DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland 21244-1850 
 
 
SMD# 22-002
RE: Updated Reporting Requirements 
and Extension of Deadline to Fully 
Expend State Funds Under American 
Rescue Plan Act of 2021 Section 9817  
 
June 3, 2022 
 
Dear State Medicaid Director: 
 
Section 9817 of the American Rescue Plan Act of 2021 (ARP) (Pub. L. 117-2) provides 
qualifying states with a temporary 10 percentage point increase to the federal medical assistance 
percentage (FMAP) for certain Medicaid expenditures for home and community-based services 
(HCBS) provided between April 1, 2021, and March 31, 2022.  Under ARP section 9817, states 
must use the federal funds attributable to the increased FMAP to supplement, not supplant, 
existing state funds expended for Medicaid HCBS in effect as of April 1, 2021.  Additionally, 
states must use state funds equivalent to the amount of federal funds attributable to the increased 
FMAP to implement or supplement the implementation of one or more activities to enhance, 
expand, or strengthen HCBS under the Medicaid program.  The Centers for Medicare & 
Medicaid Services (CMS) is issuing this addendum to existing guidance to provide states with 
increased flexibilities in the implementation of this important provision. 
 
Background  
 
On May 13, 2021, CMS released SMD # 21-003 to provide guidance to states on the 
implementation of section 9817 of the ARP.  As discussed in SMD # 21-003, states are permitted 
to use state funds equivalent to the amount of federal funds attributable to the increased FMAP 
through March 31, 2024, on activities aligned with the goals of section 9817 of the ARP.  
Further, SMD # 21-003 indicated that CMS expects states to demonstrate compliance with 
section 9817 of the ARP, beginning April 1, 2021, and until state funds equivalent to the amount 
of federal funds attributable to the increased FMAP are fully expended.   
 
Among the requirements that states are expected to comply with is that participating states must 
submit quarterly HCBS spending plans and narratives to CMS on the activities the state has 
implemented and/or intends to implement to enhance, expand, or strengthen HCBS under the 
Medicaid program.  As discussed in SMD # 21-003, the HCBS spending plan should estimate, 
by quarter and in total, the amount of funds attributable to the increase in FMAP that the state 
has claimed and/or anticipates claiming between April 1, 2021, and March 31, 2022, as well as 
anticipated and/or actual expenditures for the states activities to implement, to enhance, expand, 
or strengthen HCBS under the state Medicaid program between April 1, 2021, and March 31, 
2024.  The HCBS spending narrative is intended to provide information and updates on the 
states required ARP section 9817 activities, the connection between the spending plan and the  Page 2  State Medicaid Director 
  
scope of the activities, and how the state intends to sustain these activities.  CMS publicly posts 
states spending plans and narratives on Medicaid.gov.  
 
Updated Reporting Requirements 
 
Effective immediately, states are only required to submit an HCBS spending narrative semi-
annually (every other quarter), rather than quarterly.  HCBS spending narratives are now due 75 
days before the start of every other federal fiscal quarter, beginning with the federal fiscal quarter 
that starts on April 1, 2022 (federal fiscal year (FY) 2022 quarter (Q) 3), and until the states 
funds in an amount equivalent to the enhanced FMAP received by the state have been expended; 
states are no longer required to submit an HCBS spending narrative for the quarter that starts on 
July 1, 2022 (FY 2022 Q4).  The next HCBS spending narrative will be due 75 days before the 
quarter beginning October, 1, 2022 (FY 2023 Q1).  Please note the frequency for submitting the 
HCBS spending plan is not changing.  States must continue to submit an HCBS spending plan 75 
days prior to the beginning of each federal fiscal quarter until the states funds in an amount 
equivalent to the enhanced FMAP received by the state have been expended.  This change to the 
reporting frequency for HCBS spending narratives is intended to reduce state reporting burden, 
while ensuring that CMS continues to receive timely and up-to-date information on the amount 
of funds attributable to the increase in FMAP that states have claimed and on state expenditures 
for activities to enhance, expand, or strengthen HCBS under the state Medicaid program.  
 
Please note that, although states are no longer required to submit an HCBS spending narrative 
quarterly, states have the option to submit an updated narrative quarterly, which would be 
necessary to request approval for new activities or changes to the scope or description of their 
approved activities. 
 
As discussed in SMD # 21-003, CMS recognizes the importance of effective stakeholder 
engagement processes that can provide states with varied perspectives on how to expand, 
enhance, and strengthen HCBS.  CMS encourages states to continue engaging a broad 
community of stakeholdersMedicaid and other state agency leadership, participants in HCBS 
programs, residents in long-term care facilities, HCBS providers, family members and other 
caregivers, the aging and disability network, health plans, and the direct support workforceto 
provide insight, ideas, and feedback to inform the states approach to developing and 
implementing activities under section 9817 of the ARP.  Further, CMS continues to expect that 
states will offer, in good faith, in a prudent manner, and in compliance with Medicaid benefit 
requirements, a public notice process, including tribal consultation as applicable, when 
implementing changes to their HCBS programs.   
 
Extension of Deadline to Fully Expend State Funds  
 
CMS is also announcing that the agency will not require states to demonstrate compliance with 
the March 31, 2024, deadline for states to use the state funds equivalent to the amount of federal 
funds attributable to the increased FMAP, which was specified in SMD # 21-003.  Instead, CMS 
expects states to use the state funds equivalent to the amount of federal funds attributable to the 
increased FMAP by March 31, 2025.  This additional flexibility is intended to address state 
statutory, regulatory, administrative, and other challenges identified by states with meeting the 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically 
incorporated into a contract.  This document is intended only to provide clarity to the public regarding existing requirements under the law.  Page 3  State Medicaid Director 
  
March 31, 2024, deadline included in SMD # 21-003.  CMS recognizes that the complexity of 
federal and state mechanisms to award funding made available under section 9817 of the ARP 
have made it difficult for states to implement approved activities in HCBS spending plans in 
order to expend state funds timely.  Please note that states are not required to use this additional 
flexibility for expending the funds.  Rather, states can fully expend state funds equivalent to the 
amount of federal funds attributable to the increased FMAP at any time prior to March 31, 
2025.1   
 
This letter makes no other changes to the requirements or other information described in SMD # 
21-003, including that the temporary 10 percentage point increase to the FMAP for certain 
Medicaid expenditures for HCBS is only available for HCBS provided between April 1, 2021, 
and March 31, 2022.  As such, states are expected to demonstrate compliance with the 
requirement not to supplant existing state funds expended for Medicaid HCBS until the state 
funds equivalent to the amount of federal funds attributable to the increased FMAP are fully 
expended.  Specifically, states must: 
 
  Not impose stricter eligibility standards, methodologies, or procedures for HCBS 
programs and services than were in place on April 1, 2021;  
  Preserve covered HCBS, including the services themselves and the amount, duration, and 
scope of those services, in effect as of April 1, 2021; and 
  Maintain HCBS provider payments at a rate no less than those in place as of April 1, 
2021.  
 
More specifically, if a state makes use of the flexibility regarding demonstrating compliance with 
the timeline for fully expending state funds equivalent to the amount of federal funds attributable 
to the increased FMAP, the state is expected to comply with these requirements until the funds 
are expended.  
 
Closing 
 
CMS remains committed to supporting states with strengthening and enhancing their HCBS 
systems and helping to ensure that Medicaid beneficiaries receive high quality, cost-effective, 
person-centered services in the setting of their choice.  Section 9817 of the ARP provides states 
with additional federal funding for Medicaid HCBS that states can use to enhance, expand, or 
strengthen HCBS in response to the COVID-19 Public Health Emergency, accelerate reforms to 
long-term services and supports systems, and address other state-specific HCBS needs and 
priorities, such as Olmstead planning.  Questions related to ARP section 9817 can be directed to 
HCBSincreasedFMAP@cms.hhs.gov.   
 
 
 
 
                                                            
1 CMS reminds states of the continued need to adhere to the requirements under section 1132(a) of the Social 
Security Act, which imposes a two-year limit from the date of expenditure on states ability to claim federal 
financial participation.  This two-year time period is not affected by the flexibility we are announcing in this letter 
under which states will not be required to demonstrate compliance with the March 31, 2024, deadline. 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically 
incorporated into a contract.  This document is intended only to provide clarity to the public regarding existing requirements under the law.  Page 4  State Medicaid Director 
  
 
              Sincerely, 
 
 
 
 
Daniel Tsai 
Deputy Administrator and Center Director 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically 
incorporated into a contract.  This document is intended only to provide clarity to the public regarding existing requirements under the law.