EPARTMENT OF HEALTH AND HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, MD 21244-1850 
 
 
 
CMCS Informational Bulletin  
 
DATE:  December 13, 2016 
 
FROM:  Vikki Wachino, Director  
Center for Medicaid & CHIP Services  
 
Shantanu Agrawal, M.D., Director 
Center for Program Integrity 
 
 
SUBJECT:  Strengthening Program Integrity in Medicaid Personal Care Services 
 
Introduction 
The Centers for Medicare & Medicaid Service (CMS) and states are taking important steps to 
support increased access by Medicaid beneficiaries who are aged or have a disability to high-
quality home and community-based services (HCBS).1  These efforts are yielding concrete 
results: in FY 2014, the majority (53%) of the $152 billion in federal and state Medicaid 
spending on long-term care services and supports (LTSS) was spent on community-based 
supports, reversing a long-standing imbalance weighted toward spending on nursing facility and 
other institutional care.2  To continue this progress, CMS and states have moved forward with 
implementing recent regulations requiring greater community integration3 and adopting key 
improvements to managed LTSS4.   
Like other HCBS services, personal care services (PCS)  are intended to enable  Medicaid 
beneficiaries who are aged and those with disabilities to live with as much independence as 
possible in their homes or other community settings rather than in a nursing facility or other 
institution. Recently the Office of Inspector General (OIG) issued an Investigative Advisory 
identifying a number of program integrity vulnerabilities in the delivery of PCS and 
                                                           
1 CMCS Informational Bulletin, Suggested Approaches for Strengthening and Stabilizing the Medicaid Home Care 
Workforce, August 3, 2016, https://www.medicaid.gov/federal-policy-guidance/federal-policy-guidance.html 
2 Truven Health Analytics, Improving the Balance: The Evolution of Medicaid Expenditures for Long-Term 
Services and Supports (LTSS), FY 1981-2014 (June 3, 2016), https://www.medicaid.gov/medicaid-chip-program-
information/by-topics/long-term-services-and-supports/long-term-services-and-supports.html 
3 79 Federal Register 2947 (January 16, 2014),  https://www.medicaid.gov/Medicaid-CHIP-Program-
Information/By-Topics/Long-Term-Services-and-Supports/Home-and-Community-Based-Services/Home-and-
Community-Based-Services.html 
4 Medicaid and CHIP Managed Care Final Rule (CMS 2390-F): Strengthening the Delivery of Managed Long 
Term Services and Supports (April 25, 2016), https://www.medicaid.gov/medicaid-chip-program-information/by-
topics/delivery-systems/managed-care/managed-care-final-rule.html  CMCS Informational Bulletin  Page 2 
 
recommending corrective actions by CMS.5  Earlier this year, CMS published guidance for PCS 
agencies and attendants describing the steps they should take to avoid improper payments. 6 
This Informational Bulletin is addressed to states, PCS agencies and attendants and other 
stakeholders .  It describes PCS, summarizes the program integrity vulnerabilities, and highlights 
safeguards state Medicaid agencies can put in place to strengthen program integrity in PCS 
without undermining beneficiary access to PCS, especially self-directed services.    
Personal Care Services (PCS) 
Coverage of PCS is optional for states, except when they are medically necessary for children 
eligible for early and periodic screening, diagnostic, and treatment (EPSDT) services.  PCS can be 
covered as a State Plan option,7 under one or more waivers approved by CMS,8 or both.  The 
definition of PCS is not uniform across these authorities, but in general, PCS consists of non-
medical services supporting Activities of Daily Living (ADL), such as movement, bathing, 
dressing, toileting, and personal hygiene. PCS can also offer support for Instrumental Activities 
of Daily Living (IADL), such as meal preparation, money management, shopping, telephone use, 
etc. Typically, an attendant provides PCS and rules for attendant qualifications are set by states. 
Certain Medicaid authorities allow states to offer family members or legal guardians the option 
to become an attendant. 
There are generally two models of PCS service delivery that states can choose to make 
available: agency-directed or self-directed. Agency-directed is the traditional delivery model for 
PCS.  Under this approach, a qualified PCS agency hires, fires, pays and trains PCAs to provide 
services to eligible individuals. A variation of the agency model is the agency with choice, in 
which an agency is co-employer with the beneficiary of PCS attendants.  Self-directed PCS is an 
alternative to the traditional delivery model. Under self-directed models, beneficiaries or their 
representatives have decision-making authority over PCS and take direct responsibility to 
manage their services with the assistance of a system of available supports.  In self-direction, 
individuals may have the option, and therefore the responsibility, for managing all aspects of 
service delivery in a person-centered planning process including, but not limited to Employer 
Authority which includes recruiting, hiring, training and/or supervising providers and Budget 
Authority, pursuant to which the individual directs how state-authorized Medicaid funds in a 
participant budget are spent.  Beneficiary decision-making and autonomy are hallmarks of self-
directed models of service provision, and CMS strongly encourages use of self-directed models 
with necessary supports using a person centered planning process.  
                                                           
5  OIG, Personal Care Services: Trends, Vulnerabilities, and Recommendations for Improvement, November 2012, 
www.oig.hhs.gov/reports-and-publications/portfolio/portfolio-12-12-01.pdf 
6 Preventing Medicaid Improper Payments for Personal Care Services (July 2016),  
https://www.cms.gov/Medicare-Medicaid-Coordination/Fraud-Prevention/Medicaid-Integrity-
Education/Downloads/pcs-booklet.pdf 
7 Section 1905(a)(24) of the Social Security Act, 42 CFR 440.167; section 1915(i), 42 CFR 440.182; section 
1915(j), 42 CFR  Part 441, Subpart J;  and 1915(k), 42 CFR Part 441, Subpart K. 
8 Section 1915(c) of the Social Security Act, 42 CFR 440.180; section 1915(d), and section 1115.  CMCS Informational Bulletin  Page 3 
 
Spending on PCS, like spending on HCBS services generally, is an increasing portion of Medicaid 
spending, reflecting the need for such services among the large and growing number of 
beneficiaries who are elderly or have disabilities.  In FY 2014, federal and state spending on PCS 
totaled $14.5 billion, or about 18 percent of Medicaid HCBS spending and 10 percent of total 
Medicaid spending on long-term services and supports that year.9  In addition to the 
approximately 950,000 beneficiaries receiving PCS under the Medicaid state plan in 2012, many 
of the 1.4 million beneficiaries receiving 1915(c) waiver services also received PCS.10  PCS, like 
other types of home and community-based care, is largely paid for on a fee-for-service basis.  
However, there is increasing state interest in delivering these services through managed care 
(MLTSS).11 
Program Integrity Vulnerabilities 
The OIG has identified a number of issues related to improper payments for PCS services and 
other compliance, payment and fraud vulnerabilities.  12 Findings from the OIG regarding 
services include services not provided in compliance with state requirements, not supported by 
documentation, provided during periods in which the beneficiaries were in Medicaid-
reimbursed institutional stays and payments for retaining the attendants during the 
institutional stay had not been authorized, and provided by PCS attendants who did not meet 
state qualification requirements. Findings related to billing practices include billing for services 
not rendered, furnished to ineligible beneficiaries, and furnished by unauthorized caregivers. 
Finally, in terms of abuse and neglect, the OIG highlighted instances of abuse and neglect of 
beneficiaries by PCS attendants, resulting in beneficiary harm.   
In response to OIG findings, CMS has recommended that states establish adequate post-
payment review processes for PCS, including implementing post-payment review processes 
specific to self-directed PCS.13  CMS also issued guidance to PCS agencies and attendants 
explaining how to avoid improper billing and describing the sanctions that apply to fraud, 
                                                           
9Truven Health Analytics, Medicaid Expenditures for Long-Term Services and Supports (LTSS) in FY 2014. 
April 15, 2016. Table A.  https://www.medicaid.gov/medicaid-chip-program-information/by-topics/long-term-
services-and-supports/long-term-services-and-supports.html 
10 http://kff.org/medicaid/report/medicaid-home-and-community-based-services-programs-2012-data-update/ 
11 Managed LTSS reached 15 percent of LTSS spending in FY 2014, Truven Health Analytics, Medicaid 
Expenditures for Long-Term Services and Supports (LTSS) in FY 2014. 
 
12 OIG, Personal Care Services: Trends, Vulnerabilities, and Recommendations for Improvement, November 2012, 
www.oig.hhs.gov/reports-and-publications/portfolio/portfolio-12-12-01.pdf and Office of Inspector General, 
"Investigative Advisory on Medicaid Fraud and Patient Harm Involving Personal Care Services," p. 2,  
https://oig.hhs.gov/reports-and-publications/portfolio/ia-mpcs2016.pdf 
 
13 CMCS, Increasing Fiscal Protections for Personal Care Services. April 2016. 
https://www.medicaid.gov/medicaid-chip-program-information/by-topics/long-term-services-and-supports/home-
and-community-based-services/hcbs-training.html  CMCS Informational Bulletin  Page 4 
 
including civil monetary penalties, criminal fines, imprisonment, and exclusion from 
participation in Medicaid, Medicare, and other Federal health care programs. 14 
Assuring both Program Integrity and Beneficiary Autonomy in Self-Directed PCS 
When establishing safeguards to ensure program integrity in PCS, states should take into 
account the special circumstances of the self-direction model.  Unlike PCS agencies, which 
enroll in the Medicaid program and sign provider agreements holding them accountable for 
properly claiming and meeting program standards, individual beneficiaries who direct their own 
services based on their needs and preferences are attempting to maximize their independence 
and ability to live in their homes and communities.  The program integrity safeguards that make 
policy and operational sense in the case of a PCS agency with many clients may not be suitable 
to an individual beneficiary directing his or her own PCS services.  This is particularly true in the 
case of the qualifications of workers that are most relevant to individual needs and preferences.  
(For example, a beneficiary requiring his or her worker to be able to communicate in a 
particular language, including sign language, or have experience in dealing with particular 
mobility issues.)  States are again encouraged to collaborate with their stakeholders, including 
beneficiary advocates, to determine the methods of PCS delivery and the resulting program 
integrity protections that will prevent fraud and abuse while still maintaining beneficiary 
autonomy in self-directed models. 
Program Integrity Safeguards 
 
The PCS benefit is a key component of Medicaid home and community-based care.  Without 
PCS, many elderly beneficiaries and individuals with disabilities have no practical alternative to 
institutionalization as they face a loss of their independence.  Thus, program integrity 
weaknesses in PCS put vulnerable beneficiaries at risk of substandard or harmful care and put 
program funds at risk for fraud, waste, and abuse.  CMS is committed to working with states 
and OIG to strengthen program integrity in PCS.  The following are safeguards states could, and 
in some instances should already have, put in place to protect the PCS benefit and program 
beneficiaries.   
Provider Qualifications and Basic Training 
HCBS services differ from medically-focused services. Recognizing the importance of balancing 
program integrity and self-direction, states frequently establish broad provider qualifications 
for HCBS services, although the qualifications can vary depending on the specific service being 
provided. For services provided primarily in the home, such as PCS, qualifications can include 
possession of a valid drivers license, a minimum age threshold, and the receipt of any training 
                                                           
14 Preventing Medicaid Improper Payments for Personal Care Services (July 2016),  
https://www.cms.gov/Medicare-Medicaid-Coordination/Fraud-Prevention/Medicaid-Integrity-
Education/Downloads/pcs-booklet.pdf 
  CMCS Informational Bulletin  Page 5 
 
required by the state. Some states require basic competency-based training such as first aid 
and CPR certification, etc.  However, such minimum qualification requirements should not 
restrict the ability of beneficiaries to require individualized training on the specific ways to 
provide care based on their own needs and preferences. Training can be provided by 
professional home care associations, training organizations, public Workforce Investment Act 
programs, or unions. In many consumer-directed personal care programs, much of the training 
can also be provided directly by the beneficiary.  One example of basic training provided to PCS 
attendants that resulted in positive attendant and beneficiary outcomes was recently publicized 
in Californias In-Home Supportive Services program. 15  PCS attendants were trained in CPR and 
first aid, infection control, medications, chronic diseases and other areas, which was linked to 
reduced use of the emergency by PCS recipients.  
PCS services covered under 1905(a)(24) of the Social Security Act and 42 CFR 440.167 must be 
provided by an individual who is qualified to provide such services and who is not a member of 
the individuals family.16  In the case of HCBS waiver services, the state Medicaid agency must 
assure that there are adequate standards for all types of providers that provide services under 
the waiver, including PCS.17  States have discretion in determining who is qualified to furnish 
State Plan PCS services and what safeguards are adequate for HCBS waiver service providers.  
Whatever provider qualifications a state chooses to establish for PCS attendants, the state 
should have in place procedures for ensuring that PCS attendants comply with the 
qualifications, including specifying how PCS agencies or attendants are to document their 
compliance.   
Registry of PCS Attendants 
States should consider establishing a centralized data bank for PCS that would be accessible to 
PCS agencies as well as to beneficiaries. The data bank could include: a registry of qualified PCS 
attendants, registration of the PCS agency with the Medicaid agency, excluded PCS agency data 
(In & out-of-state information, OIGs Exclusions Database (LEIE), etc.), and comprehensive rules 
for minimum age and qualification requirements for each provider type.  Per CMS guidance 
issued in 201618, use of registries can help strengthen the identity of the workforce and provide 
beneficiary access to information about qualified home care workers.  In the case of self-
directed PCS models where beneficiaries can hire family members or friends, a state will need 
to ensure there are no significant barriers for beneficiaries to add family members or friends to 
a registry. 
 
Screening of PCS Providers 
                                                           
15 Newcomer, Bob, UCSF, 2016.  Evaluation of Californias In-Home Supportive Services Pilot Program Training 
In-Home Workers. 
16 42 CFR 440.167(a)(2). 
17 42 CFR 441.302(a)(1). 
18 https://www.medicaid.gov/federal-policy-guidance/downloads/cib080316.pdf   CMCS Informational Bulletin  Page 6 
 
Federal regulations require that all providers furnishing services to Medicaid beneficiaries on a 
fee-for-service basis be screened and enrolled in the Medicaid program.19   (CMS will require 
compliance with this requirement by states and managed care plans with managed care 
contracts beginning on or after July 1, 2018).20  A fee-for-service provider is defined as any 
individual or entity furnishing Medicaid services under an agreement with the Medicaid 
agency.21  The level of screening to which a provider is subject varies with the risk of fraud, 
waste, or abuse the provider presents to the Medicaid program;22 in the case of provider types 
like PCS agencies that participate only in Medicaid, the determination of risk is at the discretion 
of the state.23 The purpose of the screening and enrollment requirements is to identify bad 
actors before they enroll in the Medicaid program in order to prevent them from harming 
beneficiaries and / or diverting Medicaid funds. 
In the case of agency-directed PCS, agencies are considered to be providers for purposes of 
screening and enrollment because they have signed provider agreements with the state 
Medicaid agency and are legally responsible for the truthfulness, accuracy, and completeness of 
the claims they submit for payment.24  In contrast, the attendants that PCS agencies employ or 
with whom they subcontract are not considered to be providers for this purpose, and states are 
not required to screen them or to enroll them in their Medicaid programs.  At a minimum, 
however, PCS agencies must ensure that they do not employ or subcontract with any individual 
or entity who has been excluded from Medicaid or other federal health care programs.25  State 
Medicaid agencies should review the risk levels to which they have assigned PCS agencies and 
ensure that the appropriate level of screening, including a review of all ownership and control 
disclosures, is being applied at initial enrollment and at revalidation of enrollment.  In agency-
directed models, the PCS agency is the employer and handles all employer functions for the 
employees, such as payroll services, training, tax services, verification of timesheets, hiring, 
including performing background checks on potential candidates.  
In the case of self-directed PCS, providers are typically paid differently than the agency-directed 
model. Often this is accomplished through the use of a Financial Management Service (FMS) 
entity.26 The FMS entity, which may be an independent private entity or operated by the state, 
performs the employer functions such as those identified in the agency-directed models.  When 
the FMS entity submits fee-for-service claims for self-directed PCS services furnished by 
                                                           
19 42 CFR 455.410, 455.450 
20 42 CFR 438.608(b) 
21 FF 
22 42 CFR 455.434(b); 42 CFR 455.450. 
23 Medicaid Provider Enrollment Compendium (MPEC), March 2016, section 1.3.E. 
https://www.medicaid.gov/affordablecareact/provisions/downloads/mpec-032116.pdf 
 
24 42 CFR 455.18 
25 42 CFR 1001.1901(b)(1) 
26 1915(c) waiver authority does not permit direct payments to a waiver participant, either to reimburse the 
participant for expenses incurred or to enable the participant to directly pay a service provider. FMS works as an 
intermediary organization that performs financial transactions on behalf of the participant.  CMCS Informational Bulletin  Page 7 
 
attendants that it employs at the direction of the beneficiary, the FMS entity is considered the 
provider for purposes of screening and enrollment.   
Under federal regulations, Medicaid providers determined by state Medicaid agencies to be 
high risk are required to undergo fingerprint-based criminal background checks.27  However, 
states have discretion to conduct or require criminal background checks for individual PCS 
attendants who are not considered providers but who are employed by or subcontract with 
providers and furnish the PCS services for the provider that submits the claims.  A number of 
states, including Iowa, Minnesota, Ohio, and Virginia, conduct criminal background checks of 
PCS attendants.    
The CMS National Background Check Program (NBCP) enables long-term care providers, 
including PCS agencies, to conduct a fingerprint-based search of the state and federal criminal 
history of individuals having direct access to, and one-on-one contact with, Medicaid 
beneficiaries.28  While NBCP is not a mandatory program, OIG has recommended criminal 
background checks for all PCS attendants.  The role of background checks in identifying criminal 
histories of individuals applying for PCS attendant status is not disputed and states should 
consider requiring such checks.  However, states are also encouraged to collaborate with 
stakeholders, including beneficiary advocates, to develop enrollment policies that support 
consumer-directed programs that allow friends and family members to be recognized as PCS 
attendants. The Equal Employment Opportunity Commission has issued guidance on how 
criminal history can be viewed in the context of prospective employment.29 Federal Financial 
Participation (FFP) is available to support states efforts in obtaining criminal background checks 
for individuals applying for PCS attendant status.  As part of administering consumer-directed 
PCS, a state may incur costs applicable to either performing criminal background checks or 
contracting with an entity to perform criminal background checks. In either situation, 
Medicaids allocable portion of the incurred cost can be claimed as a state program 
administrative expenditure and reimbursed at the 50 percent administrative claiming rate.  
With regard to agency-directed PCS, costs applicable to criminal background checks can be 
considered by the state in developing the PCS rate which should be paid on a per service basis 
and claimed at the applicable Federal Medical Assistance Percentage (FMAP). 
 
Verification of Need for Services 
                                                           
27 42 CFR 455.450(c). 
28 https://www.cms.gov/Medicare/Provider-Enrollment-and 
Certification/SurveyCertificationGenInfo/BackgroundCheck.html 
 
29 https://www.eeoc.gov/laws/guidance/arrest_conviction.cfm 
  CMCS Informational Bulletin  Page 8 
 
PCS covered under the state Plan option must be authorized by a physician or authorized in 
accordance with a service plan approved by the state.30  The state has discretion to determine 
the functional eligibility criteria that qualify a beneficiary for PCS.  PCS covered through an HCBS 
waiver or Community First Choice benefit must be furnished only to beneficiaries who are 
determined to need an institutional level of care based on an initial evaluation (and annual 
reevaluation).31   Whatever the functional eligibility criteria, states should verify that the 
individuals eligibility for the PCS benefit is documented before the services are furnished.  
Documentation of Claims 
PCS providers, like providers of any other Medicaid services, must be able to document the 
provision of services for which they have submitted a claim for payment.32  Section 11600 of 
the State Medicaid Manual indicates that claims for any Medicaid service must be reviewed to 
ensure the following:  it contains all the required information (which includes the date(s) of 
service, who provided the service, where the service was provided, length of time required for 
the service, if relevant, and third party billing information); the information is internally 
consistent; the individual who received the service and the provider who submitted the claim 
were certified as eligible to participate in the program on the date(s) of service; the service 
provided is covered under the program; the service does not exceed frequency limitations; and  
any required prior authorizations or certifications were obtained. 
 Improper payments for PCS occur when, among other things, claims are not supported by 
sufficient documentation.  States and PCS providers should review the common documentation 
and billing errors relating to PCS and promising practices for correcting them.33 PCS providers 
should check to avoid billing errors prior to submitting claims.34  States monthly submission of 
Transformed Medicaid Statistical Information System (T-MSIS) data will give CMS and other 
stakeholders the ability to more closely monitor the trends in states PCS claims over time.  
If a state uses a single standardized form for the PCS service record, the state should ensure 
that the records reflect the amount/scope/duration of services specified in the PCS plan.  It 
should also consider including comment boxes on forms that require employees to fill in their 
daily observation.  In the alternative, states could require PCS attendants to document the 
provision of services with some kind of verification mechanism.  There are no standard 
                                                           
30 42 CFR 440.167(a)(1) 
31 42 CFR 441.302(c) 441.510(c) 
32 Section 1902(a)(27) of the Social Security Act, 42 CFR 431.107(b)(1), (2). 
 
33 CMS, Common Errors That Lead to Improper Payments for Personal Support Services.  October 2015.   
https://www.cms.gov/Medicare-Medicaid-Coordination/Fraud-Prevention/Medicaid-Integrity-
Education/Downloads/hcbs-tk1-common-errors-PersSupServ-factsheet.pdf  
 
34 CMS, Quality Checklist for Billing Home and Community-Based Services. October 2015.  
https://www.cms.gov/Medicare-Medicaid-Coordination/Fraud-Prevention/Medicaid-Integrity-
Education/Downloads/hcbs-tk1-qual-check-billing-factsheet.pdf   
  CMCS Informational Bulletin  Page 9 
 
requirements for verification of PCS provision.  CMS encourages states to implement some 
form of verification to ensure that PCS being billed were actually provided.   
Prepayment Edits  
To avoid making payments on improper PCS provider claims, states should ensure that all 
claims for PCS services are processed with specific edits that automatically deny unusual 
activity, such as duplicative billings for the same service and duplicative billing during an 
individuals institutional stay ( unless they are billings for retention payments authorized as part 
of the states approved PCS program).  The cost of system development of these special edits in 
the states Medicaid Management Information System (MMIS) claims processing subsystem is 
eligible for the ninety percent enhanced match because the edits are applicable to MMIS 
development.  In addition, states should ensure that their requirements for record retention 
are clearly communicated to providers, along with language on penalties to be imposed for 
non-compliance. Claims submission policies require that PCS claims include all relevant data 
elements  identified above, and  states are encouraged to review PCS claims when they span a  
wide range of service dates (i.e., larger than 30 days).  
Post-payment Review 
States should conduct post-payment reviews to verify that services are in compliance with state 
standards for PCS services.  In conducting post-payment review, states should consider 
including the following elements: how an individuals level of care was certified and re-certified; 
whether the Person-Centered Service Plan (PCSP) is current at the time of Medicaid eligibility 
and billing; whether the scope/amount/duration of services provided aligns with the PCSP; and 
whether claims data and service documentation confirms services billed were rendered.  States 
should be utilizing billing system edits to prohibit payment for services provided beyond the 
scope of services authorized.  In instances in which a post-payment review reveals a lack of 
supporting documentation to validate the service claim, or reveals that services were provided 
outside of the service authorization parameters, states should recoup impacted payments from 
providers. 
Audits 
States should perform ongoing audits and provider quality reviews of PCS agencies to ensure 
that services for which claims are paid are:  
  Covered services  under the State Plan; 
  Delivered in accordance with an approved plan of care; 
  Properly documented; 
  Delivered by appropriately certified staff; and  CMCS Informational Bulletin  Page 10 
 
  Not inappropriately billed while the beneficiary was in a hospital or nursing 
home. 
 
For Further Information 
CMS recently issued a Request for Information on strengthening the provision of home and 
community-based services, including PCS.  Additional discussion is reflected in this document 
on the need to ensure the availability of high-quality and safe PCS to assist individuals to remain 
in their communities, while also ensuring services are delivered according to program integrity 
standards.  Public input is solicited on actions CMS may consider in achieving both of those 
goals. 
CMS hopes the content of this bulletin is helpful to states in strengthening integrity in Medicaid 
PCS.  States interested in learning more on these topics and to request technical assistance may 
contact Melissa Harris in CMCS at melissa.harris@cms.hhs.gov, and Clint Eisenhower in CPI at 
clint.eisenhower@cms.hhs.gov .