option currently provides 65% of community-based personal care services and 82% of respite and companion services.

This information comes from the Choices for Care Quarterly Data report 2006, available at:


DAIL Homepage

Choices for Care regulations

1115 Choices for Care waiver materials and program manual

2003 1115 waiver proposal

Vermont Enhanced Residential Care Services Medicaid waiver 2001

Additional details on these and other programs administered by DAIL's Individual Supports Unit are available on DAIL's website at

Federal testimony about Vermont July 10, 2006

Vermont: Shaping the Future of Long-term Care

Kaiser Foundation article on Vermont