Cash and Counseling Takes Hold

Even in tough times, this self-directed service option is giving Medicaid consumers more flexibility and saving states money

Article Highlights:
  • A new report finds a majority of states are now adopting the Medicaid program Cash and Counseling, or similar programs.
  • Cash and Counseling enables states to both save money and streamline services by giving participants direct control over their Medicaid “cash” and providing counseling on how to best spend their allotment.
  • The report describes successful strategies for implementing Cash and Counseling and offers guidance for those wishing to bring it or similar programs to their state.
by Miriam Davidson on March 12, 2010 - 2:30pm

Cash and Counseling, a government program that gives Medicaid recipients in 15 states direct control over their personal-care spending, has been so successful that a majority of states are now adopting it or similar programs. A new report tells why and how.

Some 2.8 million Americans receive “home and community-based services” (HCBS) such as personal care assistants, adult day care, meals and transportation, through Medicaid. While only a small fraction of  these people — about 15,000 in all 15 states studied — are in the Cash and Counseling program, that number is growing rapidly.

The report in the January 2010 issue of Health Affairs found states acting quickly and creatively to get Cash and Counseling and other self-directed options programs going, even amid budget crises and other challenges. States are embracing “participant-directed services” because, properly administered, they can both save money and improve care.

“It’s what people in these programs really want,” said Elizabeth Maguire, of the National Resource Center for Participant-Directed Services at Boston College. The NRCPDS, a co-sponsor of the report, works to implement Cash and Counseling-type programs nationwide.

About Cash and Counseling

States can pick and choose the HCBS programs they want to provide with their Medicaid dollars, and most now offer some form of participant-directed options. The study identified more than 180 Cash-and-Counseling-type programs nationwide.

The Cash and Counseling program allows participants to hire, fire and schedule their own personal care assistants, including family members. It gives them authority to manage their “cash” — their entire Medicaid allowance — including spending it on things not otherwise covered, such as rehab services, home modifications and assistive technologies. It also provides counseling to help individuals make the best use of their funds.

The report recommends a “go slow” approach to states wishing to adopt Cash and Counseling. The authors note it takes time to build political consensus and coordination among agencies; to provide training, counseling, and oversight of participants; and to get support from traditional providers.

Going slowly also can keep the program from being overwhelmed by new clients. Medicaid enrollment tends to rise when Cash and Counseling-type options are offered, demonstrating the unmet need. But through cutting administrative costs and streamlining services, states have been able to both avoid waiting lists and save money. The state of Arkansas estimates it saved $5.6 million over nine years through Cash and Counseling, not including millions more saved in nursing home costs.

Winning support

The report offers several strategies for winning support from traditional home-health care agencies and case managers. Some were more positive than expected. In Arkansas, where agency care is spotty or nonexistent in rural areas, service providers welcomed the idea. In New Jersey and other states, authorities were able to convince service providers that “your least desirable clients can be our best customers.”

“Case managers’ resistance to consumer direction is largely philosophical,” the report noted. They fear that disabled and elderly clients will not be able to manage their budgets properly, or will become victims of fraud and abuse by family members, even though studies have shown this not to be the case. Authorities in Minnesota, Rhode Island and Michigan overcame this resistance by enlisting the support of a few key case managers able to bring along their more skeptical peers.

Although Cash and Counseling is a great alternative for many people, it’s not for everyone.

“Some people don’t want this responsibility, or don’t have family members able to help, so the traditional way still needs to be an option,” said Maguire. “What we’re about is hoice, flexibility, and the participant being in charge.”

Bringing it to your state

States currently participating in the program are: Alabama, Arkansas, Florida, Illinois, Iowa, Kentucky, Michigan, Minnesota, New Jersey, New Mexico, Pennsylvania, Rhode Island, Vermont, Washington and West Virginia.

Maguire offers a couple of strategies for those wishing to expand that list. She suggests contacting the director of the state Medicaid office, or whoever is in charge of HCBS programs, and requesting that a self-directed option be developed. “Send them the handbook [see below], and say, ‘This is how you do it.’”

Maguire also suggests contacting state legislators and asking them to support the idea, either by persuading state officials to implement such a program or by enacting it into law.

The study was conducted by Pamela Doty, a senior policy analyst at U.S. Department of Health and Human Services, and Kevin Mahoney and Mark Sciegaj of the NRCPDS. It was funded by HHS, the Retirement Research Foundation, and the Robert Wood Johnson Foundation. A follow-up study of the 180 consumer-directed HCBS Medicaid programs will take place this year.

For more information

The NRCPDS Web site,, offers a handbook for policy developers and program managers working to implement self-directed service options.

An abstract of the Health Affairs report, “New State Strategies to Meet Long-Term Care Needs,” can be viewed through the Resources and Publications link on the NRCPDS Web site or at

More information can also be found at

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