26828 Federal Register / Vol. 77, No. 88 / Monday, May 7, 2012 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 441 

[CMS–2337–F] 

RIN 0938–AQ35 

Medicaid Program; Community First 

Choice Option 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule implements 

section 2401 of the Affordable Care Act, 

which establishes a new State option to 

provide home and community-based 

attendant services and supports. These 

services and supports are known as 

Community First Choice (CFC). While 

this final rule sets forth the 

requirements for implementation of 

CFC, we are not finalizing the section 

concerning the CFC setting. 

DATES: These regulations are effective 

July 6, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Kenya Cantwell, (410) 786–1025. 

SUPPLEMENTARY INFORMATION: 

I. Executive Summary and Background 

A. Executive Summary 

1. Purpose 

This final rule implements section 

2401 of the Affordable Care Act of 2010, 

as amended by the Health Care and 

Education Reconciliation Act of 2010, 

which adds section 1915(k) to the Social 

Security Act (the Act). The Community 

First Choice Option established a new 

State plan option to provide home and 

community-based attendant services 

and supports at a 6 percentage point 

increase in Federal medical assistance 

percentage (FMAP). While this final rule 

sets forth the requirements for 

implementation of CFC, we are not 

finalizing § 441.530, ‘‘Setting,’’ at this 

time. 

2. Summary of the Major Provisions 

• This final rule sets out our 

interpretation of the statutory 

requirements for eligibility under the 

Community First Choice (CFC) Option. 

Specifically, this final rule clarifies that 

under the statute, individuals should be 

determined to need an institutional 

level of care to be eligible for CFC 

services. This rule also provides States 

with the option to permanently waive 

the annual recertification requirement 

for individuals if it is determined that 

there is no reasonable expectation of 

improvement or significant change in 

the participant’s condition because of 

the severity of a chronic condition or 

the degree of impairment of functional 

capacity. 

• This rule specifies the services that 

must be made available under the CFC 

State plan option. States electing this 

option must make available home and 

community-based attendant services 

and supports to assist in accomplishing 

activities of daily living, instrumental 

activities of daily living, and healthrelated tasks through hands-on 

assistance, supervision, and/or cueing. 

Additionally, the following services 

may be provided at the State’s option: 

Transition costs such as rent and utility 

deposits, first month’s rent and utilities, 

purchasing bedding, basic kitchen 

supplies, and other necessities required 

for transition from an institution; and 

the provision of services that increase 

independence or substitute for human 

assistance to the extent that 

expenditures would have been made for 

the human assistance, such as nonmedical transportation services or 

purchasing a microwave. 

• States are required to use a personcentered service plan that is based on an 

assessment of functional need and 

allows for the provision of services to be 

self-directed under either an agencyprovider model, a self-directed model 

with service budget, or other service 

delivery model defined by the State and 

approved by the Secretary. States may 

offer more than one service delivery 

model. 

• The final rule also implements the 

requirement that for the first full twelve 

month period in which a CFC State plan 

amendment is implemented, the State 

must maintain or exceed the level of 

expenditures for home and communitybased attendant services provided under 

the State plan, waivers or 

demonstrations, for the preceding 12- 

month period. 

• States will receive an additional 6 

percentage point in Federal Medical 

Assistance Percentage (FMAP) for the 

provision of CFC services and supports. 

3. Summary of Costs and Benefits 

Provision description Total costs Total benefits 

Provision of home and community 

based attendant services and 

supports.

The Federal and State impacts for 

FY 2012 are estimated at $820 

million and $480 million, respectively.

This final rule provides States with additional flexibility to finance 

home and community-based services attendant services and supports. We anticipate this provision 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 institutional care settings. 

B. 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 (CFC) 

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 medical 

assistance 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 (FPL) 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 for 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 


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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 communitybased 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 

service plan agreed to in writing by the 

individual, or his or her representative, 

that is based on a functional needs 

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 and community-based 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, backup 

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 backup 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 medical assistance 

under section 1915(k) of the Act. 

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 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 

for medical assistance 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 for 

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 wellbeing 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, 

permitting 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 CFC 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 CFC home and community-based 

attendant services and supports. States 

must provide information for each fiscal 

year for which CFC attendant services 

and supports are provided, on the 

number of individuals estimated to 

receive these 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 


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services program under the State plan or 

under a waiver. Section 1915(k)(5) also 

requires the Secretary to submit to 

Congress an interim report no later than 

December 31, 2013 and a final report no 

later than December 15, 2015. These 

reports must be available to the public. 

Finally, section 1915(k) (6) of the Act 

sets forth the definitions of specific 

terms as they relate to CFC. 

C. Background of Home and 

Community-Based Attendant Services 

and Supports 

The CFC option expands States’ and 

individual’s Medicaid options for the 

provision of community-based longterm care services and supports. 

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 

efforts 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 day-to-day 

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 in addition to 

providing personal care to eligible 

individuals within their homes. This 

provision was implemented by a final 

rule published in the September 11, 

1997 Federal Register (62 FR 47896) 

that added a new section at § 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 

as an update to the State Medicaid 

Manual (SMM) 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 and 

Periodic Screening, 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 

served 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 selfdirection, personal choice, and control 

over services and providers. The Deficit 

Reduction Act of 2005 (Pub. L. 109–171, 

enacted on February 8, 2006) (DRA) 

added section 1915(i) of the Act which 

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 CFC 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. 

CFC 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. 

Additional important aspects of this 

background are 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 standard, the U.S. 

Supreme Court ruled in Olmstead that 

unnecessary institutionalization of 

individuals with disabilities constitutes 

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. 

Finally, the self-direction service 

delivery model is another important 

aspect to the background of this 

provision and a key component of the 

CFC option. Two national pilot projects 

demonstrated the success of selfdirected 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 attendant care provider 

turnover, and maximized the efficient 

use of community services and 


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supports. The DRA also 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. 

This rule finalizes many of the 

provisions set forth in the February 25, 

2011 proposed rule, modifies some such 

provisions and allows that one 

provision, § 440.530 ‘‘Setting’’, will be 

subject to further comment. 

II. Analysis of and Responses to Public 

Comments on the Proposed Rule 

We received a total of 141 timely 

items of correspondence from home care 

provider representatives and other 

professional associations, State 

Medicaid directors, unions, 

beneficiaries, and other individuals. We 

received hundreds of individual 

comments within these items of 

correspondence, which ranged from 

general support or opposition to the 

proposed rule, to specific questions and 

detailed comments and 

recommendations regarding the 

proposed changes. A summary of our 

proposals, the public comments and our 

responses are set forth below. 

A. General 

Comment: Many commenters 

expressed support for the rule. Several 

commenters strongly believe that 

everything must be done to help keep 

individuals out of nursing homes and in 

the community. The commenters stated 

doing so will save taxpayer’s money and 

increase the quality of life for 

individuals who receive services. The 

commenters believe individuals are 

valuable to communities and they 

deserve to have the ‘‘cheaper’’ option of 

staying home. Another commenter 

indicated that CFC could provide 

needed assistance to children with 

special health care needs and their 

families who wish to remain in their 

communities where they can direct their 

own service plan. Another commenter 

indicated that personal care is more 

humanely provided and more cost 

effective in the home rather than in an 

institution. The commenter believes 

infrastructure cost of running an 

institution and the need to protect the 

administration detracts from patient 

care efforts, and believes patient care 

becomes secondary to administrative 

function. Another commenter requests 

the CFC rule be implemented so that all 

disabled persons, such as the 

commenter’s 31-year old son who is 

partially paralyzed by a stroke, have a 

choice of living their own life. Another 

commenter stated community-based 

reimbursed services provide access for 

the growing group of aging baby 

boomers. The commenter believes that 

CFC will support individuals in the 

setting appropriate to the individual’s 

need and allow them to lead a more 

independent lifestyle. The commenters 

urged CMS to implement the final rule. 

One commenter was pleased the rule 

recognized the need for flexibility to 

‘‘meet States where they are’’ with 

regard to the provision of home and 

community-based services with an eye 

toward expanding opportunities for 

consumers. 

Response: We appreciate the 

commenters’ perspectives. 

Comment: A few commenters 

expressed opposition to the proposed 

rule. One commenter requested limiting 

excessive rules that would burden the 

States financially or would be timeconsuming to implement. Another 

commenter believes CFC violates the 

10th amendment of the United States 

Constitution by requiring States to 

perform services that the Federal 

Government is prohibited from doing by 

the Constitution. The commenter 

believes the regulation should be 

withdrawn. 

Response: We disagree with the 

commenters’ statement that the CFC 

program violates the 10th amendment of 

the United States Constitution. Section 

1915(k) of the Act sets forth an option, 

not a mandate, for States to include 

such services in their Medicaid 

program. 

We do not believe the regulation 

places excessive requirements on States, 

rather it provides States with the 

necessary guidance to implement 

section 1915(k) of the Act successfully. 

We also believe the regulation provides 

participant protections to ensure 

individuals exercise maximum control 

of home and community-based 

attendant services and supports. 

Comment: One commenter expressed 

concern that section 1.B, Background of 

Home and Community-Based Attendant 

Services and Supports, omits the section 

1930 Community Supported Living 

Arrangements program, which 

influenced the development of home 

and community-based services. The 

commenter believes this is an important 

cornerstone of the new program and 

should be included in the final rule. 

Response: We agree that the section 

1930 Community Supported Living 

Arrangement program has influenced 

the development of home and 

community-based services. However, 

we do not believe that its specific 

influence on the CFC option warrants 

inclusion in the final rule. 

Comment: One commenter indicates 

that to implement CFC for the 

population eligible to receive home and 

community-based attendant services 

and supports, as well as to implement 

the array of services available to eligible 

individuals would be overly expansive. 

The commenter believes States would 

need additional staffing to assess the 

needs of the eligible CFC populations, 

develop and maintain the quality 

assurance systems, and report data. 

Another commenter expressed concern 

that the proposed rule creates some 

uncertainty about whether States can 

build upon existing State structures in 

delivering services under CFC. 

Response: We recognize that States 

that do not currently have the 

infrastructure necessary to support 

implementation of CFC may experience 

higher initial administrative burdens 

and costs when designing their CFC 

program. We believe the enhanced 

FMAP provided under CFC will lessen 

the burden on States, allowing them to 

serve the population eligible for CFC. 

Additionally, States may use existing 

infrastructure, such as a current 

advisory council to act as the 

Development and Implementation 

Council, as long as the statutory 

requirements for the structure, 

composition, and collaborative and 

consultative role of the council are met. 

Comment: One commenter wanted to 

know the impact CFC will have on the 

Early Periodic Screening Diagnosis and 

Treatment (EPSDT) benefit 

Response: The EPSDT mandate under 

section 1905(r)(5) of the Act requires 

that any medically necessary health care 

service listed at section 1905(a) of the 

Act be provided to a Medicaid 

beneficiary under the age of 21 even if 

the service is not available under the 

State’s Medicaid plan to the rest of the 

Medicaid population. CFC services are 

provided under section 1915(k) of the 

Act, which is outside the scope of 

section 1905(a) of the Act and therefore 

are not required under the EPSDT 

program. We note that this does not 

preclude a State from providing CFC 

services to any individual who meets 

the criteria to receive CFC services, 

regardless of age, and from receiving the 

added Federal support associated with 

providing CFC services. Furthermore, in 

addition to meeting EPSDT 

requirements through the provision of 

the section 1905(a) services, a State may 

also meet a particular child’s needs 

under EPSDT through services that are 

also available through the section 

1915(k) benefit. 

Comment: One commenter expressed 

concern that the rule should include 

appeals for reductions in service based 


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26832 Federal Register / Vol. 77, No. 88 / Monday, May 7, 2012 / Rules and Regulations 

on anything other than a documented 

change in need. The commenter 

indicated that his State allows requests 

for hearings, but stated that they are 

routinely denied. The commenter stated 

that the State’s assurances with regard 

to due process are not reliable and 

recommended that there be a higher 

standard for the CFC option and other 

waivers with regard to appeals. 

Response: We acknowledge the 

importance of a beneficiary’s ability to 

appeal service reductions. States are 

required to adhere to the requirements 

specified in 42 CFR 431 subpart E for 

the Medicaid program in general, and 

for CFC specifically. It is important to 

note, however, that CFC is a State plan 

option and not an HCBS waiver. 

Comment: One commenter explained 

that their State asserts they have no 

obligation to meet the client’s needs in 

the community—only that the services 

authorized be indexed to actual needs. 

The commenter also stated that the risk 

of re-institutionalization is controlled by 

closing institutions, resulting in clients 

being placed into community 

placements without the same level of 

support provided in an institutional 

setting. The commenter believes that 

CMS ‘‘turns a blind eye’’ to these issues 

and that all waivers should respect the 

clients’ rights to have their needs met in 

the community. Another commenter 

expressed concern that their State is 

intentionally limiting services and that 

the State has declared that they have no 

obligation to, or intention of, meeting 

the needs of vulnerable adults in the 

community. The commenter is 

concerned the choice guaranteed in the 

Olmstead decision is not upheld, and 

wonders why the Federal government 

goes through these pro-forma 

rulemaking processes when there is no 

intent to follow-up or enforce the 

‘‘reassuring words.’’ 

Response: We want to clarify that the 

CFC is a State plan option, not a waiver. 

We respect the commenter’s opinions, 

but do not agree with the commenter 

with regard to the Federal government 

not enforcing regulations or ignoring 

these important issues noted above. We 

also believe that the rulemaking process 

is a meaningful process that allows the 

public to have a voice in how laws 

passed by the Congress are implemented 

by CMS. We echo throughout the 

regulation that in implementing CFC, 

States must ensure that individuals are 

served in the most integrated settings 

appropriate to their needs. We have also 

worked closely with Medicaid 

beneficiaries, as well as States, over the 

years to assist in determining how the 

Medicaid program can support them in 

meeting their Olmstead obligations. 

This regulation will establish the 

parameters States must follow in 

implementing CFC. Additionally, the 

Data collection requirements described 

at § 441.580, and the Quality assurance 

system requirements described at 

§ 441.585, require States to provide CMS 

with information regarding the 

provision of CFC services. We 

encourage all stakeholders to collaborate 

with States and CMS to ensure these 

parameters are met. 

Comment: One commenter stated that 

to be consistent with Olmstead, 

personal choice is required to 

participate in the CFC option, and the 

proposed rule should be amended to 

expressly indicate this right and take 

care not to limit expressions of 

beneficiary choice to community 

options. 

Response: We agree that personal 

choice is an important part of CFC and 

have taken steps throughout the 

regulation to illustrate its importance. 

Based on feedback received through the 

comment process, we have decided to 

amend language in the ‘‘assessment of 

need’’ and ‘‘person-centered service 

plan’’ sections, as described below, to 

strengthen this principle. 

Comment: Another commenter stated 

that the current focus of their State’s 

Home and Community-Based Services 

(HCBS) plans is on lowering costs, not 

meeting all the needs of individuals. 

The commenter is concerned that States 

have too much power and the CFC rule 

does not correct the imbalance between 

saving taxpayer money while still 

serving the needs of vulnerable adults. 

Response: The Medicaid program is a 

State/Federal partnership. States have 

the flexibility to design and administer 

their Medicaid programs as long as they 

meet the Federal requirements set forth 

in the regulations. In addition, States 

have the choice of providing an array of 

optional services. The purpose of CFC is 

to afford States another option to 

provide home and community-based 

services as an alternative to institutional 

placement. This benefit is not like a 

waiver program in that it is not required 

to be cost neutral in terms of community 

versus nursing facility costs. While this 

program should not be viewed 

individually as the key to ensuring 

community access, it is an important 

tool for States to consider as they strive 

to meet their obligations under 

Olmstead. 

Comment: We received many 

comments asking if CFC can be 

delivered through managed care under a 

section 1915(b) waiver authority, or a 

section 1915(b)/(c) waiver. One 

commenter expressed concern that the 

proposed rule does not reference the 

ability for States to deliver this rule’s 

services through Medicaid health plans 

under a section 1915(b) waiver. The 

commenter believes that Medicaid 

health plans have demonstrated their 

ability to provide coordination across a 

range of services essential to facilitate 

the choice of community setting for 

individuals with disability. The 

commenter recommended CMS confirm 

in the preamble that States have the 

option of implementing the CFC option 

through Medicaid managed care 

programs. Another commenter 

requested States not be subject to 

additional limitations or restrictions if 

they elect to have a managed care 

organization administer their program. 

Response: We are willing to consider 

the implementation of the CFC option 

through Medicaid managed care 

programs with a State interested in 

doing so; however, the State would need 

to ensure that the delivery system 

implemented through the (b) waiver 

would not impede the provision of 

services as specified in section 1915(k) 

of the Act. Therefore, we are not 

revising the regulation text. 

Comment: One commenter requested 

clarification whether the additional 6 

percentage point increase in Federal 

medical assistance percentage (FMAP) 

is for expenditures related to both direct 

services and administration. 

Response: The 6 percentage point 

increase in FMAP is related to direct 

services only and does not apply to 

administrative costs. 

Comment: One commenter expressed 

concern that regulatory requirements for 

CFC may be duplicative of, or in conflict 

with PACE regulations applicable to 

PACE organizations. The commenter 

requested clarification on the 

relationship of the PACE program and 

CFC for PACE participants who also 

meet the eligibility criteria for CFC. 

Specifically, the commenter questioned 

if home and community-based attendant 

services may be provided in a manner 

consistent with the PACE benefit under 

section 1934 of the Act. The commenter 

also questioned if PACE organizations 

may provide services under CFC under 

the agency-provider model or under 

another model established by a State. 

Response: Section 1915(k) of the Act 

does not preclude PACE organizations, 

or any entity, from providing CFC 

services as a separate line of business, 

as long as provider qualifications 

established by the State are met. 

However, CFC is a separate and distinct 

program, with its own statutory and 

regulatory requirements, and may not be 

provided under the PACE authority. 

Comment: One commenter requested 

CMS include a direct reference to a 


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State’s obligation, in establishing 

processes for public notice and input, to 

comply with section 5006(e) of the 

American Recovery and Reinvestment 

Act of 2009 (Pub. L. 111–5, enacted on 

February 17, 2009) (ARRA) prior to 

submission of a State plan amendment 

or other action under section 2401 of the 

Affordable Care Act that would have a 

direct effect on Indians or Indian health 

providers or urban Indian organizations. 

Response: The consultation 

requirements of section 5006(e) of 

ARRA require solicitation of advice 

prior to submission of any State plan 

amendment, waiver request, or proposal 

for a demonstration project that is likely 

to have a direct effect on Indians, Indian 

Health Programs or Urban Indian 

Organizations, in any State in which 

one or more Indian Health Programs or 

Urban Indian Organizations furnishes 

health care services. These requirements 

apply to but are not unique to CFC. 

Therefore, we do not believe it is 

appropriate to include these 

requirements in this regulation 

specifically. CMS reviews State plan 

amendments, waiver requests, and 

demonstration proposals for compliance 

with the ARRA 5006(e) provisions. 

Comment: One commenter requests 

Medicare expand options to allow 

individuals to stay at home. 

Response: This rule implements 

section 2401 of the Affordable care Act, 

which is limited to the Medicaid 

program. 

Comment: One commenter 

recommended CMS incorporate 

provisions within the CFC regulation to 

enable States to implement data systems 

to monitor the direct-care workforce. 

Response: We believe the 

implementation of data systems to 

monitor the direct-care workforce would 

be an acceptable component of a State’s 

Quality Assurance System. However, we 

do not believe there is a need to 

reference this specifically. 

Comment: One commenter requests 

the term ‘‘mentally retarded’’ be 

replaced throughout the final document 

in its entirety with a term such as 

‘‘developmentally disabled’’, 

‘‘individual with an intellectual 

disability’’ or other more appropriate 

language. 

Response: We appreciate the 

commenter’s concern and note that the 

rule does not include the term 

‘‘mentally retarded’’, but rather, 

includes the statutory term 

‘‘Intermediate Care Facility for the 

Mentally Retarded (ICF/MR).’’ While 

CMS supports using the term 

‘‘individuals with intellectual 

disabilities,’’ it would be beyond the 

scope of this regulation to change the 

statutory name of ICFs/MR. Since we 

are only using this term to refer to this 

specific setting, which has not been 

renamed in law, we do not believe we 

can make this change. However, in the 

October 24, 2011 Federal Register, we 

proposed in the Regulatory Provisions 

to Promote Program Efficiency, 

Transparency, and Burden Reduction 

proposed rule to replace the term 

‘‘mentally retarded’’ with ‘‘intellectually 

disabled’’ throughout our regulations. 

B. Basis and Scope (§ 441.500) 

We proposed to implement section 

1915(k) of the Act, known as the CFC 

Option, to provide home and 

community-based attendant services 

and supports through the Medicaid 

State plan. We proposed the scope of 

the benefit include the provision of 

home and community-based attendant 

services and supports to eligible 

individuals, as needed, to assist in 

accomplishing ADLs, IADLs, and 

health-related tasks through hands-on 

assistance, supervision, or cueing. 

Comment: One commenter indicated 

that CFC should be a mandatory benefit. 

Response: Section 1915(k) of the Act 

amends the Medicaid statute to add CFC 

as an optional State Plan benefit, not a 

mandatory benefit. It is beyond the 

scope of a regulation to expand CFC to 

a mandatory benefit. 

Comment: Many commenters stated 

that this section of the regulation should 

acknowledge that CFC is intended to 

make available home and communitybased attendant services and supports to 

people with disabilities of all ages as an 

alternative to institutional placement. 

Another commenter stated the same, but 

also included individuals with serious 

mental illness. 

Response: We agree with the 

commenters that the scope of CFC is to 

provide home and community-based 

services and supports as an alternative 

to institutional placement. Furthermore, 

we received comments supporting 

Congressional intent that all individuals 

receiving CFC services must meet an 

institutional level of care, consistent 

with the view that CFC is to provide 

services and supports as an alternative 

to institutional placement. We discuss 

this issue in further detail in the 

response to comments on Eligibility, 

§ 441.510. We have revised the 

eligibility section to clarify that under 

the statute all individuals receiving CFC 

services must meet an institutional level 

of care; however, we do not believe it 

is necessary to revise the basis and 

scope section explicitly. 

Comment: One commenter wanted to 

know if there is State flexibility to focus 

on a single modality (hands-on or 

supervision or cueing) or must all three 

modalities be covered. 

Response: We believe the statutory 

language requires that all three 

modalities must be available to 

individuals. 

Comment: One commenter stated that 

the regulation should allow for different 

‘‘benefit’’ packages for people with 

different needs; for example, 

populations such as children versus 

adults, young adults versus older adults. 

Response: Section 1915(k)(3)(B) of the 

Act requires that services must be 

provided 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 to lead an 

independent life. Therefore, States may 

not differentiate the benefit package; 

however, services must be provided to 

individuals based on their needs. 

Comment: A few commenters 

expressed concern with a State’s ability 

to limit the amount, duration, and scope 

of CFC. One commenter believes States 

make arbitrary and capricious 

reductions in services due only to 

budget constraints. These reductions 

result in an individual’s reliance on 

‘‘informal care contracts’’ paid by the 

individual’s small income to fill the gap 

of needed services. Another commenter 

expressed concern that States who take 

advantage of this new option may 

impose unnecessary restrictions on 

families (such as limiting in-home 

nursing supports to children who are on 

ventilators). 

Response: CFC is a State plan optional 

service and States may set limits on the 

amount, duration and scope of services, 

as long as the amount, duration and 

scope are sufficient to reasonably 

achieve the purpose of the service. In 

addition, these limits must be applied 

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 to lead an independent life. We 

will be reviewing all State proposals to 

implement CFC under the State plan. 

Our review will include a review of any 

proposed limitations. 

Comment: One commenter requested 

clarification of what is meant by 

‘‘severity of disability’’ and asked if this 

definition would preclude limiting the 

CFC to the ‘‘severely impaired’’ 

population. In addition, this commenter 

raised the concern that if the definition 

does preclude limiting CFC population, 

States would lose the ability to 

‘‘effectively utilize CFC to serve unique 

populations.’’ 


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Response: As stated above, section 

1915(k)(3)(B) of the Act indicates that 

the services must be provided on a 

statewide basis 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 to lead an 

independent life as specified in 

§ 441.515. Based on this requirement, 

the CFC population cannot be limited 

based on type or severity of disability, 

as long as the individual meets the 

eligibility requirement set forth in 

§ 441.510. States cannot refuse access to 

CFC, or the ability to self-direct CFC 

services and supports, because of the 

severity of an individual’s needs. 

After consideration of the public 

comments, this section is being 

finalized without revision. 

C. Definitions (§ 441.505) 

We proposed several definitions 

specific to CFC. 

Comment: Many commenters 

applauded CMS for prefacing the list of 

ADLs with ‘‘including, but not limited 

to.’’ The commenters believe this 

language recognizes that individuals 

may have additional needs for support. 

Response: The intent of CFC is to 

assist individuals with receiving 

services necessary to have a lifestyle 

that is integrated into their community. 

Therefore, we do not believe it is 

appropriate to specify a prescriptive list 

that may not address each person’s 

individualized needs. 

Comment: One commenter wanted to 

know if States are allowed to define 

ADLs more expansively by adding 

activities since the definition of ADLs 

includes the phrase ‘‘but not limited 

to.’’ 

Response: Through the State Plan 

Amendment (SPA) process, States have 

the flexibility to propose additional 

factors to be included as components of 

ADLs. 

Comment: A few commenters 

suggested removing the term ‘‘selfdirected’’ from the definition of 

‘‘agency-provider model.’’ The 

commenters believe the use of this term 

with the agency-provider model implies 

that services will be restricted to 

individuals who can fully manage 

services and supports, and will not 

allow individuals who are unable to 

fully manage them, or who do not wish 

to do so, from receiving services under 

the agency-provider model. 

Response: We believe the commenter 

is applying a different definition of 

‘‘self-direction’’ than what is specified 

within this rule. Section 1915(k)(6)(B) of 

the Act used the term ‘‘consumer 

controlled’’ to mean a 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 

services and supports, regardless of who 

acts as the employer of record. In the 

preamble of the proposed regulation, we 

elected to use the term self-directed 

rather than consumer controlled to be 

consistent with terminology in other 

Medicaid provisions. We interpret this 

to mean that all CFC services are selfdirected and it is up to the individual 

to determine the level of self-direction 

they want to have. Therefore we are not 

adopting the commenter’s suggestions. 

Comment: Several commenters 

requested more clarification around the 

‘‘agency-provider model.’’ A few 

commenters wanted to know if the 

agency-provider model is the same as 

what is sometimes referred to as a ‘‘coemployment’’ model. One commenter 

disagreed with the proposed definition 

stating that an agency-provider model 

does not mean that an entity contracts 

for the provision of services and 

supports. The commenter states the 

agency-provider model has to do with 

who the employer is. The commenter 

also states that under an agencyprovider model, the individual can still 

select, train, manage, and dismiss an 

attendant care provider. When the 

attendant care provider is dismissed, the 

attendant care provider is still employed 

by the agency and can be selected by 

someone else. 

Response: The definition in the rule is 

from section 1915(k)(6)(C)(i) of the Act. 

In the preamble of the Service Model 

section of the proposed rule, we 

construed the ‘‘agency-provider model’’ 

to mean ‘‘traditional agency model’’ and 

an ‘‘agency with choice’’ model. Under 

the traditional agency model, the 

individual retains hiring and firing 

authority of personal care attendants, 

with regard to the receipt of services 

from a specific personal care attendant. 

In other words, the employment 

relationship between the personal care 

attendant and the agency does not 

change. The agency with choice model 

utilizes a co-employment relationship 

between the individual and an agency. 

We acknowledge that not all agencyprovider models utilize a contractual 

relationship between the agencyprovider entity and the State Medicaid 

agency for the provision of services. 

Rather, it is more common for a 

provider agreement to be used. 

Therefore, we are modifying the agencyprovider definition to better reflect the 

various arrangements through which the 

provision of personal attendant services 

may occur. We will also modify the 

language at § 441.545(i) to reflect this 

change. Additionally, we acknowledge 

the confusion caused by our use of the 

terms ‘‘hire’’ and ‘‘fire.’’ We will replace 

such terms with ‘‘select’’ and ‘‘dismiss’’ 

throughout the regulation, as 

appropriate. We appreciate the 

commenter’s description of an agencyprovider model and believe it is one 

example of an agency-provider model 

that falls within the definition in the 

rule. We believe the definition in the 

rule is broad enough to encompass the 

various agency-provider types that exist. 

Comment: We received a few 

comments requesting that we define the 

agency-provider model in a way that 

clearly includes States that provide long 

term care services and supports directly 

through public authority entities instead 

of private contractual arrangement. 

Response: It is our understanding that 

the structure of the long-term care 

services and supports provided through 

public authority entities varies among 

States. It is possible that one State’s 

public authority entities could meet the 

definition of an agency-provider type 

while another State’s public authority 

entities meet the definition of ‘‘other 

model.’’ For this reason, we are 

requesting States to provide a 

description of such entities during the 

SPA process. 

Comment: One commenter suggests 

we add ‘‘as defined by the State and 

approved by the Secretary’’ into the 

definition of ‘‘backup systems or 

supports’’ to ensure consistency with 

other home and community-based 

service programs. 

Response: We do not agree the 

suggested language is necessary. All 

State plan amendments will require 

adherence to this regulation’s service 

definitions and will be approved by 

CMS. 

Comment: Some commenters 

suggested medication management be 

included to the definition of ‘‘backup 

systems.’’ Other commenters requested 

the definition be revised to ensure 

coverage of a broad variety of health 

support technologies, such as telehealth, 

independent living technologies, and 

remote patient monitoring. The 

commenter advised that currently 44 

States reimburse for Personal 

Emergency Response Systems (PERS), 

16 States reimburse for medication 

management technology, 1 State 

reimburses for home telecare/remote 

monitoring, and 7 States reimburse for 

home telehealth/telemonitoring under 

sections 1905(a), 1915, or section 1115 

of the Act. The commenter states that it 

is important that all these technologies 

that ensure continuity of services and 


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supports are also available under CFC. 

One commenter requested that PERS, 

medication management technology, 

telecare/remote monitoring and 

telehealth/telemonitoring should be 

included in the definition of ‘‘backup 

systems and supports.’’ 

Response: Section 1915(k) of the Act 

indicates the purpose of backup systems 

or mechanisms is to ensure continuity 

of services and supports. We do not 

believe medication management 

complies with the intent of backup 

systems and supports; however, it could 

be a component of personal attendant 

services, or another Medicaid service. 

We agree with the commenters that 

telemedicine could be a useful method 

of providing backup systems or 

supports. We are available to discuss a 

State’s interest in using such technology 

for this purpose, but do not believe the 

rule should be revised to specifically 

indicate this. Therefore, we are not 

revising the definition of backup 

systems to include explicit reference to 

medication management and 

telemedicine technologies. 

Comment: We received many 

comments requesting that we expand 

the definition of ‘‘backup systems and 

supports’’ to include other approaches, 

such as written backup plans, action 

plans such as calling emergency 

agencies or personal emergency 

contacts, contacting other systems that 

support individuals in identifying 

backup attendant care providers when 

regularly scheduled attendants are 

unavailable, or other necessary planning 

to deal with a variety of possible 

situations which require additional 

services or supports. The commenters 

also added that backup systems should 

apply to all service models, stating that 

although backup systems are most often 

considered in the context of selfdirected services they also apply to 

services and supports delivered through 

an agency-provider model. 

Response: We agree with the 

commenters that backup systems and 

supports may include approaches in 

addition to electronic devices. This 

belief is supported by the inclusion in 

the definition described in the proposed 

rule of allowing people to be included 

as backup supports. Additionally, we 

agree that each individual, regardless of 

service delivery model, should have a 

backup plan to address how 

emergencies and unplanned events 

affecting the continuity of services will 

be handled. This belief is supported in 

the requirement of backup strategies as 

a measure of risk mitigation included in 

the person-centered service plan, which 

is required for all CFC participants 

regardless of service delivery model. We 

are modifying the requirements of the 

person-centered service plan to remove 

the ‘‘as needed’’ language, to indicate 

that all individuals should have an 

individualized backup plan. 

Comment: One commenter noted that 

the rule requires backup systems be 

made available but excludes assistive 

technology devices and assistive 

technology services. 

Response: Section 1915(k)(1)(C)(iii) of 

the Act indicates that assistive 

technology devices and assistive 

technology services are excluded, other 

than those under section 

1915(k)(1)(B)(ii) of the Act. This 

authorizes the coverage of such devices 

and services when used as part of a 

backup system or mechanism to ensure 

continuity of services and supports. 

Comment: One commenter asked that 

CMS clarify in both the preamble and 

regulatory text, whether cell phones, 

hand-held communication devices such 

as smartphones, and computers that 

allow participants to communicate with 

providers of home and communitybased attendant services would be 

allowable expenditures. Another 

commenter recommended the definition 

include language explicitly stating that 

smartphones and more generally, any 

useful emerging applications or 

technologies which will become 

available, are allowable. 

Response: We do not believe it is 

necessary to mention specific types of 

technology. To allow for the inclusion 

of future developments, we will replace 

the term ‘‘pager’’ with ‘‘an array of 

available technologies.’’ We believe the 

broad definition will support the 

inclusion of technological advances as 

they are developed. 

Comment: One commenter requested 

clarification regarding the 

circumstances in which it would be 

appropriate for a State to reimburse 

expenditures for CFC services furnished 

by a person who is an identified backup 

support. The commenter also requested 

that CMS provide guidance on what 

back up support services a person can 

provide. 

Response: The State may reimburse 

for any CFC service identified on the 

approved person-centered service plan, 

including those provided by a backup 

support person. However, the backup 

support person would need to be 

recognized by the State as an 

appropriate provider of CFC services 

and supports, for the State to reimburse 

those expenditures. 

Comment: One commenter requested 

clarification regarding how the 

definition of ‘‘health-related tasks’’ as 

tasks that can be delegated or assigned 

by licensed professionals might interact 

with a State’s statutory exemption from 

the Nurse Practice Act delegation 

requirements for health maintenance 

activities under a self-directed model. 

Specifically, the commenter questioned 

if the State is required to conform to the 

delegation expectation as defined. 

Another commenter suggested the 

definition for ‘‘health-related tasks’’ 

should include tasks that are exempted 

from State law and/or licensure 

requirements. 

Response: The definition of ‘‘healthrelated tasks’’ specifies that tasks 

delegated or assigned by licensed 

professionals may be provided under 

CFC as long as the task being delegated 

is done in accordance with the State law 

governing the licensed professional 

delegating the task. Recognizing the 

variance among State laws governing 

the specific tasks licensed health-care 

professionals may delegate, we do not 

believe we should impose requirements 

that could cause a licensed professional 

to be out of compliance with the State 

law in which they provide services. We 

do acknowledge that this State variance 

will lead to a varied scope of activities 

meeting the definition of ‘‘health-related 

tasks.’’ 

Comment: One commenter questioned 

if a State can offer more than one selfdirected option under different 

authorities of section 1915 of the Act 

where an item of specific difference is 

the delegation requirement. 

Response: In addition to the section 

1915(k) authority, self-directed services 

may be provided under other section 

1915 authorities such as the section 

1915(c) HCBS waiver authority, section 

1915(j) Self-directed Personal 

Assistance Services Program State Plan 

Option, and section 1915(i) HCBS Plan 

Option. Each of these authorities has its 

own regulatory requirements that must 

be met, and each may be operated 

simultaneously with CFC as part of a 

State’s Medicaid program. However, the 

6 percent additional FMAP only 

pertains to services authorized under 

CFC. 

Comment: One commenter requested 

clarification as to whether the definition 

of ‘‘individual’s representative’’ would 

allow a State to select a self-direction 

model that limits direction by 

representatives, for example, to parents 

of minor children. 

Response: Section 1915(k)(1)(A)(iv)(II) 

of the Act requires that services are 

controlled, to the maximum extent 

possible, by the individual or where 

appropriate, the individual’s 

representative. It is an expectation that 

this control exists regardless of whether 

the individual is personally able and 

has chosen to make his or her own 


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decisions and direct his or her own 

services and supports, is represented by 

someone such as a guardian or parent 

who is authorized to make decisions for 

him or her under the laws of the State, 

or has selected or appointed a 

representative. This is true regardless of 

the service delivery model. The State 

may not place a limit on this statutory 

requirement. 

Comment: Many commenters 

suggested the definition of ‘‘individual’s 

representative’’ explicitly include 

spouse and partner. The commenters 

also suggested the definition specify 

that an authorized individual is 

someone who has been designated by 

the participant or family to represent the 

participant to the extent the participant 

wishes. One commenter requested the 

definition include paid and unpaid 

individuals chosen by the individual or 

family. One commenter requested the 

language be clear that the designation 

made by the individual does not require 

a formal process (such as guardianship). 

One commenter requested that we 

revise the definition of ‘‘individual’s 

representative’’ to include a broad 

definition of ‘‘family’’ that recognizes a 

same-sex partner or a child of a partner 

as members of the individual’s family. 

The commenter also requested the rule 

use the Office of Personnel 

Management’s definition of ‘‘family 

member.’’ 

Response: In defining the term 

‘‘individual’s representative’’ we are 

aware that States have a variety of laws 

regarding selection, appointment, 

designation, or recognition of surrogate 

decision-makers with respect to 

personal, financial, and health care 

matters. We are not requiring a formal 

process for the appointment of an 

authorized representative for the 

purposes of CFC, but are aware that 

States may have procedures and 

requirements that may apply. We do not 

agree with the suggestions to amend the 

definition further to list specific 

relationships an individual may have, as 

we believe this could be inconsistent 

with the laws of the State, or overly 

prescriptive on an issue that is deeply 

personal and highly individualized. We 

believe the definition we proposed is 

broad enough to allow individuals the 

opportunity to exercise maximum 

choice with respect to the individual 

who will act as their representative. In 

some instances, the individual’s 

representative under State law would 

have the authority to designate another 

individual as the representative for the 

purpose of participating in the planning 

and direction of services and supports 

under CFC. We expect the State to 

recognize the representative chosen by 

the individual if that choice is not 

inconsistent with State laws unless the 

State is aware of and can document 

through evidence that the representative 

is not acting in the best interest of the 

individual or is unable to perform the 

required functions. To reduce 

redundancy throughout the regulatory 

language, we are adding a definition for 

the term ‘‘individual’’ to mean the 

eligible individual and, if applicable, 

the individual’s representative. 

We are not requiring in this rule that 

an authorized representative be chosen 

using a formal process, such as a courtappointed guardian, or the execution of 

a Power of Attorney. The authorized 

representative may be any person an 

individual chooses to assist him or her 

in making decisions regarding his or her 

care unless that choice is prohibited by 

State law. We also note that § 435.908 

provides that the single State Medicaid 

agency must allow an individual of the 

applicant’s choice to accompany, assist 

and represent the application in the 

Medicaid eligibility application or 

renewal process. The individual 

assisting in the Medicaid application or 

renewal process need not be the same 

individual chosen in connection with 

the provision of services under section 

1915(k) of the Act. 

Comment: Many commenters 

requested the rule specify that the 

authorization of an individual’s 

representative should be in writing or in 

some other verifiable manner. The 

commenters expressed concern that 

someone may say they are the 

authorized representative when they are 

not. The commenters believe a written 

authorization is necessary to assure a 

purposeful and clear authorization, as 

well as to eliminate confusion if several 

individuals state that they represent a 

person with a disability. 

Response: We agree with the 

commenters that a written authorization 

is generally an appropriate safeguard to 

ensure individuals have an active role 

in electing a representative of their 

choice. Accordingly, we have revised 

the definition of individual 

representative as follows: ‘‘a parent, 

family member, guardian, advocate, or 

other authorized representative of the 

individual with written authorization, 

when feasible, by the individual to serve 

as a representative.’’ We note that a legal 

guardian would not need to obtain 

written authorization by the individual 

to serve as a representative. Likewise, it 

is not practical to require a minor child 

to provide written authorization for a 

parent to serve as a representative. 

States must have methods in place to 

ensure the individual was maximally 

involved in the choice of his or her 

representative, particularly in instances 

in which the individual is unable to 

provide written authorization. 

Comment: One commenter questioned 

if an individual’s representative 

assisting the individual to self-direct 

and manage their services can be paid 

as part of the service plan. 

Response: Individuals acting as a 

representative are not paid to do so. 

Individuals acting as a representative 

also should not be a paid caregiver of an 

individual receiving CFC services and 

supports. This arrangement was 

prohibited in the section 1915(j) 

regulation, to avoid a conflict of interest. 

We are modifying the definition of 

‘‘Individual’s representative’’ to 

continue this prohibition. 

Comment: One commenter indicated 

that the proposed language broadens the 

definition of IADLS from the definition 

in the SMM. The commenter 

recommends the rule use the SMM 

definition, and added that if we do not 

align the definition with the SMM, we 

clarify what is meant by ‘‘traveling 

around and participating in the 

community.’’ 

Response: We defined IADLs from the 

language used in section 1915(k)(6)(F) of 

the Act. We believe ‘‘traveling around 

and participating in the community’’ 

alludes to the premise that CFC services 

and supports should facilitate an 

individual’s desire to be fully integrated 

into their community and not limit the 

provision of services to an individual’s 

residence. 

Comment: One commenter suggested 

the definition for IADLs include 

activities such as work life, parenting 

and basic home maintenance. 

Response: We appreciate the 

commenter’s suggestion, however, since 

the IADL definition includes the 

language, ‘‘but is not limited to’’ which 

allows for the inclusion of additional 

activities determined appropriate for the 

individual, we do not agree that a 

change to the definition is needed. 

Comment: One commenter stated that 

the definition of IADLs includes the 

phrase ‘‘but not limited to’’ and asked 

if States be allowed to define these 

terms more expansively by adding 

activities to the definitions. 

Response: Through the SPA process, 

States have the flexibility to propose 

additional services to be included as 

components of IADLs. 

Comment: One commenter requested 

confirmation that since the definition of 

IADLs include managing finances, the 

financial management services defined 

at § 441.545(b)(1) can be included as an 

IADL. The commenter also adds that if 

these activities are permissible IADLs, 

then it is a required service under 


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§ 441.520(a)(1) and (2), meaning that 

States must provide them. 

Response: Managing finances as an 

IADL activity pertains to assisting an 

individual with the management of 

personal finances. We believe such 

assistance is beyond the scope of the 

financial management activities defined 

at § 441.545(b)(1) which is for the 

exclusive purpose of assisting an 

individual to ensure CFC service budget 

compliance with regulatory 

requirements, and is only for those 

individuals in a ‘‘self-directed model 

with service budget’’ delivery system. 

Comment: One commenter stated the 

definition for ‘‘other models’’ is not 

clear. The commenter asked for 

clarification as to whether States whose 

self-direction model recognizes the 

consumer as the employer, with the 

authority to hire and terminate 

employees, and makes available 

consumer and attendant care provider 

training opportunities, would meet the 

definition of ‘‘other models.’’ 

Response: Section 1915(k)(6)(C)(ii) of 

the Act defines other models as methods 

other than an agency-provider model, 

for the provision of consumer controlled 

services and supports. Such models may 

include the provision of vouchers, 

direct cash payments, or use of a fiscal 

agent to assist in obtaining services. 

Under the ‘‘Service Models’’ section of 

the preamble, we interpreted ‘‘other 

models’’ to mean ‘‘self-directed model 

with service budget.’’ We further 

described self-directed model with 

service budget in § 441.545(b)(1), (b)(2) 

and (b)(3). Based upon the commenter’s 

information, it is difficult for us to 

determine if the model described would 

meet an agency-provider model or the 

self-directed model with service budget. 

We recognize that States utilize various 

models to provide individuals with 

different levels of self-direction to 

receive personal attendant services. It is 

possible for States to use existing 

models under either category, as long as 

the models meet the requirements of 

§ 441.545. 

To eliminate any confusion, we are 

adding a definition of ‘‘Self-directed 

model with service budget’’ to mean 

‘‘methods of providing self-directed 

services and supports using an 

individualized service budget. Such 

models may include the provision of 

vouchers, direct cash payments and/or 

the use of a fiscal agent to assist in 

obtaining services.’’ 

To permit States to propose additional 

service delivery models not envisioned 

in this regulation, we will amend the 

definition of ‘‘other models’’ to mean 

‘‘methods other than an agency-provider 

model or the self-directed model with 

service budget, for the provision of selfdirected services and supports, as 

approved by CMS.’’ We will work with 

States through the SPA review process 

to review proposed models. 

Comment: One commenter requested 

the regulation provide a definition for 

the term ‘‘vouchers.’’ 

Response: For the purpose of CFC, 

vouchers are given a specific monetary 

value to be used for a specific good or 

service. They are used in various forms, 

such as tokens, or tickets. We believe 

the use of vouchers is common among 

State programs and the form varies 

greatly. We believe the term ‘‘voucher’’ 

should be defined by the State if they 

elect to use this structure. 

Comment: Several commenters shared 

their support of the ‘‘self-directed’’ 

definition included in the rule. One 

commenter recommended the definition 

of ‘‘self-directed’’ should specifically 

say that the individual or representative 

has control to hire, train, supervise, 

schedule, determine duties, and fire the 

attendant care provider. 

Response: The definition reflects the 

language at section 1915(k)(6)(B) of the 

Act. However, we agree with the 

commenter the definition should 

include the specific tasks an individual 

should have authority to do when selfdirecting CFC services. Therefore, we 

have revised the definition to say: ‘‘Selfdirected means a consumer controlled 

method of selecting and providing 

services and supports that allow the 

individual maximum control of the 

home and community-based attendant 

services supports, with the individual 

acting as the employer of record with 

necessary supports to perform that 

function, or the individual having a 

significant and meaningful role in the 

management of a provider of service 

when the agency-provider model is 

utilized. Individuals exercise as much 

control as desired to select, train, 

supervise, schedule, determine duties, 

and dismiss the attendant care 

provider.’’ 

Upon consideration of the public 

comments received, we are finalizing 

§ 441.505 with revision to the definition 

of ‘‘individual’’ to incorporate the 

individual’s representative as 

applicable, to add the definition of 

‘‘Self-directed model with service 

budget’’ and to modify the definitions of 

‘‘agency-provider model’’, ‘‘backup 

systems and supports’’, ‘‘individual’s 

representative’’, ‘‘other models’’ and 

‘‘self-directed.’’ 

D. Eligibility (§ 441.510) 

Section 1915(k)(1) of the Act requires 

that to receive services under CFC, 

individuals must be eligible for 

Medicaid under an eligibility group 

covered by the State plan. This section 

does not create a new eligibility group 

but rather a new benefit option. 

Individuals who are not eligible for 

Medicaid under a group covered under 

the State Medicaid plan are not eligible 

for the CFC, even if they otherwise meet 

the requirements for the option. The 

proposed rule interpreted the statute as 

providing that individuals eligible 

under the State Medicaid plan whose 

income does not exceed 150 percent of 

the FPL are eligible for CFC 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. We proposed that 

individuals eligible under the State 

Medicaid plan whose income is greater 

than 150 percent of the FPL are eligible 

for CFC if it has been determined such 

individuals need the level of care 

required under the State Medicaid plan 

for coverage of institutional services. 

Specifically, we proposed that States 

must determine that, but for the 

provision of the home and communitybased 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. Additionally, we proposed that 

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 could be 

eligible to receive CFC services. We 

stated that these individuals would have 

to receive at least one section 1915(c) 

home and community-based waiver 

service per month. As we interpreted 

the statute in the proposed rule, the 

need for a level of care determination 

would be directly related to an 

individual’s income level in section 

1915(k)(1) of the Act. Thus we proposed 

to require an annual verification of 

income for all individuals receiving 

services under the section 1915(k) State 

plan option. We proposed to implement 

this requirement at § 441.510. 

Comment: We received many 

comments both in support and 

opposition of the proposed language 

specifying the institutional level of care 

requirement. Two commenters 

supported the proposed eligibility 


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language because they believe it gives 

States the opportunity to prevent or 

delay institutional care, and that 

providing better integration and 

coordination of services in less costly 

settings creates the potential for 

significant cost savings. Some of the 

commenters believe that by not 

requiring all individuals to meet the 

standards for an institutional level of 

care, States would have the option of 

using CFC program funds for less needy 

individuals who cost less to serve. One 

commenter believes the eligibility 

language furthers the spirit of the 

Olmstead decision. Several commenters 

indicated that some States use nursing 

facility level of care assessments that do 

not consider the cognitive impairments 

of individuals, such as those with 

traumatic brain injury or Alzheimer’s 

Disease and that these individuals may 

not be able to conduct ADLs without 

cuing or compensatory strategies. 

Several commenters supported the 

provision specifying that the 

institutional level of care standard 

should only be applied to individuals 

with incomes above 150 percent of the 

FPL, and such a limiting requirement 

should not be applied to individuals 

with incomes at or below 150 percent. 

One commenter indicated that this 

population is especially vulnerable, 

with the poorest health status and the 

least resources to pay for services and 

supports. Some commenters expressed 

concern with the requirement that the 

level of care determination only applies 

to individuals whose income is above 

150 percent FPL. Commenters indicated 

that section 1915(k) of the Act is based 

upon the Community Choice Act 

[legislation introduced in the 110th 

(H.R. 1621/S. 799) and 111th (H.R. 

1670/S. 683) Congress, but not enacted] 

which required all eligible individuals 

to have an institutional level of care. 

The commenters believe that requiring 

States to serve individuals with both 

institutional and non-institutional care 

needs could have the unintended effect 

of driving up the cost of implementing 

this program, and expressed concern 

that this will be a major deterrent for 

States to elect CFC. 

While many of the commenters 

acknowledged the statutory language is 

confusing, these commenters believe the 

interpretation provided in the regulation 

does not reflect Congressional intent. 

They indicated that the intent of the 

provision was to make CFC available 

only to individuals requiring an 

institutional level of care with the goal 

of deterring institutionalization or 

encouraging transitions for 

institutionalized individuals back to the 

community. Some commenters 

provided legislative history to support 

this conclusion. The commenters 

indicated the income eligibility was 

intended to match the State’s income 

eligibility for institutional placement, 

stating that 150 percent of the poverty 

line is established as a baseline for all 

States, but if a State allows a higher 

income level for nursing facility services 

then the higher income eligibility is 

what applies. The commenters 

indicated that the intent was to assure 

that if an individual could be income 

eligible for institutional placement then 

the individual would be income eligible 

for this benefit. The commenters believe 

this interpretation is underscored by the 

requirement in the statute that 

individuals be given a choice to receive 

the transitional services, described in 

section 1915(k)(1)(D)(i) of the Act, 

which only applies to the population 

who would be otherwise eligible for 

institutional placement. 

One commenter requested we not 

apply an institutional level of care to 

anyone. Another commenter believes 

the requirement for individuals with 

incomes above 150 percent of the FPL 

to meet a nursing facility level of care 

is more restrictive than some State’s 

existing financial criteria for some 

eligibility groups (for example, working 

disabled). Because of this, the 

commenter believes that many 

individuals eligible for State plan 

services would not be eligible for CFC. 

The commenter requested we reconsider 

requiring individuals to meet a nursing 

facility level of care so that those who 

are in need are not left out. 

Some commenters recommended the 

rule be amended to require States to 

limit eligibility to individuals with 

income of up to 300 percent of the 

maximum Federal SSI benefit and an 

institutional level of care need. The 

commenters suggested that only after a 

State addresses this eligibility group, 

may a State opt to expand the eligibility 

to serve lower income persons who do 

not have an institutional level of care 

need. Furthermore, the commenters 

recommended amending the regulation 

to allow States the option to only cover 

individuals who have an institutional 

level of care need. 

Several commenters requested 

clarification on the flexibility States 

have to limit who can receive CFC 

services. Several commenters expressed 

concern that States should not be 

allowed to establish a CFC program that 

only serves low income individuals who 

do not have to meet an institutional 

level of care. 

One commenter indicated the 

eligibility language in § 441.510(b)(2) 

appears to be inconsistent with the 

eligibility language in the ‘‘Background’’ 

section. The commenter stated that 

being eligible for nursing facility 

services in Medicaid differs from 

requiring an institutional level of care. 

For example, an individual with a 

developmental disability may require an 

institutional level of care at an ICF/MR, 

but that individual would not be eligible 

for nursing facility services. The 

commenter recommended the regulation 

expressly state that an individual must 

be eligible for nursing facility services 

or require an institutional level of care. 

Another commenter requested 

clarification around the institutional 

level provided in an institution for 

mental diseases (IMD). The commenter 

stated that IMDs are a payment 

exclusion, not a facility type, service or 

level of intensity. 

One commenter indicated that it 

appears that the first reference to 

eligibility for NF services may be 

redundant in § 441.510(b)(2), and 

requests we remove or provide 

clarification as to its purpose. 

Response: The statute specifically sets 

forth the eligibility requirements for 

CFC. In our proposed rule, we 

interpreted the statute based on reading 

the clause ‘‘* * * 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 * * *’’ to 

pertain only to the phrase immediately 

preceding it, which describes 

individuals with incomes greater than 

150 percent of the poverty line. 

However, based on many comments, 

including those from the Congressional 

sponsors of CFC and from advocacy 

groups from the disability community, 

we have reconsidered the interpretation 

of the statute discussed in the proposed 

rule. We believe that the language, 

purpose, and history of the statute 

require a different interpretation. 

Commenters outlined the detailed 

historical efforts to have similar 

legislation passed since the 105th 

Congress and cited statements made 

during the 111th Congress’ health 

reform debate, that the intent of section 

1915(k) is to develop a program that 

improves access to community-based 

alternatives for individuals requiring 

services at an institutional level of care. 

Thus, the requirement in section 

1915(k)(1) of the Act that the individual 

require an institutional level of care 

should be read as an independent 

requirement, and not as a requirement 

that modifies only the higher income 


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Federal Register / Vol. 77, No. 88 / Monday, May 7, 2012 / Rules and Regulations 26839 

level. After careful review and 

consideration of the comments, we 

agree that section 1915(k)(1) of the Act 

should be read to require that an 

institutional level of care determination 

apply to all individuals who would be 

eligible for community-based attendant 

services and supports. Thus, we are 

issuing this interpretive rule to clarify 

that under the statute the institutional 

level of care requirement applies to 

those described earlier in the paragraph 

whose income does not exceed 150 

percent of the poverty line, as well as to 

those with higher incomes. For 

individuals whose income is above 150 

percent of the FPL, the individual must 

be part of an eligibility group that 

provides access to the nursing facility 

benefit. 

We are revising § 441.510 to state that, 

regardless of income, for individuals to 

receive CFC services, it must be 

determined, on an annual basis, that but 

for the provision of CFC services, the 

individual would meet an institutional 

level of care. We are also revising 

§ 441.510 to allow States, at their 

option, to waive the annual level of care 

requirement if the State, or designee, 

determines that there is no reasonable 

expectation of improvement or 

significant change in the participant’s 

condition because of the severity of a 

chronic condition or the degree of 

impairment of functional capacity. 

Lastly, we acknowledge the confusion 

created by using the term ‘‘level of care 

furnished in an IMD’’. We are revising 

§ 441.510 to specify that this means a 

level of care furnished in ‘‘an institution 

providing psychiatric services for 

individuals under age 21’’ and ‘‘an 

institution for mental diseases for 

individuals 65 or over’’. This 

clarification is now expressed at 

§ 441.510(d). 

Comment: One commenter questioned 

whether CFC is an entitlement program. 

Response: The CFC program is an 

optional service available under the 

Medicaid program. States have the 

choice of whether to include this service 

in their Medicaid State plan. As an 

optional service, States also have the 

flexibility of offering this service to 

individuals qualifying for Medicaid 

under the categorically needy group 

only, or to both the categorically and the 

medically needy under the Medicaid 

State plan. Once the service is offered 

under a State plan, all eligible 

individuals who qualify for the service 

must be provided the care. 

Comment: We received many 

comments requesting clarification on 

whether CFC established a new 

eligibility group. Several commenters 

specifically requested that we allow 

States, at their discretion, to make the 

CFC population a separate categorical 

population for the purposes of 

automatically qualifying for Medicaid. 

The commenters stated this would 

allow people in need of CFC services to 

qualify for Medicaid in the same way 

individuals qualify for nursing facility 

services, HCBS waiver services, and 

HCBS State plan (section 1915(i)) 

services. The commenters believe the 

proposed regulation’s language for 

access to CFC is more limited. The 

commenters do not believe that the 

Congress intended the eligibility 

pathways to CFC to be inferior to the 

pathways of other similar services and 

programs. Additionally, commenters 

noted that a separate CFC eligibility 

category is needed to allow individuals 

who could qualify for Medicaid in the 

medically needy category to receive CFC 

services in States that do not provide 

State plan services to the medically 

needy eligibility category. Another 

commenter believes the statutory 

language authorizes eligibility for a 

special-income level categorical 

population. Specifically the commenter 

believes the following statutory 

language ‘‘individuals who are eligible 

for medical assistance under the State 

plan whose income does not exceed 150 

percent of the poverty line, or, if greater, 

the income level applicable for an 

individual who has been determined to 

require institutional care’’ is a clear 

reference to the special income level 

categorical populations authorized by 

42 U.S.C. § 1396a(a)(10)(A)(ii)(V) and 

(VI) (relating to institutionalized 

individuals and HCBS waiver 

recipients, respectively). The 

commenter believes this language 

demonstrated Congressional intent to 

allow States to make the CFC benefit 

available to individuals with incomes 

up to 300 percent of the Federal SSI 

benefit rate, the same way that States 

may make nursing facility services, 

HCBS waiver services, and HCBS State 

plan benefit services available to them. 

In addition to the CFC statutory 

language, the commenter believes that 

the statutory language in the Deficit 

Reduction Act and the Affordable Care 

Act show that the Congress intended to 

create a new, income-based categorical 

eligibility population for HCBS State 

plan and CFC beneficiaries. The 

commenter believes that failure to create 

a separate categorical eligibility for CFC 

would result in unfair outcomes for 

beneficiaries. The commenter believes 

CMS has discretion to authorize 

separate eligibility categories. Another 

commenter requests clarification of the 

meaning of ‘‘eligible for medical 

assistance under the State plan’’ with 

regard to States that have opted to use 

the special income standard at section 

1902(a)(10)(A)(ii)(V) of the Act for 

institutionalized individuals. The 

commenter believes the CFC statute and 

the proposed regulation would prohibit 

access by those who would only be 

eligible for Medicaid by virtue of 

residing in a medical institution. 

Response: Section 1915(k) of the Act 

did not amend section 1902(a)(10) of the 

Act to the establish a new eligibility 

group of individuals receiving 1915(k) 

services. Section 1915(k) of the Act 

created new pathways for Medicaid 

eligible individuals to receive home and 

community-based attendant services 

and supports. To receive services under 

1915(k), individuals must be eligible for 

medical assistance under the State’s 

Medicaid plan, must meet an 

institutional level of care, and be in an 

eligibility group under the State plan 

that includes nursing facility services. If 

the individual is in an eligibility group 

under the State plan that does not 

provide coverage of nursing facility 

services, the individual must have 

income that is at or below 150 percent 

of the federal poverty line. 

Comment: One commenter believes 

that individuals must only be eligible 

for section 1915(c) HCBS waivers or 

section 1115 demonstrations, rather 

than be enrolled and receiving waiver 

services, to be eligible for CFC. 

Response: Section 1915(k)(1) of the 

Act provides that individuals must be 

eligible for Medicaid under an eligibility 

group covered by the State plan. As 

noted above, to be eligible for Medicaid 

under the special HCBS waiver group, 

individuals must receive at least one 

section 1915(c) waiver service per 

month. 

Comment: One commenter requested 

with regard to § 441.510(b)(3), we 

confirm that there is not an eligibility 

group specific to waiver programs, but 

that section 1902(a)(10)(A)(ii)(V) of the 

Act allows individuals in institutions to 

be eligible under the 300 percent 

Special Income Group and section 

1902(a)(10)(A)(ii)(VI) of the Act allows 

for application of the 300 percent 

Special Income Group to those 

individuals receiving HCBS as an 

alternative to institutional care. 

Response: We included the reference 

to the special income group in the CFC 

regulation to highlight that States may 

offer section 1915(k) services to 

individuals who qualify for Medical 

assistance under the special home and 

community-based waiver eligibility 

group defined at section 

1902(a)(10)(A)(ii)(VI) of the Act and 

who receive at least one home and 


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community-based waiver service per 

month. The special income group is an 

example of an eligibility group States 

may cover under the special home and 

community-based waiver group. It is our 

intent to permit people in section 

1915(c) home and community-based 

waiver programs to receive section 

1915(k) services also. We are moving 

this language to § 441.510(e), removing 

paragraph (b)(3), and making a technical 

correction to replace the term 

‘‘Medicaid assistance’’ with ‘‘medical 

assistance.’’ 

Comment: One commenter requested 

we clarify whether an individual 

qualifying for Medicaid under the 

Family and Children’s and Medicare 

savings eligibility categories are eligible 

to receive CFC services. 

Response: Individuals must be 

eligible for Medicaid under an eligibility 

group covered by the State plan. If these 

are eligibility groups the State covers 

under its Medicaid State plan, they 

could be eligible to receive services 

under CFC as long as the individuals 

meet all other eligibility criteria. 

However, we note that Medicare 

beneficiaries eligible for Medicaid only 

for Medicare cost-sharing, such as 

Qualified Medicare Beneficiaries, would 

not be eligible for CFC services unless 

they are eligible for full Medicaid 

benefits under another State plan group. 

Comment: Some commenters 

requested we clarify whether a State is 

required to cover all of the income 

levels defined at § 441.510 or whether a 

State could limit eligibility to only one 

or two of the income levels. One 

commenter questioned if a State could 

exclude State plan individuals 

qualifying under the medically needy 

group from receiving CFC services. 

Response: If an individual is eligible 

for medical assistance under the State 

plan, meets an institutional level of 

care; and is part of an eligibility group 

with access to the nursing facility 

benefit (or if part of an eligibility group 

without access to the nursing facility 

benefit with an income at or below 150 

percent FPL) then the State must allow 

the provision of CFC services if the State 

elects to include the CFC state option as 

part of its State plan. Please note that 

CFC is an optional service, therefore, as 

with any other optional service 

available under the State plan, it is at 

the State’s discretion to provide these 

services to the medically needy group in 

addition to the categorically eligible 

group. 

Comment: Some commenters 

questioned if a State has the flexibility 

to limit CFC recipients to their current 

FPL or whether they would have to 

expand to 150 percent FPL. Another 

commenter questioned if a State could 

impose stricter eligibility than 150 

percent of the FPL. 

Response: Section 1915(k) of the Act 

does not permit States to increase 

income standards or to impose stricter 

income standards for covered eligibility 

groups. If the income standard for a 

covered group is less than 150 percent 

of the FPL, States may not increase it or 

decrease it for individuals who will 

receive CFC services. 

Comment: One commenter requested 

clarification regarding eligibility groups 

that are automatically eligible for 

Medicaid without regard to income, and 

the application of the 150 percent limit 

above which institutional level of care 

is required. For example, some States 

provide eligibility without an income 

test to children eligible for foster care or 

adoption assistance, women receiving 

treatment for breast or cervical cancer, 

and individuals with section 1619(a) or 

(b) status. The commenter requests 

clarification as to whether States are 

required to identify income for these 

groups to determine eligibility for CFC 

services, or whether States should 

assume that all individuals in these 

‘‘automatic’’ categories are eligible, 

regardless of level of care status. 

Response: As indicated above, we 

have revised the regulation to require all 

individuals receiving CFC services to 

meet an institutional level of care. 

Individuals who meet the eligibility 

requirements for a Medicaid group for 

which the State provides full State plan 

services may receive CFC services if: (a) 

They satisfy the institutional level of 

care requirement; and (b) they are in an 

eligibility group that includes nursing 

facility services under the State plan, or, 

if their eligibility group does not 

include nursing facility services under 

the State plan, their income is at or 

below 150 percent of the FPL. 

Comment: One commenter requested 

clarification on what is considered a 

‘‘special population.’’ 

Response: We did not use the term 

‘‘special population’’ in the preamble or 

regulatory text. If the commenter is 

referring to our reference to the ‘‘special 

home and community-based waiver 

eligibility’’ group defined at section 

1902(a)(10)(A)(ii)(VI) of the Act and our 

use of the term ‘‘special income level 

group’’, we are referring to individuals 

eligible for Medicaid through meeting 

the eligibility for HCBS waivers services 

under institutional rules. 

Comment: One commenter questioned 

how an individual’s assets are 

considered in determining financial 

eligibility for the CFC option. 

Response: An individual receiving 

services under the CFC option must be 

eligible for Medicaid under the State 

plan. Therefore, the State’s usual 

Medicaid eligibility rules would 

determine whether and how the 

individual’s assets are counted in 

determining eligibility for Medicaid. 

This may vary from group to group. 

There are no additional special CFC 

rules regarding assets. 

Comment: Several commenters 

recommended the regulation allow 

individuals who would qualify for 

Medicaid under the medically needy 

eligibility group to qualify in the lowincome category. The commenters 

believe individuals with income over 

150 percent FPL in the medically needy 

group should be included in the lowincome group because the medically 

needy group is required to spend down 

to 75 percent of FPL to qualify for 

Medicaid. The commenters believe it 

would be costly and administratively 

burdensome for States to implement two 

sets of eligibility criteria for CFC. 

Several commenters indicated that as 

written, the proposed rules potentially 

exclude individuals who would 

otherwise qualify for a Medicaid-funded 

nursing facility placement because their 

gross income would be too high. The 

commenters recommend the regulation 

be revised to have language clarifying 

that individuals who may spend down 

to Medicaid eligibility under the 

medically needy category would also be 

eligible for the CFC benefit. 

Response: The rule does not preclude 

States from providing 1915(k) services 

to individuals who are Medicaid eligible 

as medically needy. If a State covers the 

medically needy eligibility group under 

its State plan, the State can elect to 

provide section 1915(k) services to the 

medically needy. In determining 

Medicaid eligibility for medically needy 

individuals receiving section 1915(k) 

services, the State must use the same 

income and resource methodologies 

approved under its State plan (for the 

medically needy), including spend 

down and any methodologies approved 

under section 1902(r)(2) of the Act. 

Comment: One commenter 

recommends paragraph § 441.510(c) be 

amended to add language articulating 

that the regular rules for determining 

income eligibility for an individual’s 

eligibility group under the State plan 

apply when determining whether the 

individual’s income is below 150 

percent of FPL. 

Response: We agree with the 

recommendation made by the 

commenter and will revise this 

provision accordingly. 

Comment: One commenter indicated 

that cash payments to purchase personal 

attendant services or used to purchase 


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services that substitute for human 

assistance should not be counted as 

income or resources when determining 

eligibility for public benefit programs or 

income tax purposes. The commenter 

indicated that problems could arise if 

the cash benefit is treated as income, 

that when added to the individual’s 

actual income would disqualify the 

individual from the public benefit 

programs. 

Response: Disbursement of cash to 

individuals in accordance with 

§ 441.545(b)(2) is for the sole purpose of 

purchasing program approved services 

and supports identified in an 

individual’s person centered service 

plan. Therefore, for the purpose of 

determining an individual’s Medicaid 

eligibility, receipt of such monies 

should not be considered income, nor 

should it have any effect on an 

individual’s eligibility for Medicaid. 

Determining the treatment of income for 

the income tax purposes is beyond the 

scope of this rule, as such, we do not 

have the authority to opine on tax 

related issues. 

Comment: Many commenters 

recommended the regulation be 

modified to explicitly address the 

Affordable Care Act’s modification to 

the spousal impoverishment statute that 

goes into effect January 1, 2014. The 

commenters expressed concern that if 

CFC is limited strictly to individuals 

who qualify under an eligibility group 

covered under the State plan before they 

may receive coverage for the benefit, the 

community spouse resource allowance 

will be meaningless for most CFC 

beneficiaries, because most CFC 

beneficiaries will have been screened 

against the more limited ‘‘couple’’ 

resource standard applicable to the 

category under which they originally 

qualified. Additionally, commenters 

requested the full spousal 

impoverishment protection be extended. 

Response: The rule does not need to 

be modified to reflect section 2404 of 

the Affordable Care Act because 

eligibility for the CFC services hinges on 

independent eligibility under an 

eligibility group in the State’s plan. 

Guidance on section 2404 of the 

Affordable Care Act is outside the scope 

of this regulation. 

Comment: One commenter stated that 

the eligibility criteria included in the 

regulation does not include a needs 

assessment element. The commenter 

believes that CFC services and supports 

are not medical and as such it is not 

appropriate for a State to set ‘‘medical 

necessity’’ criteria to establish who can 

receive CFC services. The commenter 

recommends CMS consider adding a 

new eligibility element to specifically 

assess an individual’s need for attendant 

services. 

Response: We disagree with the 

commenter. Section 441.535 requires an 

assessment of functional need for each 

individual receiving CFC services. The 

information gathered in the assessment 

must support the determination that an 

individual requires CFC services. 

Comment: One commenter requested 

the regulation clarify whether both noninstitutional and institutional 

individuals must be served. 

Response: Although the eligibility 

criteria require individuals to meet an 

institutional level of care, services are 

only available to individuals residing in 

a home and community-based setting. 

Recognizing the purpose of these 

services includes providing individuals 

living in institutions the opportunity to 

transition to a home and communitybased setting, we understand that 

individuals may be residing in an 

institution during the assessment 

process of the program. However, CFC 

may not be provided until the 

individual is residing in the community, 

with the exception of transitional 

services. 

Comment: A few commenters 

recommended revising the regulation to 

add a paragraph to § 441.510, clarifying 

that the CFC option is not mutually 

exclusive and can be provided to 

eligible Medicaid enrollees in the State 

who are receiving other non-CFC 

services and supports under another 

waiver program. Specifically, the 

commenters recommend that a 

paragraph (d) should be added to 

§ 441.510 providing that ‘‘Individuals 

receiving services through CFC will not 

be precluded from receiving other home 

and community-based long term care 

services through other waiver or State 

plan authorities.’’ 

Response: We agree with the 

commenter and have included the 

recommended language in a new 

paragraph (e). 

Comment: Several commenters 

requested we clarify whether States 

have the flexibility to establish medical 

or functional eligibility criteria. One 

commenter asked if a State can impose 

the same functional eligibility 

requirements that exist for a State’s 

personal care State plan option. Several 

other commenters requested we allow 

States to establish medical eligibility 

criteria that would limit eligibility for 

the program to individuals who have an 

institutional level of care, regardless of 

their income. The commenters believe 

that without this clarification, States 

could perceive the option as too 

expensive to adopt if they have to serve 

both non-institutional and institutional 

level beneficiaries. Alternatively, one 

commenter recommended the 

regulations require that any medical or 

functional criteria States establish for 

CFC not be more restrictive than the 

State’s nursing facility or other 

institutional level of care requirements. 

Response: As indicated in an earlier 

response, we are interpreting the statute 

to include a requirement that States 

make determinations for all individuals 

receiving CFC services that an 

institutional level of care would be 

required but for the provision of home 

and community-based services. 

Comment: One commenter supports 

the eligibility and statewideness 

requirements in the regulation, 

indicating that this will prevent States 

from limiting services to a numeric 

amount or to a geographic area, with the 

result being increased access to home 

and community-based services by those 

in need. The commenter stated that 

States still have flexibility to set medical 

necessity. The commenter requested 

CMS monitor State efforts to educate all 

beneficiaries of the program, expressing 

concern that States may tailor public 

relations activities, such as limiting 

outreach efforts, to certain geographic 

areas of the State. 

Response: States must offer CFC 

services on a statewide basis. As 

indicated in an earlier response, all 

individuals must meet an institutional 

level of care to receive CFC services. 

Thus, there is no need for States to 

establish separate medical necessity 

criteria, for the purpose of determining 

who may receive CFC services. 

Comment: Some commenters 

recommended the rule be amended to 

require States to limit eligibility to 

individuals with income of up to 300 

percent of the maximum Federal SSI 

benefit and an institutional level of care 

need. The commenters suggested that 

only after a State addresses this 

eligibility group, may a State opt to 

expand the eligibility to serve lower 

income persons who do not have an 

institutional level of care need. 

Furthermore, the commenters 

recommended amending the regulation 

to allow States the option to only cover 

individuals who have an institutional 

level of care need. 

Response: As we have stated, we are 

setting forth in this final rule our 

interpretation that under the statute all 

individuals must meet an institutional 

level of care to receive CFC services. 

Comment: One commenter does not 

want the institutional level of care 

requirement applied to the special 

income group. 

Response: The special income group 

is an institutional eligibility group. 


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Therefore, States must follow the rules 

pertaining to the eligibility requirements 

for the special income group defined at 

section 1902(a)(10)(A)(ii)(V) of the Act, 

which includes the requirement that 

individuals must meet an institutional 

level of care. 

Comment: With regard to the special 

income group, commenters questioned 

if case management or monthly 

monitoring would satisfy the 

requirement that individuals must 

receive at least one home and 

community-based waiver service per 

month. Additionally, the commenters 

requested the language be revised to say 

‘‘is receiving at least one home and 

community-based waiver service per 

month or monthly monitoring.’’ 

Response: The purpose of this 

language is to ensure that people in the 

special income group maintain their 

eligibility for Medicaid, thereby 

adhering to the CFC eligibility criteria 

that people must be eligible for the State 

plan. If monthly monitoring is an 

approved waiver service in the State, 

this would satisfy the requirement. 

Comment: A few commenters 

requested clarification on whether 

States had to extend CFC services to 

individuals in the waiver program. The 

commenters recommended revising 

§ 441.510(b)(3) to state ‘‘eligible if the 

State elects to expand CFC service 

coverage to its waiver program.’’ 

Another commenter expressed concern 

about the potential overutilization of 

services if individuals eligible for 

waivers are required to continue to 

receive one waiver service to maintain 

eligibility for CFC. 

Response: Individuals enrolled in 

section 1915(c) waivers are eligible to 

receive any State plan service. 

Individuals in the special home and 

community-based waiver group are 

required to receive at least one waiver 

service per month. Section 1915(k) of 

the Act did not change this requirement. 

We expect States to implement policies 

and procedures to prevent 

overutilization and duplication of 

services when individuals receive 

services through a 1915(c) waiver and 

the CFC State plan option. 

Comment: We received many 

comments both opposed to and in 

support of the annual income 

requirement set forth in § 441.510. Some 

commented on the methods for 

verification, such as recommending 

‘‘Passive redetermination’’ and that 

income recertification for CFC should 

not be more burdensome, for 

individuals or for States, than the 

existing Medicaid programs. 

Response: As explained above, in the 

final rule, we are modifying our 

regulations to make clear that the 150 

percent of FPL income determination 

would only be necessary in cases where 

an individual is not in a Medicaid 

eligibility group under the State plan 

that already provides coverage for 

nursing facility services. In such cases, 

there would need to be an annual 

verification of income for the purpose of 

determining an individual’s eligibility 

for CFC services. 

States that employ passive eligibility 

re-determination methods for the 

purpose of Medicaid eligibility could 

continue to do so. Additionally, we 

believe it is appropriate for the State to 

align this CFC requirement with the 

annual recertification process for 

Medicaid. 

Upon consideration of public 

comments received, we are modifying 

§ 441.510, and are issuing an 

interpretive rule to clarify the statutory 

requirements for eligibility. We are 

revising the language in § 441.510(b) as 

originally proposed. We are clarifying 

the statutory requirement that 

individuals must be in an eligibility 

group under the State plan that includes 

nursing facility services. Individuals in 

an eligibility group that does not 

include such nursing facility services 

must have an income at or below 150 

percent of the FPL. We added the 

language proposed at § 441.510(c) to 

§ 441.510(2) with clarification that in 

determining whether 150 percent of the 

FPL requirement is met, State must 

apply the same methodologies as would 

apply under their Medicaid State plan, 

including the same income disregards in 

accordance with section 1902(r)(2) of 

the Act. We replaced the language 

proposed at § 441.510(c) with the 

provision that all individuals meet an 

institutional level of care, removing the 

term ‘‘an institution for mental 

diseases’’ and replacing it with ‘‘an 

institution providing psychiatric 

services for individuals under age 21’’ 

and ‘‘an institution for mental diseases 

for individuals age 65 or over,’’ and 

adding § 441.510(c)(1) and (2) to allow 

for State administering agencies to 

permanently waive the annual level of 

care recertification if certain conditions 

are met. We have relocated the language 

proposed at § 441.510(b)(3) to a new 

paragraph (d), and removed the term 

‘‘Medicaid assistance’’ and replaced it 

with ‘‘medical assistance.’’ We are also 

adding a new paragraph (e) to indicate 

that receipt of CFC services does not 

impact receipt of other long-term care 

services provided through other 

Medicaid State Plan, waiver, or grant 

authorities. 

E. Statewideness (§ 441.515) 

To reflect the requirement at section 

1915(k)(3)(B) of the Act, we proposed 

that States must provide CFC services 

and supports 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, or the 

form of home and community-based 

attendant services that the individual 

requires to have an independent life. 

Comment: Many commenters 

supported the provisions under 

§ 441.515. One commenter applauded 

CMS for recognizing that people should 

receive services and supports based on 

their need rather than a predetermined 

assumption based on characteristics, 

such as age or disability. Several 

commenters further emphasized the 

ability of this program to enhance State 

adherence to the Olmstead decision and 

providing services in the most 

integrated setting appropriate to the 

individual’s needs. 

Response: We appreciate the 

perspectives these commenters had in 

support of this provision of the rule. 

Comment: One commenter asked 

CMS to clarify how we will define the 

‘‘most integrated setting appropriate to 

the individual’s needs.’’ 

Response: This requirement is not 

defined in the statute and we do not 

believe that is it appropriate to define 

this phrase in this regulation. Rather, we 

expect States implementing CFC to have 

meaningful interactions with each 

individual electing to receive CFC 

services and supports. Through the 

assessment of functional need and the 

development of the person-centered 

service plan, individuals should be 

made aware of all living arrangements 

available for their consideration. As 

indicated below at ‘‘Person-centered 

service plan’’ (§ 441.540), a requirement 

of the service plan is a description of 

these options and a reflection of the 

individual’s choice. These protections 

represent significant advances in 

facilitating individuals’ rights to live in 

the most integrated setting appropriate 

to their needs. We plan to publish a 

separate proposed rule to define home 

and community based settings and issue 

additional guidance which should 

further assist States in these efforts. 

Comment: One commenter 

recommended that CMS clarify that it is 

within the State’s discretion to limit the 

amount, duration, and scope of the 

required services within CFC. 

Response: As indicated in the 

responses to questions received in the 

‘‘Basis and Scope’’ (§ 441.500) section of 


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the regulation, CFC is an optional 

benefit and a State may set limits on the 

amount, duration and scope of the 

services provided under the option, 

consistent with the regulation at 

§ 440.250. However, section 

1915(k)(3)(B) of the Act indicates that 

the services must be provided on a 

statewide basis 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 to lead an 

independent life. There requirements 

are reflected at § 441.515. A State cannot 

set limits on the amount, duration, and 

scope based on any elements listed 

above. 

Comment: A few commenters 

indicated that the language in 

§ 441.515(c), ‘‘in a manner that provides 

the supports that the individual requires 

to lead an independent life’’ is broad. 

One commenter suggested removing the 

language, but offered the suggestion of 

defining such supports in § 441.520, 

‘‘Required Services,’’ if the language is 

not removed. Another commenter asked 

if a State could set reasonable 

parameters on the level of support 

commitment such as an annual service 

budget amount limit or a cap on the 

hours of paid care per day. 

Response: As noted above, States 

maintain the flexibility to set limits on 

the amount, duration and scope, except 

based on 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 to lead an independent life. 

While the majority of the language in 

§ 441.515(c) was taken from the statute, 

we realize that making this language 

separate from the language in 

§ 441.515(b) could create confusion, so 

we are taking this opportunity to 

remove § 441.515(c) and incorporate its 

language in § 441.515(b) to more 

directly align with the statute. 

Comment: One commenter 

encouraged CMS to issue guidance or 

add language to the regulation to ensure 

that CFC is provided to all qualified 

applicants in the State regardless of 

sexual orientation, gender identity or 

expression, or marital status. 

Response: Section 441.500(b) 

addresses this concern specifying that 

CFC is designed to make available 

services and supports to eligible 

individuals. It is not permissible for a 

State to deny the provision of medical 

assistance services to eligible 

individuals based on sexual orientation, 

gender identity or expression, or marital 

status. We do not agree that additional 

language needs to be added to the 

regulation to clarify. 

Comment: A few commenters asked 

whether States would be afforded the 

flexibility to target specific populations. 

Response: As noted above, States 

electing CFC must provide CFC services 

and supports on a statewide basis and 

without regard to the individual’s age, 

type or nature of disability, severity of 

disability or the form of home and 

community-based services and supports 

that the individual requires to lead an 

independent life. This requirement does 

not allow States to target any specific 

population. 

Comment: One commenter requested 

clarification regarding the statewide 

implementation of the CFC. 

Specifically, the commenter asked if 

CFC can be implemented throughout the 

State incrementally over time or if the 

option must be statewide upon 

implementation. 

Response: If a State chooses to 

implement CFC, it must be 

implemented on a statewide basis, not 

phased-in incrementally throughout the 

State. 

After consideration of the public 

comments, we are revising this section 

to remove § 441.515(c) and incorporate 

its language in § 441.515(b) to more 

directly align with the statute. 

F. Included Services (§ 441.520) 

We proposed to reflect the 

requirements at sections 1915(k)(1)(A) 

and (B) of the Act that States electing 

CFC must provide: 

• Assistance with ADLs, IADLs, and 

health-related tasks through hands-on 

assistance, supervision, or cueing; 

• The acquisition, maintenance and 

enhancement of skills necessary for the 

individual to accomplish ADLs, IADLs, 

and health-related tasks; 

• Backup systems or mechanisms to 

ensure continuity of services and 

supports; and 

• Voluntary training on how to select, 

manage, and dismiss attendants. 

We also proposed to require that 

States choosing to provide for 

permissible services and supports as set 

forth at section 1915(k)(1)(D) of the Act, 

must offer at a minimum, 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 ICF/MR to a communitybased home setting where the 

individual resides. States choosing to 

provide for permissible services and 

supports set forth at section 

1915(k)(1)(D) of the Act may also 

include expenditures that increase 

independence or substitute for human 

assistance, to the extent that 

expenditures would otherwise be made 

for human assistance. 

Comment: One commenter indicated 

that the proposed rule is not clear 

regarding whether all services and 

supports listed at § 441.520(a) must be 

provided to all individuals served under 

CFC, and the commenter provided cost 

estimates if each potential participant 

were provided a pager (including device 

and monthly service charges). The 

commenters indicated that it would be 

cost prohibitive for their State to 

provide each participant all the services 

and recommended it be made clear that 

the services and supports listed in (i) 

through (iii) are to be made available 

based on parameters indicated in each 

State Medicaid plan. For example, 

backup systems that include electronic 

devices may only be needed by persons 

who have high level of care needs, 

while persons with greater functioning 

across ADLs or IADLs may simply 

require advance planning in case their 

attendant fails to show up for work. 

Response: The ‘‘Background’’ and the 

‘‘Provision of the Proposed Rule’’ 

sections both indicated that the services 

listed under Required Services must be 

made available by States electing CFC. 

This does not mean that each and every 

individual participating in CFC would 

receive each of these services. Each 

individual’s needs must be assessed, 

and only those required services needed 

by the individual must be provided. As 

indicated above, States have the 

flexibility to decide what backup 

systems and supports will be offered in 

their CFC programs as long as these 

systems will sufficiently meet the needs 

of individuals served under CFC. 

Comment: One commenter asked if 

States could design a CFC program 

where each participant may not receive 

all of the four required services in 

paragraph (a). 

Response: All services listed in 

§ 441.520(a) must be made available by 

any State that elects the CFC. The 

services authorized for individuals must 

be based upon their individualized 

assessment of functional need. 

Comment: One commenter 

specifically asked if CFC could be used 

to support consumers’ employment 

goals. 

Response: As indicated at section 

1915(k)(1)(C) of the Act, vocational 

rehabilitation services under the 

Rehabilitation Act of 1973 are 

specifically excluded by the statute; 

however, we affirm that attendant 

services and supports under the CFC 


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could be utilized by an individual while 

at their place of employment. 

Comment: One commenter urged 

CMS to provide additional guidance 

regarding the frequency with which 

required services may be provided 

stating that individuals with mental 

illness may not require assistance with 

ADLs and IADLs 24 hours a day/7 days 

a week as these individuals are often 

able to accomplish these tasks 

independently, particularly when 

personal assistance is supplemented by 

skills training. The commenter 

suggested that CMS clarify at 

§ 441.520(a)(1) that assistance need not 

be furnished on a constant, 24/7 basis. 

Response: While we agree with the 

commenter that individuals may not 

require assistance with ADLs and IADLs 

24 hours a day/7 days a week, we do not 

agree that this needs to be clarified in 

the regulation. The amount of supports 

and services provided under this option 

are determined based on an 

individualized assessment of functional 

need. 

Comment: One commenter requested 

that CMS clarify ‘‘health-related tasks’’ 

and asked if these include medication 

administration and other paramedical 

tasks such as g-tube feeds, ostomy care, 

wound care, etc. and if so, for 

individuals self-directing their personal 

care, would these tasks be furnished by 

personal care attendant care providers 

who are employed by the individual 

(responsible for training and supervising 

the attendant care provider) where there 

is no nurse involvement. The 

commenter also inquired how assistance 

with medications is accounted for. 

Another commenter added that State 

Nurse Practice Acts vary greatly and 

have very specific requirements 

regarding what types of health-related 

tasks may be delegated and/or overseen 

by licensed medical professionals, such 

as registered nurses. In addition, the 

commenter requested that CMS add 

language acknowledging that the scope 

of the health-related tasks may vary by 

State and added that for health services 

that are not delegated under a State 

Nurse Practice Act or in States without 

nurse delegation, such services would 

have to be delivered under State plan 

home health or waiver skilled nursing 

benefits. 

Response: The statute specifically 

defines ‘‘health-related tasks’’ as 

‘‘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.’’ Given this 

definition, activities that are not able to 

be delegated or assigned by a licensed 

professional under State law are not 

‘‘health-related tasks.’’ Recognizing the 

variance among State laws governing 

the specific tasks licensed health-care 

professionals may delegate, we 

recognize that the scope of ‘‘healthrelated tasks’’ will differ by State. This 

will be the case regardless of the service 

delivery model utilized by the State, 

including self-direction. We agree with 

the commenter that activities outside 

the scope of ‘‘health-related tasks’’ may 

continue to be claimed, as appropriate, 

through other Medicaid authorities such 

as home health, rehabilitative services, 

services provided by other licensed 

practitioners, etc. 

Comment: One commenter indicated 

strong support for inclusion of the 

phrase ‘‘hands on assistance, 

supervision, or cueing’’ in 

§ 441.520(a)(1), as persons with different 

disabilities require different types of 

assistance. Another commenter urged 

CMS to consider whether the use of 

‘‘and/or’’ in ‘‘hands on assistance, 

supervision, or cueing’’ would make it 

clear that a combination of methods 

may be used for any particular 

individual, depending on what is 

needed. One commenter asked if there 

is State flexibility to focus on only a 

single modality (hands-on or 

supervision or cueing) or if all 3 

modalities must be covered. 

Response: We understand that what is 

needed to assist with ADLs, IADLs, and 

health-related tasks will vary from 

individual to individual and expect that 

any one, or a combination of, hands on 

assistance, supervision, or cueing could 

be necessary to accomplish these tasks. 

As such, all three modalities must be 

available, however, it is an individual’s 

assessed needs and person centered 

plan that will determine which will be 

provided. We agree with the commenter 

and have revised the rule to include 

‘‘and/or’’ to make our intent clear. 

Comment: A few commenters asked if 

there was any additional guidance 

regarding what services constitute the 

‘‘acquisition, maintenance, and 

enhancement of skills necessary for the 

individual to accomplish ADLs, IADLs, 

and health-related tasks.’’ Several 

commenters indicated that States 

should have the same discretion they 

already exercise in structuring their 

waiver programs and recommended that 

CMS make explicit that States will have 

the discretion to define the services that 

will be provided to assist consumers 

with the ‘‘acquisition, maintenance and 

enhancement of skills necessary for the 

individual to accomplish ADLs, IADLs, 

and health-related tasks’’ and suggested 

the following language be added to the 

rule: ‘‘as defined by the State and 

approved by the Secretary.’’ Another 

commenter added that to assure 

consistency with other home and 

community-based services programs 

and to allow States to define services, 

CMS should revise paragraph (a) to add 

‘‘If a State elects to provide the 

Community First Choice Option, the 

State must provide all of the following 

services as defined by the State and 

approved by the Secretary.’’ 

Response: The ‘‘acquisition, 

maintenance, and enhancement of skills 

necessary for an individual to 

accomplish ADLs, IADLs, and healthrelated tasks’’ is a direct provision of the 

statute and we agree with the 

commenters that States should have the 

same discretion they currently have to 

define their programs, particularly, 

since CFC is an optional benefit. 

We have chosen not to specifically 

define this component of the CFC 

benefit to facilitate State flexibility. 

States will need to define how they will 

implement this component through 

their SPAs. States could choose several 

methods to meet their obligations for 

this component of the benefit, 

including, but not limited to, 

incorporating functional skills training 

and/or the use of permissible services 

and supports that facilitate the 

acquisition, maintenance, and 

enhancement of skills through the 

purchasing of services and/or supports 

that increase independence or substitute 

for human assistance. We are available 

to provide technical assistance to States 

in determining alternative ways to 

satisfy this requirement. 

Comment: A commenter noted that 

for the acquisition, maintenance and 

enhancement of skills, such services 

may be unrealistic or unnecessary for 

elderly persons in extremely fragile 

health, or whose health is deteriorating 

(such as cancer patients), but 

appropriate for other persons with 

disabilities. The commenter believes 

that the statute gives States flexibility in 

these cases by identifying the 

acquisition, maintenance and 

enhancement of skills as an ‘‘included 

service and support’’ and recommends 

the CMS clarify in the regulations that 

States provide these services to 

individuals likely to benefit from them, 

based on the assessment of functional 

need and individual service plan, and 

consistent with the CFC philosophy of 

self-direction. 

Response: We appreciate the 

perspective of this commenter. 

Ultimately, each individual’s 

assessment of functional need should 

determine whether or not an individual 

needs the acquisition, maintenance, and 

enhancement of skills necessary for 

accomplishment of ADLs, IADLs, and 


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health-related tasks. If it is determined 

that an individual needs them, a State 

would be required to provide them, 

according to the parameters of the 

person-centered service plan discussed 

at § 441.540. However, we do reiterate a 

State’s ability to put limits on the 

amount, duration and scope of CFC 

services, as long as these limits are not 

based on 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 to lead an independent life, as 

prohibited in the statute. 

Comment: A commenter stated strong 

support for both the inclusion of backup 

systems or mechanisms to ensure 

continuity of services and supports, and 

the training of how to select, manage 

and dismiss attendants referenced at 

§ 441.520(a)(3) and (4), respectively. 

One commenter questioned if cell 

phones funded under Federal programs 

(for example, Safe Link) can be 

considered for use to meet backup 

system requirements. Another 

commenter recommended amending 

this rule to allow for plans of action in 

case of emergency, such as identifying 

a friend or relative who could be called 

upon if a provider does not show up, or 

calling for emergency backup through a 

local public registry. One commenter 

suggested that the plan for continuity of 

services (if existing services are 

disrupted) should be flexible and 

participant-driven, much like the plan 

for services. 

Response: There are various options 

for backup systems. We agree with the 

commenters that backup systems and 

supports may include approaches in 

addition to electronic devices. This 

belief is supported by the inclusion in 

the definition described in the proposed 

rule of allowing people to be included 

as backup supports. We agree that a cell 

phone funded under another program 

(Federal or otherwise) could be used as 

part of a backup system, assuming doing 

so does not violate any terms of use 

required by the other program. 

However, it is important to note that 

items or services provided through 

another program or benefit are not 

eligible for Federal financial 

participation (FFP) under CFC. 

Comment: One commenter voiced 

concern that States will develop a 

‘‘canned’’ ‘‘one size fits all’’ voluntary 

training package or program specified in 

§ 441.520(a)(4), and suggested that the 

voluntary training needs to be very 

flexible and individualized. Another 

commenter recommended that training 

be a required step in demonstrating that 

the individual has the tools to select, 

manage, and dismiss attendants. One 

commenter indicated that, consistent 

with the philosophy of self direction, 

this training must be voluntary and not 

a mandatory requirement for the 

individual to receive services under 

CFC, and requested that CMS allow 

States to provide established, existing 

consumer training programs already 

available to consumers/employers. 

Another commenter stated that, it is 

important that all training content and 

procedures be driven by the participants 

themselves, and while the proposed rule 

specifies that training be ‘‘developed’’ 

by States, the commenter pointed out 

that various training curricula already 

exist, and suggested that one method to 

control costs would be to modify and 

adopt existing training approaches, as 

long as such training is agreed upon by 

participants and the methods are 

sensitive to the training needs of the 

targeted groups (for example, accessible 

format, at no cost, web-based, etc.). 

Another commenter encouraged CMS to 

allow States to retain the authority to 

develop this training with a level of 

flexibility that would be appropriate to 

meet the needs of all potential CFC 

participants. 

Response: As the commenters 

indicated, many States currently have 

existing consumer training programs 

available that could potentially be 

leveraged or modified to meet this 

requirement. These training programs 

should be able to meet the needs of 

individuals at varying levels of need 

with regard to selecting, managing, and 

dismissing attendants. As we stated in 

the proposed rule, consistent with the 

philosophy of self direction, and in 

keeping with the statute set forth at 

section 1915(k)(1)(B)(iii) of the Act, this 

training must be voluntary, and may not 

be a mandatory requirement for the 

individual to receive services under this 

option. 

Comment: A few commenters 

suggested that CMS create a separate 

section for permissible purchases to 

reduce confusion. One commenter 

added that since § 441.520(b) begins a 

list of optional services, CMS should 

begin a new section here to clarify that 

these services are not required services. 

The commenter added that CMS should 

clarify at (b)(1) that ‘‘the waiver’’ would 

not cover rent as this is excluded. 

Response: We are renaming § 441.520 

as ‘‘Included Services’’ to reduce 

confusion and to highlight that 

permissible services and supports in 

paragraph (b) are at the State’s option. 

We also reiterate that CFC is not a 

waiver program, but rather a new 

optional service authorized under the 

Medicaid State plan. With regard to the 

commenter’s suggestion about the 

exclusion of rent, while ‘‘room and 

board’’ are excluded services, 

expenditures related to transition costs, 

including the first month’s rent, are the 

exception. Therefore, we do not agree 

that revisions are necessary. 

Comment: One commenter asked 

whether an individual receiving 

services through CFC and a section 

1915(c) waiver could receive assistive 

devices if they are covered services in 

the waiver. 

Response: Assistive devices and 

assistive technology services may be 

provided under CFC if the requirements 

under § 441.520(b) are met. It would be 

up to the State to choose whether to 

provide these items through a waiver, or 

through CFC, if an individual is 

participating in both programs. 

Comment: One commenter asked that 

CMS clarify the minimum services that 

must be offered if a State chooses to 

provide permissible services. 

Response: While we proposed to 

require that States offering permissible 

services and supports must at a 

minimum provide for transition costs, 

we realized that the statute does not 

provide a basis to require such services 

and supports. Therefore, the provision 

of permissible services and supports are 

at the State’s option. We strongly 

encourage States to consider providing 

for the transition services and supports 

at paragraph (b)(1) under § 441.520. 

Comment: One commenter indicated 

that States need to have the flexibility 

in permissible purchases to set 

limitations on these costs including the 

total amount, recurrence, etc. 

Response: States have the flexibility 

to design their CFC benefit as long as all 

requirements are met. States maintain 

the flexibility to set reasonable 

limitations on the costs of permissible 

services and supports. We encourage 

States to consider the ability of 

beneficiaries to actually return to the 

community when establishing limits on 

these services and supports. We will 

work with States on an individual basis 

to ensure the intent of the legislation is 

met, while acknowledging the realities 

of State fiscal situations. 

Comment: One commenter voiced 

concern that permissible purchases, 

including expenditures necessary for an 

individual to transition from 

institutional care and expenditures for 

items that could increase independence 

or substitute for human assistance, are 

considered optional for States electing 

to offer CFC. The commenter added that 

these optional services in many cases 

would make the difference between 

whether an individual can live 

successfully in the community or not 


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and suggested that CMS should more 

strongly encourage States to allow the 

purchase of these services, perhaps by 

providing some additional incentive for 

States to do so, financial or otherwise. 

Response: We agree with the 

commenter that transition costs can be 

crucial for an individual as it relates to 

being able to transition from an 

institution to the community. We also 

agree that many items that increase 

independence or substitute for human 

assistance have the potential to make a 

significant difference in an individual’s 

life while also being cost-effective. We 

hope that the enhanced match included 

in CFC, and the potential for cost 

savings, will be an incentive to States to 

include permissible services and 

supports in their CFC programs. We are 

also revising the language in paragraph 

(b)(1) under § 441.520 to reference a 

‘‘home and community-based setting’’ 

rather than a ‘‘community-based home 

setting.’’ 

Comment: One commenter suggested 

that expenditures related to transition 

costs should include funding for basic 

home modifications to expand the 

supply of physically accessible housing 

options. Such modifications to 

entrances or bathrooms, for example, 

could make an otherwise inaccessible 

unit accessible at a reasonable cost. This 

commenter also indicated that while the 

proposed rule states that individuals are 

not required to save an amount in a 

budget to purchase items that increase 

independence or substitute for human 

assistance, it should be made clear that 

individuals should not be pressured to 

purchase items if it would unduly 

reduce the hours of personal assistance 

in a manner that negatively impacts 

overall service needs. 

Response: At the State’s option, and 

consistent with the statute, where a 

service is based on a need identified in 

the person-centered service plan, 

qualifying home modifications may be 

provided either as a transitional costs or 

as a way to increase an individual’s 

independence or as a substitute for 

human assistance. We further address 

this in § 441.525(e). We also agree that 

individuals should not be pressured to 

purchase any items if such purchases 

would reduce the number of hours of 

assistance in a manner that would 

negatively impact them. 

Comment: One commenter suggested 

that institutions other than nursing 

facilities, IMDs, or ICF–MRs should be 

included among the list of institutions 

from which individuals could 

transition, as often individuals with 

serious mental illness reside in smaller 

institutional settings such as adult 

homes or large group homes. The 

commenter indicates that these funds 

would be necessary for transitions from 

those settings. The commenter 

suggested that paragraph (b)(1) be 

amended to include ‘‘adult homes for 

people with mental illness and group 

homes with over four residents.’’ 

Response: Section 1915(k)(1)(D)(i) of 

the Act sets forth requirements that 

expenditures for transition costs are 

available ‘‘for an individual to make the 

transition from a nursing facility, and 

institution for mental diseases, or 

intermediate care facility for the 

mentally retarded.’’ Therefore, we are 

not revising the regulation as suggested. 

Comment: One commenter asked if 

States can limit the CFC transition 

benefit to individuals not eligible for 

transition services under either section 

1915(c) of the Act or Money Follows the 

Person (MFP) program. The commenter 

also asked whether the transition benefit 

can differ from what is already offered 

in the State through section 1915(c) of 

the Act. 

Response: CFC services must be 

provided 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 to lead an 

independent life. Thus, a State may not 

propose to provide a service to only to 

a subset of the population eligible for 

CFC services. We recognize there may 

be instances in which individuals are 

eligible for similar services under more 

than one Medicaid authority. As 

indicated in § 441.510(e) individuals 

receiving CFC services will not be 

precluded from receiving other home 

and community-based long-term care 

services and supports through other 

waiver, State plan or grant authorities. 

To prevent duplication of the provision 

of services to the same individual, steps 

must be taken when developing the 

person- centered service plan, to 

prevent the provision of unnecessary or 

inappropriate care, as required at 

§ 441.540(b)(12). 

Comment: One commenter asked if 

States will need to contemplate and 

detail in the State plan amendment, all 

potential supports/services that may be 

allowed (presumably under permissible 

services) and whether or not States can 

define specific exclusions. Another 

commenter asked that CMS clarify 

whether permissible purchases are only 

available under the self-directed service 

model or if it applies to the agency 

model as well. 

Response: A State would not be 

required to detail each item they would 

allow under permissible services and 

supports. States will need to indicate in 

the State plan amendment electing CFC 

whether they will be offering such 

services and supports, and any 

limitations they propose to include. 

States will also be asked to identify 

whether they will include items that 

increase independence or substitute for 

human assistance as permissible 

services and supports. Permissible 

services and supports are available at 

the State’s option regardless of service 

model. 

Comment: Several commenters 

strongly supported the first component 

of section 1915(k)(1)(D)(ii) of the Act 

that permits States to make 

expenditures available for individuals to 

acquire items that increase 

independence or substitute for human 

assistance and also supported the 

inclusion of this flexibility in the CFC 

proposed rule, but stated that the 

second component of this statement (‘‘to 

the extent that expenditures would 

otherwise be made for human assistance 

and are related to a need identified in 

an individual’s person-centered plan’’) 

may actually lead to more restrictions 

than necessary. The commenters stated 

that the purchase of innovative goods 

and services may not replace human 

assistance, but rather make such 

assistance more effective (for example, 

the use of devices to support 

transferring individuals from their bed 

to a wheelchair) and suggested that 

addressing independence or substituting 

for human assistance is more 

appropriate. The commenters also stated 

that it is also important to recognize that 

some people who require CFC will not 

have the benefit of increasing 

independence, but rather may be 

successful at sustaining current 

functional ability or minimizing the 

restriction of independence that is 

occurring due to changes in health 

status and suggested that the CFC rule 

should be reflective of this reality. 

Response: We appreciate the points 

made in this comment and 

fundamentally agree with them. The 

language in the proposed regulation was 

taken directly from the authorizing 

legislation. However, we believe that 

‘‘increase independence or substitute for 

human assistance’’ is sufficiently broad 

to encompass all the scenarios 

identified by the commenter. We do not 

interpret the term ‘‘substitute’’ to mean 

only the total replacement of human 

assistance; therefore, the regulation 

would allow the purchase of items that 

just decrease the need for human 

assistance. We also agree that 

independence may be viewed to be 

‘‘increased’’ by purchases aimed at 

preventing its decline. 


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Comment: One commenter questioned 

including the same language at 

§ 441.520(b)(3) as in § 441.525 regarding 

the potential for providing some 

otherwise excluded services if they are 

based on a need in the service plan, as 

the language in paragraph (b)(3) is broad 

when applied to all permissible 

services, and this language could put a 

difficult burden on consumers to 

identify all possible future support 

needs during the care assessment phase. 

Response: We do not anticipate a 

burden being placed on individuals to 

determine possible future needs during 

the functional need assessment or 

development of the person-centered 

plan. Both the assessment and the plan 

must be revised, as indicated in 

§ 441.535(c) and § 441.540(e), 

respectively, 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. These 

protections are sufficient to address any 

future needs. 

Comment: One commenter asked 

specifically who coordinates the 

assessment and person-centered plan 

and whether there is a requirement that 

a separate Targeted Case Management 

service accomplish these tasks. The 

commenter also asked if these 

coordination services would be eligible 

for the enhanced match. Another 

commenter encouraged the addition of 

care coordination as a permissible 

service as this is essential for 

individuals with long-term care needs, 

and added that States may be more 

inclined to utilize CFC if this is a 

component that would also receive the 

enhanced FMAP. 

Response: Targeted Case Management 

is a Medicaid service separate and 

distinct from CFC. There is no Targeted 

Case Management requirement in CFC. 

States may choose to use Targeted Case 

Management to assist with coordination 

and linkage functions for individuals 

participating in CFC, as long as all 

Targeted Case Management 

requirements are met. While we agree 

that care coordination is a beneficial 

service component for individuals with 

long-term care needs, care coordination 

was not a component that was included 

in the CFC statute, and therefore, would 

not be eligible for the enhanced FMAP. 

Comment: One commenter indicated 

that States should be allowed to provide 

services in CFC that are currently 

allowable under section 1915(c) 

waivers, such as home delivered meals, 

adult day services, and non medical 

transportation if these services are an 

identified need in the service plan, as 

these services allow seniors and those 

with disabilities to live as 

independently as possible in their own 

homes and communities. 

Response: States that choose to offer 

permissible services and supports have 

the option to provide for items that 

increase independence or substitute for 

human assistance, to the extent that 

expenditures would have been made for 

human assistance, as long as the item 

meets the requirements at § 441.520(b). 

Upon consideration of public 

comments received, we are finalizing 

§ 441.520 with revision, changing the 

title of this section to ‘‘Included 

Services’’, modifying paragraph (a)(1) to 

refer to ‘‘* * * hands-on assistance, 

supervision, and/or cueing’’, modifying 

paragraph (b) to indicate that items 

covered under transition costs must be 

linked to an assessed need and adding 

the phrase ‘‘At the State’s option’’ to 

clarify that paragraphs (b)(1) and (2) that 

follow are both at the State’s option, 

revising the language in paragraph (b)(1) 

to reference a ‘‘home and communitybased setting’’ rather than a 

‘‘community-based home setting.’’ and 

removing paragraph (b)(3) and 

relocating the language to 441.520(b). 

G. Excluded Services (§ 441.525) 

Consistent with section 1915(k)(1)(C) 

of the Act, we proposed to exclude the 

following services from CFC: 

• Room and board costs for the 

individual, except for allowable 

transition services described in 

§ 441.520(b)(1) of this subpart. 

• 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. 

• Assistive devices and assistive 

technology services other than those 

defined in § 441.520(a)(3) of this subpart 

(incorrectly specified as § 441.520(a)(5) 

in the proposed rule, which does not 

exist) 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. 

• Medical supplies and equipment. 

• Home modifications. 

Consistent with section 1915(k)(1)(D) 

of the Act, we proposed to allow certain 

otherwise excluded items if they related 

to an identified need in an individual’s 

service plan that increase an 

individual’s independence or substitute 

for human assistance, to the extent that 

expenditures would otherwise be made 

for the human assistance. 

Comment: One commenter noted that 

the rule required backup systems to be 

made available, but excluded assistive 

technology and assistive technology 

services. 

Response: We appreciate this 

commenter’s perspective. 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 service 

plan that increases independence or 

substitutes for human assistance. From 

our experience with Cash and 

Counseling demonstrations, section 

1915(j) and 1915(c) authorities, we 

know that assistive technology devices 

and services often fall under the 

category of items that increase 

independence or substitute for human 

assistance. Therefore, we proposed in 

the rule that some items or services that 

could be classified as assistive 

technology devices or services could be 

covered, but only when based on a 

specific need in the person-centered 

service plan. We are maintaining this 

flexibility in the final rule. 

Comment: Several commenters 

recommended that CMS include in the 

final regulation that Medicaid 

reimbursement for room and board for 

a personal attendant is an allowable 

expenditure as this is consistent with 

the SMD letter included with the 

section 1915(c) waiver guidance and 

CFC should be consistent with current 

CMS policy. 

Response: We appreciate the 

commenters’ suggestion and 

acknowledge that section 1915(c)(1) of 

the Act indicates that excluded ‘‘room 

and board’’ costs shall not include 

amounts States may define as rent and 

food expenses for an unrelated personal 

caregiver residing in the same 

household with the individual. Such 

amounts are part of the cost of 

delivering the service; they are not room 

and board for the individual. No such 

clarification was included in the statute 

for section 1915(k) of the Act; it speaks 

only to excluded room and board costs 

‘‘for the individual.’’ To continue efforts 

to align CMS policy across Medicaid 

authorities whenever appropriate, we 

agree with the commenter. Room and 

board costs attributable to an unrelated 

attendant residing in the same 

household would be considered 

appropriate for reimbursement as a CFC 

service, as these costs are part of service 

delivery for ‘‘assistance in 

accomplishing ADLs, IADLs, and 

health-related tasks.’’ 

Comment: Multiple commenters 

stated that it is appropriate to pay for 

assistive technology, medical 

equipment, and home modifications 


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when coverage is based on an identified 

need in a service plan and used in 

conjunction with other home and 

community-based attendant services. 

One commenter added that the 

proposed regulation was in keeping 

with the intent of CFC to be primarily 

an attendant services benefit and 

indicated that it made sense to allow 

States to balance the use of these items 

in relation to attendant services. 

Multiple commenters supported the 

proposal to only exclude coverage of 

assistive devices, medical equipment, 

and home modifications in 

circumstances where they would be the 

sole needed service in an individual’s 

service plan. Another commenter added 

that coverage of other services and 

supports encourages increased 

independence which is a key goal of 

person-centered services and is cost 

effective. Multiple commenters 

commended the inclusion of the 

language referencing the exclusion of 

services ‘‘that are related to education 

only’’ in paragraph (b). One commenter 

indicated that they understood the 

reasoning behind allowing some items 

that increase independence or substitute 

for human assistance, but were unclear 

how the requirement that they be used 

in conjunction with another CFC service 

furthered that goal, as there are many 

forms of assistive technology that, 

independent of all other services, can 

reduce dependency and substitute for 

human assistance. 

Response: We agree that it is 

appropriate to pay for items that 

increase independence and substitute 

for human assistance. However, after 

reviewing comments and further 

consideration of the statute, we do not 

believe it is necessary to require that 

such items must be used in conjunction 

with other home and community-based 

attendant services. Section 1915(k)(1)(C) 

of the Act indicates that excluded 

services are subject to subparagraph (D) 

which indicates that States may cover 

‘‘expenditures relating to a need 

identified in an individual’s personcentered plan of services that increase 

independence or substitute for human 

assistance * * *’’ There is no statutory 

requirement that these items be 

provided ‘‘in conjunction with other 

home and community-based attendant 

services.’’ We are concerned that 

maintaining this requirement could 

result in an individual not receiving 

needed services. Therefore, we are 

revising § 441.525(c) to remove the 

requirement that assistive devices and 

assistive technology services meeting 

the requirements of § 441.520(b)(2) have 

to be used in conjunction with other 

home and community-based attendant 

services. 

Comment: Several commenters urged 

CMS to ensure that the actual text of the 

regulation reflect the intent expressed 

by CMS to allow assistive technology, 

medical equipment, and home 

modifications when coverage is based 

on an identified need in the service 

plan. 

Response: We have revised 

§ 441.525(d) and (e) to clarify the 

treatment of medical supplies, medical 

equipment, and home modifications. 

We believe this flexibility for assistive 

technology devices and assistive 

technology services is already clear. 

Comment: Multiple commenters 

indicated that the preamble language on 

page 10740 of the proposed rule stating 

that CFC ‘‘would not include services 

furnished through another benefit or 

section under the Act’’ is overly broad 

and should be amended to read ‘‘would 

not include certain specific types of 

services furnished through another 

benefit or section under the Act.’’ 

Response: The language in the 

preamble excluding services from CFC 

when furnished through another benefit 

or section under the Act was not 

included in the actual regulation text. 

Since section 1915(k) of the Act 

specifies the services that are available 

under the CFC State plan option, and 

such a prohibition was not specified in 

statute, we have decided to not include 

such a prohibition in the CFC 

regulation. As indicated earlier, steps 

must be taken when developing the 

person-centered service plan to prevent 

the provision of unnecessary or 

inappropriate care, as required at 

§ 441.540(b)(12). To meet this 

requirement, we expect States to 

implement policies and procedures to 

prevent the duplication of services that 

may be available under more than one 

Medicaid benefit. 

Comment: One commenter indicated 

that the statute excludes assistive 

technology devices and services and 

acknowledged that the proposed rule 

noted that the statute does not define 

the terms, which could be read broadly 

to exclude devices or services allowed 

under sections 1915(k)(1)(D)(i) or (ii) of 

the Act. The commenter stated that 

because CMS only excludes devices and 

services that do not serve a specific 

need in the person-centered service 

plan, the implementation of this 

regulation may become too restrictive as 

advances in technology may be 

accommodated too slowly because 

individuals may have imperfect 

information on the devices and services 

that may suit their particular needs. 

Response: The statute is clear at 

section 1915(k)(1)(D)(ii) of the Act that 

these expenditures must be related ‘‘to 

a need identified in an individual’s 

person-centered plan of services.’’ If 

advances in technology result in an item 

that would meet an individual’s 

identified need, it would potentially be 

allowable as a permissible service or 

supports. Both the assessment and the 

service plan must be revised, as 

indicated in § 441.535(c) and 

§ 441.540(e), respectively, 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. These protections are 

sufficient to address any future needs. It 

is also important to note that States have 

the flexibility to choose whether or not 

to provide for permissible services and 

supports as they are not a required 

service. 

Comment: One commenter asked 

CMS to clarify whether examples such 

as a walk-in shower to allow for a 

wheeled shower chair to be used for 

bathing, kitchen adjustments to permit 

someone with functional limitations to 

prepare his or her own meals, or moving 

a washer/dryer upstairs may qualify 

under such a definition. One commenter 

urged CMS to include additional 

examples of eligible assistive technology 

devices and services that could be 

included including medication 

management technology, home telecare/ 

remote monitoring, and telehealth/ 

telemonitoring, as these may assist 

personal attendant and health-related 

services under CFC in the future. 

Another commenter strongly supported 

inclusion of items such as 

environmental controls and telecare, 

stating that these could be very costeffective and improve the independence 

of persons with disabilities as such 

technology or devices could reduce the 

need for human assistance. Other 

commenters provided additional 

examples of items that increase 

independence or substitute for human 

assistance such as adaptive utensils that 

allow a participant to eat meals and a 

voice activated system that allows a 

participant with quadriplegia to control 

various aspects of the home 

environment (lights, windows, door 

locks, etc.) and added that the 

exceptions to the excluded services as 

outlined in the proposed rule are of the 

utmost importance to glean the benefits 

of the Cash & Counseling model. 

Another commenter requested that CMS 

clarify the actual scope of services 

under this exception that could be 

provided. 


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Response: We appreciate the 

commenters’ requests for clarification 

and suggestions regarding what items 

may be allowable under permissible 

services and supports. We do not 

believe it is appropriate for CMS to 

define a finite list of items that can be 

provided as a service or support. As we 

noted above, the statute set forth that 

‘‘expenditures relating to a need 

identified in an individual’s personcentered plan of services that increase 

independence or substitute for human 

assistance, to the extent that 

expenditures would other-wise be made 

for the human assistance’’ are allowable 

as permissible services and supports. 

States have the choice to provide any of 

the permissible services and supports 

that meet the requirements at 

§ 441.520(b). 

Comment: Another commenter noted 

that the prohibition on home 

modifications seems extreme as access 

to keyless entries and accessible 

bathrooms are important to increase 

both access to affordable and accessible 

housing and quality of life. The 

commenter added that ‘‘Assistive 

Technology services’’ seems too 

narrowly defined to address important 

supports such as bathroom 

modifications. 

Response: The term ‘‘assistive 

technology services’’ is taken directly 

from statute as an excluded service. 

Section 1915(k)(1)(C) of the Act 

indicates that excluded services are 

subject to subparagraph (D) which 

indicates that States may cover 

‘‘expenditures relating to a need 

identified in an individual’s personcentered plan of services that increase 

independence or substitute for human 

assistance * * *.’’ Therefore, we believe 

some services that would otherwise be 

excluded may be covered when related 

to an identified need for items that 

increase independence or substitute for 

human assistance. 

Comment: Several commenters 

supported CMS’ proposal to provide for 

coverage of assistive devices in certain 

circumstances while at the same time 

promoting appropriate allocation of 

resources within the service plan and 

the program. The commenters noted 

that under the self-directed service 

delivery model proposed for CFC, the 

State must approve a service budget or 

cap that meets specified requirements, 

including specifying a dollar amount 

that an individual may use for services 

and supports under the program. The 

commenters added that States must also 

satisfy criteria for the budget 

methodology that it employs including 

a process for describing any limits the 

State places on CFC services and 

supports and the basis for the limits. 

The commenters believe that these 

provisions work in concert with 

§ 441.525(c) to provide a framework for 

coverage that is compatible with 

implementation of the required 

exclusion and recommended that CMS 

point out this linkage in the preamble to 

the final rule. 

Response: We appreciate comments 

but do not believe that it is necessary to 

point specifically to the linkage of these 

particular provisions in the final 

regulation. 

Comment: One commenter voiced 

concern that explicitly indicating that 

States may determine at what point the 

amount of funds to purchase such 

devices and adaptations places them in 

the statutorily excluded categories will 

lead to an unreasonable limitation on 

this category with an over-emphasis on 

cost rather than need and relation to the 

other home and community-based 

attendant services. Another commenter 

added that the regulation does not 

contain any language related to the 

proposal to allow States to determine 

the point at which the funding amount 

would place items into the statutorily 

excluded categories and is concerned 

that regulatory language might confuse 

the cost of the service with the type or 

purpose of the service and that States 

should not have absolute discretion to 

target exclusions strictly based on cost. 

One commenter suggested that there 

should be some annual spending limits 

on the more costly and technologically 

advanced of the available assistive 

technologies such as an annual 

monetary limit per individual. Another 

commenter recommended that there be 

guidelines for the States to determine 

the cost threshold which would place 

the services and modifications into the 

excluded categories. The commenter 

asked if this was a onetime expenditure 

measured against the cost savings from 

reducing human assistance over the 

period of a month/year, or multiple 

years. The commenter noted concern 

that if the State sets a cap on the amount 

of funding that can be used to purchase 

devices and adaptations, this could 

prevent people from getting those 

supports even if it increases 

independence and saves money over the 

long term. 

Response: As noted above, States have 

the choice to provide permissible 

services and supports. While we 

encourage States to allow for transition 

costs and for items that increase an 

individual’s independence or substitute 

for human assistance, States have the 

flexibility to determine which, if any, 

permissible services and supports they 

will provide. All determinations 

regarding coverage of allowable items 

that meet the criteria in the final 

regulation, including the costs 

associated with the items, are the State’s 

to make. 

We acknowledge that the preamble 

language regarding the proposal to allow 

States to determine the point at which 

the funding amount would place items 

into the statutorily excluded category 

did not carry over into the regulation. 

We are not incorporating this language 

into the final regulation, but we are 

clarifying here that States retain the 

ability to establish amount, duration 

and scope limitations relative to the 

provision of these items, as long as such 

limits are not prohibited by the statute, 

which among other requirements, 

specifies that they must not be based on 

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 to lead an 

independent life. 

With regard to the costs measures and 

timeframes for the determination of cost 

savings related to the substitution for 

human assistance, we do not intend to 

set forth the methodology for 

determining this threshold as this is also 

at the State’s discretion. 

Comment: One commenter 

interpreted the proposal to allow for 

coverage of assistive technology, 

equipment or home modifications when 

used in conjunction with other 

attendant services as integrated with the 

general principle that coverage under 

CFC is available only when there is no 

other coverage available under Medicaid 

or otherwise, and noted that at first 

impression, the proposal would seem to 

be inconsistent with section 

1915(k)(1)(D) of the Act. The commenter 

stated that if this is not the case, it 

would be helpful if CMS could offer an 

estimate as to the potential cost of these 

services if included in the program. 

Response: The correlation between 

the commenter’s interpretation and the 

request for a potential cost estimate is 

not clear. We note that there is nothing 

included in the final regulation that 

would make coverage under CFC 

available only when there is no other 

coverage available under Medicaid or 

otherwise. As noted earlier, we have 

also removed the requirement that these 

items must be used in conjunction with 

other home and community-based 

services. 

Comment: One commenter noted that 

medical equipment and home 

modifications are an essential 

component of any person-centered plan 

and that these items may assist a person 

in the transition from institutionalized 


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care to community care. The commenter 

questioned why they were listed as 

excluded services in the first place and 

recommended that they be added to the 

list of included services at § 441.520. 

Response: These items were listed as 

excluded services in the statute at 

section 1915(k)(1)(C) of the Act, subject 

to section 1915(k)(1)(D). We agree that 

these items may assist an individual in 

the transition from an institution into 

the community and we also believe that 

these items may also assist an 

individual choosing to remain in their 

own homes. As such, and consistent 

with section 1915(k)(1)(D) of the Act, we 

proposed to allow States to cover such 

items as permissible services and 

supports long as the criteria described 

in § 441.520(b)(1) or (b)(2) are met. 

Comment: Several commenters noted 

that while the exclusion of vocational 

rehabilitation services provided under 

the Rehabilitation Act of 1973 is well 

understood given its existence in other 

Medicaid programs, CMS and States 

should be reminded of the importance 

of allowing CFC participants to utilize 

their CFC services and supports within 

employment settings. 

Response: We agree that individuals 

requiring attendant services and 

supports should be allowed to receive 

those services as needed/required in any 

home and community-based setting in 

which normal life activities take the 

individual, including the workplace. 

Comment: One commenter indicated 

that access to State vocational 

rehabilitation services is extremely 

limited for individuals with serious 

mental illness and recommended that 

services excluded from CFC should be 

limited to those services that vocational 

rehabilitation agencies are, in fact, 

paying for and not services for which 

they might pay, but are not providing to 

the specific individual. The commenter 

added that the regulation as written 

creates a ‘‘catch-22’’ for people with 

severe disabilities whom vocational 

rehabilitation agencies reject, and 

encouraged CMS to amend paragraph 

(b) to clarify that the intent is to prevent 

Medicaid paying for services already 

covered and paid for under vocational 

rehabilitation. 

Response: The statute specifically 

excludes vocational rehabilitation 

services (direct services to individuals 

with disabilities which teach specific 

skills required by an individual to 

perform tasks associated with 

performing a job to help them to become 

qualified for employment) from being 

provided under CFC. Therefore, we 

disagree with the suggestion to amend 

paragraph (b) as these services are not 

related to the services provided under 

CFC and should not impact vocational 

rehabilitation services being provided to 

an individual. 

Comment: A few commenters noted 

that the proposed rule indicates at 

§ 441.525 (c) that assistive technology 

devices and assistive technology 

services are excluded, other than those 

defined in § 441.520(a)(5), but pointed 

out that the proposed regulation does 

not include a § 441.520(a)(5). 

Response: We have revised the 

regulation to reference § 441.520(a)(3). 

Upon consideration of public 

comments received, we are finalizing 

§ 441.525 with revision, modifying 

paragraph (c) to correct a reference to 

paragraph (a)(3) and to remove the 

requirement that assistive devices and 

assistive technology services meeting 

the requirements of § 441.520(b)(2) have 

to be provided in conjunction with 

other home and community-based 

attendant services, and modifying 

paragraphs (d) and (e) to allow medical 

supplies, medical equipment and home 

modifications when coverage is based 

on an identified need in the service 

plan. 

H. Setting (§ 441.530) 

We proposed that States must make 

available attendant services and 

supports in a home and community 

setting and specified that such settings 

did not include the following: 

• A nursing facility; 

• An institution for mental diseases; 

• An intermediate care facility for the 

mentally retarded; 

• Any settings located in a building 

that is also a publicly or privately 

operated facility that provides inpatient 

institutional treatment or custodial care; 

or 

• 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. 

We received multiple thoughtful 

comments related to this section of the 

proposed regulation. These comments 

provided a rich and varied array of 

perspectives for our consideration. 

Several commenters were supportive of 

CMS’ efforts to add parameters 

regarding home and community-based 

settings and some were supportive of 

the proposed language. Several 

commenters were strongly supportive of 

the proposed setting exclusions 

specifically. Multiple commenters 

expressed their concerns related to the 

proposed regulation and offered 

suggestions for revision of the criteria. 

These comments are reflected as 

follows: 

• One commenter indicated the need 

for a more specific definition of setting 

adding that facilitating residents’ 

engagement with and participation in 

the community is an essential 

component of services provided in a 

home and community-based setting. 

• One commenter noted that the 

ambiguity surrounding the definition of 

home and community-based desperately 

needed to be remedied. 

• One commenter noted that CMS 

proposed to adopt the statutory 

definition at section 1915(k)(1)(A)(ii) of 

the Act and recommended that CMS 

rely on this definition for purposes of 

CFC. 

• One commenter recommended that 

CMS continue exploring how to clarify 

that certain settings are ‘‘outside of what 

would be considered home and 

community-based because they are not 

integrated into the community.’’ The 

commenter suggested that CMS consider 

that such clarification could be processbased and service-based and explore 

which processes and services 

characterize integration. The commenter 

recommended that CMS ensure that any 

clarification of the definition does not 

eliminate important community-based 

options for Medicaid beneficiaries, 

including assisted living communities, 

group homes, and settings that happen 

to be located near institutional settings. 

The commenter also suggested that 

when a clarification is developed, CMS 

should initially limit the use to one 

HCBS program until it is determined 

that there are no unintended or 

unanticipated problems caused by the 

clarification. Another commenter 

requested we clarify if CFC services may 

be provided in other residential 

community-based settings such as 

Assisted Living Facilities. The 

commenter believes the criteria should 

ensure participant independence and 

choice in residential settings that meet 

the unique needs and preferences of 

each individual. 

• Several commenters requested that 

CMS convene meetings of stakeholders 

to address the definition of home and 

community-based. 

• Other commenters encouraged CMS 

to ensure that the regulation recognizes 

that some populations need and choose 

to reside in settings that are similar to 

assisted living, so that they can 

maximize their independent living 

while still being able to access support 

services to keep them healthy and safe, 

and that some people with disabilities 

with very particular functional 

limitations need to receive support 


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services in more structured 

environments. 

• Another commenter added that any 

criteria for setting should allow 

individuals to access services that aim 

to integrate individuals into community 

life and that organizations that are 

accredited by a national accreditation 

group that meet standards for personcentered planning and community 

integration as established by the 

accrediting body for programs serving 

people with disabilities should be 

eligible providers. 

• One commenter indicated that 

‘‘community’’ is defined as a unified 

body of individuals; people with 

common interests living in a particular 

area; a fellowship; a social state or 

condition, and pointed out that a 

community is more than a place or a 

location, and is defined not just by 

where people live but how they interact. 

The commenter added that in many 

States the word ‘‘inclusion’’ means that 

adults with special needs live in 

isolated settings like group homes, 

separated by a radius of 1000 feet where 

there is little or no contact with 

neighbors but is nevertheless considered 

being in the community and thus 

‘‘included.’’ The commenter stated that 

individuals and their families are the 

primary decision makers regarding 

where and with whom to live and that 

they should be able to choose where 

they want to be rather than where they 

are forced to be included. The 

commenter pointed out that the stated 

values of CMS include ‘‘promoting 

initiative and choice in daily living,’’ 

yet HCBS waiver funding would be 

denied to those who would benefit from 

the choice of residential options, and 

recommended that Medicaid waiver 

funding should be person-centered, 

choice based, consumer driven and the 

money should follow the person, not 

‘‘idealist ideology.’’ Finally, the 

commenter stated that ‘‘inclusion’’ must 

not exclude individuals with 

developmental disabilities from the 

rights afforded to all other citizens, 

including the right to live next to peers 

in a setting of choice. 

• Another commenter indicated that 

as proposed, these exclusions, which 

they believe to be based on artificial 

considerations, might actually lead to 

greater isolation of individuals. The 

commenter indicated that despite the 

locations where some individuals 

reside, the sense of community there is 

much greater than the individual might 

have if they were living by themselves 

in an apartment with limited social 

opportunities, access to assistance and 

amenities, and vulnerable to 

exploitation. The commenter added that 

as written, this apartment would be 

considered ‘‘integrated’’ while a 

planned residential retirement 

community where individuals and their 

friends live alongside one another with 

access to services would not be 

considered a community setting. 

• One commenter recommended a 

more robust set of standards to evaluate 

the ‘‘quasi-institutional’’ setting to 

determine whether they are to be 

excluded and suggested that these 

standards include whether the setting is 

segregated from the community at large, 

whether the residents are limited in 

terms of meal times, meal sources, and 

visitors, whether the setting limits the 

choice of caregivers, whether the setting 

controls or limits the resident’s abode in 

terms of normal actions as furniture, 

food storage, paint colors, and use of 

TVs etc., and whether the facility has 

any contractual or other obligation to 

provide personal care to residents. 

• One commenter indicated that there 

is a limited supply of affordable, 

handicap accessible housing that is 

available for low income individuals 

and that establishing a strict definition 

of settings could have a negative impact 

on access to CFC. 

• Several commenters voiced concern 

regarding whether services will still be 

authorized in settings if these proposed 

criteria are adopted broadly across 

Medicaid. One commenter indicated 

that their organization serves frail 

elderly individuals, most of whom are 

Medicaid beneficiaries, on a campus 

that includes 6 buildings (1 with 20 

nursing care beds, 1 with 16 memory 

care beds, 3 assisted living buildings, 

and one building of independent living 

with 12 apartments). The commenter 

added that the nursing care beds are the 

only nursing beds in the entire county 

and they were moved to this location 

when the rural critical access hospital 

closed down due to funding issues. The 

commenter voiced concern as they have 

been involved with the waiver program 

since its inception and as written, these 

exclusions would have a negative 

impact on the lives of many elderly 

individuals currently being served. 

• One commenter requested that CMS 

regulations and State Plan Amendments 

assure that a State’s decision to access 

CFC does not adversely impact assisted 

living settings for American Indians and 

Alaska Natives (AI/AN) individuals who 

reside in/near Indian communities 

where living settings may differ 

according to the cultural norms of those 

communities. The commenter indicated 

that certain assisted living settings, even 

though they may be large congregate 

settings, should be considered 

appropriate home and community-based 

settings under certain conditions. The 

commenter recommended that the 

regulation affirmatively state that those 

culturally appropriate settings in/near 

Indian communities, including assisted 

living settings for persons of retirement 

age, without regard to disability, where 

the individual is to be served is an 

Indian or resides in/near an Indian 

community where group living 

arrangements are culturally acceptable, 

are not excluded from home and 

community-based settings. 

• One commenter suggested that CMS 

had not gone far enough to assure that 

settings are truly community-based, 

stating that the language only lists three 

types of institutions, and proposed 

language, similar to that used in the 

Money Follows the Person (MFP) 

program, that provides an exclusion that 

they felt would capture an institutional 

setting regardless of its licensure 

category. Other commenters suggested 

using the definition of ‘‘community 

housing’’ developed for the MFP 

program to clarify whether and what 

type of Assisted Living Facility will or 

will not be allowed as a setting under 

CFC. Several other commenters 

suggested using the 2011 MFP 

application definition of ‘‘qualified 

residence’’ and one commenter added 

that this would prevent HCBS dollars 

from being used to house people on 

congregate campuses. Another 

commenter suggested further clarifying 

the community nature of the setting 

where services may be provided to 

ensure that States are not using this 

option to further entrench institutional 

placements in the State and suggested 

defining ‘‘community setting’’ in the 

definition section using guidelines 

similar to those used in MFP: A home 

owned or leased by the recipient or that 

individual’s family; a residence in a 

community-based residential setting in 

which no more than four unrelated 

individuals reside; or assisted living 

facilities or settings that offer a lease, as 

long as those residences include living, 

sleeping, bathing and cooking areas, 

offer residents lockable access and 

egress and cannot require that services 

be provided as a condition of tenancy or 

from a specific company. One 

commenter indicated that ‘‘inpatient 

institutional treatment’’, ‘‘custodial 

care’’ and ‘‘provides’’ were not defined 

in the proposed regulations and added 

that it is important that CMS clarify the 

meaning of these terms, as how they are 

defined could have a significant impact 

on the settings where individuals may 

receive CFC services. The commenter 

also pointed out the definition of 

custodial care in the Medicare Benefit 


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Policy Manual and added that some of 

the services offered under CFC are these 

same services. Another commenter 

asked if individuals who live in any 

building that provides custodial care by 

the Federal definition would be 

precluded from receiving services under 

CFC. 

• One commenter asked what was 

meant by using the phrase ‘‘publicly or 

privately operated facility that provides 

custodial care’’ while several 

commenters voiced concern that the 

reference in subparagraph (d) to 

‘‘custodial care’’, depending on how it 

is defined, could preclude individuals 

who live in any building that provides 

assistance with activities of daily living 

from receiving CFC. Another commenter 

indicated that depending how terms in 

both paragraphs (d) and (e) are defined 

and interpreted, the current proposed 

language could prevent the provision of 

CFC services in any residential setting 

where personal care is provided other 

than an individual’s own private home. 

One commenter added that States have 

innovative housing with services 

models of care that promote consumer 

choice for home and community-based 

services and that at times, HUD funded 

section 202 and 811 housing are located 

on the same campus as a nursing home. 

The commenter stated that many times 

these programs provide ‘‘custodial care’’ 

to help older individuals and persons 

with disabilities age in place. The 

commenter also stated that as part of 

their rebalancing efforts, some States are 

encouraging nursing homes to decertify 

beds and establish independent living 

for older individuals and persons with 

disabilities and because this 

independent living is located in a 

nursing home, the consumers would not 

be eligible for CFC, even though their 

residences are currently considered 

independent living. The commenter 

indicated that the definition of setting in 

the proposed rule for CFC could be a 

barrier in many States where older frail 

individuals with chronic diseases and 

persons with disabilities choose to live 

in the least restrictive setting in their 

community that offer the services that 

they need to remain independent. 

• Another commenter added that if 

efforts are made to dismantle settings 

that would now be excluded, that 

people with disabilities in congregate 

housing complexes ‘‘in the community’’ 

be provided with ample phasing-in time 

or consider grandfathering- in settings 

for people who do not wish to move to 

continue receiving their services as 

people should not have to choose 

between housing and supports. 

• One commenter indicated that 

individuals receiving self-directed 

services generally must live in a setting 

that is not provider owned and operated 

and asked if such settings are excluded 

under the CFC program as it is not clear. 

• One commenter indicated that 

denying access to CFC funds for an 

individual who resides ‘‘in a building 

on the grounds of, or immediately 

adjacent to, a public institution or 

disability-specific housing complex’’ 

does not reflect the purpose of section 

1915(k) of the Act, which is to improve 

access to personal attendant services, 

and other services required under 

§ 441.520 for individuals in the 

community. The commenter added that 

there was no statement in the Olmstead 

ruling that required that the setting for 

care delivery cannot be located in a 

building on the grounds of, or 

immediately adjacent to, a public 

institution or disability-specific housing 

complex. One commenter suggested that 

terms in paragraph (e) like ‘‘disability 

specific housing complex’’ be clarified 

while another suggested that it be 

removed altogether as individuals living 

in these settings are currently eligible to 

receive home and community-based 

services and supports. One commenter 

requested that community-based 

settings not be excluded based on 

proximity to congregate care or the fact 

that they only serve individuals with 

disabilities as community integration is 

a large part of their programs. 

• Several commenters voiced concern 

about the definition excluding those 

settings that are geographically 

segregated from the community and 

urged that size alone not become part of 

the definition. The commenter indicated 

that small campus settings can provide 

rich staffing and supervision and a 

continuum of care model needed for 

individuals with traumatic brain 

injuries etc. Another commenter 

expressed concern that the proposed 

definition of home and communitybased setting might exclude important 

options for services that assist people 

with disabilities, especially cognitive 

disabilities related to severe brain 

injuries, to live in and be part of the 

community. Specifically, the 

commenter is concerned that services 

could be denied to individuals currently 

receiving Medicaid benefits from postacute brain injury rehabilitation service 

programs that are enrolled in Medicaid 

and other State programs serving people 

with brain injury. Another commenter 

with a family member in a facility for 

individuals with traumatic brain injury 

stated that this setting was much better 

for her daughter than a nursing home 

and that she is part of community there. 

• Other commenters indicated that 

some companies have various settings 

ranging from a campus to group homes 

and apartments and individuals as well 

as families and guardians choose these 

settings. Another commenter suggested 

that rather than including geographical 

segregation when setting a standard, 

CMS should impose a standard for 

community integration that is applied to 

service plans, including access and 

involvement in the community and the 

level of social interaction in the 

residence of the individual. 

• One commenter voiced concern 

about the tension between the need for 

affordable, accessible housing for people 

with developmental disabilities 

(including HUD’s section 811 and 202 

housing programs) and the need for that 

housing to be provided in integrated 

settings rather than clustered or 

segregated housing that primarily or 

exclusively serves people with 

disabilities. Other commenters shared 

concerns that housing used by the 

elderly and individuals with disabilities 

as allowed by the Senior Housing 

Exemption to the Fair Housing Act and 

under HUD’s subsidized apartments 

(811 and 202 housing programs) would 

be restricted by the phrase ‘‘disability 

specific housing segregated from the 

larger community’’ and recommended 

that these settings be allowed. Another 

commenter questioned what type of 

setting this language intended to 

address and voiced concern that 

individuals in these 811 and 202 

housing programs might be affected or 

lose services. Several commenters 

expressed concern that the proposed 

definitions would exclude the delivery 

of attendant services in many settings 

that are the most appropriate setting to 

an individual’s needs, especially those 

residing in HUD funded section 811 and 

202 housing designated specifically for 

targeted populations with disabilities. 

• Another commenter added that to 

exclude certain settings goes beyond the 

Congressional intent of the CFC option 

as the Congress only excluded CFC in 

particular settings and urged CMS to 

remove the reference to disabilityspecific housing in this section. 

• One commenter indicated that some 

individuals need and choose to receive 

services in ICFs/MR and the provision 

of a range of service options is 

supported by Federal law including 

Medicaid and the U.S. Supreme Court 

(Olmstead). 

• One commenter requested that in 

addition to excluding settings that are 

co-located with current institutions that 

CMS also exclude settings created on 

the grounds of former institutions as it 

should be clear that the reorganization 

and reclassification of an institution 


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would not meet the criteria of a 

community-based setting. 

• Another commenter added that 

CMS should clarify instances where 

paragraph (e) would not apply. One 

commenter referred to this proposed 

rule as providing clarifications of setting 

at § 441.530 with the purpose of 

disallowing HCBS Waiver funding for 

living arrangements in ‘‘alternative or 

subsidiary residential settings on the 

ground of or located adjacent to such 

institutional facilities’’ and 

recommended language revisions. The 

commenter appreciates explicit 

clarification that would prevent the 

practice of reconfiguring institutions to 

access funds not intended for 

institutional settings. 

• One commenter indicated that 

community-based care settings like 

adult foster care, assisted living and 

residential care should qualify as a 

permitted setting under CFC. 

• One commenter indicated that the 

preamble of the Home and CommunityBased Services Waivers proposed rule 

published in the April 15, 2011 Federal 

Register (76 FR 21311), listed 8 

conditions for an assisted living home to 

be included as a community setting. The 

commenter stated that, with the 

exception of aging in place, the 

conditions are common to, and actually 

regulated for the licensing of assisted 

living homes in their State. The 

commenter stated that the view that 

assisted living is not part of the larger 

community is due to lack of experience 

with it and recommended that the 

emphasis be on the character of a 

building inside the walls rather than the 

location or foundation within the larger 

community or sharing grounds or walls 

with a nursing facility. 

• Many commenters expressed 

concern that the definitions of setting 

would exclude assisted living facilities 

and other specific settings that they felt 

should be settings in which individuals 

could receive CFC services. Many 

commenters noted that individuals 

often choose to reside in these settings 

and continue to be part of the 

community rather than moving into a 

nursing facility. 

• Several commenters indicated that 

any definition of home and communitybased service settings applied across the 

Medicaid program should include 

assisted living facilities as well as group 

homes, disability-specific and noninstitutional settings providing services 

to individuals and encouraged CMS to 

recognize the need for some populations 

to reside in settings that are similar to 

assisted living to maximize 

independence while at the same 

accessing support services to keep them 

healthy and safe. 

• Several commenters recommended 

the following criteria be added to the 

section for a setting to be considered 

community-based: 

++ The Unit/room must be a specific 

place that can be owned or rented and 

include the same protections from 

eviction under the State’s landlord/ 

tenant law; 

++ The individual must have privacy 

in the unit (lockable entrance doors, 

freedom to furnish and share the unit 

only by choice, the inclusion of 

individual bathroom), unless partners/ 

spouses share a room); 

++ There is freedom/support to 

control one’s own schedules and 

activities including access to food at any 

time; and 

++ The individual may have visitors 

of their choosing at any time. 

• One commenter proposed adding 

the following language to the list of 

excluded characteristics: 

++ Any residence that requires that 

services must be provided as a 

condition of tenancy; 

++ Any setting that requires 

notification of absence from the facility; 

++ Any setting that does not have 

lockable access and egress controlled by 

the individual; and 

++ Any residence where the lease 

reserves the right to assign apartments 

or change apartment assignments. 

• One commenter indicated that the 

new proposed rule seems vague and 

seems to give the Secretary great 

latitude in describing what kind of 

setting is ‘‘geographically segregated’’ 

from the larger community (and 

therefore ineligible for waiver 

reimbursement for brain injury 

services). The commenter indicated that 

they support the freedom of consumers’ 

choice and the option to live in a setting 

where community integration is 

maximized. The commenter does not 

support any definition that uses size of 

a home or the adjacency of homes on a 

small ‘‘campus’’ as the criteria for 

defining ‘‘geographic segregation.’’ The 

commenter added that in terms of small 

campus settings for individuals who are 

catastrophically injured and severely 

limited cognitively and physically and 

who require a good deal of medical 

oversight, this kind of living 

arrangement may provide the necessary 

richness of staffing to facilitate, rather 

than inhibit community integration to 

the highest degree possible for 

particular individuals. The commenter 

stated that while home size can matter, 

one size does not fit all, especially 

where the results from brain injury are 

profound for the consumer. Finally, this 

commenter urged the inclusion of the 

following specific criteria, other than 

simply size of the home, in the 

definition of settings: 

++ The facility provides post-acute 

residential care to individuals with an 

acquired brain injury. 

++ The facility is accredited by the 

Commission on Accreditation of 

Rehabilitation Facilities(CARF) as a 

community integrated brain injury 

rehabilitation facility. 

++ There is handicap access to the 

community. (One example would be an 

accessible wheelchair path). 

++ There is evidence of a robust level 

of community participation on the part 

of individuals living in the homes. (The 

commenter noted that one significant 

measure of the levels of community 

participation can be highlighted by 

applying the Maya-Portland inventory; 

the internationally recognized, 

standardized assessment in brain injury 

populations). Other evidence of such 

community participation may be access 

to jobs in the community, recreational 

outings, participation in community 

programs and prolific voting in local 

and national elections etc. 

++ There is consideration given to 

the functional level of the people living 

in that home. For some individuals with 

profound limitations due to brain 

injury, a small campus in close 

proximity to a town or urban center is 

frequently the most effective way to 

provide the intensity of staffing, medical 

oversight, and richness of rehabilitation 

services that will enable people living in 

the home to access the social capital of 

community life. 

++ There is a continuum of care 

available at the facility, so that as 

individuals gain functionally and can 

negotiate the community more safely, 

they can move from small campus 

settings in the community to even 

smaller group homes and independent 

apartments. 

++ There is evidence of consumer 

choice in selection of the residential 

setting. 

++ The home is not on the grounds of 

a hospital, nursing home or ICF. 

• Several commenters strongly 

disagree with CMS’ proposed 

clarifications and stated that proximity 

of a community setting to an 

institutional setting or disabilityspecific housing complex has little, if 

any, bearing on the degree of 

community integration experienced by 

residents. The commenters added that 

geographic separation should not matter 

if a residence is well integrated with the 

larger community. They believe that a 

better way to clarify community 

integration would be to look at the 


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services available and provided by the 

setting and to ensure that processes, 

such as care planning, promote 

beneficiary choice. The commenters 

stated that because all States license or 

certify assisted living providers, 

Medicaid beneficiaries living in these 

communities receive services with 

greater government oversight than those 

receiving services in freestanding 

homes. The commenters also added that 

in recent years, as residents’ levels of 

disability and the proportion of 

residents with Alzheimer’s and other 

related diseases have increased, States 

have responded by increasing regulatory 

standards applying to assisted living 

communities and that due in part to the 

fact that Medicaid cannot pay for room 

and board in community-based settings, 

the extent of Medicaid coverage in 

assisted living already is much more 

limited than Medicaid coverage for 

nursing homes and other long term care 

options. The commenters urged CMS to 

reconsider its clarification of ‘‘home and 

community-based’’ and recommended 

that CMS utilize the definition in law 

and explore a clarification that relies on 

services available and provided by the 

setting, and ensure that processes, such 

as care planning, promote choice. 

• One commenter suggested that 

consideration be given to including the 

list of factors characterizing settings 

included in the recently proposed rule 

revising section 1915(c) HCBS waiver 

provisions published in the April 15, 

2011 Federal Register. The commenter 

shared language from § 441.301(b)(1)(iv) 

that states that attendant services may 

be provided ‘‘only in settings that are 

home and community-based, integrated 

in the community, provide meaningful 

access to the community and 

community activities, and choice about 

providers, individuals with whom to 

interact, and daily life activities.’’ 

Response: We appreciate these 

thoughtful comments. Several 

commenters referenced waivers in their 

comments and we would like to clarify 

that this regulation pertains to the CFC 

State plan option, not the HCBS waiver 

program. 

In consideration of the comments 

received, we are not finalizing the 

setting provisions of proposed § 441.530 

at this time. The comments received 

indicated to us that the proposed 

provisions caused more confusion and 

disagreement than clarity and we 

believe further discussion and 

consideration on this issue is necessary. 

In addition, similar language proposed 

in the notice of proposed rulemaking for 

revisions to the 1915(c) waiver program 

garnered significant public comment. 

Therefore, we intend to issue a new 

proposed regulation that will provide 

setting criteria for CFC that we 

developed in light of the comments 

received and to invite additional public 

comment on our proposal. We plan to 

propose home and community-based 

settings shall have all of the following 

qualities, and such other qualities as the 

Secretary determines to be appropriate, 

based on the needs of the individual as 

indicated in their person-centered 

service plan: 

• The setting is integrated in, and 

facilitates the individual’s full access to, 

the greater community, including 

opportunities to seek employment and 

work in competitive integrated settings, 

engage in community life, control 

personal resources, and receive services 

in the community, in the same manner 

as individuals without disabilities; 

• The setting is selected by the 

individual from among all available 

alternatives and is identified in the 

person-centered service plan; 

• An individual’s essential personal 

rights of privacy, dignity and respect, 

and freedom from coercion and restraint 

are protected; 

• Individual initiative, autonomy, 

and independence in making life 

choices, including but not limited to, 

daily activities, physical environment, 

and with whom to interact are 

optimized and not regimented; 

• Individual choice regarding services 

and supports, and who provides them, 

is facilitated; 

• In a provider-owned or controlled 

residential setting, the following 

additional conditions must be met. Any 

modification of the conditions, for 

example, to address the safety needs of 

an individual with dementia, must be 

supported by a specific assessed need 

and documented in the person-centered 

service plan: 

++ The unit or room is a specific 

physical place that can be owned, 

rented or occupied under another 

legally enforceable agreement by the 

individual receiving services, and the 

individual has, at a minimum, the same 

responsibilities and protections from 

eviction that tenants have under the 

landlord tenant law of the State, county, 

city or other designated entity; 

++ Each individual has privacy in 

their sleeping or living unit: 

—Units have lockable entrance doors, 

with appropriate staff having keys to 

doors; 

—Individuals share units only at the 

individual’s choice; and 

—Individuals have the freedom to 

furnish and decorate their sleeping or 

living units; 

++ Individuals have the freedom and 

support to control their own schedules 

and activities, and have access to food 

at any time; 

++ Individuals are able to have 

visitors of their choosing at any time; 

and 

++ The setting is physically 

accessible to the individual. 

We also plan to propose that home 

and community-based settings do not 

include the following: 

(1) A nursing facility; 

(2) An institution for mental diseases; 

(3) An intermediate care facility for 

the mentally retarded; 

(4) A hospital providing long-term 

care services; or 

(5) Any other locations that have 

qualities of an institutional setting, as 

determined by the Secretary. The 

Secretary will apply a rebuttable 

presumption that a setting is not a home 

and community-based setting, and 

engage in heightened scrutiny, for any 

setting that is located in a building that 

is also a publicly or privately operated 

facility that provides inpatient 

institutional treatment in a building on 

the grounds of, or immediately adjacent 

to, a public institution or disabilityspecific housing complex. CMS will 

engage States in discussion and review 

any pertinent information submitted 

during the SPA review process to 

determine if these facilities meet the 

HCBS qualities set forth in the proposed 

rule. 

While we are proposing the 

aforementioned setting requirements in 

a new proposed rule, the CFC option is 

in full effect. CMS will rely on the 

proposed setting provision as we review 

new 1915(k) State plan options and we 

will fully expect States to comply with 

the setting requirements and design and 

implement the benefit accordingly. To 

the extent there are changes when this 

language is finalized, we are committed 

to permitting States with an approved 

section 1915(k) State plan amendment a 

reasonable transition period, at a 

minimum of one year, to make any 

needed program changes to come into 

compliance with the final setting 

requirements. We are committed to 

minimizing disruption to State systems 

that have been established based upon 

compliance with these proposed 

regulations. 

It is our intent to and to apply this 

criteria to sections 1915(c) and 1915(i) 

of the Act authorities. 

As expressed earlier, we believe 

further discussion is necessary and we 

believe this can be accomplished by 

soliciting public comments on the 

modified criteria. Therefore, we are not 

finalizing the setting provision at this 

time. 


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I. Assessment of Need (§ 441.535) 

We proposed that States must conduct 

a face-to-face assessment of the 

individual’s needs, strengths and 

preferences that supports the 

determination that an individual 

requires attendant services and supports 

available under CFC, as well as the 

development of a person-centered 

service plan and, if applicable, a service 

budget. We also proposed that this 

assessment 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. 

Comment: One commenter indicated 

support for this section and appreciated 

the emphasis on understanding and 

honoring an individual’s personal goals 

and preferences for the provision of 

services. 

Response: We believe that an 

individual’s preferences and goals for 

the provision of services is an important 

aspect of both an assessment and the 

person-centered service plan. 

Comment: Several commenters 

indicated that it is unclear whether the 

term ‘‘may’’ in § 441.535(a) makes the 

entire subpart optional and suggested 

that CMS clarify that States must gather 

information on all the items listed in the 

proposed rule at paragraphs (a)(1) 

through (8). The commenters also 

indicated that it is unclear what role the 

consumer has in selecting (or 

prohibiting) the use of specific 

processes and techniques used to obtain 

information about an individual, and 

pointed out that the list of items 

included in paragraph (a) does not 

clearly correspond to ‘‘processes and 

techniques.’’ The commenters suggested 

that CMS change ‘‘processes and 

techniques’’ to ‘‘criteria’’ and 

recommended that certain criteria be 

mandatory to assure that the assessment 

is based on a comprehensive 

information set. The commenters 

recommended that the other criteria 

should be optional, but in all cases 

should not exceed the scope of the 

conversation with the individual, 

adding that collateral contacts should 

not be allowed unless requested by the 

individual. Finally, the commenters 

recommended that ‘‘health condition’’ 

at § 441.535(a)(1) be expanded to read 

‘‘health condition and treatments’’, and 

that ‘‘household’’ at § 441.535(a)(7) be 

edited to read, ‘‘household and physical 

living arrangements, including the 

safety of those arrangements’’ as 

‘‘household’’ may be relevant to 

understanding the individual’s 

functional limitation, but should not be 

a basis for lowering a needs 

determination based on availability of 

other people. One commenter requested 

that CMS amend § 441.535(a)(1) to read 

‘‘health and mental health condition.’’ 

Response: With regard to the 

‘‘processes and techniques’’ to gather 

information for the assessment, the 

intent of this language was to indicate 

that States have the flexibility to utilize 

multiple methods to gather this 

information. Therefore, we do not agree 

with the commenters’ suggestion to 

modify this language. With regard to the 

individual’s role in the processes or 

techniques the State chooses to utilize, 

an individual should have the 

opportunity to discuss any gathered or 

related information during the 

assessment, and the individual must 

approve the person-centered service 

plan which is based on the assessment 

of need. 

In the absence of other statutory 

requirements, we proposed language in 

the assessment section for CFC that was 

consistent with the section 1915(j) SelfDirected Personal Attendant Services 

final rule, in an effort to streamline State 

requirements where possible across the 

programs. In addition, we indicated in 

the preamble that we are currently 

working to determine universal core 

elements to include in an assessment for 

consistency across programs. This 

initiative is directly related to the work 

being done regarding the Balancing 

Incentives Payment Program (Balancing 

Incentive Program) created under 

section 10202 of the Affordable Care 

Act. 

Based on multiple comments and the 

acknowledgement that additional policy 

work is necessary to maximize the 

extent to which consistency can exist 

across the Medicaid programs as it 

relates to assessments for HCBS 

programs, we are revising the language, 

as some commenters suggested, to 

reflect the broad assessment 

requirements in statute. As such, we are 

reflecting this assessment throughout 

the final rule as the ‘‘assessment of 

functional need.’’ We are also taking 

more time to consider all of the 

thoughtful comments from this rule and 

the forthcoming comments from the 

proposed rule that will be published to 

implement changes to the section 

1915(i) HCBS State Plan option required 

by the Affordable Care Act, and to have 

additional policy discussions both 

internally and with stakeholders. Our 

intent is to share any finalized universal 

core elements that are developed under 

the Balancing Incentive Program with 

States to use as examples of elements to 

be incorporated into the assessment of 

functional need for CFC and other HCBS 

assessments as determined by CMS. As 

such we are revising the language to add 

that the assessment must include other 

requirements as determined by the 

Secretary. Finally, we are clarifying the 

scope of the assessment to indicate that 

it is the individual’s need for the 

services and supports provided under 

CFC that must be assessed. This is in no 

way meant to limit a State from 

implementing a comprehensive 

assessment that would determine an 

individual’s need for a broader scope of 

services. We are simply clarifying in 

this rule that the assessment described 

at § 441.535 is only required to assess 

the need for CFC services and supports. 

Comment: One commenter stated that 

the proposed regulation does not 

recognize that there may be other 

services and programs that can meet the 

needs of those applying for CFC and 

indicated that a comprehensive 

assessment should include a 

determination as to whether the 

individual is appropriate for this and 

other State plan and/or home and 

community-based services so that the 

consumer can be offered a choice of 

programs and not be limited to one 

model of care. The commenter added 

that such an assessment tool is 

recognized as a vital component of other 

Federal programs including the State 

Balancing Incentive Program and is 

used by some States. 

Response: We agree with the 

commenter that it would be ideal for a 

State to have one comprehensive 

streamlined assessment for an 

individual that would serve to inform a 

person-centered service plan, and that 

the entity that coordinates and/or 

conducts these functions be able to 

present an array of possible services and 

supports to meet the individual’s needs 

to provide a choice among these 

services to the individual. States have 

the flexibility to offer this kind of 

assessment and service plan and as the 

commenter pointed out, some States 

have implemented their programs in 

this manner. 

Comment: One commenter 

appreciated that CMS decided not to 

prescribe a specific assessment tool to 

determine an individual’s functional 

needs. Another commenter pointed out 

that the preamble clearly states that 

CMS will not dictate the assessment tool 

and asked that CMS clarify in the rule 

that States may design and/or select the 

assessment tool to determine functional 

eligibility, as well as identify needed 

services as long as such tools contain 

the required CMS elements. Another 

commenter asked CMS to clarify 


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expectations about the face-to-face 

assessment process and instrument 

proposed for use in CFC, the more 

universal level of care assessment and 

service planning process, and 

instruments used in a State’s section 

HCBS 1915(c) waiver programs. The 

commenter asked if there is flexibility 

for a State to use the same fundamental 

processes and instruments but with 

different threshold levels for program 

participation or if a State may choose 

different processes and instruments. 

The commenter also asked if States may 

set an assessment standard to 

operationalize the determination that an 

individual requires CFC. One 

commenter asked if States were 

expected to develop new assessment 

tools or if they can use existing 

assessment tools that establish level of 

care and service planning if the current 

tools conform to the requirements in the 

CFC regulation. The commenter added 

that States should be permitted to use 

assessment processes and personcentered service planning to allow 

individualized determinations of the 

most integrated setting appropriate to 

the individual’s needs and preferences, 

as well as eligibility for this option. 

Other commenters asked if States will 

have flexibility in selecting an 

assessment instrument and if the 

instrument could focus on specific types 

of disabilities (physical, intellectual, 

developmental, etc.). 

Response: We have not specified the 

instruments or techniques that should 

be used to secure the information 

necessary to determine an individual’s 

functional need for the attendant 

services and supports offered under CFC 

or to develop the service plan and/or 

service budget. States continue to have 

the flexibility to develop their own 

assessment tools or to utilize existing 

tools to the extent possible to meet the 

requirements under CFC. While this 

regulation does not specifically address 

the assessment process or tool States 

utilize in their section 1915(c) programs 

for assessments or level of care 

determinations, States have the 

flexibility to use any existing 

assessment tools if the CFC 

requirements are met. As States are not 

permitted to target attendant services 

and supports provided under CFC to 

any particular population or disability, 

we do not anticipate States will tailor an 

assessment of need to focus on any such 

population or disability. 

Comment: One commenter indicated 

that the most important aspect of 

legislative intent that is not captured in 

the proposed rule is a clear statement of 

a State obligation to provide services 

and supports to meet the individuals’ 

assessed needs. The commenter 

suggested that language be added to 

paragraph (a) to say ‘‘so as to meet the 

individual’s assessed needs’’ and 

recommended that this language be 

included elsewhere in the regulation as 

needed to ensure that a State has to 

meet the assessed needs of the 

individuals to receive funding. 

Response: An individual’s personcentered service plan must be based on 

that individual’s assessment of 

functional need. We expect that as 

needs for the required attendant services 

and supports available under CFC are 

identified and incorporated into the 

person-centered service plan, these 

services would be made available to the 

individual to meet those needs. 

Therefore, we disagree with the 

suggestion to add this proposed 

language as we believe this expectation 

is clear. In fact, we do reiterate the 

ability of a State to establish limits on 

the amount, duration and scope of CFC 

services, as long as those limits are not 

based on 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 to lead an independent life, as 

prohibited in the statute. 

Comment: One commenter voiced 

concern that States might ‘‘poorly 

integrate’’ the CFC assessment into their 

current assessment processes for HCBS 

and suggested, along with another 

commenter, that States be required to 

have a publicly available written plan 

explaining how the CFC assessment will 

work, interact with existing assessments 

for HCBS, and ensure that the regulatory 

requirements are met. 

Response: States have the flexibility 

to design a new assessment tool, or 

utilize current assessment tools as long 

as the requirements in the CFC 

regulation are met. We do not agree with 

the commenter’s recommendation to 

require States to have a written plan 

regarding their assessment, as we do not 

require a CFC-specific assessment. 

States electing CFC must submit a State 

plan amendment that shows how they 

propose to implement CFC and how the 

program requirements will be met. Once 

approved, this will become part of a 

State’s Medicaid plan, which is a public 

document. 

Comment: One commenter 

recommended that CMS consider 

adding the concept of an independent 

assessment found in section 1915(i) of 

the Act and suggested that CMS add an 

independent assessment descriptor to 

§ 441.535. The commenter indicated 

that in paragraph (b), an independent 

assessment would also address concern 

about recipients needing the service, as 

an objective assessment would establish 

medical necessity for the services. 

Response: We agree that consideration 

should be given to the proposed 

requirements of the assessment for the 

section 1915(i) State plan option. As 

noted above, in addition to the 

comments received for this proposed 

rule, we will be considering the 

forthcoming section 1915(i) proposed 

rule public comments related to 

assessments as we move forward with 

the development of the universal core 

assessment elements and methods to 

streamline requirements across the 

Medicaid program. 

Comment: One commenter pointed 

out that CMS states in the preamble that 

‘‘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 * * *’’ and 

added that inclusion of such language in 

the preamble implies that CFC includes 

a waiver of comparability as found at 

section 1915(j)(3) of the Act. The 

commenter indicated that they have not 

identified a corresponding provision in 

section 2401 of the Affordable Care Act 

or in the proposed section 1915(k) rule 

and requested that CMS clarify whether 

such a waiver of comparability is 

intended and add language authorizing 

such a waiver. 

Response: We can confirm that no 

waiver of comparability was included in 

the authorizing legislation, or in the 

implementing regulation for CFC. 

However, we do not believe that 

comparability of services is violated 

based on an individualized 

determination of the impact of available 

unpaid personal assistance on the CFC 

services and supports required. 

Comment: One commenter indicated 

that the preamble mentions the 

identification of natural supports but 

the proposed rule related to assessment 

does not. The commenter recommended 

that if CMS mentions natural supports 

in the rule that we specify that the 

assessment and service plan take into 

account, but do not compel, natural 

supports, as case managers or other 

entities conducting the assessment and/ 

or planning process should not 

automatically make judgments about 

what families ought to provide and 

reduce needed services accordingly. 

Response: We mention the 

identification of natural supports in the 

assessment preamble section as 

understanding an individual’s natural 

supports is an important aspect in 

determining an individual’s needs. It is 

a requirement in the person-centered 


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service plan that these supports be 

reflected in the person-centered service 

plan. We expect that identification of 

these natural, unpaid supports be taken 

into consideration with the purpose of 

understanding the level of support an 

individual has, and should not be used 

to reduce the level of services provided 

to an individual unless these unpaid 

supports are provided voluntarily to the 

individual. We have incorporated this 

philosophy into the ‘‘Person-Centered 

Service Plan’’ section, as discussed 

below. 

Comment: A few commenters 

indicated that they did not understand 

the purpose of paragraph (b) which 

states that ‘‘assessment information 

supports the determination that an 

individual requires CFC * * *’’ and 

suggested clarification or deletion. One 

commenter requested that in paragraph 

(b) CMS substitute the word ‘‘requires’’ 

with the words ‘‘would benefit from’’ 

CFC services. 

Response: Information gathered in the 

assessment should support the 

determination that an individual 

requires the services and supports 

available under CFC. If an individual 

does not meet the State’s medical 

necessity criteria for the receipt of 

attendant services and supports, the 

individual would not participate in the 

option. Therefore, we do not agree with 

the suggested language change. 

Comment: One commenter voiced 

concern that the proposed rule does not 

address the gap between the actual 

support needs of individuals and the 

needs typically assessed in current 

assessment tools which are generally 

limited to ADLs and IADLs. 

Response: While we appreciate the 

commenter’s concern, CFC is a benefit 

to provide attendant services and 

supports to individuals to assist in 

accomplishing ADLs and IADLs. While 

States are not limited to assessing an 

individual’s needs based solely on ADLs 

and IADLs, CFC as a benefit is centered 

around these services and supports. 

Comment: Several commenters 

referenced and supported the 

requirement at § 441.535(c) that the 

assessment 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. 

One commenter appreciated these 

caveats and noted that without them, 12 

months could be too long a period 

considering how quickly an individual’s 

needs may change. A few commenters 

indicated that § 441.535(c) uses the 

word ‘‘or’’ to link the clauses whereas 

§ 441.540(e) uses the word ‘‘and’’ and 

suggested that CMS be consistent and 

use ‘‘and’ in both sections. One of the 

commenters added that the policy 

should guarantee that a service plan 

would always be reviewed at the request 

of the individual and suggested that this 

meaning is best implemented by using 

the word ‘‘and.’’ Some commenters 

added that assessments often need to be 

conducted more often than every 12 

months for some populations due to 

frequent changes in needs due to 

behavior, improved cognitive skills, and 

other emerging health issues. Several 

commenters suggested that CMS clarify 

either in the regulation or in future 

guidance that an individual’s 

circumstances or needs change 

significantly when a participant’s 

support network changes, including 

friends and family that the participant 

relies on for physical or emotional 

support and these protections should 

explicitly include Lesbian, Gay, 

Bisexual and Transgender individuals 

and their families. Other commenters 

recommended that CMS provide 

specific timeframes for conducting these 

assessments including both a standard 

timeframe and an emergency timeframe 

to address situations where a 

consumer’s health or safety may be in 

jeopardy. One commenter asked if it 

was possible for the State to require 

more frequent assessments but not 

exceed an annual authorization as this 

would assure consistency across other 

home and community-based services 

and the potential for moving between 

service modalities. 

Response: We believe that an 

assessment of functional need should be 

conducted at least every 12 months, at 

a minimum, to ensure that an 

individual’s needs are commensurate to 

the services authorized in the service 

plan, as we understand that an 

individual’s needs can change 

significantly over time and as a result of 

various circumstances. Regarding the 

comment that mentioned changes in a 

participant’s support network, we 

expect this paragraph and all parts of 

this rule to apply to all individuals 

equally regardless of disability, age, 

sexual orientation, or any other factor. 

We include several provisions related to 

the reassessments that we believe 

capture various circumstances 

necessitating a reassessment and 

updates to the service plan. Therefore, 

we do not agree that we need to change 

the language. In addition, States have 

the option to choose how many 

reassessments they offer as long as the 

requirements in the final rule are met. 

We appreciate the commenters pointing 

out the discrepancy between the use of 

‘‘and’’ and ‘‘or’’ in different sections of 

the regulation. We are modifying 

§ 441.535(c) to incorporate the word 

‘‘and’’ to ensure appropriate 

reassessments as necessary. 

Comment: Several commenters voiced 

support for the face-to-face assessment. 

Other commenters added that in-person 

assessment meetings allow for the 

building of rapport to improve 

information sharing. Two commenters 

added that CMS should specify that CFC 

applicants should have the right, though 

not the requirement, to have the face-toface assessment conducted in their own 

home as this would decrease undue 

burden on the individual who may have 

mobility issues and would have the 

added benefit of providing the State 

with increased information about the 

individual’s living situation and support 

system. Another commenter asked that 

CMS clarify the statement that the 

assessment be conducted at the site 

where the services are to be provided to 

assure a comprehensive assessment of 

need. Another commenter suggested 

that it be clarified in the regulations that 

the annual reassessment should be 

conducted face-to-face. One commenter 

suggested that the initial assessment be 

conducted face-to-face but CMS should 

allow subsequent assessments to be 

conducted via a variety of other health 

technologies and tools as appropriate for 

an individual’s needs, accessibility and 

preference. 

Response: We agree that ideally, the 

assessment of functional need would be 

conducted face-to-face in order for the 

entity conducting the assessment to get 

a better overall understanding of an 

individual’s needs. However, we 

recognize that many States are 

developing infrastructure and policies 

to support the use of telemedicine and 

other ways to provide distance-care to 

individuals to increase access to 

services in rural areas or other locations 

with a shortage of providers. To support 

these activities, we are indicating here 

that the ‘‘face-to-face’’ assessment can 

include any session(s) performed 

through telemedicine or other 

information technology medium if the 

following conditions apply: 

(1) The health care professional(s) 

performing the assessment meet the 

provider qualifications defined by the 

State, including any additional 

qualifications or training requirements 

for the operation of required 

information technology; 

(2) The individual receives 

appropriate support during the 

assessment, including the use of any 

necessary on-site support-staff; and 

(3) The individual is provided the 

opportunity for an in-person assessment 


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in lieu of one performed via 

telemedicine. 

We have modified the regulation to 

allow for use of these technologies to 

meet this requirement. With regard to 

the location of the assessment, we 

continue to encourage that these 

assessments be conducted in the 

individual’s place of residence, as this 

would provide the best picture of the 

individual’s needs, allow the State to 

monitor the health and welfare of the 

individual, and allow the State to get a 

sense of how well the services and 

supports in the service plan are meeting 

the individual’s needs. But we note that 

the CFC proposed rule did not require 

the assessment to be conducted at the 

site where the services are to provided. 

In addition, as the assessment of 

functional need and the person-centered 

planning process may take place at the 

same visit, the service planning process 

section at § 441.540 indicates that this 

process take place at times and locations 

of convenience to the individual. 

Comment: Several commenters 

indicated that assessments, when 

overdone, can be draining and 

somewhat de-humanizing for 

participants and requested that CMS 

and States be sensitive to this as they 

design tools and policies for the 

frequency of assessments. The 

commenters added that recognizing that 

some people may not experience a 

change in functional status over time, 

trigger questions that allow the assessor 

to shorten the assessment and minimize 

intrusiveness, when possible, can be 

beneficial to all. One commenter 

disagreed with the proposed 

requirement that an assessment be 

conducted at a minimum of every 

twelve months and indicated, along 

with another commenter, that States 

should have the discretion to both allow 

for exceptions where an individual’s 

living situation is stable, medical 

condition is non-degenerative, and 

abuse risk factors are low, and to 

conduct telephone or paper 

reassessments in similar situations. The 

commenter indicated that less frequent 

assessments promote efficient use of 

governmental resources and are less 

burdensome on the recipient, but did 

support the allowance for more frequent 

reassessments if necessary or at the 

individual’s request. Similarly, multiple 

commenters recommended that CMS 

identify certain circumstances in which 

it would not be necessary to conduct a 

face-to-face assessment of need every 12 

months such as when an individual can 

document that their needs are unlikely 

to change from year to year. 

Response: We agree that the 

assessment process should not be 

overdone or burdensome for individuals 

participating in CFC. States may want to 

design their assessments to 

accommodate the needs of individuals 

whose needs are not likely to change 

significantly from year to year. This 

could save both the individual and the 

State time, but the requirements in the 

final rule would still apply to these 

circumstances. Assessments must be 

conducted at least every 12 months. We 

appreciate the commenter’s suggestions 

to identify circumstances in which it 

would not be necessary to conduct 

reassessments face-to-face. While we 

believe that a face-to-face visit is ideal 

for the reasons previously indicated, we 

have revised the regulation to allow for 

the use of telemedicine or other 

information technology medium if 

certain conditions apply. We strongly 

advise States to consider a face-to-face 

meeting to allow for the closer 

monitoring of health and welfare and 

appropriate services and supports. 

Comment: One commenter 

recommended additional guidance for 

States regarding the reauthorization 

periods for services, stating that 

frequent reauthorizations can be 

burdensome for individuals with longterm care needs and often serve as an 

opportunity to reduce services despite 

no decrease in need. 

Response: We believe that the 

regulation is clear that the service plan 

is based on the assessment of functional 

need. If an individual requires a 

particular level or amount of attendant 

services to meet these needs, the 

services should not be decreased at any 

time unless an individual no longer 

requires that level of support. An 

individual must agree to and sign any 

service plan, and therefore, we do not 

believe that we need to issue any further 

guidance to States regarding the 

reduction of services absent a decrease 

in need. We do reiterate the ability of a 

State to implement limits on the 

amount, duration and scope of CFC 

services, as long as these limits are not 

based on an 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 to lead an independent life, as 

prohibited in the statute. 

Comment: One commenter suggested 

that the assessments not be limited to 

only 1 hour as such planning and 

discussion requires more time and only 

allowing for 1 hour of payment for the 

assessment creates barriers to preparing 

an effective plan. 

Response: We do not require that an 

assessment be limited to 1 hour. While 

the Regulatory Impact Analysis section 

of the proposed rule included an 

estimate of 1 hour to conduct an 

assessment, this estimate was based on 

an average amount of time, and we did 

not limit the assessment to 1 hour in the 

regulation. 

Comment: Multiple commenters 

recommended that the regulations 

require the assessment to be conducted 

in a linguistically and culturally 

appropriate manner for the individual 

(and/or their appointed representative) 

as determined by the individual in a 

fully accessible way. 

Response: We agree with the 

commenter. We expect that States will 

conduct assessments of functional need 

and the subsequent person-centered 

planning process in a linguistically and 

culturally appropriate manner for the 

individual and as appropriate, their 

representative in a fully accessible way. 

Such a requirement already exists for 

the development of the person-centered 

service plan, as identified at 

§ 441.540(a)(4). 

Comment: Several commenters 

indicated that participants should be 

treated with dignity in the needs 

assessment, regardless of their sexual 

orientation or gender identity. 

Response: We expect that all 

individuals will be treated with dignity 

in the assessment process and all other 

aspects of CFC. 

Comment: Two commenters pointed 

out that the statutory language includes 

a requirement that the assessment be 

agreed to in writing in section 

1915(k)(1)(A)(i) of the Act and suggested 

that the regulation explicitly include 

this language in § 441.535. 

Response: Section 1915(k)(1)(A)(i) of 

the Act indicates that the ‘‘personcentered plan of services and supports 

that is based on an assessment of 

functional need’’ be agreed to in writing 

by the individual or, as appropriate, the 

individual’s representative. We reflect 

this statutory requirement at 

§ 441.540(d). 

Comment: One commenter asked if 

CMS intends for an individual to have 

a right to appeal the assessment. 

Response: Rather than appealing the 

assessment, individuals have the right 

to appeal their person-centered service 

plan. The person-centered service plan 

must be based on the assessment of 

functional need and agreed to in writing 

by the individual. If the individual does 

not agree with the findings of the 

assessment or the proposed service plan 

based on these findings, an individual 

does not have to agree to or sign the 

service plan. The individual would have 

the right to disagree with the assessment 

and service plan at any time during the 

process. States electing the CFC Option 


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are required as specified in § 441.585, to 

have procedures for appeals of denials 

and reconsideration of an individual 

service plan in place as part of their 

quality assurance system for the CFC. 

The fair hearing requirements of 42 CFR 

part 431, Subpart E apply to CFC in the 

same manner as they apply to other 

Medicaid State plan services. 

Comment: One commenter asked if 

the requirement that States conduct the 

assessments allows for the State to 

contract with a private entity and if so, 

urged CMS to require that States 

demonstrate that the private entity is 

complying with the law and regulations. 

Response: States are required to 

comply with all requirements related to 

CFC regardless of whether they contract 

with private entities to fulfill any 

function of CFC. Contracting with an 

entity does not absolve the State of 

making sure that all requirements are 

met in accordance with the final 

regulation. 

Comment: One commenter requested 

that States be granted the discretion to 

determine the qualifications of persons 

who may conduct functional 

assessments. Another commenter 

recommended that the assessment of 

need standards include the 

qualifications of the person conducting 

the assessment. Another commenter 

asked who coordinates the 

responsibilities of the assessment and 

person-centered plan. 

Response: States are responsible for 

determining the provider qualifications 

of the entities who will conduct the 

assessments and the person-centered 

planning process. With regard to who 

coordinates the responsibilities of the 

assessment and the person-centered 

service plan, that is also up to the State. 

Many States choose to utilize service 

coordinators to fulfill this role. 

Comment: One commenter suggested 

that the designated representative 

participate fully in the assessment of 

need and that any representative also be 

evaluated regarding competency to 

undertake the role of representative. 

Response: We agree with the 

commenter that if an individual has a 

representative, that representative 

should have an active role in the 

assessment and person-centered 

planning process to the extent that the 

individual chooses to include that 

representative. However, we are not 

revising the regulation to make this a 

requirement. With regard to evaluating 

the competency of an individual to 

undertake the role of representative, we 

do not believe it is necessary to require 

such a step, although States would have 

the ability to do so. 

Comment: One commenter indicated 

that assessments and service plans 

should include an assessment of the 

consumer’s interest and ability to selfdirect. Another commenter 

recommended that the assessment 

include an evaluation of the 

individual’s ability to receive care in the 

delivery model available under the 

State’s program, particularly if the 

program is limited to self-directed care, 

as it would be harmful to an individual 

or his or her representative to permit 

placement in a self-directed care model 

when the individual, or his or her 

representative was not able and/or 

willing to take on the responsibilities 

under the self-directed model. While 

these elements are included to an extent 

in the support system section, they 

should be integrated in the assessment 

process. 

Response: States may include as part 

of their assessments and service plans a 

determination of an individual’s interest 

and ability to self-direct. If the State is 

only offering CFC via a self-directed 

model with service budget, and the 

individual or individual’s representative 

is not able or willing to assume 

responsibilities inherent in this model, 

the entity conducting the assessment or 

development of the service plan should 

identify other programs for which the 

individual would be eligible. 

Comment: Several commenters 

suggested that CMS should be more 

prescriptive regarding the specific 

elements incorporated into assessments, 

as they have the capacity to inform 

quality assurance monitoring and 

measurement of quality outcomes, and 

suggested that CMS require States to 

develop an assessment of need that 

includes these ‘‘standardized elements, 

key system functionality, and workflow 

that will be sufficiently 

comprehensive.’’ 

Response: We appreciate the 

commenters’ suggestions. As indicated 

above, and in the preamble of the 

proposed rule, a set of universal core 

assessment elements is being developed. 

As these elements are developed, we 

will work with States to determine the 

extent to which these elements, if not 

already part of a State’s assessment for 

CFC, could be incorporated. States have 

the flexibility to design a quality 

assurance system that integrates current 

and future assessment elements. We 

also set forth our expectation in the 

preamble to the proposed rule that 

States 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 CFC and the 

development of the individual’s 

subsequent service plan and budget. For 

these reasons, we do not believe it is 

necessary to add an additional 

requirement for this purpose. 

Comment: Multiple commenters 

provided feedback specifically regarding 

the statement in the preamble that CMS 

is currently working to determine the 

universal core elements to include in a 

standard assessment for consistency 

across programs. Several commenters 

supported our effort in seeking 

consistency across authorities, 

including the attempt to create 

commonalities within assessment 

processes. Several commenters 

expressed various concerns regarding 

standardized assessments. Multiple 

commenters offered suggestions 

regarding what should be included in a 

universal assessment. Other 

commenters added that ensuring 

participants are involved in the 

prioritization of core elements may help 

to identify elements that have a clear 

link to the planning process, and a few 

commenters expressed interest in 

commenting on any proposed list. The 

specific comments as summarized above 

are as follows: 

• One commenter suggested that the 

core elements should include an 

assessment of an individual’s ability to 

perform ADLs and IADLs without 

assistance, assess the ability to selfdirect his or her services, and should 

reflect and be consistent with the State’s 

functional eligibility criteria for the 

service. 

• One commenter indicated that 

functional assessments should consider 

that a person’s disability can change 

over time. 

• One commenter indicated that 

functional assessments should address 

the complexities of independent living 

and active daily living outside the 

home, such as what supports are needed 

to go to a community bathroom. 

• Several commenters recommended 

that universal core elements include 

discussion of unique needs of families, 

such as whether there are needs of 

children and partners that should be 

addressed in the home. The commenters 

added that these assessments are 

important for all families because 

assessing the needs of others in the 

home will help identify the unique 

needs of the individual requiring 

assistance. 

• Another commenter voiced concern 

about the development of universal 

assessment tools and requested that 

CMS recognize during its universal core 

elements development process that core 

elements likely will vary by population 


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and recommended, along with other 

commenters, that rather than specific 

assessment elements, CMS develop 

universal domains that cut across 

programs and populations, and added 

that program and/or population specific 

elements could be developed. The 

commenter urged CMS to convene a 

meeting of stakeholders to discuss our 

vision and the viability of universal core 

domains with elements that might vary 

by population and program. 

• One commenter requested that if 

changes are necessary after 

implementation of CFC has begun, that 

CMS provide States sufficient time to 

incorporate any new core elements into 

their assessment process. 

• One commenter cautioned against 

requiring additional elements to be 

included in the assessment beyond the 

statutory requirements, as they believed 

it would increase the assessment time 

for social attendant care providers. 

• One commenter urged CMS to 

proceed with caution with regard to 

standardized assessments for States, as 

research on HCBS is in need of 

development and codification of 

assessment elements at this stage may 

be premature. The commenter added 

that some States have broader eligibility 

standards than others and indicated that 

they would want CMS to adopt a broad 

view of assessment at this stage to 

facilitate future expansion and 

experimentation. The commenter also 

suggested that to the extent CMS 

requires States to use a standardized set 

of data elements, we should consider 

additional individualized assessments 

of need that may not fit the standardized 

data elements. 

• One commenter asked whether 

CMS will be including the determined 

universal core elements in the core 

standardized assessment in the State 

Balancing Incentive Payments Program. 

Response: We appreciate the various 

points, concerns and recommendations 

made by these commenters. We will 

take these perspectives and 

recommendations into consideration 

during the development of universal 

core assessment elements as part of the 

Balancing Incentives Payment Program 

created under section 10202 of the 

Affordable Care Act, as well as future 

HCBS guidance. As noted above, we 

intend to share any finalized universal 

core elements that are developed with 

States as examples of elements that can 

be incorporated into the assessment of 

functional need for CFC and other HCBS 

assessments as determined by CMS. 

Future guidance will provide additional 

detail regarding the finalized set of 

universal core assessment elements. 

After consideration of the public 

comments received, we are finalizing 

§ 441.535 with revision, to refer to an 

‘‘assessment for functional need’’, to 

indicate that the scope of the assessment 

is limited to CFC services and supports, 

to change ‘‘or’’ to ‘‘and’’ in paragraph 

(c), to add the ability for States to meet 

the face-to-face requirement through the 

use of telemedicine or other information 

technology medium if certain 

conditions are met, and to add a new 

paragraph (d) to indicate ‘‘Other 

requirements as determined by the 

Secretary.’’ 

J. Person-Centered Service Plan 

(§ 441.540) 

We proposed to require a minimum 

set of criteria for a person-centered 

planning process, and proposed that the 

resulting person-centered service 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. We also proposed to require a 

minimum set of criteria for the personcentered service plan. Finally, we 

proposed additional requirements of the 

plan, including the timeframes for its 

review and revision. 

Comment: Several commenters 

applauded CMS for recognizing the 

importance of person-centered planning 

and for seeking consistency in personcentered planning expectations across 

Medicaid authorities. The commenters 

noted that the person-centered planning 

process should be implemented in a 

customized fashion according to the 

unique needs and preferences of the 

individual. Two commenters agreed 

with our proposed language and one 

commenter added that the personcentered planning process should be 

comprehensive. 

Response: We believe that our 

proposed approach will allow for the 

process to be incorporated with States’ 

current approaches to maximize the 

strengths and preferences of the 

individual. As indicated earlier in the 

final rule, in an effort to streamline State 

requirements where possible across the 

programs, we proposed language in the 

CFC proposed rule that in some 

instances was consistent with other 

HCBS final rules, such as section 1915(j) 

of the Act, and in some instances was 

consistent with proposed language in a 

recently proposed rule for the section 

1915(c) waiver program, which 

published in the April 15, 2011 Federal 

Register. Based on multiple comments 

and the acknowledgement that 

additional policy work is necessary to 

maximize the extent to which 

consistency can exist across Medicaid 

HCBS programs, we are revising the 

language in this section to clarify the 

requirements of this process and 

resulting service plan as it pertains to 

CFC. We are taking more time to 

consider all of the thoughtful comments 

from this rule, the comments received 

from the section 1915(c) proposed rule, 

and comments forthcoming from the 

section 1915(i) proposed rule to have 

additional policy discussions both 

internally and with stakeholders. We 

will be issuing subregulatory guidance 

to provide additional details and 

expectations as it pertains to the personcentered planning process and the 

elements that should be included in a 

person-centered service plan. 

Comment: A few commenters stated 

that it is extremely important that the 

person-centered planning process not 

interfere with, or delay access to, 

services. One commenter added that at 

times extensive person-centered 

assessment and planning processes are 

so time consuming that individuals 

trying to avoid placement in a facility 

cannot access services in a timely 

manner and are forced into an 

unwanted institutional placement. A 

few commenters suggested that the 

regulation require States to include an 

expedited enrollment process for such 

situations so that individuals may 

receive basic attendant services and 

supports and avoid institutional 

placement while the complete personcentered service plan is being 

developed. One commenter suggested 

that CMS require States to complete the 

assessment and service plan within 30 

days of application. 

Response: We agree that the process 

should not interfere with or delay access 

to services. States currently conduct 

assessment processes and create service 

plans for HCBS programs. We do not 

believe that the proposed personcentered principles and service plan 

components for CFC should be overly 

burdensome or time consuming. In the 

Collection of Information Requirements 

for implementing CFC, we estimated 

that a total of 3.5 hours on average 

would be necessary per individual, 

including the assessment, the personcentered planning process, service plan 

development and providing an 

individual a copy of the service plan. In 

addition, as we indicated in the 

preamble of the proposed rule, States 

will need to have a minimum set of 

policies and procedures associated with 

the assessment and service plan. These 

policies and procedures should ensure 

that the process is timely. We expect 


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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. We encourage States to 

implement policies and procedures that 

provide services as expeditiously as 

possible. In addition, we are 

incorporating language originally 

proposed at paragraph (c)(2) to indicate 

that the person-centered planning 

process must be timely, in addition to 

occurring at times and locations of 

convenience to the individual. 

Comment: Another commenter 

suggested that while the statute uses the 

term person-centered, CMS should 

encourage States to use a consumerdirected process as consumer-directed 

planning puts the individual in charge 

of the planning process whereas the 

term person-centered has been used to 

allow others on a planning team to make 

all important decisions ‘‘in their best 

interests.’’ 

Response: We appreciate the 

commenter’s perspective and the term 

consumer-directed, but do not agree that 

the language should be changed for this 

rule. To be consistent with other 

Medicaid programs, we will maintain 

the phrase ‘‘person-centered’’ in 

referring to this process. That said, CFC 

has a strong focus on individual choice 

and direction that is evidenced 

throughout the regulation. For the 

person-centered service plan, much 

effort was put into ensuring that an 

individual maintains a central role in 

both the planning process and finalizing 

the service plan. In addition, we are 

adding at § 441.540(a) that the personcentered planning process must be 

driven by the individual. 

Comment: One commenter suggested 

that more guidelines be provided to 

States for the person-centered planning 

process as the proposed rule does not 

include qualifications for the entities 

responsible for the planning process and 

the entities States utilize may not have 

adequate training in self-determination/ 

direction or any true person-centered 

planning training. The commenter 

suggested that § 441.540(c) include 

requirements for the States’ policies and 

procedures including the qualifications, 

training and quality assurance of those 

conducting the person-centered plans. 

Another commenter indicated that it 

would be beneficial, particularly for 

individuals with mental illness, if the 

person-centered service planning 

process included a requirement for a 

facilitator who had more experience and 

information than family or other outside 

individuals chosen by the individual. 

The commenter noted that in mental 

health service planning, individuals 

need some support to fully understand 

their choices and explore their 

preferences, and to learn how to assess 

what support they may need to carry out 

the plan. The commenter indicated that 

peers trained to perform this facilitator 

role might be the best option and 

suggested that States could be 

encouraged to consider that option. 

Response: States are responsible for 

determining the provider qualifications 

of the entities who will conduct the 

assessments and the person-centered 

planning process as long as the 

requirements in the final regulations 

have been met. It is expected that these 

entities would have adequate training to 

perform this function. We agree 

additional guidance should be provided 

to States and we intend to issue future 

guidance, as indicated above, regarding 

our vision of the person-centered 

process and how we intend to apply 

that philosophy across Medicaid HCBS 

programs. 

Comment: One commenter asked if 

States can leverage existing single entry 

point entities currently under contract 

for section HCBS 1915(c) waiver 

assessments and planning processes to 

conduct the person-centered planning 

process outlined in § 441.540. Another 

commenter asked CMS to clarify 

whether the State can delegate its 

responsibilities to other entities, such as 

a managed long-term care plan, to 

develop service plans, budgets, etc. 

Response: States have the flexibility 

to leverage existing entities to conduct 

various functions required in CFC, 

provided all requirements of the final 

regulation are met. 

Comment: One commenter stated that 

the proposed rule implies that two 

separate meetings will be held, one to 

complete the assessment and one to 

develop the service plan through the 

person-centered planning process, and 

recommended, along with another 

commenter, that the rule reflect the 

ability to combine these meetings. 

Response: We did not intend to 

require two separate and distinct 

meetings. While individuals and States 

may choose to conduct separate 

meetings, particularly depending on the 

length of the assessment and the 

availability of all parties involved, we 

believe that it is appropriate that the 

assessment of need and the personcentered planning process could be 

combined into one meeting. We have 

not revised the regulation, to maintain 

flexibility, based on individual 

circumstances. 

Comment: Two commenters 

supported the identification of all of a 

person’s needs (not just what is offered 

under CFC). One of the commenters also 

supported the identification of the 

individual’s desired outcomes from 

services and suggested that the 

assessment cover the individual’s broad 

life goals and desires as well. The other 

commenter added that CMS should 

require that all needs identified during 

the assessment be addressed in the 

service plan, ensuring that the needed 

service is actually being addressed 

either informally and/or by applying to 

other programs and benefits. 

Response: While this comment 

references the assessment, the specifics 

of the comment relate to this section so 

we will address this comment here. It is 

our expectation that during the 

assessment process, and the subsequent 

person-centered service plan process, an 

individual’s CFC service and supports 

needs, as well as what is important to 

the person with regard to preferences for 

the delivery of such services and 

supports, be identified and addressed. 

In States conducting a more 

comprehensive assessment that exceeds 

the scope of CFC services and supports, 

a determination would then need to be 

made as to which services and supports 

could be delivered under CFC and 

which are more appropriately delivered 

through another benefit or informal 

support. For the purposes of CFC, States 

would only be required to provide the 

services and supports required under 

CFC as indicated by the final rule. 

However, we encourage States to 

coordinate among all the services an 

individual is eligible for to determine 

how to best meet an individual’s needs 

as identified during this assessment. As 

indicated above, we will issue 

additional guidance regarding our 

vision of the person-centered process 

and how we intend to apply that 

philosophy across Medicaid HCBS 

programs. 

Comment: One commenter suggested 

that CMS add language that requires 

coordination with other governmentfunded health services that may also be 

providing personal care to consumers, 

stating that the absence of such clarity 

can threaten the continuity of care and 

risk care duplication. 

Response: It is our expectation that 

during the assessment of functional 

need and the subsequent personcentered service planning process, all 

attendant/personal care needs and 

currently received services and supports 

in place to meet those needs would be 

identified. A determination would then 

need to be made as to which services 

and supports could be delivered under 

the CFC Option and which are more 

appropriately delivered through another 

benefit. States are familiar with this 

process and we do not agree that 


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additional regulatory language is 

necessary. States are expected to take 

every step to ensure that services are not 

being duplicated and individuals 

currently receiving attendant services 

and supports experience continuity of 

care during a transition to CFC. 

Comment: One commenter noted that 

the criteria described including 

consumer direction, convenience to 

time and place, cultural considerations, 

conflict resolution, the ability to alter 

the plan and real choice are all good 

markers for a good process but indicated 

that these should be regarded as a 

minimum level of responsiveness and 

not a maximum. The commenter added 

that respecting a person’s gender 

identification is also important. 

Response: We appreciate the 

commenter’s perspective regarding the 

criteria being regarded as a minimum 

level of responsiveness and not a 

maximum. We agree that respecting an 

individual’s gender identification is 

important. We expect that all 

individuals will be treated with respect. 

Comment: One commenter suggested 

that CMS offer guidance on how to 

provide necessary support to ensure the 

person with a disability has meaningful 

input in the planning process. 

Response: We will consider this 

suggestion as we work on additional 

guidance regarding our vision of the 

person-centered process and how we 

intend to apply that philosophy across 

Medicaid HCBS programs. In the 

meantime, we will look to States to 

implement a person-centered planning 

process that ensures meaningful input 

from all individuals in the CFC 

program. 

Comment: One commenter voiced 

concern over the requirement that the 

person-centered planning process must 

occur at ‘‘times and locations of 

convenience to the individual’’ as 

referenced in paragraph (a)(3), as they 

believed that this is overly restrictive 

and beyond the statutory requirement. 

The commenter stated that the process 

should be scheduled when it is 

mutually convenient for both the agency 

staff and individuals and added that it 

may be necessary to have the 

assessment conducted at the 

individual’s home so that the staff can 

more accurately assess the client’s needs 

in the context of their home 

environment and community. Another 

commenter urged CMS to include 

language that will allow States 

flexibility to put reasonable limits on 

the optional locations for these 

assessments/plans. One commenter 

indicated that to adequately assess for 

environmental as well as health and 

safety needs, States must be allowed to 

require the face-to-face meeting be held 

in the participant’s place of residence 

and recommended deleting the words 

‘‘and locations’’ from paragraph (a)(3). 

Response: We appreciate the 

commenters’ concerns and suggestions. 

The commenters appear to be talking 

about both the assessment of functional 

need, which was required in the 

proposed rule to be conducted face-toface with the individual, and the 

person-centered service plan 

development, which is to occur at times 

and locations of convenience to the 

individual. While we do not prescribe 

the setting in which the assessment of 

functional need takes place, we 

encourage the assessment to be 

conducted in an individual’s home in 

order for the entity conducting the 

assessment to get a more informed 

perspective of the individual’s supports 

and needs in their residence. However, 

we are not mandating this as some 

individuals will use CFC to transition 

from an institutional setting, and 

therefore, would be assessed while still 

residing in the institution. With regard 

to the person-centered planning process, 

if this process takes place separate and 

apart from the assessment of functional 

need, we expect that this meeting be 

scheduled at a time and place that is 

convenient to all parties taking part in 

the process, but particularly to the 

individual. We recognize that there will 

be practical constraints for the 

professionals involved in the personcentered planning process and the 

assessment of functional need, such as 

availability being limited to certain 

business hours; however, we do not 

believe it is necessary to revise the 

regulation as suggested. 

Comment: One commenter asked 

what the expectations/requirements are 

for States in terms of supports that 

address the needs identified by the 

assessment of expanded areas such as 

employment, school, income and 

savings, and social goals as referenced 

in paragraph (b)(3). The commenter 

indicated that providing this expanded 

assessment will result in additional 

costs to States and it is unclear what 

States would be required to address. 

The commenter asked if these 

requirements would be limited in scope 

to ‘‘the provision of services’’ as stated 

in § 441.535(a)(2) and the qualification 

at § 441.515 that States provide CFC ‘‘in 

a manner that provides the supports that 

the individual requires to lead an 

independent life.’’ The commenter 

asked CMS to confirm that a State 

would not be required to provide 

money-management support, and it 

would not have to have an outcome 

measured in the quality assurance 

system, if an individual had the goal to 

save money for their grandchild’s 

college fund in their assessment/plan. 

The commenter wanted to know how 

this expands a State’s responsibilities or 

liability. 

Response: While this comment 

references aspects also covered in the 

assessment section, the main issue 

expressed in this comment relates to 

this section so we will address this 

comment here. As indicated above, we 

have revised the regulation to indicate 

that it is only the need for services and 

supports within the scope of CFC 

services that must be assessed. It is our 

expectation that during the assessment 

process, and the subsequent personcentered service plan process, an 

individual’s CFC service and supports 

needs as well as what is important to 

the person with regard to preferences for 

the delivery of such services and 

supports be identified and addressed. In 

States conducting a more 

comprehensive assessment that exceeds 

the scope of CFC services and supports, 

a determination would then need to be 

made as to which services and supports 

could be delivered under the CFC and 

which are more appropriately delivered 

through another benefit or informal 

support. We believe that many States 

already have such a system in place. For 

the purposes of CFC, States would only 

be required to provide the services and 

supports required under CFC as 

indicated by the final rule. However, we 

encourage States to coordinate among 

all the services an individual is eligible 

for to determine how to best meet an 

individual’s needs as identified during 

this assessment. 

After considering the feedback 

received and the acknowledgement that 

additional policy work is necessary to 

maximize the extent to which 

consistency can exist across Medicaid 

HCBS programs, we are revising the 

language in this section to clarify what 

must be included in the plan as it 

pertains to CFC. As indicated above, we 

are taking more time to consider all of 

the thoughtful comments from the CFC 

proposed rule, the section 1915(c) 

proposed rule and the comments we 

will receive in response to the 

forthcoming section 1915(i) proposed 

rule to have additional policy 

discussions both internally and with 

stakeholders. We plan to issue 

additional guidance regarding our 

vision of the person-centered process 

and how we intend to apply that 

philosophy across Medicaid HCBS 

programs. 

Comment: One commenter indicated 

that in § 441.540(a)(5), CMS describes 

the requirements for service plans 


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including a requirement that States have 

‘‘strategies for solving conflict or 

disagreement within the process, 

including clear conflict of interest 

guidelines for all planning participants’’ 

and in § 441.555(b)(2)(xiv), CMS 

requires that participants be provided 

‘‘information about an advocate or 

advocacy systems * * * and how [they] 

can access [such] systems.’’ The 

commenter then pointed out that CMS 

does not discuss CFC appeals processes 

in the proposed rule and recommended 

that CMS clarify the appeals processes 

and the relation to the provisions noted 

above. Another commenter asked if 

CMS plans to intend for an individual 

to have the right to appeal the service 

plan. A commenter suggested that CMS 

require that both the final written 

assessment and the service plan include 

information on the individual’s right to 

appeal if she/he disagrees with the 

assessment or any parts of the service 

plan. 

Response: An individual has the right 

to appeal the service plan. The personcentered service plan, which is based on 

the assessment of functional need, must 

be finalized and agreed to in writing by 

the individual. If the individual does 

not agree with the findings of the 

assessment or the proposed service plan 

based on these findings, an individual 

does not have to agree to or sign the 

service plan. The individual would have 

the right to disagree with the assessment 

and service plan at any time during the 

process. As such, States electing the 

CFC option are also required to have 

appeals for denials and reconsideration 

procedures of an individual service plan 

in place as part of their quality 

assurance system for the CFC. 

Comment: Several commenters noted 

that it is not clear what components of 

the service plan proposed by CMS are 

‘‘required’’ versus ‘‘recommended’’ and 

pointed out that there is also 

inconsistency in the use of terms (for 

example, Support Plan, Service Plan, 

and Plan of Care). The commenters 

recommended that, regardless of the 

term chosen, the term reflect the personcentered approach and participantdirected nature of CFC. 

Response: As indicated in the 

proposed rule, the elements in 

§ 441.540(b) are all required. This is 

evidenced by the use of the term ‘‘must’’ 

in the last sentence prior to the 

numbered list of elements. We are 

revising the regulation to ensure that all 

‘‘plan’’ references throughout the rule 

indicate that it is the ‘‘person-centered 

service plan.’’ In addition, based on 

multiple comments regarding the 

requirements of the plan at § 441.540(c), 

we have removed the duplicative 

requirements that were already captured 

in § 441.540(b) and have moved the 

remaining requirements to the more 

appropriate Support System section at 

§ 441.555. 

Comment: One commenter stated that 

the person-centered service plan should 

reflect that the place where the 

individual resides is the least restrictive 

setting available based on the 

individual’s need for a handicap 

accessible place of residence and 

affordability, as well as the consumer’s 

freedom of choice to live in that 

particular place of residence. The 

commenter added that the personcentered service plan should determine 

the appropriate setting for an individual 

covered under CFC. 

Response: While we agree that the 

service plan could reflect that an 

individual resides in the least restrictive 

setting of their choice, we do not agree 

that the service plan should determine 

the appropriate setting for an 

individual. We have revised the service 

plan process to add paragraph (a)(8) 

requiring States to record the alternative 

home and community-based settings 

that were considered by the individual. 

We also amended the person-centered 

service plan to require an assurance that 

the setting in which the individual 

resides is chosen by the individual. This 

will be reflected as a new paragraph 

(b)(1), and all existing text will be 

renumbered accordingly. 

Comment: One commenter suggested 

that to protect the integrity of the 

program and to ensure adherence to 

service plans, that CMS allow for fiscal 

or other program intermediaries to 

validate service plans, issue rules for the 

training of attendants, and develop a 

process to ensure that services and 

supports are assessed for 

appropriateness. 

Response: States may decide to have 

a mechanism by which a service plan is 

compared to the services provided to 

protect the integrity of the program, but 

we are not clear how allowing a fiscal 

or other program intermediary to issue 

rules for the training of attendants 

would protect program integrity. States 

have the discretion to determine 

provider training and qualifications as 

long as the requirements in the final 

rule are met. We believe the assessment 

of functional need, person-centered 

service planning process and finalizing 

of the service plan should result in 

appropriate services and supports being 

provided to the individual to meet their 

assessed needs. 

Comment: One commenter asked 

CMS to clarify whether a State may use 

a prior authorization process to ensure 

services rendered and paid for match 

the service needs indentified through 

the service planning process. 

Response: States have the flexibility 

to use various methods to ensure that 

services provided match the needs 

identified through the assessment and 

service plan. States will need to 

describe in their State plan amendment 

how they propose to utilize the prior 

authorization process. 

Comment: Two commenters suggested 

that the development of the personcentered service plan, as spelled out in 

the proposed rule, should include 

health promotion and wellness 

components designed to mitigate health 

risks and maintain and support 

healthful behaviors. 

Response: As indicated above, 

additional policy work is necessary to 

maximize the extent to which 

consistency can exist across Medicaid 

HCBS programs and we are taking more 

time to consider all of the thoughtful 

comments from this rule, comments 

received from the section 1915(c) 

proposed rule, and forthcoming 

comments from the section 1915(i) 

proposed rule to have additional policy 

discussions both internally and with 

stakeholders. We plan to issue 

additional guidance regarding how we 

intend to apply the person-centered 

philosophy across Medicaid HCBS 

programs. We will continue to consider 

this comment during that process. In the 

meantime, there is no prohibition 

against a State incorporating these 

elements into the development of the 

person-centered service plan. In 

addition, we are taking this opportunity 

to add an additional requirement that 

will allow for the incorporation of 

future person-centered planning 

requirements published by CMS. 

Comment: A commenter noted that 

paragraph (b)(2) refers to the ‘‘personcentered functional assessment’’ and 

recommended that CMS change the 

language to: ‘‘reflect clinical and 

support needs as identified through a 

functional assessment’’ as they believe 

that § 441.540 needs to more clearly 

reflect the distinction between the 

assessment of functional need and the 

person-centered service plan. 

Response: We are revising the 

regulation to say ‘‘reflect clinical and 

support needs as identified through the 

assessment of functional need.’’ This is 

now paragraph (b)(3). 

Comment: Several commenters 

suggested that in paragraph (b)(3) CMS 

change the phrase ‘‘individually 

identified goals’’ to ‘‘participant 

identified goals.’’ 

Response: We do not agree with the 

commenters’ suggestion. While an 

individual receiving services and 


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supports under CFC will be a 

‘‘participant’’, we choose to maintain 

the term ‘‘individual.’’ This term is used 

throughout the regulation and we prefer 

to be consistent so as to not create any 

unnecessary confusion. 

Comment: A commenter encouraged 

CMS to require in paragraph (b) that the 

standard assessment of need include the 

individual’s assessment of their 

strengths and their goals regarding 

housing, services, education, 

transportation, employment, recreation 

and socialization, wellness and the 

supports needed to enable them to live 

independently in the community setting 

of their choice, in addition to a person’s 

preferences. 

Response: The proposed rule at 

§ 441.540(b)(1) indicates that the 

person-centered service plan must 

reflect the individual’s strengths and 

preferences. Section 441.540(b)(3) 

proposed language to address an 

individual’s goals and desires and 

included the term ‘‘may’’ to suggest 

aspects that could be included in the 

person-centered service plan. Based on 

comments and further consideration we 

have decided not to specify particular 

aspects of an individual’s strengths, 

preferences and goals that could be 

assessed or included in the personcentered plan as we do not want to 

create an unintended limit on the 

aspects that could be included in the 

service plan. Therefore, we are revising 

the regulation to read ‘‘Include 

individually identified goals and 

desired outcomes’’ at paragraph (b)(4). 

Comment: Several commenters 

indicated that the proposed rule 

appropriately sets forth multiple factors 

to be considered in determining the 

need for and authorization/provision of 

services, but they, and multiple other 

commenters, voiced concern regarding 

the identification of informal supports. 

Other commenters supported the 

consideration of natural and informal 

supports but did not want it to be 

construed that the existence of family, 

natural and other informal supports 

could be used as a reason to reduce the 

level of services an individual would 

receive. Multiple commenters indicated 

that these supports can be considered as 

appropriate in determining the 

individual’s needs, strengths, and 

preferences, but eligibility and supports 

covered for an individual by CFC 

should be based upon functional need, 

independent of the existence of family 

or other informal caregivers. Several 

commenters believed that reliance on 

family and other informal supports who 

may not be skilled/trained to care for 

certain conditions and may have 

limitations of their own could lead to 

additional strain on families and could 

put the consumer at risk. One 

commenter voiced concern that the 

regulation does not include the CMS 

Handbook definition of informal care 

(that which is capable, available and 

freely given) and that without emphasis 

on ‘‘freely given’’ States may assign the 

responsibility of this care to family 

members and other informal supports. 

Another commenter suggested that at a 

minimum, if family members or other 

informal supports are identified in the 

assessment/plan, the participant must 

indicate acceptance of the unpaid 

supports in lieu of provided services 

and the family members or other 

informal supports must indicate they 

are willing and able to perform the 

roles/tasks. The commenter added that 

the participant and family/informal 

supports must also have the ability to no 

longer accept or to withdraw their 

support without harming the beneficiary 

and the plan should be adjusted to 

reflect the lost support. Another 

commenter added that if the State 

includes family or other informal 

caregivers in the service plan, it should 

be a requirement that the needs of the 

family or other informal caregiver also 

be assessed and addressed, especially if 

crucial aspects of the service plan 

depend on these caregivers. The 

commenter added that such an 

assessment would identify the family 

caregiver’s needs, strengths and 

preferences and connect such caregivers 

to critical supports such as respite, 

training or other assistance, as helping 

the caregiver to continue in their 

caregiving role could delay or prevent 

institutionalization of the care recipient. 

Another commenter indicated that the 

consideration of unpaid assistance 

needs to take into account the 

sometimes oppressive influence this has 

on family and personal relationships 

adding that these relationships should 

not be forced to become strictly defined 

as a caregiver/care-receiver 

relationships at their core level and that 

the provision of unpaid but necessary 

services can affect the ability of the 

consumer to control how his/her 

services are provided. Other 

commenters urged CMS to remove the 

language from the preamble. 

Response: While these comments 

reference aspects also referenced in the 

preamble for assessment of need, the 

requirement referenced is included in 

§ 441.540 so we will address this 

comment here. We appreciate the 

concerns regarding the potential that the 

identification of natural supports could 

result in the decrease of services 

provided under CFC, or these natural 

supports might be weakened as a result 

of the expectation that they be provided. 

We expect that the identification of 

these natural, unpaid supports be taken 

into consideration for the purpose of 

understanding the level of support an 

individual has, and should not be used 

to reduce the level of services provided 

to an individual unless the individual 

chooses to receive, and the identified 

person providing the support agrees to 

provide, these unpaid supports to the 

individual in lieu of a paid attendant. 

We have modified the regulation to 

incorporate this intention. We also 

expect that if an individual is receiving 

services and supports, either paid or 

unpaid, that if circumstances change, an 

individual has the right to request a 

reassessment of need and/or revision to 

the person-centered plan. For the 

concern regarding individuals providing 

supports having the skills or training to 

care for certain conditions or having 

their own limitations, having a full 

picture of the individual’s paid and 

unpaid supports will assist the State 

and the individual in determining what 

level of support the individual requires 

and what services need to be accessed 

to meet the individual’s needs and 

ensure their health and safety. With 

regard to the recommended requirement 

that the needs of the family or other 

informal caregiver also be assessed and 

addressed, we agree that it is important 

to consider these needs to encourage 

and preserve support for the individual, 

but we do not agree that this should be 

an additional requirement in the CFC 

final regulation. As noted above the 

order of the paragraphs has shifted and 

this requirement is now reflected at 

paragraph (b)(5). 

Comment: One commenter indicated 

that the risk assessment portion of the 

planning process is a challenge, as many 

consumers are competent adults and 

need to be allowed the same level of 

freedom and personal control as a nondisabled person, and allowed to assume 

risk at the same levels as non-disabled 

persons. The commenter voiced concern 

that this section could potentially be 

used to impede a consumer’s goals and 

desires and recommended that if there 

are disability-related conditions that 

impact the ability of the individual to 

assess risk, their plan should only 

impinge on their freedom 

commensurate with the need for 

reasonable safety. The commenters 

added that strategies for risk abatement 

should include voluntary participation 

in skills training and peer support to 

improve their ability to access and 

assume risk, and that the consumer’s 

use of additional training for the 


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personal assistant related to risk 

avoidance may be another strategy. 

Another commenter asked that CMS 

clarify that a contingency plan should 

be part of the service plan, to ensure 

that individuals are prepared and have 

a backup attendant care provider if the 

regular attendant care provider is not 

able to provide services. 

Response: We agree that individuals 

should have personal control and the 

opportunity to assume risk. We 

proposed at § 441.540(b)(5) that the 

person-centered service plan reflect risk 

factors and measures in place to 

minimize them, including backup 

strategies when needed. Service plans 

will need to reflect risk factors and 

measures in place to minimize them for 

each individual regardless of disability 

or level of need. Nothing in this section 

should be used to impede an 

individual’s goals and desire outcomes 

or to impinge on an individual’s 

freedom. As noted in response to 

comments received in the Definitions 

section, we are modifying the 

requirements of the person-centered 

service plan to remove the ‘‘as needed’’ 

language, to indicate that all individuals 

should have an individualized backup 

plan as specified in paragraph (b)(6). We 

would like to point out that for the 

purposes of CFC, this backup plan could 

include formal or informal backup 

supports as part of the plan. 

Comment: A commenter voiced 

concern regarding the requirement that 

the individual sign the service plan as 

this may not always be possible due to 

disability or inability to write, and 

suggested that the regulation be 

amended by adding ‘‘if possible.’’ 

Another commenter suggested language 

in paragraph (b)(6) that would allow an 

individual’s representative to sign the 

service plan when appropriate, and 

suggested the removal of a similar 

requirement in paragraph (d), as they 

felt the emphasis should be related to 

the individual and persons responsible 

for implementation. Another commenter 

indicated that the requirement for all 

individuals and providers to sign the 

plan may be onerous and logistically 

complicated as consumers can change 

providers frequently for a variety of 

reasons, and consumers should be able 

to obtain agreement from providers 

through formats other than the service 

plan. Other commenters added for 

clarification that the signature 

expectation is only for those involved 

with the actual assessment/planning 

process and not for the providers and 

others not present who are responsible 

for the implementation of the plan. 

Another commenter recommended that 

the language in paragraph (b)(6) be 

changed to: ‘‘be distributed to all 

individuals and providers responsible 

for its implementation and signed by all 

parties within 30 days of the 

development date’’ as they felt that 

requiring all provider signatures at the 

point of development would delay 

services. 

Response: After consideration of these 

comments, we have revised the final 

regulation to indicate that the plan be 

finalized and agreed to in writing by the 

individual and signed by all individuals 

and providers responsible for its 

implementation. While we understand 

that some individuals may not be able 

to provide an actual signature, we 

believe that it is important to capture 

that the individual agrees to the service 

plan as finalized. Should an individual 

not be able to make any indication that 

they agree with the plan in writing or 

the individual does not have a 

representative who can do so on the 

individual’s behalf, States will need to 

explain the methods they propose to use 

to indicate that the individual agrees 

with the service plan. While we do not 

specify the timeframe by which States 

must obtain the signature of the 

providers responsible for 

implementation of the plan, we expect 

that any provider that is responsible for 

implementing services or supports 

authorized in the service plan should 

receive and sign the individual’s service 

plan, as this would be necessary to not 

only understand the level of CFC 

services and supports needed by an 

individual, but also the individual’s 

strengths, preferences, goals and desired 

outcomes related to the provision of the 

services and supports. We are reflecting 

this change at a revised paragraph (b)(9) 

under § 441.540, and have removed this 

language from paragraph (b)(6) and 

paragraph (d). 

Comment: One commenter suggested 

that CMS should clarify explicitly at 

paragraph (b)(7) that the plan must also 

be understandable to the individual’s 

representative. A few commenters 

recommended that the regulations 

require the development of the service 

plan be conducted in a linguistically 

and culturally appropriate manner for 

the individual (and/or their appointed 

representative) as determined by the 

individual in a fully accessible way. 

Response: We appreciate the 

commenters’ suggestions. However, we 

do not agree that paragraph (b)(7) under 

§ 441.540 needs to clarify explicitly that 

the plan must be understandable to the 

individual’s representative as the 

language at paragraph (b)(7) 

encompasses a representative. We also 

believe that the requirement at 

§ 441.540(a)(2), that the planning 

process provides necessary support to 

ensure the individual directs the 

process to the maximum extent 

possible, and the requirement at 

paragraph (a)(4), that the process and 

plan reflects cultural considerations of 

the individual, encompass the other 

commenters’ suggestions. 

Comment: With regard to the 

requirement to include a timeline for 

review, a commenter suggested that 

CMS add a requirement at paragraph 

(b)(8) that reviews of the service plan 

occur at least every 18 months to assure 

that not too much time will pass 

between reviews and does not place 

undue burden on the participant or 

service providers. Another commenter 

suggested that the person-centered plan 

of care be revised as needed to reflect 

the goal of providing the least restrictive 

setting. Another commenter strongly 

supported the periodic reassessment 

and revision of the care plan at least 

every 12 months. Another commenter 

suggested that CMS require timely 

review (within 1 week) when the 

individual believes that the plan needs 

to be revised. Multiple commenters 

recommended that paragraph (b)(8) be 

expanded to read ‘‘include a timeline 

for review and implementation of 

changes.’’ 

Response: While we proposed at 

paragraph (b)(8) that the personcentered service plan include a 

‘‘timeline for review’’, we also proposed 

requirements at § 441.540(e) for 

reviewing the service plan. To clarify 

our expectation regarding review of the 

service plan, we are removing the 

language at paragraph (b)(8), as it is 

encompassed later in this section and 

have moved the language proposed at 

paragraph (e) to (c) with the exception 

of ‘‘or the individual’s representative, as 

applicable’’ which we have removed. 

Comment: One commenter stated that 

the ‘‘agreement’’ portion of the service 

plan, as required in paragraph (d), needs 

to be strengthened. The commenter 

indicated that ‘‘agreement’’ needs to be 

elevated to the level of a ‘‘contract’’ to 

avoid what they perceive to be the 

‘‘pitfalls’’ of current HCBS waivers. The 

commenter indicated that in their State, 

the waiver service plan can be 

unilaterally altered by the State without 

the ability of clients to challenge the 

State’s decision. The commenter 

believes this is a fundamental denial of 

a civil right, must not be extended into 

the new rule, and must be corrected 

within current HCBS waivers. 

Response: We disagree with the 

commenter’s suggestion that CMS 

change the service plan agreement 

language to a contract. We believe that 

the requirement proposed at 


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§ 441.540(d), now reflected in paragraph 

(b)(9), that the service plan must be 

agreed to in writing by the individual or 

their representative, as applicable, will 

ensure that the service plan is approved 

by the individual. States may not alter 

an individual’s service plan without the 

individual’s knowledge or approval. In 

addition, an individual has the right to 

appeal any State decision to decrease 

services. With regard to other HCBS 

programs including waivers, changes to 

their processes are not within the scope 

of this regulation. 

Comment: With regard to distribution 

of the plan at § 441.540(b)(10), one 

commenter recommended that CMS 

should require that a copy of the service 

plan be placed in the hands of the 

consumer. Another commenter 

suggested that the phrase ‘‘including the 

participant’’ makes it look like 

providing the plan to the individual is 

an afterthought and that the consumer 

should be able to decide who else 

received a copy of the plan, as there 

may be services or goals identified in 

the plan that do not need to be shared 

with every provider. 

Response: It is expected that each 

individual receiving services under CFC 

would receive a copy of the finalized 

service plan. We interpret the 

commenter’s recommendation to mean 

that we should require States to handdeliver the service plan to the 

individual. While we do not discourage 

a State from doing so, we do not require 

that the service plan be hand-delivered 

to each individual. The intent of the 

language ‘‘including the participant’’ 

was to emphasize that the individual 

must receive a copy of the plan. We 

have revised paragraph (b)(10) to make 

this clear. We appreciate the 

commenter’s indication that individuals 

should determine with whom to share 

their person-centered service plan. 

While we do not believe it is necessary 

to include this requirement in the 

regulation, we expect an individual’s 

preferences for the level of information 

in the plan that is shared with other 

providers to be respected. 

Comment: One commenter indicated 

that the service plan should be 

composed to fully meet the needs of the 

individual regardless of the service 

delivery model and any shortcomings of 

a plan within the limitations of the 

Medicaid program or the delivery model 

should be referenced to the individual. 

The commenter added a person needs to 

be informed of their options, the risks of 

choosing particular options, the 

alternatives available, and the 

anticipated consequences of any 

alternatives. The commenter added that 

if a limitation in the State program puts 

an individual at risk of adverse 

consequences that could be mitigated in 

an alternative approach available under 

the State program, the service planning 

process should provide the individual 

with that information before the plan is 

finalized. 

Response: It is our expectation that 

during the person-centered planning 

process and development of the service 

plan, the issues indicated above and 

options available will be articulated and 

discussed with the individual, 

regardless of the service delivery model. 

In addition, we are taking this 

opportunity to make clear that the 

service plan requirements for the selfdirected model with service budget 

must be incorporated into the personcentered service plan when applicable. 

Comment: Several commenters 

requested that CMS explain the 

rationale for service plan criteria related 

to the ‘‘provision of unnecessary or 

inappropriate care.’’ 

Response: This requirement was 

included to emphasize that the service 

plan should reflect and authorize only 

the services and supports necessary to 

meet the assessed needs of the 

individual. 

Comment: One commenter asked who 

has final approval of the service plan. 

Several commenters stated that the 

preamble explains that the entire plan 

must be in writing and agreed to by the 

individual, but the regulation only 

requires ‘‘signing off’’ on the plan in 

writing. The commenters recommended 

that specific requirements be put in the 

plan itself, in writing, for the consumer 

to have adequate time to review the plan 

themselves or with others. 

Response: The regulation does not 

indicate that an individual only needs 

to ‘‘sign off’’ on the service plan, but 

requires the service plan be ‘‘finalized 

and agreed to by the individual.’’ As the 

individual, and as appropriate the 

individual’s representative, are included 

in the planning process and the 

development of the service plan, we 

believe that the individual should know 

what the plan includes throughout the 

process. Additionally, the service plan, 

as a whole, must be finalized and agreed 

to, in writing, by the individual. 

Therefore, we do not agree that 

revisions to the regulation are necessary. 

Comment: One commenter indicated 

that the main conflict of interest in the 

care planning process emanates from 

the pressure on State agencies and their 

contractors to keep spending to certain 

levels, to promote or discourage the use 

of certain services based on cost and 

availability, or to enforce unwritten 

rules about levels of services which 

results in consumers previously 

determined eligible for services 

experiencing terminations either of 

particular services or of their HCBC 

eligibility all together. The commenter 

recommended that the conflict of 

interest provision at § 441.540(c)(4) 

address these conflicts as they are very 

real and limit consumer access to the 

services they need. 

Response: The person-centered 

service plan is based on an assessment 

of functional need. If an individual 

requires a particular level or amount of 

attendant services to meet these needs, 

the services should not be decreased at 

any time unless an individual no longer 

requires that level of support. An 

individual must agree to and sign any 

service plan, and therefore, we do not 

believe that we need to issue any further 

guidance to States regarding the 

reduction of services absent a decrease 

in need. We do reiterate the ability of a 

State to implement limits on the 

amount, duration and scope of CFC 

services, as long as these limits are not 

based on an 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 to lead an independent life, as 

prohibited in the statute. 

The conflict of interest provisions 

proposed at § 441.540(c)(4) were 

intended to protect the individual and 

relate to similar protections at § 441.555. 

We are moving these protections to the 

more appropriate Support System 

(§ 441.555). 

Comment: Two commenters indicated 

that there is potential for a significant 

conflict of interest resulting in public 

and private entities that authorize or 

pay for services and the individuals 

affiliated with them participating in the 

development of the person-centered 

service plan and suggested CMS include 

these entities at § 441.540(c)(4). 

Response: We believe that this is 

already addressed in this section as 

paragraph (c)(4) indicates ‘‘that apply to 

all individuals and entities, public or 

private.’’ As indicated above, this 

section is being moved to the more 

appropriate Support System. 

Comment: One commenter 

recommended that the conflict of 

interest provisions be clarified, as they 

may exclude a provider who conducts 

an assessment from providing one or 

more services to individuals under CFC, 

which the commenter believes would 

undermine their State’s current delivery 

system. The commenter indicated that 

its State pioneered and predicated its 

core models of long term care and home 

care on the consolidation of the 

assessment, care management and 


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service delivery functions within, and at 

the provider level, which has been very 

successful in terms of cost efficiency, 

timely integration, and provision of 

services in accordance with the 

individuals needs. The commenter 

noted that the prohibition of this 

coordinated approach should not be 

part of CFC and stated that it was not 

required by the statute. 

Response: As noted earlier, the 

conflict of interest provisions have been 

relocated to the more appropriate 

Support System, § 441.555. While we do 

not believe it is generally appropriate 

for an entity that would benefit 

financially from the assessed needs of 

the individual to also be the entity to 

perform the assessment of functional 

need or the person-centered planning 

process for the individual, we 

acknowledge that in some geographic 

areas there may be circumstances in 

which the only willing and qualified 

entity to perform the assessment of 

functional need and/or the development 

of the person-centered service plan also 

provides the HCBS services and 

supports in that area. Therefore, we are 

adding additional language to address 

this circumstance. 

Comment: Multiple commenters 

expressed concern regarding the 

proposed conflict of interest standards 

included in § 441.540(c)(4). One 

commenter indicated that the proposed 

rule is contradictory with regard to the 

assessment of need in that section 

§ 441.535 indicates that family members 

can support the individual, serve as 

representatives and be paid providers 

whereas paragraph (c)(4) excludes the 

family member from conducting the 

assessment/service plan. Another 

commenter suggested that there was a 

contradiction in the conflict provisions 

between the mandate that the individual 

be permitted to designate who may 

assist them with service plan 

development and who may provide the 

actual services. Multiple commenters 

indicated that the total prohibition of 

family members is too broad and may 

inappropriately undermine the 

preference of individuals to choose 

persons they wish to involve. Another 

commenter added that while the 

commenters agree that the assessment 

and planning process needs to be done 

by a neutral party, the regulation seems 

to include and exclude family/other 

participation. Several commenters urged 

CMS to develop a specific process by 

which the individual or authorized 

representative can make a written 

informed decision to waive the 

prohibition on family member 

involvement in development of the 

service plan that includes safeguards to 

facilitate an independent informed 

choice to waive the prohibition. 

Multiple commenters suggested that 

‘‘involved in’’ at paragraph (c)(4) be 

changed to ‘‘conducting’’ as this conflict 

of interest provision should apply only 

to the team conducting that assessment 

and creating the plan, as a relative may 

be ‘‘involved in’’ the process to help the 

individual with any one of a number of 

functional limitations, assist with 

communication, or distribute and 

collect materials. Another commenter 

recommended that the words ‘‘and 

service plan development process’’ be 

removed from paragraph (c)(4) and that 

CMS change the language in the same 

paragraph to: ‘‘at a minimum, these 

standards must ensure that the 

individuals or entities conducting that 

assessment of need are not.’’ Multiple 

commenters objected to the conflict of 

interest provisions in paragraph (c)(4) 

altogether and suggested that CMS 

remove them, stating that service plan 

development should often include 

family members and service providers 

and that it is counterproductive, and 

potentially undermines a person’s 

preference, to exclude them. Other 

commenters asked that CMS provide 

clarifying language to explain the intent 

of the provision. Other commenters 

asked CMS to provide guidance 

reconciling an individual’s ability to 

choose participants with the 

requirement that certain individuals are 

not to be included in the planning 

process. 

Response: These comments illustrate 

the need to clarify the intent of this 

provision. We acknowledge the 

confusion caused by use of the term 

‘‘involved in’’ when describing the 

conflict of interest protections. To 

clarify our intent, we are revising this 

paragraph to state ‘‘At a minimum, these 

standards must ensure that the 

individuals or entities conducting the 

assessment of functional need and 

person-centered service plan 

development are not * * *.’’ As noted 

above, this new language will now be 

reflected in § 441.555, Support System. 

Comment: A commenter suggested 

that at § 441.540(c)(4)(i), CMS change 

the language to ‘‘family members, as 

defined by this section’’ indicating that 

as written the language does not provide 

conflict of interest protections to 

Lesbian, Gay, Bisexual and Transgender 

individuals as there are different types 

of families that may not fall under the 

definition of ‘‘related by blood and 

marriage.’’ Another commenter asked 

for additional guidance on the exclusion 

of blood relatives, financially 

responsible relatives, paid caregivers 

and those with a financial interest in 

provided services from the assessment 

and service plan development 

processes. 

Response: We do not believe that such 

revision is necessary, given the revision 

to the regulation text described above. 

Comment: One commenter stated that 

physician input is necessary and 

indicated that it is not clear whether the 

proposed rules intend to exclude 

primary care providers (physicians, 

physician’s assistants, etc) from the 

assessment and planning process. 

Response: Nothing in this regulation 

excludes primary care providers from 

participating in the assessment of 

functional need or the development of 

the person-centered service plan, as 

long as the requirements of this section 

are met. 

Comment: Multiple commenters 

recommended that subpart (e) be 

expanded to read ‘‘the review and 

revision of the service plan must be 

conducted according to an established 

timeframe that is explained to the 

consumer.’’ 

Response: We believe that a personcentered service plan, based on a 

reassessment of functional need, should 

be conducted at least every 12 months, 

at a minimum, to ensure that an 

individual’s needs are commensurate to 

the services authorized in the service 

plan, as we understand that an 

individual’s needs can change 

significantly over time and as a result of 

various circumstances. We include 

several provisions related to the 

reassessments and reviews to the service 

plan that we believe capture various 

circumstances necessitating a 

reassessment and updates to the service 

plan. Therefore, we do not agree that we 

need to revise the language. While we 

do not specify in regulation a particular 

timeframe for the review of the service 

plan based on each of the provisions, we 

expect States to respond to the requests 

for review in a timely manner as 

specified in paragraph (c). 

Upon consideration of the public 

comments received, we are finalizing 

§ 441.540 with the following revisions: 

• We are adding a requirement that 

the person-centered planning process be 

driven by the individual; 

• We are indicating that the scope of 

the person-centered service plan is only 

required to address the services and 

supports provided under CFC; 

• We are consistently using the term 

‘‘person-centered service plan’’ 

throughout the document; 

• We are adding a requirement in 

paragraph (a) that the person-centered 

planning process must record the 

alternative home and community-based 


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settings that were considered by the 

individual; 

• We are adding a requirement in 

paragraph (b) that the person-centered 

service plan must indicate that the 

setting in which the individual resides 

was chosen by the individual; 

• Paragraph (b)(3) will now say 

‘‘reflect clinical and support needs as 

identified through the assessment of 

functional need;’’ 

• We are modifying what is now 

paragraph (b)(4) to modify ‘‘desires’’ to 

‘‘desired outcomes’’, to remove the 

specific examples of goals that could be 

addressed in the person-centered 

service plan; 

• We are modifying what is now 

paragraph (b)(5) to indicate that natural 

supports should not supplant services 

and supports provided under CFC. 

• We are modifying what is now 

paragraph (b)(6) to require all 

individuals to have an individualized 

backup plan specified in the personcentered service plan; 

• We are removing the proposed 

language at paragraph (b)(8); 

• We are modifying what is now 

paragraph (b)(9) to require that the 

person-centered service plan be 

finalized and agreed to in writing by the 

individual, and signed by all 

individuals and providers responsible 

for its implementation; 

• We are modifying paragraph (b)(10) 

to indicate that the person-centered 

service plan must be distributed to the 

individual and others involved in the 

plan; 

• We are revising § 441.540(b)(11) to 

incorporate the service plan 

requirements for the self-directed model 

with service budget at § 441.550, when 

applicable; 

• We are adding § 441.540(b)(13) to 

state ‘‘Other requirements as determined 

by the Secretary;’’ 

• We have relocated the language 

from (c)(1) to the more appropriate 

Support System § 441.555, relocated ‘‘is 

timely’’ from proposed (c)(2) to the 

beginning of paragraph (a)(3), removed 

the duplicative requirements from the 

proposed paragraph (c)(3) that were 

already captured in § 441.540 (b), 

revised the language proposed at 

paragraph (c)(4) to state ‘‘At a minimum, 

these standards must ensure that the 

individuals or entities conducting the 

assessment of functional need and 

person-centered service plan 

development are not’’, and have moved 

this paragraph to the more appropriate 

Support System § 441.555. 

• We have removed paragraph (d) as 

the requirements in the proposed (d) 

were incorporated in the revised 

paragraphs (b)(9) and (10). 

• We have removed paragraph (e) as 

these requirements are now reflected at 

paragraph (c) with the exception of ‘‘or 

the individual’s representative, as 

applicable’’ as this has been removed. 

K. Service Models (§ 441.545) 

We proposed that a State may choose 

one or more of the service delivery 

models defined in the statute. We 

categorized these models into two main 

groups, the Agency Model and the Selfdirected Model with Service Budget. We 

proposed 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. 

Comment: Many commenters 

expressed support of the efforts to align 

CFC with Medicaid HCBS programs like 

section 1915(j) of the Act. Many other 

commenters offered support for the 

service models described in the 

proposed rule, including allowing States 

to use multiple service models. Many 

commenters strongly supported the 

direct cash option and the inclusion of 

financial management activities. 

Response: We appreciate the 

commenters’ support. 

Comment: One commenter noted that 

in the definition section, § 441.505, the 

rule uses the term ‘‘Agency-provider 

model’’ and in § 441.545 the term 

‘‘Agency model’’ is used. 

Response: We have revised the rule at 

§ 441.545(a) to make this technical 

correction. 

Comment: One commenter 

recommended we include the statutory 

language regarding maximized 

consumer control found at section 

1915(k)(1)(A)(iv)(II) of the Act in the 

opening language of this subpart. The 

commenter recognizes that it has been 

incorporated by definition into the term 

‘‘self-directed’’ but considers it 

important here for clarity. 

Response: We appreciate the 

commenter’s perspective, but we do not 

believe such a revision is necessary, as 

the ‘‘consumer controlled’’ philosophy 

is inherent throughout this regulation. 

Comment: One commenter requested 

that the regulation allow States to 

differentiate service models among 

populations serviced under CFC. 

Response: Section 1915(k)(3)(B) of the 

Act requires that services must be 

provided 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 to lead an 

independent life. When a State specifies 

what service delivery models will be 

provided under CFC, the model must be 

available to all individuals meeting the 

medical necessity for CFC services. 

Therefore, States may not target certain 

service delivery models to subpopulations of individuals eligible for 

CFC. However, States could give all 

individuals participating in CFC the 

ability to choose among more than one 

service model. 

Comment: Many commenters 

expressed concern and disagreed with 

the fact that the regulation gives States 

a choice to provide one or more service 

models. Many commenters believe the 

proposed rules did not carry out the 

statutory intent that States must offer 

people with disabilities a full range of 

options (including choice of service 

model) for receiving home and 

community-based services. The 

commenters believe States should be 

required to offer both an agency with 

choice as well as a self-directed model 

with service budget. The commenters 

indicate that a ‘‘choice’’ does not exist 

if the State only offers one model. One 

commenter recommended the regulation 

require assurances that individuals, 

rather than the State, would have the 

ability to select the service model that 

is best suited for their specific needs. 

Additionally, the commenters expressed 

concern that States could choose to only 

provide services under a self-directed 

model with service budget, which 

would potentially prevent individuals 

without the capacity to self-direct from 

accessing these services. Similarly, 

States could choose to only select the 

agency model, which would potentially 

prevent individuals from stating control 

over the budget and prevent them from 

having control to the maximum extent 

possible. The commenters indicated that 

either of these alternatives alone is 

inconsistent with the statutory language. 

The commenters requested the 

regulation be revised to assure that 

individuals have the opportunity to 

select the service model that best meets 

their needs. Another commenter 

believed States should not be allowed to 

have one model of care because one 

model will not fit all participants. The 

commenter stated that limiting the 

service delivery model is counter to the 

purpose of section 1915(k) of the Act 

and would only serve to perpetuate 

discrimination against individuals who 

can safely live in their own homes. 

Response: The commenters provided 

compelling arguments as to why a State 

should provide more than one service 

delivery model. However, section 

1915(k)(A)(iii) of the Act requires that 

the State shall make available home and 

community-based attendant services 

and supports ‘‘under an agency-provider 


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model or other model * * *.’’ The use 

of the word ‘‘or’’ instead of ‘‘and’’ led 

us to interpret the requirement that 

States are given a choice of service 

model to offer. We agree that 

individuals should be given a choice of 

service model that best meets their 

needs and we encourage States to elect 

to provide more than one. However, 

based upon the statutory language, we 

do not believe we have the authority to 

mandate a State to offer both service 

models. 

Comment: A few commenters 

indicated that it is not clear what 

models would be included in the 

agency-provider model. In addition to 

requiring States to offer more than one 

service delivery model, a few 

commenters also requested the 

regulation specify the additional 

delivery models to be provided, such as 

traditional agency model, agency with 

choice model and self-direction with a 

service budget. 

Response: We would like to clarify 

that, for the purposes of CFC, the 

agency-provider model could include 

both the traditional model and the 

agency with choice model. States using 

the agency-provider model for CFC may 

choose one or both of these agency 

options. As noted in the response to 

comments received in the Definition 

section, we have modified the definition 

of agency-provider model. Therefore, we 

have also revised the language at 

§ 441.545 to align this section with the 

revised definition. 

Comment: One commenter believed 

that mandating all models would not 

only allow a wider range of eligible 

individuals the opportunity to access 

services, but could potentially be of 

benefit to the growing personal care 

workforce. The commenter 

acknowledged the value of self-directed 

models, but also expressed the belief 

that it can isolate attendant care 

providers and offer them little 

opportunity for advancement. If the 

person they care for passes away or is 

hospitalized, the attendant care 

providers have no assurance of 

continued work. Payment for travel 

costs and holidays, which is standard in 

agencies, is almost non-existent for 

attendant care providers participating in 

self-directed models. Working for an 

agency may guarantee continued work, 

ongoing professional training or 

support, and recourse for addressing 

employment problems. 

Response: We appreciate the 

commenter’s perspective, and as stated 

earlier, encourage States to offer more 

than one service delivery model. 

However, we do not believe the statute 

mandates the provision of more than 

one service delivery model. 

Additionally, the scope of this 

regulation does not extend to address 

advancement opportunities and the 

examples of employees benefits the 

commenter provided. 

Comment: One commenter stated that 

attendant services and supports should 

be available to individuals whether or 

not the individual fully manages them. 

The commenter requested that we use 

the term ‘‘consumer controlled’’ instead 

of ‘‘self-directed’’ when talking about 

the agency-provider model. 

Response: We agree that individuals 

should exercise the level of control they 

want to, and we believe the selfdirection philosophy supports this 

flexibility. As indicated above, we have 

modified the definition of ‘‘agencyprovider model’’ to remove the term 

‘‘self-directed’’, to avoid confusion. 

Comment: One commenter requested 

that we clarify how an agency-provider 

model can legally provide participants 

with ‘‘hiring and firing authority’’ of 

personal care attendants, if attendant 

care providers are employees of the 

agency. Another commenter requested 

we clarify the definition of agency 

model within the context of consumer 

direction. 

Response: We would like to clarify 

that the hiring and firing authority in 

the agency-provider model grants 

individuals the choice of who will 

provide services to them. When an 

individual chooses to not continue to 

use a attendant care provider (that is, 

‘‘fire’’ the attendant care provider), the 

attendant care provider is still employed 

by the agency and is available to 

provide services to someone else. As 

indicated in an earlier response we have 

replaced references to ‘‘hire’’ and ‘‘fire’’ 

with ‘‘select’’ and ‘‘dismiss’’. 

Comment: One commenter wanted to 

know if an individual’s representative 

assisting the individual to self-direct 

and manage their services can be paid 

as part of the service plan. 

Response: The assistance provided to 

a participant by an authorized 

representative is not considered a CFC 

service, and therefore, there is no 

reimbursement available through CFC. 

Comment: One commenter indicated 

that the services available through the 

CFC program are provided in most 

States as adult day, home care and 

PACE, under different authorities such 

as sections 1915(c), 1915(b), 1115, 

1915(i), and 1905(a) of the Act. The 

commenter recommended the regulation 

be amended to allow these providers to 

participate in the CFC program. One 

commenter suggested that the final 

regulation indicate that voluntary 

participation by PACE programs as a 

provider under CFC is allowed under 

the agency model or under another 

model established by the State. 

Response: We do not agree the 

regulation should specify the various 

provider types that may be allowed to 

provide CFC services. The State 

determines the provider qualifications 

for providers to provide CFC services 

under the agency provider model. If the 

provider types listed meet the State’s 

qualifications, and the providers are 

willing to provide the service, they may 

do so. 

Comment: We received many 

comments requesting clarification on 

the level of control individuals have 

under the agency service model. One 

commenter indicated the regulatory 

language pertaining to the agency 

service delivery model is ambiguous. 

Section 441.545(a)(2) provided that 

under the agency model for CFC, 

individuals maintain the ability to hire 

and fire the providers of their choice. 

The commenter indicated that this can 

be read to mean individuals under this 

model only have the ability to hire and 

fire providers and do not have 

maximum control over service delivery, 

as required by the statute in section 

1915(k)(6)(B) of the Act. The commenter 

recommended that this regulation be 

amended to make the language in 

§ 441.550, relating to the authority of the 

individual to control service delivery, 

compliant with their interpretation of 

the statute. 

Response: We do not agree with the 

commenter. When services are provided 

under the agency-provider model, 

individuals have maximum control 

within that service delivery model to 

select and dismiss attendant care 

providers, provide input as to the 

provision of services, and the type of 

assistance the attendant care provider 

provides. The individual also retains the 

right to train attendant care providers to 

perform the needed assistance in a 

manner that comports with the 

individual’s personal, cultural, or 

religious preferences. 

Comment: A few commenters 

requested that the regulation require 

that under the agency model, the 

individual maintain the ability to do the 

following: Select providers of their 

choice for services identified in their 

person-centered service plan, train, 

supervise, schedule, determine duties, 

fire their attendants, manage their 

providers and control, to the maximum 

extent possible, the services identified 

in their person-centered service plan. 

Response: We believe the regulations 

include these requirements. 


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Comment: One commenter indicated 

that it is not clear if ‘‘provider’’ means 

agent, attendant or something else. 

Response: For purposes of CFC, 

provider means any individual or entity 

providing a CFC service and/or support. 

Comment: One commenter indicated 

that the statute calls for ‘‘consumercontrolled’’ services, regardless of the 

model utilized. The methods for 

adhering to this philosophy are clear 

with the self-directed model, but less 

clear within the agency-provider model. 

Response: We would like to clarify 

that the agency-provider model (which 

States could choose to implement 

through a traditional agency model and/ 

or an agency-with-choice model) also 

adheres to the philosophy of 

‘‘consumer-controlled.’’ Under this 

model, individuals retain the ability to 

select, dismiss, and manage their 

attendant care provider. 

Comment: A few commenters 

recommended that the rule ensure that 

the scope and authority it provides for 

the consumer’s ‘‘hiring and firing’’ of 

the attendant care provider are 

complementary, appropriate and in sync 

with the agency’s business and 

employment model, all applicable 

agency regulations, and basic employee 

protections. The regulation should 

include a clear delineation of the roles 

and responsibilities of the consumer 

and the agency under this model. 

Response: We do not believe it is 

necessary to include such specificity in 

the regulation, as it will vary by service 

delivery model and should be 

developed by the State. We believe there 

are sufficient requirements in the 

regulation to ensure all parties 

understand their basic roles and 

responsibilities. We also reaffirm that 

the individual’s ability to ‘‘fire’’ their 

attendant care provider in no way 

affects the attendant care provider’s 

employment status with the agency. We 

reiterate that we have replaced 

references to ‘‘hire’’ and ‘‘fire’’ with 

‘‘select’’ and ‘‘dismiss.’’ 

Comment: One commenter indicated 

that the agency service model can 

‘‘muddy the water’’ for self-direction. 

The commenter recommends a 

consulting system, where an individual 

can receive any assistance needed to 

perform employer duties, such as hiring, 

training, and paperwork. 

Response: We agree with the 

commenter’s suggestion that individuals 

receive assistance needed to perform 

employer duties and believe these 

protections are included in the Support 

System section. Therefore, we have 

revised the Support System 

requirements at § 441.555 to apply to all 

individuals receiving CFC regardless of 

the service delivery model. We describe 

these revisions further in § 441.555. 

Comment: Many commenters 

supported the provision in the PersonCentered Service Plan section of CFC 

that required that the Plan ‘‘be directly 

integrated into self-direction where 

individual budgets are used’’, but noted 

that it was unclear why the use of 

service budgets across all models is not 

assumed, given the language proposed 

in the section, ‘‘Service Budget 

Requirements’’ (§ 441.560). The 

commenters supported the use of 

service budgets in all models (since 

such a process ensures transparency and 

allows participants to have meaningful 

control over their services). The 

commenters requested that CMS 

reconsider the proposal for a separate 

section, ‘‘Service Plan Requirements for 

Self-Directed Model with Service 

Budget’’ (§ 441.550), as the PersonCentered Service Plan section should 

address the requirements for assuring 

true participant direction, regardless of 

the model chosen. The commenters 

pointed out that this is consistent with 

the expectation set forth by the CFC 

statute requiring CFC be ‘‘consumercontrolled,’’ regardless of the models 

chosen. The commenters added that 

while they recognize that basic elements 

of the person-centered service plan may 

be implemented differently based on the 

model, there should be core 

expectations for assuring participant 

direction across the models, and that 

models should be chosen based on 

appropriateness for the State, not based 

on presumptions relative to cost 

associated with fewer or less 

requirements. 

Response: Every individual 

participating in CFC is expected to have 

a person-centered service plan that is 

based on an assessment of functional 

need regardless of the service delivery 

model available in the State. The service 

plan requirements for the self-directed 

model with service budget include the 

additional requirements that must be 

met when an individual is directing 

services through this model. We do not 

agree that service budgets should be a 

component of every service delivery 

model, as service budgets are not used 

in the agency-provider model. 

Comment: We received many 

comments requesting that the regulation 

specify the various types of service 

delivery models that may be included 

under the ‘‘other’’ category. One 

commenter requested the regulations 

not restrict the statute’s open-ended 

‘‘other’’ category to only those models 

that feature a service budget component. 

A few commenters requested the 

regulation clarify that a collective 

bargaining model, which provides 

consumers the ability to select, direct 

and dismiss their own caregiver, while 

giving States the ability establish workforce wide compensation standards is 

an acceptable ‘‘other model.’’ Many 

commenters requested the CFC rules be 

designed so that all States with public 

authorities can fully participate in all 

aspects of CFC without undermining 

their successful policy approaches for 

expanding and stabilizing the workforce 

available to these consumers. In 

particular, the commenters requested 

that the regulation clarify that 

compensation setting and other 

workforce-related activities by the State 

be consistent with all allowable service 

models under CFC. The commenters 

indicated that difficulties finding and 

retaining quality home care attendant 

care providers are among the significant 

impediments to the expansion of 

attendant care programs, and CMS 

should ensure that the CFC regulation 

does not undermine these State 

activities but encourages such activities. 

Response: We do not believe it is 

necessary to specify in regulation every 

type of service delivery model that 

exists, as we do not believe we would 

be able to capture them all. States 

wishing to utilize ‘‘other models’’, as 

defined in § 441.505, would need to 

include a description of the proposed 

service delivery model in their CFC 

SPA. We will discuss these models with 

the State, and a determination will be 

made as to whether it is an appropriate 

service delivery model for CFC. 

We are taking this opportunity to add 

a new paragraph (c), to indicate that 

States have the ability to propose an 

alternative service delivery model not 

envisioned in this regulation. Such a 

model would be described in the State’s 

CFC SPA, and approved by CMS. 

Comment: One commenter requested 

the regulation be amended to add a 

provision that enables States to take on 

responsibility for building a selfdirected workforce sufficient to meet the 

goals of the program by ensuring 

adequate compensation for direct care 

attendant care providers, establishing a 

consumer workforce for direct care 

attendant care providers, and 

implementing data systems to monitor 

the direct care attendant care providers. 

Response: We do not believe it is 

within the scope of this regulation to 

mandate such activities. We believe that 

States have the ability to implement 

such requirements and should discuss 

them with the Development and 

Implementation Council. 

Comment: One commenter is very 

appreciative of the broad language 

allowing individuals to choose their 


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attendant, establish additional cultural 

competency requirements, and train 

attendants to their specific cultural 

competency requirements. The 

commenter expressed that this 

flexibility is particularly important to 

ensuring service provision to Lesbian, 

Gay, Bisexual and Transgender (LGBT) 

individuals, especially older LGBT 

adults and people of color. 

Response: We appreciate the 

commenter’s support. 

Comment: One commenter requested 

we clarify whether CMS perceives selfdirection delivery models approved 

under different Federal authorities to be 

vulnerable to allegations of inequitable 

access under provisions of the 

Americans with Disabilities Act. 

Response: The Americans with 

Disabilities Act requires that individuals 

with disabilities be given the ability to 

receive their long-term care services and 

supports in the most integrated setting 

appropriate to their needs. We believe 

that Medicaid authorities allowing for 

self-direction of services and supports 

do not conflict with this mandate, as 

self-direction is a service delivery 

model, and does not prevent the 

provision of additional services, through 

Medicaid or other authorities, that may 

be necessary for a State to comply with 

the Americans with Disabilities Act. 

Comment: One commenter requested 

that the regulation clarify whether a 

State may select a self-direction model 

under the authority of section 1915(k) of 

the Act that differs from the State’s 

existing self-direction delivery models 

under HCBS 1915(c) waivers. 

Response: While there are many 

similarities between the section 1915(k) 

authority and the self-direction delivery 

models under the section 1915(c) 

authority, these are separate authorities 

with different requirements. States may 

implement different self-direction 

models under sections 1915(c) and 

1915(k) of the Act, as long as all 

program requirements are met. 

Comment: One commenter indicated 

that it is unclear if the direct cash model 

is intended to be a stand-alone model or 

an option within the financial 

management entity. 

Response: Section 441.545(b)(1) 

requires a State to make financial 

management services available to all 

individuals with a service budget. States 

can separately choose to allow cash 

disbursement to individuals selfdirecting CFC services. Individuals 

using the direct cash option have the 

choice of using the financial 

management entity for some or all of the 

relevant functions. 

Comment: One commenter 

recommended the regulation specify 

when FFP is drawn down under the 

direct cash option and how unexpended 

portions of a cash disbursement should 

be treated. 

Response: Cash disbursement is given 

prospectively. States would report 

expenditures for CFC services on the 

CMS 64 form based on this prospective 

disbursement. States may determine 

how to account for unexpended 

portions of cash disbursements. Based 

on past experience, we know that some 

States recoup unexpended funds; others 

allow beneficiaries to carry over 

unexpended funds into subsequent 

months. 

Comment: One commenter requested 

clarification on the requirement to 

comply with Internal Revenue Service 

rules contained under each service 

model. The commenter also requested 

clarification on how these paragraphs 

relate to the requirements in the State 

assurance provisions in § 441.570. The 

commenter suggested the regulations be 

clarified to ensure that the requirements 

of § 441.570 apply to each of the service 

models listed in § 441.545, as required 

by the statute. 

Response: While the language 

pertaining to meeting IRS requirements 

may seem duplicative, the entity 

responsible for ensuring the 

requirement is met differs depending on 

the service delivery model used, and 

whether an individual is utilizing 

financial management activities. We 

believe the regulation is clear that 

requirements under the State Assurance 

sections apply to all service delivery 

models. 

Comment: We received several 

comments supporting the inclusion of a 

financial management entity and the 

specific requirements for the service. 

Response: We appreciate the 

commenters’ support. 

Comment: One commenter indicated 

that given the participant direction 

requirement of CFC, it may be important 

for CMS to consider whether or not a 

financial management entity could also 

be used within an Agency with Choice 

and other agency-provider models. The 

commenter added that the regulation 

does not provide specificity as to 

whether the financial management 

entity would operate on behalf of an 

individual who would be the employer 

of his or her attendants, or if a financial 

management entity could be an Agency 

with Choice, wherein the agency is the 

official employer of attendant care 

providers who provide service to 

participants. 

Response: It is unclear how a 

financial management entity would be 

utilized in an agency-provider model. 

However, we would be willing to 

discuss such a proposal with States. 

Comment: Two commenters suggested 

the regulation require States to offer 

more than one choice of financial 

management entity, and recommended 

the term ‘‘entity’’ be changed to 

‘‘entities.’’ 

Response: Section 1915(k) of the Act 

does not provide the authority to require 

States to provide more than one choice 

of financial management entity, as this 

is an administrative function that may 

be completed by the State or a vendor 

organization. However, the statute does 

not prohibit States from having more 

than one financial management entity if 

they choose to. We believe offering more 

than one entity is congruent with the 

philosophy of consumer choice and 

encourage States to consider allowing 

more than one financial management 

entity. 

Comment: One commenter 

recommended that § 441.545(b)(1)(iii) be 

amended to say ‘‘separately track budget 

funds and expenditures for each 

individual.’’ The commenter believes 

this revision is necessary because States 

may interpret ‘‘separate account’’ to 

mean ‘‘separate bank account’’ which is 

an overly complex, costly and 

unnecessary approach to managing an 

individual budget. 

Response: The intent of this provision 

is to eliminate the possibility of 

commingling of individuals’ budget 

funds. We have revised the rule to 

incorporate the suggested language and 

also added the requirement for the 

financial management entity (FME) to 

separately maintain budget funds. 

Additionally, we have revised 

paragraph (b)(vi) to clarify that the FME 

is required to provide periodic reports 

of expenditures to the individual and 

State. 

Comment: One commenter suggested 

revising § 441.545(b)(2)(I) to also require 

filing and reporting FICA, FUTA and 

State unemployment taxes. 

Response: We believe the regulation 

already specifies these functions, as we 

interpret ‘‘compliance with’’ to 

encompass filing and reporting. 

However, we are taking this opportunity 

to add ‘‘and State employment and 

taxation authorities’’ after requiring 

compliance with all applicable 

requirements of the IRS. 

Comment: One commenter 

recommended that communications 

between the FME and the individual 

occur at least monthly. 

Response: We believe the frequency of 

communication between the FME and 

the individual should be established by 

the State and should be based upon the 

level of assistance needed and provided. 


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Comment: One commenter wanted 

clarification as to whether the cost of 

the FME is considered a service cost 

rather than an administrative cost. The 

commenter also wanted to know if this 

service may be included in an 

individual’s service budget. 

Response: Consistent with other 

authorities including services provided 

by a financial management entity, this is 

considered an administrative function 

and may not be included in the 

individual service budget. 

Comment: One commenter suggested 

the regulation should recognize fiscal 

intermediaries and include language 

that those entities that have been 

approved to serve a similar role under 

a State program should be automatically 

approved or allowed a streamlined 

approval process to provide similar 

services under CFC. 

Response: Section 441.545 sets forth 

the minimum mandatory functions that 

must be performed by the FME. We 

recognize that States may interpret 

‘‘fiscal intermediaries’’ differently. 

Additionally, we do not believe that 

fiscal intermediaries are synonymous 

with fiscal management activities. 

Therefore, we do not believe it is 

appropriate to list fiscal intermediaries 

in the regulation; however, we note they 

could provide the functions set forth in 

§ 441.545, as determined by the State. 

Comment: One commenter 

recommended the regulation clarify 

whether FME activities must be 

provided if a State does not elect to offer 

direct cash, vouchers, or permissible 

purchases. 

Response: Section 441.545(b)(1) 

requires a State to make financial 

management activities available to all 

individuals with a service budget, 

including when the direct cash option is 

used. We are modifying paragraph (b)(3) 

to clarify that the requirements at 

§ 441.545(b)(2)(i) through (iv) also apply 

to vouchers. Accordingly, we are 

removing ‘‘If the cash option is the only 

model offered by the State for 

Community First Choice’’ and ‘‘services 

under the cash option’’ from paragraph 

(b)(2)(iv) as we want to be clear that this 

provision applies to both direct cash 

and vouchers. States only implementing 

CFC through an agency-provider model 

would not need to provide FME 

activities. 

Comment: One commenter 

recommended that a financial 

management entity be available for all 

self-directed model options. In such 

cases, the role of the financial 

management entity within each of the 

models would need to be clarified. 

Response: Section 441.545(b)(1) 

requires a State to make financial 

management activities available to all 

individuals with a service budget. States 

can separately choose to allow cash 

disbursement or vouchers to individuals 

self-directing CFC services. Individuals 

using the direct cash option have the 

choice of using the financial 

management entity for some or all of the 

relevant functions. We believe these 

requirements ensure sufficient access to 

financial management entities. 

Comment: One commenter stated that 

education on the responsibilities of 

managing cash when an FME is not 

used is key. Specifically, States and 

individuals should be educated on the 

risks associated with not using a 

financial management entity and the 

consequences of mismanaging the 

duties required. 

Response: We agree with the 

commenter and believe the 

requirements under § 441.555, Support 

System, will provide individuals with 

the necessary education. 

Comment: One commenter 

recommended the regulatory citations 

for service models be reorganized so 

that all the information pertinent to the 

agency model is together and the selfdirection requirements are all together. 

Response: As indicated earlier, we 

have revised the Support System 

language at § 441.555 to indicate that it 

applies to all service delivery models. 

We believe this addresses this 

commenter’s suggestion. 

Upon consideration of public 

comments received, we are finalizing 

§ 441.545 with revision, revising 

paragraph (a) to refer to the ‘‘agencyprovider model’’, amending paragraph 

(a)(1) to align with the revised agencyprovider model definition, amending 

paragraph (b)(1)(iii) to say ‘‘separately 

track budget funds and expenditures for 

each individual’’, amending paragraph 

(b)(1)(vi) to require the FME to provide 

periodic reports of expenditures to the 

individual and to the State, amending 

paragraph (b)(2)(i) to specify compliance 

with State employment and taxation 

authorities, removing ‘‘If cash option is 

the only model offered by the State for 

Community First Choice’’ and ‘‘services 

under the cash option’’ from (b)(2)(iv), 

modifying paragraph (b)(3) to make the 

requirements at § 441.545(b)(2)(i) 

through (iv) apply to vouchers, and 

adding a new paragraph (c) to permit 

States to propose other service delivery 

models. 

L. Service Plan Requirements for SelfDirected Model With Service Budget 

(§ 441.550) 

We proposed that the self-directed 

service plan requirements convey 

authority to the individual to recruit, 

hire (including specifying attendant care 

provider qualifications), fire, supervise, 

and manage attendant care providers in 

the provision of CFC services and 

supports. In addition, we proposed 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. 

Comment: Many commenters offered 

general support of the self-direction 

model with service budget. The 

commenters believe the intent of this 

section is to give people maximum 

control over their services, recognizing 

that giving individuals the authority to 

manage their service provider is integral 

for self direction. 

Response: We appreciate the 

commenters’ support. 

Comment: One commenter requested 

more specificity regarding the 

requirement for individuals to evaluate 

an attendant care provider’s 

performance found at § 441.550(d)(4). 

Specifically, the commenter suggests 

that we explain the purpose of the 

evaluation, who will deliver and receive 

the evaluations, and what actions are to 

be taken in response to the evaluations. 

This commenter also questioned 

whether evaluations are required if the 

recipient is the spouse of the provider, 

or a minor with a parent provider. 

Alternatively, one commenter offered 

support of the evaluation requirement, 

but requested the rule not allow States 

to impose formal or standard evaluation 

processes. The commenter believes that 

the method for evaluation should be the 

decision of the employer. 

Response: Individuals receiving 

services under the self-directed model 

with service budget have the ability to 

supervise and manage attendant care 

providers providing services to them. 

We expect individuals to evaluate the 

quality and adequacy of services the 

attendant care provider provides as part 

of their supervision responsibilities. We 

do not expect that the evaluation has to 

be a formal process, nor is it the 

responsibility of the State to impose a 

standard evaluation process. The 

purpose of the evaluation is to provide 

the individual with the opportunity to 

provide feedback to the attendant care 

provider with regard to the provision of 

services. When the individual has a 

representative, the representative would 

be expected to conduct the evaluation. 

Comment: Many commenters 

expressed support of the self-directed 

service plan requirements. The 

commenters believe the requirements 

are essential to meaningful self-directed 

models of care and encourage their 

inclusion in the final regulation. 


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Response: We appreciate the 

commenters’ support. 

Comment: One commenter requested 

we clarify whether the State is allowed 

to set parameters or limits on any of the 

following: Annual service budget 

amount, the number of paid attendant 

care hours received from any single 

family member within a time period 

(per week, month, etc), or minimum 

wages. 

Response: CFC is an optional State 

plan service. As such, States may set 

limits on the amount duration and 

scope of CFC benefits, as long these 

limits comply with the CFC specific 

requirements set forth in statute and 

regulation. We will be reviewing all 

State proposals to implement CFC under 

the State plan. Our review includes a 

review of any proposed limitations. 

Comment: Many commenters 

expressed concern with individuals 

determining the amount to pay for a 

service, support, or item. Many 

commenters indicated that States 

should be allowed to establish 

reimbursement rates and methodologies 

including the use of collective 

bargaining as a way to establish 

consistent reimbursement rates for 

services and supports, while still 

allowing the individual to determine the 

amount, duration, and scope of the 

services provided. One commenter 

recommended the regulation be 

amended to specify that when an 

individual is determining the amount to 

pay for a service, support or item, the 

individual’s decision should be 

consistent with existing State laws and 

regulations governing compensation 

standards. Another commenter 

indicated that while individuals should 

appropriately review invoices, requiring 

that individuals determine payment for 

attendant services (hourly rate or wages) 

is not a necessary component of selfdirection and could undermine States’ 

efforts to build their long-term services 

attendant workforce through regulating 

compensation standards for attendants/ 

direct care attendant care providers. 

Another commenter requests the 

elimination of the requirement that 

individuals in a self-directed model 

with service budget determine the 

amount paid for a service, support, or 

item. 

Response: We understand the concern 

expressed by these commenters. The 

intent of CFC is to provide individuals 

with the opportunity to maximize their 

independence and control of the home 

and community-based attendant 

services and supports. An integral 

component of the self-directed model 

with service budget is the ability of the 

individual to determine the amount 

paid for services. However, this 

flexibility should not conflict with 

responsibilities for setting compensation 

according to State and Federal 

requirements. Therefore, we are 

modifying § 440.550(e) to specify that 

determining the amount to pay for 

services should be ‘‘in accordance with 

State and Federal compensation 

requirements’’. 

Comment: One commenter expressed 

concern related to the requirement that 

‘‘the budget methodology include 

calculations of the expected costs of 

CFC services and supports if those 

services and supports were not selfdirected.’’ The commenter believes 

States will find this provision 

challenging since it asks them to 

compare two separate models that are 

not necessarily directly comparable. 

Response: We do not agree with the 

commenter. We expect the State to 

obtain this information based on an 

analysis of historical costs and 

utilization and other factors that are 

likely to affect costs. 

Comment: One commenter requested 

that we provide clarification around 

budgeting requirements, specifically 

whether individual budgeting is 

required. 

Response: The service budgeting 

requirements are used when individuals 

are receiving services under the selfdirected model with a service budget. 

The budget is developed based on an 

individual’s assessment of functional 

need and the services specified in the 

person-centered service plan. 

Comment: The commenter indicated 

that the proposed rule gives the 

appearance that the self-directed model 

is more costly and onerous to 

implement than agency-provider 

models. 

Response: CMS encourages States to 

avail themselves of a variety of service 

models to implement CFC. We 

acknowledge that agency-provider 

models are more straightforward to 

implement, and likely are already in 

existence in most States. However, we 

fully recognize the merits of selfdirected service models, and will work 

with any State interested in adopting a 

self-directed service model for CFC. 

Comment: One commenter 

recommended that the rule be revised to 

add language stating that the attendant 

care provider’s duties are identified in 

the approved self-directed service plan 

and within the scope of CFC services. 

Response: It is the person-centered 

service plan, required for each 

individual receiving CFC services and 

supports, regardless of service delivery 

model, that would convey the duties of 

the attendant care provider in 

accordance with the scope of CFC. We 

do not believe that it is necessary to 

amend this section of the rule to 

additionally make these points. 

Comment: One commenter stated that 

with regard to ‘‘reviewing and 

approving provider invoices or 

timesheets’’ attendant care providers 

must utilize timesheets per the Fair 

Labor Standards Act (rather than 

invoices). The commenter 

recommended revising the rule to say 

‘‘Reviewing and approving provider 

payment requests.’’ 

Response: We agree with the 

commenter and have revised the rule at 

§ 441.550(f) to say ‘‘reviewing and 

approving provider payment requests.’’ 

Upon consideration of the public 

comments received, we are finalizing 

§ 441.550 with revision, modifying 

paragraph (e) to specify that 

determining the amount paid for 

services should be ‘‘in accordance with 

State and Federal compensation 

requirements’’, modifying paragraph (f) 

to specify ‘‘reviewing and approving 

provider payment requests.’’ As noted 

in the response to comments received in 

the Definitions section, we modified 

paragraphs (a) and (b) to use the terms 

‘‘dismiss’’ and ‘‘select.’’ 

M. Support System (§ 441.555) 

Based on our experience with selfdirection 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 § 441.555 

we proposed the requirement that the 

State have in place a support system to 

facilitate successful self-direction by the 

individual. While we did not prescribe 

the way States are to design their 

support system, to allow flexibility, 

based on our experience, we included 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. 

Comment: We received several 

comments providing overall support for 

the requirements set forth at § 451.555. 

One commenter strongly endorsed this 

section as a critical component to 

ensuring consumers achieve maximum 

independence. 

Response: We appreciate the 

commenters’ support. 

Comment: A few commenters 

suggested that we extend paragraph 

(b)(1) to require communication in a 

linguistically and culturally appropriate 


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manner, with accommodations for all 

functional limitations, including the 

need for alternative formats. 

Response: For a State to comply with 

this requirement, it is an expectation 

that the State will assure that 

information is provided to individuals 

in a manner that is culturally sensitive 

and at a level most appropriate for the 

individual to understand the 

information. This includes translator 

services as needed for non-English 

speaking participants and interpreter 

services and accommodations for 

individuals with sight or hearing 

impairments. We agree with the 

commenter’s recommendation and have 

revised paragraph (b)(1) to include the 

following language: ‘‘To ensure that the 

information is communicated in an 

accessible manner, information should 

be communicated in plain language and 

needed auxiliary aids and services 

should be provided.’’ 

Comment: One commenter requested 

that we provide guidance on all 

conditions that are required for personcentered planning with a service budget 

to better determine the cost of 

participating. 

Response: The requirements for 

person-centered planning are the same 

regardless of the service delivery model 

and are described at § 441.540. 

Additionally, the requirements set forth 

at § 441.560 must be met for individuals 

receiving services through the selfdirected model with a service budget. 

Comment: One commenter indicated 

that, with regard to risk management 

agreements required under paragraph 

§ 441.555(b)(2)(xi), the regulation does 

not address whether criminal history 

record checks are permitted to help 

mitigate risk. The commenter 

questioned whether record or 

background checks would be allowed if 

the participant recruits, hires, trains and 

fires attendant care providers. The 

commenter requested CMS to clarify 

whether States are required to allow 

participants to hire someone who 

presents a risk of harm. 

Response: Following the practice of 

other programs offering self-direction, 

we believe that criminal background 

checks of attendants should be left to 

the discretion of the States. However, 

we agree that this expectation was not 

clear in the proposed regulation. 

While we will not prescribe the tools 

or instruments States should use when 

developing risk management 

agreements, we are revising § 441.555 to 

require States to specify any tools or 

instrument it uses to mitigate identified 

risks. In this section, we further add that 

if States make criminal or background 

checks a requirement, States would bear 

the expense of the background checks it 

performs on behalf of individuals 

participating in CFC. 

Additionally, we believe that the 

individual must retain the authority to 

decide who to hire to provide personal 

attendant services, as this decision is 

inherent in self-direction, as long as the 

choice adheres to section 1903(i) of the 

Act that Medicaid payment shall not be 

made for items or services furnished by 

individuals or entities excluded from 

participating in the Medicaid Program. 

Comment: One commenter requested 

that we consider giving States the 

option to make self-directed training 

mandatory to ensure that individuals 

have mastered the skills needed to 

manage the service budget. 

Response: We do not agree with the 

commenter. Section 441.555(b) requires 

States to provide or arrange for the 

provision of appropriate information, 

counseling, training and assistance to 

ensure that an individual is able to 

manage the services and budget. These 

supports are to be available to the 

individual on a continuous basis until 

such time as it has been demonstrated 

that after additional counseling, 

information, training or assistance the 

individual cannot effectively manage 

self-direction responsibilities. 

Furthermore, § 451.555(b)(2)(v) 

requires there to be a discussion about 

the risks and responsibilities of selfdirection. We believe these protections 

are sufficient to facilitate successful 

provision of services and supports via a 

self-directed model with service budget. 

Comment: One commenter asked if 

the entity providing the support system 

could also be the financial management 

entity. 

Response: Such an arrangement 

would be appropriate, as long as the 

conflict of interest protections originally 

proposed in § 441.540(c)(4)(iv), and now 

relocated to this section, are met. 

Comment: One commenter requested 

clarification as to whether the State’s 

obligation is limited to providing 

information about existing advocacy 

systems or if there is an expectation that 

States actively invest in fostering 

development of advocacy systems for 

the CFC option. 

Response: It is an expectation that 

States would provide information about 

existing advocacy systems. We are not 

mandating the establishment of 

additional systems specific to the CFC 

program. 

Comment: One commenter 

recommends that paragraph (b)(2)(vii) 

be revised as ‘‘Individual rights, 

including appeal rights.’’ 

Response: We agree with the 

commenter and have revised the rule at 

§ 441.555(b)(2)(vii) to say ‘‘individual 

rights, including appeal rights.’’ 

Comment: One commenter expressed 

concern that the regulatory language 

requiring States to provide assistance to 

define goals, needs and preferences in 

paragraph (b)(2)(ix) exceeds current 

program limits and could overpower 

existing systems. The commenter 

recommends States have the ability to 

define this within current program 

abilities and limits. 

Response: We do not agree with the 

commenter that States be given the 

ability to define support activities 

within the States’ current program 

abilities. While similar to existing 

authorities, CFC is not the same. We are 

clarifying that this requirement relates 

to the provision of CFC. Therefore we 

have revised the rule at 

§ 441.555(b)(2)(ix) to say ‘‘Defining 

goals, needs and preferences of 

Community First Choice services and 

supports.’’ 

Comment: Several commenters 

expressed concern that the regulation 

only applies supports to the selfdirected model population. The 

commenters indicated that some of 

these supports may also be relevant and 

important to individuals participating in 

the agency model. The commenter 

recommends extending the relevant 

support requirements to that 

population. 

Response: We recognize that although 

participants may not control an 

individualized budget in the agencyprovider model, participants may 

manage their services to the maximum 

extent possible. We agree with the 

commenters that the supports provided 

under this section apply to all service 

delivery models, not just the selfdirection model with a service budget. 

Therefore, we have revised the rule to 

include language that applies this 

requirement to all service delivery 

models. 

Comment: We received many 

comments suggesting States be 

encouraged to develop attendant care 

provider registries as part of the 

additional activities they undertake to 

support a self-directed model of service 

delivery. A few commenters expressed 

concern that individuals who do not 

choose to receive services through an 

agency may have difficulty locating 

direct-care attendant care providers 

outside of their immediate network of 

family members and contacts. The 

commenters indicated that a ‘‘matching 

service registry’’ is a labor market 

intermediary that creates a dynamic 

platform for matching supply and 

demand by allowing individuals to tap 

into an up-to-date bank of available 


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attendant care providers. The 

commenters also indicated that the 

attendant care providers can also alert 

participants of their availability for 

employment. These commenters 

recommended the regulatory language 

be revised to require States to establish 

a labor market intermediary such as a 

matching service registry to assist 

participants with identifying and 

accessing independent providers. 

Response: We believe States should 

have the flexibility to design a system 

that would best address workforce 

issues and ensure access to providers in 

their States. We support State activity to 

implement systems that will improve an 

individual’s access to attendants. 

However we believe it is beyond the 

scope of the regulation to mandate that 

States implement attendant care 

provider registries. 

Comment: A few commenters suggest 

we add ‘‘peer supports’’ to the list of 

included support activities. Another 

commenter suggested that the regulation 

promote the use of local, peer-based and 

consumer controlled providers so 

beneficiaries have maximum access to 

their fiscal agent. 

Response: We do not agree with the 

commenters that ‘‘peer support’’ 

services should be added to the list of 

support activities. For purposes of 

Medicaid, peer support services are an 

evidence-based mental health model of 

care that assists individuals with their 

recovery from mental illness and 

substance use disorders. We recognize 

that peer support is provided by 

specially trained individuals who are in 

recovery from mental illness and/or 

substance use services. As such, we 

believe it would create confusion to 

include ‘‘peer supports’’ as a CFC 

service. 

Recognizing that individuals with 

experience in utilizing personal 

attendant services and supports could 

provide valuable assistance to 

individuals who desire to do the same, 

States could utilize individuals who 

were or are receiving such services in 

the implementation of the activities 

required under the Support System. 

Comment: One commenter 

recommends deleting paragraph 

(b)(2)(xi), pertaining to risk management 

agreements. The commenter compares 

such agreements to managed risk 

agreements in assisted living facilities 

that are inappropriate and illegal to the 

extent that they purport to release a 

service provider from liability. The 

commenter indicated consumer law 

invalidates any agreement that would 

absolve a personal care provider from 

responsibility for his or her actions. 

Response: We disagree with the 

commenter, as we do not believe the 

risk management agreement 

requirement absolves personal care 

providers from responsibility for his or 

her actions. We believe the purpose of 

the risk management agreement is to 

identify the risks that an individual is 

willing and able to assume, and the plan 

for how identified risks will be 

mitigated. The State must ensure that 

the risk management agreement is the 

result of discussion and negotiation 

among persons providing the support 

system functions, the individual, and 

others from whom the individual may 

seek guidance. This is a requirement 

under the person-centered service plan. 

Comment: One commenter suggested 

that the regulation be revised at 

§ 441.555(b)(2)(vi) to state ‘‘The ability 

to freely choose from available home 

and community-based attendant 

providers, service delivery models and 

(if applicable) financial management 

entities.’’ 

Response: We agree with the 

commenter, but must acknowledge that 

States have the choice of how many 

service delivery models to provide. 

Therefore we have revised 

§ 441.555(b)(2)(vi) to state ‘‘the ability to 

freely choose from available home and 

community-based attendant providers, 

available service delivery models and if 

applicable, financial management 

entities.’’ 

Comment: One commenter requested 

that we clarify the vision for ensuring 

development of a conflict free support 

system, as alluded to in the preamble, 

in the service plan discussion. The 

commenter indicated the proposed rule 

contains no such language or guidance. 

Response: The conflict free support 

system discussed in the preamble is 

operationalized by a State’s adherence 

to the language proposed in 

§ 441.540(c)(4), which has now been 

relocated to this section. 

Comment: One commenter indicated 

that to avoid conflict with standard 

language referring to contracts, the word 

‘‘plan’’ should be substituted for the 

word ‘‘agreement’’ in paragraph 

(b)(2)(xi): development of risk plans. 

Response: We do not agree with the 

commenter’s suggestion. We believe the 

use of the term ‘‘agreement’’ most 

accurately reflects that these strategies 

are the result of discussion and 

negotiation required under the personcentered plan development. 

Comment: One commenter requested 

that the regulation include support 

system workforce competencies. 

Response: We disagree with this 

suggestion, as we believe States should 

have the flexibility to determine the 

qualifications of the entities conducting 

the assessment of functional need and 

developing the person-centered service 

plan, provided all requirements of this 

regulation are met. 

Comment: One commenter indicated 

that individuals may need ongoing 

education and guidance from the selfdirection support system. 

Response: We agree with the 

commenter, and believe that this 

ongoing support is provided for. 

Upon consideration of the public 

comments received, we are finalizing 

§ 441.555 with the following revisions: 

• We are revising paragraph (b)(1) to 

include the following language: ‘‘To 

ensure that the information is 

communicated in an accessible manner, 

information should be communicated in 

plain language and needed auxiliary 

aids and services should be provided.’’ 

• We are adding a requirement at 

paragraph (b)(2)(xi) that States specify 

any tools or instruments it uses to 

mitigate identified risks, and adding 

that if States make criminal or 

background checks a requirement, 

States would bear the expense of the 

background checks it performs on behalf 

of individuals participating in CFC; 

• We are revising paragraph (b)(2)(vii) 

to include ‘‘individual rights, including 

appeal rights’’; 

• We are revising paragraph (b)(2)(ix) 

to state ‘‘Defining goals, needs and 

preferences of CFC services’’; 

• We are revising the introduction to 

include language that applies this 

requirement to all service delivery 

models; 

• We are revising paragraph (b)(2)(vi) 

to state ‘‘the ability to freely choose 

from available home and communitybased attendant providers, available 

service delivery models and if 

applicable, financial management 

entities.’’ 

• We are adding a paragraph (c) to 

incorporate conflict of interest language 

proposed in § 441.540(c)(4). 

N. Service Budget Requirements 

(§ 441.560) 

We proposed to 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. We 

proposed 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 proposed the budget methodology 

include calculations of the expected 


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costs of CFC services and supports if 

those services and supports were not 

self-directed. We proposed that States 

could place monetary or budgetary 

limits on self-directed CFC services and 

that if a State chose to do so, we 

proposed to require that the State have 

a process in place that describes the 

limits and the basis for the limits, any 

adjustments that will be allowed, and 

the basis for the adjustments, such as an 

individual’s health and welfare. We 

proposed to require certain beneficiary 

safeguards in light of these possible 

limitations. 

Comment: Many commenters offered 

their support for this requirement. 

Response: We appreciate the 

commenters’ support. 

Comment: One commenter requested 

clarification around CMS’ intent for 

anticipated safeguards, and whether it is 

limited to circumstances in which an 

individual’s needs change. 

Response: Our experience with selfdirection indicated that at a minimum, 

a certain level of oversight by the State 

is necessary to help flag potential issues 

with the provision of services. We 

believe it is important that States have 

a system to oversee the expenditures 

being made by individuals self-directing 

their care. Premature depletion of the 

funds in a service budget could signal 

a health crisis which would require the 

State to immediately determine the 

health status of an individual and 

construct a new assessment. It could 

also signal misuse of funds, for which 

the State would need to take corrective 

action. Although there are general 

safeguard requirements outlined in the 

Support System section, the safeguard 

requirements in § 441.560 pertain 

specifically to resolving issues when the 

budgeted service amount is insufficient 

to meet the individual’s needs. 

Comment: One commenter requested 

more guidance in the regulation on the 

procedures the State must have in place 

to provide safeguards when the 

budgeted service amount is insufficient 

to meet the individual’s needs. 

Response: We appreciate the 

commenters’ suggestions; however the 

specific safeguards are determined by 

the State. We will review the State’s 

proposed safeguards during the review 

of their State plan amendment 

submitted to implement CFC. 

Comment: One commenter suggested 

that the rule should require the State to 

explain and provide in writing the 

criteria used for determining an 

individual’s service budget amount 

when the individual receives the final 

written service plan. 

Response: Section 441.560(a)(2) 

requires the State to specify procedures 

for informing an individual of the 

amount of the service budget before the 

service plan is finalized. Additionally, 

paragraph (d) requires the State to have 

a method of notifying individuals of the 

amount of any limit that applies to CFC 

services and supports. To ensure 

individuals receive information in a 

manner in which they understand, we 

have revised § 441.560(d) to include the 

following language: ‘‘Notice must be 

communicated in an accessible format, 

communicated in plain language, and 

needed auxiliary aids and services 

should be provided.’’ 

Comment: One commenter wanted to 

know if a State must adhere to the 

required elements at § 441.560(a)(1), 

(a)(2), (a)(3)(i) and (a)(5) if the State does 

not elect to provide transition costs, 

direct cash, vouchers or permissible 

purchases. 

Response: Any State allowing selfdirection with a service budget must 

adhere to all requirements of the final 

regulation. To clarify the requirements 

as they relate to permissible services 

and supports, we are taking this 

opportunity to revise paragraph (a)(5) 

inserting ‘‘other permissible services 

and supports as defined at § 441.520(b)’’ 

after ‘‘transition costs’’ and removing 

the remaining language. 

Comment: We received several 

comments requesting clarification with 

regard to a State’s flexibility to establish 

service limits on the service budget. One 

commenter believes strongly that States 

should be allowed the flexibility to 

institute caps on hours of services in 

this section, especially in times of fiscal 

crisis or uncertainty. The commenter 

also believes States should not be 

required to provide all services relating 

to all needs identified through the needs 

assessment process as there are limited 

[financial] resources. Another 

commenter requested the regulation 

explicitly say if a State may set a per 

person service budget limit for the selfdirected model. 

Response: CFC is an optional State 

plan service and States have the 

flexibility to determine the amount, 

duration, and scope of the program, 

within the confines of statutory 

requirements. We provide clarification 

under the assessment of functional need 

section that although the assessment 

will identify all needs an individual 

has, the CFC program will only be 

responsible for the provision of services 

available under CFC. We believe it is 

necessary and appropriate for the 

individual to be referred to other 

Medicaid and non-Medicaid programs 

the individual may be eligible for, that 

will address the needs identified that 

are not available under CFC. 

Comment: One commenter requested 

the provision of guidance to States on 

ensuring that when a budget is capped, 

there are methods to modify the budget 

allotment, especially in emergency 

situations. 

Response: Section 441.560(b)(5) and 

(c) require States to have procedures to 

adjust limitations placed on CFC 

services and procedures to provide 

safeguards to individuals when the 

budgeted amount is insufficient to meet 

the individual’s needs. These provisions 

allow States to modify the budget 

allotments in emergency situations. 

Comment: One commenter 

recommends the regulation include 

appropriate safeguards to ensure that 

budgets are not arbitrarily reduced for 

an individual’s self-directed services. 

Another commenter indicated it is not 

clear what ‘‘safeguards’’ are considered 

acceptable when the budgeted services 

amount is insufficient to meet the 

individual’s needs. The service budget 

requirements should explicitly address 

what adjustments may be made, for 

example when the individual is at risk 

of an institutional placement because of 

budget limits. Another commenter 

indicated that individuals should be 

well-informed of the appeal process if 

they believe that a service budget cannot 

adequately meet their needs. 

Response: Section 441.560(c) requires 

the State to have procedures in place 

that will provide safeguards to 

individuals when the budgeted service 

amount is insufficient to meet the 

individual’s needs. The Support System 

set forth in § 441.555 requires 

individuals be informed of the process 

for changing the person-centered service 

plan. An individual is supposed to sign 

their plan only if they agree with it. If 

the individual does not agree with the 

service budget, it should be addressed at 

this time. Additionally, there are 

requirements for individuals to file an 

appeal, and as always, the standard 

Medicaid fair hearing appeal rights exist 

for individuals receiving CFC services. 

Comment: One commenter indicated 

that the regulation should require that 

appeals be handled by entities not 

responsible for conducting the 

assessment or providing case 

management services. 

Response: We agree appeals should be 

handled by an independent entity. 

Reconsiderations may be handled by the 

individuals responsible for conducting 

an assessment and facilitating the 

person-centered plan of care. However, 

if an individual is not satisfied with the 

service plan developed, including the 

amount of hours identified on the plan, 

an individual has the right to file an 

appeal. The individuals should file an 


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appeal following the State’s appeal 

process. 

Comment: One commenter requested 

the rule clarify the applicability of 

‘‘evidence based’’ to a service budget 

allocation methodology, as referenced in 

paragraph (b)(1). Additionally, the 

commenter requests clarification as to 

whether the ‘‘cost data’’ invokes a 

relationship to historical Medicaid rates 

and corresponding expenditure costs, or 

if it CMS’ expectation that ‘‘cost’’ is 

related to audited costs for providing 

services unrelated to historical 

reimbursement rates. 

Response: By this, we mean that the 

method used by the State is based on an 

analysis of historical costs and 

utilization and other factors that are 

likely to affect costs. 

Comment: One commenter requested 

that CMS clarify the test against which 

we will measure service budget 

allocation methodology to determine 

approval. This commenter asked if there 

is an expectation of actuarial soundness 

or some other rate setting standard 

against which the methodology will be 

judged. 

Response: Verification of actuarial 

soundness will not be required. States 

are expected to provide a description of 

the methodology used to determine the 

individual’s service budget amount. The 

methodology must take into account the 

cost of services if they were not selfdirected. We would like to further 

clarify that we use the term ‘‘cost’’ to 

mean what it will cost the beneficiary to 

purchase the services, at either the feefor-service rate or a beneficiary 

negotiated rate. We recognize the 

confusion the use of the terms 

‘‘allocation’’ and ‘‘cost’’ in 

§ 441.560(b)(1) have created, and 

therefore, we have revised the rule to 

remove the terms. Additionally, we 

have revised this section to remove 

redundant language. 

Comment: One commenter requested 

clarification as to whether a State may 

set participation parameters, such that 

individuals may be prohibited from 

participating if the individual’s choices 

around wage limits result in the service 

budget being insufficient to cover the 

assessed needs. 

Response: Section 441.545(b)(2)(iii) 

requires that States 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 responsibilities of receiving a cash 

payment. 

Comment: A few commenters noted 

an incorrect regulatory citation for the 

Medicaid fair hearing process. 

Response: We have revised the rule to 

make this technical correction. 

Comment: A few commenters 

suggested the regulation be revised at 

paragraph (b)(1) to require individuals 

to follow a compensation standard 

developed by the State under § 441.570. 

The commenters believe the States 

should include labor market data in 

their methodology for developing a 

participant service budget as a basis for 

setting adequate compensation 

standards for direct care services to 

support recruiting and retaining 

qualified providers. 

Response: We do not agree with the 

commenter’s suggestion because it 

would not support the requirement at 

§ 441.550(e) granting individuals the 

authority to determine the amount paid 

for a service, support, or item. 

Comment: Several commenters 

expressed support for the requirement 

§ 441.560(e) that the service budget not 

restrict access to other medically 

necessary care and services furnished 

under the State plan. 

Response: We appreciate the 

commenter’s support. 

Comment: One commenter requested 

that the service budget criterion be clear 

regarding what is permitted and 

prohibited. With regard to what is 

permitted, flexibility due to changing 

needs, priorities, or goals needs to be 

recognized. 

Response: States must ensure the 

method of determining the budget 

allocation is objective and evidence 

based utilizing valid and reliable cost 

data. Additionally, the regulation 

requires that States have a process for 

adjusting any limits placed on the 

provision of CFC services. 

Comment: One commenter indicated 

that safeguards for individuals to 

address budgeted amounts insufficient 

to meet consumer needs must be robust 

and timely. 

Response: We agree with the 

commenter and will review the 

description of the State’s safeguards 

through the State plan amendment 

process. 

Comment: One commenter requests 

the regulation clarify if a State may set 

self-directed budgets at a level which 

assures that those using the self-directed 

service option will not exceed the 

amount of funding which would be 

spent under an agency-directed mode. 

The commenter indicated the necessity 

for fiscal neutrality, indicating that selfdirected services in the State has led to 

budgets being reduced by a specific 

percentage to account for the fact that 

flexibility is likely to mean a person 

uses more of the funding allowed to care 

for them during the year. The 

commenter urges that any reductions or 

discounts be based on data and a 

transparent methodology. 

Response: States determine the 

methodology through which the service 

budgets are developed. As required in 

paragraph (b)(1), this methodology must 

be objective and evidence-based, using 

valid, reliable cost data. 

Comment: One commenter 

recommends revising paragraph (a)(3)(i) 

to indicate that ‘‘the procedure for an 

individual to freely adjust amounts 

allocated to specific services and 

supports within the approved service 

budget.’’ 

Response: We acknowledge the clarity 

this revision brings, and are revising the 

regulation to incorporate it. 

Comment: One commenter 

recommends health and safety be added 

to paragraph (c). 

Response: We do not believe that such 

a clarification is necessary, as the term 

‘‘safeguards’’ is sufficiently broad to 

encompass health and safety 

protections. 

Upon consideration of public 

comments received, we are finalizing 

§ 441.560 with revision to paragraph 

(a)(5) inserting ‘‘other permissible 

services and supports as defined at 

§ 441.520(b)’’ after ‘‘transition costs’’ 

and removing the remaining language, 

correcting the citation of the fair 

hearings process in paragraph (a)(6), 

incorporating the commenter’s 

suggested revision to paragraph (a)(3)(i), 

removing the terms ‘‘allocation’’ and 

‘‘cost’’ from paragraph (b)(1), revising 

paragraph (d) to inserting ‘‘Notice must 

be communicated in an accessible 

format, communicated in plain 

language, and needed auxiliary aids and 

services should be provided’’ and 

removing redundant language. 

O. Provider Qualifications (§ 441.565) 

We proposed to require that States 

provide assurances that necessary 

safeguards have been taken to protect 

the health and welfare of CFC 

recipients. States must define 

qualifications for providers of attendant 

services and supports under the agencyprovider model. We proposed that an 

individual has the option to permit 

family members, or any other 

individuals to provide CFC services and 

supports identified in service plan as 

long as they meet the qualifications to 

provide such services and supports. We 

also proposed that individuals retain the 

right to train their attendant care 

providers in the specific areas of 

attendant services and supports needed 

by the individual, and that individuals 

also retain the right to establish 


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additional staff qualifications based on 

their needs and preferences. 

Comment: One commenter supported 

the requirement that States take 

necessary safeguards to protect the 

‘‘health and welfare’’ of enrollees. 

Response: We recognize that the 

protection of health and safety requires 

program-wide consideration and 

oversight; we are therefore taking this 

opportunity to move this assurance from 

the Provider Qualifications section to 

the State Assurances section. 

Additionally, we are adding language to 

the State Assurance section to make it 

clear that this includes assuring the 

State’s adherence to section 1903(i)(2) of 

the Act that Medicaid payment shall not 

be made for items or services furnished 

by individuals or entities excluded from 

participating in the Medicaid Program. 

Comment: One commenter expressed 

concern that the regulatory language at 

§ 441.565(c) does not state the statutory 

requirement that services be provided 

by an individual who is qualified. The 

commenter recommended the regulatory 

language be revised to explicitly state 

this. 

Response: The requirements at 

§ 441.565(b) requiring the development 

of provider qualifications includes the 

requirement that providers must be 

qualified. Therefore, we are not revising 

the regulatory language to explicitly 

state this. 

Comment: One commenter requested 

that we define the term ‘‘qualified.’’ A 

few commenters requested that the 

regulation go beyond requiring States to 

define provider qualifications, by also 

establishing core qualifications for 

States to build around. The commenters 

believe the core qualifications should be 

applied uniformly to home care 

agencies, as well as the self-directed 

model with service budget. The 

commenters indicated that at a 

minimum, attendant care providers 

should be subject to criminal 

background checks, a minimum set of 

basic caregiver training standards, and 

training on mandated ‘‘abuse and 

neglect’’ reporting. Several commenters 

requested that the regulation require 

States to adopt national credentialing 

standards for personal assistance 

attendant care providers. One 

commenter requested that we confirm 

that the individual’s right to establish 

additional staff qualifications does not 

interfere with a State’s ability to set 

provider qualifications including those 

necessary to ensure the individual’s 

health and welfare. A few commenters 

expressed concern that the State would 

not define the qualifications of 

providers who are not part of an agency, 

such as family members and friends. 

These commenters believed that there 

should be minimum safeguards that 

States must meet in establishing 

provider qualifications for services 

provided under both an agency model 

and self-directed model. These 

standards should include caregiver 

training and competencies, health 

assessments, quality assurance systems 

and others. 

Response: Consistent with other 

Medicaid authorities providing personal 

assistant services, States have the 

flexibility to establish the minimum 

provider qualifications for providers of 

services provided under the agencyprovider model. A description of 

provider qualifications will be reviewed 

with each State’s proposal to implement 

CFC. Additionally, individuals 

receiving services under the agencyprovider model retain the right to 

establish additional staff qualifications 

based on the individual’s needs and 

preferences. We agree that these 

additional qualifications should not 

interfere with the State’s ability to 

protect the health and welfare of 

individuals receiving CFC services and 

supports. 

We appreciate the commenters’ 

suggestions for possible safeguards 

States could employ to protect the 

health and welfare of participants 

receiving CFC services. While we agree 

with the suggestions, we believe that 

mandating specific safeguards will not 

allow States the flexibility to utilize 

procedures that have proven successful. 

In addition, we do not believe it is 

necessary or appropriate to establish at 

the Federal or State level provider 

qualifications for individuals delivering 

services via the self-directed model with 

service budget. A hallmark of selfdirected models is the ability of the 

individual receiving services to define 

the qualifications of those furnishing 

services. The only exceptions in CFC is 

the need to adhere to requirements of 

State Practice Acts when determining 

the ability of ‘‘health-related tasks’’ to be 

delegated by licensed healthcare 

professionals and adherence to section 

1903(i) of the Act prohibiting payment 

for items or services furnished by 

individuals or entities excluded from 

participating in the Medicaid Program. 

We believe requiring State assurance 

of the provision of necessary safeguards 

is sufficient; however, as indicated 

above, we are moving this required 

assurance and adding language 

requiring adherence to section 1903(i) of 

the Act to § 441.570, State Assurances. 

Comment: One commenter expressed 

concern that providers with a history of 

defrauding government programs need 

to be avoided in the selection process. 

Response: We agree with the 

commenters’ concerns and expect States 

to implement safeguards to prevent such 

individuals or entities from providing 

CFC services. 

Comment: Several commenters 

requested the regulation require that all 

employers comply with basic attendant 

care providers rights such as minimum 

wage, tax withholding and provision of 

attendant care providers compensation. 

Response: Except for the mandatory 

flexibility within the self-directed 

model with service budget for 

individuals to retain the authority to 

determine the amount to be paid for a 

service, we believe the commenters’ 

suggestions are addressed in the 

requirements set forth in §§ 441.545 and 

441.570. Additionally, we have 

modified § 441.570 State Assurances to 

add a paragraph (d)(5) to say ‘‘any other 

employment or tax related 

requirements.’’ 

Comment: One commenter asked if 

the personal care attendant is 

considered to be the provider. If the 

personal care attendants are considered 

to be providers, the commenter wanted 

to know if the providers are subject to 

the screening requirements under 

§ 455.000. 

Response: Based on the commenter’s 

statement we are unable to determine if 

the commenter is referencing the 

program integrity requirements found at 

42 CFR Part 455 or if this is an error as 

the proposed rule for CFC did not 

contain a § 455.000. However, we note 

that § 400.203(1) defines provider as 

either of the following: (1) For the feefor-service program, any individual or 

entity furnishing Medicaid services 

under an agreement with the Medicaid 

agency; or (2) For the managed care 

program, any individual or entity that is 

engaged in the delivery of health care 

services and is legally authorized to do 

so by the State in which it delivers the 

services. To the extent personal care 

attendants meet one of the above 

definitions, they would be considered 

Medicaid providers and subject the 

program integrity requirements found at 

42 CFR part 455. We acknowledge that 

the inherent flexibility of who can 

provide services under a self-directed 

service model, may result in a personal 

care attendant not meeting the 

definition of providers found in 

§ 400.203. We believe the program 

safeguards included throughout this 

regulation, such as the activities 

required under the support system, 

provider qualifications, State 

assurances, and establishing a quality 

assurance system that evaluates quality 

of care and develops and implements 

mechanisms for discovery and 


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remediation and quality improvement 

activities, will ensure individuals 

receiving services under this benefit are 

afforded protections of health, safety 

and program integrity in circumstances 

in which the personal care attendant 

does not fall within the regulatory 

definition of a provider. Additionally, a 

State must adhere to the provisions of 

section 1902(a)(27) of the Act, and 

Federal regulations § 431.107, governing 

provider agreements. 

Comment: We received many 

comments supporting the requirement 

that individuals have the option to 

permit family members or other 

individuals of their choosing to provide 

attendant services and supports. We 

also received many comments 

supporting the requirement that 

individuals set their own qualifications 

for family members or individuals they 

recruit. 

Response: We appreciate the 

commenter’s support. 

Comment: One commenter believes 

services are best provided by public or 

not-for-profit entities. The commenter 

believes that if for-profit driven entities 

are used, the contracts should specify 

the profit and make sure the rest is 

spent for the consumers’ benefit. The 

commenter also expressed concern that 

services may be cut to boost profits. 

Response: The statute does not 

include language to exclude for-profit 

entities from providing CFC services if 

they are qualified to do so. We believe 

the regulation provides sufficient 

safeguards to thwart inappropriate 

behavior that could occur with any 

provider. 

Comment: One commenter stated 

consumer voices need to be heard 

regarding the selection for providers. 

Response: We believe that selfdirection and consumer choice are 

supported throughout the rule. 

Regardless of the service delivery 

model, the individuals have control 

over who is providing services to them. 

As specified in the statute, and 

implemented in provisions of the rule, 

individuals have control to select and 

manage services. The Development and 

Implementation Council, which requires 

its membership composition include a 

majority of elderly individuals, 

individuals with disabilities, and their 

representatives, is an excellent forum to 

discuss important issues such as service 

delivery options and provider types to 

be included in the State’s CFC program. 

Comment: We received many 

comments requesting clarification 

regarding whether individuals are 

allowed to hire family members to 

provide CFC services. The commenters 

requested that participants be allowed 

maximum flexibility to hire any 

individual capable of providing services 

and supports, including legally 

responsible relatives. Many commenters 

requested that the regulatory language at 

§ 441.565(b) state that individuals have 

the option to have family members 

provide services and supports whether 

the State allows family members to be 

a attendant care provider or not. 

Response: Section 

1915(k)(1)(A)(iv)(III) of the Act requires 

that services are provided by any 

individual who is qualified to provide 

such services, including family 

members. We interpret this to mean that 

under the self-directed model with 

service budget, States must allow 

individuals to hire family members 

qualified to provide any service 

identified on the person-centered 

service plan. Recognizing States have 

the option of only offering the agencyprovider model, we expect that this 

model would allow an individual to 

exercise maximum control over who 

provides services to them. While we 

cannot mandate agencies to employ 

individuals’ family members for the 

purpose of providing CFC services, we 

strongly encourage agencies to consider 

employing such individuals if they meet 

the established qualifications. 

Comment: Many commenters 

requested the regulatory language at 

§ 441.565(c) be revised to state that 

individuals or their representatives have 

the right to train attendant care 

providers to perform any tasks within 

an approved service plan without regard 

to State licensure or certification 

requirements. 

Response: We interpret this provision 

to allow individuals to train providers 

to perform non-skilled activities tailored 

to the specific needs of the individual; 

therefore, we are not revising the 

regulatory language. However, for 

reimbursement to be made for services 

that meet the definition of a healthrelated task, those services must be 

delegated within the State’s Practice Act 

for the practitioner delegating the 

service. 

Comment: One commenter asked for 

confirmation on the applicability of 42 

CFR 440.167 that prohibits FFP for 

payments to legally responsible 

individuals for the provision of State 

plan personal care services, unless those 

services meet the criteria as being 

‘‘extraordinary’’ care. 

Response: The regulatory 

requirements for State Plan personal 

care services do not apply to CFC, 

which has its own statutory and 

regulatory requirements. We 

acknowledge the confusion created by 

including in the same section State 

flexibilities in determining provider 

qualifications under agency-provider 

models and individual flexibilities in 

determining provider qualifications 

under self-directed models with service 

budgets. Such confusion was evident in 

many comments received. To that end, 

we are revising this section to indicate 

that paragraph (a) applies to all service 

delivery models, and paragraph (b) 

applies only to agency models and 

paragraph (c) applies only to selfdirected models with a service budget. 

Paragraph (d) applies to ‘‘other’’ models 

defined by the State. 

Comment: Many commenters 

expressed concern that the provider 

qualifications established by the State 

could threaten the ability of individuals 

to staff their support needs. The 

commenters suggested there be an 

exception process if there is no 

satisfactory attendant care provider 

available and the consumer makes a 

voluntary affirmative choice to waive 

the provider qualifications requirement. 

The commenters suggested that the 

regulation define ‘‘voluntary affirmative 

choice’’ in a way that will allow 

informed and sophisticated consumers 

to have the default requirement for a 

provider qualifications waiver, while 

not allowing this authority to be abused. 

For example, an agency should not be 

able to offer an unsuspecting consumer 

a waiver to ‘‘get a faster attendant 

placement.’’ Lastly, the commenter 

recommended that the administrative 

burdens of ascertaining and evaluating 

provider qualifications should not fall 

so heavily on an individual as to 

prevent hiring. 

Response: As noted above, we have 

restructured this paragraph to clarify the 

requirements that apply under the 

various service delivery models. We 

believe this should alleviate any 

confusion. However, we disagree with 

the commenters’ recommendation to 

add an exception process for 

individuals if there is no satisfactory 

attendant care provider available. For 

the purposes of ensuring health and 

welfare of individuals receiving CFC 

services, we believe that providers must 

meet either the qualification standards 

established by the State when services 

are delivered through the agencyprovider model, or by the individual, 

when services are delivered through the 

self-directed model with service budget. 

Comment: One commenter requested 

clarification as to whether a State, in 

accordance with State law, may prohibit 

family members from serving as the 

client’s representative while also 

providing paid attendant services. 

Response: We are clarifying here that 

an individual’s representative may not 


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also serve as the individual’s paid 

attendant. This arrangement was 

prohibited in the section 1915(j) 

program, and we are modifying the 

definition of ‘‘individual’s 

representative’’ to continue that 

prohibition for CFC. 

Comment: One commenter requested 

that the regulation give States the 

authority to determine which family 

members may act as providers of care. 

Response: We do not believe it is 

appropriate for the regulation to 

authorize States to determine which 

family members may act as providers of 

care under the self-directed model with 

service budget. Consistent with the 

philosophy of self-direction, we believe 

individuals receiving CFC services must 

have the opportunity to exercise 

maximum control in deciding who can 

provide services. 

Comment: One commenter indicated 

that when services are provided in a 

traditional agency model, the regulation 

should mandate that States establish a 

qualification standard that includes 

establishing a specific set of patient 

rights, including the right to immediate 

access to a supervisor to request a 

change in attendant, or hours, or duties. 

Response: We do not agree that the 

regulation should mandate that States 

establish qualifications above and 

beyond what is already required for 

CFC. We believe that these important 

individual rights are included as 

requirements under the person-centered 

planning requirements at § 441.540 and 

the support system requirements at 

§ 441.555. 

Comment: One commenter suggested 

that the regulation should set the 

expectation that fraud, waste and abuse 

will not be tolerated and should be 

prevented, punished and prosecuted. 

Response: A major tenet of the 

Medicaid program is maintaining 

program integrity. This requirement 

applies not only the section 1915(k) 

authority, but to all Medicaid 

authorities. In addition, the CFC 

regulation specifically requires services 

furnished to be based on the assessment 

of functional need, and indicates that 

the person-centered service plan should 

prevent the provision of unnecessary or 

inappropriate care. To promote the 

integrity of the Medicaid program, we 

have modified § 441.570(a), State 

assurances, to explicitly require a State’s 

adherence to section 1903(i) of the Act, 

which stipulates that Medicaid payment 

shall not be made for items or services 

furnished by individuals or entities 

excluded from participating in the 

Medicaid Program, when implementing 

the CFC State plan option. 

Comment: One commenter believes 

mandatory attendant training should be 

required. Another commenter believes 

the State should make available training 

programs or individualized coaching for 

those participants who prefer their 

attendant care provider receive such 

training. Alternatively, many 

commenters support the right of 

individuals to train attendant care 

providers in the specific areas of 

attendant care needed. The commenters 

suggested CMS clarify the interaction of 

this individual right with State laws 

mandating training requirements 

governing all attendant care providers. 

Response: We disagree with the 

commenters’ suggestion to require 

States to have mandatory trainings for 

providers of attendant services, as this 

would remove the authority vested in 

the individuals to train their providers. 

However, to support the requirement at 

§ 441.565 that individuals retain the 

right to train attendant care providers in 

specific areas, and to be consistent with 

related requirements under section 

1915(j) of the Act, we expect States to 

allow individuals to have access to 

additional attendant care provider 

training if needed or desired by the 

individual and related to needs 

identified in the person-centered plan. 

We have revised the rule at § 441.565 

(a)(1) to reflect this change. 

Comment: One commenter requests 

that cultural competency provisions 

explicitly include lesbian, gay, bisexual, 

and transgender populations. 

Response: We do not believe that 

language specific to lesbian, gay, 

bisexual, and transgender populations is 

necessary, as the requirement applies 

for all individuals receiving CFC 

services. 

Comment: A few commenters believe 

that there should be certain safeguards 

and oversight to ensure that services 

have been provided appropriately and at 

the level that is authorized. 

Response: We believe that the 

regulation provides sufficient individual 

protections to detect whether needed 

services are provided appropriately. It is 

our expectation that an individual’s 

services will be monitored by the entity 

providing support system services, and 

any irregularities in the provision of 

services will be detected and addressed. 

Additionally, the State Medicaid agency 

will exercise ongoing oversight and 

monitoring of the provision of services 

through review of the person-centered 

service plans, and through the Quality 

Assurance and Improvement Plan. 

Comment: One commenter requested 

clarification regarding whether a State 

may set limits on the number of hours 

an individual may receive from any 

single family member, such as 40 hours 

per week. 

Response: We do not believe it is 

appropriate for States to apply 

limitations to a certain classification of 

providers. 

Upon consideration of public 

comments received, we are finalizing 

§ 441.565 with revision, moving the 

requirement in paragraph (a) that 

requires States to assure the necessary 

safeguards that will be taken to protect 

the health and welfare of enrollees in 

CFC to § 441.570. ‘‘State Assurances’’ 

and modifying paragraph (c) to include 

the phrase ‘‘including through the use of 

training programs offered by the State.’’ 

We are also modifying this section to 

specify which requirements apply in 

various service delivery models. 

P. State Assurances (§ 441.570) 

We proposed to reflect the 

requirements at section 1915(k)(3)(C) of 

the Act 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), 1915, or 1115 of the Act, or 

otherwise, to individuals with 

disabilities or elderly individuals 

attributable to the preceding fiscal year. 

We also proposed to interpret this 

requirement to be limited to personal 

care attendant services. In addition we 

proposed to reflect requirements at 

section 1915(k)(4) of the Act that States 

electing this option must comply with 

certain laws in the provision of CFC 

regardless of which service delivery 

model the State elects to provide. 

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 compensation insurance for 

attendant care workers; maintenance of 

general liability insurance; and 

occupational health and safety. We 

proposed to include these assurances as 

specified in the statute at § 441.570(b). 

Comment: Multiple commenters 

supported limiting the application of 

the State maintenance of expenditure 

requirement to a defined set of services 

rather than to all Medicaid expenditures 

for older people and individuals with 

disabilities. Multiple commenters 

agreed that there is a need to develop a 

standard which more accurately reflects 

the legislative intent of CFC, as applying 

the maintenance of expenditure to all 

services is overly broad and would 

render the provision ‘‘nearly pointless’’, 


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but indicated that limiting it only to 

personal care services is overly narrow. 

Multiple commenters added that the 

maintenance of expenditure 

requirement should include all home 

and community-based services, not just 

personal care and indicated that this 

would be consistent with the intent of 

the law. Other commenters asked CMS 

to clarify in the regulation that CMS 

interpreted this requirement to only 

apply to personal care attendant 

services under sections 1905(a), 1915, 

and 1115 of the Act for the first year. 

Response: We interpreted section 

1915(k)(3)(C) of the Act to mean that, for 

the first full calendar year in which the 

State chooses to offer CFC in the State 

plan, the State’s share of Medicaid 

personal care attendant expenditures for 

individuals with disabilities or elderly 

individuals must remain at the same 

level or be greater than State 

expenditures from the previous 12 

month period year. As CFC is an 

attendant services and supports benefit, 

we believe it is appropriate to apply this 

maintenance of expenditure 

requirement only to comparable 

expenditures authorized under sections 

1905(a), 1915, 1115 or other sections of 

the Act. We articulated this 

interpretation in the preamble of the 

proposed rule. To increase the clarity of 

this requirement, we are modifying the 

regulatory provision to specify the scope 

of services required under the 

requirement, to indicate that the clause 

‘‘or otherwise’’ also applies to home and 

community-based attendant services 

authorized under other provisions of the 

Social Security Act, clarify that this 

requirement applied to State 

expenditures and to clarify we interpret 

the fiscal year to be a 12 month period. 

The new language will say ‘‘For the first 

full 12 month period in which the State 

plan amendment is implemented, the 

State must maintain or exceed the level 

of State expenditures for home and 

community-based attendant services 

and supports provided under sections 

1115, 1905(a), 1915, or otherwise, under 

the Act, to individuals with disabilities 

or elderly individuals attributable to the 

preceding 12 month period.’’ 

Comment: A commenter indicated a 

1-year maintenance of expenditure 

requirement is not sufficient, given that 

demographics will drive an increasing 

need and suggested that the requirement 

should be at a baseline for the first full 

fiscal year and then increase based on 

factors such as population 

demographics or indicators of need or 

demand such as waiting lists, 

applications for services, etc. Another 

commenter recommended that the 

requirement include gradual increases 

each year in access to personal care 

services. 

Response: We believe that section 

1915(k)(3)(C) of the Act was clear in 

terms of the timeframe for which States 

are required to maintain or exceed the 

level of expenditures. 

Comment: Multiple commenters 

indicated that while States should have 

the flexibility to move beneficiaries 

from other programs into CFC, they 

recommended that safeguards be in 

place to ensure that beneficiaries do not 

experience any disruptions or loss of 

benefits, and that they are able to retain 

their providers from the initial program 

if they previously directed their own 

supports. Multiple commenters added 

that the shift should be seamless for 

consumers. Another commenter added 

that if States substitute personal care 

services under CFC for otherwise 

available personal care services, the 

qualifications and availability of the 

services should be maintained so that 

no currently eligible person or group 

loses care, and pointed out that the level 

of expenditures could be maintained in 

several ways including the expansion of 

eligibility for personal care services 

under section 1915(c) programs or State 

plan personal care. 

Response: We believe the 

maintenance of expenditures provision 

will serve as a safeguard in that these 

expenditures cannot decrease for the 

first year of implementation; however, 

we acknowledge the commenters’ 

concerns and expect States to ensure 

that services will not be disrupted, 

decreased, or lost as a result of a State 

choosing to elect CFC. We do not 

foresee there being an issue with 

individuals retaining their current 

providers if they choose to receive their 

attendant services and supports through 

CFC. 

Comment: Multiple commenters 

stated that it was their belief that the 

legislative intent of the maintenance of 

expenditure provision was to ensure 

that States implemented the CFC to 

expand access to services, and not as a 

way to constrict existing services while 

securing higher matching funds. The 

commenters suggested that there be 

extra scrutiny of State reductions in 

services that are related to taking up 

CFC, in particular, where the State 

makes no effort to grandfather in 

existing services for affected consumers. 

The commenters explained that if a 

State were to take up the CFC option 

and apply an institutional level of care 

eligibility requirement, the State might 

be tempted to eliminate its personal care 

option to get higher match for those 

services through CFC. The commenter 

added that the large majority of States 

do not have an institutional level of care 

requirement for the personal care option 

and thus many individuals who were in 

the personal care option would not be 

able to transition to CFC. While the 

commenter noted that the State would 

likely not be in technical violation of 

the maintenance of expenditure 

requirement, based on the broader CFC 

spending obligations, it might violate 

the spirit of the CFC for thousands of 

consumers to find themselves without 

personal care services. The commenter 

cautioned that HHS should be careful to 

avoid helping States evade the purpose 

of the requirement. 

Response: We do not believe that this 

regulation promotes the constriction of 

existing services to secure higher 

matching funds. We appreciate the 

suggestions regarding the potential 

reduction of services. The CFC State 

plan option provides individuals 

requiring an institutional level of care 

the opportunity to receive personal 

attendant services and supports (PAS) 

in the community instead of in an 

institution. We anticipate States will use 

this State plan option to improve access 

to non-institutional long term care 

services and supports. Additionally, 

§ 441.570 requires States, for the first 12 

months of implementing this State plan 

option, to maintain or exceed the level 

of State expenditures for similar 

services provided under other benefit 

authorities under the Act. 

Comment: One commenter advised 

that if the maintenance of expenditure 

requirements for CFC pertain only to 

personal care attendant services, it 

should be clarified in the regulatory 

language in paragraph (a) to include 

HCBS waiver services as well. The 

commenter also expressed concern 

regarding the interaction between the 

Affordable Care Act Maintenance of 

Effort (MOE) for home and communitybased waiver services and the 

maintenance of expenditure 

requirement for CFC purposes, as the 

commenter anticipated that persons 

may move from a waiver to CFC, and 

indicated that States should not risk 

noncompliance with the MOE under the 

Affordable Care Act if persons move 

from HCBS to CFC. Another commenter 

indicated that States need clarification 

as to whether they are required to 

maintain the same number of waiver 

slots, as would be required by the 

Affordable Care Act MOE if a State takes 

up CFC, as States may be unwilling to 

take up the option if they cannot realize 

savings from directing people away 

from waivers and towards less 

expensive State plan services. 

Response: This set of comments 

addressed two aspects of the 


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maintenance of expenditure 

requirement of CFC. First, the spending 

covered by the maintenance of 

expenditure requirements are for home 

and community-based attendant care 

services in the State as authorized under 

sections 1905(a), 1915, 1115, or 

otherwise, under the Act. The final rule 

reflects that this requirement pertains to 

these services and these provisions of 

statute. 

Secondly, the comments raised 

questions regarding the relationship of 

the maintenance of expenditure 

requirements as set forth in section 

1915(k) of the Act to the MOE 

requirements established through 

Affordable Care Act as such 

requirements apply to long term 

services and supports, including HCBS 

waiver programs. The Affordable Care 

Act MOE pertains to Medicaid 

eligibility standards, methodologies, 

and procedures. Because institutional 

care and HCBS waivers can serve as a 

doorway to eligibility for certain 

individuals, changes impacting access 

to those benefits may raise MOE 

questions. 

While changes to the section 1915(c) 

waiver eligibility and capacity may have 

implications for the Affordable Care Act 

requirements regarding MOE, a State 

currently has great flexibility to modify 

benefits to manage waiver costs. As a 

result, a State may elect to provide 

attendant care services and supports 

through CFC that are currently provided 

through other Medicaid authorities. 

States seeking to reduce waiver capacity 

(‘‘slots’’) or otherwise adjust the 

eligibility requirements for HCBS 

waivers should consult with CMS to 

ensure continued compliance with the 

MOE requirements, and to receive 

guidance on alternatives available to 

them in this regard. For additional 

information on the MOE requirements 

of the Affordable Care Act and its 

relationship to HCBS waivers, please 

see the State Medicaid Director letter 

issued on this matter at http:// 

www.cms.gov/SMDL/SMD/ 

list.asp#TopOfPage. 

However, we do encourage States to 

evaluate what it offers under existing 

programs and consider the 

opportunities offered through CFC and 

the corresponding reporting and quality 

requirements to determine what is best 

for each State and its beneficiaries. We 

note that the additional 6 percentage 

point increase in FMAP would apply 

only to CFC, and would not apply to 

any currently approved program 

authorizing personal attendant services 

and supports. 

Comment: A commenter 

recommended that CMS require States 

to formulate a plan to reduce existing 

waiver waiting lists for personal 

attendant care services. 

Response: While we appreciate the 

commenter’s suggestion, we do not plan 

to add a requirement to CFC for States 

to formulate such a plan as it is outside 

the scope of this benefit. 

Comment: Another commenter 

requested further clarification on the 

section 1915(k)(4) requirement that 

waiver services meet FLSA and payroll 

tax requirements. Currently the State in 

which this commenter resides does not 

pay payroll taxes. The State shifts its 

payroll obligations to Medicaid 

recipients and also imposes unpaid care 

on the providers forcing them to 

‘‘volunteer’’ for their employers. The 

commenter would like clarification as to 

whether or not CMS is attempting to 

remedy these abuses for CFC Option, as 

well as existing waivers. 

Response: We reiterate that CFC is not 

a waiver program, but is a new, optional 

State plan benefit. Any State 

implementing CFC must adhere to the 

requirements in the authorizing 

legislation. By submitting a SPA to 

implement this program, the State will 

be assuring adherence to these 

requirements. States have the ability to 

contract with entities for the provision 

of activities such as the withholding of 

payroll taxes, etc., but retain ultimate 

responsibility for ensuring they are done 

appropriately. 

Comment: A commenter asked for 

details regarding the applicable Federal 

laws regarding the requirement to 

maintain ‘‘general liability insurance’’ 

as their State’s current personal care 

services program does not require this 

insurance for any party, and their 

current program is in compliance with 

all other provisions of this section. The 

commenter requested that this language 

be removed. Another commenter asked 

that CMS clarify which entity is 

expected to maintain general liability 

insurance as it is unclear whether it is 

the individual self directing care, the 

attendant providing services, or the 

financial management entity. The 

commenter also asked CMS to clarify 

whether the attendant’s employer must 

provide attendant care providers with 

health insurance coverage. 

Response: These details are best left to 

State Medicaid Agencies as they 

implement the program, so as to allow 

for State flexibility. 

Comment: Another commenter 

suggested that CMS require States to set 

forth in detail how they intend to 

comply with/meet the various 

employment-related laws. 

Response: States electing CFC must 

submit a State plan amendment that 

assures their adherence to this 

requirement. The specifics of how this 

happens are left to the States to 

determine. 

Comment: A commenter stated that at 

paragraph (c)(4), CMS indicates that a 

State must assure that all applicable 

provisions of Federal and State law are 

met including those related to 

‘‘occupational health and safety’’ and 

added that since the majority of CFC 

services will be delivered under personcentered plans and primarily in persons’ 

residences, CMS should clarify how 

they envision States ensuring 

compliance with OSHA requirements, if 

that is the intent. The commenter stated 

that if compliance with OSHA 

requirements is not the intent, CMS 

needs to clarify what is meant by 

‘‘occupational health and safety.’’ 

Response: These assurances were set 

forth in statute at section 1915(k)(4) of 

the Act. We will look to the State 

Medicaid Agencies to implement any 

policies they believe are necessary to 

ensure compliance. 

Comment: Two commenters proposed 

an additional assurance at a new 

paragraph (c)(5) that States ensure that 

fiscal agents who will be cutting checks 

to attendant care providers on behalf of 

beneficiaries have sufficient cash 

reserves to be able to pay attendant care 

providers timely, notwithstanding 

delays in reimbursement due to bank 

holidays, etc. 

Response: It is the responsibility of a 

State to ensure that the fiscal agents 

with whom the State chooses to work 

are capable of compensating providers 

of services and supports. 

Comment: Several commenters 

recommended the following language: 

‘‘A State must assure that fair hearing 

processes for individuals are met in 

accordance with 42 CFR Part 431 

Subpart E.’’ 

Response: State Medicaid programs 

must adhere to the fair hearing 

requirements at 42 CFR part 431 

Subpart E for all Medicaid programs. 

Therefore, we do not agree with the 

commenters that it is necessary to add 

an additional State assurance to the 

regulations for CFC. 

Comment: A commenter suggested 

that the regulation promote the use of 

local, peer-based and consumercontrolled providers so beneficiaries 

have maximum access to their fiscal 

agent. 

Response: This regulation includes 

extensive flexibility for States to 

establish provider qualifications in a 

way that encompasses a broad pool of 

experience. Individuals participating in 

a self-directed model will have ultimate 


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flexibility for selecting providers of 

services. 

Upon consideration of public 

comments received, we are finalizing 

§ 441.570 with revision, to clarify the 

intent of the maintenance of 

expenditures requirements proposed in 

paragraph (a), now paragraph (b). In 

addition, as indicated above, we are 

adding a new paragraph to reflect the 

movement of the requirement that States 

assure the provision of necessary 

safeguards to protect the health and 

welfare of CFC enrollees including 

adherence to section 1903(i) of the Act 

which stipulates that Medicaid payment 

shall not be made for items or services 

furnished by individuals or entities 

excluded from participating in the 

Medicaid Program. This will be a new 

paragraph (a), with the existing language 

being adjusted accordingly. As 

indicated in § 441.565, Provider 

Qualifications, we are adding a new 

paragraph (d)(5) to state ‘‘any other 

employment or tax related 

requirements.’’ 

Q. Development and Implementation 

Council (§ 441.575) 

We proposed that States must 

establish a Development and 

Implementation Council that is 

primarily comprised of individuals with 

disabilities, elderly individuals and 

their representatives. We also proposed 

to require that States must consult and 

collaborate with this Council during the 

development and implementation of a 

State plan amendment to provide home 

and community-based attendant 

services and supports under CFC. 

Comment: Many commenters had 

positive comments regarding the 

Development and Implementation 

Council. Many commenters stated the 

Development and Implementation 

Council is an excellent idea and a 

positive step forward for States, as well 

as a mechanism to ensure consumer 

input and implementation monitoring. 

Many of the commenters were pleased 

that CMS is soliciting comments on 

ways to design the Implementation 

Council, as it provides for robust 

stakeholder collaboration. 

Response: We agree that the Council 

will provide additional opportunities 

for stakeholder input and collaboration. 

Comment: Many commenters weighed 

in on the makeup of the Development 

and Implementation Council. Many 

commenters requested that a diverse 

population from advocacy 

organizations, disability rights groups, 

private agency representatives, 

stakeholders, direct support 

professionals, and direct service 

attendant care providers or their 

representatives be included in the 

Council’s membership. 

Many commenters requested that the 

final rule ensure that a majority of the 

Council is made up of individuals with 

disabilities, elderly individuals, and 

their representatives. The commenters 

further recommended that the Council 

should be comprised of members that 

reflect the diverse populations who use 

or could use CFC services and supports. 

One commenter requested that the 

following sentence be added to the end 

of § 441.575(a): ‘‘This Council must also 

include home and community-based 

attendants or their selected 

representatives.’’ Another commenter 

requested that the rule should require 

that 51 percent of the Council be made 

up of elderly or disabled individuals. 

Response: Section 1915(k)(3)(A) of the 

Act requires that this Council include a 

majority of members with disabilities, 

elderly individuals and their 

representatives. This was reflected in 

the proposed rule at § 441.575 and is a 

requirement of the program. We believe 

that this membership will reflect the 

populations who will participate in 

CFC. We acknowledge that various 

advocacy organizations, disability rights 

groups, private agency representatives, 

stakeholders, direct support 

professionals and direct service 

attendant care providers and 

representatives could have a voice on 

the Council as long as the Council meets 

the requirements set forth in the final 

regulation. We do not agree that the 

regulation should add an additional 

requirement that attendants or their 

selected representatives be included in 

the membership of the Council or that 

the Council be broken down into a 

specific percentage of individuals. The 

statute specifically requires a ‘‘majority’’ 

of members with disabilities, elderly 

individuals and their representatives 

and this language will be maintained in 

our final rule. However, we 

acknowledge that the regulatory 

language proposed in the proposed rule 

used the phrase ‘‘primarily comprised’’ 

rather than a ‘‘majority.’’ We are 

revising the regulation to more closely 

align with the statute. 

Comment: One commenter requested 

that consumers with the highest needs 

have a significant presence on the 

Development and Implementation 

Council. 

Response: We believe that a having an 

array of individuals with varying needs 

on the Council will provide a broad 

representation of the individuals for 

whom CFC was created. 

Comment: One commenter requested 

further definition of an ‘‘aging or 

disability’’ consumer. The commenter 

requested clarification on whether an 

older adult, who is not Medicaid 

eligible or low income, could hold a 

position on the Council under the 

current definition. 

Response: Section 1915(k)(3)(A) of the 

Act requires that the Development and 

Implementation Council include a 

majority of members with disabilities, 

elderly individuals and their 

representatives. The statute did not set 

forth any additional qualifier or 

specifications these individuals must 

meet to participate on the Council. 

Therefore, we do not believe an older 

adult who is not on Medicaid or is not 

low-income would be prohibited from 

participating on the Council. 

Comment: One commenter requested 

that the regulation suggest agencies and 

advocacy groups from which the 

Council could recruit. 

Response: We disagree with providing 

specific agencies and advocacy groups 

from which to recruit, as this would 

unfairly advantage certain groups. States 

have the flexibility to determine how to 

best meet this requirement. 

Comment: Many commenters 

requested that the Council’s meetings 

and other functions be accessible and 

that supports be provided to 

individuals, as needed, to facilitate their 

full participation. The commenters 

indicated that these supports could 

include the use of modern technological 

devices. Several commenters requested 

that the Development and 

Implementation Council should hold 

their meetings publically and provide 

opportunities for public input, which 

would allow for transparency. 

Response: We agree that the Council’s 

meetings and other functions should be 

accessible to individuals to facilitate 

their full participation. With regard to 

the commenters’ suggestion to require 

that these meetings be held publicly to 

allow for transparency, while we 

appreciate the suggestion, States have 

the flexibility to decide how to meet 

these requirements. A State’s proposal 

for operating the Council will need to be 

described in their State plan 

amendment and approved by CMS for 

implementation. We do encourage these 

meetings to be held in a way that 

facilitates participation by a broad range 

of individuals. 

Comment: Several commenters 

requested clarification of what 

‘‘transparency in the selection process’’ 

means, as mentioned in the preamble to 

this section, and suggested using rules 

for implementing section 10201(i) of the 

Affordable Care Act as a means of 

providing transparency. 

Response: In the proposed rule, we 

invited comments regarding how States 


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could achieve robust stakeholder input 

including transparency in the selection 

process and activities of the Council. 

The intent of this request was to gather 

ideas regarding what processes States 

might use to select members of the 

Council. States have the flexibility to 

determine how to meet the requirements 

of the final rule and we encourage States 

to be transparent in their selection 

processes. 

Comment: One commenter requested 

that States be required to provide public 

notice on how they will establish the 

Development and Implementation 

Council. 

Response: While we encourage States 

to provide public notice regarding how 

they will establish the Council, as this 

is a matter of interest to individuals and 

may be a direct way to solicit members, 

we do not agree that this should be an 

additional requirement that is added to 

this regulation. States maintain the 

flexibility to determine how to best meet 

the requirements to implement CFC. 

Comment: Many commenters 

provided input related to how the 

Development and Implementation 

Council should be structured and the 

duties associated with it. Many 

commenters requested that baseline 

definitions and minimum participation 

standards for the Council be included in 

the final rule. 

Response: We disagree with further 

defining the role of the Council or with 

setting minimum participation 

standards for the Council in this 

regulation. 

Comment: One commenter provided 

models and examples of committees and 

councils formed to address issues 

related to home health care. 

Response: We appreciate the 

commenter’s efforts and contribution, 

but again emphasize that, outside of the 

specific mandates of the regulation, 

States will have the discretion to design 

their councils. 

Comment: One commenter requested 

that the regulation require the Council 

to be in place, and to provide 

recommendations on CFC prior to 

October 2011, or whenever the State 

implements the program. 

Response: We agree with the 

commenter that the Council will need to 

be in place prior to implementation, as 

the State is required to consult and 

collaborate with the Council to develop 

a State plan amendment for CFC, as set 

forth in section 1915(k)(3)(A) of the Act 

and reflected at § 441.575. We do not 

agree that revisions to the regulation are 

necessary. 

Comment: One commenter requested 

that Council members be trained on 

what it means to be a Council member, 

including what the expectations are 

with regard to their role representing a 

larger constituency group. Council 

members should be supported in the 

acquisition of knowledge necessary to 

be active members and provided 

support to ensure meeting attendance. 

Response: We agree that members of 

the Council should understand their 

role in the Council and the 

responsibilities that the Council has 

with regard to CFC. States may want to 

take this into consideration when 

determining how to best meet the 

requirements of this Council. It is 

important for the Council membership 

to understand their role and the purpose 

of the Council as a whole. Training 

requirements for the Council are beyond 

the scope of this regulation and we do 

not agree with the commenter that these 

should be added to the regulation. With 

regard to the commenter’s point about 

support for meeting attendance, as we 

indicated above, States should make 

every effort to ensure that the meetings 

are held at times and locations that are 

accessible to the members of the 

Council. 

Comment: One commenter requested 

that financial and personnel resources 

be dedicated solely to the work of the 

Council. The commenter added that 

States should recognize that the 

frequency of meetings will impact the 

success of the Council and suggested 

that they occur at least quarterly. 

Response: States have the flexibility 

to implement the Council, and to 

determine the frequency at which 

meetings of the Council will occur, as 

long as all the requirements in the final 

regulation are met. Therefore, we do not 

agree that the regulation should add 

specific requirements pertaining to 

these issues. 

Comment: Many commenters weighed 

in on the level of influence that the 

Development and Implementation 

Council has on the State. One 

commenter requested that the 

recommendations made by the 

Development and Implementation 

Council be incorporated into the State 

plan. One commenter expressed 

concern regarding the role of Council as 

it relates to the independent decision 

making authority of the State in 

developing and implementing a State 

plan amendment for CFC. The 

commenter would like clarification that 

the Council should in no way be 

empowered to impede a State’s 

authority. 

Response: As noted above, section 

1915(k)(3)(A) of the Act sets forth the 

requirement that a State establish the 

Development and Implementation 

Council. This provision also requires a 

State to consult and collaborate with 

this Council to develop and implement 

the State plan amendment for CFC. 

While States must describe in their State 

plan amendment how this collaboration 

and consultation occurred, this does not 

mean that the State’s ability to make 

decisions is compromised. States need 

to consider the Council’s input and 

should make every effort to incorporate 

the feedback of the Council in these 

decisions. However, we are not 

interpreting ‘‘collaboration’’ as total 

concurrence. 

Comment: Another commenter 

requested that the life of the 

Development and Implementation 

Council be extended beyond 

implementation to include a role in the 

ongoing improvement of the State’s CFC 

program. 

Response: Section 1915(k)(3) of the 

Act requires consultation and 

collaboration with the Council ‘‘in order 

for a State plan amendment to be 

approved under this paragraph.’’ We 

encourage States to continue operations 

of the Council even after 

implementation of CFC. A strict 

interpretation of the statute would 

require consultation and collaboration 

with the Council prior to submitting any 

type of CFC SPA to CMS, which would 

encompass amendments to an already 

approved CFC SPA. We recognize that 

requiring such consultation and 

collaboration prior to submitting a SPA 

to implement a minor or administrative 

change would be overly burdensome to 

both the State and Council members. 

But we are taking this opportunity to 

specify that any substantive changes to 

the operation of an approved CFC 

program would require the prior 

consultation and collaboration of the 

Council. We would define a substantive 

change to include revisions to the 

amount, duration, and scope of services 

provided under CFC, revisions to the 

service delivery model, revisions to 

payment methodologies, etc. 

Comment: Another commenter 

requested that the Development and 

Implementation Council identify 

specific data to help better advise the 

State on the program and recommended 

that the proposed rules should also 

assure that States are responsive to the 

Council’s request for such data. 

Response: Section 441.575 reflects the 

requirements in the statute for this 

Council and we do not agree that 

additional requirements are necessary in 

regulation. 

Comment: Many commenters 

requested further guidance from CMS 

regarding the Development and 

Implementation Council. A number of 

commenters requested confirmation that 


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a State may use an existing self directed 

care advisory committee or whether the 

requirement is for a dedicated advisory 

Council limited to self direction 

pursued under the section 1915(k) 

authority. Many commenters believe 

States should ensure that the Council 

coordinates with other stakeholder 

bodies that have related missions such 

as Olmstead implementation councils 

and long-term service and support 

commissions. 

Response: States may utilize existing 

advisory bodies in the implementation 

of CFC, as long as the statutory 

requirements for the Development and 

Implementation Council are met. We 

acknowledge the benefits of the Council 

coordinating with related stakeholder 

councils and commissions and strongly 

encourage States to do so. States may 

also choose to leverage these councils 

and/or incorporate members from these 

councils to meet the requirements for 

CFC. 

Comment: Many commenters 

requested amending the current 

proposed language to include more 

specific Development and 

Implementation Council criteria 

regarding what groups should be 

included in the Council membership 

and additional roles that the Council 

should assume. Several commenters 

requested adding a reference to ‘‘directcare attendant care providers’’ after 

‘‘elderly individuals.’’ The rationale 

behind the commenters’ request is that 

direct care attendant care providers’ 

contributions will enhance the work of 

the Council by providing regular, direct 

communication with the State on core 

service delivery issues. Furthermore the 

commenters recommend the following 

language be included, ‘‘(c) The Council 

should develop a plan that ensures the 

adequacy of provider rates and 

compensation; makes attendant care 

provider training available; establishes a 

central mechanism to help program 

participants find providers; and 

develops an approach to collecting 

essential workforce data elements.’’ 

Response: As indicated above, the 

statute was very specific in both the 

requirements for the membership and 

the functions and responsibilities of the 

Council. The final regulations reflect the 

statutory requirement and we do not 

agree with creating additional 

requirements that States must meet in 

addition to what is clear in the statute. 

Comment: One commenter requested 

clarification regarding whether the 

activities of the Development and 

Implementation Council will be eligible 

for Federal funds because the Council is 

mandated both by statute and 

regulation. 

Response: Activities required by CFC 

that are done for the operation of the 

program, such as implementation of the 

Development and Implementation 

Council will not receive an additional 6 

percentage point FMAP increase, as 

they are administrative activities and 

are only eligible for the standard Federal 

administrative matching rate of 50 

percent available at § 433.15(b)(7). 

Comment: Several commenters 

requested a timeline for the creation of 

this Council. 

Response: We believe that the Council 

should be in place prior to the submittal 

of a SPA requesting CFC, as States are 

required to consult and collaborate with 

the Council regarding the development 

and implementation of a SPA for CFC. 

Comment: One commenter requested 

changing the rule to state: ‘‘(a) States 

must establish a Development and 

Implementation Council comprised 

primarily of individuals with 

disabilities, elderly individuals, their 

representatives, and disability rights 

advocates. The Development and 

Implementation Council must be crossdisability and cross-age and must 

include representation of all categories 

identified in this paragraph; (b) The 

Council must include individuals who 

are eligible for and, when applicable, in 

receipt of CFC services; (c) 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 or when 

contemplating any changes; and (d) To 

maintain quality assurance, States must 

continue to regularly consult with the 

Council and incorporate their 

recommendations into the operation of 

the Community First Choice Option.’’ 

Response: We appreciate these 

suggestions, but do not agree that these 

additional requirements need to be 

incorporated into the regulation. 

Comment: Another commenter 

requested changing the Development 

and Implementation Council language 

as follows: ‘‘(a) States must establish a 

Development and Implementation 

Council which includes providers and 

individuals with disabilities including 

elderly individuals, and their 

representatives; and (b) States must 

consult the Council when developing 

and implementing a State plan 

amendment to provide home and 

community-based attendant services 

and supports.’’ 

Response: We disagree with adding 

‘‘providers’’ to § 441.575(a). The statute 

only directs that the majority of the 

Council must consist of elderly or 

disabled individuals, and their 

representatives. We do not believe it is 

appropriate to require other 

representation. We believe that 

§ 441.575(b) closely mirrors the 

commenter’s change in language and 

does not require change. 

Comment: One commenter requested 

clarification of the term 

‘‘representative’’ in reference to 

individuals who are elderly, have 

disabilities, or are the representatives of 

individuals with disabilities. Another 

commenter requested clarification of the 

term ‘‘consumer representative’’ as it is 

ambiguous and could be interpreted as 

an individual representing a consumer 

or an employee of an advocacy 

organization. 

Response: We are interpreting 

‘‘representative’’ broadly in the context 

of the Council, including both the 

individual’s representative, as defined 

in § 441.505, and other representatives 

of elderly individuals or individuals 

with disabilities in general. The phrase 

‘‘consumer representative’’ is not used 

in this regulation. 

Comment: One commenter 

recommended that the proposed rule 

expressly state that section 1915(k)(3) of 

the Act, pertaining to State collaboration 

with a Development and 

Implementation Council, does not 

negate the State responsibility to solicit 

advice from Indian health programs and 

urban Indian organizations as required 

by section 5006(e) of the ARRA. 

Response: We acknowledge the 

commenter’s concern. Nothing in the 

CFC regulation should be construed as 

superseding current requirements for 

States in regard to Indian health 

organizations and programs. 

Upon consideration of public 

comments received, we are finalizing 

§ 441.575 with revision, to align with 

the statutory requirement that a majority 

of the Council be comprised of 

individuals with disabilities, elderly 

individuals, and their representatives. 

R. Data Collection (§ 441.580) 

We proposed to require that States 

must provide information regarding the 

provision of home and communitybased attendant services and supports 

under CFC for each fiscal year for which 

the services and supports are provided. 

We also proposed a number of specific 

data elements that must be collected 

and reported. 

Comment: One commenter 

commended the inclusion of subpart (c) 

regarding the collecting of information 

about individuals served under CFC and 

indicated that this data will be an 

essential tool to identify deficiencies in 

the provision of the benefit. 

Response: We appreciate the 

commenter’s support. 


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Comment: A few commenters asked 

what is meant by ‘‘type of disability’’, as 

indicated in paragraph (c). 

Response: We interpret ‘‘type of 

disability’’ as set forth in section 

1915(k)(5)(B)(iii) to include 

developmental disability, physical 

disability, traumatic brain injury, etc. 

Comment: One commenter stated that 

in section § 441.535(a)(5) States are 

required to obtain information about an 

individual’s ‘‘school.’’ This commenter 

asked if ‘‘school’’ is synonymous with 

‘‘education level’’ as specified in 

§ 441.580(c). 

Response: Based on comments, we 

revised the text at § 441.535(a) and 

school is no longer a specified element 

of the assessment of functional need for 

the implementation of CFC. Therefore, 

there is no need to clarify further as the 

data collection requirement at 

§ 441.580(c) is clear regarding 

‘‘education level.’’ 

Comment: One commenter asked for a 

clarification of ‘‘previous fiscal year’’ 

with regard to data collection 

timeframes. 

Response: We interpret ‘‘fiscal year’’ 

to mean ‘‘Federal fiscal year.’’ We plan 

to issue additional guidance to States 

regarding maintenance of expenditure 

requirements. 

Comment: Several commenters asked 

for clarification regarding the data 

collection requirements at § 441.580(e) 

in terms of what CMS meant by ‘‘data 

regarding how the State provides CFC 

and other home and community-based 

services.’’ 

Response: We interpret this 

requirement to mean the methods in 

which the State delivers home and 

community-based services under CFC, 

through other State Plan authorities, 

through section 1915(c) waivers, or 

through section 1115 demonstrations. 

For CFC, this could include which 

service models are offered in the State, 

the permissible services and supports 

that a State has chosen to make 

available, any limits the State has set on 

services and supports, and a number of 

other factors as determined by the State. 

We anticipate being able to collect much 

of the information related to this 

requirement from the State Plan as the 

State Plan must describe how the State 

is providing CFC. We anticipate 

releasing additional guidance in the 

future, providing more detail on data 

collection and how it relates to the CFC 

evaluation required in the legislation. 

Comment: One commenter stated that 

the language in paragraph (g) appears to 

be a request for a description and not 

data collection activity. 

Response: We do not understand the 

commenter’s concerns based on this 

comment, but while the requirement at 

§ 441.580(g) could include a description 

of how the State provides individuals 

the choice to receive home and 

community-based services in lieu of 

institutional care, it could also include 

information regarding the methods used 

to offer this choice, the strategies 

involved in making this choice 

available, and the number of individuals 

that have made that choice. 

Comment: One commenter asked 

CMS to clarify any expectations to 

reconcile estimated number of 

individuals anticipated to receive 

services against actual utilization. This 

commenter asked if there will be an 

expected accuracy standard and further 

stated that since this is a new option 

there is potential for significant 

discrepancy. 

Response: We are clarifying that 

States may report on the actual number 

of individuals that received CFC 

services and supports in the prior fiscal 

year, when reporting on the estimate of 

individuals expected to receive them in 

the upcoming fiscal year. We 

understand that there will be 

discrepancies in the number of 

individuals estimated vs. actually 

served. 

Comment: One commenter sought 

clarification on the respective roles the 

State and Federal government will play 

in regard to the evaluation. 

Response: Section 1915(k)(5) of the 

Act sets forth the requirements that 

States provide data to the Secretary for 

an evaluation and reports to Congress. 

The States and the Federal government 

will partner to accomplish an evaluation 

of CFC. The States can evaluate their 

individual programs based on data 

collected throughout the fiscal year. The 

Federal government will be evaluating 

CFC on a nationwide basis based on 

each State’s data. We anticipate 

releasing additional guidance in the 

future, providing more detail on data 

collection and how it relates to the CFC 

evaluation required in the legislation. 

Comment: One commenter asked 

whether a self-report is an acceptable 

standard for type of disability, 

education level and employment status. 

Additionally, this commenter asked that 

CMS clarify the acceptability of 

retaining the original data with updates 

if there are changes rather than 

collecting it each year. This commenter 

also asked for clarification of the 

expectations for linking the data 

collected and asked whether a State 

could begin with data unlinked and 

phase in those capabilities over time. 

Response: We are deferring answering 

this question until such time as we 

release additional guidance in the 

future, providing more detail on data 

collection and how it relates to the CFC 

evaluation required in the legislation. 

Comment: One commenter asked 

what the Department hopes to collect. 

Response: Through the data collection 

process, the Department hopes to 

determine the effectiveness of the 

provision of CFC services and supports 

in allowing the individuals receiving 

such services and supports to lead an 

independent life to the maximum extent 

possible; the impact on the physical and 

emotional health of the individuals who 

receive such services; and an 

comparative analysis of the costs of 

services provided under the State plan 

amendment under this paragraph and 

those provided under institutional care 

in a nursing facility, institution for 

mental diseases, or an intermediate care 

facility for the mentally retarded. As 

such, we are modifying the regulation to 

include a data collection requirement 

for States to capture data on the impact 

of CFC services and supports on the 

physical and emotional health of 

individuals, and other data as 

determined by the Secretary. 

Comment: One commenter requested 

specificity of the exact data comparison 

expected for CFC and other home and 

community-based services. 

Response: We are deferring answering 

this question until such time as we 

release additional guidance in the 

future, providing more detail on data 

collection and how it relates to the CFC 

evaluation required in the legislation. 

Comment: One commenter suggested 

that the data collection section should 

begin with what questions CMS wants 

answered, some of which are in the 

preamble. This commenter further asked 

what the data at § 441.580 are supposed 

to illuminate. In conclusion, this 

commenter suggested considering 

convening an expert group to help draw 

up data points. 

Response: The data collected from 

States will be used to complete the 

statutorily required evaluation of the 

effectiveness of CFC services and 

supports. We anticipate releasing 

additional guidance in the future, 

providing more detail on data collection 

and how it relates to the CFC evaluation 

required in the legislation. 

Comment: One commenter asked for 

clarification regarding reporting the 

number of individuals that received 

services and supports during the 

preceding fiscal year. This commenter 

asked if after CFC has been in place the 

second and following years, if States 

report the number of persons in CFC 

from the preceding year(s). 

Response: In accordance with section 

1915(k)(5)(B) of the Act, States should 


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report the number of individuals that 

have received CFC services and 

supports during the preceding fiscal 

year. This means that after CFC has been 

in place the second and following years, 

States should report the number of 

persons in CFC for the preceding year 

(that is, reporting the number of 

individuals served under CFC in year 

one after the program has been in place 

for 2 years). 

Comment: Two commenters asked for 

clarification pertaining to the 

requirement to report the specific 

number of individuals who were 

previously served under other 

authorities or State Plan options. 

Response: To clarify, with regard to 

individuals receiving CFC services and 

supports, the State should report the 

number of these individuals who were 

previously receiving supports under 

sections 1115, 1915(c) and (i) of the Act, 

or the personal care State plan option. 

Comment: One commenter asked 

whether a State may limit the number 

of individuals reported to those who 

received attendant support services 

under the specified authorities rather 

than all individuals served under the 

waivers, with regard to the requirement 

in paragraph (d). 

Response: A State may not limit the 

number of individuals reported in this 

way. As stated in § 441.580(d), States 

are required to report the specific 

number of CFC individuals who were 

previously served under another 

authority regardless of what services 

and supports were received under that 

authority. 

Comment: One commenter asked 

whether the requirement to report the 

specific number of individuals who 

have been previously served under 

sections 1115, 1915(c) and (i) of the Act 

is intended to include those individuals 

who are served concurrently or just 

those who are no longer accessing 

personal care services under those 

authorities and are now accessing only 

CFC services. 

Response: States are required to report 

the number of individuals who were 

previously served under the authorities 

stated above, meaning that these 

individuals are now accessing attendant 

care services and supports through the 

CFC Option. It is possible that 

individuals receiving attendant services 

and supports through CFC could also be 

receiving other services, particularly via 

a section 1115 demonstration or section 

1915(c) waiver. 

Comment: One commenter stated that 

it is imperative that data collection is 

not a barrier to the provision of timely, 

high quality services. 

Response: We agree that data 

collection should not be a barrier to the 

provision of services. Our intention is to 

place as little burden as possible on 

States and individuals in terms of data 

collection while ensuring that data is 

available to comply with the statutory 

requirements for evaluation and 

reporting. 

Comment: Many commenters 

provided suggestions for additional data 

collection options. One commenter 

recommended the regulation require 

recording the number of individuals 

served, both in terms of the number of 

individuals eligible to receive CFC, and 

in terms of individuals receiving all of 

the various CFC services. Another 

commenter stated that it would be 

helpful if the data could show whether 

individuals who transferred to CFC from 

another home and community-based 

option experienced any loss of service 

subsequent to the transfer. This same 

commenter recommended that the 

regulation provide for the collection of 

data in such a way as to tell whether 

individuals receiving CFC services and 

supports were previously receiving 

home and community-based services 

through waivers or other options, or if 

individuals receiving CFC services are 

newly eligible for home and 

community-based services. Two 

commenters suggested collecting data 

specific to the service models utilized. 

One of these commenters further 

suggested including what services and 

items are used by those choosing the 

agency model versus those who choose 

the self-directed model with a service 

budget. Several commenters suggested 

including data pertaining to the number 

of people who were previously 

receiving services in institutions or 

nursing facilities. One of these 

commenters suggested collecting data 

on Medicaid costs of this option vs. 

Medicaid costs in institutional settings. 

Two commenters suggested that data 

should be made available to the public. 

One of these commenters also suggested 

that CMS should collect the data 

quarterly. Several commenters also 

suggested including data with 

additional demographic break-down of 

individuals. Two commenters suggested 

collecting data pertaining to race. One of 

these commenters suggested also 

including ethnicity, limited English 

proficiency, and type of residence. One 

commenter suggested that States 

include optional sexual orientation and 

gender identity questions to break down 

utilization rates. One commenter 

suggested requiring States to provide 

data on an individual’s veteran status. 

Many commenters recommended that 

States be urged to provide data on the 

staff providing services including: 

attendant care provider availability, 

turnover and retention rates, and 

compensation. One commenter 

suggested also collecting data pertaining 

to training and credentialing of staff. 

Additionally, many commenters stated 

that in a self-directed delivery system, 

program participants will be the most 

likely source of data pertaining to staff, 

and urged for identification of collection 

methods that will be feasible for 

participants. One commenter suggested 

adding an ‘‘other as determined by the 

Secretary’’ element to this section. 

Response: We appreciate the ideas 

and suggestions that commenters 

proposed. States continue to have the 

flexibility to design their data collection 

requirements as long as all of the 

requirements included in the regulation 

for CFC are met. States may adopt 

additional data collection requirements 

for their own purposes. As indicated 

above, we are adding data collection 

requirements for States to capture data 

on the impact of CFC services and 

supports on the physical and emotional 

health of individuals, and other data as 

determined by the Secretary. 

Comment: One commenter stated that 

data collection requirements are 

excessive in comparison to reporting on 

section 1915(c) waivers and the section 

1915(j) State Plan option. The 

commenter also stated that some of the 

requirements do not appear to provide 

CMS or the States with any additional 

information that is useful in the 

operation of multiple home and 

community-based services programs, 

quality assurance, or customer 

satisfaction. This commenter also stated 

that the requirements at paragraphs (a), 

(b), (d), and (f) are similar to existing 

reporting. 

Response: We have implemented data 

collection requirements as they were 

specified in the statute. We do not agree 

that the data collection requirements are 

excessive. We believe that these 

requirements are an essential tool 

needed to evaluate CFC. 

Comment: One commenter asked for 

CMS to clarify anticipated mechanisms 

to report annual estimates, and asked 

whether CMS will make changes to 

existing reporting mechanisms. Another 

commenter suggested that CMS provide 

States with flexibility in data reporting 

until existing State automated systems 

can be updated to accommodate new 

reporting requirements. Another 

commenter stated that mechanisms 

chosen need to include consumer input 

and consumer satisfaction surveys as 

well as outcome measures. 


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Response: As we noted, we will 

provide future guidance on the format of 

this reporting requirement. We will 

consider the commenters’ perspectives 

as we develop our guidance and will try 

to impose as little burden on the States 

and individuals as possible. However, 

with regard to State flexibility in 

reporting, States must provide the 

information specified in § 441.580 in a 

timely manner regardless of the State’s 

systems and potential system 

modifications needed. States may 

leverage existing data collection and 

reporting vehicles to meet the 

requirements of CFC. 

Upon consideration of the public 

comments received, we are finalizing 

§ 441.580 with revision, adding data 

collection requirements for States to 

capture data on the impact of CFC 

services and supports on the physical 

and emotional health of individuals, 

and other data as determined by the 

Secretary. 

S. Quality Assurance System (§ 441.585) 

We proposed to require that 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. We proposed that 

the quality assurance system must 

include program performance measures, 

quality of care measures, standards for 

delivery models and methods that 

maximize consumer choice and control. 

We also required that States elicit and 

incorporate feedback from key 

stakeholders to improve the quality of 

the CFC benefit and that States must 

collect and report on monitoring, 

remediation, and quality improvements 

related to information defined in the 

State’s quality improvement strategy. 

Comment: Several commenters 

commended the requirement that the 

quality assurance system be detailed in 

the CFC SPA. 

Response: We appreciate the support 

of this requirement. 

Comment: Several commenters noted 

that it is crucial that the quality 

management system utilized for CFC 

reflect the participant direction 

philosophy and recommended that the 

quality system resemble what is seen in 

sections 1915(i) and 1915(j) of the Act. 

The commenter indicated that special 

attention and/or assistance may be 

needed to ensure agencies administering 

CFC implement quality assurance and 

measurement techniques that build 

upon the participant direction 

paradigm. 

Response: We appreciate the 

commenters’ views and agree that the 

perspective of the individuals receiving 

CFC attendant services and supports is 

an important aspect to consider. We 

believe the requirement to incorporate 

stakeholder feedback will complement 

the other elements of the participant 

direction philosophy included in CFC. 

While certain aspects of the CFC quality 

assurance system were set forth in the 

statute, similar measures are required 

for other Medicaid programs including 

sections 1915(c), 1915(i) and 1915(j) of 

the Act, and we anticipate that States 

will leverage their current systems to 

meet the requirements for CFC where 

possible. 

Comment: Multiple commenters 

suggested additional requirements for 

the quality assurance system including 

the following: 

• Modification of the program 

performance measures to capture 

achievement of individuals’ outcomes 

and goals identified in the service plan; 

• Indication of the choice of location 

where the services are provided such as 

home, school, work or other; 

• Collection of type of living situation 

such as group home, family home, 

individual’s home or other in 

§ 441.585(a)(1)(iii); 

• Specification of the choice of 

institution or community; 

• Collection of a core set of functional 

indicators which are representative of 

the full range of functional limitations 

for the CFC population; 

• Implementation of measures of 

consumer satisfaction and consumer 

experience; 

• Measurement and reporting of 

barriers to achievement of individual 

outcomes and goals and how the State 

intends to address and remove any 

identified barriers; 

• Collection and monitoring of the 

difference between the number of 

personal attendant care hours scheduled 

or authorized in each qualified 

individual’s service plan and the hours 

of the scheduled type of service that are 

actually delivered to the qualified 

individual; 

• Implementation of a program 

performance measure called ‘‘gaps in 

service’’ which they believe would 

allow States to document, gauge and 

address service gaps; 

• Implementation of standards for 

services and supports; 

• Measurement of the numbers 

individuals served both in terms of the 

number of individuals eligible to receive 

CFC, and in terms of the individuals 

receiving all of the various CFC services; 

• Measurement of the numbers of 

shifts that went unstaffed; 

• Measurement of the general 

availability, turnover and retention of 

attendant staffing; 

• Measurement of access to services 

on the basis of fields identified in 

§ 441.580(c); 

• Measurement of race, ethnicity, 

limited English proficiency, and type of 

residence; 

• Evaluation of whether the payment 

methodologies for attendant services 

and supports are sufficient for 

developing and sustaining an adequate 

workforce; 

• Measurement of the impact direct 

care workforce wages have on the access 

consumers have to a wide range of 

reliable, timely home and communitybased services; 

• Analysis of workforce quality and 

stability; and 

• Development and implementation 

of program integrity measures to 

evaluate the validity of individual 

eligibility, appropriateness of the care 

plan, and propriety of payments to 

caregivers. 

Response: We appreciate the 

commenters’ suggestions regarding 

additional requirements to be included 

in States’ quality assurance systems for 

CFC. As noted in previous sections, we 

are working to streamline the various 

HCBS requirements and expectations 

where possible across Medicaid HCBS 

programs. We are presently working 

with stakeholders to better understand 

the most effective and efficient method 

to assure the health and welfare of 

individuals with long term services and 

support needs, and to maximize quality 

across Medicaid HCBS authorities. We 

are considering the feedback from 

stakeholders, including the feedback 

received regarding the proposed 

language for CFC and forthcoming 

section 1915(i) comments, and 

analyzing current statutory and 

regulatory guidance across applicable 

Medicaid authorities. Additional 

guidance will be provided to States 

regarding any streamlined approaches 

that are developed for utilization across 

Medicaid HCBS. For the purposes of 

this regulation and the implementation 

of CFC, we have revised the quality 

assurance system requirements to more 

closely align with requirements 

included in statute. We will consider 

these commenters’ suggestions as the 

work continues to better understand the 

most effective and efficient method to 

assure the health and welfare of 

individuals with long term services and 


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support needs, and to maximize quality 

across Medicaid HCBS authorities. 

Comment: One commenter indicated 

that it is critical in a quality 

improvement framework to examine 

participant outcomes and suggested that 

CMS be more prescriptive in the 

assessment elements which will result 

in comparable data on which to monitor 

quality and compare outcomes across 

States over time. The commenter 

suggested that CMS consider identifying 

a standard set of measures that would be 

implemented across States as they 

believed that this would allow CMS to 

identify exemplary States that could 

serve as best practice examples, as well 

as identify those States that may require 

support to improve the provision of 

services to CFC participants. Another 

commenter recommended that CMS 

include a set of minimum measures in 

the regulation, stating that this will both 

ensure States are collecting core 

meaningful quality measures and also 

allow for comparison of different 

programs to help identify best practices. 

Several commenters indicated that 

States’ continuous quality assurance 

systems must be designed to measure 

and report on achievement of individual 

outcomes and goals expressed by 

beneficiaries in their person-centered 

services and supports plans. 

Response: We agree with the 

commenters that individual outcomes 

are an important component to consider 

in terms of quality improvement and 

quality assurance, particularly as they 

relate to specific services. We expect 

that States’ quality assurance systems 

will utilize the information present in 

service plans to inform how needs are 

being met across the program and to see 

where improvements need to be made. 

As noted earlier, we have modified the 

Person-Centered Service Plan section to 

include individually identified goals 

and desired outcomes. States have the 

flexibility to incorporate additional 

measures above what is required 

through this regulation. Also, as 

mentioned in the assessment section, 

we are currently working to determine 

universal core elements to include in an 

assessment for consistency across 

Medicaid HCBS programs. Based on 

multiple comments and the 

acknowledgement that additional policy 

work is necessary to maximize the 

extent to which consistency can exist 

across the Medicaid programs as it 

relates to assessments for HCBS 

programs, we revised the assessment 

requirements to reflect the broad 

requirements in statute. Our intent is to 

require any finalized universal core 

elements that are developed to be 

incorporated into the assessment of 

functional need for CFC and other HCBS 

assessments as determined by CMS. 

We also appreciate the commenters’ 

suggestions regarding standard sets of 

quality measures. As noted, we are 

presently working with stakeholders to 

better understand the most effective and 

efficient method to assure the health 

and welfare of individuals with long 

term services and support needs, and to 

maximize quality across Medicaid 

HCBS authorities. For the purposes of 

this regulation and the implementation 

of CFC, we have revised the quality 

assurance system requirements to more 

closely reflect the requirements 

included in statute. 

Comment: One commenter asked 

what the expectation is for measuring 

individuals’ outcomes associated with 

the receipt of community-based 

attendant services and supports, 

particularly for the health and welfare of 

recipients of the service as stated at 

§ 441.585(a)(2). The commenter asked if 

this is a major evaluation element or if 

it could be satisfied with a survey. The 

commenter voiced concern that a broadbased assessment of need that includes 

elements over and above what is offered 

in the personal care program’s purview 

may negatively impact the ability of 

States to develop and measure 

individual outcomes. 

Response: As noted above, individual 

outcomes are an important component 

to consider in terms of quality 

improvement and quality assurance, 

particularly as they relate to the services 

and supports provided under CFC. For 

these outcome measures being tied to 

assessment elements or the achievement 

of individual outcomes and goals 

expressed in the service plan, we expect 

that States’ quality assurance systems 

will utilize the information present in 

service plans to inform how needs are 

being met across the program and to see 

where improvements need to be made. 

This information will also be a major 

component in the evaluation of CFC. 

States will need to describe how they 

plan to capture these outcomes in their 

quality assurance system. With regard to 

the commenter’s concern regarding the 

assessment of need including elements 

over and above what is offered under 

CFC, as mentioned earlier, the 

assessment portion of the regulation has 

also been revised, as has the personcentered planning section, to remove 

the specified elements that went beyond 

the services and supports available 

under CFC. However, it is important to 

reiterate that our intent is to require any 

finalized universal core assessment 

elements that are developed to be 

incorporated into the assessment of 

functional need for CFC and other HCBS 

assessments as determined by CMS. 

Comment: One commenter indicated 

that the proposed rule deferred too 

much to States, was too vague to 

provide adequate protection for 

Medicaid beneficiaries, and did not 

incorporate the monitoring function that 

section 2401 of the Affordable Care Act 

included as a requirement for a State’s 

quality assurance system. The 

commenter recommended more 

prescriptive requirements for this 

function. 

Response: We believe that the 

monitoring function was incorporated. 

Several protections for individuals are 

required under the quality assurance 

system, and the system as a whole must 

continuously monitor the quality of the 

program and incorporate feedback from 

key stakeholders. However, as 

mentioned above, we are continuing the 

work to determine quality approaches 

for utilization across Medicaid HCBS 

authorities. Therefore, for the purposes 

of this regulation and the 

implementation of CFC, we have revised 

the quality assurance system 

requirements to more closely reflect the 

requirements included in statute. 

Section 441.585(a)(2) now indicates that 

the quality assurance system must 

monitor the health and welfare of each 

individual who received CFC home and 

community-based attendant 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 community-based 

attendant services and supports. 

Comment: One commenter noted that 

the data collection and quality 

assurance system should not be 

burdensome on consumers and they 

should not be surveyed every month 

with a lot of questions that get into 

unnecessary detail or invade the 

person’s privacy. 

Response: We agree with the 

commenter. 

Comment: Several commenters 

commended the inclusion of the 

examples of measures in the preamble, 

including functional indicators and 

individual satisfaction. One commenter 

added that the perspective of service 

recipients and advocates will be 

critically important in making 

determinations as to ‘‘quality,’’ 

particularly as it pertains to personal 

goal and outcome achievement. 

Response: We believe that individual 

outcomes are an important component 

to consider in terms of quality 

improvement and quality assurance, 

particularly as they relate to the services 

and supports provided under CFC. With 


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regard to the perspective of individuals 

and advocates as referenced in the 

comment, States’ quality assurance 

systems must also incorporate 

stakeholder feedback to improve the 

quality of the services offered under 

CFC. These aspects of CFC, along with 

the Development and Implementation 

Council, demonstrates the importance of 

the individual’s perspective as it relates 

to services and supports provided under 

the program. 

Comment: One commenter asked 

CMS to clarify whether a State can 

delegate its quality assurance 

responsibilities to an outside entity 

while retaining ultimate responsibility, 

or if the State is required to facilitate 

these functions. 

Response: States continue to have the 

flexibility to design their quality 

assurance programs as long as all of the 

requirements included in the regulation 

for CFC are met. A State will need to 

determine whether they want an entity 

outside the State to be responsible for 

meeting this requirement. 

Comment: A few commenters voiced 

concern about the complexity of the 

proposed quality assurance system, 

pointed out that it is very similar to that 

for the section HCBS 1915(c) waiver 

programs, and referenced a previous 

letter they had sent to CMS that stated: 

‘‘The growing demands on States to 

implement increasingly complex quality 

management systems and improvement 

strategies are problematic because they: 

(a) Deviate significantly from the 

original intent of the quality initiative, 

that is, that CMS would review State 

systems of quality rather than monitor 

activities at the level of the individual 

beneficiary, (b) extend beyond the 

expectation specific in the HCBS Waiver 

Application Version 3.5 and related 

guidance, and (c) are being placed on 

States at a time when their fiscal and 

human resources are diminishing.’’ 

Another commenter referenced this 

letter and asked that CMS clarify 

expectations regarding how section 

1915(k) quality assurance is similar or 

dissimilar to section 1915(c) quality 

improvement, with specific attention 

paid to individual outcome measures 

and remediation activity level of detail. 

Response: As noted earlier, based on 

the feedback received during this 

process and the direction of ongoing 

work at CMS to develop a quality 

strategy that can be utilized to the extent 

possible across the Medicaid programs, 

we are revising this portion of the 

regulation to more closely align with the 

quality assurance system requirements 

included in statute. 

Comment: One commenter indicated 

that the proposed language is similar to 

quality assurance in HCBS waivers, 

which they believe is unsatisfactory 

because it has few, if any, quality of care 

standards, and is based on quality 

indicators that may or may not be 

meaningful and do not give guidance to 

consumers when there is a dispute 

about how services are to be provided. 

The commenter added that the quality 

assurance process seems to be hidden 

from consumers and that the data seems 

to be almost exclusively viewed by the 

State and CMS, with little or no 

involvement from consumers. The 

commenter recommended that 

information from the quality assurance 

process be shared with stakeholders, 

including but not limited to consumers 

and their representatives. 

Response: As mentioned above, we 

have revised the quality assurance 

system requirements to more closely 

align with the quality assurance system 

requirements included in statute. We 

have maintained the language that 

requires outcome measures associated 

with the receipt of community-based 

attendant services and supports, 

particularly for the health and welfare of 

recipients of this service. States may use 

a number of quality of care measures to 

meet that requirement. We also point 

the commenter to the final rule at 

§ 441.585(b), which requires that the 

quality assurance system 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, and 

§ 441.585(c), which requires that the 

State elicit and incorporate feedback 

from individuals and their 

representatives, disability organizations, 

providers, families of disabled or elderly 

individuals, members of the 

community, and others to improve the 

quality of CFC. 

Comment: One commenter indicated 

that the quality improvement strategy 

needs to involve consumer and 

stakeholder input, and that 

measurements and remediation needs to 

consider the convenience to the 

consumer and their ability to 

understand the process, and not 

impinge unduly on consumer direction 

while improving service delivery. The 

commenter added that the Development 

and Implementation Council needs to be 

directly involved in monitoring and 

making program changes to implement 

quality improvement strategies. Several 

other commenters indicated that in 

addition to stakeholder feedback 

received through the Council, feedback 

from consumer satisfaction surveys and 

other means should be included in the 

quality assurance system and should be 

included in the rule. Another 

commenter urged CMS to clarify that 

feedback from aging organizations 

should also be incorporated in the 

quality assurance system. 

Response: We point the commenter to 

the final rule at § 441.585(b), which 

requires that the quality assurance 

system 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, and 

§ 441.585(c), which requires that the 

State elicit and incorporate feedback 

from individuals and their 

representatives, disability organizations, 

providers, families of disabled or elderly 

individuals, members of the 

community, and others to improve the 

quality of CFC. We expect that States 

will include the feedback of the 

Development and Implementation 

Council as part of this requirement as 

the membership of the Council will 

include many of the individuals 

specified at § 441.585(c). We agree with 

the commenter that consideration 

should be given to the methods that 

involve individuals’ feedback. We agree 

that surveys may be a useful component 

with which to gain feedback, but 

caution that this process not be overly 

complicated or burdensome for 

individuals. 

Comment: One commenter asked that 

CMS clarify expectations for 

incorporating stakeholder feedback that 

may conflict with Federal regulations or 

State policy direction as defined in State 

statute, or drive increased expenditures 

for which a State lacks funding 

appropriation. 

Response: The requirement at section 

1915(k)(3)(D)(ii) of the Act, which we 

proposed to implement at § 441.585(b), 

requires that the quality assurance 

system incorporate feedback from 

consumers and their representatives, 

disability organizations, providers, 

families of disabled or elderly 

individuals, members of the 

community, and others. We are 

interpreting the use of the word 

‘‘incorporate’’ to mean that feedback 

from these key stakeholders must be 

considered, but we do not expect that 

States must make changes based on each 

and every suggestion received. Should 

feedback received be in conflict with 

Federal regulations, States would not be 

expected to incorporate that feedback, 

in terms of making changes to the 

program, as Federal regulations must be 

adhered to for a State to be in 

compliance with such regulations. If 

feedback received was in conflict with 


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State policy direction, as defined in 

State statute, or would drive increased 

expenditures for which a State lacks 

funding appropriation, the State would 

need to make a choice as to whether to 

consider it. 

Comment: One commenter asked to 

what extent a State must ‘‘maximize 

consumer independence and control’’ as 

described at § 441.585(a)(4), asked for an 

example of what this means and what 

CMS’ intent is with this language. The 

commenter asked for confirmation that 

this is all within the confines of the 

individual’s health needs and requested 

that if this is the case that CMS include 

additional language to make this clear. 

Response: The statute and this 

regulation facilitate the ability for States 

to maximize individual independence 

and control throughout the CFC benefit, 

as illustrated by the inclusion of the 

language related to self-direction and 

person-centered planning, the 

Development and Implementation 

Council, and the stakeholder feedback 

requirements for the quality assurance 

system. While we do not set a minimum 

or maximum threshold that States must 

meet in terms of maximizing consumer 

independence and control, we expect 

that States make every effort to meet 

these requirements. 

Comment: Multiple commenters 

recommended that the language at 

section 1915(k)(3)(D)(ii) of the Act be 

used at paragraph (b) Stakeholder 

feedback, instead of the term ‘‘key 

stakeholders.’’ 

Response: We appreciate the 

commenters’ suggestion and have 

revised the language to include each 

entity specified in the statute. 

Comment: Several commenters stated 

that at paragraph (a)(2), the regulation 

applies the statutory requirement 

regarding reporting and investigation of 

abuse and neglect. The commenters 

commended the connection of abuse 

and neglect reporting to quality of care 

measures, but believed that the statute 

(at section 1915(k)(3)(D)(iii) of the Act) 

applies the requirement more broadly 

than to the more limited subpart of 

‘‘Quality of care measures’’ specified in 

paragraph (a)(2). The commenters 

recommended that it be more broadly 

set forth as an independent requirement 

under the quality assurance system. 

Response: As mentioned above, we 

have revised the quality assurance 

system requirements to more closely 

align with the quality assurance system 

requirements included in statute. As 

such, § 441.585 of the final rule is clear 

that this function applies more broadly 

than to the proposed limited subpart of 

‘‘quality of care measures.’’ 

Upon consideration of the public 

comments received, we are finalizing 

§ 441.585 with revision, to more closely 

mirror the quality assurance 

requirements specified in statute. 

T. Increased Federal Financial 

Participation (§ 441.590) 

We proposed that beginning October 

1, 2011, the FMAP applicable to the 

State will be increased by 6 percentage 

points for the provision of CFC home 

and community-based attendant 

services, under an approved State plan 

amendment. 

Comment: One commenter expressed 

concern that since States will receive 6 

percentage point increase in FMAP for 

costs associated to the program, it 

would seem shortsighted for a State not 

to take advantage of this opportunity to 

expand community-based services 

which will decrease the amount of 

money needed for institutional care. 

Response: We appreciate the 

commenter’s perspective. 

Comment: Many commenters 

indicated that States should be 

permitted to receive the enhanced 

FMAP provided in CFC concurrently 

with receiving other HCBS enhanced 

match rates such as those authorized by 

the Money Follows the Person 

Rebalancing Demonstration and the 

Balancing Incentive Payments Program. 

Response: We acknowledge the 

potential for States to receive enhanced 

FMAP under more than one program, 

and are willing to provide technical 

assistance to States interested in doing 

so. 

Comment: One commenter requested 

clarification regarding how CFC services 

would work in conjunction with similar 

efforts already under way to transition 

individuals from skilled nursing 

facilities to a home and communitybased setting, such as section 1915(c) 

waivers and MFP. The commenter asked 

if waiver participants would be able to 

access CFC services and if so, whether 

the additional FMAP would apply to 

MFP or waiver services. 

Response: The enhanced FMAP 

applies to services authorized under the 

CFC program, but there is no 

prohibition on individuals receiving 

services through a section 1915(c) 

waiver or MFP program also receiving 

services through CFC. 

Comment: One commenter stated that 

this provision needs to be strong enough 

to encourage State participation and 

should be seen as an incentive for States 

to comply with the Olmstead Integration 

Mandate. The commenter indicated that 

it should not preclude other forms of 

enforcement of the law. 

Response: We agree with the 

commenter, and believe that the 6 

percentage point increase in Federal 

match provides incentives to the States 

to provide CFC to eligible individuals. 

This provision does not preclude other 

forms of enforcement of the Olmstead 

decision. 

Comment: Several commenters asked 

for clarification pertaining to what 

services and expenditures would be 

eligible for increased FMAP. One of 

these commenters requested that CMS 

clarify whether increased FFP is 

available for activities that support the 

delivery of ‘‘home and communitybased attendant services’’ in context of 

CFC requirements. Two commenters 

requested that the enhanced 

reimbursement rate also be applied to 

assessments. One of these commenters 

further requested that CMS cover the 

coordination of the person-centered 

plan at the enhanced FMAP rate. 

Another commenter stated that their 

understanding is that attendant care 

would be eligible for the enhanced 

FMAP, and inquired whether additional 

services such as necessary case 

management or support brokerage 

services, administrative costs related to 

implementation of a fiscal agent 

structure, voluntary training for service 

participants, and the implementation of 

quality improvement mechanisms 

would be covered. One commenter 

requested clarification of the range of 

services eligible for the enhanced FMAP 

rate other than attendant services, such 

as case management, training, or 

personal agents. One commenter 

requested that CMS clarify that the 

additional 6 percent FMAP would be 

applied to all services qualifying under 

CFC. This same commenter encouraged 

CMS to clarify that the 6 percent 

additional FMAP applies to the entire 

package of services to anyone qualified 

to receive them, not just those who are 

newly in receipt of attendant care 

services and supports provided under 

CFC. This commenter also asked 

whether a Personal Emergency 

Response System (PERS) would also 

qualify for enhanced reimbursement. 

Response: The authorizing legislation 

indicates that the additional 6 

percentage points in FMAP applies to 

CFC services and supports. We are 

interpreting ‘‘services and supports’’ 

broadly in this context, to include not 

only the services referenced at § 441.520 

(‘‘Included services’’), but also some of 

the activities referenced in the 

comments described above. Specifically, 

activities required by CFC that are 

performed for specific individuals, such 

as assessments, person-centered 

planning, support system and Financial 


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Management Services will receive an 

additional 6 percentage points to the 

State’s service match rate. Activities 

required by CFC that are done for the 

operation of the program in general, 

such as quality management, data 

collection, implementation of the 

Development and Implementation 

Council, and administrative costs 

related to implementation of a fiscal 

agent structure will not receive an 

additional 6 percentage points as they 

are administrative activities and are 

only eligible for the standard federal 

administrative matching rate of 50 

percent available at § 433.15(b)(7). 

Comment: One commenter stated that 

CMS should ensure that the ‘‘and 

supports’’ is added to the end of ‘‘home 

and community-based attendant 

services’’ to be consistent with the 

terminology in the statute. 

Response: We agree with this 

commenter and will add ‘‘and supports’’ 

to the end of ‘‘home and communitybased attendant care services’’ in 

§ 441.590. 

Comment: One commenter requested 

that CMS clarify its expectations on how 

these services and expenditures are to 

be tracked to appropriately draw the 

higher FMAP. The commenter asked 

whether CMS will revise the CMS–64 

form to reflect this State plan option. 

Response: The CMS–64 form has been 

modified to include a new CFC line 

item. 

Comment: Two commenters 

supported the 6 percent increase in 

FMAP, hoping that this will encourage 

States to select this option. 

Response: We appreciate the 

perspectives these commenters had in 

support of this provision of the rule. 

Comment: Two commenters requested 

confirmation of the duration of the 6 

percent FMAP increase. 

Response: There is no time limit 

attached to the FMAP increase. The 6 

percentage point increase in FMAP is 

available to States for as long as States 

choose to provide services and supports 

under CFC. 

Comment: One commenter asked if 

the enhanced Federal match is available 

if a State decides to implement later 

than October, 2011 to coordinate 

implementation efforts with other 

efforts connected to Affordable Care 

Act. 

Response: The enhanced FMAP 

becomes available to a State upon the 

effective implementation date of their 

approved SPA for CFC, regardless of 

whether this date occurs after October 1, 

2011. 

Comment: One commenter suggested 

that a portion of the increased Federal 

financial assistance that States receive 

be invested in workforce compensation, 

and investment that has been shown to 

improve recruitment and retention and 

thus quality of care. 

Response: States will continue to have 

flexibility with determining how they 

utilize the increased Federal funds that 

they will receive with the 6 percentage 

point enhanced match. 

Upon consideration of the public 

comments received, we are finalizing 

§ 441.590 with revision, to reflect that 

the enhanced match is available for CFC 

‘‘home and community-based attendant 

services and supports.’’ 

III. Provisions of the Final Regulations 

Generally, this final regulation 

incorporates the February 25, 2011 

provisions of the proposed rule. We 

have outlined in section II of this 

preamble the revisions in response to 

the public comments. The provisions of 

this final regulation that differ from the 

proposed rule are as follows: 

• At § 441.505 we have revised the 

following definitions: Agency-provider 

model, backup systems and supports, 

individual representative, other models, 

Self-directed. This section has also been 

revised to add two new definitions: 

Individual, Self-directed model with 

service budget. 

• We have revised § 441.510 to set 

forth the requirement that all 

individuals that meet an institutional 

level of care, allow for State 

administering agencies to permanently 

waive the annual level of care 

recertification if certain conditions are 

met and clarify income requirements 

• We have revised § 441.515 to 

combine (b) and (c) to more directly 

align with the statute. 

• We have revised § 441.520 to 

rename it ‘‘Included services’’ to align 

with the statute. We have revised 

§ 441.520(b) to clarify that (b)(1) and (2) 

that follow are both at the State’s option, 

and to add the language from proposed 

441.520(b)(3) ’’linked to an assessed 

need or goal identified in the 

individual’s person-centered service 

plan’’ into the introductory section so 

that it is clear it applies to both (b)(1) 

and (2). 

• We have revised § 441.530 to 

remove the proposed home and 

community-based settings criteria. This 

section is now reserved for future use. 

• We have revised § 441.535 to add 

the ability for States to meet the face-toface requirement through the use of 

telemedicine or other information 

technology medium if the certain 

conditions are met. We also added a 

new requirement at § 441.535(d) 

indicating ‘‘Other requirements as 

determined by the Secretary.’’ 

• We have revised § 441.540 to add a 

new requirement that the service plan 

require an assurance that the setting in 

which the individual resides is chosen 

by the individual, and to require a 

description of the setting alternatives 

available to the individual from which 

to choose. The proposed text at 

§ 441.540(b)(1) through (5) all shifted 

down by one number. We added 

requirements for administering the 

person-centered service plan. We also 

relocated some of the proposed rule 

language to the Support System section 

at § 441.555. 

• We have revised § 441.545 to 

expand the types of arrangements that 

may exist under the Agency provider 

model, to clarify the authority 

individuals have in the selection and 

dismissal of their service providers, to 

clarify the responsibilities of the 

Financial management entity and to add 

‘‘Other service delivery model’’ as an 

additional service delivery model to 

allow States the option of proposing 

alternate delivery models for 

consideration. 

• We have revised § 441.550(e) to 

specify that determining the amount 

paid for services should be ‘‘in 

accordance with State and Federal 

compensation requirements’’. 

• We have revised § 441.555 to 

specify that support system activities 

must be available to all individuals 

regardless of the service delivery model; 

We also revised the requirements under 

this section to add additional 

beneficiary protections. 

• We have revised § 441.560(a)(3)(i), 

replacing the phrase ‘‘change the 

budget’’ with ‘‘adjust amounts allocated 

to specific services and supports within 

the approved service budget.’’ 

• We have revised § 441.560 to make 

technical corrections. 

• We have revised § 441.565 to clarify 

which requirements apply to which 

service delivery model. 

• We have revised § 441.570 to clarify 

that this includes assuring the State’s 

adherence to section 1903(i) of the Act 

that Medicaid payment shall not be 

made for items or services furnished by 

individuals or entities excluded from 

participating in the Medicaid Program. 

We also clarified that the Maintenance 

of Existing Expenditures requirements 

described at § 441.570(b) pertains to the 

first full 12 months in which the CFC 

State plan amendment is implemented, 

and is limited to the expenditures for 

home and community-based attendant 

services and supports provided under 

sections 1115, 1905(a), 1915, or 

otherwise, under the Act, to individuals 

with disabilities or elderly individuals 


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attributable to the preceding 12-month 

period. 

• We have revised § 441.575 to align 

with the statutory requirement that a 

majority of the Council be comprised of 

individuals with disabilities, elderly 

individuals, and their representatives. 

• We have revised § 441.580 adding 

additional requirements for States to 

capture data on the impact of CFC 

services and supports on the physical 

and emotional health of individuals and 

other data as determined by the 

Secretary. 

• We have revised § 441.585 to more 

closely align with requirements set forth 

in statute. 

V. Collection of Information 

Requirements 

We solicited public comment on each 

of the issues for the following sections 

of this document that contain 

information collection requirements 

(ICRs). We received several public 

comments on specific sections 

contained in the ICRs. The comments 

and our responses follow: 

A. Assessment of Functional Need 

(§ 441.535) 

Section 441.535 requires States to 

conduct a face-to-face assessment of the 

individual’s needs, strengths, 

preferences, and goals for the services 

and supports under CFC. States may use 

one or more processes and techniques to 

obtain this information about an 

individual. In § 441.535(a)(1), the State 

must define the provider qualifications 

for health care professionals to use 

telemedicine or other information 

technology mediums for the assessment. 

In § 441.535(a)(3), the State must obtain 

informed consent from the individual to 

use telemedicine or other information 

technology mediums for the assessment. 

In addition to the initial assessment, 

States are required to conduct 

reassessments at least every 12 months 

(§ 441.535(c)). 

The burden associated with the 

requirements under § 441.535 is the 

time and effort it would take to conduct 

a face-to-face assessment of each 

individual’s needs, strengths, 

preferences and goals for the services 

and supports under CFC. While this 

requirement is subject to the PRA, only 

a few States have expressed potential 

interest. Therefore, based on our 

informal discussions with States after 

the publication of the proposed rule, we 

believe that it would affect less than 10 

entities on an annual basis; therefore, it 

is exempt from the PRA in accordance 

with 5 CFR 1320.3(c). 

The one-time burden associated with 

the requirements under § 441.535(a)(1) 

is the time and effort it would take the 

respondents to define the provider 

qualifications for health care 

professionals. While this requirement is 

subject to the PRA, only a few States 

have expressed potential interest. 

Therefore, based on our informal 

discussions with States after the 

publication of the proposed rule, we 

believe that it would affect less than 10 

entities on an annual basis; therefore, it 

is exempt from the PRA in accordance 

with 5 CFR 1320.3(c). 

The burden associated with the 

requirements under § 441.535(a)(3) is 

the time and effort it would take the 

respondents to obtain informed consent 

from the individual to use telemedicine 

or other information technology 

mediums for the assessment. While this 

requirement is subject to the PRA, only 

a few States have expressed potential 

interest. Therefore, based on our 

informal discussions with States after 

the publication of the proposed rule, we 

believe that it would affect less than 10 

entities on an annual basis; therefore, it 

is exempt from the PRA in accordance 

with 5 CFR 1320.3(c). 

The burden associated with the 

requirements under § 441.535(c) is the 

time and effort it would take the 

respondents to conduct reassessments at 

least every 12 months. While this 

requirement is subject to the PRA, only 

a few States have expressed potential 

interest. Therefore, based on our 

informal discussions with States after 

the publication of the proposed rule, we 

believe that it would affect less than 10 

entities on an annual basis; therefore, it 

is exempt from the PRA in accordance 

with 5 CFR 1320.3(c). 

Comment: Several commenters 

recommended that CMS revisit the time 

estimates for the assessment of 

functional need and reassessment of 

need. The commenters had concerns 

regarding the one hour estimate 

provided in the proposed rule stating 

that an assessment could take up to 

three hours. The commenters added that 

this estimate also does not include 

travel time or the time necessary to 

analyze the information. It was also 

noted that while a reassessment may 

take less time than an initial assessment, 

it still would take up to two hours to 

perform. 

Response: Our estimates are based on 

the average time it may take for States 

to complete the assessment. This 

average would take into account the fact 

that some assessments may take less 

than one hour while some may take 

more than 1 hour. We do not believe the 

estimate of 1 hour to complete a faceto-face interview to be unreasonable and 

did not receive overwhelming public 

comment to indicate otherwise. 

Therefore, we have not revised the 

collection of information estimate. 

B. Person-Centered Service Plan 

(§ 441.540) 

Section 441.540 requires the State to 

conduct a person-centered planning 

process resulting in a person-centered 

service plan (§ 441.540(b)), based on the 

assessment of functional need 

(§ 441.535), in collaboration with the 

individual and the individual’s 

authorized representative, if applicable. 

This service plan must be agreed to in 

writing by the individual and signed by 

all individuals and providers 

responsible for its implementation. In 

addition, States must provide a copy of 

the plan to the individual and anyone 

else responsible for the plan. In addition 

to the initial plan, States are required to 

review the plan at least every 12 months 

(§ 441.540(c)). 

The burden associated with the 

requirements under § 441.540(b) is the 

time and effort it would take to develop 

and finalize a written person-centered 

service plan for each individual, and to 

provide each individual and anyone 

else responsible for the plan a copy of 

that plan. While this requirement is 

subject to the PRA, only a few States 

have expressed potential interest. 

Therefore, based on our informal 

discussions with States after the 

publication of the proposed rule, we 

believe that it would affect less than 10 

entities on an annual basis; therefore, it 

is exempt from the PRA in accordance 

with 5 CFR 1320.3(c). 

The burden associated with the 

requirements under § 441.540(c) is the 

time and effort it would take 

respondents to review each personcentered service plan at least every 12 

months and revise, when necessary. 

While this requirement is subject to the 

PRA, only a few States have expressed 

potential interest. Therefore, based on 

our informal discussions with States 

after the publication of the proposed 

rule, we believe that it would affect less 

than 10 entities on an annual basis; 

therefore, it is exempt from the PRA in 

accordance with 5 CFR 1320.3(c). 

Comment: Several commenters 

recommended that CMS revisit the time 

estimates for development of the service 

plan. Several commenters stated that the 

CMS estimate of 2 hours to develop and 

finalize a service plan was too short. 

The commenters indicated that 2 hours 

is needed to develop the plan with an 

additional 2 hours, at minimum, to 

finish the plan. They added that the 

overall development of a personcentered plan, including administrative 

tasks, could take up to 5 hours. 


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Response: Our estimates are based on 

the average time it may take for States 

to complete the requirements related to 

§ 441.540—Person-centered Service 

plan. This average would take into 

account the fact that some of these 

components may take less than the 

estimated time while some may take 

more than we estimated. We estimated 

a total of 3.5 hours on average. We do 

not believe that this estimate is 

unreasonable and did not receive 

overwhelming public comment to 

indicate otherwise. Therefore, we have 

not revised the collection of information 

estimate. 

C. Service Models (§ 441.545) 

Section 441.545 requires the State to 

choose one or more service delivery 

models for providing home and 

community-based attendant services 

and supports. 

Under the agency-provider model for 

CFC, in § 441.545(a)(1), the State 

Medicaid agency or delegated entity, 

must enter into a contract or provider 

agreement with the entity providing the 

services and supports. 

Under the self-directed model with 

service budget, in § 441.545(b), the 

individual must be provided with a 

service budget based on the assessment 

of functional need. 

States must provide additional 

counseling, information, training, or 

assistance to individuals who have 

demonstrated that they cannot 

effectively manage the cash option 

described in § 441.545(b)(2)(iii). They 

must also provide the individual with 

the conditions under which the State 

would require an individual to use a 

financial management entity 

(§ 441.545(b)(2)(iv)). 

In § 441.545(c), States have the option 

of proposing other service delivery 

models which must be defined by the 

State and approved by CMS. 

The burden associated with the 

requirements under § 441.545(a)(1) is 

the time and effort it would take to enter 

into a contract or provider agreement 

with the entity providing the services 

and supports. While this requirement is 

subject to the PRA, only a few States 

have expressed potential interest. 

Therefore, based on our informal 

discussions with States after the 

publication of the proposed rule, we 

believe that it would affect less than 10 

entities on an annual basis; therefore, it 

is exempt from the PRA in accordance 

with 5 CFR 1320.3(c). 

The burden associated with the 

requirements under § 441.545(b) is the 

time and effort it would take the 

respondents to develop person-centered 

service plans and service budgets. While 

this requirement is subject to the PRA, 

we believe that it would affect less than 

10 entities on an annual basis; therefore, 

it is exempt from the PRA in accordance 

with 5 CFR 1320.3(c). 

The burden associated with the 

requirements under § 441.545(b)(2) is 

the time and effort it would take the 

respondents to provide additional 

counseling, information, training, or 

assistance to individuals who have 

demonstrated that they cannot 

effectively manage the cash option and 

provide that individual with the 

conditions under which the State would 

require an individual to use a financial 

management entity. While this 

requirement is subject to the PRA, only 

a few States have expressed potential 

interest. Therefore, based on our 

informal discussions with States after 

the publication of the proposed rule, we 

believe that it would affect less than 10 

entities on an annual basis; therefore, it 

is exempt from the PRA in accordance 

with 5 CFR 1320.3(c). 

Comment: One commenter was 

concerned that the State burden will 

vary depending on the service model. 

The commenter indicated that 

implementing the ‘‘self directed model 

with service budget’’ would create 

additional burden for the State and that 

a State would view the complexity of 

managing self-directed service budgets 

with new service features such as direct 

cash, vouchers, and training to support 

consumers with the full employer 

responsibility, as a significant 

additional burden. 

Response: We appreciate the 

commenter’s perspective. It is difficult 

to accurately estimate the total burden 

associated with any one of these 

models, as it would depend on the 

number of models a State chose to offer. 

While we acknowledge the additional 

burden that a State may have if they do 

not already offer such a model that 

could be leveraged to meet the 

requirements of CFC, we did not receive 

any estimates or additional comments 

that provide any compelling 

information to modify this section. 

Therefore, we will not be revising this 

collection of information estimate. 

D. Support System (§ 441.555) 

For each service delivery model 

described under § 441.545, States must 

provide or arrange for the provision of 

a support system to: Appropriately 

assess and counsel an individual or the 

individual’s representative, if 

applicable, before enrollment 

(§ 441.535); provide appropriate 

information, counseling, training and 

assistance to ensure that an individual 

is able to manage the services and 

budgets (if applicable) (§ 441.545); 

establish conflict of interest standards 

for the assessments of functional need 

and the person-centered service plan 

development process that apply to all 

individuals and entities, public or 

private (§ 441.540); and ensure that the 

responsibilities for assessment of 

functional need and person-centered 

service plan development are identified 

(§§ 441.535 and 441.540). 

In § 441.555(b), States must specify in 

their State plan any tools or instruments 

used to mitigate identified risks. The 

one-time burden associated with the 

requirements under § 441.555(b) is the 

time and effort it would take to amend 

their State plan by specifying any tools 

or instruments used to mitigate any 

identified risks. While this requirement 

is subject to the PRA, only a few States 

have expressed potential interest. 

Therefore, based on our informal 

discussions with States after the 

publication of the proposed rule, we 

believe that it would affect less than 10 

entities on an annual basis; therefore, it 

is exempt from the PRA in accordance 

with 5 CFR 1320.3(c). 

Comment: One commenter indicated 

that designing and implementing a 

support system that appropriately 

assesses and counsels an individual 

before an assessment, as well as 

providing information counseling, 

training, and assistance to the 

individual will require significant effort. 

Response: We appreciate the 

commenter’s perspective and agree that 

the requirements will require State 

effort. We did not receive any estimates 

or additional comments that provide 

any compelling information to modify 

this section. Therefore, we will not be 

revising this collection of information 

estimate. 

E. Service Budget Requirements 

(§ 441.560) 

For the self-directed model with a 

service budget, the State is required to 

develop and approve a service budget 

that is based on the assessment of 

functional need and person-centered 

service plan and must include all of the 

requirements in § 441.560(a)(1) through 

(a)(6). In addition to developing a 

service budget, the methodology used to 

determine an individual’s service 

budget amount must meet the 

requirements in § 441.560(b) and must 

be included in the State plan 

(§ 441.560(b)(3)). 

In § 441.560(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. In 

§ 441.560(d), the State must have a 


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method of notifying individuals of the 

amount of any limit that applies to an 

individual’s CFC services and supports. 

In § 441.560(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. 

The burden associated with the 

requirements under § 441.560(a) is the 

time and effort it would take to develop 

and approve each service budget. While 

this requirement is subject to the PRA, 

only a few States have expressed 

potential interest. Therefore, based on 

our informal discussions with States 

after the publication of the proposed 

rule, we believe that it would affect less 

than 10 entities on an annual basis; 

therefore, it is exempt from the PRA in 

accordance with 5 CFR 1320.3(c). 

The one-time burden associated with 

the requirements under § 441.560(b) is 

the time and effort it would take the 

respondents to develop a methodology 

used to determine an individual’s 

service budget amount and include that 

methodology in the State plan. While 

this requirement is subject to the PRA, 

only a few States have expressed 

potential interest. Therefore, based on 

our informal discussions with States 

after the publication of the proposed 

rule, we believe that it would affect less 

than 10 entities on an annual basis; 

therefore, it is exempt from the PRA in 

accordance with 5 CFR 1320.3(c). 

The one-time burden associated with 

the requirements under § 441.560(c), (d), 

and (f) is the time and effort it would 

take the respondents to develop: 

Procedures that will provide safeguards 

to individuals when the budgeted 

service amount is insufficient to meet 

the individual’s needs, a method for 

notifying individuals of the amount of 

any limit that applies to an individual’s 

CFC services and supports, and a 

procedure to adjust a budget when a 

reassessment indicates a change in an 

individual’s medical condition, 

functional status, or living situation. 

While this requirement is subject to the 

PRA, only a few States have expressed 

potential interest. Therefore, based on 

our informal discussions with States 

after the publication of the proposed 

rule, we believe that it would affect less 

than 10 entities on an annual basis; 

therefore, it is exempt from the PRA in 

accordance with 5 CFR 1320.3(c). 

An additional burden associated with 

the requirements under § 441.560(d) is 

the time and effort it would take the 

respondents to develop and distribute 

each notice that specifies the amount of 

any limit for the individual’s CFC 

services and supports. While this 

requirement is subject to the PRA, only 

a few States have expressed potential 

interest. Therefore, based on our 

informal discussions with States after 

the publication of the proposed rule, we 

believe that it would affect less than 10 

entities on an annual basis; therefore, it 

is exempt from the PRA in accordance 

with 5 CFR 1320.3(c). 

Comment: One commenter believed 

that is would take far more than 16 

hours to develop communicate, test, and 

finalize budget procedures with input 

from interested parties and 

intradepartmental reviews. 

Response: We acknowledge the 

commenter’s concern, however, the 

development requirement imposed is a 

onetime burden that will vary by State. 

We believe that the 16-hour estimate is 

an accurate reflection of the average 

time a State would take to develop their 

procedures. We did not receive any 

estimates or additional comments that 

provide any compelling information to 

modify this section. Therefore, we will 

not be revising this collection of 

information estimate. 

F. Provider Qualifications (§ 441.565) 

For the agency provider model of CFC 

services and supports, States must 

develop system safeguards that include 

written adequacy qualifications for 

providers. In certain circumstances, this 

requirement may apply to other models. 

The one-time burden associated with 

the requirements under § 441.565(b) is 

the time and effort it would take to 

develop written adequacy qualifications 

for providers. While this requirement is 

subject to the PRA, only a few States 

have expressed potential interest. 

Therefore, based on our informal 

discussions with States after the 

publication of the proposed rule, we 

believe that it would affect less than 10 

entities on an annual basis; therefore, it 

is exempt from the PRA in accordance 

with 5 CFR 1320.3(c). 

Comment: One commenter believed 

that 16 hours to develop system 

safeguards, including written adequacy 

qualifications for providers, was 

significantly insufficient. The 

commenter noted that the identification, 

analysis, and development of provider 

qualifications together with executing 

regulator or contractual mechanisms to 

control and/or oversee the risk in the 

individual’s environment will require 

more than 16 hours to complete. 

Response: We disagree that 16 hours 

to develop system safeguards is 

insufficient. Our estimates are based on 

the average time it may take for States 

to fulfill these requirements. This would 

include States who may only have to 

slightly modify qualifications that are 

already in place and States who would 

have to create new qualifications. We 

did not receive any estimates or 

additional comments that provide any 

compelling information to modify this 

section. Therefore, we will not be 

revising this collection of information 

estimate. 

G. Development and Implementation 

Council (§ 441.575(b)) 

States are required to establish a 

Development and Implementation 

Council, and 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. 

The burden associated with the 

requirements under § 441.575(b) is the 

time and effort it would take to consult 

and collaborate with the Council when 

developing and implementing a State 

plan amendment to provide home and 

community-based attendant services 

and supports. While this requirement is 

subject to the PRA, only a few States 

have expressed potential interest. 

Therefore, based on our informal 

discussions with States after the 

publication of the proposed rule, we 

believe that it would affect less than 10 

entities on an annual basis; therefore, it 

is exempt from the PRA in accordance 

with 5 CFR 1320.3(c). 

H. Data Collection (§ 441.580) 

Section 441.580 requires States to 

provide specified information regarding 

the provision of home and communitybased attendant services and supports 

under CFC for each Federal fiscal year 

for which such services and supports 

are provided. 

The burden associated with the 

requirements under § 441.580 is the 

time and effort it would take to provide 

specified information regarding the 

provision of home and communitybased attendant services and supports 

for each fiscal year for which such 

services are provided. While this 

requirement is subject to the PRA, only 

a few States have expressed potential 

interest. Therefore, based on our 

informal discussions with States after 

the publication of the proposed rule, we 

believe that it would affect less than 10 

entities on an annual basis; therefore, it 

is exempt from the PRA in accordance 

with 5 CFR 1320.3(c). 

Comment: Many commenters 

expressed concerns pertaining to the 

estimated annual burden associated 

with the data collection requirement. 

Response: We have implemented data 

collection requirements as they were 

specified in the statute. We disagree that 

the annual burden will be significantly 


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more than estimated. While some States 

may need to revise their data collection 

systems, we do not believe that this will 

affect all States. Additionally, since 

much of this data collection is also a 

requirement under other authorities, we 

believe that States have the mechanisms 

in place to gather the requested 

information for reporting without 

excessive additional burden. 

Comment: One commenter believed 

that the data collection requirements set 

forth in the proposed regulations are 

reasonable. However, the commenter 

believed that the burden of the 

requirement to estimate the number of 

individuals served by type of disability, 

education level, and employment status 

in their State prior to the first fiscal year 

will be significant because it will likely 

require a manual effort from disparate 

sources. The commenter stated that 

once other major projects involving 

automation are implemented, the 

requirement for reporting in future years 

will become far less burdensome. 

Response: We appreciate this 

comment and the time that it may 

initially take States to set up systems to 

capture the required information. We 

agree that the initial data collection 

effort could be significant; however, as 

systems are put in place to capture this 

data we are confident that the time 

associated with data collection will be 

significantly reduced. 

Comment: One commenter believed 

that the requirement to report whether 

specific individuals were previously 

served in other programs or waivers is 

significant because it requires the 

development of ad-hoc reporting and 

report validation system which is not 

currently produced. The commenter 

stated that the estimated annual burden 

associated with this requirement will be 

significantly more than 24 hours or $576 

per State for the initial year. 

Response: We appreciate this 

commenter’s perspective. Our estimates 

are based on the average time it may 

take for States to fulfill these 

requirements. This would include States 

who may only have to slightly modify 

or determine how to leverage current 

data collection methods and States that 

would have to create new methods or 

systems. We also believe that some of 

the data required could be retrieved by 

a State’s MMIS. We did not receive any 

estimates or additional comments that 

provide any compelling information to 

modify this section. Therefore we will 

not be revising this collection of 

information estimate. 

I. Quality Assurance System (§ 441.585) 

Section 441.585(a) requires each State 

to establish and maintain a 

comprehensive, continuous quality 

assurance system, detailed in the State 

plan amendment. In § 441.585(b), States 

must provide information about the 

provisions of quality improvement and 

assurance to each individual receiving 

such services and supports. In 

§ 441.585(c), States must elicit and 

incorporate feedback from individuals 

and their representatives, disability 

organizations, providers, families of 

disabled or elderly individuals, 

members of the community and others 

to improve the quality of the 

community-based attendant services 

and supports benefit. 

The burden associated with the 

requirements under § 441.585(a) is the 

time and effort it would take to establish 

and maintain a comprehensive, 

continuous quality assurance system, 

detailed in the State plan amendment. 

While this requirement is subject to the 

PRA, only a few States have expressed 

potential interest. Therefore, based on 

our informal discussions with States 

after the publication of the proposed 

rule, we believe that it would affect less 

than 10 entities on an annual basis; 

therefore, it is exempt from the PRA in 

accordance with 5 CFR 1320.3(c). 

The burden associated with the 

requirements under § 441.585(b) is the 

time and effort it would take the 

respondents to provide information 

about the provisions of quality 

improvement and assurance to each 

individual receiving such services and 

supports. While this requirement is 

subject to the PRA, only a few States 

have expressed potential interest. 

Therefore, based on our informal 

discussions with States after the 

publication of the proposed rule, we 

believe that it would affect less than 10 

entities on an annual basis; therefore, it 

is exempt from the PRA in accordance 

with 5 CFR 1320.3(c). 

The burden associated with the 

requirements under § 441.585(c) is the 

time and effort it would take the 

respondents to elicit and incorporate 

feedback from individuals and their 

representatives, disability organizations, 

providers, families of disabled or elderly 

individuals, members of the community 

and others to improve the quality of the 

community-based attendant services 

and supports benefit. While this 

requirement is subject to the PRA, only 

a few States have expressed potential 

interest. Therefore, based on our 

informal discussions with States after 

the publication of the proposed rule, we 

believe that it would affect less than 10 

entities on an annual basis; therefore, it 

is exempt from the PRA in accordance 

with 5 CFR 1320.3(c). 

Comment: One commenter believed 

that establishing and maintaining a 

comprehensive quality assurance 

system that includes a continuous 

quality assurance system, quality 

improvement strategy, and measures for 

program performance will exceed 100 

hours for development. The cost will 

also be more than $2,400 annually. 

Response: We appreciate this 

commenter’s perspective. Our estimates 

are based on the average time it may 

take for States to fulfill these 

requirements. This would include States 

who may only have to slightly modify 

or determine how to leverage current 

quality assurance systems and States 

that would have to create new systems. 

We did not receive any estimates or 

additional comments that provide any 

compelling information to modify this 

section. Therefore, we will not be 

revising this collection of information 

estimate. 

This document imposed information 

collection and recordkeeping 

requirements. Consequently, it was 

reviewed by the Office of Management 

and Budget under the authority of the 

Paperwork Reduction Act of 1995 

(44 U.S.C. 35). 

VI. Regulatory Impact Analysis 

A. Statement of Need 

This final rule implements section 

2401 of the Affordable Care Act. 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 (January 18, 

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)). 


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Executive Orders 12866 and 13563 

direct 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). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This final 

rule has been designated an 

‘‘economically’’ significant rule, under 

section 3(f)(1) of Executive Order 12866 

and a major rule under the 

Congressional Review Act. Accordingly, 

the rule has been reviewed by the Office 

of Management and Budget. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

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 2012, that 

threshold is approximately $139 

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. Therefore, we 

estimate this final rule will not mandate 

expenditures in the threshold amount of 

$139 million in any 1 year. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 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 final rule does not 

have a substantial effect on State and 

local governments. 

This final rule is estimated to have an 

economic impact of $1.3 billion in fiscal 

year 2012, with the Federal and State 

shares reflecting $820 million and $480 

million, respectively. The economic 

impact estimates presented in this final 

rule differ from those originally 

presented in the proposed rule, 

primarily due to the final rule revising 

§ 441.510 to require, that in order to 

receive CFC services, all individuals, 

regardless of income, must be 

determined annually to meet an 

institutional level of care. 

TABLE 1—MEDICAID COSTS FOR THE COMMUNITY FIRST CHOICE OPTION

[In $ millions] 1

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 2

Federal Medicaid ......................................................................................................... $820 $1,060 $1,815 $2,585 $3,520 

State Medicaid ............................................................................................................. 480 620 1,061 1,511 2,058 

1Figures are rounded to the nearest $1 million and assume increased State participation per fiscal year. 

2The proposed rule included cost estimates for FY 2012 through FY 2015. The cost estimates in this final rule are for FY 2012 through FY 

2016. 

This final rule provides States with 

additional flexibility to finance home 

and community-based services by 

establishing a new CFC Option at an 

increased FMAP 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 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 2016, 30 percent of 

eligible persons who would want this 

coverage would reside in States that 

offer it. 

C. Anticipated Effects 

1. Effects on Medicaid Recipients 

We anticipate that a large number of 

Medicaid recipients will be affected. We 

believe the additional option to provide 

attendant care services and supports at 

the increased FMAP will likely have 

significant positive effects on Medicaid 

recipients, particularly on their demand 

for these services. We anticipate that the 

provisions of the final rule will likely 

increase State and local accessibility to 

services that augment the quality of life 

for individuals through a personcentered plan of service and various 

quality assurances, all at a potentially 

lower per capita cost relative to 

alternative care-settings. 

2. Effects on Other Providers 

We anticipate that this final 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. 

3. Impact on Small Entities 

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://www.sba.gov/sites/ 

default/files/Size_Standards_Table.pdf.) 

Individuals and States are not included 

in the definition of a small entity. We 

are not preparing an analysis for the 

RFA because the Secretary has 

determined that this final rule does 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 604 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 final rule will not 

have a significant impact on the 

operations of a substantial number of 

small rural hospitals. 


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4. Effects on the Medicaid Program 

Expenditures 

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 CFC under section 

1915(k) of the Act. While we 

specifically solicited comments on the 

number of States that were likely to 

participate in CFC, we received none. 

Table 1 above 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 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. 

D. Alternatives Considered 

In finalizing the policies set forth in 

this rule, we reviewed all public 

comments submitted within the allowed 

time. 

We received a large number of 

comments on the proposed definition of 

home and community-based settings. 

We met with Federal partners to discuss 

the concerns raised by public 

commenters. We also reviewed several 

documents and policy papers prepared 

by advocacy groups, independent policy 

groups, and other stakeholders for 

information on the types of settings 

personal attendant services are provided 

in. Additionally, we looked to the 

Olmstead Decision and the ADA as the 

framework onto which we built our 

definition. 

After much discussion and 

consideration of the impact of each 

option discussed, we concluded that 

further discussion and consideration on 

this issue is necessary. Therefore, we are 

not finalizing the language proposed at 

§ 441.530. Rather, we will issue a new 

proposed regulation that will establish 

setting criteria for CFC developed as a 

result of the comments received. 

E. Accounting Statement 

As required by OMB Circular A–4 

(available at: http:// 

www.whitehouse.gov/sites/default/files/ 

omb/assets/omb/circulars/a004/a4.pdf), we have prepared an accounting 

statement showing the classification of 

estimated transfers, benefits and costs 

associated with section 1915(k) services 

offered by qualified providers in the 

Medicaid program, as a result of this 

final rule. 

TABLE 2—ACCOUNTING STATEMENT: ESTIMATED TRANSFERS, BENEFITS, AND COSTS

[FYs 2012 to 2016] 3

Category Transfers 

Annualized monetized 

transfers 

Year dollar Discount rate 

Period covered 

2012 7% 3% 

Primary Estimate ................... $1.87 Billion ........................... $1.92 Billion ........................... FYs 2012–2016 

From/To ................................. Federal Government to Medicaid Qualified Providers. 

Category Transfers 

Annualized monetized 

transfers 

Year dollar Discount rate 

Period covered 

2012 7% 3% 

Primary Estimate ................... $1.09 Billion ........................... $1.12 Billion ........................... FYs 2012–2016 

From/To ................................. State Governments to Medicaid Qualified Providers. 

Category Benefits 

Qualitative Benefits ................ The CFC option will increase State and local accessibility to services which in turn improves, through a personcentered plan of service with various quality assurances, the quality of life for individuals, and reduces the financial strain on States and Medicaid participants. 

Category Costs 

Administrative Burden Costs The administrative burden costs are presented in the Paperwork Reduction Act section of this final rule. 

3The proposed rule included cost estimates for FY 2012 through FY 2015. The cost estimates in this final rule are for FY 2012 through FY 

2016. 

List of Subjects in 42 CFR Part 441 

Aged, Family planning, Grant 

programs—health, Infants and children, 

Medicaid, Penalties, Reporting and 

recordkeeping requirements. 

The Centers for Medicare & Medicaid 

Services amends 42 CFR Chapter IV as 

follows: 

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 Included services. 

441.525 Excluded services. 

441.530 [Reserved] 

441.535 Assessment of functional need. 

441.540 Person-centered service plan. 


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441.545 Service models. 

441.550 Service plan requirements for selfdirected 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 CommunityBased Attendant Services and 

Supports State Plan Option 

(Community First Choice) 

§ 441.500 Basis and scope. 

(a) Basis. This subpart implements 

section 1915(k) of the Act, referred to as 

the Community First Choice option 

(hereafter Community First Choice), to 

provide home and community-based 

attendant services and supports through 

a State plan. 

(b) Scope. Community First Choice 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. 

§ 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 a 

method of providing Community First 

Choice services and supports under 

which entities contract for or provide 

through their own employees, the 

provision of such services and supports, 

or act as the employer of record for 

attendant care providers selected by the 

individual enrolled in Community First 

Choice. 

Backup systems and supports means 

electronic devices used to ensure 

continuity of services and supports. 

These items may include an array of 

available technology, 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 means the eligible 

individual and, if applicable, the 

individual’s representative. 

Individual’s representative means a 

parent, family member, guardian, 

advocate, or other person authorized by 

the individual to serve as a 

representative in connection with the 

provision of CFC services and supports. 

This authorization should be in writing, 

when feasible, or by another method 

that clearly indicates the individual’s 

free choice. An individual’s 

representative may not also be a paid 

caregiver of an individual receiving 

services and supports under this 

subpart. 

Instrumental activities of daily living 

(IADLs) means activities related to 

living independently in the community, 

including but 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 or the 

self-directed model with service budget, 

for the provision of self-directed 

services and supports, as approved by 

CMS. 

Self-directed means a consumer 

controlled method of selecting and 

providing services and supports that 

allows the individual maximum control 

of the home and community–based 

attendant services and supports, with 

the individual acting as the employer of 

record with necessary supports to 

perform that function, or the individual 

having a significant and meaningful role 

in the management of a provider of 

service when the agency-provider model 

is utilized. Individuals exercise as much 

control as desired to select, train, 

supervise, schedule, determine duties, 

and dismiss the attendant care provider. 

Self-directed model with service 

budget means methods of providing 

self-directed services and supports 

using an individualized service budget. 

These methods may include the 

provision of vouchers, direct cash 

payments, and/or use of a fiscal agent to 

assist in obtaining services. 

§ 441.510 Eligibility. 

To receive Community First Choice 

services and supports under this 

section, an individual must meet the 

following requirements: 

(a) Be eligible for medical assistance 

under the State plan; 

(b) As determined annually— 

(1) Be in an eligibility group under the 

State plan that includes nursing facility 

services; or 

(2) If in an eligibility group under the 

State plan that does not include such 

nursing facility services, have an 

income that is at or below 150 percent 

of the Federal poverty level (FPL). In 

determining whether the 150 percent of 

the FPL requirement is met, States must 

apply the same methodologies as would 

apply under their Medicaid State plan, 

including the same income disregards in 

accordance with section 1902(r)(2) of 

the Act; and, 

(c) Receive a determination, at least 

annually, that in the absence of the 

home and community-based attendant 

services and supports provided under 

this subpart, the individual would 

otherwise require the level of care 

furnished in a hospital, a nursing 

facility, an intermediate care facility for 

the mentally retarded, an institution 

providing psychiatric services for 

individuals under age 21, or an 

institution for mental diseases for 

individuals age 65 or over, if the cost 

could be reimbursed under the State 

plan. The State administering agency 

may permanently waive the annual 

recertification requirement for an 

individual if: 

(1) It is determined that there is no 

reasonable expectation of improvement 

or significant change in the individual’s 

condition because of the severity of a 

chronic condition or the degree of 

impairment of functional capacity; and 

(2) The State administering agency, or 

designee, retains documentation of the 

reason for waiving the annual 

recertification requirement. 

(d) For purposes of meeting the 

criterion under paragraph (b) of this 

section, individuals who qualify for 

medical assistance under the special 

home and community-based waiver 

eligibility group defined at section 

1902(a)(10)(A)(ii)(VI) of the Act must 

meet all section 1915(c) requirements 

and receive at least one home and 

community-based waiver service per 

month. 

(e) Individuals receiving services 

through Community First Choice will 

not be precluded from receiving other 

home and community-based long-term 

care services and supports through other 

Medicaid State plan, waiver, grant or 

demonstration authorities. 

§ 441.515 Statewideness. 

States must provide Community First 

Choice 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 


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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 to lead an 

independent life. 

§ 441.520 Included services. 

(a) If a State elects to provide 

Community First Choice, the State must 

provide all of the following services: 

(1) Assistance with ADLs, IADLs, and 

health-related tasks through hands-on 

assistance, supervision, and/or cueing. 

(2) Acquisition, maintenance, and 

enhancement of skills necessary for the 

individual to accomplish ADLs, IADLs, 

and health-related tasks. 

(3) Backup systems or mechanisms to 

ensure continuity of services and 

supports, as defined in § 441.505 of this 

subpart. 

(4) Voluntary training on how to 

select, manage and dismiss attendants. 

(b) At the State’s option, the State may 

provide permissible services and 

supports that are linked to an assessed 

need or goal in the individual’s personcentered service plan. Permissible 

services and supports may include, but 

are not limited to, 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 linked to an assessed need 

for an individual to transition from a 

nursing facility, institution for mental 

diseases, or intermediate care facility for 

the mentally retarded to a home and 

community-based setting where the 

individual resides; 

(2) Expenditures relating to a need 

identified in an individual’s personcentered service plan that increases an 

individual’s independence or 

substitutes for human assistance, to the 

extent that expenditures would 

otherwise be made for the human 

assistance. 

§ 441.525 Excluded services. 

Community First Choice may not 

include the following: 

(a) Room and board costs for the 

individual, except for allowable 

transition services described in 

§ 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 § 441.520(a)(3) of this 

subpart, or those that meet the 

requirements at § 441.520(b)(2) of this 

subpart. 

(d) Medical supplies and medical 

equipment, other than those that meet 

the requirements at § 441.520(b)(2) of 

this subpart. 

(e) Home modifications, other than 

those that meet the requirements at 

§ 441.520(b) of this subpart. 

§ 441.530 [Reserved] 

§ 441.535 Assessment of functional need. 

States must conduct a face-to-face 

assessment of the individual’s needs, 

strengths, preferences, and goals for the 

services and supports provided under 

Community First Choice in accordance 

with the following: 

(a) States may use one or more 

processes and techniques to obtain 

information, including telemedicine, or 

other information technology medium, 

in lieu of a face-to-face assessment if the 

following conditions apply: 

(1) The health care professional(s) 

performing the assessment meet the 

provider qualifications defined by the 

State, including any additional 

qualifications or training requirements 

for the operation of required 

information technology; 

(2) The individual receives 

appropriate support during the 

assessment, including the use of any 

necessary on-site support-staff; and 

(3) The individual is provided the 

opportunity for an in-person assessment 

in lieu of one performed via 

telemedicine. 

(b) Assessment information supports 

the determination that an individual 

requires Community First Choice and 

also supports the development of the 

person-centered service plan and, if 

applicable, service budget. 

(c) The assessment of functional 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 personcentered service plan, and at the request 

of the individual. 

(d) Other requirements as determined 

by the Secretary. 

§ 441.540 Person-centered service plan. 

(a) Person-centered planning process. 

The person-centered planning process is 

driven by the individual. The process— 

(1) Includes people chosen by the 

individual. 

(2) Provides necessary information 

and support to ensure that the 

individual directs the process to the 

maximum extent possible, and is 

enabled to make informed choices and 

decisions. 

(3) Is timely and 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-ofinterest guidelines for all planning 

participants. 

(6) Offers choices to the individual 

regarding the services and supports they 

receive and from whom. 

(7) Includes a method for the 

individual to request updates to the 

plan. 

(8) Records the alternative home and 

community-based settings that were 

considered by the individual. 

(b) The person-centered service plan. 

The person-centered service plan must 

reflect the services and supports that are 

important for the individual to meet the 

needs identified through an assessment 

of functional need, as well as what is 

important to the individual with regard 

to preferences for the delivery of such 

services and supports. Commensurate 

with the level of need of the individual, 

and the scope of services and supports 

available under Community First 

Choice, the plan must: 

(1) Reflect that the setting in which 

the individual resides is chosen by the 

individual. 

(2) Reflect the individual’s strengths 

and preferences. 

(3) Reflect clinical and support needs 

as identified through an assessment of 

functional need. 

(4) Include individually identified 

goals and desired outcomes. 

(5) 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, including natural supports. 

Natural supports cannot supplant 

needed paid services unless the natural 

supports are unpaid supports that are 

provided voluntarily to the individual 

in lieu of an attendant. 

(6) Reflect risk factors and measures 

in place to minimize them, including 

individualized backup plans. 

(7) Be understandable to the 

individual receiving services and 

supports, and the individuals important 

in supporting him or her. 

(8) Identify the individual and/or 

entity responsible for monitoring the 

plan. 

(9) Be finalized and agreed to in 

writing by the individual and signed by 

all individuals and providers 

responsible for its implementation. 

(10) Be distributed to the individual 

and other people involved in the plan. 

(11) Incorporate the service plan 

requirements for the self-directed model 


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with service budget at § 441.550, when 

applicable. 

(12) Prevent the provision of 

unnecessary or inappropriate care. 

(13) Other requirements as 

determined by the Secretary. 

(c) Reviewing the person-centered 

service plan. The person-centered 

service plan must be reviewed, and 

revised upon reassessment of functional 

need, at least every 12 months, when 

the individual’s circumstances or needs 

change significantly, and at the request 

of the individual. 

§ 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-provider model. (1) The 

agency-provider model is a delivery 

method in which the services and 

supports are provided by entities, under 

a contract or provider agreement with 

the State Medicaid agency or delegated 

entity to provide services. Under this 

model, the entity either provides the 

services directly through their 

employees or arranges for the provision 

of services under the direction of the 

individual receiving services. 

(2) Under the agency-provider model 

for Community First Choice, individuals 

maintain the ability to have a significant 

role in the selection and dismissal of the 

providers of their choice, for the 

delivery of their specific care, and for 

the services and supports 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 person-centered 

service plan and a service budget based 

on the assessment of functional need. 

(1) Financial management entity. 

States must make available financial 

management activities to all individuals 

with a service budget. The financial 

management entity performs functions 

including, but not limited to, the 

following activities: 

(i) Collect and process timesheets of 

the individual’s attendant care 

providers. 

(ii) Process payroll, withholding, 

filing, and payment of applicable 

Federal, State, and local employment 

related taxes and insurance. 

(iii) Separately track budget funds and 

expenditures for each individual. 

(iv) Track and report disbursements 

and balances of each individual’s funds. 

(v) Process and pay invoices for 

services in the person-centered service 

plan. 

(vi) Provide individual periodic 

reports of expenditures and the status of 

the approved service budget to the 

individual and to the State. 

(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 all 

applicable requirements of the Internal 

Revenue Service. 

(2) Direct cash. States may disburse 

cash prospectively to individuals selfdirecting their Community First Choice 

services and supports, and must meet 

the following requirements: 

(i) Ensure compliance with all 

applicable requirements of the Internal 

Revenue Service, and State employment 

and taxation authorities, including but 

not limited to, retaining required forms 

and payment of FICA, FUTA and State 

unemployment taxes. 

(ii) Permit individuals 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) The State may require an 

individual to use a financial 

management entity, but must provide 

the individual with the conditions 

under which this option would be 

enforced. 

(3) Vouchers. States have the option 

to issue vouchers to individuals who 

self-direct their Community First Choice 

services and supports as long as the 

requirements in paragraphs (b)(2)(i) 

through (iv) of this paragraph are met. 

(c) Other service delivery models. 

States have the option of proposing 

other service delivery models. Such 

models are defined by the State and 

approved by CMS. 

§ 441.550 Service plan requirements for 

self-directed model with service budget. 

The person-centered service plan 

under the self-directed model with 

service budget conveys authority to the 

individual to perform, at a minimum, 

the following tasks: 

(a) Recruit and hire or select attendant 

care providers to provide self-directed 

Community First Choice services and 

supports, including specifying attendant 

care provider qualifications. 

(b) Dismiss specific attendant care 

providers of Community First Choice 

services and supports. 

(c) Supervise attendant care providers 

in the provision of Community First 

Choice services and supports. 

(d) Manage attendant care providers 

in the provision of Community First 

Choice services and supports, which 

includes the following functions: 

(1) Determining attendant care 

provider duties. 

(2) Scheduling attendant care 

providers. 

(3) Training attendant care providers 

in assigned tasks. 

(4) Evaluating attendant care 

providers’ performance. 

(e) Determining the amount paid for a 

service, support, or item, in accordance 

with State and Federal compensation 

requirements. 

(f) Reviewing and approving provider 

payment requests. 

§ 441.555 Support system. 

For each service delivery model 

available, 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 before 

enrollment. 

(b) Provides appropriate information, 

counseling, training, and assistance to 

ensure that an individual is able to 

manage the services and budgets if 

applicable. 

(1) This information must be 

communicated to the individual in a 

manner and language understandable by 

the individual. To ensure that the 

information is communicated in an 

accessible manner, information should 

be communicated in plain language and 

needed auxiliary aids and services 

should be provided. 

(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 personcentered service plan and, if applicable, 

service budget. 

(iv) Grievance process. 

(v) Information on the risks and 

responsibilities of self-direction. 

(vi) The ability to freely choose from 

available home and community-based 

attendant providers, available service 

delivery models and if applicable, 

financial management entities. 

(vii) Individual rights, including 

appeal rights. 

(viii) Reassessment and review 

schedules. 

(ix) Defining goals, needs, and 

preferences of Community First Choice 

services and supports. 

(x) Identifying and accessing services, 

supports, and resources. 

(xi) Development of risk management 

agreements. 


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(A) The State must specify in the State 

Plan amendment any tools or 

instruments used to mitigate identified 

risks. 

(B) States utilizing criminal or 

background checks as part of their risk 

management agreement will bear the 

costs of such activities. 

(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 can access the 

advocate or advocacy systems. 

(c) Establishes conflict of interest 

standards for the assessments of 

functional need and the person-centered 

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 conducting the 

assessment of functional need and 

person-centered service plan 

development process are not: 

(1) Related by blood or marriage to the 

individual, or to any paid caregiver of 

the individual. 

(2) Financially responsible for the 

individual. 

(3) Empowered to make financial or 

health-related decisions on behalf of the 

individual. 

(4) Individuals who would benefit 

financially from the provision of 

assessed needs and services. 

(5) Providers of State plan HCBS for 

the individual, or those who have an 

interest in or are employed by a 

provider of State plan HCBS for the 

individual, except when the State 

demonstrates that the only willing and 

qualified entity/entities to perform 

assessments of functional need and 

develop person-centered service plans 

in a geographic area also provides 

HCBS, and the State devises conflict of 

interest protections including separation 

of assessment/planning and HCBS 

provider functions within provider 

entities, which are described in the 

State plan, and individuals are provided 

with a clear and accessible alternative 

dispute resolution process. 

(d) Ensures the responsibilities for 

assessment of functional need and 

person-centered service plan 

development are identified. 

§ 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 functional 

need and person-centered service plan 

and must include all of the following 

requirements: 

(1) The specific dollar amount an 

individual may use for Community First 

Choice services and supports. 

(2) The procedures for informing an 

individual of the amount of the service 

budget before the person-centered 

service plan is finalized. 

(3) The procedures for how an 

individual may adjust the budget 

including the following: 

(i) The procedures for an individual to 

freely adjust amounts allocated to 

specific services and supports within 

the approved service 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 personcentered service plan. 

(5) The procedures that govern the 

determination of transition costs and 

other permissible services and supports 

as defined at § 441.520(b). 

(6) The procedures for an individual 

to request a fair hearing under Subpart 

E of this title 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: 

(1) Be objective and evidence-based 

utilizing valid, reliable cost data. 

(2) Be applied consistently to 

individuals. 

(3) Be included in the State plan. 

(4) Include a calculation of the 

expected cost of Community First 

Choice services and supports, if those 

services and supports are not selfdirected. 

(5) Have a process in place that 

describes the following: 

(i) Any limits the State places on 

Community First Choice 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 services and 

supports. Notice must be communicated 

in an accessible format, communicated 

in plain language, and needed auxiliary 

aids and services should be provided. 

(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. 

§ 441.565 Provider qualifications. 

(a) For all service delivery models: 

(1) An individual retains the right to 

train attendant care providers in the 

specific areas of attendant care needed 

by the individual, and to have the 

attendant care provider perform the 

needed assistance in a manner that 

comports with the individual’s 

personal, cultural, and/or religious 

preferences. 

(2) An individual retains the right to 

establish additional staff qualifications 

based on the individual’s needs and 

preferences. 

(3) Individuals also have the right to 

access other training provided by or 

through the State so that their attendant 

care provider(s) can meet any additional 

qualifications required or desired by 

individuals. 

(b) For the agency-provider model, the 

State must define in writing adequate 

qualifications for providers in the 

agency model of Community First 

Choice services and supports. 

(c) For the self-directed model with 

service budget, an individual has the 

option to permit family members, or any 

other individuals, to provide 

Community First Choice services and 

supports identified in the personcentered service plan, provided they 

meet the qualifications to provide the 

services and supports established by the 

individual, including additional 

training. 

(d) For other models, the applicability 

of requirements at paragraphs (b) or (c) 

of this section will be determined based 

on the description and approval of the 

model. 

§ 441.570 State assurances. 

A State must assure the following 

requirements are met: 

(a) Necessary safeguards have been 

taken to protect the health and welfare 

of enrollees in Community First Choice, 

including adherence to section 1903(i) 

of the Act that Medicaid payment shall 

not be made for items or services 

furnished by individuals or entities 

excluded from participating in the 

Medicaid Program. 

(b) For the first full 12 month period 

in which the State plan amendment is 

implemented, the State must maintain 

or exceed the level of State expenditures 

for home and community-based 

attendant services and supports 

provided under sections 1115, 1905(a), 

1915, or otherwise under the Act, to 

individuals with disabilities or elderly 


srobinson on DSK4SPTVN1PROD with RULES2
Federal Register / Vol. 77, No. 88 / Monday, May 7, 2012 / Rules and Regulations 26903 

individuals attributable to the preceding 

12 month period. 

(c) All applicable provisions of the 

Fair Labor Standards Act of 1938. 

(d) 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. 

(5) Any other employment or tax 

related requirements. 

§ 441.575 Development and 

Implementation Council. 

(a) States must establish a 

Development and Implementation 

Council, the majority of which is 

comprised 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 Community 

First Choice services and supports. 

§ 441.580 Data collection. 

A State must provide the following 

information regarding the provision of 

home and community-based attendant 

services and supports under Community 

First Choice for each Federal fiscal year 

for which the services and supports are 

provided: 

(a) The number of individuals who 

are estimated to receive Community 

First Choice services and supports 

under this State plan option during the 

Federal fiscal year. 

(b) The number of individuals who 

received the services and supports 

during the preceding Federal 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 Community First Choice and 

other home and community-based 

services. 

(f) The cost of providing Community 

First Choice 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. 

(h) Data regarding the impact of 

Community First Choice services and 

supports on the physical and emotional 

health of individuals. 

(i) Other data as determined by the 

Secretary. 

§ 441.585 Quality assurance system. 

(a) States must establish and maintain 

a comprehensive, continuous quality 

assurance system, described in the State 

plan amendment, which includes the 

following: 

(1) A quality improvement strategy. 

(2) Methods to continuously monitor 

the health and welfare of each 

individual who receives home and 

community-based attendant 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. 

(3) Measures individual outcomes 

associated with the receipt of home and 

community-based attendant services 

and supports as set forth in the person 

centered service plan, particularly for 

the health and welfare of individuals 

receiving such services and supports. 

These measures must be reported to 

CMS upon request. 

(4) Standards for all service delivery 

models for training, appeals for denials 

and reconsideration procedures for an 

individual’s person-centered service 

plan. 

(5) Other requirements as determined 

by the Secretary. 

(b) The State must ensure the quality 

assurance system will employ methods 

that maximizes individual 

independence and control, and provides 

information about the provisions of 

quality improvement and assurance to 

each individual receiving such services 

and supports. 

(c) The State must elicit and 

incorporate feedback from individuals 

and their representatives, disability 

organizations, providers, families of 

disabled or elderly individuals, 

members of the community and others 

to improve the quality of the 

community-based attendant services 

and supports benefit. 

§ 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 Community First Choice services and 

supports, under an approved State plan 

amendment. 

Authority 

(Catalog of Federal Domestic Assistance 

Program No. 93.778, Medical Assistance 

Program) 

Dated: April 24, 2012. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: April 24, 2012. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2012–10294 Filed 4–26–12; 4:15 pm] 

BILLING CODE 4120–01–P 


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