Medicaid home and community-based services are under heavy scrutiny right now. People in the self-direction community are being asked tough questions. This is a quick reference guide to help you answer them.
If you are connected to a self-direction program, you've probably had to defend it recently. To a lawmaker, a reporter, a funder, or a friend. The question sounds different each time, but it always means the same thing: Can we really trust this model?
Yes! Not because self-direction runs on good faith, but because it was built with accountability from the start. Here's what advocates need to know.
01
Self-direction is backed by strong research.
A major study called the Cash & Counseling Demonstration and Evaluation used a randomized controlled trial, the most reliable research design, to compare self-directed care with traditional agency care. Turns out self-direction works: people had fewer unmet needs, were happier with their care, and had better health. So did their family caregivers.1 Study after study since then has found similar results.2
02
This program serves millions of people by choice.
More than 1.5 million people were self-directing their care as of 2023, a 23% increase since 2019. Forty-four out of 50 states saw enrollment grow.3 More than 600,000 people are still on waiting lists for home and community-based care.4 Experts widely recognize self-direction as one of the best tools we have for keeping people out of institutions and in their communities.2
03
Every program has two critical supports that provide oversight.
Medicaid rules require every self-directed program to provide Information and Assistance (I&A) and Financial Management Services (FMS). I&A counselors work one-on-one with participants and workers to explain the rules, help create care plans and budgets, and stay involved over time — which means they're often the first to notice when something is wrong. FMS providers manage payroll and taxes using sophisticated systems to prevent, detect, report, and address fraud in real time. Both add a layer of protection.5
04
The financial safeguards are strong.
Before a worker gets their first paycheck, FMS providers do things like check their identity, run them through a federal list of excluded providers, make sure their employer has confirmed their eligibility to work in the U.S., do a criminal background check, and check state abuse registries. Many of these checks are ongoing. The system is set up so that workers can never be paid more than what was authorized, and money goes straight to workers, never directly to the participant.6 Federal law also requires Electronic Visit Verification (EVV) for personal care services. This means every visit is recorded with a timestamp and a location check, proving the care actually happened.7 Suspicious activity, such as a worker billing two places at once or hours that don't add up, is flagged automatically.
05
Extra rules apply when a family member is the worker.
Many people assume programs just pay family members to do what they were already doing for free. That's not how it works. Under federal law, the default rule is that spouses and parents of minor children cannot be paid. Payment for any family member or relative is only allowed when the care goes beyond what a family member would normally provide. Meaning activities like operating a ventilator, managing a catheter, or providing support with toileting. This is called the "extraordinary care" standard.8 The Department of Labor also says that when a family member is paid through Medicaid or a similar public program, it creates an employment relationship subject to labor law, requiring payment of wages for hours worked.9 The line between regular family support and paid caregiving is written into federal policy on purpose.
06
Improper payments and fraud are not the same thing.
Fraud means someone intentionally cheats the system. Improper payments, which happen across all of Medicaid, not just in self-direction, are any payments that should not have been made or were made in the wrong amount. Improper payments are not necessarily intentional; they often result from unintentional errors.10 These problems have different solutions. Mistakes call for better training and clearer guidance. Fraud calls for investigation and legal consequences. When we treat every mistake as intentional, we create the wrong policies — and we end up hurting the people who rely on these programs most.11
07
The oversight is working. Here's the proof.
In 2021, of an estimated 1.8 million self-directed workers, there were 360 fraud convictions, a fraud rate of 0.02%. Total money recovered from fraud cases involving personal care workers nationally came to just over $6 million.12 That's what a well-overseen system looks like: not perfect, but with a very low rate of fraud and the tools to catch and address it when it happens.
The bottom line: Self-direction is a federal program backed by strong rules, real oversight, and decades of research. The answer to concerns about fraud is not to cut the program. It's to understand how the safeguards already work — and to work with people who self-direct and with policy experts to determine how to continue refining systems that protect these vital programs.