(Updated: March 6, 2012 at 1:47 PM CT)

Medicaid officials are beginning to hand out billions of dollars in new matching grants made available under the health care reform act for states to increase community living opportunities.

New Hampshire will be the first state to see added funding under the so-called Balancing Incentive Program, officials at the Centers for Medicare and Medicaid Services said late last week.

The $3 billion initiative established as part of the Affordable Care Act is designed to boost spending in states that allocate less than 50 percent of their long-term care dollars to community-based offerings.

Currently, states are required to fund institutional care for individuals with disabilities, but funding is limited for community-based options.

States that qualify for the new money must use it to increase the availability of services in the community, Medicaid officials said.

“No one should have to live in an institution or nursing home if they can live in their homes and communities with the right mix of affordable supports,” said Cindy Mann, who oversees the federal Medicaid program. “These new grants will help states like New Hampshire give people with long-term care needs the choice about how and where to live their lives.”

Under the new program, New Hampshire will get $26.5 million over the next three years.

Medicaid officials said they are working with several other states that are preparing applications for the grant money and indicated that a proposal from Maryland is currently under review.