DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland 21244-1850 
 
Center for Medicaid and State Operations 
 
                   SMDL #08-001 
 
 
Dear State Medicaid Director: 
 
This letter provides guidance on the implementation of section 6086 of the Deficit Reduction Act 
of 2005 (DRA), Public Law Number 109-171.  
 
Section 6086, Expanded Access to Home and Community-Based Services for the Elderly and 
Disabled, adds a new section 1915(i) to the Social Security Act (the Act).  Under section 1915(i), 
States have the option to amend their State plans to provide home and community-based services 
(HCBS) without regard to statewideness or certain other Medicaid requirements.  This provision 
was effective January 1, 2007.   
 
There are certain similarities and differences between HCBS under the new State plan option and 
the existing section 1915(c) waiver authority.  It should be noted that the addition of section 
1915(i) of the Act does not alter a States ability to request or administer waivers under section 
1915(c) of the Act.  The enclosed chart outlines a comparison of the Medicaid benefits States can 
offer under these two different authorities.  
 
State Plan HCBS Financial Eligibility 
Section 1915(i)(1) of the Act gives States the option of providing HCBS under their State plan to 
individuals eligible for Medicaid under an eligibility group covered in the State plan, and who 
have income that does not exceed 150 percent of the Federal poverty level (FPL).  This option 
does not create a new eligibility group.  Rather, the 150 percent of poverty income requirement 
must be met in addition to all of the eligibility requirements applicable to the group under which 
the individual qualifies for Medicaid.  In determining whether the 150 percent of poverty 
requirement is met, the regular rules for determining income eligibility for the individuals 
eligibility group apply.   
 
State Plan HCBS Program Eligibility 
Section 1915(i)(3) of the Act gives States the option not to apply section 1902(a)(10)(C)(i)(III) 
of the Act (pertaining to income and resource eligibility rules) for the medically needy living in 
the community.  This election allows States to treat medically needy individuals as if they are 
living in an institution by not deeming income and resources from an ineligible spouse to an 
applicant, or from a parent to a child.  However, this authority is limited to the medically needy.  
There is no authority under section 1915(i) of the Act, comparable to the statutory authority 
under section 1915(c) of the Act, in which a State can treat individuals who are not medically 
needy as if they are living in an institution for purposes of determining their eligibility for the 
HCBS State plan option.  We note, however, that individuals with incomes up to 150 percent of 
the FPL who are only eligible for Medicaid because they are receiving 1915(c) waiver services  Page 2  State Medicaid Director  
may also be eligible to receive services under 1915(i) of the Act, provided they meet all other 
requirements of the 1915(i) State plan option. 
 
Additionally, section 1915(i)(1)(A) of the Act requires States to impose needs-based criteria for 
eligibility for State plan HCBS.  States may also establish additional needs-based criteria for the 
specific service(s) that an individual could receive under the State plan HCBS.  In contrast to 
HCBS waivers, it is not necessary for States to demonstrate, or for the Centers for Medicare & 
Medicaid Services (CMS) to conclude, that but for the provision of the services furnished under 
section 1915(i) of the Act, the individual would require the level of care provided in a hospital, 
nursing facility, or intermediate care facility for persons with mental retardation.  However, 
States must demonstrate that the institutional level of care criteria they apply are more stringent 
than the needs-based criteria established for 1915(i) State plan HCBS.  States may use the needs-
based criteria, as well as requirements of medical necessity, to provide State plan HCBS only to 
individuals who qualify for the benefit.  
 
Number Served Reporting Requirement 
States are required under section 1915(i)(1)(C)(i) of the Act to project the number of individuals 
served in a year and to submit this information to CMS in the form and upon the frequency 
specified by the Secretary.  CMS will require States to report annually the actual number of 
individuals served.  In the event that a State serves more individuals than the number originally 
projected, the law provides a mechanism by which the State may modify the needs-based 
eligibility criteria without prior approval by the Secretary.  In addition, States may establish a 
limit on the total number of individuals served and provide for waiting lists for State plan HCBS.  
 
Services 
Section 1915(i) of the Act allows the provision of specific HCBS under the State plan.  These 
services are listed in section 1915(c)(4)(B) of the Act that governs HCBS waivers.  The services 
listed in section 1915(c)(4)(B) of the Act are:  case management services, homemaker/home 
health aide services, personal care services, adult day health services, habilitation services, and 
respite care.  In addition, the following services may be provided for individuals with chronic 
mental illness:  day treatment, other partial hospitalization services, psychosocial rehabilitation 
services, and clinic services (whether or not furnished in a facility).  As with other State plan 
services, States may impose criteria of medical necessity or requirements for prior authorization 
and utilization control to ensure the appropriate level of services furnished to an eligible 
individual.  In addition, States may establish a maximum utilization level of a particular service 
furnished under the State plan HCBS option. 
 
Independent Evaluation and Assessment & Conflict of Interest Standards 
Section 1915(i)(1)(E) of the Act requires an independent evaluation and assessment of each 
individual who applies for services under this benefit.  Additionally, section 1915(i)(1)(H)(ii) of 
the Act requires States to establish standards for the conduct of the independent evaluation and 
assessment to safeguard against conflicts of interest.  Thus, States should establish standards and 
procedures to ensure that evaluators and assessors are not: 
  related by blood or marriage to the individual, or any paid caregiver of the 
individual; 
  financially responsible for the individual; 
  Page 3  State Medicaid Director  
  empowered to make financial or health-related decisions on behalf of the individual; 
and/or  
  providers of State plan HCBS for the individual, or those who have interest in or are 
employed by a provider of State plan HCBS, except when the only willing and 
qualified provider in a geographic area also provides HCBS, and States devise 
conflict of interest protections. 
 
In addition, the law sets forth requirements for the independent assessment.  Based on these 
requirements, the assessment should be based on the following: 
  an objective face-to-face evaluation by an independent agent trained in assessment of 
need for HCBS and supports; 
  consultation with the individual and others as appropriate; 
  an examination of the individuals relevant history, medical records, care and support 
needs, and preferences; 
  objective evaluation of the inability to perform, or need for significant assistance to 
perform 2 or more activities of daily living (as defined in section 7702B(c)(2)(B) of 
the Internal Revenue Code of 1986);  
  where applicable, an evaluation of the support needs of the individual (or the 
individuals representative) to participant-direct; and 
  a determination of need (and, if applicable, determination that service-specific 
additional needs-based criteria are met) for at least one State plan HCBS before an 
individual is enrolled into the State plan HCBS benefit. 
 
Individualized Care Plans  
Section 1915(i) of the Act requires States to provide services according to an individualized care 
plan for each individual.  The law also sets forth requirements for the development and 
monitoring of the individualized care plan.  Based on these requirements, the individualized plan 
of care should: 
  be based on the independent assessment; 
  be developed by a person-centered process in consultation with the individual, the 
individuals treating physician, health care or supporting professional, or other 
appropriate individuals, as defined by the State, and, where appropriate, the 
individuals family, caregiver, or representative; 
  identify the State plan HCBS necessary for the individual, and furnish (or, fund if the 
individual elects to participant-direct the purchase of such services) all HCBS which 
the individual needs and for which the individual meets service-specific additional 
needs-based criteria (if any); 
  take into account the extent of, and need for, any family or other supports for the 
individual; 
  prevent the provision of unnecessary or inappropriate care; 
  be guided by best practices and research on effective strategies for improved health 
and quality of life outcomes; and 
  be reviewed at least every 12 months and as needed when there is significant change 
in the individuals circumstances. 
 
 
 
  Page 4  State Medicaid Director  
Self-Directed Services 
Under the State plan HCBS option, States may offer an individual (or the individuals 
representative) the option to self-direct HCBS.  Self-directed services may be planned and 
purchased under the direction and control of the individual or the individuals authorized 
representative, including the amount, duration, scope, provider, and location of such services.  
The provision of these services must be based upon the individualized plan of care, which 
specifies the services that the individual or his/her representative will self-direct and the methods 
by which they will do so.  States may also allow individuals who choose to self-direct services to 
have individualized budgets.  With respect to these budgets, the State plan amendment must 
describe in detail the method for calculating the dollar values (e.g., based on a prospective 
budget amount uniquely assigned to each participant by level of support).  States must also 
define a process for making adjustments in the budget to reflect changes in the individual 
assessments and service plans. 
 
Quality 
States must ensure that the provision of HCBS meets Federal and State guidelines for quality 
assurance.  As is the case with HCBS waivers, CMS requires States to have a quality 
improvement strategy that includes methods for ongoing measurement of program performance 
and mechanisms of intervention to assure quality of care, proportionate to the scope of the HCBS 
and the number of individuals receiving HCBS.   
 
Effective January 1, 2010, the DRA also requires that the Secretary develop, through the Agency 
for Health Care Research and Quality, indicators and measures for program performance and 
quality of care to assess HCBS at the State and national level, and service outcomes, particularly 
regarding health and welfare of individuals receiving HCBS.  Likewise, the measures in the State  
quality improvement strategy must consist of indicators for program performance and quality of 
care as approved and prescribed by the Secretary, and applicable to the nature of the State plan 
HCBS benefit.   
 
Compliance with the Law 
States will be required to continue to comply with all other provisions of the Act in the 
administration of the State plan under this Title. 
 
Submission Procedures 
This provision was effective January 1, 2007.  To incorporate this new benefit into your State 
plan, please submit your State Plan Amendment electronically to the Associate Regional 
Administrator for Medicaid in your servicing regional office. 
 
  Page 5  State Medicaid Director  
If you have any additional questions, please contact Ms. Suzanne Bosstick, Director, Division of 
Community and Institutional Services, Disabled and Elderly Health Programs Group, at  
410-786-1301. 
 
Sincerely, 
 
 
 
Dennis G. Smith 
Director 
 
Enclosure 
 
cc: 
 
CMS Regional Administrators 
 
CMS Associate Regional Administrators 
      Division of Medicaid and Childrens Health 
 
Barbara Edwards 
NASMD Interim Director 
American Public Human Services Association 
 
Joy Wilson 
Director, Health Committee 
National Conference of State Legislatures 
 
Matt Salo 
Director of Health Legislation 
National Governors Association 
 
Debra Miller 
Director for Health Policy 
Council of State Governments 
 
Christie Raniszewski Herrera 
Director, Health and Human Services Task Force 
American Legislative Exchange Council 
 
Barbara Levine 
Director of Policy and Programs 
Association of State and Territorial Health Officials