The Americans with Disabilities Act (ADA) established a lasting national commitment to inclusion — the right to live, work, and participate in community life rather than in institutions. For states, that commitment is inseparable from Medicaid, which remains the primary vehicle for turning the ADA’s promise into daily reality.

Medicaid Home and Community-Based Services (HCBS) remain one of the country’s most important tools for helping older adults and people with disabilities live in their own homes and communities instead of institutions. Section 1915(c) waivers give states room to tailor services, target people at risk of institutionalization, and build plans around what each person actually needs.

What that looks like in practice varies from person to person. It might mean a home health aide who helps an older adult stay in the house she’s lived in for forty years. It might mean transportation and job coaching that let a young adult with a developmental disability keep a first job. It might mean respite care that gives a family caregiver a weekend to rest. The most meaningful person-centered planning begins with a person’s real life – what matters to them and what makes daily life possible.

For states, HCBS also represents a long-standing policy commitment to community integration and choice. Most people don’t realize how central Medicaid is to this system: it remains the primary payer for long-term home care in the United States, covering roughly two-thirds of the nation’s home care spending. Getting HCBS policy right isn’t a niche Medicaid issue; it’s central to how the country pays for long-term care.

At the same time, the HCBS landscape is entering a period of real fiscal and operational pressure. Demand continues to outpace waiver capacity in many states. KFF’s most recent survey found over 607,000 people on Medicaid HCBS waiting or interest lists in 2025, with an average reported wait of 32 months – an improvement from prior years, but still a long time for someone waiting on services. States define and manage these lists differently, so they’re an imperfect measure – but the scale of unmet need is not in question.

States are also managing rapid cost growth, workforce shortages, and stronger federal expectations for transparency and program integrity. We’ve noticed the same pattern across HCBS programs: enrollment and costs are rising, average cost per member is often outpacing caseload growth, and states are leaning harder into waitlist management, cost containment, provider capacity, and fraud, waste, and abuse mitigation.

The New Federal Context: Change and Opportunity

H.R. 1 adds a new dimension to state HCBS planning. Section 71121 creates a pathway, effective July 1, 2028, for standalone 1915(c) waivers serving people who meet state-developed needs-based criteria but don’t yet meet institutional level-of-care requirements – letting states reach people earlier, before a crisis hits. CMS issued its first implementation guidance on the option in November 2025, and it’s candid on this point: uptake will depend as much on state capacity and fiscal readiness as on policy design.

Picture a composite case that plays out in nearly every state: a working parent caring for a teenager with a developmental disability who doesn’t yet meet institutional level-of-care criteria but is losing ground — missed medical appointments, a parent cutting back work hours, a slow slide toward crisis. Today, that family often waits until things get bad enough to qualify for a comprehensive waiver. Section 71121 is built for exactly this gap: a lighter-touch waiver that intervenes before the crisis, not after it.

The new authority comes with real guardrails – defensible needs-based criteria, cost neutrality, no lengthening of existing wait times, stronger data and reporting. Given those guardrails and the 2028 effective date, waiting to decide is itself a decision: the states that start on data infrastructure and cost modeling now will be ready to move when the option opens.

Cost Containment and Program Integrity Aren’t Separate Conversations

As HCBS programs grow, states face more scrutiny – not just on how many people they serve, but on whether services are authorized appropriately, delivered as planned, billed accurately, and producing real outcomes. Effective oversight relies on layered controls: independent assessments, clear service authorization, provider enrollment and screening, electronic visit verification, claims analytics, incident management, and coordination across Medicaid, operating agencies, managed care entities, and providers.

This debate is playing out in real time, and the framing matters. Some attribute rising HCBS costs to fraud. While fraud is a variable to increasing costs, states more often identify capacity challenges, such as workforce shortages and wage pressures, rising operational expenses, and demand outpacing costs as key cost drivers. The distinction isn’t just semantic: a fraud narrative points toward enforcement and funding cuts, while a capacity narrative points toward investment in systems and staffing. States that can show which one actually explains their cost growth will be in a much stronger position heading into federal conversations.

None of this means treating HCBS purely as a compliance exercise. The goal isn’t to restrict access – it’s to protect it by making sure public dollars reach the people who need them. Program integrity and person-centered care aren’t in tension; strong integrity, paired with transparent data and practical provider support, is what makes these programs .

Strategies for the Next Phase of HCBS Transformation

A few practical moves can help states honor the ADA’s promise while responding to today’s fiscal and operational realities:

• Build tiered service models. Combine 1915(c), 1915(i), 1915(k), 1115, and the new H.R. 1 authority so service intensity matches assessed need — offering lighter support earlier and reserving comprehensive waiver services for people with the highest needs.
• Improve waitlist accuracy and prioritization. Earlier financial and functional screening, clearer categories, and transparent prioritization rules help distinguish immediate need from future interest or eligibility uncertainty.
• Strengthen data integration and routine reporting. Quarterly reporting on enrollment, waitlists, utilization, expenditures, provider capacity, and cost per person helps states catch cost drivers earlier and budget with better information.
• Pair cost containment with quality and access safeguards. Cost caps, utilization benchmarks, and prior authorization should be designed carefully so they support sustainability without undermining health, safety, or community integration.
• Modernize program integrity for HCBS settings. Fraud, waste, and abuse controls need to reflect how HCBS is actually delivered — personal care, self-direction, transportation, supported employment, and residential supports.
• Invest in provider and workforce capacity. The direct care workforce needs to grow toward nearly 9 million jobs nationally to keep pace with aging and disability populations. Sustainable transformation depends on adequate provider networks, fair rate-setting, training, and accountability that supports both access and quality.

Building Systems That Support Dignity, Independence, Health, and Connection

Community living is both a civil rights commitment and an ongoing operational challenge. HCBS waivers have changed millions of lives by making support outside of institutions possible. It’s imperative that states continue to build systems that help people receive services in the setting that best supports dignity, independence, health, and connection. As states continue to protect that progress, they’ll also need to continue building and protecting these systems, and adapt to rising demands, fiscal pressure, federal oversight, and new policy tools.

States that start now – modernizing data systems, sharpening eligibility and waitlist processes, strengthening program integrity, and designing flexible service continuums – will be better positioned to sustain access and keep transforming how community-based support gets delivered. The work is complex.

Sellers Dorsey is currently helping states redesign waitlist and needs-based criteria and strengthen HCBS program integrity. If your state is weighing these decisions, we’d welcome the conversation. Learn how we can help.