DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland 21244-1850 
 
Center for Medicaid and State Operations 
 
                    SMDL #07-013 
 
September 13, 2007 
 
Dear State Medicaid Director: 
 
This letter is one of a series that provides guidance on the implementation of section 6087 of the 
Deficit Reduction Act of 2005, Public Law Number 109-171.  Section 6087, Optional Self-
Direction Personal Assistance Services (PAS) Program (Cash and Counseling), amends section 
1915 of the Social Security Act (the Act) to add 1915(j) as a new subsection.  Under section 
1915(j), States have the option to amend their State plan to provide self-directed PAS to 
beneficiaries, without regard to the Medicaid requirements of comparability or statewideness.  
This provision was effective January 1, 2007.  A State plan amendment (SPA) pre-print is 
enclosed with this letter to assist you in submitting an amendment.  
 
Scope of Coverage 
Prior to enactment of this legislation, when a State elected to provide self-directed PAS, they 
could pursue 1) a SPA to add some limited self-direction under the traditional personal care 
services optional benefit, 2) a section 1915(c) Home and Community-Based Services waiver, or 
3) a section 1115 demonstration program.  Many States currently offer some degree of self-
directed personal care through these options.  This legislation permits States the flexibility to 
amend their State plans to offer a more comprehensive self-directed PAS program than under the 
traditional personal care services option and also relieves States of the administrative burden of 
submitting a waiver or demonstration proposal.  
 
Self-directed PAS is a service delivery model that States may offer as an alternative to traditional 
agency-delivered services.  Under section 1915(j) of the Act, PAS include personal care and 
related services provided under the State plan, or Home and Community-Based Services 
provided under a section 1915(c) waiver.  States have the discretion to determine whether to 
include State plan personal care services and/or section 1915(c) Home and Community-Based 
Services in the self-direction PAS SPA.  The election of this service delivery model does not 
affect an individuals Medicaid eligibility, including that of an individual whose Medicaid 
eligibility is attained through receipt of section 1915(c) waiver services. 
 
Prior to electing the self-directed PAS State plan option, States must have in place traditional 
personal care services through the State plan, or be operating a section 1915(c) Home and 
Community-Based Services waiver that includes the services to be self-directed under this State 
plan option.  In this way, States that choose to amend their State plans to add the self-directed 
PAS service delivery option will have the traditional PAS delivery option available in the event 
that individuals voluntarily disenroll from, or are involuntarily disenrolled from, the self-directed 
PAS State plan option.   
   
 
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The self-directed PAS State plan option permits individuals to hire, fire, supervise, and manage 
employees of their own choosing, including, at the States option, legally liable relatives, and to 
direct a budget from which they purchase their PAS.  
 
Payment Methodology Requirements 
States may use the same payment methodology for individuals self-directing their PAS under 
section 1915(j) as that approved for State plan personal care services as described in Attachment 
4.19-B of the State plan, or for section 1915(c) Home and Community-Based waiver services as 
described in the section 1915(c) waiver.  If States indicate that they will use the approved 
payment methodology, States need not submit revised State plan 4.19-B pages with the section 
1915(j) SPA.  However, if States will use a different payment methodology from that approved 
for State plan personal care services or section 1915(c) Home and Community-Based Services, 
the State must submit revised State plan 4.19-B pages to describe the new section 1915(j) 
payment methodology. 
 
Assurances 
The Centers for Medicare & Medicaid Services (CMS) requires States to assure that necessary 
safeguards have been taken to protect the health and welfare of Medicaid beneficiaries served 
under this State plan option and to assure the financial accountability for funds expended for 
self-directed services.  Minimally, we require that participants have sufficient supports available 
to them to manage their workers and budgets and an individualized backup plan to address 
critical contingencies or incidents that would pose a risk of harm to the participants health or 
welfare.   
 
We require that States perform an evaluation of the need for personal care under the State plan or 
a section 1915(c) Home and Community-Based Services waiver.  Individuals who are interested 
in the self-directed State plan option must be appropriately counseled and informed of the option 
and feasible alternatives to the self-directed PAS State plan option, prior to enrollment.   
 
The CMS further requires that States provide a support system to individuals prior to enrollment, 
and, as requested, throughout the period of an individuals enrollment, or when the State has 
determined that the individual is not effectively managing their services identified in their 
service plans or budgets.  The support system is intended to inform, counsel, train, and assist 
participants with their employer-related responsibilities, including managing their workers and 
budgets and performing their fiscal and tax responsibilities.  Individuals have discretion whether 
and to what extent they will avail themselves of these supports, although individuals not 
participating in the cash option will be utilizing financial management services. 
 
In accordance with the statute, we require that States submit an annual report to CMS reflecting 
the number of individuals served under the State plan option and total expenditures on their 
behalf.  
 
States also are required to conduct an evaluation every 3 years of the overall impact of the self-
directed State plan option on participants health and welfare as compared to non-participants.  
CMS has not yet defined the requirements of the evaluation, but will issue further guidance and 
offer technical assistance on a case-by-case basis to States that submit a State plan amendment 
for this option.     
 
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Beneficiaries Subject to the Provision 
Self-directed PAS under this State plan option are not subject to the statewideness and 
comparability requirements (i.e., services may be provided in some but not all geographic 
regions of the State).  States also may limit the population eligible to self-direct and the number 
of individuals self-directing. 
 
Self-directed State plan PAS are not available to individuals who reside in a home or property 
that is owned, operated, or controlled by a provider of services not related to the individuals by 
blood or marriage.  If PAS are provided as part of a package of services within a congregate 
living arrangement (e.g., in an assisted living arrangement) the State plan PAS would not be 
available.  
 
Enrollment and Disenrollment 
The decision whether to enroll in the self-directed PAS State plan option must be voluntary and 
informed.  With the implementation of this new State plan option, there could be multiple 
programs offering beneficiaries different vehicles through which to receive their services.  It is 
important that beneficiaries be made aware of feasible alternatives, prior to electing this new 
self-directed State plan option.  Furthermore, participants may elect to voluntarily disenroll from 
the self-directed State plan option.  Finally, we are permitting States to determine the conditions 
under which an individual may be involuntarily disenrolled from the self-directed PAS State plan 
option.  For all disenrollments, we require that the traditional delivery system for PAS be offered 
to the individuals, provided they still qualify for those services.  We also require that States 
specify the safeguards that will be in place to ensure continuity of services during the transition 
to the traditional service delivery system, in order to assure health and welfare.  
 
Options 
The State may elect to permit individuals to choose to receive cash disbursements, on a 
prospective basis, with which to purchase the self-directed PAS identified in their self-directed 
service plan.  If this option is made available by the State, individuals selecting the cash option 
are not required to utilize a fiscal management entity.  Individuals must be given flexibility to 
determine the functions, if any, to be performed on their behalf by the fiscal management entity.  
For example, some individuals may want the fiscal management entity to perform all employer-
related tax functions, while they retain responsibility for paying their providers of PAS. 
 
Also, the State may elect to permit individuals to use their funds to acquire items that increase 
independence or substitute for human assistance, to the extent that expenditures would otherwise 
be made for the human assistance.    
 
Compliance with the Law 
States will be required to continue to comply with all other provisions of the Act in the 
administration of the State plan under title XIX.  We especially note that section 1915(j) will not 
change or impact an individuals eligibility for Medicaid benefits in the State, including 
eligibility for a section 1915(c) Home and Community-Based Services waiver.  We further note 
that other provisions of the Act that include self-direction as a service delivery option are not 
impacted by this provision.  States operating self-directed programs under the personal care 
services State plan option may continue to do so, under the parameters of existing guidance.  
States may also continue to offer self-directed home and community based services through the    
 
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section 1915(c) waiver authority.  States wishing to offer self-directed PAS beyond these 
traditional models may do so through the enclosed State plan pre-print. 
 
Submission Procedures 
As previously mentioned, this provision was effective January 1, 2007.  State plans, may be 
approved retroactively to the first day of the quarter in which they are submitted and would be 
subject to the traditional State plan review process.  Please submit your SPA electronically in a 
pdf file format to your regional office in order to implement these provisions.   
 
The CMS contact for this new legislation is Ms. Gale Arden, Director, Disabled and Elderly 
Health Programs Group, who may be reached at 410-786-6810.   
 
            Sincerely, 
 
 
                    /s/ 
            Dennis G. Smith 
            Director 
 
Enclosure 
 
cc: 
CMS Regional Administrators 
 
CMS Associate Regional Administrators,  
     Division of Medicaid and Childrens Health 
 
Martha Roherty 
Director, Health Policy Unit 
American Public Human Services Association 
 
Joy Wilson 
Director, Health Committee 
National Conference of State Legislatures 
 
Matt Salo 
Director of Health Legislation 
National Governors Association 
 
Jacalyn Bryan Garden  
Director of Policy and Programs  
Association of State and Territorial Health Officials 
 
Christie Raniszewski Herrera 
Director, Health and Human Services Task Force  
American Legislative Exchange Council 
 
 
 
   
 
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Debra Miller 
Director for Health Policy 
Council of State Governments