DEPARTMENT OF HEALTH AND HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, MD 21244-1850 
 
 
Center for Medicaid, CHIP, and Survey & Certification 
 
           
                SMDL#  10-008 
 
                 
May 20, 2010 
         
                Re: Community Living Initiative  
 
Dear State Medicaid Director: 
 
July 26, 2010, will mark the 20th anniversary of the enactment of the Americans with Disabilities 
Act (ADA).  In June 2009, President Obama announced the Year of Community Living to 
mark the 10th anniversary of the Olmstead v. L.C. decision, in which the U.S. Supreme Court 
affirmed a States obligation to serve individuals in the most integrated setting appropriate to 
their needs.1  In the Olmstead decision, the Court held that the unjustified institutional isolation 
of people with disabilities is a form of unlawful discrimination under the ADA.    
 
Shortly after arriving at the Department of Health and Human Services (HHS), Secretary 
Sebelius announced the Community Living Initiative.  As part of this initiative, HHS is working 
with several Federal agencies, including the Centers for Medicare & Medicaid Services (CMS), 
to implement solutions that address barriers to community living for individuals with disabilities 
and older Americans.  HHS is also partnering with the Department of Housing and Urban 
Development (HUD) to improve access and affordability of housing for, people with disabilities 
and older Americans with long-term care needs.  The HHS Office for Civil Rights is also 
collaborating with the Department of Justice to advance civil rights enforcement of the ADA and 
the U.S. Supreme Courts Olmstead decision.  Additional agencies involved in the Community 
Living Initiative include: 
 
  Administration on Aging (AoA) 
  Administration for Children and Families 
  Health Resources and Services Administration 
  Substance Abuse and Mental Health Services Administration 
  HHS Office on Disability 
  HHS Office of the Assistant Secretary for Planning and Evaluation 
 
                                         
1 Olmstead v. L.C., 527 U.S. 581 (1999).    Page 2  State Medicaid Director 
 
CMS recognizes the important role that Medicaid plays in States efforts to ensure compliance 
with the ADA and Olmstead.  In the early 2000s, CMS (then the Health Care Financing 
Administration) issued a series of letters to State Medicaid Directors to identify policies, tools, 
and expectations for home and community-based services (HCBS) and their role in Olmstead 
compliance.  These letters, collectively known as the Olmstead letters, identified services that 
help transition individuals from institutional to community settings and maintain their 
community living status.  The letters also described the obligations of States under Federal 
Medicaid rules to provide services necessary to assure the health and welfare of individuals 
served under Medicaid section 1915(c) waiver programs.   
 
Since the passage of the ADA and the Olmstead decision, progress has been made to improve 
community living opportunities for people with disabilities.  However, the demand for 
community services continues to grow, and many individuals in need of these services struggle 
without them.  In addition, State budget constraints threaten the progress that has been achieved, 
raising concerns about compliance with the ADA and Olmstead.   
 
The Patient Protection and Affordable Care Act, P.L. 111-148, enacted March 23, 2010, and the 
Health Care and Education Reconciliation Act of 2010, P.L. 111-152, enacted March 30, 2010, 
(together referred to as the Affordable Care Act), is designed to increase accountability, give 
more choices, and bring down costs in the health insurance system.  The Affordable Care Act 
also provides new opportunities to serve more individuals in home and community-based 
settings, adding to the available tools for realization of the integration mandate of the ADA, as 
required by the Olmstead decision.  While this letter will provide some basic information related 
the Affordable Care Act, additional guidance documents will be issued in the near future. 
 
In anticipation and recognition of the important anniversary of the ADA, CMS issues this 
Community Living Initiative letter to provide information on new tools for community 
integration, as well as to remind States of existing tools that remain strong resources in State 
efforts to support community living.  We will provide separate guidance to describe the newly 
enacted provisions of the Affordable Care Act that provide additional opportunities for Medicaid 
beneficiaries to receive services in the most integrated settings. 
 
With the issuance of this letter, CMS reaffirms its commitment to the policies identified in the 
Olmstead Letters and hopes to build upon those earlier innovations.  CMS offers the following 
tools and information to help States make greater strides in achieving the promise of the ADA 
and Olmstead:    
 
Opportunities and Partnership  Tools for Community Living  
 
Availability of Technical Assistance 
CMS offers a variety of resources for technical assistance to States regarding the design and 
operation of their Medicaid programs.  Listed here are new and existing resources that may aid 
States as they devise strategies to ensure individuals are able to access quality HCBS. 
 
  Technical Assistance to Support Greater Community-Based Service System Capacity  
Under President Obamas leadership, CMS is committed to providing guidance and 
leadership to advance opportunities for the full community inclusion of all individuals.  
While we understand that States currently face unprecedented budget shortfalls, we also 
recognize the partnership opportunities between CMS and the States provided by the   Page 3  State Medicaid Director 
 
Medicaid program.  As part of this partnership, CMS commits to provide targeted 
technical assistance to States to help them meet their obligations under the ADA.  
Specifically, this technical assistance, to be provided at State request, will identify the 
Medicaid tools available to increase the States system capacity to serve individuals in 
the community.  Technical assistance can also help identify the strategies States can 
employ to ensure that services meet the needs and preferences of each individual.  States 
interested in receiving Medicaid-related technical assistance on methods to better meet 
their Olmstead obligations may request assistance by sending an e-mail to the following 
mailbox:  Medicaid-Olmstead_Technical_Assistance@cms.hhs.gov.  CMS will 
coordinate the appropriate team of CMS and other Federal experts to address the specific 
State needs.   
 
  Technical Assistance for Quality in HCBS 
CMS continues to offer technical assistance through the National Quality Enterprise 
(NQE) to assist States in developing and improving the structures to ensure the health and 
welfare of individuals served through HCBS waivers.  The NQE, which provides 
assistance at no cost to States, is a valuable resource that States can use to design and 
improve their quality improvement systems.  States can access the assistance of the NQE 
at www.nationalqualityenterprise.net. 
 
  Technical Assistance for Implementation of Preadmission Screening and Resident 
Review (PASRR) 
Under Federal requirements, States must assure that individuals with mental disabilities 
or developmental disabilities being considered for admission to a nursing facility are 
evaluated to determine the most integrated setting to meet their needs.  CMS has 
established the new National PASRR Technical Assistance Center, which provides 
technical assistance to States, at no cost, to facilitate this reform activity.  To request 
technical assistance or to gain information regarding PASRR, visit PASSRassist.org.    
 
CMS has also included a PASRR element in the nursing facility resident assessment 
instrument Minimum Data Set 3.0 to assure a person-centered process to help nursing 
facility residents transition to community services.  Each nursing facility certified to 
participate in Medicare and Medicaid is required to administer a standard assessment, 
called the Minimum Data Set (MDS), to all facility residents when they are admitted, and 
at  specified times thereafter.  Important changes to the MDS, which will be implemented 
in October 2010, are discussed below.  PASRR is a powerful tool for diversion from 
institutions, and together with the MDS 3.0, the resident review elements of PASRR are a 
powerful tool for transition.  
 
Managed Long-Term Services and Supports  
CMS continues to identify service delivery models that can be used to further the goals of the 
ADA.  One such tool, when structured carefully, is managed care.  CMS published a technical 
assistance guide that describes the various Medicaid authorities and structures that States can use 
to enhance the availability of HCBS within managed care delivery systems.  These managed care 
delivery systems allow for the use of capitation payments with both institutional and HCBS 
services in a global budget, where the resources available to support an individual can follow the   Page 4  State Medicaid Director 
 
individual wherever they choose to receive their services.  The technical assistance guide entitled 
Long Term Services and Supports in a Managed Care Delivery System, is now available online 
at http://www.cms.hhs.gov/CommunityServices/55_ManagedHCBS.asp#TopOfPage. 
 
Advancing Access to Affordable Housing as a Means to Maximize Opportunities for 
Community Living 
The lack of accessible and affordable housing continues to be an obstacle to serving individuals 
in the most integrated setting.  As part of the Community Living Initiative, HHS has partnered 
with HUD to improve access to affordable housing for people with disabilities and older 
Americans with long-term care needs.   Progress to date includes:  
 
  On April 5, 2010, HUD issued a final Notice of Funding Availability totaling $40 million 
that will provide approximately 5,300 Housing Choice Vouchers over 12 months for non-
elderly persons with disabilities living in the community or transitioning out of institutional 
care.  HHS will use its network of State Medicaid agencies and local human service 
organizations to link eligible individuals and their families to local housing agencies, which 
will administer voucher distribution.  Information for Medicaid agencies regarding the 
Housing Choice Vouchers and available technical assistance may be found at 
http://www.cms.hhs.gov/CommunityServices/20_MFP.asp.  We strongly encourage State 
Medicaid agencies to use this information and work with their States public housing 
authorities to increase available housing options for individuals with disabilities.  
Importantly, the applications are due to HUD by July 7, 2010. 
 
  Collaborative partnerships between housing and human service organizations at the Federal, 
State, and local levels are critical to the ongoing availability of affordable and accessible 
housing options for the elderly and individuals with disabilities.  Working with HUD, CMS 
expects to initiate targeted capacity building activities to foster effective coordination 
between housing and human service agencies in the summer of 2010. 
 
  Many Money Follows the Person (MFP) grantees have created or enhanced housing 
registries (e.g., interactive and online).  Ten MFP States set aside State funding to pay rental 
subsidies as a transitional service until individuals qualify for HUD subsidies.  See more 
information on MFP later in this letter. 
 
Home and Community Based Services - Waiver and State Plan Options  
CMS continues to assess our policies and practices to identify ways in which the Medicaid 
program can assist States in achieving the goals of the ADA, including assisting States in efforts 
to serve more individuals in community settings.  One example of our ongoing assessment 
process is the Advanced Notice of Proposed Rulemaking (ANPRM) that we published as a part 
of the Community Living Initiative in June 2009.  We published the ANPRM to obtain public 
input on specific changes to the 1915(c) HCBS waiver program related to the combining of 
target groups within HCBS waivers and to identify hallmarks of settings where HCBS can be 
provided.  The ANPRM also sought public comment on person-centered planning and how we 
can ensure that services are provided to individuals in ways that meet their needs and 
preferences.  After a careful review of more than 300 comments, CMS plans to publish a Notice 
of Proposed Rulemaking (NPRM) to address the issues raised by the public and to solicit 
additional input from stakeholders.  The ANPRM can be found at 
http://edocket.access.gpo.gov/2009/E9-14559.htm.  Page 5  State Medicaid Director 
 
Section 1915(i) and 1915(j) of the Social Security Act (the Act) both provide State plan 
opportunities to serve individuals in the most integrated setting.  Section 1915(i), which permits 
States to provide HCBS as a State plan option, allows States to serve individuals in the 
community without linking the benefit to either a current or future need for institutional care.  To 
date, States have used this benefit to provide an array of services, meeting a diversity of needs 
within the State.2  The Affordable Care Act included important changes to 1915(i), and CMS 
will be issuing guidance on these changes soon.  This option offers great promise as a tool to 
prevent institutionalization and to meet mental health service needs.  Section 1915(j) allows 
States to design self-directed personal assistance or other HCBS for individuals who would 
otherwise receive State plan personal care or HCBS waiver services.3   
 
CMS also reminds States of the existing features within State plan options and the HCBS waiver 
program.  Examples are highlighted below: 
 
  Behavioral Health.  Currently eight States use HCBS waivers to serve children or adults 
with mental health and substance use needs.  These waivers, when coordinated with the 
State plan benefits available to all Medicaid beneficiaries, can provide valuable services to 
support individuals in the community.   
  Personal Care. Personal Care is an optional state plan benefit that can play an important role 
in supporting people in their homes and communities, provide necessary help to caregivers, 
and can prevent or delay the need for institutional care. 
  Self-Direction.  The self-direction service delivery model is available under multiple 
Medicaid authorities, including section 1915(c) HCBS waiver programs, section 1915(i) 
HCBS as a State plan option, and section 1915(j) Self-Directed Personal Assistance 
Services.  Self-direction affords individuals an important option for maximum choice and 
control over their services, and can be an important tool for the expansion of integrated 
community services. 
  Caregiver Supports.  States can offer support, training, and respite care through HCBS 
waivers and State plan services. 
  Peer Supports.  This is an evidence-based mental health practice that States may use to 
expand opportunities for meaningful community inclusion.  Qualified peer support 
providers assist individuals with their recovery from mental health and substance use 
disorders.  CMS recognizes that the experiences of peer support providers can be an 
important part of effective treatment systems, and has issued guidance regarding State use 
of peer supports which can be found at 
http://www.cms.hhs.gov/SMDL/downloads/SMD081507A.pdf.  While this letter was 
published in 2007, it contains some important information that States may consider as they 
expand and improve services.  
   
                                         
2 As of April 15, 2010, four States have approved 1915(i) HCBS State plan benefits (Iowa, Washington, Nevada, 
and Colorado). 
3 As of April 15, 2010, the following States have 1915(j) programs approved:  Arkansas, Florida, New Jersey, 
California, Oregon, Alabama, and Texas.  Page 6  State Medicaid Director 
 
Supporting Infrastructure Reforms 
The Federal Government has provided grant funds and enhanced Medicaid financing to support 
State efforts to create more balanced long-term care services and support systems and to assure 
more informed decision-making and improved access to community-based long-term services 
and supports.   
 
  The Money Follows the Person (MFP) demonstration program provides participating 
States with many opportunities, including funding for short-term supplemental and 
demonstration services, MFP support of personnel and infrastructure development, and 
technical assistance to support efforts to transition individuals from institutions to the 
community.  States continue to make progress in implementing the MFP Demonstration.  
As of December 2009, States have transitioned over 6,000 persons from institutions to 
the community through the MFP demonstration.  Since the beginning of calendar year 
2009, the number of participants transitioning has increased as solutions to barriers were 
identified and significant technical assistance is continuing to be provided to help meet 
the MFP benchmarks that the States set.  States have closed several large institutions for 
people with intellectual and development disabilities.  More than two-thirds of MFP 
States have demonstrated continued growth in the percent of long-term care expenditures 
devoted to community-based services.   
 
The Medicaid Infrastructure Grants (MIG) program has provided assistance for State 
development of local systems that support employment opportunities for individuals with 
disabilities since 1998; today, 40 States have a Medicaid Buy-In program, where the 
State can allow individuals with disabilities who work to buy into the Medicaid program 
through the use of optional eligibility groups.  These programs have nearly 120,000 
persons enrolled for at least one month.  In late Spring 2010, CMS will issue the final 
grant solicitation authorized under this program.  In addition, CMS and the Office of the 
Assistant Secretary for Planning and Evaluation are collaborating with the Rehabilitation 
Services Administration, Social Security Administration, Department of Labor, and 
Substance Abuse and Mental Health Services Administration to produce a guide for the 
Federal financing of customized employment and the Individual Placement and Support 
Model of Supported Employment for people with mental health needs.  
  
HCBS Participant Experience Measures 
CMS is committed to the development and testing of participant experience measures that could 
be collected across long-term care service delivery settings to ensure that the State programs 
improve individuals quality of life.  CMS will make these measures available for States use to 
monitor progress and efficacy of their efforts around community living.  CMS expects to issue 
additional information on this initiative by the end of 2010.  
 
Aging and Disability Resource Center (ADRC) 
The ADRC program, a collaborative effort of the AoA and CMS, is designed to streamline 
access to long-term care services and supports.  ADRCs play a critical role in supporting health 
and long-term care reform by improving the ability of State and local governments to effectively 
manage the system, monitor program quality, and measure the responsiveness of State and local 
systems of care.  ADRCs now operate in at least one community in each of the 50 States and in 
four Territories.  There are currently over 200 ADRC sites across the Nation.  Thirty-four 
ADRCs have Medicaid applications available on the Internet with seven of these allowing 
consumers to complete and submit the application online.  CMS, in collaboration with its HHS  Page 7  State Medicaid Director 
 
partners, plans to explore expansion of the ADRC program and similar models to ensure 
streamlined access to information and service supports, as provided in the Affordable Care Act.    
 
Discharge Planning 
 
Minimum Data Set (MDS) for Certified Nursing Facilities 
On October 1, 2010, all certified nursing facilities will be required to adopt and implement a new 
3.0 version of the MDS.  While MDS 3.0 has several new enhancements to ensure the resident 
assessments are more person-centered, there are notable changes in the MDS Section Q, which 
address resident discharge planning.  Under Section Q, nursing facilities must now ask residents 
directly if they are interested in learning about the possibility of returning to the community.  
If a resident indicates yes, a facility will be required to make appropriate referrals to community 
integration agencies such as ADRCs, Centers for Independent Living, State Medicaid Agencies, 
and Area Agencies on Aging.  Further information regarding MDS 3.0 and the CMS training 
opportunities may be found at: 
http://www.cms.hhs.gov/nursinghomequalityinits/25_nhqimds30.asp.  This improvement to the 
MDS ensures that all individuals are asked about their preferences and advised of community 
options. 
 
Person-Centered Hospital Discharge Planning Model Grants  
To further CMS efforts to strengthen person-centered planning and community-based long-term 
care options, CMS awarded 10 Person-Centered Hospital Discharge Planning Model Grants 
between 2008 and 2009, totaling approximately $12 million.  These grants are designed to assist 
States in developing hospital discharge planning structures and processes that will place greater 
emphasis on involving consumers and their families in after-care plans, including community-
based alternatives to institutional care.  Grantees are expected to create and/or enhance systems 
for the exchange of accurate, useful, and timely information on available home and community-
based long-term supports between hospital discharge planners, ADRCs, community-based 
providers, and individuals and their caregivers.  Grantee efforts to date include:  development of 
discharge planning checklists; patient and caregiver information kits and hospital staff training 
webinars; enhancing online resource directories; developing electronic referral, application, and 
tracking systems; and employing transition coaches to follow-up with individuals once they are 
discharged from the hospital back into the community.  CMS continues to work closely with the 
AoA on these grants as the ADRC effort is central to improving the hospital discharge planning 
process and enhancing community-based long-term care options.   
 
Health Insurance Reform 
The Affordable Care Act includes important provisions related to HCBS infrastructure 
development, quality in HCBS, and important protections for individuals receiving HCBS.  
Specifically, the reform legislation includes improvements to section 1915(i) of the Social 
Security Act, an extension of the MFP program, additional funding for ADRCs, and other 
elements that may aid States in meeting their obligations under the Olmstead decision.  HHS will 
provide additional guidance and information, including additional letters to State Medicaid 
Directors and, in some instances, regulations, related to those provisions.   
 
    Page 8  State Medicaid Director 
 
While the Nation has made great strides in increasing the availability of HCBS, we must 
continue our efforts to increase the capacity nationally and to ensure that individuals receive the 
services and supports necessary to realize the full benefits of community living.  If you have 
questions about any of the initiatives described in this letter, please contact Ms. Barbara Coulter 
Edwards, Director, Disabled and Elderly Health Programs Group, at 410-786-7089. 
 
Sincerely, 
 
/s/ 
 
Cindy Mann 
Director 
cc:  
 
CMS Regional Administrators 
  
CMS Associate Regional Administrators 
Division of Medicaid and Children's Health 
 
Ann C. Kohler 
NASMD Executive Director 
American Public Human Services Association 
 
Joy Wilson 
Director, Health Committee 
National Conference of State Legislatures 
  
Matt Salo 
Director of Health Legislation 
National Governors Association 
  
Debra Miller 
Director for Health Policy 
Council of State Governments 
  
Christine Evans, M.P.H. 
Director, Government Relations  
Association of State and Territorial Health Officials 
 
Alan R. Weil, J.D., M.P.P. 
Executive Director 
National Academy for State Health Policy