DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland   21244-1850 
SMD # 20-003
Re: Home and 
Community-Based Settings 
Regulation  Implementation 
Timeline Extension and Revised 
Frequently Asked Questions 
July 14, 2020 
Dear State Medicaid Director: 
The Centers for Medicare & Medicaid Services (CMS) is issuing guidance pertaining to the 
home and community-based services (HCBS) Settings Rule, which became effective on 
March 17, 2014.1 As states are responding to the Coronavirus Disease 2019 public health 
emergency (COVID-19 PHE), CMS recognizes that its impact  has necessitated changes to 
states ongoing efforts to comply with the HCBS settings criteria.  States stay-at-home and/or 
safer-at-home orders and the process of social distancing have made it difficult, if not 
impossible, for states to accurately evaluate how an individual is experiencing community 
integration in current HCBS settings.   These necessary directives have seriously impacted not 
only the measurement of community integration for individuals, but the intent of the Settings 
Rule to ensure that individuals with disabilities and older adults have the opportunity to be 
active participants in their communities. Lastly, older adults and individuals with disabilities 
who receive Medicaid HCBS often have underlying conditions that increase risks to health 
and welfare associated with COVID-19 that can further delay a return to integrated activities 
as they existed prior to the global pandemic.   
States have requested flexibility from CMS with respect to demonstrating compliance with the 
requirements of the HCBS Settings Rule under section 1135, Appendix K to section 1915(c) 
HCBS waivers, section 1115 demonstrations, and disaster relief State Plan Amendments 
(SPAs).2 States have highlighted, in particular, delays in their ability to effectively assess 
settings and determine needed remediation to ensure compliance with the Settings Rule.  
Economic factors including state workforce furloughs and redirection or refocusing of limited 
existing state human and monetary resources due to the COVID-19 PHE have also impacted 
some of these activities. States have also requested that CMS consider extending the HCBS 
settings implementation deadline again in the course of ongoing training and technical 
assistance activities. 
1 See 79 Fed. Reg. 2948 (Jan. 16, 2014), available at https://www.gpo.gov/fdsys/pkg/FR-2014-01-
16/pdf/2014-00487.pdf; see also 42 CFR Parts 430, 431, et. al.  
2 See https://www.medicaid.gov/resources-for-states/disaster-response-toolkit/coronavirus-disease-
2019-covid-19/index.html.   On May 9, 2017, in recognition of the reform efforts underway across the country, CMS 
issued guidance3 extending the timeframe for states to demonstrate compliance with the 
settings requirements to March 17, 2022.  This extension permitted states and providers an 
additional three years to demonstrate true community integration of individuals receiving 
Medicaid HCBS. In light of impacts discussed above from COVID-19, and to ensure the 
continued delivery of quality Medicaid HCBS to beneficiaries, CMS will allow states an 
additional year, through March 17, 2023, to complete implementation of activities required to 
demonstrate compliance with the settings criteria.  
 
CMS also issued a State Medicaid Director Letter on March 22, 2019 (SMD #19-001),4 that 
included Frequently Asked Questions (FAQ) to discuss settings identified by the regulation as 
being presumed to have the qualities of an institution that the state identifies for a heightened 
scrutiny review by CMS. States have been unable to complete settings assessments and 
implement remediation plans due to COVID-19 and have requested an extension to relevant 
deadlines to demonstrate compliance with these settings and/or submit heightened scrutiny 
evidence packages to CMS for review.  Therefore, CMS is extending the timeframes 
identified in relevant FAQs an additional year through this letter.  The revised FAQs are 
attached.   
 
Under these revised FAQs, if a state determines that a setting that isolates individuals from the 
broader community has implemented remediation strategies that brought the setting into 
compliance with the settings criteria by July 1, 2021, then that setting will not need to be 
submitted to CMS for a heightened scrutiny review.  Additionally, states may submit to CMS 
isolating settings that have not completed necessary remediation for a heightened scrutiny 
review no later than October 31, 2021, which is an additional year from the original timeline.  
 
CMS requests that information on settings located in the same building as a public or private 
institution or on the grounds of or adjacent to a public institution be submitted for heightened 
scrutiny no later than March 31, 2021. 
 
Given the impact of the COVID-19 PHE, states are strongly encouraged to use this extra year 
to evaluate how the provision of Medicaid-funded HCBS fulfills larger public health priorities 
and advances the tenets of beneficiary autonomy and community integration. HCBS are a key 
feature of state efforts to offer a meaningful choice to beneficiaries on where to live and how 
to receive services, and in state compliance with the Americans with Disabilities Act and the 
Olmstead v. L.C.5 Supreme Court decision.  As states continue to examine their array of 
HCBS as part of strategies to recover from the COVID-19 PHE, the availability of person-
centered, individualized supports will take on even greater importance.  States are encouraged 
to use this additional year to develop short and long-term strategies for increasing the capacity 
of these supports.  In light of the risks associated with congregate settings and COVID-19, 
states may wish to give particular priority to those provisions of the rule regarding making 
available non-disability specific settings among the range of options available to individuals 
with disabilities, including to individuals currently residing in disability-specific congregate 
settings (for whom transition supports may be necessary to make the option available).   
 
                                                 
3 Available at https://www.medicaid.gov/sites/default/files/federal-policy-
guidance/downloads/cib050917.pdf.   
4 Available at https://www.medicaid.gov/sites/default/files/Federal-Policy-
Guidance/Downloads/smd19001.pdf.  
5 527 U.S. 581 (1999).  Several states have also expressed a desire to engage with CMS to further enhance rebalancing 
efforts, lessening reliance on institutional settings in the provision of long-term care, due to 
the disproportionate impact of COVID-19 in nursing facilities and other institutions.  The 
additional year will also free-up state resources that may be used in furtherance of these 
pursuits. 
 
Lastly, acknowledging that states are and will continue to be faced with a backlog of actions 
as a result of COVID-19, states are encouraged to work consistently on their HCBS settings 
compliance activities between now and March 17, 2023.  CMS continues to expect that states 
will demonstrate progress toward compliance throughout the transition period.  This will 
avoid a last-minute build-up of actions and decisions, and ensure adequate engagement of 
stakeholders throughout the transition period as states finalize and implement their vision for 
HCBS provision. 
 
CMS remains steadfast in its commitment to continue to provide technical assistance to states 
and other stakeholders to identify implementation approaches that ensure provision of 
Medicaid services in a manner consistent with program requirements.  If you have any 
questions regarding the information in this letter, please contact Michele Mackenzie, 
Technical Director, in the Disabled and Elderly Health Programs Group, by email at 
Michele.MacKenzie@cms.hhs.gov. 
       
            Sincerely, 
 
         
 
 
Calder A. Lynch 
            Deputy Administrator and Director 
  Frequently Asked Questions: HCBS Settings Regulation Implementation and  
Heightened Scrutiny Reviews of Presumptively Institutional Settings: July 2020 Update  
1.  Question: What is the new deadline for states to assure that all settings are in compliance 
with the home and community-based services (HCBS) settings criteria? 
Answer: States have been granted an additional year to demonstrate compliance and 
should ensure all settings are in full compliance with the HCBS settings criteria by March 
17, 2023. This date to demonstrate compliance replaces the March 17, 2022 timeline 
included in CMS guidance issued May 9, 2017.1  Several states have requested an 
extension to demonstrate compliance with the HCBS settings criteria due to an inability 
to complete site-specific assessment and remediation activities due to the COVID-19 
public health emergency (PHE).  Social-distancing requirements in response to the PHE 
are resulting in the inability to complete activities outlined in approved statewide 
transition plans and/or activities required to obtain final approval of those plans.   
During this extension, CMS urges states to continue to identify settings in need of 
remediation and work on the development, approval and implementation of their 
Statewide Transition Plans, including close consultation with relevant stakeholders. In 
light of the risks associated with congregate settings during the COVID-19 PHE, states 
may wish to give particular priority to those provisions of the rule regarding making 
available non-disability specific settings among the range of options available to 
individuals with disabilities, including to individuals currently residing in disability-
specific congregate settings (for whom transition supports may be necessary to make the 
option available).  
In addition, CMS reminds states that they continue to have independent obligations to 
comply with the Americans with Disabilities Act, Section 1557 of the Affordable Care 
Act, and Section 504 of the Rehabilitation Act, including their requirements under 
Olmstead v. L.C.2, which remain in effect during this public health emergency. Technical 
assistance is available from the HHS Office for Civil Rights and the Department of 
Justice Civil Rights Division. 
 
2.  Question: What assistance is available to states to address the impact of the COVID-19 
PHE on statewide transition plan activities? 
 
                                                            
1 https://www.medicaid.gov/sites/default/files/federal-policy-guidance/downloads/cib050917.pdf  
2 Under title II of the ADA and Olmstead v. L.C., the unjustified isolation of individuals with disabilities 
constitutes unlawful discrimination. States are required to provide community-based treatment where 
such treatment would be appropriate, the affected person does not oppose such treatment, and the 
treatment can be reasonably accommodated.  Further information on state obligations under Olmstead can 
be found at https://www.ada.gov/olmstead/q&a_olmstead.htm.  Answer:  States can review up-to-date guidance on flexibilities available for the delivery 
of HCBS on the CMS website.3 States can also avail themselves of individual and small 
group technical assistance from CMS, including alternative ways to gather site-specific 
assessment data and conduct validation activities.  CMS also is available to offer 
assistance with approaches to gather information from beneficiaries and other 
stakeholders when face-to-face contact is impacted by state or local restrictions due to the 
COVID-19 PHE.      
 
3.  Question: Given the extension of the deadline to assure full implementation of the 
settings criteria to March 17, 2023, when will states be required to submit heightened 
scrutiny packages for settings that have the effect of isolating Medicaid HCBS 
beneficiaries from the broader community?  
Answer: If the state determines, through their assessment and validation activities, that a 
setting that isolates individuals from the broader community has implemented 
remediation strategies to bring the setting into compliance with the settings criteria by the 
new timeline of July 1, 2021, the setting will not need to be submitted to CMS for 
heightened scrutiny review. This replaces the original date published in the March 2019 
FAQs.4 However, states should continue to provide information to the public about how 
those settings have overcome the presumption and comply with the settings criteria, in 
accordance with the parameters of questions 4 and 7 of the March 2019 FAQs. 
Any settings that meet the criteria in question 2 of the March 2019 FAQs of having the 
effect of isolating Medicaid beneficiaries from the broader community, and have not 
come into compliance with the regulatory criteria by July 1, 2021, should be posted for 
public comment with the remediation plan to comply with the settings criteria by March 
17, 2023 in accordance with question 8 of the March 2019 FAQs. For these settings, 
CMS requests that states submit information for a heightened scrutiny review no later 
than October 31, 2021, which also represents an additional year beyond the original 
timeline. 
The above dates replace prior guidance given in FAQ 4 of the March 2019 FAQs (SMD 
#19-001) issued on this subject. The deadlines by which states can work with settings that 
isolate Medicaid beneficiaries from the broader community to implement remediation 
and demonstrate compliance have been revised.  
4.  Question: What is the timeline to submit all other settings that are presumed to be 
institutional according to the HCBS settings rule5 (i.e., settings that are located in the 
                                                            
3 Available at https://www.medicaid.gov/resources-for-states/disaster-response-toolkit/coronavirus-
disease-2019-covid-19/index.html. 
4 Available at https://www.medicaid.gov/sites/default/files/Federal-Policy-
Guidance/Downloads/smd19001.pdf.  
5 See 42 CFR 441.301(c)(4), .530(a)(1), .710(a)(1).  same building as a public or private institution, or are on the grounds of or adjacent to a 
public institution providing inpatient treatment) to CMS for heightened scrutiny review?  
Answer: In accordance with the parameters described in FAQ 8 of the March 2019 
FAQs, the state should submit a numbered list of settings that the state has determined to 
be located in the same building as a public or private institution or on the grounds of or 
adjacent to a public institution that comply, or will comply, with the settings criteria by 
the end of the transition period to CMS for heightened scrutiny review. This information 
should be submitted to CMS by March 31, 2021. Public comments should be solicited 
upon completion of the assessment and validation activities outlined above.   
The above dates replace prior guidance given in FAQ 9 in the March 2019 FAQs (SMD 
#19-001) issued on this subject. The deadline for states to submit evidence packages for 
settings that fall under the institutional presumption is revised. 
5.  Question: If settings have made significant and long-term changes to the services 
provided or the location in which services will be provided in response to the COVID-19 
PHE, will states be required to reassess those settings? 
 
Answer: If a setting has made significant and permanent changes to the services 
provided or the location in which those services are provided, the state may be required to 
reassess the setting, after the PHE, for compliance with the Settings Rule requirements.