States will get extra time to spend billions of federal dollars aimed at bolstering the beleaguered Medicaid home and community-based services system after it took longer than expected for the money to make it their way.

The U.S. Department of Health and Human Services is giving states an additional year to use funds that were made available for home and community-based services as part of the American Rescue Plan, a $1.9 trillion pandemic relief package signed in 2021. The cash infusion was intended to address pressures on the nation’s disability services system that were exacerbated by the pandemic, chiefly a long-simmering workforce crisis.

The measure included a 10% bump in the federal government’s share of spending on home and community-based services between April 2021 and March 2022. States were given broad flexibility in how the added federal funds — estimated to total $12.7 billion — could be used, but the money had to go toward services that were not available before April 2021.

States have outlined plans to use the money to reduce or eliminate their waiting lists for home and community-based services, raise wages for direct support professionals and improve employment opportunities for people with disabilities, among other initiatives.

CMS had already extended the time states had to spend the money until March 2024. But many states waited longer than anticipated for CMS to approve their plans and gain access to the extra money prompting concerns that there wouldn’t be enough time to spend all of it.

“It is vital that states have the opportunity to maximize the impact of this dearly needed funding,” the Consortium for Citizens with Disabilities, a coalition representing dozens of disability advocacy groups, wrote in a letter to CMS in February asking for more time. “Successful implementation … has the potential to address a number of crises exacerbated by the pandemic and set our system on a path toward increasingly individualized services, expanding access, and ameliorating racial inequities. Rushed implementation would not just be an opportunity lost but potentially very damaging for state HCBS systems and the people who rely on them.”

Now, CMS is pushing back the deadline to March 31, 2025.

“With this extension, we are addressing states’ concerns, giving states the time and resources to strengthen connections to care at home and in communities,” said CMS Administrator Chiquita Brooks-LaSure.

The move comes as home and community-based services providers are struggling to maintain staffing and keep group homes, day programs and other offerings for those with disabilities in operation.

“Allowing additional time for states to spend funds is crucially important for states that have workforce initiatives underway and risk loss of (American Rescue Plan Act) funding without it,” said Lydia Dawson, director of policy, regulatory and legal analysis at the American Network of Community Options and Resources, or ANCOR, which represents disability service providers across the nation.

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