Critical Analysis of Colorado House Bill 25-1003: Medicaid Waiver Consolidation and Institutionalization Risks

Overview

House Bill 25-1003 proposes merging two existing Medicaid waiver programs into a single Children with Complex Health Needs Waiver Program. The stated purpose is to “streamline” home- and community-based services (HCBS), expand access, and ensure continued eligibility for children with disabilities and complex medical needs.

However, the bill raises serious concerns that it is actually designed to reduce access to home-based care, limit private duty nursing (PDN) and certified nursing assistant (CNA) support, and drive more children into Intermediate Care Facilities (ICFs). This shift benefits the state financially, as institutionalized children generate higher federal reimbursement rates compared to those cared for at home by their families.

Key Concerns & Analysis

  1. The Real Goal: Cutting HCBS to Force Institutionalization

The bill claims to “expand access” to services, but the actual effect could be a reduction in home-based care options that forces families to place children in state-controlled facilities.

  • Merging Waiver Programs Without Clear Guarantees of HCBS Protections
  • The bill eliminates the Disabled Children Care Program and Pediatric Hospice Care Program (§25.5-5-305, §25.5-6-901) and replaces them with a vague new “Children with Complex Health Needs Waiver Program” (§25.5-6-904).
  • There are no explicit protections ensuring families will continue receiving the same level of home-based support.
  • Many states have used waiver restructuring as a way to limit HCBS eligibility, increasing institutionalization.
  • Financial Incentives for Institutionalization
  • Federal Medicaid reimbursement is higher for children placed in Intermediate Care Facilities (ICFs) than for HCBS recipients.
  • Shifting children out of home care and into ICFs allows the state to maximize federal funding at the expense of family autonomy.
  • Risk of Tightened Eligibility Requirements for HCBS
  • The bill states that eligibility will be limited to children with “life-limiting illnesses” or those who “qualify for nursing facility or hospital level of care” (§25.5-6-904(3)(b)).
  • This narrower eligibility criteria could disqualify children who currently receive PDN or CNA care at home, forcing them into facilities.
  • Many children with medically complex conditions do not fit these restrictive categories but still require intensive home care.
  1. Stripping Parents of Their Right to Be Caregivers
  • Reduction of Private Duty Nursing (PDN) and Certified Nursing Assistant (CNA) Compensation for Parents
  • Many parents currently serve as paid caregivers (CNAs, PDNs) under existing waivers.
  • This bill creates an opportunity for the state to cut payments to parent-caregivers, making it financially impossible for families to continue home-based care.
  • If parents cannot be paid, many will be forced to institutionalize their children due to financial necessity.
  • No Explicit Protections for Family Caregivers
  • The bill does not state whether parent-caregivers will continue to be reimbursed for home care services.
  • Other states have used waiver program changes to phase out parental CNA and PDN roles, forcing families to rely on state-assigned caregivers—or institutionalization.
  1. Loss of HCBS-Specific Protections
  • Eliminating the Current Waivers Removes Safeguards
  • The Disabled Children Care Program and Pediatric Hospice Care Program were specifically designed to keep children out of institutional settings.
  • By merging them into one general waiver, existing protections against forced institutionalization could be removed.
  • Vague Language on HCBS Services
  • The bill states that the new waiver will include “respite care, palliative care, and bereavement services” (§25.5-6-904(3)(a)).
  • It does not explicitly guarantee home nursing services, CNA care, or parent-provider rights.
  • This loose language creates an opening for future service cuts.
  1. Systematic Funnel Into State-Controlled Intermediate Care Facilities (ICFs)
  • Eligibility Requirements May Shift Families Toward ICF Placement
  • The bill specifies that waiver services must meet aggregate federal waiver budget neutrality requirements (§25.5-6-904(4)).
  • Budget neutrality often means limiting HCBS access and shifting children into costlier—but federally reimbursed—ICFs.
  • Other states have restructured Medicaid waivers under the guise of “streamlining” to force children out of home care.
  • Federal Medicaid Policies Favor Institutionalization
  • CMS (Centers for Medicare & Medicaid Services) has historically incentivized ICF placements over home care due to the higher reimbursement rates.
  • By restructuring the waiver, Colorado may be aligning with these federal incentives to shift medically fragile children into state-funded institutional settings.

Conclusion: HB25-1003 Is a Trojan Horse for Institutionalization

Who Benefits?

✅ The State Government → By reducing home care services and pushing children into ICFs, the state maximizes federal funding at the expense of families.

✅ ICF Operators → More children placed in state-run residential facilities means more money for facility owners and operators.

✅ Hospitals and Managed Care Organizations (MCOs) → Hospitals can push complex cases into state care, reducing their liability and costs.

Who Loses?

❌ Families and Parent Caregivers → Losing PDN/CNA payments forces many families to institutionalize their children.

❌ Medically Complex Children → More children will end up in ICFs instead of living with their families.

❌ Home- and Community-Based Services (HCBS) Recipients → HCBS services could be gradually reduced or eliminated.

Recommendation

🔴 Oppose HB25-1003 or Demand Major Amendments

Unless this bill is explicitly amended to:

  • ✅ Guarantee HCBS funding at current levels or higher.
  • ✅ Protect parental PDN and CNA compensation.
  • ✅ Ensure institutionalization is only voluntary—not a forced outcome due to funding incentives.
  • ✅ Mandate that waiver changes must be reviewed and approved by a disability rights oversight committee.

Without these protections, HB25-1003 could become a mechanism for stripping families of care options and forcing institutionalization for financial gain.