CMS-2337-F 

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 [OFR--Insert date 60 days after the date of 

publication in the Federal Register]. 

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 communitybased attendant services and supports to assist in accomplishing activities of daily living, 

instrumental activities of daily living, and health-related 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 non-medical transportation 

services or purchasing a microwave. 
• States are required to use a person-centered 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 agency-provider 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 community-based 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 the mentally 

retarded, or an institution for mental diseases, the cost of which could be reimbursed 

under the State plan. The individual must choose to receive such home and 

community-based attendant services and supports, and the State must meet certain 

requirements set forth in section 1915(k)(1) of the Act. Section 1915(k)(1)(A) of the Act 

requires States electing this option to make available home and community-based 

attendant services and supports to eligible individuals, under a person-centered 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 personcentered 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 well-being of 

each individual who receives section 1915(k) services and supports, including a process 

for the mandatory reporting, investigation, and resolution of allegations of neglect, abuse, 

or exploitation in connection with the provision of such services and supports. The State 

must also provide information about the provisions of the quality assurance required to 

each individual receiving such services. 

States must collect and report information for the purposes of approving the State 

plan amendment, 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 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 long-term 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 self-direction, 

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 self-directed care. During the 1990’s, the 

Robert Wood Johnson Foundation funded these projects which evolved into Medicaid 

funded programs under section 1915(c) of the Act and the “Cash and Counseling” 

national section 1115 demonstration programs. Evaluations were conducted in both of 

these national projects. Results in both projects were similar – persons directing their 

personal care experienced fewer unnecessary institutional placements, experienced higher 

levels of satisfaction, had fewer unmet needs, experienced higher continuity of care 

because of less attendant care provider turnover, and maximized the efficient use of 

community services and 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 time-consuming 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 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 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 community-based 

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.” 

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 “self-directed” 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 self-directed 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 “agencyprovider model.” A few commenters wanted to know if the agency-provider model is the 

same as what is sometimes referred to as a “co-employment” 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 agency-provider 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 agency-provider models utilize a contractual relationship 

between the agency-provider 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 agency-provider 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 agency-provider 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 agencyprovider 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 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 

self-directed 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 personcentered 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 community-based 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 “health-related 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 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 court-appointed 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 §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 self-directed 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 “selfdirected” 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 self-directing CFC services. 

Therefore, we have revised the definition to say: “Self-directed 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 community-based 

attendant services and supports, the individual would require the level of care provided in 

a hospital, a nursing facility, intermediate care facility for the mentally retarded or an 

institution for mental diseases, the cost of which would be reimbursed under the State 

plan. 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 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 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 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 low-income category. The commenters believe individuals with income over 

150 percent FPL in the medically needy group should be included in the low-income 

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 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 

community-based 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. 

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 “Personcentered 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 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 community-based 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 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 “health-related 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 “healthrelated 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 health-related 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 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 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 communitybased 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 personcentered 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. 

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 community-based 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 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 person-centered 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 cost-effective 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. 

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 person-centered 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 person-centered 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 communitybased 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 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 process-based 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 communitybased 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 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 

person-centered 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 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 grandfatheringin 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 communitybased 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 community-based 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 post-acute 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 disability-specific 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 colocated 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 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 non-institutional 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 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 disability-specific 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. 

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) Self-Directed 

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 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 person-centered 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 person-centered 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 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 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-to-face 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 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 long-term 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 “person-centered 

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 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 personcentered 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 self-direct. 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 self-direct 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 addresses 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 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 person-centered 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 person-centered planning 

expectations across Medicaid authorities. The commenters noted that the personcentered 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 person-centered 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 

person-centered 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 

person-centered 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 person-centered 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 person-centered 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 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 consumer-directed 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 consumerdirected, 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 person-centered 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 personcentered 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 person-centered 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 government-funded 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 person-centered 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 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-to-face 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 person-centered 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 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 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 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 person-centered approach and participant-directed 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 person-centered 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 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 

person-centered 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 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 person-centered 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 non-disabled 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 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 person-centered 

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 §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 hand-deliver 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 self-directed model with service budget must be incorporated into 

the person-centered 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 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 personcentered 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 personcentered 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 person-centered 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 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 person-centered 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 personcentered 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 Self-directed 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 sub-populations 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 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 agencyprovider 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 “selfdirected” 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 self-direction philosophy supports this flexibility. As 

indicated above, we have modified the definition of “agency-provider 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. 

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 agencyprovider 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-withchoice 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 Person-Centered 

Service Plan section of CFC that required that the Plan “be directly integrated into selfdirection 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 Person-Centered 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 “consumer-controlled,” 

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 personcentered 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 selfdirected 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 work-force 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 self-directed 

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 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 selfdirection 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 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. 

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 agencyprovider 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. 
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 self-direction 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 “agency-provider model”, amending 

paragraph (a)(1) to align with the revised agency-provider 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 Self-directed 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 selfdirected models of care and encourage their inclusion in the final regulation. 

Response: We appreciate the commenter’s 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 self-direction 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 self-directed.” 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 self-directed 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 agencyprovider 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 self-directed 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 self-direction programs, we are aware that the 

support system provided by the State is a critical element of the service delivery model. 

Therefore, to maintain consistency and to reflect our policy relating to self-direction, in 

§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 selfdirected 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 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 person-centered 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 self-directed 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 selfdirection, 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 self-direction. 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 self-directed 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 agency-provider 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-todate bank of available 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 person-centered 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 self-direction 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 community-based 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 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 self-direction 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 self-direction 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 self-directed 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 selfdirected 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 

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 self-directed. 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 fee-forservice 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 selfdirected 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 agency-provider 

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 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 agency–provider model. A 
description of provider qualifications will be reviewed with each State’s proposal to 

implement CFC. Additionally, individuals receiving services under the agency-provider 

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 self-directed 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 fee-forservice 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 selfdirected 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 

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 notfor-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 self-direction 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 agency-provider 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 health-related 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 self-directed 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 

agency-provider 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 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 selfdirected 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 personcentered 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 personcentered 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 personcentered 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”, 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 community-based 
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 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 person-centered 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 consumer-controlled 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 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 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 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 “direct-care 

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 cross-disability 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 community-based 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. 

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 

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 communitybased 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 selfdirected 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.

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 community-based 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 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 broad-based 

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 person-centered 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 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 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 communitybased 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 communitybased 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 community-based 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 community-based 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 

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 community-based 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, Selfdirected . This section has also been revised to add two new definitions: individual, Selfdirected 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 communitybased 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-to-face 

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 personcentered service plan. We also relocated some of the proposed rule language to the 

Support System section at §441.555. 

● We have revised §441.545 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 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 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 face-to-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 person-centered 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. 

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 personcentered 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 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, 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 community-based 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 

community-based 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 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)). 

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 

20162

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

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

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 

 

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

2 The 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. 
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 person-centered plan of service and various 

quality assurances, all at a potentially lower per capita cost relative to alternative caresettings. 

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. 

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/a-4.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 

 

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

Category TRANSFERS 

Year Dollar Discount Rate Period 

Covered 

2012 7% 3% 

Annualized 

Monetized 

Transfers 

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 person-centered 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. 
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. 

441.545 Service models. 

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

441.555 Support system. 

441.560 Service budget requirements. 

441.565 Provider qualifications. 

441.570 State assurances. 

441.575 Development and Implementation Council. 

441.580 Data collection. 
441.585 Quality assurance system. 

441.590 Increased Federal financial participation. 

Subpart K –- Home and Community-based Attendant Services and Supports State 

Plan Option (Community First Choice) 

§ 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 communitybased waiver eligibility group defined at section 1902(a)(10)(A)(ii)(VI) of the Act must 

meet all section1915(c) requirements and receive at least one home and communitybased 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 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 person-centered 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 person-centered 

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 person-centered 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-of-interest 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 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 

self-directing 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 person-centered 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. 
(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 personcentered 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 person-centered 

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 self-directed. 

(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 person-centered 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 

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

BILLING CODE 4120-01-P 
[FR Doc. 2012-10294 Filed 04/26/2012 at 4:15 pm; Publication Date: 05/07/2012]