On December 23, 2025, the Centers for Medicare & Medicaid Services (CMS) released several new reports detailing Medicaid long-term services and supports (LTSS) use and spending. These publications offer a comprehensive view of national and state-level trends in LTSS rebalancing — the policy effort to shift services from institutional settings toward home‑ and community-based services (HCBS) to improve autonomy and outcomes for older adults and people with disabilities, while promoting cost-effective care.

This blog post highlights key themes emerging from the data and outlines ways states can use these insights to advance their LTSS/HCBS strategies.

1. HCBS spending declined slightly nationally, but HCBS also made important gains.

Between 2022 and 2023, the proportion of total Medicaid LTSS expenditures devoted to HCBS decreased by roughly one percentage point. During the same period, all institutional categories — nursing, mental health facilities, and intermediate care facilities for individuals with developmental disabilities (ICF/DD) — saw increases in both users and spending, with mental health and ICF/DD facilities showing some of the steepest growth. This decrease may reflect, in part, the end of the enhanced Federal Medical Assistance Percentage that eligible states received in 2021 and 2022 for Section 9817 HCBS projects under the national COVID-19 response.

In 2023, Oregon had the highest proportion of HCBS users in the country (99%), while Wisconsin led in HCBS spending (95%). In addition to Oregon and Wisconsin, other states that increased both HCBS users and expenditures included Minnesota (94% users, 84% spending), Colorado (91% and 81%), and New Mexico (93% and 77%)

• What States Can Do: States often focus their rebalancing efforts on reducing the use of and spending on nursing facilities, but these data show that the greatest increases between 2022 and 2023 occurred in mental health facilities (users and spending up 17% and 22%) and ICF/DD facilities (20% increase in users and 16% in spending). Recognizing these settings as key cost-drivers may help states identify opportunities to strengthen HCBS strategies that better support the needs of people with behavioral health disabilities and intellectual/developmental disabilities. As states examine the drivers behind these increases, it may also be helpful to examine how specialized mental health services offered in nursing facilities could help further rebalancing efforts.

2. LTSS use among people with behavioral health disabilities is growing.

In 2023, people with behavioral health disabilities — including mental health disabilities and substance use disorders — made up larger shares of both HCBS users (42%) and institutional users (62%). People in mental health facilities were typically younger (70% were under age 20), not dually eligible (86%), and included a greater percentage of individuals who were Hispanic of any race (15%).

• What States Can Do: LTSS services that work for older adults or people with physical health disabilities may not meet the needs of younger individuals with behavioral health disabilities. States interested in improving care for this population can look to places like Washington State, which invested significant resources in building a tailored LTSS system for people with behavioral health disabilities. To maximize impact, states can also focus deinstitutionalization efforts on younger, non-dually eligible Hispanic individuals, who are disproportionately represented in institutional settings.

3. Self-direction saw growth overall and among some populations but not others.

The 1915(j) self-directed Personal Assistance Services (PAS) option allows members greater control over their personal care services and personnel. The PAS option saw large increases in both spending (about 25%) and enrollment (68%) in 2023. A higher percentage of users self-directing their attendant care through the program had behavioral health disabilities (56%). Only eight percent of PAS option users were Hispanic, compared to a full 20 percent of the total HCBS population.

• What States Can Do: States can explore opportunities to expand or strengthen self-directed service models like PAS, which offer users more freedom and flexibility and may help broaden the direct care workforce by allowing users to hire care workers outside of the traditional agency structure. They can also assess reasons for higher participation in self-directed PAS among people with mental health or substance use disabilities, and lower participation among people who identify as Hispanic, and use those insights to improve equitable access.

4. Some demographic groups have high rebalancing ratios (above 90% for users and 79% for spending), but others lag behind.

Rebalancing ratios reflect the extent to which different groups receive Medicaid LTSS in HCBS settings rather than in institutions. Several groups had the highest rebalancing ratios, with more than 90 percent of LTSS users receiving HCBS and more than 79 percent of spending directed to HCBS.  These groups included people who spoke Spanish (user ratio 95%) or a language other than English or Spanish (94%), Hispanic individuals of any race (94%), Asian/Pacific Islanders (API) (93%), multiracial individuals (93%), and people with Autism Spectrum Disorder, Intellectual Disability, or Developmental Disabilities (95%).

In contrast, some groups had much lower rebalancing ratios, indicating a greater reliance on institutional care. These included adults who were 65 and older (67% users, 47% spending), fully dual-eligible for Medicare and Medicaid (76% and 59%), and people with behavioral health disabilities (83% and 54%) who had some of the lowest user and expenditure rebalancing ratios.

Compared to the overall HCBS population, Programs of All Inclusive Care for the Elderly served a greater proportion of users who spoke Spanish or a language other than English or Spanish. The share of API users in 1915(k) Community First Choice was twice that of HCBS overall. Users of 1905(a) state plan personal care services were more likely to be Spanish-speaking, Hispanic, or API.

• What States Can Do: States can build on or adapt promising practices that are contributing to higher rebalancing ratios and usage of specific HCBS programs among people who speak Spanish or a language other than English or Spanish, who are Hispanic, API, multiracial, and have IDD. They can also apply or modify those approaches to help reduce barriers to rebalancing for older adults, fully dually eligible individuals, and people with behavioral health disabilities.

5. Managed care LTSS is serving more people at lower cost than fee-for-service (FFS) models, but FFS continues to dominate.

In 2023, more people received LTSS services through managed care than FFS approaches (59% vs. 48%), yet managed care accounted for a smaller share of spending than FFS (38% vs. 62%). Institutional services were more commonly delivered through managed care, but FFS continued to represent a larger share of institutional expenditures than managed care.

• What States Can Do: Explore opportunities to use managed care LTSS to serve more members effectively and contain costs. States considering a transition to managed LTSS may find CHCS’ publication outlining practical strategies for California and other states helpful as they assess their options.

Conclusion

These recent reports from CMS include a wealth of data on LTSS/HCBS spending and enrollment trends. While most LTSS users now receive services in community settings, spending and participation vary substantially across service models, age, language, race and ethnicity, and disability (including behavioral health disability status. As states build on rebalancing efforts, understanding these discrete, population-level patterns will be critical to ensuring HCBS systems are flexible, accessible, and responsive to the needs of diverse members. Close attention to these patterns and other data can help advance a more person-centered LTSS system grounded in independence and community.