[Federal Register Volume 76, Number 38 (Friday, February 25, 2011)]
[Proposed Rules]
[Pages 10736-10753]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-3946]



[[Page 10735]]

Vol. 76

Friday,

No. 38

February 25, 2011

Part III





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Part 441



Medicaid Program; Community First Choice Option; Proposed Rule

Federal Register / Vol. 76, No. 38 / Friday, February 25, 2011 / 
Proposed Rules

[[Page 10736]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 441

[CMS-2337-P]
RIN 0938-AQ35


Medicaid Program; Community First Choice Option

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule implements Section 2401 of the Affordable 
Care Act (ACA) which establishes a new State option to provide home and 
community-based attendant services and supports. These services and 
supports may be offered through the Community First Choice State plan 
option.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on April 26, 2011.

ADDRESSES: In commenting, please refer to file code CMS-2337-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address only: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-2337-P, P.O. Box 8016, 
Baltimore, MD 21244-8016.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address only: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-2337-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC-- Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 
20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
please call telephone number (410) 786-7195 in advance to schedule your 
arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    Submission of comments on paperwork requirements. You may submit 
comments on this document's paperwork requirements by following the 
instructions at the end of the ``Collection of Information 
Requirements'' section in this document.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Carrie Smith, (410) 786-4485.

SUPPLEMENTARY INFORMATION: Submitting Comments: We welcome comments 
from the public on all issues set forth in this rule to assist us in 
fully considering issues and developing policies. You can assist us by 
referencing the file code CMS-2337-P and the specific ``issue 
identifier'' that precedes the section on which you choose to comment.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

I. Background

A. Section 2401 of the Affordable Care Act

    The Patient Protection and Affordable Care Act of 2010 (Pub. L. 
111-148, enacted on March 23, 2010), as amended by the Health Care and 
Education Reconciliation Act of 2010 (Pub. L. 111-152, enacted March 
30, 2010) (collectively referred to as the Affordable Care Act) 
established a new State plan option to provide home and community-based 
attendant services and supports. Section 2401 of the Affordable Care 
Act, entitled ``Community First Choice Option,'' adds a new section 
1915(k) of the Social Security Act (the Act) that allows States, at 
their option, to provide home and community-based attendant services 
and supports under their State plan. This option, available October 1, 
2011, allows States to receive a 6 percentage point increase in Federal 
matching payments for expenditures related to this option.
    Under section 1915(k)(1) of the Act, States can provide home and 
community-based attendant services and supports for individuals who are 
eligible for medical assistance under the State plan whose income does 
not exceed 150 percent of the Federal Poverty Level or, if greater, the 
income level applicable for an individual who has been determined to 
require an institutional level of care to be eligible for nursing 
facility services under the State plan and with respect to whom there 
has been a determination that, but for the provision of such services, 
the individuals would require the level of care provided in a hospital, 
a nursing facility, an intermediate care facility for the mentally 
retarded, or an institution for mental diseases, the cost of which 
could be reimbursed under the State plan. The individual must choose to 
receive such home and community-based attendant services and supports, 
and the State must meet certain requirements set forth in section 
1915(k)(1) of the Act. Section 1915(k)(1)(A) of the Act requires States 
electing this option to make available home and community-based 
attendant services and supports to eligible individuals, under a 
person-centered

[[Page 10737]]

service plan agreed to in writing by the individual, or his or her 
representative, that is based on a functional need assessment. This 
assessment will determine if the individual requires assistance with 
activities of daily living (ADLs), instrumental activities of daily 
living (IADLs), or health-related tasks. The services and supports must 
be provided by a qualified provider in a home or community setting 
under an agency-provider model, or through other methods for the 
provision of consumer controlled services and supports as referenced in 
section 1915(k)(6)(C) of the Act. Section 1915(k)(1)(B) of the Act 
requires that States make available additional services and supports 
including the acquisition, maintenance, and enhancement of skills 
necessary for the individual to accomplish ADLs, IADLs, and health-
related tasks, back-up systems or mechanisms to ensure continuity of 
services and supports and voluntary training on how to select, manage, 
and dismiss attendants.
    Section 1915(k)(1)(C) of the Act prohibits States from providing 
services and supports excluded from section 1915(k) of the Act, 
including room and board costs for the individual, special education 
and related services provided under the Individuals with Disabilities 
Education Act (Pub. L. 101-476, enacted on October 30, 1990) (IDEA) and 
vocational rehabilitation services provided under the Rehabilitation 
Act of 1973 (Pub. L. 93-112, enacted on September 26, 1973), assistive 
technology devices and services other than back-up systems or 
mechanisms to ensure continuity of services and supports, medical 
supplies and equipment, or home modifications. However, some, although 
not all, of these services can be covered by Medicaid under other 
authorities. Section 1915(k)(1)(D) of the Act sets forth services and 
supports permissible under section 1915(k) of the Act that States can 
provide, including expenditures for transition costs such as rent and 
utility deposits, first month's rent and utilities, bedding, basic 
kitchen supplies, and other necessities required for an individual to 
make the transition from a nursing facility, institution for mental 
diseases, or intermediate care facility for the mentally retarded to a 
community-based home setting where the individual resides. States can 
also provide for expenditures relating to a need identified in an 
individual's person-centered plan of services that increase 
independence or substitute for human assistance, to the extent that 
expenditures would otherwise be made for the human assistance.
    Section 1915(k)(2) of the Act provides that States offering this 
option to eligible individuals during a fiscal year quarter occurring 
on or after October 1, 2011 will be eligible for a 6 percentage point 
increase in the Federal medical assistance percentage (FMAP) applicable 
to the State for amounts expended to provide services under section 
1915(k) of the Act (hereinafter referred to as ``section 1915(k) 
services'').
    Section 1915(k)(3)of the Act sets forth the requirements for a 
State plan amendment. States must develop and have in place a process 
to implement an amendment in collaboration with a Development and 
Implementation Council established by the State that includes a 
majority of members with disabilities, elderly individuals, and their 
representatives. States must also provide consumer controlled home and 
community-based attendant services and supports to individuals on a 
statewide basis, in a manner that provides such services and supports 
in the most integrated setting appropriate to the individual's needs, 
without regard to the individual's age, type or nature of disability, 
severity of disability, or the form of home and community-based 
attendant services and supports the individual requires in order to 
lead an independent life.
    In addition, for expenditures during the first full fiscal year of 
implementation, States must maintain or exceed the level of State 
expenditures attributable to the preceding fiscal year for medical 
assistance provided under sections 1905(a), 1915, or 1115 of the Act, 
or otherwise provided to individuals with disabilities or elderly 
individuals. States must also establish and maintain a quality 
assurance system with respect to community-based attendant services and 
supports that includes standards for agency-based and other delivery 
models for training, appeals for denials and reconsideration procedures 
of an individual plan, and other factors as determined by the 
Secretary. The quality assurance system must incorporate feedback from 
individuals and their representatives, disability organizations, 
providers, families of disabled or elderly individuals, and members of 
the community, and maximize consumer independence and control. The 
quality assurance system must also monitor the health and well-being of 
each individual who receives section 1915(k) services and supports, 
including a process for the mandatory reporting, investigation, and 
resolution of allegations of neglect, abuse, or exploitation in 
connection with the provision of such services and supports. The State 
must also provide information about the provisions of the quality 
assurance required to each individual receiving such services.
    States must collect and report information for the purposes of 
approving the State plan amendment, providing Federal oversight, and 
conducting an evaluation, including data regarding how the State 
provides home and community-based attendant services and supports and 
other home and community-based services, the cost of such services and 
supports, and how the State provides individuals with disabilities who 
otherwise qualify for institutional care under the State plan or under 
a waiver the choice to receive home and community-based services in 
lieu of institutional care.
    Section 1915(k)(4) of the Act requires that States ensure, 
regardless of the models used to provide attendant services and 
supports, such services and supports are to be provided in accordance 
with the requirements of the Fair Labor Standards Act of 1938 and 
applicable Federal and State laws regarding the withholding and payment 
of Federal and State income and payroll taxes; the provision of 
unemployment and workers compensation insurance; maintenance of general 
liability insurance; and occupational health and safety.
    Section 1915(k)(5) of the Act sets forth the requirements that 
States provide data to the Secretary for an evaluation and Report to 
Congress on the provision of home and community-based attendant 
services and supports. States must provide information for each fiscal 
year for which attendant services and supports are provided, on the 
number of individuals estimated to receive section 1915(k) services and 
supports during the fiscal year; the number of individuals that 
received such services and supports during the preceding fiscal year; 
the specific number of individuals served by type of disability, age, 
gender, education level, and employment status; and whether the 
specific individuals have been previously served under any other home 
and community-based services program under the State plan or under a 
waiver.

B. Background of Home and Community-Based Attendant Services and 
Supports

    The Community First Choice Option continues to move Medicaid toward 
expanding options to States and individuals for the provision of 
community-based long-term care services. Consistent with the decision 
of the United States Supreme Court in Olmstead v. L.C., 527 U.S. 581 
(1999), this option will support States in their

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mission to develop or enhance a comprehensive system of long-term care 
services and supports in the community that provide beneficiary choice 
and direction in the most integrated setting. Since the mid-1970s, 
States have had the option to offer personal care services under their 
Medicaid State plans. The option was originally provided at the 
Secretary's discretion, had a medical orientation and could only be 
provided in an individual's place of residence. Personal care services 
were mainly offered to assist individuals in activities of daily 
living, and, if incidental to the delivery of such services, could 
include other forms of assistance (for example, housekeeping or 
chores). In the 1980s, some States sought to broaden the scope of 
personal care services to include community settings for the provision 
of services to enable individuals to participate in normal life 
activities.
    Through the Omnibus Budget Reconciliation Act of 1993 (Pub. L. 103-
66, enacted on August 10, 1993) (OBRA 93), the Congress formally 
included personal care as a separate and specific optional service 
under the Federal Medicaid statute and gave States explicit 
authorization, under a new section 1905(a)(24) of the Act, to provide 
such services outside the individual's residence. This was implemented 
by final rule published in the September 11, 1997 Federal Register (62 
FR 47896) that added a new section at Sec.  440.167 describing the 
option for States to provide a wide range of personal assistance both 
in an individual's residence and in the community. In 1999, we released 
additional guidance to clarify that personal care services may include 
ADLs and IADLs that all qualified relatives, with the exception of 
``legally responsible relatives'', could be paid to provide personal 
care services and that States were permitted to offer the option of 
consumer-directed personal care services.
    Additionally, the Omnibus Reconciliation Act of 1989 (Pub. L. 101-
239, enacted on December 19, 1989) (OBRA 89), revised the Early 
Periodic Screening and Diagnosis and Treatment Benefit to include the 
requirement that all section 1905(a) services are mandatory for 
individuals under the age of 21 if determined to be medically necessary 
in accordance with section 1905(r) of the Act.
    Furthermore, before 1981, the Medicaid program provided limited 
coverage for long-term care services in non-institutional, community-
based settings. Medicaid's eligibility criteria and other factors made 
institutional care much more accessible than care in the community.
    Medicaid home and community-based services (HCBS) were established 
in 1981 as an alternative to care provided in Medicaid institutions, by 
permitting States to waive certain Medicaid requirements upon approval 
by the Secretary. Section 1915(c) of the Act was added to title XIX by 
the Omnibus Budget Reconciliation Act of 1981 (Pub. L. 97-35, enacted 
on August 13, 1981) (OBRA 81). Programs of HCBS under section 1915(c) 
of the Act are known as ``waiver programs'', or simply ``waivers'' due 
to the authority to waive certain Medicaid requirements.
    Since 1981, the section 1915(c) HCBS waiver program has afforded 
States considerable latitude in designing services to meet the needs of 
people who would otherwise require institutional care. In 2010, 
approximately 315 approved HCBS waivers under section 1915(c) of the 
Act serve nearly 1 million elderly and disabled individuals in their 
homes or alternative residential community settings. States have used 
HCBS waiver programs to provide numerous services designed to foster 
independence; assist eligible individuals in integrating into their 
communities; and promote self-direction, personal choice, and control 
over services and providers. The addition of section 1915(i) of the Act 
in 2005 affords some of the same flexibility and service coverage 
through the State plan without a waiver.
    The section 1915(k) benefit does not diminish the State's ability 
to provide any of the existing Medicaid home and community-based 
services. States opting to offer the Community First Choice Option 
under section 1915(k) of the Act can continue to provide the full array 
of home and community-based services under section 1915(c) waivers, 
section 1115 demonstration programs, mandatory State plan home health 
benefits, and the State plan personal care services benefit. Community 
First Choice provides States the option to offer a broad service 
package that includes assistance with ADLs, IADLs, and health-related 
tasks, while also incorporating transition costs and supports that 
increase independence or substitute for human assistance.
    Another important aspect to this background is the passage of the 
Americans with Disabilities Act of 1990 (Pub. L. 101-336, enacted July 
26, 1990) (ADA), and the Olmstead v. L.C., U.S. Supreme Court decision. 
In particular, Title II of the ADA prohibits discrimination on the 
basis of disability by State and local governments and requires these 
entities to administer their services and programs, in the most 
integrated setting appropriate to the needs of qualified individuals 
with disabilities. In applying the most integrated setting mandate, the 
U.S. Supreme Court ruled in Olmstead that unnecessary 
institutionalization of individuals with disabilities constitute 
discrimination under the ADA. Under Olmstead, States may not deny a 
qualified individual with a disability a community placement when: (1) 
Community placement is appropriate; (2) the community placement is not 
opposed by the individual with a disability; and (3) the community 
placement can be reasonably accommodated.
    As self-direction is a key component to Community First Choice, 
this service delivery model is another important aspect to the 
background of this provision. Two national pilot projects demonstrated 
the success of self-directed care. During the 1990's, the Robert Wood 
Johnson Foundation funded these projects which evolved into Medicaid 
funded programs under section 1915(c) of the Act and the ``Cash and 
Counseling'' national section 1115 demonstration programs. Evaluations 
were conducted in both of these national projects. Results in both 
projects were similar--persons directing their personal care 
experienced fewer unnecessary institutional placements, experienced 
higher levels of satisfaction, had fewer unmet needs, experienced 
higher continuity of care because of less worker turnover, and 
maximized the efficient use of community services and supports. The 
Deficit Reduction Act of 2005 (Pub. L. 109-171, enacted on February 8, 
2006) (DRA), established section 1915(j) of the Act which provided a 
State plan option for States to utilize this self-direction service 
delivery model without needing the authority of a Section 1115 
demonstration.

II. Provisions of the Proposed Regulations

    In the following discussion, we refer to particular home and 
community-based attendant services and supports offered under section 
1915(k) of the Act as Community First Choice services and supports. We 
refer to the ``Community First Choice Option'' when describing the 
collective requirements of section 1915(k) of the Act for the State 
plan option.

A. Eligibility (Sec.  441.510)

    Section 1915(k)(1) of the Act requires that in order to receive 
services under the Community First Choice Option, individuals must be 
eligible for

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Medicaid under an eligibility group covered by the State plan. This 
section does not create a new eligibility group. Individuals who are 
not eligible for Medicaid under a group covered under the State 
Medicaid plan are not eligible for the State plan Community First 
Choice Option, even if they otherwise meet the requirements for the 
option. Individuals eligible under the State Medicaid plan whose income 
does not exceed 150 percent of the Federal Poverty Level (FPL) are 
eligible for the Community First Choice Option without requiring a 
determination of institutional level of care. In determining whether 
the 150 percent of the FPL requirement is met, the regular rules for 
determining income eligibility for the individual's eligibility group 
under the State plan apply, including any income disregards used by the 
State for that group under section 1902(r)(2) of the Act.
    Individuals eligible under the State Medicaid plan whose income is 
greater than 150 percent of the FPL are eligible for the Community 
First Choice Option if it has been determined such individuals need the 
level of care required under the State Medicaid plan for coverage of 
nursing facility services. The State must determine that but for the 
provision of the home and community-based attendant services and 
supports, the individual would require the level of care provided in a 
hospital, a nursing facility, intermediate care facility for the 
mentally retarded or an institution for mental diseases, the cost of 
which would be reimbursed under the State plan. For example, section 
1902(a)(10)(A)(ii)(XIII) of the Act defines an optional eligibility 
group known as working disabled. The income standard for this group is 
250 percent of the FPL. An individual in this eligibility group with 
income that does not exceed 150 percent of the FPL would be eligible 
for CFC services without a level of care determination. An individual 
in the same eligibility group with income that exceeds 150 percent of 
the FPL would need to have a level of care determination to be eligible 
for CFC services. Additionally, individuals who are eligible for 
Medicaid under the special home and community-based waiver eligibility 
group defined at section 1902(a)(10)(A)(ii)(VI) of the Act, for 
example, the special income level group for institutionalized 
individuals, could be eligible to receive CFC services. These 
individuals would have to receive at least 1 section 1915(c) home and 
community-based waiver service per month. We propose to implement this 
eligibility requirement at Sec.  441.510.
    As the need for a level of care determination is directly related 
to an individual's income level in section 1915(k)(1) of the Act, we 
propose to require an annual verification of income for all individuals 
receiving services under the section 1915(k) State plan option. We 
propose to implement this requirement at Sec.  441.510.

B. Statewideness (Sec.  441.515)

    Section 1915(k)(3)(B) of the Act requires that a State that chooses 
to provide the Community First Choice Option do so for individuals on a 
statewide basis, in a manner that provides such services and supports 
in the most integrated setting appropriate to the individual's needs, 
and without regard to the individual's age, type or nature of 
disability, severity of disability, or the form of home and community-
based attendant services and supports that the individual requires in 
order to lead an independent life. We propose at Sec.  441.515 to adopt 
this statutory language as our definition.

C. Required Services (Sec.  441.520)

    Section 1915(k)(1)(B) of the Act provides detailed requirements for 
the services and supports included in the Community First Choice 
Option. Therefore at Sec.  441.520, we propose the following services 
must be available under the Community First Choice option:
    <bullet> Assistance with ADLs, IADLs, and health related tasks 
through hands-on assistance, supervision or cueing.
    <bullet> The acquisition, maintenance and enhancement of skills 
necessary for the individual to accomplish ADLs, IADLs, and health-
related tasks.
    <bullet> Back-up systems or mechanisms to ensure continuity of 
services and supports.
    <bullet> Voluntary training on how to select, manage, and dismiss 
attendants.
    With regard to back up systems or mechanisms to ensure continuity 
of services and supports, we propose at Sec.  441.505 that such devices 
may include personal emergency response systems, pagers, or any other 
appropriate mobile electronic device that may be used to ensure 
continuity of services and supports.
    The Community First Choice Option requires the utilization of a 
person-centered planning process. A key component of the Community 
First Choice option is to allow individuals to self direct the 
provision of services and supports. Individuals must have the authority 
to hire, fire, and train attendants to provide services tailored to the 
individuals' needs. Therefore, we propose at Sec.  441.520(a)(6) to 
require States to develop and provide a training program for 
individuals (or representative) on how to select, manage and dismiss 
attendants. Consistent with the philosophy of self-direction, this 
training must be voluntary, and may not be a mandatory requirement for 
the individual to receive services under this option.
    Section 1915(k)(1)(D) of the Act provides that States may allow an 
individual to purchase permissible services and supports. We propose to 
implement this option at Sec.  441.520(b). At a minimum, permissible 
services and supports include expenditures for transition costs such as 
rent and utility deposits, first month's rent and utilities, bedding, 
basic kitchen supplies, and other necessities required for an 
individual to transition from a nursing facility, institution for 
mental disease, or intermediate care facility for the mentally retarded 
to a community-based home setting where the individual resides. We 
believe that the primary focus of Community First Choice is to remove 
barriers that prevent individuals from returning to the community or 
remaining in the community, thus avoiding unnecessary or premature 
institutionalization. Section 1915(k)(1)(D)(ii) of the Act permits 
States to make expenditures available for individuals to acquire items 
that increase independence or substitute for human assistance, to the 
extent that the expenditures would otherwise be made for the human 
assistance and are related to a need identified in an individual's 
person-centered plan. Based on our experience with the Cash and 
Counseling Demonstrations, and authorities under sections 1915(j) and 
1915(c) of the Act, we know that many individuals do avail themselves 
of and benefit from this option and use this flexibility to purchase 
items that allow them greater independence, such as non-medical 
transportation services, or that substitute for human assistance, such 
as a microwave oven. We propose at Sec.  441.520(b)(2), when 
individuals utilize this option that items purchased must relate to a 
need identified in the service plan.
    Based on our experience with Cash and Counseling, we found that 
some States limited participants' purchases to a list of allowable 
items for which no prior approval was necessary. Still, other States 
required prior approval for all items, while others provided a list of 
allowable items and required prior approval for other items not on the 
list. Each permissible purchase was determined based on an identified 
goal

[[Page 10740]]

in an individual's service plan. Each State developed procedures that 
governed how participants could save an amount of their monthly budget 
and how and at what intervals the State would recoup funds that were 
not spent according to the purchase plan. The Community First Choice 
Option differs from Cash and Counseling and the section 1915(j) State 
plan Option in that an individual is not required to save an amount in 
a budget to purchase items that increase independence or substitute for 
human assistance. Therefore, in Community First Choice Option these 
purchases are permissible for inclusion in the service plan and service 
budget if applicable. CMS believes that permissible purchases will be a 
particularly useful tool for States to promote community integration.

D. Excluded Services (Sec.  441.525)

    In Sec.  441.525, consistent with the provisions of section 1915(k) 
of the Act, we propose the following services are excluded from the 
Community First Choice Option:
    <bullet> Room and board costs (except with respect to the 
transition costs identified above).
    <bullet> Special education and related services provided under the 
IDEA.
    <bullet> Vocational rehabilitation services provided under the 
Rehabilitations Act of 1973.
    <bullet> Assistive technology devices and assistive technology 
services other than those defined in Sec.  441.520(a)(5).
    <bullet> Medical supplies and equipment.
    <bullet> Home modifications.
    The exclusion of room and board costs is consistent with section 
1905(a) of the Act, which limits Medicaid coverage of room and board to 
an inpatient setting only. The goal of the Community First Choice 
option is to provide attendant and support services in the community, 
as such, services provided in an inpatient setting are excluded from 
coverage. While attendant services and supports may be provided in a 
residential setting in the community, only the costs of the services 
and supports, not the room and board costs of the residential setting, 
will be covered.
    The IDEA ensures every child with a disability has available a free 
appropriate public education that includes special education and 
related services. When services are identified in an Individualized 
Education Program (IEP) or an Individualized Family Service Plan 
(IFSP), Medicaid will only pay for services determined to be medically 
necessary. Therefore, at Sec.  441.525, we propose that services 
related to education only are excluded from this section.
    The Rehabilitation Act of 1973 provides for direct services to 
people with disabilities which help them to become qualified for 
employment. Vocational services are those that teach specific skills 
required by an individual to perform tasks associated with performing a 
job. Therefore, at Sec.  441.525, we propose the general prohibition 
established by section 1915(k) of the Act excluding vocational 
rehabilitation services provided under the Rehabilitation Act of 1973.
    We also propose at Sec.  441.525 that Community First Choice would 
not include services furnished through another benefit or section under 
the Act. Per section 1915(k)(1)(C) of that Act, we propose at Sec.  
441.525 the exclusion of the following services: Assistive technology 
(other than what is described in Sec.  441.520(a)(5); Medical supplies 
and equipment; and home modifications.
    The statute specifically excludes assistive technology devices and 
assistive technology services (other than back-up systems or 
mechanisms), medical equipment and home modifications. However, the 
statute does not define such items and furthermore, the statute 
provides that the excluded services and supports are ``subject to 
subparagraph (D)'' which defines permissible services and supports to 
include expenditures relating to a need identified in an individual's 
person-centered plan of services that increase independence or 
substitute for human assistance. In general, the terms ``assistive 
technology devices'' and ``assistive technology services'' may be 
broadly interpreted to include items and services necessary for an 
individual to make the transition from an institution to a community-
based setting, or that increase independence or substitute for human 
assistance. In addition, some medical equipment and environmental 
adaptations may make the provision of human assistance feasible when it 
would not otherwise be provided. These types of items could be covered 
under sections 1915(k)(1)(D)(i) and (ii) of the Act. For example, 
eating and cooking utensils can be fitted with oversized handles for 
easier gripping. These ``assistive devices'' can enable an individual 
with limited hand function to continue to prepare meals for himself or 
herself. Further examples would include items such as bedside controls 
for lights and other appliances to increase the ability of mobility 
impaired individuals to control the lighting, temperature or other 
conditions of their home without getting out of bed. Wheelchair lifts 
and stair-climbs can provide an individual with full access and 
mobility throughout a multi-level home. Other self-direction programs 
have permitted the inclusion of certain items that could be broadly 
defined as assistive technology, medical equipment, and home 
modifications. To ensure that items or services that could be covered 
under sections 1915(k)(1)(D)(i) or (ii) of the Act are not excluded, we 
interpret the provision to prohibit service plans from identifying 
assistive technology or services, medical equipment or home 
modifications as the only needed service in an individual's plan of 
services or supports. Therefore, we are proposing that in Community 
First Choice some items or services that could be classified as 
assistive technology devices or services, medical equipment or home 
modifications may be covered, but only when based on a specific need in 
the person-centered service plan, when used in conjunction with other 
home and community-based attendant services. We invite comment on this 
proposal. We further propose to allow States to determine at what point 
the amount of funds to purchase such devices and adaptations places 
them in the statutorily excluded categories. We also invite comments on 
this proposal.

E. Setting (Sec.  441.530)

    Section 1915(k)(1)(A)(ii) of the Act provides that a home and 
community-based setting does not include a nursing facility, 
institution for mental diseases, or an intermediate care facility for 
the mentally retarded. We propose at Sec.  441.530 to adopt this 
statutory language in our regulations.
    In the June 22, 2009 Federal Register (74 FR 29453), we published 
the Home and Community-Based Services (HCBS) Waivers Advance Notice of 
Proposed Rulemaking (ANPRM) to seek public input on strategies to 
define home and community with regard to waivers under section 1915(c) 
of the Act. We recognize the important role that Medicaid plays in 
States' efforts to ensure compliance with the ADA and the Olmstead v. 
L.C., 527 U.S. 581 (1999) U.S. Supreme Court decision. In the Olmstead 
decision, the Court affirmed a State's obligation to serve individuals 
in the most integrated setting appropriate to their needs. The Court 
held that the unjustified institutional isolation of people with 
disabilities is a form of unlawful discrimination under the ADA. We 
seek to assist States' objective to meet these ADA and Olmstead 
obligations. However, a State's Olmstead obligations under the ADA and 
section 504 of the

[[Page 10741]]

Rehabilitation Act are not defined by, or limited to, the scope or 
requirements of the Medicaid program and nothing in this regulation 
should be construed as limiting a State's obligation to comply with the 
integration requirements under the ADA or section 504 of the 
Rehabilitation Act.
    Notwithstanding our continuing efforts to gain stakeholder input on 
the nature of HCBS settings, we are proposing to clarify that certain 
settings are clearly outside of what would be considered home and 
community-based because they are not integrated into the community. 
Section 1915(k)(1)(A)(ii) of the Act provides that services must be 
provided in a home or community setting, which excludes nursing 
facilities, institutions for mental diseases, and intermediate care 
facilities for the mentally retarded. However, there may be instances 
in which individuals reside in alternative or subsidiary residential 
settings on the grounds of or located adjacent to such institutional 
facilities, which are not licensed as institutions for the purpose of 
Medicaid reimbursement or under State licensing rules. We are proposing 
to clarify that home and community settings may not include a building 
that is also a publicly or privately operated facility which provide 
inpatient institutional treatment or custodial care; or in a building 
on the grounds of, or immediately adjacent to, a public institution or 
disability-specific housing complex, designed expressly around an 
individual's diagnosis that is geographically segregated from the 
larger community, as determined by the Secretary. To maintain 
consistency across the Medicaid program, we anticipate adopting this 
same clarification for services provided under section 1915(c) of the 
Act and other authorities permitting coverage of home and community-
based services under Medicaid.

F. Assessment of Need (Sec.  441.535)

    Section 1915(k)(1)(A)(i) of the Act requires that States conduct an 
assessment of individuals' functional need on which to base the person-
centered service plan. We propose to implement this requirement at 
Sec.  441.535. An assessment of an individual's needs, strengths, and 
preferences is crucial because it forms the basis for the 
identification of the needed services and supports that will be 
authorized in the individual's subsequent person-centered service plan. 
The assessment should include a determination of whether there are any 
persons available to support the individual, including family members. 
These persons may be able to provide unpaid personal assistance, or 
fulfill the more formal roles such as acting in the capacity of a paid 
provider of attendant services or as an individual's representative. We 
propose to require in Sec.  441.535 that the assessment include a face-
to-face meeting with the individual (``individual'' meaning in this 
context, if applicable, the individual and the individual's authorized 
representative when appropriate).
    For consistency among Medicaid program benefits and in keeping with 
our decisions for implementation of the Self-directed Personal 
Assistance Services State plan Option under section 1915(j) of the Act, 
we do not prescribe the assessment tool to be used by States, but we 
expect that the assessment will include a standardized set of data 
elements, key system functionality, and workflow that will be 
sufficiently comprehensive to support the determination that an 
individual would require attendant care services and supports under the 
Community First Choice State Option and the development of the 
individual's subsequent service plan and budget. We propose at Sec.  
441.535(a), as in section 1915(j) of the Act, that the assessment 
include information about an individual's health condition, personal 
goals and preferences for the provision of services, identified 
functional limitations, age, school participation status, employment, 
household, and other factors that are relevant to the authorization and 
provision of services, and support the finding for need of home and 
community-based attendant services and supports and development of the 
service plan and budget. We are currently working to determine 
universal core elements to include in a standard assessment for 
consistency across programs. As these elements are identified, it is 
expected States will incorporate these elements in the assessment of 
need to be used for Community First Choice. We invite comments on the 
elements that should be included in this list.
    Finally, in Sec.  441.535(c), we propose to require that the 
assessment of need is conducted at least every 12 months and as needed 
when the individual's needs and circumstances change significantly, or 
as requested by an individual or their representative, in order to 
revise the service plan.

G. Service Plan (Sec.  441.540)

    Section 1915(k)(1)(A)(i) of the Act require a person-centered 
approach to establishing a service plan, based on an assessment of 
need, developed in collaboration with an individual (``individual'' 
meaning in this context, if applicable, the individual and the 
individual's authorized representative) choosing to receive home and 
community-based attendant services and supports under the Community 
First Choice State Option. In Sec.  441.540, we propose to require that 
based on the assessment of need specified in Sec.  441.535, the State 
must develop (or approve, if the Plan is developed by others) a written 
service plan, in collaboration with the individual (including, for 
purposes of this paragraph, the individual and the individual's 
authorized representative if applicable). The service plan must be 
created using a person-centered and directed planning process.
    For clarification and consistency among programs, our expectation 
regarding person-centered services and supports is that the plan 
reflects what is important to the individual and important for his or 
her health and welfare. The person-centered approach is a process, 
directed by the individual with long-term support needs, or by another 
person important in the life of the individual who the individual has 
freely chosen to direct this process, intended to identify the 
strengths, capacities, preferences, needs, and desired outcomes of the 
individual. The person-centered process includes the opportunity for 
the individual to choose others to serve as important contributors to 
the planning process.
    These participants in the person-centered planning process enable 
and assist the individual to identify and access a personalized mix of 
paid and non-paid services. This process and the resulting service plan 
will assist the individual in achieving personally defined outcomes in 
the most integrated community setting in a manner that reflects what is 
both important for the individual to meet identified support needs and 
what is important to the individual to ensure delivery of services in a 
manner that reflects personal preferences and choices and assures 
health and welfare. The individual identifies planning goals to achieve 
these personal outcomes in collaboration with those that the individual 
has identified. The identified personally-defined outcomes, preferred 
methods for achieving them and the training supports, therapies, 
treatments, and other services the individual needs to achieve those 
outcomes become part of the written services and support plan, also 
known as plan of care.
    Based on our experience with States' self-direction waivers and 
demonstrations, we are aware that States have historically implemented

[[Page 10742]]

the person-centered planning process differently. Based on the above 
clarification of person-centered planning and to promote consistency 
among programs, we propose to require, at Sec.  441.540(a), a person-
centered planning process. We propose that the person-centered planning 
process would:
    <bullet> Include people chosen by the individual;
    <bullet> Provide necessary support to ensure that the individual 
has a meaningful role in directing the process;
    <bullet> Occur at times and locations of convenience to the 
individual;
    <bullet> Reflect cultural considerations of the individual;
    <bullet> Include strategies for solving conflict or disagreement 
within the process, including clear guidelines for the management of 
conflict of interest concerns among planning participants;
    <bullet> Include opportunities for periodic and ongoing plan 
updates as needed or requested by the individual; and
    <bullet> Offer choices to the individual regarding the services and 
supports they receive and from whom.
    We propose at Sec.  441.540(b) that the plan resulting from this 
process must reflect the services that are important for the individual 
to meet individual services and support needs as assessed through a 
person-centered functional assessment, as well as what is important to 
the person with regard to preferences for the delivery of such 
supports. Commensurate with the level of need of the individual, the 
plan must reflect the individual's strengths and preferences, as well 
as clinical and support needs (for example, as identified through a 
person-centered functional assessment). The plan should include 
individually identified goals, which may include goals and preferences 
related to relationships, community participation, employment, income 
and savings, health care and wellness, education, and others.
    The plan should reflect the services and supports (paid and unpaid) 
that will assist the individual to achieve identified goals and who 
provides them. The plan should reflect risk factors and measures in 
place to minimize them including back-up strategies when needed. The 
plan should be signed by all individuals and providers responsible for 
its implementation, should be understandable to the individual 
receiving services and the individuals important in supporting him or 
her, and should include a timeline for review. The plan should identify 
the individual or entity responsible for monitoring the plan and should 
be distributed to everyone involved (including the participant) in the 
plan. The plan should also be directly integrated into self-direction 
where individual budgets are used and should prevent the provision of 
unnecessary or inappropriate care. We invite comment on the person-
centered process and planning elements of this proposed rule.
    We would also propose at Sec.  441.540(c) a minimum list of 
policies and procedures associated with service plan development that 
must be completed and included by the State. We believe these are 
necessary to ensure the proper administration and development of the 
service plan. Policies and procedures should ensure that the 
responsibilities for assessment of need and service plan development 
are identified, the planning process is timely, the participant's needs 
are assessed and services meet the needs. When determining the 
timeframe in which the planning process should occur, we expect States 
to establish guidelines that support a timeframe that responds to the 
needs of the individual, thus allowing access to needed services as 
quickly as possible. Additionally, the State must ensure the conflict 
of interest standards for assessment of need and service plan 
development apply to all individuals and entities, public or private. 
These standards at a minimum must ensure that the individuals and 
entities conducting the assessment of need and developing the service 
plan are not related by blood or marriage to the individual or to any 
paid caregiver of the individual, financially responsible for the 
individual, empowered to make financial or health-related decisions on 
behalf of the individual, and would not benefit financially from the 
provision of assessed needs and services.
    Section 1915(k)(1)(A)(i) of the Act requires that the service plan 
be agreed to in writing by the individual or, as appropriate, the 
individual's representative. We propose at Sec.  441.540(d) to require 
that the service plan must be finalized and agreed to in writing by the 
individual or, as appropriate, the individual's representative and that 
a copy of the plan must be provided to the individual.
    Finally, in Sec.  441.540(e), we propose to require that the 
service plan be reviewed and revised upon reassessment of need at least 
every 12 months, when the individual's circumstances or needs change 
significantly and at the individual's request.

H. Service Models (Sec.  441.545)

    Section 1915(k)(1)(A)(iii) of the Act requires that the Community 
First Choice Option be provided under an agency-provider model or other 
model. Section 1915(k)(6)(C)(ii) of the Act defines other models to 
mean methods, other than the agency-provider model, for the provision 
of consumer controlled services and supports. The statute provides that 
such models may include vouchers, direct cash payments, or use of a 
fiscal agent to assist in obtaining services.
    We propose at Sec.  441.545 that a State may choose one or more of 
the service delivery models defined in the statute. In Sec.  441.545(a) 
and (b), we have categorized these models into two main groups, the 
Agency Model and the Self-directed Model with Service Budget. We have 
elected the use of the term self-directed rather than consumer 
controlled to be consistent with terminology in other regulatory 
provisions that offer this type of service delivery model including 
sections 1915(i) and 1915(j) of the Act. In Sec.  441.545(a), we 
propose to reflect the statutory definition of the agency model as a 
service delivery method in which services and supports are provided by 
entities through a contract.
    Based on our experience with self-directed programs, we are aware 
that States may choose to allow individuals to self-direct services 
under a traditional agency model or an ``agency with choice'' model, 
which utilizes a co-employment relationship between the individual and 
an agency. Under the traditional agency model, the individual retains 
hiring and firing authority of personal care attendants. The ``agency 
with choice'' utilizes a co-employment relationship between the 
individual and the agency. We interpret the definition of ``agency-
provider model'' in section 1915(k)(6)(C)(i) of the Act to include such 
delivery options as allowable under Community First Choice as the 
agency model.
    In Sec.  441.545(b)(1), (b)(2) and (b)(3), we propose to further 
define the categories within the Self-directed Model with Service 
Budget to include the models specified in the statute including 
financial management entity, direct cash, and vouchers. We have elected 
to use the term financial management entity rather than fiscal agent to 
be consistent with other regulatory provisions that offer this type of 
service delivery model.
    In Sec.  441.545(b)(1), we propose to require that the financial 
management entity perform specific functions that include, but are not 
limited to, the following: Collect and process timesheets of the 
individual's workers; process payroll, withholding, filing and payment 
of applicable Federal, State

[[Page 10743]]

and local employment related taxes and insurance; maintain a separate 
account for each individual's budget; track and report disbursements 
and balances of individual's funds; process and pay invoices for 
services in the service plan; and provide to the individual periodic 
reports of expenditures and the status of the approved service budget. 
We propose to adopt these functions to be consistent with section 
1915(j) of the Act in which a self-directed service delivery model is 
also defined. We propose in Sec.  441.545(b)(1)(vii) that States may 
perform the functions of a financial management entity internally or 
use a vendor organization that has the capabilities to perform the 
required task in accordance with the applicable IRS requirements. 
Again, we propose this provision to be consistent with flexibility 
offered in section 1915(j) of the Act.
    We propose in Sec.  441.545(b)(2) that the State have the option of 
disbursing cash prospectively to individuals self-directing their 
Community First Choice Option. This Direct Cash option is specified in 
section 1915(k)(6)(C)(ii) of the Act. To be consistent with the option 
under section 1915(j) of the Act, which also allows for the direct 
payment of cash, we further propose that if a State elects this option, 
it must meet the following requirements: Ensure compliance with all 
applicable requirements of the Internal Revenue Service, including but 
not limited to, retaining required forms and payment of FICA, FUTA and 
State unemployment taxes; permit individuals, or their representatives 
as applicable, using the cash option to choose to use the financial 
management entity for some or all of the functions; make available a 
financial management entity to an individual who has demonstrated, 
after additional counseling, information, training, or assistance that 
the individual cannot effectively manage the cash option described in 
this section. If the cash option is the only model offered by the State 
for Community First Choice, then the State may require an individual to 
utilize the financial management entity services under the cash option, 
but must provide the conditions under which this would be enforced 
after additional counseling, information, training or assistance are 
unsuccessful.
    In Sec.  441.545(b)(3), we propose that the State also have the 
option of issuing vouchers as a self-directed service delivery model. 
We propose that if the State elects this option that it must ensure 
compliance with all applicable requirements of the Internal Revenue 
Service.

I. Additional Service Plan Requirements for Self-Directed Model With 
Service Budget (Sec.  441.550)

    Section 1915(k)(1)(A)(i) of the Act requires that the Community 
First Choice Option be provided through a person-centered plan of 
services and supports that is based on an assessment of functional 
need. While the general requirements of the service plan are proposed 
in Sec.  441.550, to clarify our expectations for a service plan when 
the State elects the option of a Self-Directed Service Model with 
Service Budget and to be consistent with the self-directed service 
delivery model under section 1915(j) of the Act, we propose that the 
service plan convey authority to the individual to perform, at a 
minimum, specific tasks. In Sec.  441.550, we propose these tasks 
include the ability to recruit, hire (including specifying worker 
qualifications), fire, supervise, and manage workers in the provision 
of Community First Choice Option services and supports. We propose that 
the expectations for managing workers include determining worker 
duties, scheduling workers, training workers in assigned tasks, and 
evaluating workers' performance. In addition, we propose that the 
service plan describe the ability of the individual to determine the 
amount paid for a service, support, or item, as well as the ability to 
review and approve provider invoices. It is the approval of the service 
plan that authorizes the individual to undertake these activities as 
part of the self-directed service delivery model. The service plan must 
encompass both the general decision-making authority that an individual 
has and outline the individualized services and supports to address the 
individual's needs, abilities, preferences and choices. In our 
experience with self-directed programs these components of the service 
plan have been critical elements in the implementation of successful 
programs. Therefore, we propose to adopt the same elements in this 
provision of self-directed services.

J. Support System (Sec.  441.555)

    Based on our experience with self-direction programs, we are aware 
that the support system provided by the State is a critical element of 
the service delivery model. Therefore, to maintain consistency and to 
reflect our policy relating to self-direction, in Sec.  441.555 we 
propose the requirement that the State have in place a support system. 
While we do not prescribe the way States are to design their support 
system, in order to allow flexibility, based on our experience, we 
include in the proposed regulation a minimum list of activities for 
which individuals may need information, counseling, training, or 
assistance, but States may offer additional activities. Generally, the 
activities requiring support include participant rights information and 
how the self-directed model of service delivery operates.

K. Service Budget Requirements (Sec.  441.560)

    While section 1915(k) of the Act does not specifically address the 
requirement for an individual to have authority over a budget, in Sec.  
441.560 we have proposed specific service budget requirements based on 
experience with the section 1915(j) self-directed service delivery 
model which utilizes the options of financial management entities and 
direct cash payments. The requirements of section 1915(j) of the Act 
were supported by the experience of section 1115 demonstrations and 
proven to be successful models for implementation of a self-directed 
service model with a service budget. The service budget amount is the 
cap on the amount of funds available to an individual with which to 
purchase self-directed Community First Choice Option services and 
supports. Therefore, in Sec.  441.560(a), we require that a service 
budget be developed and approved by the State and include specific 
items such as the specific dollar amount, how the individual is 
informed of the amount, and the procedures for how the individual may 
adjust the budget.
    In Sec.  441.560(b), we propose that the budget methodology set 
forth by the State meet certain criteria such as being objective and 
evidence based, be applied consistently to individuals in the program, 
and be included in the State plan. In addition, we propose the budget 
methodology include calculations of the expected costs of Community 
First Choice Option services and supports if those services and 
supports were not self-directed. We recognize in Sec.  441.560(b)(5) 
that States may place monetary or budgetary limits on self-directed 
Community First Choice Option services. Therefore, if a State does so, 
we would require that the State have a process in place that describes 
the limits and the basis for the limits, and any adjustments that will 
be allowed and the basis for the adjustments, such as an individual's 
health and welfare.
    Additionally, we propose to require certain beneficiary safeguards 
in light of these possible limitations. First, we propose that States 
have procedures to adjust a budget when a reassessment indicates a 
change in a participant's

[[Page 10744]]

medical condition, functional status, or living situation to ensure 
that the budget amount is appropriate to the individual's current 
needs. Second, we propose that States have a method of notifying 
participants of the amount of any limit that applies to an individual's 
Community First Choice Option services and supports. Finally, we 
propose that the budget not restrict access to other medically 
necessary care and services furnished under the State plan and approved 
by the State but not included in the budget. Based on our experience in 
other self-directed programs like those specified in section 1915(j) of 
the Act, these components of the budget and the budget methodology are 
critical elements of a successful program. We invite comments on this 
approach.

L. Provider Qualifications (Sec.  441.565)

    Section 1915(k)(1)(A)(iv)(III) of the Act requires that Community 
First Choice State Option services and supports be provided by 
individuals, including family members, who are qualified to provide 
such services. We reflect these requirements in the proposed regulation 
at Sec.  441.565. We propose in Sec.  441.565(a) to require that States 
provide assurance that necessary safeguards have been taken to protect 
the health and welfare of the enrollees in the Community First Choice 
State Option by provision of adequate standards for all types of 
providers of attendant services and supports under the option. States 
must define qualifications for providers of attendant services and 
supports under the agency model.
    Self-direction is an integral component of the Community First 
Choice State Option. This is reflected in Sec.  441.565(b) through (d). 
To ensure that individuals maintain the ability to participate in and 
control the provision of Community First Choice Option attendant 
services and supports, we propose in Sec.  441.565(b) that individuals 
can choose any qualified provider, including family members, to provide 
such services. In Sec.  441.565(c), we propose that individuals retain 
the right to train their workers in the specific areas of attendant 
services and supports needed by the individual and to perform the 
needed assistance in a manner that comports with participants' personal 
preferences, as well as their needs, which we believe is an important 
component of self-direction based on our experience with the self-
direction waiver and demonstration programs. In this way, workers 
benefit from clear instructions about how to effectively and 
appropriately deliver the attendant services, and any potential 
dissatisfaction with the way services are being delivered can be 
averted. We further propose, at Sec.  441.565(d), that individuals 
retain the right to establish additional staff qualifications based on 
their needs and preferences. Again, we believe that the individual is 
in the best position to set forth the particular staff qualifications 
needed to meet the particular preferences of the individual. For 
example, if the individual communicates best using American Sign 
Language (ASL), the individual may require the worker to be able to 
communicate using ASL.

M. State Assurances (Sec.  441.570)

    Section 1915(k)(3)(C) of the Act requires that, for the first full 
fiscal year in which the State plan amendment is implemented, the State 
must maintain or exceed the level of expenditures for services provided 
under sections 1905(a), section 1915, or section 1115 of the Act, or 
otherwise, to individuals with disabilities or elderly individuals 
attributable to the preceding fiscal year. We interpret this 
requirement to mean that, for the first 12 months the State chooses to 
offer this option in the State plan, the State's share of Medicaid 
expenditures for individuals with disabilities or elderly individuals 
must remain at the same level or be greater than expenditures from the 
previous year. We also interpret this requirement to be limited to 
personal care attendant services. We propose to implement this 
requirement at Sec.  441.570. States will need to identify the existing 
programs for individuals with disabilities and elderly individuals and 
the related expenditures to be monitored for this requirement and 
calculation. We will provide future guidance on the format of this 
reporting requirement.
    Section 1915(k)(4) of the Act requires States that elect this 
option to comply with certain laws in the provision of the Community 
First Choice Option regardless of which service delivery model the 
State elects. Specifically, the statute requires that services and 
supports are provided in accordance with the Fair Labor Standards Act 
of 1938 and applicable Federal and State laws regarding withholding and 
payment of Federal and State income and payroll taxes; provision of 
unemployment and workers compensations insurance; maintenance of 
general liability insurance; and occupational health and safety. We 
propose to include these assurances as specified in the statute at 
Sec.  441.570(b).

N. Development and Implementation Council (Sec.  441.575)

    Under this State plan option, the statute requires a State to 
consult and collaborate with a Development and Implementation Council 
during the development and implementation of a State plan amendment 
under this subsection. Section 1915(k)(3)(A) of the Act requires that 
the council include a majority of members with disabilities, elderly 
individuals, and their representatives. We recognize that stakeholder 
input is an important piece of the Medicaid program and agree that this 
council will provide additional opportunities for stakeholder 
collaboration. We propose to set forth this requirement as defined by 
the statute at Sec.  441.575. We invite comment on how States can 
achieve robust stakeholder input including transparency in the 
selection process and the activities of the council.

O. Data Collection (Sec.  441.580)

    Section 1915(k)(5)(B) of the Act requires that States provide CMS 
with information regarding the provision of home and community-based 
attendant services and supports under the Community First Choice Option 
for each fiscal year for which such services and supports are provided. 
The statute requires States to provide data including the number of 
individuals who are estimated to receive Community First Choice Option 
services and supports during the fiscal year, the number of individuals 
that have received such services and supports during the preceding 
fiscal year, the specific number of individuals served by type of 
disability, age, gender, education level and employment status, and 
whether the specific individuals have been previously served under any 
other home and community-based services program under the State plan or 
under a waiver. We propose to adopt these requirements as detailed in 
the statute at Sec.  441.580. We will provide future guidance on the 
format of this reporting requirement. Section 1915(k)(3)(E) of the Act 
requires States to collect and report information for the purposes of 
approving the State plan amendment, providing Federal oversight and 
conducting an evaluation of the provision of the Community First Choice 
State Option. The data collected through this requirement and the 
quality assurance system will help determine how States are currently 
providing home and community-based services, the cost of those 
services, and whether States are currently offering individuals with 
disabilities who otherwise qualify for institutional care

[[Page 10745]]

under Medicaid the choice to instead receive home and community-based 
services, as required by the U.S. Supreme Court in Olmstead v. L.C. 
(1999). We will provide future guidance on the format of this reporting 
requirement.

P. Quality Assurance System (Sec.  441.585)

    We propose in Sec.  441.585 the requirements for the comprehensive 
continuous quality assurance system that the State must establish and 
maintain as set forth in section 1915(k)(3)(D) of the Act. The system 
must employ measures for program performance and quality of care, 
standards for delivery models, mechanisms for discovery and 
remediation, and quality improvements proportionate to the benefit and 
number of individuals served. The system must also include a quality 
improvement strategy that reflects the nature and scope of the benefit 
the State will provide. The statute also requires stakeholder input and 
feedback to be incorporated in the quality assurance system and for 
information regarding quality assurance to be provided to each 
individual receiving Community First Choice State Option services. We 
propose to adopt these requirements in Sec.  441.585(a)(4) and Sec.  
441.585(b). We will review the State's description of the quality 
assurance system and improvement plan when we review the State's 
Medicaid plan amendment electing the Community First Choice State 
Option.
    In Sec.  441.585(a)(1), we propose to require States to have 
program performance measures, appropriate to the scope of the benefit, 
designed to assess the State's overall system for providing home and 
community-based attendant services and supports.
    In Sec.  441.585(a)(2), we propose to require States to have 
quality of care measures that may be used to measure individual 
outcomes associated with the receipt of community-based attendant 
services and supports, such as function indicators and measures of 
individual satisfaction. These measures must be made available to CMS 
upon request and must include a process for the mandatory reporting, 
investigation, and resolution of allegations of neglect, abuse, or 
exploitation in connections with provision of Community First Choice 
services as well as quality indicators approved or prescribed by the 
Secretary.
    In Sec.  441.585(a)(3), we propose to require States to have 
standards for agency-based and other delivery models for training, 
appeals for denials and reconsideration procedures on an individual 
service plan.

Q. Increased Federal Financial Participation (Sec.  441.590)

    Unlike similar programs such as those specified under sections 
1915(c) and 1915(j) of the Act, section 1915(k) of the Act does not 
allow States to choose only specific categories or types of home and 
community-based attendant services and supports to be included in the 
overall service benefit. Recognizing the section 1915(k) option is a 
more robust service package, section 1915(k)(2) of the Act requires 
States to receive an increased FMAP of 6 percent for the provision of 
services under the Community First Choice Option effective October 1, 
2011, or later under an approved State plan amendment. We propose to 
implement this requirement at Sec.  441.590.

III. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
    <bullet> The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
    <bullet> The accuracy of our estimate of the information collection 
burden.
    <bullet> The quality, utility, and clarity of the information to be 
collected.
    <bullet> Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs):

A. ICRs Regarding Assessment of Need (Sec.  441.535)

    Proposed Sec.  441.535 would require States to conduct face-to-face 
assessments of the individual's needs, strengths and preferences. 
Specifically, the face-to-face assessments may use one or more 
processes and techniques to obtain information about an individual, 
including but not limited to the information listed in proposed Sec.  
441.535(a)(1) through (8). In addition to the initial face-to-face 
assessment, proposed Sec.  441.535 would require States to conduct 
face-to-face assessments at least every 12 months as needed. The burden 
associated with this requirement would be the time required for a State 
to conduct a face-to-face assessment. We estimate that all States that 
elect this option will comply with this requirement. We further 
estimate that it will take each State 1 hour to perform a face-to-face 
assessment; however, we know that the number of assessments will vary 
according to the number of participants in each State under this State 
plan option. Because we cannot accurately quantify the number of 
assessments per State, we are soliciting public comment pertaining to 
the per State volume and will reevaluate this issue and the associated 
burden estimate in the final rule stage of rulemaking.

B. ICRs Regarding Service Plan (Sec.  441.540)

    As stated in proposed Sec.  441.540(a), the State must develop a 
person-centered planning process resulting in a service plan, based on 
the assessment of need, in collaboration with the individual and the 
individual's authorized representative, if applicable. Proposed Sec.  
441.540(b) lists the minimum components of a person-centered service 
plan, while proposed Sec.  441.540(c) lists the requirements of a 
service plan. Proposed Sec.  441.540(d) would require that a service 
plan must be agreed to in writing by the individual or the individual's 
representative, if applicable. In addition, States must provide a copy 
of the plan to the individual.
    The burden associated with the aforementioned requirements is the 
time and effort necessary for a State to both develop and finalize a 
written service plan for each individual. We estimate that it will take 
each State an average of 2 hours to develop and finalize a service 
plan. Because we cannot accurately quantify the number of service plans 
per State, we are soliciting public comment pertaining to the per State 
volume and will reevaluate this issue and the associated burden 
estimate in the final rule stage of rulemaking.
    In addition to the burden associated with developing and finalizing 
service plans, proposed Sec.  441.540 also imposes a disclosure 
requirement. As part of the finalization process, States are required 
to give each individual a copy of the service plan. We estimate that it 
will take each State 30 minutes to produce and disseminate a copy of a 
finalized report to an individual. The total estimated burden 
associated with this disclosure requirement will vary

[[Page 10746]]

according to the number of participants in each State under this State 
plan option. Because we cannot accurately quantify the number of plan 
copies each State will need to distribute to the individuals in the 
State plan option, we are soliciting public comment pertaining to the 
number of plan copies distributed per State and will reevaluate this 
issue and the associated burden estimate in the final rule stage of 
rulemaking.
    Proposed Sec.  441.540(e) would require States to review each 
service plan at least every 12 months. We estimate that it will take 
each State 1 hour to annually review and revise (upon reassessment of 
need or at the individual's request) a single written service plan. The 
total estimated burden associated with this requirement will vary 
according to the number of participants in each State under this State 
plan option. Because we cannot accurately quantify the number of plans 
each State will need to review annually, we are soliciting public 
comment pertaining to the number of plans each State must review 
annually and will reevaluate this issue and the associated burden 
estimate in the final rule stage of rulemaking.

C. ICRs Regarding Service Models (Sec.  441.545)

    Proposed Sec.  441.545 would require State to choose one or more 
service delivery models by which to provide self-directed home and 
community-based attendant services and supports. Specifically, a State 
may choose one or more of the models discussed in proposed Sec.  
441.545(a) through (b). While we acknowledge that the service models 
discussed in proposed Sec.  441.545(a) through (b) contain information 
collection requirements, it is difficult for us to accurately quantify 
both the number of States that will avail themselves of these models 
and the time associated with the information collection requirements 
contained therein. As a result, because we are unable to estimate both 
the total number of participating States and the burden associated with 
these requirements, we are soliciting public comment pertaining to this 
burden and will reevaluate this issue in the final rule stage of 
rulemaking.

D. ICRs Regarding Support System (Sec.  441.555)

    As stated in proposed Sec.  441.555, for the self-directed model 
with a service budget, States must provide or arrange for the provision 
of a support system. Proposed Sec.  441.555(a) would require a support 
system to appropriately assess and counsel an individual or the 
individual's representative, if applicable, before enrollment. Proposed 
Sec.  441.555(b) would require that the support system to provide 
appropriate information, counseling, training and assistance to ensure 
that an individual is able to manage the services and budgets. In 
addition, proposed Sec.  441.555(b) would require that the information 
be communicated to the individual in a manner and language 
understandable by the individual.
    The burden associated with proposed Sec.  441.555 would be the time 
and effort necessary for the State or the provider of the support 
system to meet the aforementioned disclosure requirements. We estimate 
that it will take each State 2 hours to provide or arrange for the 
provision of a support system that meets the necessary requirements. 
However, we cannot estimate the frequency with which a State will 
provide or arrange for the provision of support systems, as it will 
vary by State depending on the number of participants that are assessed 
to need this service. Because we cannot accurately quantify the 
frequency with which a State will provide or arrange for the provision 
of support systems, we are soliciting public comments on this issue and 
will reevaluate the associated burden estimate in the final rule stage 
of rulemaking.

E. ICRs Regarding Service Budget Requirements (Sec.  441.560)

    Proposed Sec.  441.560(a) would require, for the self-directed 
model with a service budget, that a service budget be developed and 
approved by the State based on the assessment of need and service plan. 
The budget must include all of the information listed in Sec.  
441.560(a) through (b). The burden associated with this requirement is 
the time and effort put forth by the State to develop a service budget. 
We estimate that it will take each State 3 hours to develop a service 
budget; however, the total number of budgets each State must prepare 
will depend on the number of individual's utilizing the self-directed 
model in each State. Because we are unable to estimate the total number 
of service budgets each State would be required to develop, we are 
soliciting public comments pertaining to this issue and will reevaluate 
the burden estimate in the final rule stage of rulemaking.
    Proposed Sec.  441.560(c) would require States to have procedures 
in place that will provide safeguards to individuals when the budgeted 
services amount is insufficient to meet the individual's needs. The 
burden associated with this requirement is the time and effort it would 
take for a State to develop and maintain its procedures. We estimate 
that will take each State 16 hours to develop these procedures. 
Similarly, we estimate that all States that elect this State plan 
option will comply with this requirement. We believe this requirement 
imposes a one-time burden; therefore, we have not assigned any future 
burden to this requirement. We cannot estimate the total annual burden 
associated with this requirement because it will vary by State. Because 
we cannot quantify the aforementioned burden, we are soliciting public 
comments pertaining to this issue and will reevaluate the burden 
estimate in the final rule stage of rulemaking.
    Proposed Sec.  441.560(d) would require a State to have a method of 
notifying individuals of the amount of any limit that applies to an 
individual's Community First Choice Option services and supports. The 
burden associated with this requirement is the time and effort it would 
take for each State to develop and distribute a notice to each 
individual. We estimate that all States that elect this option must 
comply with this notification requirement. We further estimate it would 
take each State 15 minutes to develop and distribute a single notice. 
The total number of notices each State must distribute will vary 
depending on the number of individual's utilizing the self-directed 
model in each State. Therefore, we are unable to estimate the burden 
associated with this requirement. We are soliciting public comments 
pertaining to this issue and will reevaluate the burden estimate in the 
final rule stage of rulemaking.

F. ICRs Regarding Provider Qualifications (Sec.  441.565)

    Proposed Sec.  441.565 would require States to provide assurances 
that necessary safeguards have been taken to protect the health and 
welfare of enrollees in the Community First Choice State Option. In 
addition, the States must define in writing the adequate qualifications 
for providers in the agency model of Community First Choice services 
and supports. The burden associated with the aforementioned 
requirements is the time and effort necessary to develop system 
safeguards that include written adequacy qualifications for providers. 
We estimate that it will take each State 16 hours to comply with this 
requirement; however, the total estimated annual burden associated with 
these requirements will vary by State. We are unable to estimate the 
total number of written assurances that will be required; therefore, we 
are

[[Page 10747]]

seeking public comment pertaining to this issue and will reevaluate the 
burden estimate in the final rule stage of rulemaking.

G. ICRs Regarding Data Collection (Sec.  441.580)

    Proposed Sec.  441.580 would require a State to provide information 
regarding the provision of home and community-based attendant services 
and supports under the Community First Choice Option for each fiscal 
year for which such services are provided. Specifically, States must 
submit the information contained in proposed Sec.  441.580(a) through 
(f). We estimate that it will take each State 24 hours to submit the 
required information. We also estimate that all States that elect this 
State plan option must comply with this requirement. The total 
estimated annual burden associated with this requirement is 24 hours at 
a cost of $576 per State for the initial year.

H. ICRs Regarding Quality Assurance System (Sec.  441.585)

    Proposed Sec.  441.585 would require each State to establish and 
maintain a comprehensive, continuous quality assurance system, detailed 
in the State plan amendment, that includes a quality improvement 
strategy and employs measures for program performance and quality of 
care, standards for delivery models, mechanisms for discovery and 
remediation, and quality improvements proportionate to the benefit and 
number of individuals served. Specifically, the quality assurance 
system must include but not be limited to the components listed in 
proposed Sec.  441.585(a) through (c). The burden associated with this 
requirement is the time and effort necessary for a State to develop and 
maintain a quality assurance system. We estimate that it will take 100 
hours for each State to comply with the initial requirement to develop 
a quality assurance system. The total estimated annual burden 
associated with developing a quality assurance system is 100 hours per 
State, at a cost of $2,400. Similarly, we estimate that each State will 
incur an annual burden of 16 hours to review and maintain its quality 
assurance system. The total estimated annual burden associated with 
reviewing a quality assurance system is 16 hours at a cost of $384 for 
each participating State.
    If you comment on these information collection and recordkeeping 
requirements, please do either of the following:
    1. Submit your comments electronically as specified in the 
ADDRESSES section of this proposed rule; or
    2. Submit your comments to the Office of Information and Regulatory 
Affairs, Office of Management and Budget,
    Attention: CMS Desk Officer, [CMS-2337-P].
    Fax: (202) 395-6974; or
    E-mail: <a href="/cdn-cgi/l/email-protection#db9492899a84a8aeb9b6b2a8a8b2b4b59bb4b6b9f5beb4abf5bcb4ad"><span class="__cf_email__" data-cfemail="0946405b48567a7c6b64607a7a6066674966646b276c6679276e667f">[email protected]</span></a>.

IV. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

V. Regulatory Impact Analysis

A. Statement of Need

    This proposed rule implements section 2401 of the Affordable Care 
Act of 2010, as amended by the Health Care and Education Reconciliation 
Act of 2010. The Secretary is to establish a new State plan option to 
provide home and community-based attendant services and supports at a 6 
percentage point increase in Federal matching payments for expenditures 
related to the provision of services under this option. Section 2401 of 
the Affordable Care Act, entitled ``Community First Choice Option,'' 
adds a new section 1915(k) of the Act that allows States, at their 
option, to provide home and community-based attendant services and 
supports under their State plan beginning October 1, 2011.

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(February 2, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4), Executive Order 13132 on Federalism (August 4, 1999), and the 
Congressional Review Act (5 U.S.C. 804(2)).
    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any 1 year). The proposed 
rule is estimated to have an economic impact of approximately 
$1,585,000,000 in the fiscal year beginning on October 1, 2011. 
Therefore, we estimate that this rulemaking is economically significant 
as measured by the $100 million threshold, and hence also a major rule 
under the Congressional Review Act. Accordingly, we have prepared an 
RIA below that to the best of our ability presents the costs and 
benefits of the rulemaking.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. Most hospitals and most other health care 
providers and suppliers are small entities, either by being nonprofit 
organizations or by meeting the SBA definition of a small business and 
having revenues of less than $7 million to $34.5 million in any 1 year. 
(For details, see the Small Business Administration's Table of Size 
Standards at http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=2465b064ba6965cc1fbd2eae60854b11&rgn=div8&view=text&node=13:1.0.1.1.16.1.266.9&idno=13.) Individuals and States are not included 
in the definition of a small entity. We are not preparing an analysis 
for the RFA because we have determined, and the Secretary certifies, 
that this proposed rule would not have a significant impact on a 
substantial number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a metropolitan 
statistical area and has fewer than 100 beds. We are not preparing an 
analysis for section 1102(b) of the Act because the Secretary has 
determined that this proposed rule will not have a significant impact 
on the operations of a substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess

[[Page 10748]]

anticipated costs and benefits before issuing any rule whose mandates 
require spending in any 1 year of $100 million in 1995 dollars, updated 
annually for inflation. In 2011, that threshold is approximately $136 
million. Because this rule does not mandate State participation in 
section 1915(k) of the Act, there is no obligation for the State to 
make any change to their Medicaid program. As a result, there is no 
mandate for the State. Therefore, we estimate this rule will not 
mandate expenditures in the threshold amount of $136 million in any 1 
year.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. As stated above, this proposed rule would not have a 
substantial effect on State and local governments.

C. Anticipated Effects

1. Overview
    This proposed rule provides States with additional flexibility to 
finance home and community based services by establishing a new 
Community First Choice Option at an increased Federal financial 
participation for attendant services and supports. Because of this 
enhanced flexibility, and the fact that a majority of States may 
already provide attendant services and supports through optional 
medical assistance services in its Medicaid State plan, HCBS waiver 
programs or both, we anticipate that each State will likely compare and 
decide which vehicle provides greater benefits and stability to their 
overall Medicaid program. As such, at this time it is very difficult to 
accurately predict how many States will choose to adopt the Community 
First Choice (CFC) Option, and how a State's election to exercise this 
option will influence other parts of its Medicaid program. However, for 
purposes of this RIA, we assume a gradual growth in the number of 
States adopting this option, so that, by FY 2015, 25 percent of 
eligible persons who would want this coverage would reside in States 
that offer it.
2. Effects on Medicaid Recipients
    We anticipate that a large number of Medicaid recipients will be 
affected. We believe the optional expansion of settings where attendant 
care services and supports may be furnished at the increased Federal 
Medical Assistance Percentage (FMAP) will likely have significant 
positive effects on Medicaid recipients, particularly on their demand 
for these services. We anticipate that the provisions of the proposed 
rule will likely increase State and local accessibility to services 
that augment the quality of life for individuals through a person-
centered plan of service and various quality assurances, all at a 
potentially lower per capita cost relative to alternative care-
settings.
3. Effects on Other Providers
    We anticipate that this proposed rule will increase the demand for 
attendant care services and supports. We believe this effect will be 
beneficial to providers, particularly providers of attendant care 
services and supports. Additionally, if the increase in demand for such 
services is sufficient, the number of providers of such services may 
increase.
4. Effects on the Medicaid Program Expenditures
    Table 1 provides estimates of the anticipated Medicaid program 
expenditures associated with furnishing attendant care services and 
supports. The estimates were made using various assumptions about 
increases in service utilization and costs, as well as assumptions 
about the induced utilization that may result from the CFC option. We 
have taken into account the varying costs for those who have a need for 
an institutional level of care as opposed to those who do not. We have 
allowed for possible State incentives due to the increased FMAP rate, 
as well as for the possibility of savings due to beneficiaries being 
diverted from nursing facility use. Given these assumptions and based 
on prior program experience, our estimate is shown in Table 1. We 
estimate the following costs to the Medicaid program:

                      Table 1--Attendant Care Services and Supports Medicaid Cost Estimates
                                                [In millions] \1\
----------------------------------------------------------------------------------------------------------------
            Services                  FY 2011         FY 2012         FY 2013         FY 2014         FY2015
----------------------------------------------------------------------------------------------------------------
Federal Share...................             N/A          $1,075          $1,475          $2,425          $3,420
State Share.....................             N/A             510             615           1,085           1,540
                                 -------------------------------------------------------------------------------
    Total.......................             N/A           1,585           2,090           3,510           4,960
----------------------------------------------------------------------------------------------------------------
\1\ Figures are rounded to the nearest $1 million and assume increased State participation per fiscal year.

5. Effects on States
    Varying State definitions of personal care services and rules 
concerning who may furnish them make it difficult to estimate 
accurately the potential increases in expenditures for States that 
choose to adopt the CFC option under section 1915(k) of the Act. 
Therefore, in light of the provisions of this proposed rule, we welcome 
comments about the number of States that are likely to participate in 
the CFC program.

D. Alternatives Considered

    Section 2401 of the Affordable Care Act is the legislation that we 
are required to implement. Therefore we considered no other 
alternatives.

E. Accounting Statement

    As required by OMB Circular A-4 (available at: http://www.whitehouse.gov/sites/default/files/omb/assets/omb/circulars/a004/a-4.pdf), we have prepared an accounting statement showing the 
classification of expenditures associated with the provisions of this 
rule and discussed earlier in the RIA. This statement, to the best of 
our ability, captures the anticipated distributional effects of section 
1915(k) services offered by qualified providers in the Medicaid 
program.

[[Page 10749]]



         Table 2--Accounting Statement: Classification of Estimated Expenditure From FY 2011 to FY 2015
                                                  [In millions]
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
              CATEGORY
----------------------------------------------------------------------------------------------------------------
              BENEFITS                  Qualitative: Provision of the CFC option will increase State and local
                                            accessibility to services that increase the quality of life for
                                       individuals through a person-centered plan of service and various quality
                                           assurances, and reduce the financial strain on States and Medicaid
                                                                     participants.
----------------------------------------------------------------------------------------------------------------
                COSTS                   Administrative costs included in the Paperwork Reduction Act section of
                                                                     the preamble.
----------------------------------------------------------------------------------------------------------------
              TRANSFERS                                            PRIMARY ESTIMATE
----------------------------------------------------------------------------------------------------------------
    Federal Annualized Monetized      3 percent Discount Rate               7 percent Discount Rate
          ($millions/year)            $1,630.6                              $1,568.6
----------------------------------------------------------------------------------------------------------------
         From Whom to Whom?                           Federal Government to Qualified Providers.
----------------------------------------------------------------------------------------------------------------
     State Annualized Monetized
          ($millions/year)            $728.4                                $700.8
----------------------------------------------------------------------------------------------------------------
         From Whom to Whom?                            State Governments to Qualified Providers.
----------------------------------------------------------------------------------------------------------------

    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 441

    Aged, Family planning, Grant programs--health, Infants and 
children, Medicaid, Penalties, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services proposes to amend 42 CFR Chapter IV as set forth 
below:

PART 441--SERVICES: REQUIREMENTS AND LIMITS APPLICABLE TO SPECIFIC 
SERVICES

    1. The authority citation for part 441 continues to read as 
follows:

    Authority: Sec 1102 of the Social Security Act (42 U.S.C 1302).

    2. Part 441 is amended by adding subpart K to read as follows:

Subpart K--Home and Community-based Attendant Services and Supports 
State Plan Option (Community First Choice)

Sec.
441.500 Basis and scope.
441.505 Definitions.
441.510 Eligibility.
441.515 Statewideness.
441.520 Required services.
441.525 Excluded services.
441.530 Setting.
441.535 Assessment of need.
441.540 Person-centered service plan.
441.545 Service models.
441.550 Service plan requirements for self-directed model with 
service budget.
441.555 Support system.
441.560 Service budget requirements.
441.565 Provider qualifications.
441.570 State assurances.
441.575 Development and Implementation Council.
441.580 Data collection.
441.585 Quality assurance system.
441.590 Increased Federal financial participation.

Subpart K--Home and Community-based Attendant Services and Supports 
State Plan Option (Community First Choice)


Sec.  441.500  Basis and Scope.

    (a) Basis. This subpart implements section 1915(k) of the Act 
concerning the Community First Choice Option to provide home and 
community-based attendant services and supports through a State plan.
    (b) Scope. The Community First Choice Option is designed to make 
available home and community-based attendant services and supports to 
eligible individuals, as needed, to assist in accomplishing activities 
of daily living (ADLs), instrumental activities of daily living 
(IADLs), and health-related tasks through hands-on assistance, 
supervision, or cueing.


Sec.  441.505  Definitions.

    As used in this subpart:
    Activities of daily living (ADLs) means basic personal everyday 
activities including, but not limited to, tasks such as eating, 
toileting, grooming, dressing, bathing, and transferring.
    Agency-provider model means, with respect to the provision of home 
and community-based attendant services and supports, a method of 
providing self-directed services and supports under which entities 
contract for the provision of these services and supports.
    Backup systems and supports means electronic devices used to ensure 
continuity of services and supports. These items may include pagers, 
personal emergency response systems, and other mobile communication 
devices. Persons identified by an individual can also be included as 
backup supports.
    Health-related tasks means specific tasks related to the needs of 
an individual, which can be delegated or assigned by licensed health-
care professionals under State law to be performed by an attendant.
    Individual's representative means a parent, family member, 
guardian, advocate, or other authorized representative of the 
individual.
    Instrumental activities of daily living (IADLs) means activities 
related to living independently in the community, including but is not 
limited to, meal planning and preparation, managing finances, shopping 
for food, clothing, and other essential items, performing essential 
household chores, communicating by phone or other media, and traveling 
around and participating in the community.
    Other models means methods, other than an agency-provider model, 
for the provision of self-directed services and supports. These models 
may include the provision of vouchers, direct cash payments, or use of 
a fiscal agent to assist in obtaining services.
    Self-directed means a consumer controlled method of selecting and 
providing services and supports that allow the individual, or where 
appropriate, the individual's representative, maximum control of the 
home and community-based attendant

[[Page 10750]]

services and supports, regardless of who acts as the employer of 
record.


Sec.  441.510  Eligibility.

    To receive Community First Choice services under this section, an 
individual must meet the following requirements:
    (a) Be eligible for medical assistance under the State plan.
    (b) Have an income that meets one of the following thresholds as 
determined annually:
    (1) Is equal to or less than 150 percent of the Federal poverty 
level (FPL).
    (2) Is greater than 150 percent of the FPL, and is eligible for 
nursing facility services under the State plan and for whom it has been 
determined that in the absence of home and community-bases attendant 
services and supports, the individual would otherwise require a 
Medicaid covered level of care furnished in a hospital, a nursing 
facility, an intermediate care facility for the mentally retarded or an 
institution for mental diseases.
    (3) Qualifies for Medicaid assistance under the special home and 
community-based waiver eligibility group defined at section 
1902(a)(10)(A)(ii)(VI) of the Act, and is receiving at least one home 
and community-based waiver service per month.
    (c) In determining whether the 150 percent of the FPL requirement 
is met, States must apply the same income disregards in accordance with 
section 1902(r)(2) of the Act as they do under their Medicaid State 
plan.


Sec.  441.515  Statewideness.

    States must provide the Community First Choice Option to 
individuals:
    (a) On a Statewide basis.
    (b) In a manner that provides such services and supports in the 
most integrated setting appropriate to the individual's needs, and 
without regard to the individual's age, type or nature of disability, 
severity of disability, or the form of home and community-based 
attendant services.
    (c) In a manner that provides the supports that the individual 
requires in order to lead an independent life.


Sec.  441.520  Required services.

    (a) If a State elects to provide the Community First Choice Option, 
the State must provide all of the following services:
    (1) Assistance with ADLs, IADLs, and health-related tasks through 
hands-on assistance, supervision, or cueing.
    (2) Acquisition, maintenance, and enhancement of skills necessary 
for the individual to accomplish ADLs, IADLs, and health related tasks.
    (3) Back-up systems or mechanisms to ensure continuity of services 
and supports, as defined in Sec.  441.505 of this subpart.
    (4) Voluntary training on how to select, manage, and dismiss 
attendants.
    (b) The State may provide permissible services and supports which 
include the following:
    (1) Expenditures for transition costs such as rent and utility 
deposits, first month's rent and utilities, bedding, basic kitchen 
supplies, and other necessities required for an individual to 
transition from a nursing facility, institution for mental diseases, or 
intermediate care facility for the mentally retarded to a community-
based home setting where the individual resides.
    (2) Expenditures relating to a need identified in an individual's 
person-centered plan of services that increase a participant's 
independence or substitute for human assistance, to the extent that 
expenditures would otherwise be made for the human assistance.
    (3) The services and supports that are purchased must be linked to 
an assessed need or goal established in the individual's person-
centered service plan.


Sec.  441.525  Excluded services.

    The Community First Choice Option may not include the following:
    (a) Room and board costs for the individual, except for allowable 
transition services described in Sec.  441.520(b)(1) of this subpart.
    (b) Special education and related services provided under the 
Individuals with Disabilities Education Act that are related to 
education only, and vocational rehabilitation services provided under 
the Rehabilitation Act of 1973.
    (c) Assistive devices and assistive technology services other than 
those defined in Sec.  441.520(a)(5) of this subpart or those that are 
based on a specific need identified in the service plan when used in 
conjunction with other home and community-based attendant services.
    (d) Medical supplies and equipment.
    (e) Home modifications.


Sec.  441.530  Setting.

    States must make available attendant services and supports in a 
home or community setting, which do not include the following:
    (a) A nursing facility.
    (b) An institution for mental diseases.
    (c) An intermediate care facility for the mentally retarded.
    (d) Any settings located in a building that is also a publicly or 
privately operated facility that provides inpatient institutional 
treatment or custodial care.
    (e) A building on the grounds of or immediately adjacent to, a 
public institution or disability-specific housing complex, designed 
expressly around an individual's diagnosis that is geographically 
segregated from the larger community, as determined by the Secretary.


Sec.  441.535  Assessment of need.

    States must conduct a face-to-face assessment of the individual's 
needs, strengths, and preferences in accordance with the following:
    (a) States may use one or more processes and techniques to obtain 
information about an individual including the following:
    (1) Health condition.
    (2) Personal goals and preferences for the provision of services.
    (3) Functional limitations.
    (4) Age.
    (5) School.
    (6) Employment.
    (7) Household.
    (8) Other factors that are relevant to the need for and 
authorization and provision of services.
    (b) Assessment information supports the determination that an 
individual requires the Community First Choice Option and also supports 
the development of the person-centered service plan and, if applicable, 
service budget.
    (c) The assessment of need must be conducted at least every 12 
months, as needed when the individual's support needs or circumstances 
change significantly necessitating revisions to the service plan, or at 
the request of the individual, or the individual's representative, as 
applicable.


Sec.  441.540  Person-centered service plan.

    (a) Person-centered planning process. The person-centered planning 
process must include the following criteria:
    (1) Includes people chosen by the individual.
    (2) Provides necessary support to ensure that the individual has a 
meaningful role in directing the process.
    (3) Occurs at times and locations of convenience to the individual.
    (4) Reflects cultural considerations of the individual.
    (5) Includes strategies for solving conflict or disagreement within 
the process, including clear conflict-of-interest guidelines for all 
planning participants.
    (6) Offers choices to the individual regarding the services and 
supports they receive and from whom.

[[Page 10751]]

    (7) Includes a method for the individual to request updates to the 
plan.
    (b) The person-centered plan. The person-centered plan must reflect 
the services that are important for the individual to meet individual 
services and support needs as assessed through a person-centered 
functional assessment, as well as what is important to the person with 
regard to preferences for the delivery of such supports. Commensurate 
with the level of need of the individual, the plan must include the 
following criteria:
    (1) Reflect the individual's strengths and preferences.
    (2) Reflect clinical and support needs as identified through a 
person-centered functional assessment.
    (3) Include individually identified goals, which may include, as 
desired by the individual, items related to relationships, community 
participation, employment, income and savings, health care and 
wellness, education, and others.
    (4) Reflect the services and supports (paid and unpaid) that will 
assist the individual to achieve identified goals and the providers of 
those services and supports.
    (5) Reflect risk factors and measures in place to minimize them, 
including back-up strategies when needed.
    (6) Be signed by all individuals and providers responsible for its 
implementation.
    (7) Be understandable to the individual receiving services and the 
individuals important in supporting him or her.
    (8) Include a timeline for review.
    (9) Identify the individual and/or entity responsible for 
monitoring the plan.
    (10) Be distributed to everyone involved (including the 
participant) in the plan.
    (11) Be directly integrated into self-direction where individual 
budgets are used.
    (12) Prevent the provision of unnecessary or inappropriate care.
    (c) Requirements of the plan. All of the State's applicable 
policies and procedures associated with the person-centered service 
plan development must be carried out and must include, but are not 
limited to, the following policies and procedures:
    (1) Ensure the responsibilities for assessment of need and service 
plan development are identified.
    (2) Ensure the planning process is timely.
    (3) Ensure the individual's needs are assessed and the services and 
supports meet the individual's needs.
    (4) Establish conflict of interest standards for assessment of need 
and the service plan development process that apply to all individuals 
and entities, public or private. At a minimum, these standards must 
ensure that the individuals or entities involved in the person-centered 
assessment of need and service plan development process are not:
    (i) Related by blood or marriage to the individual, or to any paid 
caregiver of the individual.
    (ii) Financially responsible for the individual.
    (iii) Empowered to make financial or health-related decisions on 
behalf of the individual.
    (iv) Individuals who would benefit financially from the provision 
of assessed needs and services.
    (d) Finalizing the person-centered service plan. The service plan 
must be finalized and agreed to in writing by the individual or, as 
appropriate, the individual's representative and a copy of the plan 
must be provided to the individual.
    (e) Reviewing the person-centered service plan. The service plan 
must be reviewed, and revised upon reassessment of need, at least every 
12 months, when the individual's circumstances or needs change 
significantly, and at the request of the individual or the individual's 
representative, as applicable.


Sec.  441.545  Service models.

    A State may choose one or more of the following as the service 
delivery model to provide self-directed home and community-based 
attendant services and supports:
    (a) Agency model. (1) The agency model is a delivery method in 
which the services and supports are provided by entities under a 
contract.
    (2) Under the agency model for the Community First Choice option, 
individuals maintain the ability to hire and fire the providers of 
their choice for the services identified in their person-centered 
service plan.
    (b) Self-directed model with service budget. A self-directed model 
with a service budget is one in which the individual has both a service 
plan and service budget based on the person-centered assessment of 
need.
    (1) Financial management entity. States must make available 
financial management services to all individuals with a service budget. 
The financial management entity performs functions including, but not 
limited to, the following services:
    (i) Collect and process timesheets of the individual's workers.
    (ii) Process payroll, withholding, filing, and payment of 
applicable Federal, State and local employment related taxes and 
insurance.
    (iii) Maintain a separate account for each individual's budget.
    (iv) Track and report disbursements and balances of each 
individual's funds.
    (v) Process and pay invoices for services in the service plan.
    (vi) Provide individual periodic reports of expenditures and the 
status of the approved service budget.
    (vii) States may perform the functions of a financial management 
entity internally or use a vendor organization that has the 
capabilities to perform the required tasks in accordance with 
applicable IRS requirements.
    (2) Direct cash. States may disburse cash prospectively to 
individuals self-directing their Community First Choice Option services 
and supports and must meet the following requirements:
    (i) Ensure compliance with all applicable requirements of the 
Internal Revenue Service, including but not limited to, retaining 
required forms and payment of FICA, FUTA and State unemployment taxes.
    (ii) Permit individuals, or their representatives as applicable, 
using the cash option to choose to use the financial management entity 
for some or all of the functions described in paragraph (b)(1)(ii) of 
this section.
    (iii) Make available a financial management entity to an individual 
who has demonstrated, after additional counseling, information, 
training, or assistance that the individual cannot effectively manage 
the cash option described in this section.
    (iv) If the cash option is the only model offered by the State for 
Community First Choice, the State may require an individual to use the 
financial management entity services under the cash option, but must 
provide the individual with the conditions under which this option 
would be enforced.
    (3) Vouchers. (i) States have the option to issue vouchers to 
individuals who self-direct their Community First Choice Option 
services and supports.
    (ii) States that choose to offer the vouchers must ensure 
compliance with all applicable requirements of the Internal Revenue 
Service.


Sec.  441.550  Service plan requirements for self-directed model with 
service budget.

    An approved self-directed service plan conveys authority to the 
individual to perform, at a minimum, the following tasks:
    (a) Recruit and hire workers to provide self-directed services, 
including specifying worker qualifications.

[[Page 10752]]

    (b) Fire workers.
    (c) Supervise workers in the provision of Community First Choice 
Option services and supports.
    (d) Manage workers in the provision of Community First Choice 
Option services and supports, which includes the following functions:
    (1) Determining worker duties.
    (2) Scheduling workers.
    (3) Training workers in assigned tasks.
    (4) Evaluating workers performance.
    (e) Determining the amount paid for a service, support, or item.
    (f) Reviewing and approving provider invoices.


Sec.  441.555  Support system.

    For the self-directed model with a service budget, States must 
provide, or arrange for the provision of, a support system that meets 
all of the following conditions:
    (a) Appropriately assesses and counsels an individual, or the 
individual's representative, if applicable, before enrollment.
    (b) Provides appropriate information, counseling, training, and 
assistance to ensure that an individual is able to manage the services 
and budgets.
    (1) This information must be communicated to the individual in a 
manner and language understandable by the individual.
    (2) The support activities must include at least the following:
    (i) Person-centered planning and how it is applied.
    (ii) Range and scope of individual choices and options.
    (iii) Process for changing the person-centered service plan and 
service budget.
    (iv) Grievance process.
    (v) Risks and responsibilities of self-direction.
    (vi) The ability to freely choose from available home and 
community-based attendant providers.
    (vii) Individual rights.
    (viii) Reassessment and review schedules.
    (ix) Defining goals, needs, and preferences.
    (x) Identifying and accessing services, supports, and resources.
    (xi) Development of risk management agreements.
    (xii) Development of a personalized backup plan.
    (xiii) Recognizing and reporting critical events.
    (xiv) Information about an advocate or advocacy systems available 
in the State and how an individual, or individual's representative, if 
applicable, can access the advocate or advocacy systems.


Sec.  441.560  Service budget requirements.

    (a) For the self-directed model with a service budget, a service 
budget must be developed and approved by the State based on the 
assessment of need and service plan and must include all of the 
following requirements:
    (1) The specific dollar amount an individual may use for Community 
First Choice Option services and supports.
    (2) The procedures for informing an individual of the amount of the 
service budget before the service plan is finalized.
    (3) The procedures for how an individual may adjust the budget 
including the following:
    (i) The procedure for an individual to freely change the budget.
    (ii) The circumstances, if any, that may require prior approval by 
the State before a budget adjustment is made.
    (4) The circumstances, if any, that may require a change in the 
service plan.
    (5) The procedures that govern the determination of transition 
costs and expenditures, relating to a need in the service plan, that 
increase independence or substitute for human assistance to the extent 
that expenditures would otherwise be made for human assistance.
    (6) The procedures for an individual to request a fair hearing 
under Sec.  441.300 of this part if an individual's request for a 
budget adjustment is denied or the amount of the budget is reduced.
    (b) The budget methodology set forth by the State to determine an 
individual's service budget amount must meet all of the following 
criteria:
    (1) The State's method of determining the budget allocation is 
objective and evidence based utilizing valid, reliable cost data.
    (2) Be applied consistently to individuals.
    (3) Be included in the State plan.
    (4) Includes a calculation of the expected cost of Community First 
Choice Option services and supports, if those services and supports are 
not self-directed.
    (5) The State has a process in place that describes the following:
    (i) Any limits it places on Community First Choice Option services 
and supports, and the basis for the limits.
    (ii) Any adjustments that are allowed and the basis for the 
adjustments.
    (c) The State must have procedures in place that will provide 
safeguards to individuals when the budgeted service amount is 
insufficient to meet the individual's needs.
    (d) The State must have a method of notifying individuals of the 
amount of any limit that applies to an individual's Community First 
Choice Option services and supports.
    (e) The budget may not restrict access to other medically necessary 
care and services furnished under the State plan and approved by the 
State but which are not included in the budget.
    (f) The State must have a procedure to adjust a budget when a 
reassessment indicates a change in an individual's medical condition, 
functional status, or living situation.


Sec.  441.565  Provider qualifications.

    (a) The State must provide assurances that necessary safeguards 
have been taken to protect the health and welfare of enrollees in the 
Community First Choice State Option, and must define in writing 
adequate qualifications for providers in the agency model of Community 
First Choice services and supports.
    (b) An individual has the option to permit family members, or any 
other individuals, to provide Community First Choice attendant services 
and supports identified in the service plan provided they meet the 
qualifications to provide the services and supports.
    (c) An individual retains the right to train workers in the 
specific areas of attendant care needed by the individual and to 
perform the needed assistance in a manner that comports with the 
individual's personal, cultural, or religious preferences.
    (d) An individual retains the right to establish additional staff 
qualifications based on the individual's needs and preferences.


Sec.  441.570  State assurances.

    A State must assure the following requirements are met:
    (a) For the first full fiscal year in which the State Plan 
amendment is implemented, a State must maintain, or exceed, the level 
of expenditures for services provided under sections 1115, 1905(a), and 
1915, of the Act, or otherwise to individuals with disabilities or 
elderly individuals attributable to the preceding fiscal year.
    (b) All applicable provisions of the Fair Labor Standards Act of 
1938.
    (c) All applicable provisions of Federal and State laws regarding 
the following:
    (1) Withholding and payment of Federal and State income and payroll 
taxes.
    (2) The provision of unemployment and workers compensation 
insurance.
    (3) Maintenance of general liability insurance.
    (4) Occupational health and safety.

[[Page 10753]]

Sec.  441.575  Development and Implementation Council.

    (a) States must establish a Development and Implementation Council 
primarily comprised primarily of individuals with disabilities, elderly 
individuals, and their representatives.
    (b) States must consult and collaborate with the Council when 
developing and implementing a State plan amendment to provide home and 
community-based attendant services and supports.


Sec.  441.580  Data collection.

    A State must provide the following information regarding the 
provision of home and community-based attendant services and supports 
under the Community First Choice Option for each fiscal year for which 
the services and supports are provided:
    (a) The number of individuals who are estimated to receive the 
Community First Choice under this State plan option during the fiscal 
year.
    (b) The number of individuals that received the services and 
supports during the preceding fiscal year.
    (c) The number of individuals served broken down by type of 
disability, age, gender, education level, and employment status.
    (d) The specific number of individuals who have been previously 
served under sections 1115, 1915(c) and (i) of the Act, or the personal 
care State plan option.
    (e) Data regarding how the State provides the Community First 
Choice State option and other home and community-based services.
    (f) The cost of providing Community First Choice State option and 
other home and community-based services and supports.
    (g) Data regarding how the State provides individuals with 
disabilities who otherwise qualify for institutional care under the 
State plan or under a waiver the choice to receive home and community-
based services in lieu of institutional care.


Sec.  441.585  Quality assurance system.

    States must establish and maintain a comprehensive, continuous 
quality assurance system, detailed in the State plan amendment, that 
includes a quality improvement strategy and employs measures for 
program performance and quality of care, standards for delivery models, 
mechanisms for discovery and remediation, and quality improvements 
proportionate to the benefit and number of individuals served.
    (a) Details of the quality assurance system. Details of the quality 
assurance system must include the following:
    (1) Program performance measures. The States' quality assurance 
system must be designed to measure and provide evidence of program 
performance related to the following:
    (i) Health and welfare.
    (ii) Provider qualifications.
    (iii) Choice of institution or community.
    (iv) Choice of services, supports and providers.
    (v) Cost of services and supports.
    (2) Quality of care measures. The State's quality assurance system 
must be designed to measure individual outcomes associated with the 
receipt of community-based attendant services and supports, 
particularly with respect to the health and welfare of recipients of 
this service. These measures must be made available to CMS upon request 
and must include a process for the mandatory reporting, investigation, 
and resolution of allegations of neglect, abuse, or exploitation in 
connection with the provision of community based attendant services and 
supports, as well as quality indicators approved or prescribed by the 
Secretary.
    (3) Standards for delivery models. The States' quality assurance 
system must include standards for agency-based and other delivery 
models for training, appeals for denials and reconsideration procedures 
on an individual service plan.
    (4) Choice and control. The quality assurance system will employ 
methods that maximize consumer independence and control and will 
provide information about the provisions of quality improvement and 
assurance to each individual receiving such services and supports.
    (b) Stakeholder feedback. The State must elicit and incorporate 
feedback from key stakeholders to improve the quality of the community-
based attendant services and supports benefit.
    (c) Collection and evaluation. The State must collect and report on 
monitoring, remediation, and quality improvements related to 
information defined in the State's quality improvement strategy.


Sec.  441.590  Increased Federal financial participation.

    Beginning October 1, 2011, the FMAP applicable to the State will be 
increased by 6 percentage points, for the provision of the Community 
First Choice Option home and community-based attendant services, under 
an approved State plan amendment.

    Authority: (Catalog of Federal Domestic Assistance Program No. 
93.778, Medical Assistance Program)

    Dated: December 1, 2010.
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: January 31, 2011.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2011-3946 Filed 2-22-11; 8:45 am]
BILLING CODE 4120-01-P


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