DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland   21244-1850 
SMD # 19-001 
Re:  Home and Community-Based 
Settings Regulation  Heightened 
Scrutiny 
March 22, 2019 
Dear State Medicaid Director: 
The Centers for Medicare & Medicaid Services (CMS) is issuing the attached set of guidance 
responses to Frequently Asked Questions (FAQs) on implementation activities associated with 
the January 2014 home and community-based settings final rule,1 based in part on collaboration 
with states, state associations, and other stakeholders.  Promoting community integration for 
older adults and people with disabilities remains a high priority for CMS.  The FAQs discuss 
settings identified by the regulation as being presumed to have the qualities of an institution, 
unless CMS determines through a heightened scrutiny review that the settings do not have the 
qualities of an institution and that the settings do have the qualities of home and community-
based settings.  The FAQs focus on settings that have the effect of isolating individuals 
receiving Medicaid [Home and Community-Based Services] HCBS from the broader community 
of individuals not receiving Medicaid HCBS.  Where noted, this guidance replaces or 
supplements prior guidance; content not specifically referenced in the attached as being replaced 
remains in effect. 
CMS is issuing this guidance in keeping with a letter from CMS Administrator Seema Verma to 
the nations Governors on March 14, 2017, indicating the intention to provide additional 
flexibility to states and to streamline implementation efforts associated with the home and 
community-based settings regulation.  The attached guidance is designed to ensure that 
implementation decisions balance the need for robust stakeholder engagement with 
administrative feasibility. 
In addition to information clarifying the heightened scrutiny process, the FAQs also clarify two 
other topics that have often been raised with CMS: whether an individuals private residence 
should be assessed for compliance with the settings criteria, and whether an individual should 
reside in a compliant setting in order to receive Medicaid reimbursement for non-residential 
HCBS. 
1 See https://www.gpo.gov/fdsys/pkg/FR-2014-01-16/pdf/2014-00487.pdf   Page 2  State Medicaid Director 
  
If you have any questions regarding the information in this letter or in the attached FAQs, please 
contact Melissa Harris, in the Disabled and Elderly Health Programs Group, by email at 
Melissa.harris@cms.hhs.gov. 
  
Sincerely, 
 
 
 
Chris Traylor 
Deputy Administrator and Director 
 
Enclosure 
 
cc:  National Association of Medicaid Directors 
National Academy for State Health Policy 
National Governors Association 
American Public Human Services Association 
Association of State Territorial Health Officials 
Council of State Governments 
 
 
 
   
Frequently Asked Questions: HCBS Settings Regulation Implementation  
Heightened Scrutiny Reviews of Presumptively Institutional Settings 
 
1.  Question: What types of settings are identified in the home and community-based settings 
regulation2 as presumed to have the qualities of an institution to which the heighted scrutiny 
process applies?  
Answer:  The regulations describe three categories of residential or non-residential settings 
that are presumed to have the qualities of an institution: 
  Settings that are located in a building that is also a publicly or privately operated facility 
that provides inpatient institutional treatment;  
  Settings that are in a building located on the grounds of, or immediately adjacent to, a 
public institution; and 
  Any other settings that have the effect of isolating individuals receiving Medicaid home 
and community-based services (HCBS) from the broader community of individuals not 
receiving Medicaid HCBS.  
 
Questions Specific to Settings that Isolate HCBS Beneficiaries 
2.  Question:  What are the characteristics of a setting that isolates HCBS beneficiaries from 
their broader community? 
 
Answer: CMS intends to take the following factors into account in determining whether a 
setting may have the effect of isolating individuals receiving Medicaid HCBS from the 
broader community of individuals not receiving HCBS:  
  Due to the design or model of service provision in the setting, individuals have limited, if 
any, opportunities* for interaction in and with the broader community, including with 
individuals not receiving Medicaid-funded HCBS; 
  The setting restricts beneficiary choice to receive services or to engage in activities 
outside of the setting; or  
  The setting is physically located separate and apart from the broader community and does 
not facilitate beneficiary opportunity to access the broader community and participate in 
community services, consistent with a beneficiarys person-centered service plan. 
 
* Opportunities, as well as identified supports to provide access to and participation in 
the broader community, should be reflected in both individuals person-centered service 
plans and the policies and practices of the setting in accordance with 42 CFR 441.301(c)(1)-
(3) and (4)(vi)(F), 42 CFR 441.530(a)(1)(vi)(F) and 441.540, and 42 CFR 
441.710(a)(1)(vi)(F) and 441.725. 
  
2  42 C.F.R. 441.301(c)(5)(v); 441.530(a)(2)(v); and 441.710(a)(2)(v). 
                                                             
 
   
States may identify additional factors beyond those included above.  However, the state 
needs to clarify any additional characteristics of isolation so that stakeholders have a clear 
understanding of what the state considers isolating.  
 
The above response replaces in totality prior guidance3 published on the criteria of an 
isolating setting under 42 CFR 441.301(c)(5)(v); 441.530(a)(2)(v); and 441.710(a)(2)(v).  The 
criteria of an isolating setting have been revised and examples of settings that may have 
isolating effects have been removed.  
 
3.  Question:  Does CMS expect states to submit information specific to settings located in rural 
areas for a heightened scrutiny review? 
 
Answer:4  Settings located in rural areas are not automatically presumed to have qualities of 
an institution, and more specifically, are not considered by CMS as automatically isolating to 
HCBS beneficiaries.  States should only submit a specific setting to CMS for a heightened 
scrutiny review if the setting has been identified as presumed to have qualities of an 
institution, and if the state believes that the setting has overcome the presumption.  With 
respect to determining whether a rural setting may be isolating to HCBS beneficiaries, states 
should compare the access that individuals living in the same geographical area (but who are 
not receiving Medicaid HCBS) have to engage in the community. See question 2 for the 
elements of an isolating setting, which states should use to apply to all settings where 
individuals are receiving Medicaid-funded HCBS, irrespective of geographic location.  
 
The above response supplements prior guidance5 given on this topic.  
 
4.  Question:  May states work with settings that are presumed to be isolating to bring them into 
compliance with regulatory criteria of a home and community-based setting without 
necessitating a heightened scrutiny review? 
 
Answer: The transition period for states to ensure provider compliance with the regulatory 
settings criteria for settings in which a transition period applies extends to March 17, 2022.6  
Within that timeframe, states should determine when to conduct assessments of settings to 
identify those that are isolating.  If the state initially determines that a setting has the effect of 
isolating individuals and that setting implements remediation to comply with regulatory 
criteria7 to the states satisfaction by July 1, 2020, then there will be no need to submit 
information on that setting to CMS for a heightened scrutiny review.  The settings, however,  
3 https://www.medicaid.gov/medicaid/hcbs/downloads/settings-that-isolate.pdf. 
 4   C   M   S     r e  m   i n  d   s   s  t a  t e  s    a b  o   u  t   t h  e  i r    r e  s ponsibility under the Americans with Disabilities Act and the Rehabilitation Act 
to enable persons with disabilities to be served in the most integrated settings appropriate to their needs.  42 U.S.C.  
12132; 28 C.F.R.  35.130(d); 29 U.S.C.  794; 45 C.F.R.  84.4; Olmstead v. L.C., 527 U.S. 581 (1999).  While 
Medicaid may be an important resource to assist states in satisfying their responsibilities under Olmstead, 
compliance with federal Medicaid requirements will not necessarily permit states to satisfy this responsibility.  
Accordingly, we encourage states to regularly review their policies and operations to ensure they are enabling 
persons with disabilities to be served in the most integrated setting appropriate to their needs. 
5 See question 13 on page 6 of https://www.medicaid.gov/medicaid/hcbs/downloads/q-and-a-hcb-settings.pdf  
6 https://www.medicaid.gov//federal-policy-guidance//downloads/cib050917.pdf  
7 42 CFR 441.301(c)(4);441.530(a)(1); 441.710(a)(1) 
2 
   
should be identified in a states statewide transition plan (STP) for public comment and/or 
identified in information disseminated separate from the STP for public comment (see 
Question 7).  Further, CMS reserves the right to review any setting that the state has attested 
has remediated isolating characteristics if the state receives significant public comment 
disagreeing with the states assessment. 
  
States may submit to CMS those isolating settings that have not completed remediation by 
July 1, 2020 if a state determines that an isolating setting can implement remediation before 
the expiration of the transition period (March 17, 2022), and also determines that the 
isolating setting can achieve compliance with the settings criteria.  Isolating settings that have 
not completed necessary remediation by July 1, 2020 should be submitted to CMS by the 
state for a heightened scrutiny review within 120 days (by the end of October 2020).  
 
The transition period for states to come into compliance with the settings rule runs until 
March 17, 2022, during which states may work with all existing HCBS providers to complete 
their remediation and be validated as fully complying with the settings criteria.  CMS notes 
that states have discretion to rely on the July 1, 2020 date in their work with providers, and to 
submit packages for heightened scrutiny review prior to this timeframe.  
 
5.  Question: What are some promising practices to remediate settings that have been identified 
as being isolating to ensure compliance with the home and community-based settings 
criteria? 
 
Answer: CMS is collaborating with federal partners in the Administration for Community 
Living (ACL) to develop a comprehensive set of promising practices.  In the meantime, CMS 
offers the following for state and provider consideration: 
  Increasing technical assistance to assist states to transform the long-term services and 
supports (LTSS) systems to fully implement person-centered thinking, planning, and 
practices. 
  Increasing engagement with the broader community by: 
  Developing partnerships and alliances with generic, community-based entities 
o
that result in inclusion of HCBS beneficiaries in the broader community available 
to all community members; and/or 
  Establishing a community-based advisory group to help identify and design new 
o
models and strategies for the setting to expand its individualized service offerings 
and increase greater access to activities in the broader community. 
  Implementing a broad range of services and supports, programming, and multiple daily 
activities to facilitate access to the broader community that allows for each individual to 
be able to select from an array of individual and/or group options and control his or her 
own schedule.  Such activities should: 
  Promote  skills development and facilitate training and educational opportunities 
o
among HCBS beneficiaries designed to attain and expand opportunities for 
3 
   
community-based integration  (including volunteering, social and recreational 
activities, and competitive, integrated employment); 
  Expose beneficiaries to community activities and situations comparable to those 
o
in which individuals not receiving HCBS routinely engage;  
  Encourage families and friends to participate regularly in activities with the 
o
beneficiary onsite as well as in the broader community; and/or  
  Promote greater HCBS beneficiary independence and autonomy.  
o
  Implementing organizational changes that: 
  Assure the required level of support, including appropriate staffing , and adequate 
o
transportation options to offer both group and individualized options that facilitate 
optimal community engagement based on individual preferences (as articulated in 
beneficiary person-centered service plans); and/or 
  Decentralize staff structures to promote greater flexibility and encourage staffing 
o
focused on individuals access to and participation in the broader community 
rather than centralized insular staff models focused around a specific facility/site.  
  Expanding strategies for increasing beneficiary access to transportation, including 
through existing public transportation, friends/family, and volunteer organizations, to 
activities in the broader community.  This could include providing transportation in a way 
that promotes ease of access and optimizes individuals ability to select their own options 
and make decisions about their services and supports. 
6.  Question: When soliciting public input on settings the state has determined to overcome the 
institutional presumption of isolating individuals receiving HCBS, are there HIPAA-related 
privacy concerns that states should consider? 
 
Answer:  The Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule 
restricts covered entities, such as state Medicaid agencies and providers that meet the 
definition of covered entities, from publicly disclosing protected health information (PHI) 
without the authorization of the individual, unless disclosure is expressly permitted under the 
Rule. 
  
Examples of PHI include an HCBS beneficiarys name and health condition. The state should 
not include any personally identifiable information of beneficiaries in the submission of the 
STP or in any notifications or information disseminated to the public.  
 
Under some circumstances, information about a particular setting, including the name and 
address, may constitute PHI if it relates to the past, present or future physical or mental 
health or condition of an individual, the provision of health care or payment for care, and 
there is a reasonable basis to believe the information can be used to identify the individual.8 
The addresses and locations of settings that are either on the grounds of or adjacent to public 
8 See 45 CFR 160.103, definitions of protected health information and individually identifiable health information. 
                                                             
4 
   
institutions or in buildings that provide inpatient institutional treatment are typically known 
to the general public.  The same may not be true for settings that have been evaluated by the 
state as overcoming the institutional presumption of isolating individuals receiving HCBS, 
although individual circumstances and recognition of each setting will vary. While 
recognizing the need for public input, states must also adhere to applicable federal and state 
laws and regulations9 protecting the privacy of individuals receiving HCBS.  
 
CMS recommends adherence to the following guidance for disclosure of information 
regarding settings identified as overcoming the institutional presumption of isolating 
individuals: 
 
  To the extent possible, states are encouraged to disclose generalized descriptions (not 
including names or addresses of the settings) of how the state determined that a 
presumptively institutional setting overcame, or will overcome, that presumption.  
 
  Should a state determine it is necessary to disclose the name or address of the setting, 
the state should consider whether the information about the setting that will be 
publicly disclosed is PHI as defined by HIPAA, based on the circumstances of each 
setting and the individuals served by that setting.  The outcome of such a 
determination will be fact specific and will vary across settings.  If the information is 
determined to be PHI, the state can take one of the following steps to address HIPAA 
compliance:  
 
  Remove all 18 identifiers described in 45 CFR  164.512(b)(2)(i), including 
o
address and other geographic subdivisions smaller than a state, and show that 
the state has no knowledge that the information could be used to identify the 
individual, before publishing the comment solicitation.10  
 
  Receive an authorization from every resident (or their representative) of the 
o
setting granting permission to release the address and any other potentially 
identifiable information. 
 
  In circumstances where state, local or other law requires a state to disclose 
o
PHI, such disclosures are permissible under the HIPAA Privacy Rule,11 and 
the  state would not need to take further action to make such a disclosure. 
 
7.  Question: To what extent may stakeholders receive notice and provide comment about the 
states intention regarding a setting determined to overcome an institutional presumption of 
isolation?  
 
Answer:  The state may notify the individuals living in or receiving non-residential services 
9 See, e.g., Section 1902(a)(7) of the Social Security Act and 42 CFR Part 431, Subpart F.  
 1 0   S   e e    4  5     C  F   R         1  6  4  . 5  1  2  (  b  ) ( 2   ) ( i )  ;   s  e e also, Guidance Regarding Methods for De-identification of Protected Health 
Information in Accordance with the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule, at 
https://www.hhs.gov/hipaa/for-professionals/privacy/special-topics/de-identification/index.html 
11 45 CFR 164.512(a). 
5 
   
in the setting in question, and if permitted by applicable law, may also notify family 
members, and guardians (identified in the individuals person-centered service plan as 
involved in their care) of the following: that the state has determined that the setting 
overcomes the institutional presumption of being isolating, the states justification for that 
determination (outlined below in number 8), and how these individuals may offer comments 
in response. 
 
To the extent the information is not PHI, the state may notify primary aging and disability 
rights and advocacy organizations in the state of the justification described above.  These 
organizations may include, but are not limited to, Protection and Advocacy organizations, 
Developmental Disability Councils, University Centers of Excellence on Disabilities, Area 
Agencies on Aging, Aging & Disability Resource Centers, Centers for Independent Living, 
LTC Ombudsmen, organizations representing individuals with mental illness and Traumatic 
Brain Injury, service coordinators, state licensure and certification entities, and advocacy 
organizations that include HCBS beneficiaries within their membership. 
  To the extent the justification includes PHI, the state may provide the justification 
o
to external entities when the disclosure of PHI to those entities is permissible 
under HIPAA, such as when required by law, or where the disclosure is to a 
health oversight agency. For example, states may disclose this information, 
including the address of the setting, to a state-designated Protection and Advocacy 
organization if required by law, or to the LTC Ombudsman requesting that 
information for oversight activities. 
 
In compliance with applicable laws, any non-personally identifiable information related to a 
presumptively institutional setting may be made available to the beneficiary or any other 
third party upon request.  The STP should publicize an email and mailing address for 
submitting requests of this information.  
 
The above response replaces prior guidance12 given on this topic, to account for HIPAA 
implications. 
 
Questions Pertaining to All Presumptively Institutional Settings 
 
8.  Question:  What information should a state provide during the public comment on settings 
that the state has considered for heightened scrutiny review?  
 
Answer:  The following information should be disseminated by states for stakeholder input 
during periods of public comment, in compliance with the HIPAA provisions described 
above: 
  State strategies to identify settings falling into any of the three categories of settings 
presumed to have qualities of an institution; 
  State approaches to reviewing settings flagged as being presumptively institutional, as 
well as how the state will use public comments to inform its review, and how the state 
12 See question 8 on page 7 of https://www.medicaid.gov/medicaid/hcbs/downloads/home-and-community-based-
 s e  t t i n   g  - r e  q  u  i  r e  m   e  n  t s  . p  d  f                       
6 
   
has/will determine whether a setting overcomes the presumption that it is an institutional 
setting; 
  A numbered list of settings identified for each category of settings that the state believes 
overcomes the presumption that the settings are institutions (e.g., adult day center inside 
of a nursing facility, or group home on the campus of a public ICF/IID, or a setting that 
the states has identified as isolating).  The list should also identify the presumptively 
institutional category that each setting falls into for heightened scrutiny, and include a 
summary of how each setting has or will overcome the presumption that it is an 
institution as well as the states plan for oversight of remediation to ensure compliance 
with the settings criteria by the end of the transition period; 
  A list of settings that the state does not believe can overcome the presumption that the 
settings are institutions by the end of the transition period, and thus may not receive 
Medicaid funding for HCBS after the transition period; 
  A list of settings, if any, that the state  previously identified as presumptively institutional 
due to isolation, but subsequently demonstrate compliance with the settings criteria by 
July 1, 2020, along with a statement that information supporting remediation for those 
settings is available upon request; and 
  Process for applying CMS feedback on specific settings to similarly situated settings 
(described in greater detail below in Question 9). 
Additionally, CMS requests that when states publish information related to heightened 
scrutiny for public comment, that they send the electronic links to the CMS statewide 
transition plan team as soon as the public comment period begins.  
The above response both provides new guidance and replaces prior guidance13given on 
presumptively institutional settings under 42 CFR 441.301(c)(5)(v); 441.530(a)(2)(v); and 
441.710(a)(2)(v), as states are no longer encouraged to identify the number of individuals 
receiving services at each setting.  
 
9.  Question: How will CMS review state requests for heightened scrutiny of settings that the 
state believes overcome the presumption of having the qualities of institutional settings?  
Answer: Based on conversations with our state partners, CMS understands that a sizable 
number of requests for heightened scrutiny reviews could be submitted by states to CMS 
throughout the remainder of the transition period.  In response, the agency is implementing 
the following review strategy:  
  The numbered list of settings identified for each category of presumptively institutional 
setting (reflected in the previous question) will be made available to CMS. (CMS seeks to 
provide states with useful feedback prior to the close of the transition period. Therefore, 
CMS strongly encourages states to submit information on settings located in the same 
building as a public or private institution or located on the grounds of or adjacent to a 
public institution by March 2019.  Information on isolating settings should be submitted 
no later than October 2020.) 
13 See the third bullet of question 8 at https://www.medicaid.gov/medicaid/hcbs/downloads/home-and-community-
 b  a s  e  d  - s  e  t t i n  g  -  r e  q  u  i r  e  m   e  n  t s  . p  d  f ,            
7 
   
  CMS will use the list provided by a state to compile a random sample of settings to 
review.  The review sample will also include any setting the state requests CMS to review 
and any setting that generated significant public comment in opposition of the states 
assessment. 
  CMS will review all information presented by the state and other parties on settings 
selected for the review sample and will either: approve the states assertion that the 
setting overcomes the presumption that the setting is an institution; or provide the state 
feedback on missing information, questions for clarity, or reason(s) why CMS cannot 
agree that a setting is able to overcome the presumption that it is an institution. States will 
then have the opportunity to provide the additional information needed to support their 
assertion before final determination is made by CMS.  
  Based on the process described in the states STP on how CMS feedback on a particular 
setting will be applied to similarly situated settings, the state will use the CMS feedback 
to remediate settings that have the qualities of an institution not included in the CMS 
review sample. 
  CMS will make final heightened scrutiny review determinations of each setting in the 
sample available on the Medicaid.gov/hcbs website. 
  CMS may request to review additional settings and/or suggest changes to the states 
heightened scrutiny review process if the sample review highlights concerns with the 
states approach in determining whether a setting overcomes the presumption that it is an 
institution. 
  CMS may also request information on any setting for which the state received public 
comments that the setting was presumptively institutional but was not included on the 
states heightened scrutiny list because the state determined it to meet the HCBS settings 
criteria. 
 
The above response supplements prior guidance14 given on this topic, to refine the process 
by which CMS will review settings presumed to be institutions, including through the use of 
sampling. 
 
10. Question:  What information should states submit to CMS for a heightened scrutiny review 
of a setting selected for the review sample? 
Answer:  When submitting a setting for heightened scrutiny review, states should provide 
evidence of how the state has determined that a setting overcomes the presumption that it has 
the qualities of an institution. Information should focus on the qualities of the setting and 
how the setting is integrated in and supports access of individuals receiving HCBS into the 
broader community via the organizations policies and practices as well as in how the setting 
supports individuals consistent with their person-centered service plans. 
  
The exploratory questions available in the Toolkit found at  
www.medicaid.gov/medicaid/hcbs/guidance/settings/index.html can also be helpful in 
determining the type of information that should be included in the documentation.  Some 
additional examples of information the state might include are: 
14 See question 10 at https://www.medicaid.gov/medicaid/hcbs/downloads/home-and-community-based-setting-
 r e  q  u  i r e  m    e n  t  s . p  d  f                                    
8 
   
 
  Description of the proximity to and scope of interactions in and with the broader 
community, which can be demonstrated through mechanisms such as: 
  Description of the states review of a reasonable sample15 of individuals daily 
o
activities, person-centered service plans, and/or interviews to determine that there 
is variation in the scope, frequency, and breadth of individual beneficiary 
interactions and engagement in and with the broader community;  
  A copy of the procedures (including, for example, the types of activities, 
o
transportation, and staffing that are in place) and services provided by the setting 
that indicate evidence of access to and demonstrated support for beneficiary 
integration in community activities in the broader community consistent with 
individuals person-centered service plans; 
  Descriptions of processes in place or actions taken by direct support professionals 
o
to support, monitor, improve, and enhance individual beneficiary integration  in 
and with the broader community over time;  
  A summary of examples of how schedules are varied according to individual 
o
beneficiaries preferences and in recognition of the need to integrate into the local 
community at times when the general community attends an activity; and 
  Procedures in place to routinely monitor individual access to services and 
o
activities of the broader community to the extent identified in person centered 
service plans; 
  Description of how staff are trained and monitored on their understanding  of the settings 
criteria and the role of person-centered planning, consistent with state standards as 
described in the waiver or state plan amendment or in community training policies and 
procedures established by the state; 
  Description of the settings proximity to public transportation or how transportation is 
facilitated; 
  Attestation that the state has reviewed provider-owned or controlled settings and 
concluded through  observation made during an onsite visit and/or through a reasonable 
sample16 of consumer interviews, or through a review of person-centered service plans 
that any modifications to the settings criteria are documented in person-centered service 
plans as required by the regulation;17 
  Description of the settings remediation plan  to achieve compliance by the end of the 
transition period, along with the states oversight to ensure completion of actions;  
  Summary or other description of stakeholder comments received in response to the states 
solicitation of public feedback; and 
  Other information the state deems helpful to demonstrate that the setting overcomes its 
institutional presumption, e.g., photos of the setting, but not of beneficiaries or other 
identifying information, or an attestation that the setting has been selected by the 
individual from among settings options, including non-disability-specific settings. 
15 While there is no number or percentage of individuals that states must sample in this context, states should 
 d  e m    o  n  s t  r a  t e    a    s a  m    p  l e    s i z  e    s  u  f f  i c  i e  n  t  to obtain data that is representative of the overall experiences of individuals in 
the setting. 
16 Ibid.17 See 42 CFR 441.301(c)(4)(vi)(F), 42 CFR 441.530(a)(1)(vi)(F), and 42 CFR 441.710(a)(1)(vi)(F). 
17 See 42 CFR 441.301(c)(4)(vi)(F), 42 CFR 441.530(a)(1)(vi)(F), and 42 CFR 441.710(a)(1)(vi)(F). 
9 
   
 
The above response replaces prior guidance18 given on this topic, to streamline the 
suggested content of information submitted for a heightened scrutiny review. 
 
CMS recognizes the role of person-centered planning to identify necessary services and 
supports to realize each beneficiarys goals regarding access to and participation in the 
broader community. The person-centered planning process should not be limited to 
consideration of services and supports covered solely under a particular Medicaid-funded 
HCBS authority, but should also include potential natural supports, external resources, or 
other funding vehicles available to meet those needs, separate and distinct from Medicaid 
HCBS).  However, the agency also acknowledges parameters around the scope of services 
authorized under each states HCBS programs that providers of HCBS settings must operate 
within.  For example, CMS notes that nothing in the HCBS settings regulation requires a 
setting in which HCBS are provided to finance recreational activities in the community on 
behalf of Medicaid beneficiaries.  
CMS seeks to strike a balance between supporting individuals in accessing and participating 
in the broader community with available HCBS resources, noting that it is not sufficient for 
HCBS settings to solely or primarily bring people from the broader community into the 
setting.  Rather, it is the expectation that through operational policies and practices, HCBS 
settings are also offering meaningful opportunity for individuals receiving services to interact 
with the community outside of the setting, supporting individuals consistent with their 
person-centered plans. 
CMS also notes that for heightened scrutiny requested under section 1915(c) or section 
1915(i) of the Social Security Act, such information should also include the information the 
state received during the applicable public input process.  CMS will also consider 
information provided by other parties. For section 1915(k) Community First Choice (CFC) 
programs, information should be submitted as part of a states request for heightened scrutiny 
for any such settings included in the CFC State Plan Amendment (SPA).  
 
11. Question:  How will CMS monitor settings identified as presumptively institutional to 
ensure adherence to regulatory criteria by the end of the transition period? 
 
Answer:  CMS intends to utilize different mechanisms to ensure that settings presumed to be 
institutional are compliant with regulatory home and community-based setting criteria by the 
end of the transition period. A key component of a states STP is a description of the process 
the state will use to ensure identified remediation is completed for all settings presumed to 
have qualities of an institution. The description of this process within the STP should also 
include an articulation of the steps and associated timelines for bringing provider into 
compliance with the regulatory criteria. CMS will refer to this process in our ongoing 
conversations with the state through the transition period. 
  
In addition, as mentioned in the response to Question 9, states should also include in the 
18 See question 3 at https://www.medicaid.gov/medicaid/hcbs/downloads/home-and-community-based-setting-
 r e  q  u  i r e  m    e n  t  s . p  d  f                                    
10 
   
information submitted to CMS as part of a heightened scrutiny review of a particular setting, 
a discussion of how the state will monitor that setting to ensure completion of remediation.  
The state will identify milestones for the completion of activities to bring the setting(s) into 
compliance and report to CMS in an agreed upon schedule on the progress toward achieving 
those milestones.  
 
Questions Pertaining to Other Topics 
 
12. Question: What kind of compliance assessment with the home and community-based 
settings criteria does CMS expect of states for private residences? 
 
Answer:  Individual, privately-owned homes (privately-owned or rented homes and 
apartments in which the individual receiving Medicaid-funded HCBS lives independently or 
with family members, friends, or roommates) are presumed to be in compliance with the 
regulatory criteria of a home and community-based setting.  CMS is clarifying that states are 
not responsible for confirming this presumption for purposes of ensuring compliance with the 
regulation.19  States should, however, include private residences as part of their overall 
quality assurance framework when implementing monitoring processes for ongoing 
compliance with the federal HCBS requirements, as well as any oversight provisions 
articulated in their approved HCBS waivers or state plan amendments (such as activities to 
ensure the health and welfare of individuals).  Also, settings where the beneficiary lives in a 
private residence owned by an unrelated caregiver (who is paid for providing HCBS services 
to the individual), are considered provider-owned or -controlled settings and should be 
evaluated as such. 
 
The above response supplements prior guidance20 on this topic. 
 
13. Question:  Should Medicaid beneficiaries reside in residential settings that comply with the 
home and community-based settings criteria even if Medicaid is only funding non-
residential services for that individual? 
 
Answer:  CMS is clarifying that states are responsible for ensuring compliance with the 
home and community-based settings criteria for those settings in which Medicaid 
beneficiaries receive HCBS.21  If Medicaid is only funding non-residential HCBS for an 
individual, then the state is not responsible for ensuring compliance with the settings criteria 
for the setting in which that individual resides.  However, a state may decide to require 
beneficiaries receiving Medicaid-funded non-residential HCBS to live in settings that meet 
the federal home and community-based settings criteria, even if the individual does not 
receive HCBS in the setting.  
19 42 CFR 441.301(c)(4); 441.530(a)(1); and 441.710(a)(1). 
 2 0   S   e e    q  u  e  s  t i o  n    3     o  n    p  a  g  e    4    a  t   h  t t p  s  : / /www.medicaid.gov/medicaid/hcbs/downloads/q-and-a-hcb-settings.pdf  
21 42 CFR 441.301(c)(5)(v); 441.530(a)(2)(v); and 441.710(a)(2)(v). 
11