Vol. 79 Thursday, 

No. 11 January 16, 2014 

Part II 

Department of Health and Human Services 

Centers for Medicare and Medicaid Services 

42 CFR Part 430, 431 et al. 

Medicaid Program; State Plan Home and Community-Based Services, 

5-Year Period for Waivers, Provider Payment Reassignment, and Home 

and Community-Based Setting Requirements for Community First Choice 

and Home and Community-Based Services (HCBS) Waivers; Final Rule 


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2948 Federal Register / Vol. 79, No. 11 / Thursday, January 16, 2014 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 430, 431, 435, 436, 440, 

441 and 447 

[CMS–2249–F; CMS–2296–F] 

RIN 0938–AO53; 0938–AP61 

Medicaid Program; State Plan Home 

and Community-Based Services, 5- 

Year Period for Waivers, Provider 

Payment Reassignment, and Home 

and Community-Based Setting 

Requirements for Community First 

Choice and Home and CommunityBased Services (HCBS) Waivers 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule amends the 

Medicaid regulations to define and 

describe state plan section 1915(i) home 

and community-based services (HCBS) 

under the Social Security Act (the Act) 

amended by the Affordable Care Act. 

This rule offers states new flexibilities 

in providing necessary and appropriate 

services to elderly and disabled 

populations. This rule describes 

Medicaid coverage of the optional state 

plan benefit to furnish home and 

community based-services and draw 

federal matching funds. 

This rule also provides for a 5-year 

duration for certain demonstration 

projects or waivers at the discretion of 

the Secretary, when they provide 

medical assistance for individuals 

dually eligible for Medicaid and 

Medicare benefits, includes payment 

reassignment provisions because state 

Medicaid programs often operate as the 

primary or only payer for the class of 

practitioners that includes HCBS 

providers, and amends Medicaid 

regulations to provide home and 

community-based setting requirements 

related to the Affordable Care Act for 

Community First Choice State plan 

option. This final rule also makes 

several important changes to the 

regulations implementing Medicaid 

1915(c) HCBS waivers. 

DATES: Effective Date: These regulations 

are effective on March 17, 2014. 

FOR FURTHER INFORMATION CONTACT: 

Kathy Poisal, (410)786–5940. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Executive Summary 

II. State Plan Home and Community-Based 

Services, 5-Year Period for Waivers, 

Provider Payment Reassignment, and 

Home and Community-Based Setting 

Requirements for Community First 

Choice 

A. Background 

B. Provisions of the Proposed Regulations 

and Analysis of and Responses to Public 

Comments 

1. 5-Year Period for Certain Demonstration 

Projects and Waivers (part 430) 

2. State Organization and General 

Administration (part 431) 

3. Eligibility in the States, District of 

Columbia, the Northern Mariana Islands, 

and American Samoa (part 435) and 

Eligibility in Guam, Puerto Rico and the 

Virgin Islands (part 436) 

4. Services: General Provisions (part 440) 

5. State Plan Home and Community-based 

Services under section 1915(i)(1) of the 

Act (§ 441.710) and Community First 

Choice State Plan Option: Home and 

Community-Based Setting Requirements 

(§ 441.530) 

6. Needs-based Criteria and Evaluation 

(§ 441.715) 

7. Independent assessment (§ 441.720) 

8. Person-Centered Service plan (§ 441.725) 

9. Provider qualifications (§ 441.730) 

10. Definition of Individual’s 

Representative (§ 441.735) 

11. Self-directed Services (§ 441.740) 

12. State Plan HCBS Administration: State 

Responsibilities and Quality 

Improvement (§ 441.745) 

13. Prohibition Against Reassignment of 

Provider Claims (§ 447.10) 

III. Home and Community-Based Services 

(HCBS) Waivers (Section 1915(c) of the 

Act) 

A. Background 

B. Provisions of the Proposed Regulations 

and Analysis of and Responses to Public 

Comments 

1. Contents of request for a waiver 

(§ 441.301) 

2. State Assurances (§ 441.302) 

3. Duration, extension, and amendment of 

a waiver (§ 441.304) 

IV. Provisions of the Final Regulations 

V. Collection of Information Requirements 

VI. Regulatory Impact Analysis 

VII. Regulatory Flexibility Act Analysis 

VIII. Unfunded Mandates Reform Act 

Analysis 

IX. Federalism Analysis 

Regulation Text 

Acronyms 

Because of the many terms to which we 

refer by acronym in this final rule, we are 

listing the acronyms used and their 

corresponding terms in alphabetical order 

below. 

ADA Americans with Disabilities Act of 

1990 (Pub. L. 110–325) 

ADLs Activities of daily living 

AHRQ Agency for Healthcare Research and 

Quality 

ANPRM Advance Notice of Proposed 

Rulemaking 

CFC Community First Choice (1915(k) State 

plan Option) 

CHIPRA Children’s Health Insurance 

Program Reauthorization of 2009 (Pub. L. 

111–3) 

CMS Centers for Medicare & Medicaid 

Services 

DRA Deficit Reduction Act of 2005 (Pub. L. 

109–171) 

EPSDT Early and Periodic Screening, 

Diagnosis and Treatment 

FBR Federal benefit rate 

FFP Federal financial participation 

FPL Federal poverty line 

FY Federal fiscal year 

HCB Home and community based 

HCBS Home and Community-Based 

Services 

HHS Department of Health and Human 

Services 

IADLs Instrumental activities of daily living 

ICF/IID Intermediate care facility for 

individuals with intellectual disabilities 

LOC Level of care 

NF Nursing facility 

OBRA‘81 Omnibus Budget Reconciliation 

Act of 1981 (Pub. L. 97–35) 

OT Occupational therapy 

PT Physical therapy 

RFA Regulatory Flexibility Act 

SPA State Plan Amendments 

SSI Supplemental Security Income 

SSI/FBR Supplemental Security Income 

Federal Benefit Rate 

UPL Upper payment limit 

I. Executive Summary 

A. Purpose 

This final rule amends Medicaid 

regulations consistent with the 

requirements of section 2601 of the 

Patient Protection and Affordable Care 

Act of 2010 (Affordable Care Act), 

which added section 1915(h)(2) to the 

Act to provide authority for a 5-year 

duration for certain demonstration 

projects or waivers under sections 1115, 

1915(b), (c), or (d) of the Act, at the 

discretion of the Secretary, when they 

provide medical assistance to 

individuals who are dually eligible for 

both Medicaid and Medicare benefits. 

This final rule also provides 

additional limited exception to the 

general requirement that payment for 

services under a state plan must be 

made directly to the individual 

practitioner providing a service when 

the Medicaid program is the primary 

source of reimbursement for a class of 

individual practitioners. This exception 

will allow payments to be made to other 

parties to benefit the providers by 

ensuring workforce stability, health and 

welfare, and trainings, and provide 

added flexibility to the state. We are 

including the payment reassignment 

provision, because states’ Medicaid 

programs often operate as the primary or 

only payer for the class of practitioners 

that includes HCBS providers. 

In addition, this final rule also 

amends Medicaid regulations to provide 

home and community-based setting 

requirements related to section 2401 of 

the Affordable Care Act for section 


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1915(k) of the Act, the Community First 

Choice State plan option. 

This final rule further amends the 

Medicaid regulations to define and 

describe state plan home and 

community-based services (HCBS). This 

regulation outlines the optional state 

plan benefit to furnish home and 

community-based state plan services 

and draw federal matching funds. As a 

result, states will be able to design and 

tailor Medicaid services to better 

accommodate individual needs. This 

may result in improved patient 

outcomes and satisfaction, while 

enabling states to effectively manage 

their Medicaid resources. 

This final rule also revises the 

regulations implementing Medicaid 

home and community-based services 

(HCBS) waivers under section 1915(c) of 

the Social Security Act (the Act) by 

providing states the option to combine 

the existing three waiver targeting 

groups identified in § 441.301. In 

addition, this final rule will include 

other changes to the HCBS waiver 

provisions to convey expectations 

regarding person-centered plans of care, 

to provide characteristics of settings that 

are home and community-based as well 

as settings that may not be home and 

community-based, to clarify the timing 

of amendments and public input 

requirements when states propose 

modifications to HCBS waiver programs 

and service rates, and to describe the 

additional strategies available to CMS to 

ensure state compliance with the 

statutory provisions of section 1915(c) 

of the Act. The final rule also includes 

requirements for person-centered plans 

of care that document, among other 

things, an individual’s choice of a HCB 

setting from among options that meet 

the individual’s needs. 

B. Summary of the Major Provisions 

1. State Plan Home Community-Based 

Services (Section 1915(i) of the Act) 

The Deficit Reduction Act (DRA) 

added a new provision to the Medicaid 

statute entitled ‘‘Expanded Access to 

Home and Community-Based Services 

for the Elderly and Disabled.’’ This 

provision allows states to provide HCBS 

(as an optional program) under their 

state Medicaid plans. This option allows 

states to receive federal financial 

participation for services that were 

previously eligible for federal funds 

only under waiver or demonstration 

projects. This provision was further 

amended by the Affordable Care Act. 

The statute now provides additional 

options for states to design and 

implement HCBS under the Medicaid 

state plan. In the April 4, 2008, Federal 

Register, (73 FR 18676) we published a 

proposed rule to amend Medicaid 

regulations to implement HCBS under 

the DRA. That proposed rule was not 

finalized, and with the passage of 

section 2402 of the Affordable Care Act, 

some previously proposed regulations 

would no longer be in compliance with 

the current law under section 1915(i) of 

the Act. In addition, several new 

provisions were added. Specifically, the 

Affordable Care Act amended the statute 

by adding a new optional categorical 

eligibility group for individuals to 

provide full Medicaid benefits to certain 

individuals who will be receiving 

HCBS. It also authorized states to elect 

not to comply with section 

1902(a)(10)(B) of the Act pertaining to 

comparability of Medicaid services. 

After closely analyzing the Affordable 

Care Act provisions, we concluded that 

a new proposed rule was necessary. 

This final rule also establishes home 

and community-based setting 

requirements. We will allow states a 

transition/phase-in period for current 

approved 1915(i) State plan HCBS to 

demonstrate compliance with these 

requirements. 

2. 5-Year Period for Certain 

Demonstration Projects and Waivers 

This final rule provides for a 5-year 

approval or renewal period, subject to 

the discretion of the Secretary, for 

certain Medicaid waivers. Specifically, 

this time period applies for 

demonstration and waiver programs 

through which a state serves individuals 

who are dually eligible for both 

Medicare and Medicaid benefits. 

3. Provider Payment Reassignments 

Section 1902(a)(32) of the Act 

provides that state plans can allow 

payments to be made only to certain 

individuals or entities. Specifically, 

payment may only be made to an 

individual practitioner who provided 

the service. The statute provides several 

specific exceptions to the general 

principle of direct payment to the 

individual practitioner. 

Over the years, some states have 

requested that we consider adopting 

additional exceptions to the direct 

payment principle to permit 

withholding from the payment due to 

the individual practitioner for amounts 

paid by the state directly to third parties 

for health and welfare benefits, training 

costs and other benefits customary for 

employees. These amounts would not 

be retained by the state, but would be 

remitted to third parties on behalf of the 

practitioner for the stated purpose. 

While the statute does not expressly 

provide for additional exceptions to the 

direct payment principle, we believe the 

circumstances at issue were not 

contemplated under the statute. 

Therefore, we proposed that the direct 

payment principle should not apply 

because we think its application would 

contravene the fundamental purpose of 

this provision. The apparent purpose of 

the direct payment principle was to 

prohibit factoring arrangements, and not 

to preclude a Medicaid program that is 

functioning as the practitioner’s primary 

source of revenue from fulfilling the 

basic responsibilities that are associated 

with that role. Therefore, we proposed 

an additional exception to describe 

payments that we do not see as within 

the intended scope of the statutory 

direct payment requirement, that would 

allow the state to claim as a provider 

payment amounts that are not directly 

paid to the provider, but are withheld 

and remitted to a third party on behalf 

of the provider for health and welfare 

benefit contributions, training costs, and 

other benefits customary for employees. 

4. Community First Choice State Plan 

Option: Home and Community-Based 

Setting Requirements (Section 1915(k) 

of the Act) 

Section 1915(k)(1)(A)(ii) of the Act 

provides that home and communitybased attendant services and supports 

must be provided in a home and 

community-based setting. The statute 

specifies that home and communitybased settings do not include a nursing 

facility, institution for mental diseases, 

or an intermediate care facility for 

individuals with intellectual 

disabilities. We have adopted this 

statutory language in our regulations. 

Additionally, to provide greater clarity, 

we have established that home and 

community-based settings must exhibit 

specific qualities to be eligible sites for 

delivery of home and community-based 

services. 

After consideration of comments 

received in response to the Community 

First Choice (CFC) proposed rule 

published in the Federal Register (76 

FR 10736) on February 25, 2011, we 

decided to revise the setting provision 

and publish our proposed definition as 

a new proposed rule to allow for 

additional public comment before this 

final rule. The public comment process 

has been valuable in assisting us to 

develop the best policy on this issue for 

Medicaid beneficiaries. We have fully 

considered all comments received, and 

have aligned the requirements 

pertaining to home and communitybased settings across CFC, section 

1915(i) State plan HCBS, and section 

1915(c) of the Act HCBS waivers. 


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1Note that the abbreviation HCBS does not 

distinguish between singular and plural. Where this 

could be confusing, we spell out home and 

community-based service(s). 

5. Home and Community Based Services 

Waivers (Section 1915(c) of the Act) 

Section 1915(c) of the Act authorizes 

the Secretary of Health and Human 

Services to waive certain Medicaid 

statutory requirements so that a state 

may offer Home and Community-Based 

Services (HCBS) to state-specified 

group(s) of Medicaid beneficiaries who 

otherwise would require services at an 

institutional level of care. This final rule 

will give states the option to combine 

the existing three waiver targeting 

groups as identified in § 441.301. In 

addition, it will implement 

requirements regarding person-centered 

service plans, clarify the timing of 

amendments when states modify HCBS 

waiver programs and service rates, and 

describe the additional strategies 

available to us to ensure state 

compliance with the provisions of 

section 1915(c) of the Act. This final 

rule also establishes home and 

community-based setting requirements. 

We will allow states a transition/phasein period for current approved 1915(c) 

HCBS waivers to demonstrate 

compliance with these requirements. 

C. Summary of Costs, Benefits and 

Transfers 

Provision description Total costs Total benefits Total transfers 

1915(i) State Plan 

Home CommunityBased Services.

The estimated total 

annual collection of 

information requirements cost to states 

is $21,805..

We anticipate that states will make varying 

use of the state plan HCBS benefit provisions to provide needed long-term care 

services for Medicaid beneficiaries. These 

services will be provided in the home or alternative living arrangements in the community, which is of benefit to the beneficiary, and is less costly than institutional 

care..

We estimate that, adjusted for a phase-in period during which states gradually elect to 

offer the state plan HCBS benefit, in FY 

2014 the federal cost would be $150 million, and the estimated state cost would be 

$115million. (Some portion of these impacts would actually be societal costs rather than ‘‘transfers’’, to the extent that new 

users of the HCBS in this rule are previously not receiving services.) 

Section 2601 of the Affordable Care Act: 5- 

Year Period for Demonstration Projects 

(Waivers).

N/A ............................. As this provision elongates the time period 

under which states may operate certain 

waiver programs without renewal, it will 

help states to minimize administrative and 

renewal requirements in order to better 

focus on program implementation and quality oversight..

No impact on federal or state Medicaid funding. This rule is voluntary on the part of 

states. 

Provider Payment Reassignments.N/A ............................. This rule implements additional operational 

flexibilities for states to help ensure a 

strong provider workforce..

We do not anticipate any impact on federal 

Medicaid funding. This rule is voluntary on 

the part of states. 

Section 2401 of the Affordable Care Act: 

Community First 

Choice State Plan 

Option: Home and 

Community-Based 

Setting Requirements.

N/A ............................. This rule provides states with necessary guidance to support compliance with the requirement that CFC services are provided 

in a home or community based-setting. 

This rule also provides beneficiary protections to support an individual’s choice to receive HCBS in a manner that allows for integration with the greater community..

We do not anticipate there is an impact on 

federal or state Medicaid funding, as the 

purpose of the rule is merely to define 

home and community-based settings in 

which CFC services may be provided. 

1915(c) Home and 

Community-Based 

Services Waivers.

States may incur costs 

in coming into compliance with this 

rule. Given the variability in state programs, and the 

varying extent to 

which some are already complying, it 

is difficult to estimate these costs..

These changes will support beneficiaries by 

enabling services to be planned and delivered in a manner driven by the beneficiary 

and will maximize opportunities for beneficiaries to have access to the benefits of 

community living and receive services in 

the most integrated setting. These changes 

will also enable states to realize administrative and program design simplification 

and improve efficiency of operation..

We do not anticipate any impact on federal 

Medicaid funding. 

II. State Plan Home and CommunityBased Services, 5-Year Period for 

Waivers, Provider Payment 

Reassignment, and Home and 

Community-Based Setting 

Requirements for Community First 

Choice 

A. Background 

On February 8, 2006, the Deficit 

Reduction Act (DRA) of 2005 (Pub. L. 

109–171) was signed into law. Section 

6086 of the DRA is entitled ‘‘Expanded 

Access to Home and Community-Based 

Services for the Elderly and Disabled.’’ 

Section 6086(a) of the DRA adds a new 

section 1915(i) to the Act that allows 

states, at their option, to provide home 

and community-based services (HCBS) 

under their regular state Medicaid 

plans. This option allows states to 

receive federal financial participation 

(FFP) for services that were previously 

eligible for the funds only under waiver 

or demonstration projects, including 

those under sections 1915(c) and 1115 

of the Act. Section 1915(i) of the Act 

was later amended by sections 2402(b) 

through (g) of the Patient Protection and 

Affordable Care Act of 2010 (Pub. L. 

111–148, enacted March 23, 2010) 

(Affordable Care Act) to provide 

additional options for states to design 

and implement HCBS under the 

Medicaid state plan. 

In the following discussion of this 

regulation, we refer to particular home 

and community-based service(s) offered 

under section 1915(i) of the Act as 

‘‘State plan HCBS’’ or simply ‘‘HCBS’’ 1. 

We refer to the ‘‘State plan HCBS 

benefit’’ when describing the collective 

requirements of section 1915(i) of the 

Act that apply to states electing to 

provide one, or several, of the 

authorized HCBS. We choose to use the 


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2While the Social Security Act still refers to these 

types of facilities as intermediate care facilities for 

the mentally retarded (ICFs/MR), the language used 

in this rule reflects ‘‘intellectual disability’’ as the 

appropriate way to discuss this type of disability, 

based on Rosa’s Law and we now refer to this types 

of facility as an intermediate care facility for 

individuals with intellectual disabilities (ICF/IID). 

term ‘‘benefit’’ rather than ‘‘program’’ to 

describe section 1915(i) of the Act to 

avoid possible confusion with section 

1915(c) HCBS waiver programs. The 

State plan HCBS benefit shares many 

features with section 1915(c) waiver 

programs, but it is a state plan benefit, 

although one with very unique features 

not common to traditional state plan 

services. 

Under section 1915(i) of the Act, 

states can provide HCBS to individuals 

who require less than institutional level 

of care (LOC) and who would, therefore, 

not be eligible for HCBS under section 

1915(c) waivers, in addition to serving 

individuals who have needs that would 

meet entry requirements for an 

institution. As with other state plan 

services, the benefits must be provided 

statewide, and states must not limit the 

number of eligible people served. 

Section 1915(i) of the Act explicitly 

provides that State plan HCBS may be 

provided without determining that, but 

for the provision of these services, 

individuals would require the LOC 

provided in a hospital, a nursing facility 

(NF), or an intermediate care facility for 

individuals with intellectual 

disabilities 2 (ICF/IID) as is required in 

section 1915(c) HCBS waivers. While 

HCBS provided through section 1915(c) 

waivers must be ‘‘cost-neutral’’, as 

compared to institutional services, no 

cost neutrality requirement applies to 

the section 1915(i) State plan HCBS 

benefit. States are not required to 

produce comparative cost estimates of 

institutional care and the State plan 

HCBS benefit. This significant 

distinction allows states to offer HCBS 

to individuals whose needs are 

substantial, but not severe enough to 

qualify them for institutional or waiver 

services, and to individuals for whom 

there is not an offset for cost savings in 

NFs, ICFs/MR, or hospitals. 

To be eligible for the State plan HCBS 

benefit, an individual must be included 

in an eligibility group that is contained 

in the state plan, including if the state 

elects, the new eligibility group defined 

at section 1902(a)(10)(A)(ii)(XXII) of the 

Act. Each individual must meet all 

financial and non-financial criteria set 

forth in the plan for the applicable 

eligibility group. 

HCBS benefits that are not otherwise 

available through section 1905(a) of the 

Act state plan services under the 

Medicaid Early and Periodic Screening, 

Diagnostic, and Treatment (EPSDT) 

benefit may be furnished to Medicaid 

eligible children who meet the State 

plan HCBS needs-based eligibility 

criteria, and who meet the state’s 

medical necessity criteria for the receipt 

of services. In addition to meeting 

EPSDT requirements through the 

provision of 1905(a) services, a state 

may also meet, in part, a particular 

child’s needs under EPSDT through 

services that are also available through 

the 1915(i) benefit. However, all 

Medicaid-eligible children must have 

full access to services required under 

EPSDT, and the provision of 1915(i) 

State plan HCBS should in no way 

hinder their access to such services. 

Section 1915(i)(1)(H)(i) of the Act 

requires the state to ensure that the State 

plan HCBS benefit meets federal and 

state guidelines for quality assurance, 

which we interpret as assurances of 

quality improvement. Consistent with 

current trends in health care, the 

language of quality assurance has 

evolved to mean quality improvement, a 

systems approach designed to 

continuously improve services and 

support and prevent or minimize 

problems prior to occurrences. 

Guidelines for quality improvement 

have been made available through CMS 

policies governing section 1915(c) HCBS 

waivers available at 

www.hcbswaivers.net and published 

manuscripts available at 

www.nationalqualityenterprise.com. 

Section 1915(i) provides states the 

option to provide home and 

community-based services, but does not 

define ‘‘home and community-based.’’ 

Along with our overarching goal to 

improve Medicaid HCBS, we seek to 

ensure that Medicaid is supporting 

needed strategies for states in their 

efforts to meet their obligations under 

the ADA and the Supreme Court 

decision in Olmstead v. L.C., 527 U.S. 

581 (1999). In the Olmstead decision, 

the Court affirmed a state’s obligations 

to provide covered program services to 

eligible individuals with disabilities in 

the most integrated setting appropriate 

to their needs. A state’s obligations 

under the ADA and section 504 of the 

Rehabilitation Act are not defined by, or 

limited to, the services provided under 

the State’s Medicaid program. However, 

the Medicaid program can support 

compliance with the ADA, section 504 

of the Rehabilitation Act, and Olmstead 

through the provision of Medicaid 

services to Medicaid-eligible 

individuals in integrated settings. 

We noted in the May 3, 2012 

proposed rule published in the Federal 

Register (77 FR 26362), that home and 

community-based settings do not 

include nursing facilities, institutions 

for mental diseases, intermediate care 

facilities for the mentally retarded, 

hospitals, or any other locations that 

have the qualities of an institutional 

setting as determined by the Secretary. 

While HCBS are not available while 

an individual resides in an institution, 

HCBS may be available to assist 

individuals to transition from an 

institution to the community. 

Recognizing that individuals leaving 

institutions require assistance to 

establish themselves in the community, 

we would allow states to include in a 

section 1915(i) benefit, as an ‘‘other’’ 

service, certain transition services to be 

offered to individuals to assist them in 

their transition to the community. We 

proposed that community transition 

services could be commenced prior to 

discharge and could be used to assist 

individuals during the period of 

transition from an institutional 

residence. Additionally, services could 

be provided to assist individuals 

transitioning to independent living in 

the community, as described in a letter 

to the State Medicaid Directors on May 

9, 2002 (SMDL #02–008). We further 

recognize that, for short hospital stays, 

an individual may benefit from ongoing 

support through the State plan HCBS 

benefit to meet needs not met through 

the provision of hospital services that 

are identified in the individual’s personcentered service plan, to ensure smooth 

transitions between acute care settings 

and home and community-based 

settings, and to preserve the individual’s 

functions. Importantly, these services 

must be exclusively for the benefit of 

the individual, not the hospital, and 

must not substitute for services that the 

hospital is obligated to provide through 

its conditions of participation or under 

federal or state laws. However, 

payments for room and board are 

expressly prohibited by section 

1915(i)(1) of the Act, except for respite 

care furnished in a setting approved by 

the state that is not the individual’s 

residence. 

Section 2601 of the Affordable Care 

Act adds a new paragraph to section 

1915(h) of the Act to permit the 

Secretary, at her discretion, to approve 

a waiver that provides medical 

assistance for individuals dually eligible 

for Medicare and Medicaid (‘‘dual 

eligibles’’) for an initial period of up to 

5 years and renewed for up to 5 years, 

at the state’s request. The statute defines 

a dual eligible as: ‘‘an individual who is 

entitled to, or enrolled for, benefits 

under part A of title XVIII, or enrolled 

for benefits under part B of title XVIII, 

and is eligible for medical assistance 


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3Although we recognize that the language used 

here is outdated, and that ‘‘intellectual disability’’ 

is the appropriate way to discuss this type of 

disability, the Social Security Act still refers to 

these types of facilities in this manner. 

under the state plan under this title or 

under a waiver of such plan.’’ This new 

authority enhances existing tools 

available to improve and coordinate 

care and services for this particularly 

vulnerable group of beneficiaries. This 

change provides an important tool for 

states to design programs to better 

coordinate services for dual eligible 

individuals. 

Section 1902(a)(32) of the Act 

generally states that ‘‘no payment under 

the plan for care and services provided 

to an individual shall be made to 

anyone other than such individual or 

the person or institution providing such 

care or service, under an assignment or 

power of attorney or otherwise.’’ 

However, section 1902(a)(32) of the Act 

contains several specific exceptions to 

the general principle of direct payment 

to individual practitioners. There are 

exceptions for payments for practitioner 

services where payment is made to the 

employer of the practitioner, and the 

practitioner is required as a condition of 

employment to turn over fees to the 

employer; payments for practitioner 

services furnished in a facility when 

there is a contractual arrangement under 

which the facility bills on behalf of the 

practitioner; reassignments to a 

governmental agency, through a court 

order, or to a billing agent; payments to 

a practitioner whose patients were 

temporarily served by another identified 

practitioner; or payments for a 

childhood vaccine administered before 

October 1, 1994. 

Section 1915(k)(1)(A)(ii) of the Act 

provides that home and communitybased attendant services and supports 

must be provided in a home and 

community-based setting. The statute 

specifies that home and communitybased settings do not include a nursing 

facility, institution for mental diseases, 

or an intermediate care facility for the 

mentally retarded.3 We are aware of 

settings other than those specified in 

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

may exhibit qualities of an institutional 

setting, such as public hospitals. Over 

the past several years, we have sought 

input on how to define the 

characteristics of what makes a setting 

‘‘home and community-based’’ (HCB). 

To provide greater clarity, we are 

establishing with this final rule that 

home and community-based settings 

must exhibit specific qualities to be 

eligible sites for delivery of HCBS under 

Medicaid. Any modifications to these 

qualities must be justified in an 

individual’s person-centered plan, and 

we believe this gives states the 

flexibility to address specific needs of 

beneficiaries. We have included these 

provisions to move toward a stronger 

articulation of the qualities that make a 

setting a home and truly integrated in 

the broader community. These are the 

qualities most often articulated by 

persons with disabilities as key 

determinants of independence and 

community integration. We believe that 

these qualities of home and communitybased settings will support the use of 

the Medicaid program to maximize the 

opportunities for individuals to access 

the benefits of home and community 

living. We expect states electing to 

provide benefits under section 1915(k), 

1915(i), and/or 1915(c) to include a 

definition of home and communitybased setting that incorporates these 

qualities and will review all SPAs and 

1915(c) waivers to determine whether 

they propose settings that are home or 

community-based. We will permit states 

with approved section 1915(k) SPAs, 

1915(i) SPAs, and 1915(c) waivers a 

reasonable transition period to come 

into compliance with the HCB setting 

requirements as promulgated in our 

final rule. 

For a detailed description of the 

background of this rule, please refer to 

‘‘State Plan Home and CommunityBased Services, 5-Year Period for 

Waivers, Provider Payment 

Reassignment, and Setting 

Requirements for Community First 

Choice’’ proposed rule published in the 

May 3, 2012 Federal Register (77 FR 

26362). 

B. Provisions of the Proposed 

Regulations and Analysis of and 

Responses to Public Comments 

On May 3, 2012, we published a 

proposed rule (77 FR 26362) in the 

Federal Register entitled ‘‘Medicaid 

Program; State Plan Home and 

Community-Based Services, 5-Year 

Period for Waivers, Provider Payment 

Reassignment, and Setting 

Requirements for Community First 

Choice,’’ (hereinafter referred to as 

‘‘HCBS proposed rule’’) that proposed to 

amend the Medicaid regulations to 

define and describe state plan home and 

community-based services (HCBS) 

under the Affordable Care Act. This rule 

offers states new flexibilities in 

providing necessary and appropriate 

services to elderly and disabled 

populations. The rule also proposed to 

amend Medicaid regulations consistent 

with the requirements of section 2601 of 

the Affordable Care Act, which added 

section 1915(h)(2) to the Act to provide 

authority for a 5-year duration for 

certain demonstration projects or 

waivers under sections 1115, 1915(b), 

(c), or (d) of the Act. In addition, the 

proposed rule includes payment 

reassignment provisions because states’ 

Medicaid programs often operate as the 

primary or only payer for the class of 

practitioners that includes HCBS 

providers. Finally, the rule proposed 

Medicaid regulations to provide home 

and community-based setting 

requirements related to section 2401 of 

the Affordable Care Act for the section 

1915(k) Community First Choice State 

plan option. 

We received a total of 401 timely 

comments from state agencies, advocacy 

groups, health care providers, 

employers, health insurers, health care 

associations, and the general public. 

The comments ranged from general 

support or opposition to the proposed 

provisions to very specific questions or 

comments regarding the proposed 

changes. We note that many expressed 

overall satisfaction with the benefit as a 

whole, in that it offers another 

opportunity for individuals served 

through the Medicaid program to return 

or remain in the community with family 

and friends. A couple stated that this 

opportunity offers additional flexibility 

and will not only provide people the 

opportunity to live and thrive where 

they choose, but also has the potential 

to save states’ dollars. 

After consideration of comments 

received in response to the Community 

First Choice (CFC) proposed rule 

published in the Federal Register on 

February 25, 2011, we revised the 

setting provision and published our 

proposed definition as a new proposed 

rule to allow for additional public 

comment before this final rule. Since 

CFC and section 1915(i) both pertain to 

home and community-based services, 

we have aligned this CFC proposed 

language with the section 1915(i) 

proposed home and community-based 

setting requirements also included in 

this rule. 

Brief summaries of each proposed 

provision, a summary of public 

comments we received (with the 

exception of specific comments on the 

paperwork burden or the economic 

impact analysis), and our responses to 

the comments follow. Comments related 

to the paperwork burden and the impact 

analyses are addressed in the 

‘‘Collection of Information 

Requirements’’ and ‘‘Regulatory Impact 

Analysis’’ sections in this preamble. 


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1. 5-Year Period for Certain 

Demonstration Projects and Waivers 

(part 430) 

In accordance with section 2601 of 

the Affordable Care Act, we proposed a 

5-year approval or renewal period, 

subject to the discretion of the 

Secretary, for Medicaid waivers under 

sections 1915(b), 1915(c), 1915(d) and 

1115 of the Act. Specifically, this time 

period applies for demonstration and 

waiver programs through which a state 

serves individuals who are dually 

eligible for both Medicare and Medicaid 

benefits. While section 2601 of the 

Affordable Care Act did not provide a 

new type of waiver, it did provide an 

important opportunity for states to 

simplify the operation of existing or 

future waivers under current authorities 

that serve dually eligible individuals, 

especially important when states 

combine waiver authorities that have 

different approval periods. The approval 

of such periods is at the Secretary’s 

discretion, and determinations will be 

made regarding applications for 5-year 

waivers in a manner consistent with the 

interests of beneficiaries and the 

objectives of the Medicaid program. We 

proposed that if a demonstration or 

waiver program does not serve or 

excludes dually eligible individuals, the 

5-year approval period will not be 

available under this authority, and 

existing approval period requirements 

will apply. In addition, we proposed 

that in order for coverage-related 

waivers to be approved for 5 years 

periods, they must meet all necessary 

programmatic, financial, and quality 

requirements. 

Comment: Commenters on this 

section expressed agreement with this 

provision. One also requested that we be 

mindful of the demonstrations under 

the Financial Alignment Initiative for 

dual eligibles. Another recommended 

clarification that this provision would 

also apply to other future waiver 

demonstration requests by states to 

combine Medicare and Medicaid 

funding at the state level for delivering 

care to Medicare-Medicaid eligibles. 

Response: This provision is available 

for waivers that serve dually eligible 

individuals, under sections 1915(b), 

1915(c), 1915(d) and 1115 of the Act, 

and that meet all necessary 

programmatic, financial, and quality 

requirements. 

Comment: One commenter requested 

that CMS make wise and appropriate 

use of this authority. Another 

commenter recommended that CMS 

include a statement in the regulation 

language like one in the preamble to the 

proposed rule that determinations ‘‘be 

made regarding applications for 5-year 

waivers in a manner consistent with the 

interests of beneficiaries and the 

objectives of the Medicaid program.’’ 

This commenter stated that one example 

would be a waiver that effectively 

reduces services for dual eligibles, 

which should not be approvable as it 

would not be consistent with the 

purposes of Title XIX. 

Response: We have added ‘‘and in a 

manner consistent with interests of the 

beneficiaries and the objectives of the 

Medicaid program’’ to the final 

regulation. In the event that the state 

finds a need to make reductions to its 

program, the state would have to 

explain to CMS how they will account 

for the interest of individuals before 

taking such action. 

2. State Organization and General 

Administration (part 431) 

In § 431.54, we proposed to add 

paragraphs (a)(3) and (h) to include state 

plan HCBS as exceptions to 

comparability and community income 

and resource rules. For specific 

discussion, see the published May 3, 

2012 proposed rule (77 FR 2012 through 

10385). 

Comment: Commenters requested that 

we clarify that under section 1915(i)(3) 

of the Act noncompliance with 

comparability or community income 

and resource rules is optional, not 

mandatory. Specifically, they requested 

that we modify § 431.54 (a)(3) and (h) as 

follows: 

• For § 431.54 (a)(3): Section 1915(i) 

of the Act provides that if a state may 

provide, as medical assistance, home 

and community-based services under an 

approved state plan amendment that 

meets certain requirements, it may elect 

to do so without regard to the 

requirements of sections 1902(a)(10)(B) 

and 1902(a)(10)(C)(i)(III) of the Act, with 

respect to such services only. 

• For § 431.54(h): State plan home 

and community-based services. If the 

state so elects, the requirements of 

§ 440.240 of this chapter related to 

comparability of services do not apply 

with respect to State plan home and 

community-based services defined in 

§ 440.182 of this chapter. 

Response: We believe that the 

language in the regulation is clear and 

we are finalizing the rule as proposed. 

3. Eligibility in the States, District of 

Columbia, the Northern Mariana 

Islands, and American Samoa (part 435) 

and Eligibility in Guam, Puerto Rico and 

the Virgin Islands (part 436) 

We received several comments that 

were in support of the eligibility 

policies pertaining to the new eligibility 

group specified at § 435.219 and 

§ 436.219. Commenters were pleased 

that the regulation offers states 

flexibility in providing HCBS to elderly 

and disabled populations who do not 

meet an institutional level of care. 

Commenters were also pleased that the 

methodology proposed for the new 

eligibility group described at 

§ 435.219(a) & (c) did not have a 

resource test and that the income 

standard for this new eligibility group is 

set at 150 percent of the FPL. Comments 

on eligibility policies not contained in 

this rule are not addressed. 

Comment: A few commenters 

believed that the language in the 

regulation should be more detailed to 

better reflect the language in the 

preamble. 

Response: We do not believe that the 

regulatory language should be as 

detailed as the language in the 

preamble. The language in the preamble 

contains the rationale for the 

requirements described in the regulatory 

language. Therefore, we are not revising 

the regulatory language to be as detailed 

as the preamble. We will be revising the 

regulatory language to correct an error 

which inaccurately indicated that a 

State could cover some but not all 

people described in paragraph (a) or (b). 

The response to that comment is 

addressed separately. 

Comment: A few commenters 

suggested that the regulation at 

§ 435.219(c) should be revised to 

include a requirement that the 

methodology elected by the state can be 

no more restrictive than the SSI 

methodology. 

Response: To provide states with 

flexibility, we are not prescribing a 

methodology. We will review the 

methodology proposed by the state to 

determine whether it meets the criteria 

set forth at § 435.219(c) and 

§ 436.219(c). We believe that the current 

regulatory language is in the best 

interest of the beneficiary. 

Comment: One commenter suggested 

revising the introductory language in 

§ 435.219 and § 436.219 to make it 

clearer that a state may choose to cover 

persons described in paragraph (a), 

persons described in paragraph (b) or 

both sets of persons. The commenter 

suggested deleting the language ‘‘any 

group or groups of’’ because the 

language suggests inaccurately that a 

state might be able to cover some but 

not all of the persons described in either 

of paragraphs (a) or (b) of the regulation. 

Response: We agree with the 

commenter. The state has the option to 

provide Medicaid to individuals 

described in one or both of the 

paragraphs under (a) or (b) of this 


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section but cannot cover some but not 

all of the individuals that may be 

eligible under either or both parts of the 

eligibility group. We are revising the 

regulatory language at § 435.219 and 

§ 436.219 by removing the phrase ‘‘any 

group or groups of.’’ 

Comment: A few commenters 

suggested that the language in § 453.219 

should be revised to specify that any 

income methodologies must be applied 

to all members of the eligibility group. 

Response: The state must use the 

same income methodology for all 

members within the eligibility group. 

Specifically, if a state elects to cover 

§ 435.219(a) the income methodology 

must be the same for all members 

determined eligible under § 435.219(a). 

If the state elects § 435.219(b) the state 

must use the same income and resource 

methodologies and standards that it 

uses for the § 435.236 (the special 

income level) group. As described in the 

previous comment, states have the 

option to provide Medicaid to 

individuals described in one or both of 

the paragraphs under (a) or (b) of this 

section. 

Comment: One commenter 

commended CMS for proposing 

regulations to implement optional 

categorical eligibility for Medicaid for 

individuals in need of section 1915(i) of 

the Act services. The commenter 

believes that this category has the 

potential to help secure coverage for 

uninsured and underinsured 

individuals and will provide states with 

a useful option to consolidate coverage 

groups. 

Response: The intent of the regulation 

is to provide eligibility for more 

individuals needing State plan HCBS 

not to consolidate coverage groups. 

Comment: One commenter urged 

CMS to retain the regulatory language 

that requires states to use income 

standards, which are, ‘‘reasonable, 

consistent with the objective of the 

Medicaid program . . . and in the best 

interest of the beneficiary. 

Response: We are not changing this 

regulatory language, which is specified 

at § 435.219(c) and § 436.219(c). 

4. Services: General Provisions (part 

440) 

Section 1915(i)(1) of the Act grants 

states the option to provide, under the 

state plan, the services and supports 

listed in section 1915(c)(4)(B) of the Act 

governing HCBS waivers. The HCBS 

may not include payment for room and 

board. Eligibility for this option is based 

upon several different factors that are 

either specified by the statute or that a 

state may define. These include 

financial eligibility, the establishment of 

needs-based criteria, and the state 

option to target the benefit and to offer 

benefits differing in type, amount, 

duration or scope to specific 

populations. Section 1915(i) of the Act 

provides that State plan HCBS may be 

provided without determining that, but 

for the provision of these services, 

individuals would require the LOC 

provided in a hospital, a nursing facility 

(NF), or an intermediate care facility for 

individuals with intellectual disabilities 

(ICF/IID) as is required in section 

1915(c) HCBS waivers. While HCBS 

provided through section 1915(c) 

waivers must be ‘‘cost-neutral’’ as 

compared to institutional services, no 

cost neutrality requirement applies to 

the section 1915(i) State plan HCBS 

benefit. State plan HCBS are intended to 

enable individuals to receive needed 

services in their own homes, or in 

alternative living arrangements in what 

is collectively termed the ‘‘community’’ 

in this context. 

Comment: A few commenters 

requested that CMS add additional 

services to § 440.182. One additional 

commenter requested that nursing 

services be added to the list of services 

specifically listed in section 

1915(c)(4)(B) of the Act governing HCBS 

waivers. 

Response: The services that section 

1915(i)(1) of the Act authorizes states to 

include are the services and supports 

listed in section 1915(c)(4)(B) of the Act 

governing HCBS waivers. While we are 

unable to expand on this list of services, 

we note that the ‘‘other services’’ 

specifically referenced in the statute 

may include coverage of services not 

designated in the list of specific 

services, and gives states the flexibility 

to propose and define other specific 

services. 

Comment: Many commenters 

requested that CMS add to the 

regulation text that ‘‘other services’’ can 

include services that have been, or 

could be, approved as ‘‘other services’’ 

under a 1915(c) waiver and to list 

specific examples, such as transition 

services or services for individuals with 

traumatic brain injury. 

Response: ‘‘Other services’’ may 

include coverage of services not 

specifically designated, and states have 

the flexibility to propose and define 

other specific services. We will provide 

examples of ‘‘other services’’ in future 

guidance. 

Comment: A couple of commenters 

requested revisions to § 440.182(c) to 

emphasize that the habilitation services 

that can be covered by the state include, 

but are not limited to, expanded 

habilitation services as specified in 

§ 440.180(c). 

Response: We have revised 

§ 440.182(c) to add the phrase ‘‘may 

include expanded habilitation services’’ 

to specify that states can choose 

whether or not to include expanded 

habilitation services as defined in 

§ 440.180(c). 

Comment: One commenter expressed 

that the final regulation regarding home 

and community-based settings must 

continue to permit the full array of 

home and community-based services, as 

defined by the Medicaid HCBS statute 

and regulations and included in the 

individual’s person-centered service 

plan. 

Response: We agree and, as in the 

proposed rule, the final regulation will 

continue to convey this flexibility for 

states. 

Comment: Another commenter 

applauded the flexibility given to states 

to not only provide specified HCBS 

benefits under the state Plan, but to also 

provide other services at a state’s 

request with Secretary approval, and 

encourages CMS to work with states on 

an ongoing basis to educate, train, and 

support the use of this new state plan 

option. 

Response: We appreciate this 

comment and believe that this option 

provides states with an opportunity to 

deliver long-term supports and services 

to individuals in need. Since 

implementation of this benefit, we have 

directly and indirectly provided states 

with technical assistance in the use of 

section 1915(i) of the Act, and we are 

committed to continuing to offer such 

assistance to states. 

Comment: One commenter stated that 

CMS should not allow section 1915(i) of 

the Act to be used to provide 

instrumental activities of daily living 

(IADL) services while an individual is 

in a general acute hospital short-term 

stay, as this would be duplicative to the 

services received in the hospital and 

would be hard to administer without 

increased costs to the state. 

However, another commenter was 

supportive of allowing HCBS to 

continue, as applicable for people who 

are temporarily hospitalized, stating that 

based on the needs of the individual, 

there could be a genuine necessity for 

HCBS while an individual is 

hospitalized in a short-term acute care 

setting and would not be a duplication 

of hospital care services: 

‘‘Some individuals may need assistance 

from their personal care provider to 

communicate their needs, medical history, 

redirect behaviors, and provide consistent 

person-directed physical assistance. Most 

hospitals do not have adequate, nor trained 

staff to provide the level and type of ongoing 

‘personal care’ many people using HCBS 


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require. Providing continuation of HCBS 

while someone is in a hospital is not letting 

hospitals avoid their responsibilities, but 

rather acknowledging the reality that their 

focus/responsibility is on ‘medical care’, 

while HCBS’ focus is on ‘personal care’.’’ 

Response: We agree with the second 

commenter and believe that this should 

remain an option afforded to the state 

subject to the conditions and limitations 

stated in our rule. To support program 

integrity, states are required to perform 

claims edits or adopt other systematic 

approaches that prevent duplicate 

payment. 

Comment: One commenter noted that 

the inclusion of ‘‘other services’’ 

including certain transition services can 

make a significant difference in 

addressing chronic homelessness. 

Response: We agree. 

Comment: One commenter suggested 

providing FFP for rent and food 

expenses reasonably attributed to a 

related caregiver providing State plan 

HCBS, just as CMS proposed in the 

proposed rule for unrelated caregivers. 

Response: Section 1915(i) of the Act 

does not include authority that would 

allow payment for the costs of rent and 

food attributable to a related personal 

caregiver residing in the same 

household as the participant. 

Comment: One commenter asked us 

to clarify if there can be differences in 

the amount, scope or duration of 

services provided under 1915(i) and 

similarly named services provided in a 

section 1915(c) HCBS waiver, and 

whether rates or rate methodologies 

could differ. The commenter also asked 

whether there could be different 

provider qualifications for a covered 

State plan HCBS benefit and a similar 

covered HCBS waiver service. 

Response: States are permitted the 

flexibility to define the section 1915(i) 

of the Act services they will include 

under their benefit, including the 

amount, duration, and scope of those 

services. If a proposed section 1915(i) 

service is also available under another 

Medicaid authority, states must explain 

how the section 1915(i) services would 

not be provided in duplicate, or incur 

duplicate payment. However, we note 

that while 1915(i) services are not 

identified in 1905(a) and are not part of 

the EPSDT requirement, all Medicaideligible children must have full access 

to services required under EPSDT, and 

the provision of section 1915(i) of the 

Act State plan HCBS should in no way 

hinder their access to such services. 

With regard to rate methodologies, 

while rate determination methods may 

vary, payments for Medicaid services 

must be consistent with the provision of 

section 1902(a)(30)(A) of the Act (that is, 

‘‘payments are consistent with 

efficiency, economy, and quality of care 

and are sufficient to enlist enough 

providers’’) and the related federal 

regulations at § 447.200 through 205. If 

the state-established rates will vary for 

different providers of a service 

(including a service that is also available 

under a section 1915(c) of the Act 

waiver), the state must explain the basis 

for the variation. 

Provider qualifications must be 

reasonable and appropriate to the nature 

of the service, reflect sufficient training, 

experience and education to ensure that 

individuals will receive services in a 

safe and effective manner, and not have 

the effect of limiting the number of 

providers by the inclusion of 

requirements that are unrelated to 

quality and effectiveness. If the stateestablished minimum provider 

qualifications will vary for a service that 

is also available under a section 1915(c) 

of the Act waiver, the state must explain 

the basis for the variation. 

Comment: One commenter requested 

that CMS amend the language to ensure 

that the rule addresses individuals with 

disabilities across the lifespan, 

including children, in order to help 

states understand that they can serve 

children under the special population 

classification. They expressed concern 

that the proposed rule does not 

explicitly address children. They also 

requested that CMS add language to 

specify children with physical and 

sensory disabilities, not just those with 

cognitive and behavioral disorders. 

Response: Our intention was not to 

exclude children with disabilities or any 

other population as we cited examples 

in the preamble to the proposed rules. 

The regulation text does not cite specific 

populations who can receive Medicaid 

HCBS, nor do we think it prudent to do 

so, as it may imply limitations on state 

flexibility. 

Comment: One commenter requested 

that CMS allow federal financial 

payment for room and board costs to be 

included in payment for State plan 

HCBS, in order to make such 

alternatives viable for individuals who, 

without housing assistance, must seek 

institutional placement. 

Response: The statute explicitly 

excludes coverage of room and board 

and our rule cannot override that 

exclusion. 

Comment: For § 440.182(c)(8), which 

refers to conditions set forth at § 440.180 

for persons with chronic mental illness, 

one commenter proposed instead a 

reference to § 440.180(d)(2). 

Response: We agree that this reference 

is more precise and have incorporated 

this revision. 

Comment: One commenter expressed 

support for not including the phrase ‘‘as 

cost effective and necessary to avoid 

institutionalization,’’ which appears in 

§ 440.180(b)(9) to describe the ‘‘other’’ 

services that might be authorized under 

section 1915(c) of the Act, in 

§ 440.182(c)(9) pertaining to section 

1915(i) of the Act. 

Response: We agree that this phrase is 

not appropriate to include in 

§ 440.182(c)(9), as State plan HCBS 

under 1915(i) are not subject to cost 

neutrality. 

Comment: One commenter indicated 

that the regulation text should indicate 

that services must be furnished to 

individuals with an assessed need, and 

must not be based on available funds. 

Response: This is reflected in 

§ 441.725(b) regarding the personcentered service plan. 

Income Eligibility: 

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

that in order to receive State plan HCBS, 

individuals must be eligible for 

Medicaid under an eligibility group 

covered under the State’s Medicaid 

plan. In determining whether either of 

the relevant income requirements 

(discussed) is met, the regular rules for 

determining income eligibility for the 

individual’s eligibility group apply, 

including any less restrictive income 

rules used by the state for that group 

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

Section 2402(b) of the Affordable Care 

Act added a new option at section 

1915(i)(6) of the Act, to allow states, in 

addition to continuing to provide 

services to individuals described in 

section 1915(i)(1) of the Act, to provide 

section 1915(i) of the Act services to 

certain individuals who meet the needsbased criteria, who would be eligible for 

HCBS under sections 1915(c), (d) or (e) 

of the Act waivers or a section 1115 

waiver approved for the state, and who 

have income up to 300 percent of the 

Supplemental Security Income Federal 

Benefit Rate (SSI/FBR). 

Section 2402(d) of the Affordable Care 

Act also amended section 

1902(a)(10)(A)(ii) of the Act by adding a 

new optional categorically needy 

eligibility group specified at section 

1902(a)(10)(A)(ii)(XXII) of the Act to 

provide full Medicaid benefits to certain 

individuals who will be receiving 

section 1915(i) services. This eligibility 

group has two parts, and states can 

cover individuals under either or both 

parts of the group. Under this group, 

states can elect to cover individuals who 

are not otherwise eligible for Medicaid 

who meet the needs-based criteria of the 

section 1915(i) of the Act benefit, have 

income up to 150 percent of the Federal 

poverty line (FPL) with no resource test 


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4 1915(d) and (e) waivers are State options to 

provide HCBS to the elderly and to individuals 

with disabilities, respectively. Currently, no State 

elects to provide services under either of these 

authorities. 

and who will receive section 1915(i) of 

the Act services, or individuals with 

income up to 300 percent of the SSI/

FBR, who would be eligible under an 

existing section 1915(c), (d) or (e) 4

waiver or section 1115 waiver approved 

for the state and who will receive 

section 1915(i) services. These 

individuals do not have to be receiving 

services under an existing section 

1915(c), (d) or (e) waiver or section 1115 

waiver; the individual just has to be 

determined eligible for the waiver. 

Comment: One commenter indicated 

that there is not a lot of difference 

between 300 percent FBR and 150 

percent FPL. In 2012 the amounts were 

$2094 versus approximately $1400 per 

month. The commenter believes that 

having two income levels to administer 

will cause more work for the states and 

make explaining the program more 

confusing. The commenter 

recommended that for all 1915(i) 

services, the income standard be 300 

percent of the SSI/FBR. 

Response: The statute does not permit 

the income standard to be raised to 300 

percent of the SSI/FBR for all 

individuals receiving 1915(i) services. 

Electing the new eligibility group 

specified at § 435.219 and § 436.219 in 

order to provide state plan HCBS to 

individuals who were not previously 

eligible to receive these services is 

strictly a state option. Therefore, if a 

state believes that the requirements for 

this eligibility group are too 

burdensome, the state does not have to 

elect to cover this optional eligibility 

group. 

Comment: One commenter believes 

that existing financial eligibility rules 

should remain in place. 

Response: Electing any changes to 

financial eligibility set forth in this final 

rule are strictly a state option. 

5. State Plan Home and CommunityBased Services Under Section 1915(i)(1) 

of the Act (§ 441.710) (Proposed 

§ 441.656) and Community First Choice 

State Plan Option: Home and 

Community-Based Setting Requirements 

(§ 441.530) 

a. Home and Community-Based 

Settings Under 1915(i) and 1915(k) of 

the Act 

To implement the statutory 

requirement that the benefit be ‘‘home 

and community-based,’’ we proposed to 

require in § 441.656(a) that the 

individual reside in the home or 

community, not in an institution, and 

that the settings must have qualities of 

community-based settings prescribed by 

the Secretary. We stated our recognition 

of the need for a consistent definition of 

this term across Medicaid HCBS, and 

our goal to align the final language 

pertaining to this topic across the 

regulations for sections 1915(i), 1915(k), 

and 1915(c) of the Act Medicaid HCBS 

authorities. 

Section 1915(i) of the Act provides 

states the option to provide home and 

community-based services, but does not 

define ‘‘home and community-based.’’ 

Along with our overarching interest in 

making improvements to Medicaid 

HCBS, we seek to ensure that Medicaid 

is supporting needed strategies for 

States in their efforts to meet their 

obligations under the ADA and the 

Supreme Court decision in Olmstead v. 

L.C., 527 U.S. 581 (1999). We proposed 

language defining the qualities and 

requirements for settings in which 

section 1915(i) of the Act services and 

supports could be provided and sought 

additional comments on this issue. 

Instead of attempting to provide one 

singular definition to encompass all 

settings that are home and communitybased, we described the qualities that 

apply in determining whether a setting 

is community-based. We stated that we 

would expect states electing to provide 

HCBS under section 1915(i) of the Act 

to include a definition of home and 

community-based settings that 

incorporates these qualities, and that we 

would review all SPAs to determine 

whether they propose settings that are 

home and community-based. 

In the proposed rule, we stated that 

we would permit states with approved 

section 1915(i) of the Act SPAs a 

reasonable transition period, a 

minimum of one year, to come into 

compliance with the HCBS setting 

requirements that are promulgated in 

our final rule. 

Overall, we received 280 comments in 

response to the HCB settings section of 

the proposed rule regarding 1915(i) 

State plan HCBS and 1915(k) CFC. 

Commenters included advocacy 

organizations, individuals receiving 

services, family members, friends and 

guardians of individuals receiving 

services as well as providers, 

government entities and the general 

public. Because we are proposing the 

same requirements for home and 

community-based settings in regulations 

implementing 1915(i) and 1915(k), we 

are discussing comments pertaining to 

both in this section. The comments were 

mixed, with commenters providing both 

support and disagreement within 

subsections of the HCBS settings 

provision. A few of the issues that 

elicited a substantial number of 

comments are: qualities, integration, 

providers, choice, accessibility and 

privacy in addition to general 

comments. 

Comment: We received many 

comments related to this section of the 

proposed rule. These comments are 

reflected as follows: 

Many commenters expressed concern 

about the effect the criteria will have on 

existing home and community-based 

services, and expressed concern that the 

proposed rule will eliminate community 

based-services that elderly individuals 

and people with disabilities are 

currently receiving. Several commenters 

suggested eliminating all provisions that 

restrict the consumer’s freedom of 

choice regarding the residential settings 

in which they can utilize their Medicaid 

funds, stating that the qualities and 

characteristics of home are determined 

by the individual. 

Some commenters stated that 

affordable rental options, especially 

those in apartment complexes where 

home maintenance responsibilities are 

handled by the landlord, are hard to 

find or non-existent in some 

communities. They indicated that lack 

of affordable housing is a huge 

challenge for people seeking to live in 

the community while being supported 

for severe disabilities, and that many 

individuals who experience multiple 

disabilities need housing that is tailored 

for their specific physical needs. These 

commenters stressed that group homes 

that were built and owned by a third 

party, specifically for the purpose of 

serving people with disabilities, would 

not be available if they tried to rent on 

the open market and that ruling out 

such homes for HCBS funding imposes 

further hardship and segregation on the 

population in need of HCBS. 

One commenter believes the 

requirements will drive up costs. 

Some commenters believe that the 

changes would effectively eliminate 

their freedom to provide their adult 

child a setting that is protected from 

exposure to community members that 

do not understand the effect of a 

community’s environment on 

individuals with disabilities. 

One commenter indicated that if 

adopted, the criteria would have a 

significant adverse impact on its ability 

to continue to serve individuals with 

the most significant disabilities in the 

community. The language included in 

the proposed regulation would: (1) 

Thwart informed choice by negating or 

severely restricting longstanding 

program options and opportunities to 

provide services and supports expressly 

authorized by the HCBS provisions of 


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the Medicaid statute and regulations; 

and (2) Significantly restrict state 

flexibility to respond to identified needs 

of Medicaid beneficiaries. 

Some commenters stated within the 

broad disability community, different 

groups have different needs and desires 

and any definition of home and 

community-based needs to be broad 

enough to encompass these divergent 

needs and desires with one not 

outweighing others. They indicated that 

it may not be possible to have a single 

definition to meet these needs. 

One commenter stated that the 

standards proposed for home and 

community-based settings are 

impractical, overly prescriptive, 

inappropriate for persons with cognitive 

impairments and neurobehavioral 

challenges, and cannot be delivered at a 

rate that states and taxpayers can afford. 

Another commenter disagreed with 

eliminating congregate care options and 

requested CMS clearly state policies 

which encourage states to operate a 

range of services for people with 

disabilities which reflect the diversity of 

their care and that of their families, 

including congregate care. 

Several commenters disagreed with 

the notion embedded in the CMS 

proposal that ‘‘community based’’ can 

only be defined as a totally independent 

setting or small stand-alone group home 

in an urban or suburban environment. 

We received many comments 

supporting the proposed criteria. These 

indicate that the criteria are a step in the 

right direction and support the goal of 

HCBS to assist individuals to be able to 

live fully in the greater community. One 

of these commenters stated that the 

criteria proposed appropriately establish 

the essential elements of resident 

autonomy and person-centered care. 

Many commenters stated their belief 

that the provisions are key to assisting 

states with complying with the 

Olmstead decision. One recommended 

that the regulation quote verbatim the 

conclusion of the Olmstead decision 

and that reference to the ‘‘integration 

mandate’’ in the final regulation restates 

actual language in the ADA regulations 

for instance, ‘‘most integrated setting 

appropriate to the needs of qualified 

individuals with disabilities.’’ 

Another indicated that the 

requirements appropriately ensure that 

individuals have control over their care 

environment while also making 

allowances for serving people with 

cognitive disabilities. Several 

commenters stated that the rule offers 

appropriate flexibility to ensure that 

individuals can remain in the 

community for as long as possible. 

Many commenters commended CMS 

for its efforts to promote the rights of 

people with disabilities to live in the 

most integrated setting possible. They 

stated that the proposed rule has the 

potential to improve the care of many 

adults and children in the public mental 

health and developmental disabilities 

system. 

A few commenters stated that making 

an institutional setting more ‘‘homelike’’ 

does not mean that it becomes 

community-based, and that the intent is 

to ensure that people with disabilities 

have more self-direction and ability to 

govern and control important 

components of their personal living 

environment. 

One commenter stated appreciation 

and support for criteria that support 

individual choice, the ability for a 

recipient to exercise control over his or 

her immediate environment and day to 

day activities, and that do not restrict 

the individual’s ability to live in the 

community in which his or her 

residence is located. However, the 

commenter is concerned that residency 

in some of the more creative 

congregated living arrangements may be 

disqualified. The commenter added that 

CMS should be as flexible as possible to 

ensure that these homes are able to 

continue to support individuals with 

disabilities and illnesses in the least 

restrictive environment possible. 

Response: We appreciate all of the 

comments submitted. We believe the 

requirements we are finalizing are 

critical to ensure that individuals have 

the opportunity to receive services in a 

manner that protects individual choice 

and promotes community integration. 

Individuals who are elderly and/or 

disabled who commented made it clear 

that their personal rights should not be 

curtailed because of where they live or 

because there is a need to receive HCBS. 

It is not the intent of this rule to prohibit 

congregate settings from being 

considered home and community-based 

settings. State plan HCBS must be 

delivered in a setting that meets the 

HCB setting requirements as set forth in 

this rule (except for HCBS that may be 

delivered in an institutional setting, 

such as institutional respite). Also, since 

this authority provides states the 

opportunity to provide individuals 

HCBS and not institutional services, 

individuals must be living in settings 

that comport with the HCB setting 

requirements as set forth in this rule. 

We acknowledge that for some settings, 

implementing these requirements will 

require a change to operational protocol, 

and perhaps changes to licensure 

requirements, but we believe that the 

requirements are achievable and 

provide for reasonable transition time to 

facilitate such changes as may be 

necessary. We are committed to working 

with states as they examine their 

systems and develop plans to bring their 

HCBS programs/benefits into 

compliance. 

Comment: One commenter noted that 

Medicaid reimbursement for room and 

board is expressly prohibited, yet the 

criteria laid out in §§ 441.530 and 

441.656(a) are primarily focused on 

considerations of what is a beneficiary’s 

room and board choice and therefore 

arguably outside CMS’ authority to 

regulate. This commenter stated that 

CMS lacks authority to regulate these 

features of alternative housing 

arrangements for which it does not 

provide reimbursement and requested 

that CMS clarify under what authority 

CMS can mandate physical structure 

alternative housing requirements and 

whether such authority extends to nonprovider controlled alternative housing 

arrangements. Other commenters stated 

that creating an exhaustive list of 

potential requirements will be difficult 

and suggested that CMS carefully 

consider the wide range of states’ 

specific programs over the next year 

before providing guidance through a 

State Medicaid Director letter. 

Response: While we do not regulate 

housing, we are required to determine 

whether Medicaid State plans and 

waivers comply with the statutes 

authorizing the provision of medical 

assistance. In authorizing HCBS 

Medicaid expenditures, we must ensure 

that such settings are home and 

community-based. 

Comment: We received many 

comments in response to our request for 

input on whether the regulation should 

be modified to prohibit housing 

providers from requiring individuals to 

receive services from that provider, or 

requiring an individual to receive a 

particular service as a condition of 

living or remaining in the setting. Many 

commenters believe that housing should 

not be conditioned upon the acceptance 

of services and believe that individuals 

should have the right to choose their 

living environment, as well as their 

supports and services. Some 

commenters expressed concern that 

such an arrangement is inconsistent 

with the requirement that Medicaid 

beneficiaries have a free choice of 

provider. Other commenters believe that 

if assisted living facilities, and other 

congregate settings that bundle housing 

and services, were required to separate 

housing and services, those providers 

could maintain their customer base by 

providing services of a quality that 

appeals to individuals, not by taking 


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advantage of a captive pool of residents. 

Others expressed concern that people 

would become homeless or 

institutionalized because the services 

they require change, and individuals are 

not given the opportunity to age in 

place. Some commenters believe that 

individuals should have the opportunity 

to make their own decisions about 

where they live, free of any coercion. 

One commenter supporting the 

restriction acknowledged that 

compliance with such a provision 

would require monumental changes to 

certain business models and service 

delivery systems and that such a change 

may be beyond the scope of this 

regulation. Overall, the commenters 

supporting the prohibition believe that 

individuals with disabilities deserve 

choice among livable options and 

control over the space they call home. 

Alternatively, we received comments 

opposing a separation of housing 

services requirement, stating that it is 

too restrictive. Some commenters 

expressed concern that such a 

requirement would limit a provider’s 

ability to evict tenants who become a 

threat to other tenants and staff or 

repeatedly refuse a particular service 

that would treat their medical 

condition. Other commenters believe 

that while the inclusion of this criterion 

is important in some settings, such as an 

individual’s home or apartment, it 

should not be applied to settings such 

as group homes or assisted living 

residences, where the provision of 

services is inherent in the setting. 

Several commenters suggested that 

instead of modifying the regulation to 

require separating housing and services, 

this issue could be handled in a 

different manner, such as the use of 

resident agreements in specific 

residential settings or through the 

person centered planning process. 

Commenters believe that this regulation 

should not preclude reasonable 

conditions for residency that are 

consistent with the rules of the 

regulating agency. There is also concern 

with the effect such restriction could 

have on specialized programs, such as 

those targeted toward the homeless 

population. Such programs include 

residential services and require 

individuals to maintain sobriety. Other 

commenters expressed concern 

regarding how such a requirement 

would be operationalized in assisted 

living facilities whose model is to 

provide both housing and services. In 

such settings, multiple service providers 

and multiple staff with multiple lines of 

authority, sorting through oversight and 

management issues becomes very 

complex. A few commenters suggested 

that CMS should provide guidance that 

as a matter of practice, individuals 

should not be locked into a particular 

service package as a condition of their 

receipt of housing services. Other 

commenters suggest that in 

arrangements where placement is 

contingent on acceptance of a specific 

program, it should be clearly specified 

as part of the person-centered planning 

process that individuals have been 

apprised of all alternatives and that the 

decision to accept the placement is free 

from coercion. The commenter notes 

that adult care and assisted living 

facilities are also guided by state 

regulations and in most cases these 

regulations indicate that residents may 

not reside in the facility if they are a 

threat to themselves or others. The 

commenter explains that if a facility 

fails to ‘‘discharge’’ a resident to a more 

appropriate environment, the facility 

may be in conflict with those state 

regulations, running the risk of being 

cited with a deficiency or 

endangerment, which can threaten its 

viability. 

Response: Upon consideration of the 

thoughtful comments submitted, we are 

not requiring the separation of the 

housing provider from the provider of 

HCBS. Commenters provided 

compelling arguments both in support 

and against the proposed prohibition. 

We recognize that the needs of the 

individuals receiving HCBS vary 

greatly. Just as there should be a variety 

of service options to meet those needs, 

there should be a variety of residential 

options as well. We agree with 

commenters that the issue of choice 

regarding the provision of services can 

be addressed as part of the personcentered planning process and reflected 

in the individual’s person-centered 

service plan. States must ensure that 

when an individual chooses a home and 

community based setting, the individual 

has made an informed choice among 

options. In the event the individual has 

made an informed choice to reside in a 

setting that provides both housing and 

services, the individual must 

acknowledge that he has also chosen 

that provider to be the service provider. 

Our decision not to require the 

separation of housing and services in 

the final rule does not preclude a state 

from structuring its service delivery 

system to promote separation. Nor does 

it preclude a provider from allowing for 

such an arrangement if all parties agree, 

and the arrangement does not violate 

state licensing requirements. At this 

time, we do not believe that there 

should be a federal mandate requiring 

such a separation. 

Comment: Several commenters 

requested that § 441.656(a)(1)(vi) be 

modified to include a ‘‘right to refuse 

service’’ provision. One commenter 

suggested the following modification 

‘‘in a provider-owned or controlled 

residential setting, that receipt of any 

particular service or support either from 

the provider/owner or other qualified 

provider cannot be a condition for living 

in the unit and that this shall mean that 

the owner of the unit cannot terminate 

occupancy/tenancy of someone for not 

agreeing to participate in a particular 

service.’’ A few commenters suggest that 

if CMS decides against including a 

‘‘right to refuse service’’ provision, then 

a narrow exception should be provided, 

allowing the requirement to be waived 

only for substance abuse treatment 

services, on the grounds that such 

treatment services are distinct in 

character from other forms of service 

provision focused on ADLs, IADLs, etc. 

One commenter believes that while 

providers should receive adequate 

reimbursement for housing and services, 

the individual should be protected 

against restrictive (service utilization) 

requirements for tenancy and should 

maintain the right to elect, receive or 

deny services without risk of eviction. 

Another commenter indicated that this 

interpretation could have an effect on 

residential settings as some of these 

settings include a structure in which 

individuals are required to participate 

in treatment (substance use, for 

example) as a condition of residing in 

the unit. Overall, the commenters 

believe that individuals should not be 

forced to move out of their homes 

because they do not want a particular 

service offered by the provider. 

Response: We do not believe that a 

‘‘right to refuse’’ provision is necessary 

as it is a basic tenet of the Medicaid 

program that individuals cannot be 

compelled to receive any Medicaid 

service. Additionally, we believe the 

requirements specified under the 

person-centered planning process, and 

the requirement at § 441.530(a)(1)(iii) 

and § 441.710(a)(1)(iii) that an 

individual is free from coercion and 

restraint, achieve the same purpose as a 

‘‘right to refuse’’ provision. Although 

Medicaid beneficiaries have the right to 

refuse a service, we recognize that 

depending on the setting, rules other 

than those of the Medicaid program may 

be applicable and may reflect health and 

safety concerns related to the refusal of 

services. We plan to issue additional 

guidance on how other components of 

this regulation can be useful tools in 

addressing such concerns. 


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Comment: Several commenters 

recommend that the proposed 

regulation be amended to reference the 

ADA, which generally requires a 

provider to accommodate a resident’s 

needs by making necessary services 

available to the extent that those 

accommodations are setting-appropriate 

and are not legally prohibited. 

Commenters believe that this type of 

accommodation should be required in a 

community-based setting, as it values 

the individual’s interest in staying in 

the home over the facility’s interest in 

limiting the care needs that must be 

met. 

Response: The requirements of this 

rule do not replace or override the 

requirements of the ADA. There are 

already a few general provisions in our 

regulations that prohibit discrimination 

in State Medicaid programs on the basis 

of nationality, disability, etc., (§ 430.2, 

§ 435.901, § 435.905, and § 435.908). As 

these regulations apply in determining 

eligibility and administering the 

Medicaid program generally, it is not 

necessary to add a regulation on this 

subject specific to section 1915(i) of the 

Act. 

Comment: One commenter suggested 

that clear contracts and boundaries need 

to be defined in order to recognize that 

no matter the setting, that location is the 

individual’s home. 

Response: We agree with the 

commenter that regardless of the type of 

setting, the location is the person’s 

home. 

Comment: One commenter suggested 

CMS include the concept of ‘‘aging in 

place,’’ as defined by the Center for 

Disease Control. The commenter 

believes that regardless of whether or 

not the setting is provider-owned or 

controlled, individuals should be 

protected by a reasonable 

accommodation requirement in their 

current settings as their needs change in 

order to prevent individuals from being 

evicted or losing their home. The 

commenter further suggests that 

individuals should also have access to 

an appeals process through an objective 

third party to dispute decisions about 

terminations of agreements and 

evictions. 

Response: We do not believe this 

support requires a change to the 

regulations. The requirements set forth 

in this final rule also address the 

commenters’ additional suggestion 

regarding an appeals process for 

evictions and terminations of 

agreements. 

Comment: One commenter indicated 

that their state has a long history of 

providing services that are 

institutionally-based, with 

misplacement of younger people in 

adult care homes that are for the frail 

elderly. This commenter urged CMS to 

ensure that individuals have 

assessments of need to ensure they are 

not placed in the wrong settings. 

Response: Sections 1915(c), 1915(i) 

and 1915(k) of the Act all require that 

individuals have an individual 

assessment of needs that includes the 

individual’s needs, strengths, 

preferences and goals for services and 

supports provided under the respective 

authorities. 

Comment: One commenter 

appreciates CMS noting in the preamble 

to the proposed rule the other 

authorities for providing Medicaid 

services in certain institutional care 

settings (such as SNFs and ICFs), but 

notes that this should not be construed 

to mean that assisted living can or 

should be lumped with SNFs simply 

because both provide regulated services 

in a congregate setting. The commenter 

does not support the premise that 

residents of assisted living settings 

should ‘‘fall back’’ on the institutional 

model in order to access Medicaid 

services. 

Response: It is not our intent to imply 

that all congregate settings should be 

categorized as nursing facilities and/or 

intermediate care facilities for 

individuals with intellectual 

disabilities. State plan HCBS must be 

delivered in a setting that meets the 

HCB setting requirements as set forth in 

this rule (except where HCBS are 

permitted to be delivered in an 

institutional setting, such as 

institutional respite). Also, since this 

authority provides states the 

opportunity to provide individuals with 

HCBS and not institutional services, 

individuals must be living in settings 

that comport with the HCB setting 

requirements as set forth in this rule. 

Settings that do not meet the 

requirements may be qualified to 

provide institutional services. 

Comment: One commenter suggests 

that states should consider whether 

individuals have meaningful options 

among settings located in the 

community, which afford them the 

choices that are integral to some of the 

qualities that define HCB settings. The 

commenter suggests that states should 

collect data on the choices and 

expressed preferences of Medicaid 

beneficiaries who require HCBS and set 

goals to build adequate infrastructure to 

meet these needs. 

Response: We appreciate the 

commenters’ thoughtful suggestions. 

The regulation already requires that the 

setting be selected by the individual 

from among housing options, and that 

the individual’s choice is documented 

in the person–centered service plan. We 

will not revise the regulation to include 

the commenter’s suggestion to require 

states to use the data on the choices and 

expressed preferences to set goals to 

build adequate infrastructure to meet 

these needs; however, we will consider 

that suggestion as we develop future 

guidance. 

Comment: One commenter agreed that 

these requirements should apply to 

other HCBS funding streams such as the 

section 1915(c) waiver program. 

Response: We appreciate the 

commenter’s support. As stated in the 

preamble of the proposed regulation, 

these requirements will also apply to 

section 1915(c) of the Act Home and 

Community Waiver programs and the 

section 1915(k) of the Act Community 

First Choice state plan option. 

Comment: One commenter stated that 

individuals should not be forced to live 

in the community, as this might not 

always be the individual’s preference. 

Response: This requirement does not 

require individuals to live in the 

community to receive necessary 

Medicaid services. Medicaid services 

are available in a variety of settings. 

This regulation sets forth requirements 

that must be met for individuals to 

receive services under sections 1915(i), 

(c) and (k) of the Act. 

Comment: We received many 

comments supporting the proposed 

language. Several commenters support 

CMS’ efforts in aligning HCBS setting 

qualities under sections 1915(i) and 

1915(k) of the Act and agree with the 

proposed list of qualities for home and 

community based settings at 

§ 441.656(a)(1) of the proposed rule that 

promote patient autonomy, dignity, 

choice and preference. Several 

commenters believe the provisions are 

strongly reflective of the belief that 

home- and community-based services 

should be organized in a personcentered manner, driven by the needs 

and preferences of the individual and 

that those services acknowledge the 

rights of the individual to ‘‘privacy, 

dignity and respect’’. Several 

commenters generally believe that the 

provisions establish the essential 

elements of autonomy and personcentered care in a way that promotes 

choice and independence. Many 

commenters believe that the list of 

qualities promotes integration of people 

with disabilities into the greater 

community and does not restrict 

individuals with disabilities. One 

commenter recognized the policy on 

this issue is complicated and believes 

that the proposed language is a big 

improvement over previous proposals. 


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Response: We agree and appreciate 

the commenters’ support. 

Comment: A few commenters asked if 

the rule applies to private homes and 

non-residential community settings 

where services may be provided, such 

as adult day settings or day habilitation 

settings. 

Response: 1915(i) State plan HCBS 

and 1915(k) CFC services (for example, 

residential, day or other) must be 

delivered in a setting that meets the 

HCB setting requirements as set forth in 

this rule. We will provide further 

guidance regarding applying the 

regulations to non-residential HCBS 

settings. In addition, since this authority 

provides states the opportunity to 

provide individuals HCBS and not 

institutional services, individuals 

receiving 1915(i) State plan HCBS or 

1915(k) CFC services must be living in 

settings that comport with the HCB 

setting requirements as set forth in this 

rule regardless of whether they are 

receiving HCBS in that residence. This 

is consistent with CMS’ longstanding 

policy regarding 1915(c) HCBS. We are 

unsure what the commenter means by 

the term ‘‘private home’’ but a residence 

owned or leased by an individual for his 

or her personal use would generally 

meet these criteria. 

Comment: One commenter suggests 

that CMS should consider requiring and 

monitoring state reporting on measures 

related to the qualities of home and 

community-based settings. The 

commenter suggests alignment with 

section 1915(i) of the Act quality and 

reporting standards. An alternative 

approach also suggested by the 

commenter is for CMS to require a 

Memorandum of Understanding (MOU) 

between state agencies documenting 

how they will work together to ensure 

consistency with the quality 

requirements. 

Response: Sections 1915 (c), (i) and 

(k) of the Act all require states to 

demonstrate at the time of approval that 

they have a quality improvement 

strategy that includes performance and 

outcome measures for the HCBS, 

including measures for the HCB setting 

requirements. We are currently working 

towards a streamlined approach to be 

used across Medicaid HCBS. 

Comment: One commenter 

recommended the rule be revised to 

include a requirement that individual 

choice regarding supplementation of 

services and supports and who provides 

them is facilitated, if providers meet all 

applicable requirements of the licensed 

entity. 

Response: We do not believe it is 

necessary to add language addressing 

provider qualifications to this provision. 

Implementing regulations for sections 

1915(c), 1915(i) and 1915(k) of the Act 

all include provisions that address 

provider qualification requirements. 

Comment: Several commenters 

indicated that people with disabilities 

should have the same rights, 

responsibilities and protections as 

nondisabled people have under every 

state’s Landlord and Tenant Law. One 

commenter indicated that their state’s 

landlord and tenant laws currently in 

place are sufficient to satisfy the 

requirements of the regulation (absent a 

court order, a person may not be 

involuntarily evicted even if they need 

a higher level of care, are delinquent in 

payment or create significant disruption 

for others living in the congregate 

setting). Another commenter indicated 

that their state’s landlord tenant law 

must operate equally for everyone. 

Response: We believe these comments 

are consistent with the intent of this 

regulation. We note that we do not have 

the authority to require states to modify 

their landlord and tenant laws. 

Comment: One commenter suggested 

that CMS should clarify that all settings 

in which the individual does not have 

a regular lease or full ownership rights 

should be considered ‘‘providercontrolled.’’ 

Response: Any setting where the 

provider of HCBS also owns and 

operates an individual’s residential 

service is considered providercontrolled. 

Comment: A few commenters 

indicated that because there is no 

definition of an individual’s ‘‘sleeping 

or living unit’’ it is unclear what area 

the individual’s rights pertain to. The 

commenters requested clarification that 

the ‘‘unit or room’’ to which the person 

is legally entitled is at least the space to 

which the rights in 

§ 441.530(a)(1)(vi)(B)(1–3) should apply. 

Response: The requirements set forth 

at § 441.530(a)(1)(vi)(B)(1–3) apply to 

the sleeping or living unit that is used 

by the individual, and is not a common 

area used by others residing in the 

setting. 

Comment: One commenter indicated 

that their state’s landlord-tenant laws 

and their housing with services 

regulations both apply to their housing 

with services settings and the 

commenter wants to ensure that 

anything that is finalized by CMS does 

not negatively impact the consumer 

based system developed over the last 

two decades in that state. 

Response: The proposed language 

specified that ‘‘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.’’ However, we heard 

from many commenters that depending 

on the state, tenant law may not apply 

to congregate settings, such as group 

homes or assisted living facilities. To 

address such situations, we revised 

§ 441.530 and § 441.710(a)(1)(vi)(A) to 

add the following language: ‘‘For 

settings in which landlord tenant laws 

do not apply to such units or dwellings, 

the state must ensure that a lease, 

residency agreement or other form of 

written agreement will be in place for 

each HCBS participant that provides 

protections that address eviction 

processes and appeals comparable to 

those provided under the jurisdiction’s 

landlord tenant law’’. In all instances, 

these agreements must address eviction 

processes and appeals. In summary, we 

believe that our language creates a 

minimum requirement, but allows states 

to use existing laws or establish new 

laws as long as they meet our minimum 

requirements. 

Comment: One commenter found it 

difficult to support this requirement 

based on the fact that each designated 

entity in the same state can have 

different tenant laws. 

Response: It is expected that states 

would establish policy and procedures 

to assure compliance with this 

provision. 

Comment: One commenter indicated 

that it might not be appropriate to 

require all provider-owned and operated 

settings be subject to local landlord and 

tenant laws or to meet all the 

requirements in § 441.530(a)(2)(v) 

adding that for some individuals with 

chronic mental illness or cognitive 

impairment, this strict requirement may 

exclude the least restrictive 

environment in which they can reside. 

The commenter indicated that CMS and 

state Medicaid agencies can use the 

other provisions in § 441.530 to insure 

that settings in which residents receive 

services are designed to facilitate the 

actual integration of the individual in 

the surrounding community without 

prohibiting some residences that are 

provider-owned or controlled from 

providing residential support to 

recipients. 

Response: We have modified the 

regulation to include language to 

address situations in which state 

landlord/tenant rules do not apply. 

Comment: One commenter requested 

clarification as to whether the provider 

has to hold the space when the terms of 

the lease are broken and there is no 

payment of rent and suggested that CMS 

use the typical landlord tenant 

language. 


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Response: It is beyond the scope of 

this regulation to address issues such as 

when the terms of a lease are broken or 

rent is not paid. This regulation defers 

to the state and local law, as applicable. 

Absent applicable state or local law, the 

regulation provides minimum 

requirements that the state must make 

sure are in place to inform individuals 

of the eviction process and the process 

to appeal the eviction. 

Comment: One commenter noted that 

if the provider cannot evict the 

individual from provider controlled 

housing all the other residents may 

suffer and require new housing 

arrangements. The commenter stated 

that providers of services have 

experience balancing the rights of 

multiple residents and added that there 

are circumstances when eviction is in 

the best interest of all residents. 

Response: This regulation is not 

intended to override existing rules 

governing adherence to proper eviction 

procedures. This rule requires that 

individuals receiving Medicaid HCBS 

who are in provider owned or 

controlled settings have the same or 

comparable protections related to 

evictions as individuals not receiving 

Medicaid HCBS. 

Comment: One commenter asked 

about situations where the individual 

decides to participate in an activity that 

is contrary to the person-centered plan, 

putting the individual in danger, and 

asked who is liable for the outcome of 

the risky behavior. The commenter also 

wanted to know if, when all parties 

have agreed to a plan and the individual 

receiving supports departs from that to 

which s/he has agreed, the provider has 

standing to require the individual to 

adhere to the plan and may take steps 

to ensure compliance. 

Response: We appreciate the 

commenter’s questions. There is an 

expectation that individuals and 

providers will adhere to the services 

and activities identified in the personcentered service plan. If individuals 

place themselves or those around them 

in danger, we expect the state and 

provider to take the appropriate action 

necessary to address the situation. 

However, after the immediate crisis is 

resolved, we would expect a 

reassessment of needs to occur using the 

person-centered service planning 

process and an update to the personcentered service plan. 

Comment: Many commenters 

expressed concern that the application 

of landlord/tenant law would create a 

conflict with state licensing laws 

governing assisted living providers or 

other congregate settings, and indicated 

that the state licensure laws protect 

individuals from arbitrary eviction and 

define the circumstances in which a 

provider may and may not discharge an 

individual. The commenter added that 

providers have an obligation to take all 

reasonable steps to accommodate an 

individual before seeking a discharge, 

and recommended that CMS consider 

the logistical and technical difficulties 

in referring to state, county or city 

landlord/tenant laws, as these vary 

significantly and would subject 

providers in different areas of the same 

state to different standards depending 

on where they are located. The 

commenter indicated that it would be 

burdensome for a state to create an 

HCBS program that would take into 

account all the variations when trying to 

meet these requirements, and suggested 

that providers that are not licensed 

under an existing state licensing law be 

required to only adhere to the state 

landlord/tenant law, to create 

uniformity and avoid the administrative 

difficulties created by including county 

and city laws. One commenter added 

that the legal relationship between a 

provider and a resident is very different 

than that of a landlord tenant 

relationship, as landlords typically do 

not provide, nor are required by law to 

provide, food, housekeeping or 

assistance with ADLs pursuant to a 

rental agreement. The commenters 

recommend that in lieu of mandating 

eviction protections under landlord 

tenant laws, assisted living facility 

resident protections be provided 

through specific disclosure provisions 

as part of the resident agreement and 

approved by the applicable state 

licensing authority. The commenter 

added that such provision would 

specify the terms and conditions for 

move-in, including conditions for 

discharge or transfer and an appeals 

process for resolving disputes that are 

non-emergency in nature. 

Response: We are pleased to hear that 

states have robust beneficiary 

protections included in the licensing 

requirements of certain settings. It is not 

our intent to replace a state’s current 

system. The intent of the language was 

to assert the expectation that for a 

setting to be considered home and 

community-based, residents of providerowned or controlled residential settings 

must have comparable protections 

available to them as those provided 

under the landlord tenant law of the 

state, county, city or other designated 

entity. As a result of the comments 

received, we have added to this 

requirement, for settings in which 

landlord tenant laws do not apply, that 

the state must ensure that a lease, 

residency agreement or other form of 

written agreement is in place for each 

participant and that such agreements 

provide protections that address the 

eviction processes and appeals 

comparable to those provided under the 

jurisdiction’s landlord tenant law. 

Comment: One commenter believes 

the § 441.530 (a)(1)(vi)(A) should be 

revised to permit discharge when an 

individual’s condition changes and care 

needs can no longer be met under the 

license of the dwelling they occupy 

adding that there is nothing in the 

regulation that abolishes the Keys 

amendment requirements for SSI 

recipients or HCB waiver recipients. 

Response: While we understand that 

there may be circumstances in which an 

individual’s needs require a different 

level of service, we expect that the 

assessment of functional need, the 

person-centered plan and the 

availability of HCBS will be able to 

address an individual’s changing needs. 

If it is determined that eviction or an 

involuntary discharge is necessary, the 

state must ensure that proper 

procedures for such actions are followed 

and individuals are fully informed of 

their rights. 

Comment: One commenter wanted to 

know if it is the responsibility of the 

provider to assist the individual in 

finding other housing, services, and 

supports. 

Response: The state is responsible for 

addressing this assistance through the 

person-centered planning process. 

Comment: One commenter 

recommends the regulation require that 

states and providers delineate (a) the 

conditions under which an individual 

may be involuntarily moved from a 

setting he or she prefers, and (b) the 

methods by which the individual will 

be informed of such conditions at the 

time the individual chooses the setting. 

Response: The regulation has been 

modified to provide that, in 

circumstances where tenant landlord 

tenant laws do not apply, a lease, 

residency agreement or other form of 

written agreement must be in place that 

provides protections that address 

eviction processes and appeals 

comparable to those provided under the 

jurisdiction’s landlord tenant law. 

Under circumstances where tenant 

landlord rules do apply, the state will 

ensure compliance with those rules. 

Comment: One commenter indicated 

that their state requires a contract 

between the residents and providers and 

wanted to know if it could be used in 

lieu of a lease. 

Response: It is possible that this 

arrangement would comply with the 

revised language allowing other forms of 


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written agreements to implement 

protections that are at least minimally 

comparable to the protection provided 

under the jurisdiction’s landlord tenant 

law. A final determination of whether 

such contracts comply with the 

regulatory requirements will be made 

through the state plan amendment or 

waiver review process. 

Comment: One commenter indicated 

that current requirements in their State 

allow for adequate service planning and 

transition (30-day notice) when a 

provider is unable to meet the needs of 

an individual, and the State suggested 

that the proposed rule reflect a similar 

requirement. 

Response: We believe it is a good 

protection to include, however, we do 

not propose to amend the regulation to 

require a specific timeframe. We would 

like the state to retain flexibility in 

establishing timeframes. 

Comment: Two commenters indicated 

that in their state, the assisted living 

model separates the assisted living 

services from housing. The commenters 

noted that providers of assisted living 

services are licensed and the services 

must be provided in a ‘‘Managed 

residential community’’ consisting of 

individual apartments where residents 

can continue to live and maintain 

personal autonomy. The commenters 

added that residents are considered 

tenants and are protected under the 

state’s landlord tenant laws and that 

under this arrangement the assisted 

living services provided within the 

managed residential community are 

regulated by state licensure laws. The 

commenters requested that the rule 

recognize laws and state licensure laws 

and regulations that govern the 

provision of HCBS in their state. 

Response: We believe the regulation 

allows for this. 

Comment: Many commenters 

requested further clarification of the 

‘‘specific physical place’’ language. In 

general, the commenters support the 

idea that individuals in congregate 

settings should have agreements for a 

specific room or unit and should not be 

arbitrarily moved around by providers. 

However, the commenters note that 

landlord tenant laws vary tremendously 

by state and their application to specific 

residential arrangements tends to be fact 

specific and subject to complex 

statutory and judicial interpretation. 

The commenters also note that the 

federal Fair Housing Act prohibits 

discrimination in almost all housing 

activities based on disability and 

requires housing providers to make 

reasonable accommodations to rules and 

policies when such accommodations are 

needed for the individual to use and 

enjoy the housing. The application of 

the fair housing laws to residential 

settings that are also subject to state 

licensure and regulatory schemes can be 

complex, and the law in this area is 

continuing to develop. Additionally the 

state’s ‘‘level of care’’ licensure 

standards that require the discharge of 

residents with certain types or acuity of 

conditions are at odds with civil rights 

protections designed to allow 

consumers to live and receive services 

in places they choose. Providers are not 

required to make accommodations 

where to do so would result in an undue 

financial and administrative burden or 

would fundamentally alter the nature of 

the provider’s operations. However, 

providers and state licensing agencies 

are required to make reasonable 

accommodations to enable people to 

remain in the homes that they choose if 

the accommodations meet those tests. 

The commenters suggest that state plan 

amendments and waiver applications 

should specify processes by which they 

would make ‘‘reasonable 

accommodations’’ decisions without 

forcing residents to make claims in 

court or forcing providers to jeopardize 

their licensure by reasonably 

accommodating residents whose service 

needs have intensified, for example. 

Reasonable accommodations processes 

should provide plenty of notice and be 

easily used. A number of states have 

enacted interactive processes to provide 

appeals and individual determinations 

of the ability to remain, even if their 

continued residency represents a 

violation of the level of care 

requirements. Finally, a legally 

enforceable agreement under this 

subsection should include a right to 

appeal decisions affecting tenancy. 

Agreements should clearly specify the 

conditions that would trigger a 

termination, including conditions 

related to the person’s health status or 

level of disability that would necessitate 

a move. The individual should have the 

right to appeal termination decisions to 

an objective third party in a timely 

manner, such as 30 days, which should 

be defined in the state’s waiver 

application. This appeals process 

should be accompanied by the 

reasonable accommodation process 

noted above. Other commenter’s 

recommended that if a state’s licensing 

standards do not include such 

protections, then the landlord tenant 

statutes should be the default law. 

Several commenters recommended the 

following language: ‘‘An individual has, 

under state licensing law, protections 

from evictions. If these protections are 

not provided, the individual shall have, 

at a minimum, the same responsibilities 

and protections from eviction that 

tenants have under the landlord/tenant 

law of the state, country, city or other 

designated entity.’’ 

Response: We appreciate the 

commenter’s thoughtful comments 

highlighting the complexities of 

applying tenant landlord rules to 

settings that normally do not have such 

an application. The regulation has been 

modified to specify that in 

circumstances where landlord tenant 

laws do not apply, a lease, residency 

agreement or other form of written 

agreement must be in place that 

provides at least comparable protections 

to those provided under the 

jurisdiction’s landlord tenant law. At a 

minimum, these agreements must 

address eviction processes and appeals. 

Under circumstances where tenant 

landlord rules do apply, the state will 

ensure compliance with those rules. We 

are not amending the regulation to 

include specific language referencing 

state licensing laws. Rather we have 

amended the language to add ‘‘For 

settings in which landlord tenant laws 

do not apply, the State must ensure that 

a lease, residency agreement or other 

form of written agreement will be in 

place for each HCBS participant and 

that the document provides protections 

that address eviction processes and 

appeals comparable to those provided 

under the jurisdiction’s landlord tenant 

law.’’ 

Comment: One commenter 

recommended replacing the proposed 

language ‘‘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’’ with the following: 

(A)Individual has a lease, residency 

agreement or other form of written agreement 

that includes the ability to appeal move-out 

decisions to an objective third-party. 

Reasonable accommodations are made both 

by the provider and the state to accommodate 

aging in place. An appeal of a move-out 

decision should not prevent the move-out 

when there is a significant risk of harm to the 

resident, other residents, or staff. The appeal 

process will include nonpayment of fees 

unless the state has a demonstrated 

alternative process for addressing payment 

disputes. All appeals should be pursued 

expeditiously and should not take longer 

than 30 days. 

Response: We appreciate the 

commenter’s recommendation, however 

we do not believe it is appropriate to 

include as a requirement. We note that 

the suggested language represents some 

good practice, and would encourage 

states to include such protections in 


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their policy and procedures if they do 

not already exist. 

Comment: One commenter 

recommended the following changes to 

the proposed language: ‘‘The unit or 

room is a specific physical place that, if 

a ‘family care home’, includes a private 

bedroom, and if not a ‘family care 

home’, includes, at a minimum, its own 

kitchen facilities, sleeping area, and 

private bathroom with toilet, sink and 

shower or bathtub, that can be owned, 

rented or occupied . . .’’ 

Response: We appreciate the 

commenter’s suggestions, however, we 

will not revise the rule to include these 

types of specifications as they would be 

overly prescriptive. 

Comment: One commenter requested 

that we revise the regulation to specify 

that the unit can be owned, rented or 

occupied under another legally 

enforceable agreement by the individual 

receiving services ‘‘or his/her chosen 

surrogate, who must not be an agent of 

the service provider,’’ could be inserted. 

Response: We do not believe the 

commenter’s recommendation to add 

language regarding a surrogate is 

necessary. The HCBS regulations 

already address this in the definition of 

individual’s representative. 

Comment: Several commenters 

supported giving individuals who 

receive HCBS in provider-owned or 

operated residential settings protections 

under landlord tenant law, and 

suggested adding protections afforded 

by the ADA to this section to ensure that 

individuals living in these settings 

whose health needs change are afforded 

appropriate accommodations (such as 

increased staff), in order to continue 

living in the setting. 

Response: While we do not 

administer or enforce the ADA, we note 

that Medicaid regulations prohibit 

discrimination in State Medicaid 

programs (§ 430.2, § 435.901, § 435.905, 

and § 435.908). As these regulations 

apply in determining eligibility and 

administering the Medicaid program 

generally, it is not necessary to amend 

this regulation on this subject. 

Comment: A few commenters 

recommended the word ‘‘unit’’ be 

replaced with ‘‘room’’ throughout the 

document. 

Response: We do not agree with the 

recommendation to remove the term 

unit, but to provide additional 

clarification, we have revised the 

language to add the term ‘‘dwelling’’ 

since this is the common term used 

under prevailing state and local 

landlord/tenant laws. 

Comment: Several commenters agreed 

with the list of requirements for 

provider owned and controlled 

residential settings. One commenter 

added that preservation of the right to 

privacy, including having a lockable 

unit and the ability to control access to 

the unit, and self-control of the 

participant’s schedule, are also 

important indicators for basic human 

dignity. Another commenter noted that 

individuals with disabilities should be 

afforded the same rights as anyone else 

in the country. 

Response: We agree and appreciate 

the commenter’s support. 

Comment: One commenter indicated 

that ‘‘the freedom to furnish and 

decorate their sleeping or living unit’’ 

could use clarification noting that there 

are many landlords that have 

restrictions on water beds, or 

permission prior to painting. The 

commenter added that all rules relating 

to entrance locks, roommates, furniture 

preferences, daily schedules, food, 

visitors, etc., must include caveats as to 

feasibility and reasonableness. 

Response: These requirements pertain 

to settings that are owned or controlled 

by a provider. Landlord tenant laws may 

allow landlords to set reasonable limits 

as long as the limits are not 

discriminatory or otherwise deny rights 

granted to tenants under the state law. 

Therefore, we have added additional 

language to this requirement to clarify 

that, in a provider-owned or controlled 

setting, the individual’s freedom to 

furnish and decorate sleeping or living 

units may contain limits within the 

scope of the lease or agreement. 

Comment: One commenter expressed 

support of the criteria when an 

individual lives alone, but wanted to 

know in situations where an individual 

chooses to live with a roommate who is 

responsible for collaborating schedules 

and ensuring that one person’s right to 

have visitors does not infringe on the 

privacy of the other. 

Response: While this is not 

specifically addressed through 

regulation, we note that there are many 

ways to address this concern, including 

through good roommate 

communication. 

Comment: Several commenters 

recommended that ‘‘their’’ be changed 

to ‘‘the,’’ since ‘‘individual’’ is singular 

but ‘‘their’’ is plural. 

Response: We agree with the 

commenter and have revised the 

regulation accordingly. 

Comment: One commenter noted that 

individuals requiring care and services 

will have their privacy limited in some 

fashion while those care and services 

are being provided and suggested the 

following revision to § 441.530 and 

§ 441.656(a)(1)(vi)(B): Each individual 

has privacy in their sleeping or living 

unit, to the extent care and services are 

provided in accordance with the 

individual’s assessed needs. 

Response: We do not believe the 

recommended revision is necessary as 

there is a general requirement that 

services are provided in accordance 

with an individual’s assessed needs. 

This requirement is expressed at 

§ 441.530(a)(1) and § 441.710(a)(1) and 

also under person-centered planning 

provision of the regulations for sections 

1915(c), 1915(i) and 1915(k) of the Act. 

Comment: A few commenters 

disagreed with the proposed language 

requiring that units have lockable doors. 

The commenters believe that this 

requirement poses a safety risk in the 

event of an emergency and added that 

clarification is also needed on a unit 

owned by the resident who may not 

want to provide the appropriate staff 

with keys to his/her door. The 

commenters pointed out that in some 

apartment buildings the entrance door is 

the unit’s door and asked if the resident 

owns the unit whether he/she will be 

required to provide appropriate staff 

with keys. 

Response: We disagree that the 

recommended change is necessary. 

However, the requirement for a lockable 

entrance door may be modified if 

supported by a specific assessed need 

and justified and agreed to in the 

person-centered service plan. 

Additionally, the state must ensure 

adherence to requirements set forth at 

§ 441.530(a)(1)(vi)(F) and 

§ 441.710(a)(1)(vi)(F). 

We would like to clarify that this 

regulation does not require individuals 

to provide keys to anyone. The language 

is meant to curtail the issuing of 

resident keys to all employees or staff 

regardless of the employee’s 

responsibilities, thus granting 

employees unlimited access to an 

individual’s room. This provision 

indicates that only appropriate 

individuals should have access to an 

individual’s room. For example, it may 

be appropriate for the property manager 

to have keys, but it might not be 

appropriate for the individual working 

at a reception area. 

Comment: One commenter 

recommended the additional phrase ‘‘if 

necessary’’ be added after ‘‘appropriate 

staff,’’ as there may be occasions when 

the particular setting will not have staff 

members holding keys to living units. 

Several commenters recommend adding 

the phrase ‘‘as appropriate’’ at the end 

of the provision since there may be 

times when a setting will not have staff 

members with keys to living units. 

Response: We agree with the second 

commenter’s concern and have 


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modified the regulatory language 

accordingly to indicate ‘‘as needed.’’ 

Comment: Other commenters advised 

that they support lockable entrance 

doors with appropriate staff having keys 

to doors, since there are also provisions 

under the individual modification of 

requirements discussed below that can 

be used for individuals with cognitive 

impairments for whom lockable doors 

and free egress may present safety and 

other issues. In such cases, alternative 

means for assuring meaningful 

individual privacy should be required 

(for example, knocking and waiting for 

a reply before entering a person’s 

private space, respecting private 

possessions, etc.). 

Response: We appreciate the 

commenter’s support. 

Comment: Two commenters 

expressed concern that the regulation 

does not specify a process to determine 

which staff will have keys, or that the 

individuals themselves must have keys. 

One of the commenters is aware of 

instances where people have been 

denied key access to their own homes 

without appropriate justification. The 

commenter recommended that CMS add 

language to require that (1) the staff that 

will have keys are included/identified 

in the person-centered service plan and 

chosen by the individual and (2) the 

individual must also have a key to the 

door. The commenter recommended the 

following language: ‘‘Staff holding keys 

will be named in the person-centered 

service plan and individuals must have 

keys to their own units’’ to 

§ 441.530(1)(vi)(B)(1), 

§ 441.656(1)(vi)(B)(1), and 

§ 441.665(b)(3) for clarity across the 

regulations. 

Response: We do not agree that the 

regulation should require that the 

person who has keys should be 

identified in the person centered plan, 

but we do agree that the individuals 

should have a say and agree with who 

that person is. We agree with the 

recommendation that individuals have 

keys to their door, and have clarified the 

language in the appropriate sections of 

the regulation so that this is 

unambiguous. As noted above, an 

individual’s use of the room key may be 

modified if supported by a specific 

assessed need and justified and agreed 

to in the person-centered service plan. 

Comment: One of the commenters 

requested that CMS clarify whether the 

proposed rule requires the homes to be 

locked or the bedroom doors to be 

locked. 

Response: We would like to clarify 

that the individual must be able to lock 

the door to their unit or dwelling, that 

the individual has a key to the door, and 

that only appropriate staff have keys. 

Comment: Several commenters 

offered support of the requirement that 

individuals share units only at the 

individual’s choice. One commenter 

does not believe that sharing units is 

faithful to the principles of HCBS. We 

also received comments opposing the 

requirement or requesting further 

clarification of the intent of the 

requirement. Several commenters 

believe this provision is inappropriate 

and recommended that the private 

room/living space requirement be 

deleted completely. Commenters noted 

that Medicaid does not cover room and 

board costs so they believe that the term 

‘‘choice’’ could be misleading, as the 

determining factor for choosing double 

occupancy versus a single-occupancy 

unit may be whether a resident can 

afford to. Many individuals are not 

financially able to afford a private room 

in settings such as assisted living 

facilities. One commenter expressed 

concern that, as proposed, allowing 

individuals to choose to share units 

without also requiring states to provide 

(financially needy) individuals with 

adequate funding, such as increasing the 

maintenance needs allowance, will 

force those individuals into nursing 

facility settings. One commenter added 

that ‘‘individual choice’’ should be 

reflective of an individual’s resources 

and care needs. Another commenter 

believes that since beneficiaries 

typically pay for room and board out of 

their SSI benefit the proposed language 

would effectively exclude assisted 

living as an option for Medicaid 

individuals in many states since 

providers cannot afford to offer private 

rooms at the rate Medicaid beneficiaries 

pay. A few commenters added that 

sharing living units may be necessary to 

ensure a range of housing options the 

HCBS waiver program and at the same 

time manage resources to meet the costneutrality standard under the section 

1915(c) of the Act waiver program. A 

few commenters interpreted the 

regulation to require separate bedrooms 

for all individuals receiving residential 

services unless the individual requests 

otherwise and stated that this 

requirement will result in a huge 

unfunded mandate that will double the 

cost of residential group home care. 

Commenters suggested the following 

regulatory changes related to this 

provision: 

• Revise the rule to say ‘‘Individuals 

in shared rooms will have a choice of 

roommate.’’ 

• Revise the rule to say ‘‘Individual 

roommate preferences are 

accommodated to the maximum extent 

practical and documented in the 

individual’s person-centered service 

plan.’’ 

• Revise the rule to add a requirement 

that individuals should not have to 

share a unit unless it is with a spouse, 

partner, or other family member. 

• One commenter recommended that 

sharing a bedroom is clearly 

documented as the choice of the 

individual and that the room is shared 

only with a person of the individual’s 

choosing. 

• One commenter suggested that the 

rule needs to make it clear that a 

resident’s choice acknowledges his 

economic situation. 

• Other commenters noted that if the 

requirement is finalized, CMS needs to 

add an exception to the requirement for 

residential settings that do not meet the 

private room/living space requirement 

but are appropriate to meet the waiver 

client’s needs and preferences according 

to the individual, the client’s designated 

representative and the case manager. 

• Revise the rule to say ’’ Individuals 

with disabilities receiving HCBS share 

units with other individuals with 

disabilities receiving HCBS, whether the 

unit is a single bedroom or a multi-room 

living space, only at the choice of the 

individual with disabilities receiving 

HCBS, at all times and under all 

circumstances. Individuals with 

disabilities receiving HCBS may share 

such units with a person who is present 

to provide services to the individual if 

necessary for safety reasons, if 

appropriately justified and 

documented.’’ 

Response: We understand the 

concerns raised by the commenters. We 

have clarified that we are not requiring 

that every individual receiving HCBS 

have their own bedroom when receiving 

residential services. The rule is 

requiring that individuals be provided 

options of residential settings, including 

an option of a private room. This rule 

does not require every provider to have 

a private room option. Instead it 

requires the State to ensure that there 

are private room options available 

within a state’s HCBS program. We 

agree with the commenters that the 

financial resources available to an 

individual may impact the options 

available to a particular individual and 

we have changed the regulatory text to 

make that clear. We also agree with the 

commenters that if an individual 

chooses to share a room, that individual 

also must have a choice of their 

roommate. We have changed the 

regulatory text to clarify this. We plan 

to address these issues further through 

future guidance. 


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Comment: One commenter indicated 

that in their assisted living facility, all 

residents have a private room but share 

a 1⁄2 bath with the private room next 

door and believes that under the 

proposed regulation a resident in this 

kind of situation would never find the 

appropriate bath mate because the rule 

would require that they have their own 

1⁄2 bath and the commenter believes this 

was not CMS’ intent. 

Response: We believe that the 

arrangement described by the 

commenter, that one bathroom is shared 

between two private rooms, will meet 

the requirement at 

§ 441.530(a)(1)(vi)(B)(2) and 

§ 441.710(a)(1)(vi)(B)(2) that individuals 

share units only at the individual’s 

choice. 

Comment: One commenter 

recommended that CMS form a work 

group of stakeholders to determine a 

method for ensuring that Medicaid 

waiver applications and renewals 

demonstrate how the state assisted 

living program ensures adequate 

reimbursement for private room 

occupancy (that is, the state assisted 

living program does not restrict room 

and board payments to less than the cost 

of providing a private room and 

provides housing assistance as 

required). 

Response: States are required to 

provide opportunities for public input 

in the development of Medicaid service 

rate methodologies. During the SPA 

review process, we ensure that the state 

has met this requirement and that the 

state’s proposed reimbursement 

methodologies comport with 

requirements at section 1902(a) of the 

Act. These include safeguards against 

unnecessary utilization of services, 

assurance that payments are consistent 

with efficiency, economy, and quality of 

care, and that payments are sufficient to 

enlist enough providers so that care and 

services are available under the plan at 

least to the extent that such services are 

available to the general population in 

the geographic area. 

Comment: One commenter suggested 

that the requirement that individuals 

have privacy in their sleeping or living 

unit should not be waived by the 

provider/state. 

Response: We agree that an 

individual’s privacy should always be 

respected. Where any modification of 

this condition occurs, we have included 

protections in the rule to ensure the 

individual’s rights are respected. 

Comment: Several commenters 

strongly urged CMS to require that a 

bathroom be in the unit for all settings 

with a capacity of six or more residents 

as the commenters believe that having 

one’s own bathroom is a fundamental 

characteristic of living in one’s own 

home. The commenters noted that CMS 

proposed a similar requirement last 

year, and believes that such a 

requirement is no less important today 

and added that it would be difficult to 

consider a setting ‘‘community-based’’ 

if, for example, a building housed 10 or 

20 residents who shared a bathroom or 

bathrooms located off a main hallway, 

and a resident at 2 a.m. had to walk 

down the facility hallway in order to 

use the bathroom. The commenters 

recommended the following provision 

be added to the requirements at (B): 

Units include at least one full bathroom 

(unless the setting is in a building with 

a capacity of six or fewer residents). 

Response: We understand the 

commenters’ concern; however, the 

standard for how many bathrooms a 

dwelling must have is governed by 

building code, and is beyond the scope 

of this regulation. 

Comment: One commenter expressed 

the opinion that the bathroom is the 

most private part of their home, and 

inability to control functions performed 

in that room is a major source of feelings 

of loss of dignity and personal 

autonomy among people with 

disabilities. As such, the commenter 

believes that privacy in the bathroom 

should be maximized and assistance 

should be provided only when actually 

needed, limited to specific tasks and 

carried out one-on-one with the 

bathroom door closed. 

Response: We agree with the 

commenter and believe that an 

individual’s privacy should be 

respected in all activities of an 

individual’s life. 

Comment: Several commenters 

expressed strong support and 

appreciation for the inclusion of this 

provision and two noted that the 

inability to decorate or furnish a living 

unit would be a clear indicator of an 

institutional model. 

Response: We appreciate the 

commenters’ support. 

Comment: A few commenters 

supported the proposed rule as written. 

Response: We appreciate the 

commenter’s support. 

Comment: One commenter supports 

the regulation, but believes the rule 

should go further and require living 

units to have access to food storage and 

preparation space (with the caveat that 

stoves or microwaves could be removed 

if the assessment documented that it 

would be a danger because of the 

resident’s cognitive impairment). 

Response: We agree with the 

commenter and believe that this is 

reflected in this regulatory language. 

Comment: Several commenters 

generally supported the proposal that 

individuals have the freedom and 

support to control their schedules and 

activities, but recommended that the 

word ‘‘control’’ be changed to ‘‘choose’’ 

noting that choice is a foundational 

element of HCBS and merely allowing 

individuals to control schedules and 

activities is inadequate. According to 

commenters, supporting an individual 

and providing the support necessary to 

participate in activities (for example, the 

transportation to attend a selected 

activity) allows for full community 

living. 

Response: We believe that it is 

fundamental for individuals to have the 

control to make their own choices. 

Therefore, we do not believe it is 

necessary to change the word control. 

Comment: While commenters agreed 

with the principle that a resident should 

be able to eat, socialize and come and 

go freely, several commenters expressed 

concern with the proposed language and 

suggested that (a)(1)(vi)(C) should not 

focus on ‘‘access’’ but rather on the 

individual’s choice to select the foods 

they eat, to store food in their rooms, to 

bring back food from the facility’s 

kitchen and to reschedule meal times. 

The commenters pointed out that 

because HCBS facilities most likely 

schedule meals at specific times, as 

required by regulation, a resident may 

not have access to all food in the 

building all the time, and a residential 

setting cannot reasonably accommodate 

each individual’s preference on a 24- 

hour a day basis. One commenter 

requested clarification as to whether or 

not the proposed ‘‘access’’ requirement 

would result in a housing arrangement 

that includes a daily activity (such as 

meals) at pre-arranged time not being 

considered a home and communitybased setting. A few commenters 

requested that the final regulation be 

stronger in its intent to ensure 

meaningful choice and provide for 

activities that will support integration 

with the community. The commenters 

noted that as written the language could 

be easily interpreted to maintain 

institution-like settings instead of true 

community living. The commenters are 

concerned about situations in which 

individual choice is not meaningful, for 

example, an individual being given 

access to food by having the choice of 

a snack bar or a pitcher of water and 

crackers. 

Response: We disagree with the 

commenters’ belief that a residential 

setting cannot reasonably accommodate 

an individual’s preference on a 24-hour 

a day basis. The opportunity for 

individuals to select the foods they eat, 


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store food in their room, eat in their 

room, and decide when to eat are all 

ways in which the access to food 

requirement can be met. Under this 

provision, giving an individual the 

choice of a snack bar or a pitcher of 

water and crackers does not meet the 

access to food requirement. An 

individual should not be presented with 

narrow options, decided by someone 

else, without input from the individual. 

Comment: One commenter believes 

the term ‘‘food’’ can be interpreted 

broadly and could lead participants to 

believe that there must be 24/7 access to 

full service dining. The commenter 

recommended that in order to eliminate 

the range in interpretation, CMS replace 

the word ‘‘food’’ with ‘‘snacks.’’ 

Response: We disagree with the 

recommended change. We expect that 

the individual will have access to food. 

This requirement does not pertain to 

full dining services or to meal 

preparation, only access to food. 

Comment: One commenter cautioned 

that the freedom and support of access 

to food at any time needs to be carefully 

monitored and offered the example that 

unrestricted access to food may be 

unrealistic for individuals with eating 

disorders or brain injury. 

Response: Modification to this 

requirement may occur as long as it is 

done in compliance with 

§ 441.530(a)(1)(vi)(F) and § 441.710 

(a)(1)(vi)(F). 

Comment: One commenter noted that 

freedom to control schedules and 

activities with support to do so is a 

different issue from ‘‘access to food at 

any time’’ and requested if CMS 

intended the support to be available for 

food related activities as well? 

Response: It is unclear what the 

commenter means by ‘‘food related 

activities.’’ 

Comment: One commenter believes 

that the requirement that individuals 

have ‘‘freedom to control schedules and 

activities with support to do so’’ should 

not be permitted to be changed by the 

provider/state. The commenter explains 

that this is a particularly important 

point because many residential facilities 

have policies and procedures that say 

that residents have freedom to choose 

and participate in preferred activities, 

but as a matter of actual fact, the 

facilities do not provide the necessary 

support to make such freedom a reality. 

The commenter suggests that this 

subsection may be an appropriate place 

to state that ‘‘a person’s ability to 

receive any service from any provider 

described in his/her person-centered 

plan will not be infringed upon by any 

provider for any reason.’’ 

Response: We agree that a person’s 

ability to receive services identified in 

the person-centered service plan should 

not be infringed upon by any provider 

for any reason. We believe that 

preventing an individual from receiving 

any service identified in the personcentered service plan is a direct 

violation of the person-centered plan 

requirements and the home and 

community based setting requirements 

specified in this regulation. 

Additionally, any setting not adhering 

to the regulatory requirements will not 

be considered home and communitybased. The supports necessary to 

achieve an individual’s goals must be 

reflected in the person-centered service 

plan as required under § 441.725(b)(5). 

Comment: One commenter suggested 

that, to modify the condition pertaining 

to individuals having visitors of their 

choosing at any time, provider 

documentation should be required for a 

safety need to restrict access to a 

person’s desired visitors, the names of 

specific visitors whose access will be 

controlled, how access will be 

controlled, along with a description of 

the specific independently-verifiable 

threats of real harm that uncontrolled 

access by those visitors represent to the 

person. The commenter suggested that 

the plan should allow visits even by 

people on this controlled-access list if 

they can be conducted safely by 

providing a monitor or other means. 

Response: We appreciate the 

commenter’s general support. The 

regulation has been modified at 

§ 441.530(a)(1)(vi)(F) and 

§ 441.710(a)(1)(vi)(F) to specify the 

requirements that must be met to 

modify the condition pertaining to 

individuals having visitors of their 

choosing at any time. 

Comment: One commenter expressed 

concerns that some assisted living 

settings may have policies about 

visitation and that as a result they 

would be automatically eliminated from 

being considered community-based 

settings. 

Response: Settings that do not comply 

with the requirements of this regulation 

will not be considered home and 

community-based settings. 

Comment: Several commenters 

supported individuals’ rights to have 

visitors of their choosing at any time; 

however, the commenters noted that in 

a provider-based setting this right 

should be viewed in the context of 

shared living arrangements. Several 

commenters noted that the safety of 

other residents and their ability for quiet 

enjoyment of their living setting must be 

considered and suggested that the rule 

be revised to add language that allows 

for reasonable rules for safety and the 

quiet enjoyment of the provider setting. 

Response: We acknowledge that in 

certain living situations the preferences 

of others must also be respected. We 

expect that there will need to be 

communication and coordination 

between all parties affected. 

Comment: A few commenters voiced 

concern that allowing some individuals 

to have any visitors of their choosing at 

any time in some cases could be a safety 

issue. Another commenter added that it 

is not reasonable that residents be 

allowed to have visitors to the extent 

that they can ‘‘visit’’ for extended and/ 

or indefinite periods of time, noting 

under the proposed language, these 

visitors could actually live in the HCB 

setting. 

Response: It would be reasonable for 

there to be limitations on the amount of 

time a visitor can stay as to avoid 

occupancy issues. Such limitations 

should be clearly stated in a lease, 

residency agreement, or other form of 

written agreement. 

Comment: Several commenters 

supported the proposed language in 

general but one recommended that CMS 

add ‘‘including overnight’’ to allow for 

individuals to have visitors of their 

choosing at any time as this is a right 

that others have. 

Response: We believe the language 

adequately addresses this issue, and 

allows for flexibility as appropriate. 

Comment: Several commenters 

recommended that the proposed 

requirement on visitors have additional 

language and protections, which would 

allow for reasonable limitations on how 

and where visits are conducted for 

safety and the quiet enjoyment of the 

provider setting for all residents. One 

commenter suggested that the provision 

be changed to read: ‘‘individuals are 

able to have visitors of their choosing at 

any time that is reasonably and 

mutually agreeable with other members 

of the household and consistent with 

their support needs.’’ Two commenters 

recommended adding the phrase 

‘‘provided such visitors are not 

disruptive to individuals in the 

residential setting’’ to the end of the 

proposed language. One commenter 

recommended the rule be revised to say 

‘‘if the building rules are established 

and approved by the residents, they are 

allowable and residents can receive 

HCBS.’’ Another commenter believes 

CMS should add a provision that the 

provider can deny access of visitors if 

there is a reasonable belief that the 

visitor presents a danger. 

Response: We believe the regulatory 

language adequately addresses the 

visitation requirement. We will take the 


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commenters’ suggestions under 

consideration as we develop further 

guidance. 

Comment: Several commenters 

strongly supported this provision as 

proposed and stressed that it is an 

essential provision. These commenters 

expressed concern that under current 

standards, some assisted living settings 

are not physically accessible and have 

nonetheless received HCBS waiver 

funding for setting services. One 

commenter supported this requirement 

and added that the modifications and 

justifications for physical accessibility 

are included in the service plan. 

Response: We appreciate the 

commenters’ support. 

Comment: One commenter believes 

that the proposed language is too vague 

and noted that additional guidance is 

essential, especially given the limited 

availability of resources to upgrade 

existing facilities and the varying 

degrees of accessibility needed 

depending on the nature of any 

particular disability. Some commenters 

noted that settings must be physically 

accessible under the ADA and Section 

504 of the Rehabilitation Act without 

reference to any specific characteristics 

of the individual and therefore, 

indicated that this provision isn’t 

necessary. A commenter indicated that 

there are no possible legitimate safety 

reasons for not providing a physically 

accessible residential or program setting 

to any person with a disability, and that 

failure to do so may be a safety hazard. 

These commenters advised that this 

condition must not be modifiable for 

any reason. 

Response: We agree and revised the 

regulations so that they do not include 

§ 441.530(a)(1)(vi)(E) and 

§ 441.710(a)(1)(vi)(E) as an additional 

condition that can be modified. 

Comment: Two commenters indicated 

that to ensure the exclusion of 

segregated settings and promotion of 

integrated settings, CMS should revise 

this provision to specify that a providerowned or controlled residential setting 

should not only be ‘‘physically 

accessible,’’ in terms of architecture for 

persons with mobility disabilities, but 

should also be accessible for persons 

with sensory disabilities. This includes 

ensuring effective communication 

through the provision of auxiliary aids 

and services, such as but not limited to 

sign language interpreters, alternative 

formats, and adapted equipment and 

devices, such as smoke alarms and 

telephones. 

Response: We do not agree with 

commenter’s suggestion to revise the 

regulatory language. Items and services 

that are needed by individuals to live in 

their homes and communities would 

need to be identified through the 

person-centered planning process and 

some of those items and services may be 

covered through a Medicaid service, 

such as 1915(i) HCBS, State plan home 

health or under a 1915(c) HCBS waiver. 

Comment: One commenter supports 

the list of excluded settings. 

Response: We appreciate the 

commenter’s support. The excluded 

settings included in the regulation are 

consistent with the settings excluded in 

statute. 

Comment: Many commenters noticed 

the difference between 

§ 441.530(a)(2)(iv) and 

§ 441.656(a)(2)(iv). The commenters 

wanted to know if the difference exists 

because the 1915(i) statute refers to 

‘‘hospital’’ as institutionalized care, 

whereas 1915(k) does not. To the extent 

possible, the commenter encouraged 

CMS to be consistent across authorities 

if it intends to clarify this difference. 

Response: Whereas section 

1915(k)(1)(A)(ii) of the Act expressly 

prohibits a nursing facility, institution 

for mental diseases, or an intermediate 

care facility for the mentally retarded 

from being considered home and 

community based settings, the statute 

did not include a hospital among the list 

of excluded settings. In an effort to be 

consistent with other authorities 

providing HCBS, we proposed to 

exclude hospitals providing long-term 

care services from the definition of a 

home and community setting for the 

provision of the Community First 

Choice Option. We believe that it would 

be duplicative to provide CFC services, 

such as assistance with activities of 

daily living, in such settings. 

Additionally, we believe this exclusion 

aligns with section 1915(k)(1)(A)(ii) of 

the Act requiring that services are 

provided in a home and communitybased setting and section 1915(k)(3)(B) 

of the Act requiring that services are 

provided in the most integrated setting 

appropriate to the individual’s needs. 

However, we understand that 

individuals will likely have a continued 

need for certain types of assistance 

while experiencing a short-term stay in 

a general acute hospital setting. Under 

such circumstances, most services 

provided in a general acute care hospital 

are not CFC services, but individuals 

who have an assessed need for 

assistance with IADLs may continue to 

receive such services while an inpatient 

in such a setting. 

Comment: Many commenters 

requested this section be revised to 

exclude ‘‘a hospital’’ without the 

proposed qualification that it must 

provide long-term care services. One 

commenter also agreed with the 

recommended revision and expressed 

concern about duplication of services. 

The commenter believes that allowing 

an individual to receive IADL services 

during a short-term stay in a general 

acute hospital would be hard to 

administer without increased costs to 

the state. The commenters want the 

language to be consistent with 

§ 441.656(a)(2)(iv), which excludes any 

section 1915(i) of the Act service from 

being provided in a hospital. 

Response: As with payment for any 

Medicaid service, we expect states to 

have processes in place to safeguard 

against unnecessary utilization of such 

care and services and prevent the 

duplication of the payments of 

Medicaid services. We understand that 

individuals may have a continued need 

for assistance with certain IADLs while 

experiencing a short-term stay in 

general acute hospital settings. 

Therefore, while services provided in a 

general acute care hospital are not CFC 

services, individuals who have an 

assessed need for assistance with IADLs 

may continue to receive such services, 

as long as those services do not 

duplicate services provided by the 

hospital setting while an inpatient in an 

acute hospital setting. 

Comment: A few commenters agreed 

with the regulatory language stating that 

individuals in an acute care hospital 

who need assistance with IADLs, should 

not be prevented from receiving such 

services while they are in an acute 

hospital setting. The commenters 

further stated that the ability to receive 

these services, as needed, while in the 

hospital could enable a smoother 

transition after hospital discharge back 

to a home or community setting and 

help prevent institutionalization. 

Response: We appreciate the 

commenters’ support, and will include 

this provision into the final regulation. 

Comment: Several commenters 

requested the regulation be revised to 

add ‘‘Board and Care homes’’ for people 

with disabilities to the list of excluded 

settings, because of the institutional 

manner in which they operate. 

Response: We do not believe it is 

necessary to identify specific settings, 

beyond what is specified in statute. 

States define settings differently, and 

the way board and care operates in one 

state, may be very different from the 

way board and care settings operate in 

another state. Recognizing the lack of 

national standard-setting definitions, we 

believe defining the qualities that all 

settings must exhibit to be considered 

home and community-based is the best 

way to apply a national standard. We 

believe the most effective and consistent 


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way to assure that individuals receiving 

Medicaid HCBS, regardless of age or 

type of disability, are offered HCBS in 

the most integrated setting appropriate 

to their needs and preferences, is to 

focus on the qualities of ‘‘home’’ and 

‘‘community’’ that assure independence 

and integration from the perspective of 

the individuals. We will provide 

additional guidance to states to identify 

any other setting that has the effect of 

isolating individuals receiving Medicaid 

HCBS from the broader community of 

individuals not receiving Medicaid 

HCBS. 

Comment: In response to the request 

in the preamble for comments on 

whether there are settings in addition to 

those currently enumerated that are, by 

their nature, location, or administration 

inherently non-community based, 

several commenters suggested 

§ 441.530(a)(2)(v) and § 441.710(a)(2)(v) 

be revised to say ‘‘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 isolated from the larger 

community, does not allow individuals 

to choose whether or with whom they 

share a room, limits individual’s 

freedom of choice on daily living 

experiences such as meals, visitors, and 

activities or limits an individual’s 

opportunity to pursue community 

activities.’’ The commenters also stated 

that if CMS does not make the 

recommended revision, then the 

regulations in § 441.530(a)(2)(v) and 

§ 441.710(a)(2)(v) should specify that 

such characteristics give rise to a 

rebuttable presumption that the setting 

is not home and community based. 

Response: We appreciate the 

commenters’ suggestions, however we 

believe they are already addressed in 

§ 441.530(a)(1) and § 441.710(a)(1). 

Therefore we will not revise 

§ 441.530(a)(2)(v) and § 441.710(a)(2)(v) 

to include the commenters’ suggestions 

as we believe it would be duplicative. 

Comment: One commenter indicated 

that it is difficult to imagine how 

settings located on or adjacent to the 

grounds of an institution could be 

considered home and community based. 

Another commenter further added that 

the regulation should be revised to add 

that the settings listed in 

§ 441.530(a)(2)(v) to the list of excluded 

settings. 

Response: In response to the many 

comments we received, we will not 

amend the regulation to explicitly 

prohibit settings listed in section 

§ 441.530(a)(2)(v) from the definition of 

home and community-based. However, 

such settings are presumed to be 

institutional. States wishing to identify 

such settings as home and communitybased may, during the SPA and waiver 

submission and review process, provide 

evidence as to how such settings are not 

institutional in nature. We will 

determine if the setting is not an 

institution and meets the HCB setting 

requirements. 

Comment: One commenter requests 

CMS reconsider its position with regard 

to the provision of HCBS on ICFs/MR 

campuses and planned residential 

communities for people with 

developmental disabilities. 

Response: ICF/IIDs (formally known 

as ICF/MRs) are statutorily prohibited 

from being considered home and 

community-based under the authorities 

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

and services provided on the campuses 

of these facilities are presumed to not 

have the qualities of HCBS under this 

rule and subject to the heightened 

scrutiny provision of this rule. 

Comment: A few commenters 

requested the rule clarify that the 

exclusion is intended for residential 

supports and not supported 

employment or other vocational activity 

that may find an individual choosing 

competitive employment in a setting 

that may be located in a building on the 

grounds of, or immediately adjacent to 

a public institution or disability-specific 

housing complex. 

Conversely, another commenter 

expressed concern that people with 

disabilities are being served in 

segregated work and day settings that do 

not meet the ‘‘most integrated setting’’ 

definition and do not comply with 

guidance related to the ADA and the 

Olmstead decision issued by the US 

Department of Justice (DOJ). 

Additionally, the commenter indicated 

that DOJ has made it clear that the 

ADA’s integration mandate includes day 

and employment services, and that 

unwarranted placement in segregated 

day programs is a violation of this 

mandate. Thus, this commenter 

recommends that CMS consider 

excluding segregated, congregate 

facilities and programs from the 

definition of HCBS. The commenter also 

recommends specifying the following 

settings are excluded (per DOJ 

guidance): (1) Congregate day and 

employment services populated 

exclusively or primarily with 

individuals with disabilities, (2) 

Congregate day and employment 

services settings characterized by 

regimentation in daily activities, lack of 

privacy or autonomy, policies limiting 

visitors, or limits on individuals’ ability 

to engage freely in community activities 

and to manage their own activities of 

daily living; or (3) Day and employment 

services settings that provide for 

daytime activities primarily with other 

individuals with disabilities. The 

commenter recognizes that if these 

recommendations are adopted, a 

transition period is necessary to ensure 

sufficient time for services to meet these 

new requirements. 

Response: CMS does not have the 

general authority to enforce the ADA 

independently of its oversight of the 

Medicaid program. To the extent that 

the services described are provided 

under 1915(i) or 1915(k) (for example, 

residential, day, or other), they must be 

delivered in settings that meet the HCB 

setting requirements as set forth in this 

rule. We will provide further guidance 

regarding applying the regulations to 

non-residential HCBS settings. In 

addition, since this authority provides 

states the opportunity to provide 

individuals HCBS and not institutional 

services, individuals receiving 1915(i) 

State plan HCBS or 1915(k) CFC 

services must be living in settings that 

comport with the HCB setting 

requirements as set forth in this rule 

regardless of whether they are receiving 

HCBS in that residence. This is 

consistent with CMS’ longstanding 

policy regarding 1915(c) HCBS. 

Comment: One commenter 

recommends establishing a maximum 

limit to the number of individuals living 

in a provider-owned or controlled 

residential setting. 

Response: We do not believe there is 

a maximum number beneath which we 

could determine with certainty that the 

setting would meet the requirements of 

HCB settings. The focus should be on 

the experience of the individual in the 

setting. In addition, we respect a state’s 

right to establish state laws to 

implement such a requirement 

regarding size. We intend to provide 

additional guidance to states to identify 

any other setting that has the effect of 

isolating individuals receiving Medicaid 

HCBS from the broader community of 

individuals not receiving Medicaid 

HCBS. We plan to include in the 

guidance examples of specific settings 

that will require heightened scrutiny 

and may identify additional qualities, 

including the size of the facility, 

triggering such scrutiny. Our experience 

through our work with other federal 

Departments and current research 

indicates that size can play an important 

role in whether a setting has 

institutional qualities and may not be 

home and community-based. 

Comment: One commenter added that 

an approach focused on characteristics, 


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rather than locations, provides a useful 

framework to define home and 

community-based settings, while 

allowing consumers of long-term 

services and supports choices regarding 

the services and supports they receive 

and from whom they receive them, 

rather than limiting the person’s choices 

arbitrarily. However, several other 

commenters expressed opposition to 

this language and requested that it be 

removed completely. These commenters 

stated that, if a provider-based setting 

can meet all of the criteria in paragraph 

(1), it should not matter where the 

provider is located, and applying a 

rebuttable presumption is redundant. 

They also stated that the focus should 

be on the autonomy of the individuals 

receiving services. One from this group 

of commenters stated that the 

‘‘rebuttable presumption’’ could create a 

standard that is difficult to meet and 

imposes obstacles that are unnecessary 

and unreasonable. This commenter also 

stated that each setting regardless of 

physical location should be evaluated in 

accordance with the same quality 

review criteria and that the rebuttable 

presumption is not good public policy 

and has the potential to be prejudicial. 

Another commenter stated that the 

focus should not be on the setting, but 

rather on an individual’s choices and 

the person-centered service plan, and 

does not believe arbitrary geographic or 

location-specific criteria are 

appropriate. One expressed that this 

requirement will hinder current 

initiatives to rebalance state’s long term 

care systems. Another expressed 

concern with the effect this language 

would have on settings financed by the 

Department of Housing and Urban 

Development (HUD) with millions of 

dollars to develop group homes, 

apartment complexes and other housing 

for individuals with developmental 

disabilities. Another stated that some 

individuals make the choice to live in 

disability-specific housing with 

proximity to friends that rent from the 

same provider, or that they choose 

housing in a convenient location with 

access to services such as 

transportation. 

Response: We appreciate the 

comments provided about the 

challenges of the term rebuttable 

presumption. The proposed language 

provided a list of settings that, from our 

experience in approving and monitoring 

HCB programs, typically exhibit 

qualities of an institutional setting. 

However, we recognize that state 

innovations, creative and proactive 

efforts to promote community 

integration, and market changes could 

result in the settings being located in a 

building that also provides inpatient 

institutional treatment, or in a building 

on the grounds of, or immediately 

adjacent to a public institution, that in 

some instances could be considered 

home and community-based. In 

response to public comments, we have 

revised the regulatory language to say 

‘‘Any setting that is located in a 

building that is also a publicly or 

privately operated facility that provides 

inpatient institutional treatment, or in a 

building on the grounds of, or 

immediately adjacent to, a public 

institution, or any other setting that has 

the effect of isolating individuals 

receiving Medicaid HCBS from the 

broader community of individuals not 

receiving Medicaid HCBS will be 

presumed to be a setting that has the 

qualities of an institution unless the 

Secretary determines through 

heightened scrutiny, based on 

information presented by the state or 

other parties, that the setting does not 

have the qualities of an institution and 

that the setting does have the qualities 

of home and community-based 

settings.’’ We believe the revised 

language more clearly reflects the intent 

of this provision. 

Comment: One commenter expressed 

concern with the ultimate discretion 

granted the Secretary through this 

regulation; the commenter categorizes it 

as ‘‘authority with strings attached.’’ 

The presumption, coupled with the 

requirement of heightened scrutiny for 

certain proposals, makes it very difficult 

for the Secretary to find in favor of 

innovative partnerships that provide 

immediate and consistent access to 

necessary health care, peer 

relationships, and legitimate 

‘‘integration,’’ including HCBS homes 

located on ICF/MR campuses and 

planned residential communities. 

Response: We do not agree with the 

commenter. We believe the 

requirements set forth in this regulation 

will support innovative partnerships 

that support community integration and 

provide individuals with maximum 

control. 

Comment: One commenter 

recommended the rule apply a 

presumption of ‘‘community-based’’ if 

an individual has lived in an assisted 

living facility for at least 12 months and 

is the only available alternative to the 

institutional settings. 

Response: We do not believe that the 

amount of time spent in a setting should 

be used to classify the setting as home 

and community-based. 

Comment: Several commenters stated 

that while the concept of a rebuttable 

presumption may be attractive in the 

abstract, the commenters doubt that it 

can be operationalized effectively. The 

commenters expressed concern that this 

will be done as an individualized 

determination falling under ‘‘we-knowit-when-when-we-see-it.’’ The 

commenters stated that providers need 

clear guidance ahead of time, before the 

individual moves in and/or before the 

provider develops property. A couple of 

commenters expressed concern about 

the lack of guidance regarding 

rebuttable presumption and what would 

constitute adequate rebuttal of the 

presumption. One stated that the 

proposed rule already creates a set of 

requirements specific to providerowned and controlled residential 

settings receiving HCBS funding, which 

effectively create heightened scrutiny 

for such settings. The commenter also 

questioned what procedural safeguards 

will be in place to allow appeals of 

decisions, who will make the final 

determinations, what are the additional 

administrative burdens placed on states 

and providers to add this additional 

layer of heightened scrutiny, and if a 

setting meets an individual’s needs and 

preferences and meets the other criteria 

for home and community-based settings, 

who should bear the burden of proof to 

demonstrate that a setting is not home 

and community-based. Some 

commenters believe that the settings to 

which the rebuttable presumption will 

apply should be explicitly excluded 

rather than subjected to ‘‘heightened 

scrutiny.’’ 

Response: The regulation has been 

revised to make it clear that states 

wishing to present evidence that such 

settings are home and community-based 

may do so. Under such circumstances, 

we will engage in heightened scrutiny 

in the course of the review of a SPA 

and/or the state’s transition plan of 

supporting documentation of this 

evidence to make a determination that 

the settings do comply with the 

requirements set forth in § 441.530 and 

§ 441.710. This review will also include 

assessment of how the settings allow for 

full integration into the broader 

community. In addition to information 

provided from the state, we also will 

accept information from stakeholders 

and other third parties regarding 

whether such settings have the qualities 

of being home and community-based 

and do not have the qualities of an 

institution. We stress, however, that 

lacking strong evidence to the contrary, 

we will presume the settings are not 

HCB. 

Comment: One commenter indicated 

disagreement with the application of a 

rebuttable presumption. Specifically, 

the commenter does not agree with 


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housing arrangements that encourage 

spouses and family members to tie their 

own housing to the institutional 

housing of the family member who 

requires the most care, rather than 

encouraging the development of 

innovative solutions for how 

individuals with various chronic and 

high care needs may be housed in the 

most integrated settings. The commenter 

also indicated that while it is tempting 

to cleanly differentiate between the 

needs and wishes of senior constituents 

and the disability community regarding 

this regulation, it does not take into 

account the increasing numbers of 

people with disabilities who are aging, 

who must be assured that they will not 

have any weaker protections around 

gaining access to services and supports 

in a truly integrated community setting. 

Response: We appreciate the 

commenter’s opinion. We believe our 

HCB setting requirements are beneficial 

to everyone regardless of age, condition 

or level of disability. 

Comment: Several commenters 

suggest that rather than creating a 

rebuttable presumption, CMS should 

state that the settings listed in 

§ 441.530(a)(2)(v) and § 441.710(a)(2)(v) 

are not home and community-based 

even if these settings meet the 

requirements in paragraph 

§ 441.530(a)(1) and § 441.710(a)(1). The 

commenters urged that one of the most 

important qualities of a home and 

community-based setting is its location; 

a setting that is literally on the grounds 

of, in, or synonymous with an 

institution cannot be home and 

community-based. 

Response: We appreciate the 

commenter’s perspective. Such settings 

are presumed to be institutional and not 

home and community-based. However, 

we recognize that it could be possible 

for some of these settings to operate in 

a manner that is consistent with the 

HCB requirements set forth in this rule. 

Therefore, we will engage in a formal 

review of such settings if the state 

would like to recognize them as home 

and community-based settings under 

the applicable Medicaid authorities. 

Comment: One commenter suggests 

that if we retain the heightened scrutiny 

of settings described in this section, 

then we should modify the regulation to 

include an exception from the 

requirement if the client, the client’s 

designated representative and client’s 

case manager believe it is in the client’s 

best interest to be allowed to live in 

such a setting. 

Response: We believe that individuals 

must have the opportunity to receive 

services under 1915(i) in settings that 

support integration with the greater 

community. Therefore, State plan HCBS 

must be delivered in a setting that meets 

the HCB setting requirements as set 

forth in this rule and since this 

authority provides states the 

opportunity to provide individuals 

HCBS and not institutional services, 

individuals must be living in settings 

that comport with the HCB setting 

requirements as set forth in this rule. 

For settings that do not meet these 

requirements, we note that there may be 

other Medicaid authorities under which 

such services may be covered. 

Comment: One commenter expressed 

concern that the presumptive 

ineligibility of certain congregate 

settings and disability specific housing 

may have a chilling effect on the 

development of innovative service 

delivery approaches designed to meet 

the preferences of and provide a wider 

array of options to people with limited 

income and resources. For example, the 

commenter notes that continuing care 

retirement communities (CCRCs) and 

dementia-specific assisted living have 

been important options for older 

persons who want to plan for a future 

in which increased disability is likely. 

But most of such settings and services 

are very expensive—well out of the 

reach of people who are likely to need 

Medicaid assistance. In response, some 

innovative providers of subsidized 

housing are co-locating assisted living 

settings on the same location or 

converting parts of their buildings to 

assisted living. If such approaches 

would mean that these settings were 

presumptively ineligible to participate 

in Medicaid HCBS programs, it could 

have a chilling effect on developing 

such innovations—effectively restricting 

them to those consumers who have 

substantial resources. One potential 

solution would be to recognize what the 

Fair Housing Amendments Act of 1988 

has recognized in civil rights law— 

namely that ‘‘housing for older persons’’ 

is desired by a substantial number of 

people age 55 and older and that it is 

not considered discriminatory. It is 

relevant to recall that assisted living and 

CCRCs emerged largely as private pay 

options, reflecting strong consumer 

demand for age-specific housing with 

services that enable older people to live 

more independently than they would in 

a nursing home. This history stands in 

contrast to state mental hospitals or 

institutions for those with intellectual or 

developmental disabilities, where state 

policies created segregated 

environments for people with such 

disabilities. The history of age-specific 

housing with service approaches also 

contrasts with the history of nursing 

homes, which grew dramatically after 

the enactment of Medicaid with its 

institutional funding bias. In correcting 

the history of state and federal actions 

that have segregated people with 

disabilities, CMS should not prevent the 

ability of older persons with low 

incomes to access innovative 

approaches to housing and services that 

have demonstrated strong consumer 

demand and are permissible under civil 

rights law. 

Response: It is not our intent to 

hinder innovative ideas for future 

development of HCBS. Rather, we 

believe that the requirements set forth in 

this regulation are a result of many 

comments we received from 

stakeholders, including individuals 

receiving services. Thus, we believe that 

developers and states should use this as 

a foundation as they look at developing 

plans to provide long-term care services 

and supports in their communities. We 

believe that this could be a tool to assist 

states with adhering to the Olmstead 

mandate and the requirements of ADA. 

Comment: The commenters also 

requested that CMS clarify that it did 

not intend to include such group homes 

located in and fully integrated into 

typical neighborhoods or small 

community ICF/MR homes in the 

definition of a ‘‘facility that provides 

inpatient institutional treatment.’’ 

Response: It is possible that the 

setting described by the commenter 

could be considered a home and 

community-based setting, if it meets the 

requirements set forth at § 441.530 and 

§ 441.710. ICF/IIDs regardless of size are 

statutorily prohibited from being 

considered a home and communitybased setting, because they are 

institutions under the statute. 

Comment: Several commenters 

indicated that a setting should not be 

disqualified based solely on physical 

proximity to an institution. One 

commenter expressed concern this 

provision could force people into 

nursing homes as the only financially 

viable option. Providers have been 

encouraged to diversify and move into 

HCBS, including converting portions of 

what would be considered 

‘‘institutional’’ settings to assisted living 

or other type of residential setting. 

Similarly, some commenters believe 

that if a converted nursing home space 

meets the requirements of § 441.530(a) 

and § 441.710(a) then there should not 

apply a rebuttable presumption that the 

setting is not a home and communitybased setting. 

Response: We appreciate the 

commenters’ concerns. It is not our 

intent to have individuals move into 

long term care facilities, when their 


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needs could be met safely and 

adequately in a less restrictive 

environment. Our experience has shown 

that settings in close proximity to 

institutional settings, whether on the 

same campus, in the same building, 

sharing the same staff, and perhaps 

sharing some common areas are more 

likely to be operated in a manner similar 

to the institution. They are often also 

similarly segregated from the larger 

community of individuals not receiving 

Medicaid HCBS. Therefore, we strongly 

believe in applying a presumption that 

such settings are institutional in nature. 

However, we recognize that not all 

settings co-located, or closely located 

with an institutional setting, exhibit the 

same institutional characteristics. 

Therefore, through the applicable state 

plan amendment process, states will 

have the opportunity to describe how 

such settings meet the HCB setting 

requirements set forth in this final rule 

and do not have the qualities of an 

institutional setting. 

Comment: One commenter indicates 

that there is a strong incentive for states, 

local government authorities, and 

providers to work together to use 

existing segregated institutional 

locations. The incentive falls toward 

keeping these properties fully utilized. 

These incentives will not be easily 

overcome, and may well require an 

outright prohibition on providing public 

funding to settings that share the 

buildings or grounds of an institution 

that provides in-patient care. A few 

commenters expressed concern with the 

effect this rule will have on the 

commenter’s state plan to rebalance its 

long term care system. The state is 

currently seeking to ‘‘right size’’ the 

nursing home bed supply. The driving 

force behind this initiative is to 

rebalance the long term care system and 

provide an optimal level of choice for 

the consumer. It would only be natural 

for long-term care providers to 

participate in this right size initiative by 

utilizing the state’s successful model of 

affordable assisted living to create 

campus settings that would provide a 

full continuum of long term care 

services. Many nursing home providers 

possess land and existing structures that 

could be used to develop managed 

residential communities, individual 

homes or cottages, or other independent 

living options where assisted living or 

home care services could be delivered 

in accordance with an individualized 

person-centered plan. 

Response: We recognize that 

repurposing existing building structures 

is a tool used to control costs. However, 

we believe that such structures should 

not be a state’s first option when looking 

to increase the pool of community-based 

residential settings. Such structures 

were often built and operated in such a 

way that they inherently hinder 

individuals from participating in the 

broader community, and reduce 

individuals’ control of how and where 

they receive services. However, there 

may be circumstances where such a 

setting could be repurposed in a way 

that it would meet the requirements for 

HCB settings and would no longer have 

the characteristics of an institution. The 

final rule allows a state to submit 

evidence for CMS’ consideration in this 

circumstance. 

Comment: Many commenters 

requested § 441.530(a)(2)(v) and 

§ 441.710(a)(2)(v) be modified to also 

include settings on the grounds of or 

adjacent to a privately operated 

institution. These commenters noted 

that a private institution is no less 

institutional than a public one and 

should be treated the same for purposes 

of this provision. 

Response: We appreciate the 

commenters’ concern. It is expected that 

all settings, public and private, meet the 

HCB setting requirements of this 

regulation. We specifically make 

reference to a setting that is adjacent to 

a public institution in the regulation 

language due to public input. However, 

while we did not incorporate this 

suggestion into the regulation, we note 

that heightened scrutiny will be applied 

to any setting that hinders or 

discourages integration with the broader 

community. 

Comment: One commenter agreed that 

it is important to have rules that 

circumvent practices such as building 

many group homes or apartments on the 

grounds of institutions or on the 

property where an institution once 

stood. However, the commenter believes 

the requirements proposed go too far, as 

the standards would preclude people 

from choosing to live in many 

neighborhoods that might be in 

proximity to an institution, such as the 

VA hospital where they worked, even if 

they live in proximity to other aspects 

of community living as well. 

Response: The presumption will be 

applied to settings that discourage 

integration of individuals from the 

broader community. We will describe 

these settings in future guidance and 

will take into account the commenter’s 

concerns about group homes on the 

grounds of an institution that are 

recently closed. Regarding the concerns 

about settings adjacent to VA hospitals, 

a residential setting that allows 

individuals to have full access to 

community services, and allows for 

active participation in neighborhood/

community events, resources and 

integrated activities, but is located in 

close proximity to a VA hospital might 

meet the qualities for a home and 

community-based setting and not the 

qualities of an institution. 

Comment: A few commenters 

indicated that older persons often seek 

out settings in which they can stay as 

they grow older and develop service 

needs. A significant number of older 

persons prefer to live in a senior 

community or similar setting that 

includes a nursing facility, particularly 

when one spouse or partner needs 

nursing facility care and the other does 

not. The commenter recommends that 

being on the grounds of, or adjacent to 

an institution not be a disqualifying 

characteristic. 

Response: We will engage in 

discussion with any state who proposes 

that such settings would meet the 

qualities for home and communitybased and not the qualities for an 

institution. 

Comment: One commenter indicated 

that the Fair Housing Act contains an 

exception that allows distinctions based 

on age, and believes this rule should do 

so also. 

Response: The purpose of this section 

of the regulation is to define qualities 

for home and community-based settings. 

Since Medicaid services are available to 

individuals of all ages, we do not 

believe it is appropriate to create agebased distinctions. 

Comment: One commenter believes 

that hospital-based providers should not 

be allowable HCBS providers. The 

commenter also believes that there 

should be two types of HCBS allowed 

for a non-hospital entity to offer, even 

if they are provided on the grounds of 

a hospital: (1) Services provided by an 

HCBS provider in the emergency room 

before the patient is admitted to the 

hospital, and (2) Discharge planning 

with a patient in a hospital or long term 

care setting in order to help facilitate a 

more rapid, seamless, and coordinated 

transition into community-based care. 

Response: We recognize that while an 

individual is moving through a state’s 

overall service delivery system, there 

may be certain circumstances in which 

services provided under various 

authorities may overlap. Services 

should be provided as appropriate to 

meet an individual’s needs; however, it 

is incumbent upon the state to ensure 

that there is no duplication of payment 

for the same services. A provider of 

HCBS could provide services in the 

emergency room, as long as those 

services are necessary and do not 

duplicate the services being provided by 

the emergency room. 


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We believe it would be a best practice 

for there to be communication between 

those settings and the program that will 

assist the individual in the community. 

However, such communication should 

not supplant the discharge planning 

activities that hospitals and long-term 

care settings are required to perform for 

any individual leaving its setting. 

Comment: A few commenters 

requested the regulation define public 

institution. One commenter requested 

clarification on the definition of a 

public institution. Specifically the 

commenter wanted to know if ‘‘public 

institution’’ means an ICF/MR, or 

whether it also includes a university, 

library or community care hospital. 

Another commenter wanted to know if 

this provision presumptively excludes 

HCBS in publicly funded housing for 

older persons if a nursing home 

happens to be located on the same 

campus. 

Response: The term public institution 

is already defined in Medicaid 

regulations for purposes of determining 

the availability of Federal Financial 

Participation (FFP). Section 435.1010, 

specifies that the term public institution 

means an institution that is the 

responsibility of a governmental unit or 

over which a governmental unit 

exercises administrative control. 

Medical institutions, intermediate care 

facilities, child care institutions and 

publicly operated community 

residences are not included in the 

definition, nor does the term apply to 

universities, public libraries or other 

similar settings. We will apply this 

existing definition in implementing the 

provisions of this final rule. However, 

we note that any setting that has the 

effect of isolating individuals receiving 

Medicaid HCBS from the broader 

community of individuals not receiving 

Medicaid HCBS will be presumed to be 

a setting that has the qualities of an 

institution unless the Secretary 

determines through heightened scrutiny 

that it has the qualities of home and 

community-based settings. Thus, 

settings that are located on the grounds 

of, or adjacent to, institutions that are 

not defined as public institutions under 

the existing regulation will still be 

subject to heightened scrutiny if such 

settings have the effect of isolating or 

segregating those receiving HCBS from 

the broader community. 

Comment: One commenter expressed 

concern about the effect this regulation 

will have on individuals living in 

continuing care retirement communities 

(CCRC’s). Another commenter believes 

that co-location on a campus facilitates 

efficiency, reduces administrative and 

food service costs, and potentially 

increases the quality of services 

provided in the nursing home since the 

independent living residents often visit 

their friends who reside in the CCRC’s 

nursing home. The commenter added 

that co-location facilitates seamless 

transition among the various levels of 

care on campus. One commenter 

expressed concern that the regulation 

would have a particularly negative 

impact on not-for-profit long term care 

providers that more often provide 

services in a multi-level campus setting 

because of their missions to meet the 

multiple needs of the community. 

Response: In general, CCRC’s are a 

combination of residential settings and 

care options that include independent 

living, assisted living, and nursing home 

care. It is possible that currently the 

state considers the independent living 

units to be home and community-based. 

Nursing facilities are statutorily 

prohibited from being considered home 

and community-based and is considered 

an institutional setting. The 

independent living units and assisted 

living units would be presumed 

institutional and receive heightened 

scrutiny if they are (1) located in the 

same building as the nursing home or 

other facility providing inpatient 

treatment; or (2) if they are located on 

the grounds of, or immediately adjacent 

to, a public institution. 

Comment: One commenter believes 

that excluding assisted living facilities 

that are on the same grounds of an 

institutional facility may be limiting the 

choices available to individuals. The 

commenter believes that offering a 

variety of locations for community 

based services better addresses the 

diverse population that receives these 

services. 

Response: Assisted living facilities are 

not excluded from being considered 

home and community-based if they are 

structured and operate in a manner that 

adheres to the requirements set forth in 

this rule. 

Comment: One commenter requested 

that CMS clarify what is ‘‘inpatient 

institutional treatment’’ and asked 

whether ‘‘provides’’ means direct 

provision of services by the facility, any 

provision of services in the facility, or 

facilitating the provision of such 

services. 

Response: Inpatient institutional 

treatment means that services are 

provided 24 hours/7 days a week. 

Therefore, to avoid confusion, we have 

retained the language ‘‘inpatient 

institutional treatment.’’ 

Comment: Many commenters believe 

the proposed regulations would 

eliminate or severely restrict the 

provision of HCBS in programs located 

adjacent to a public institution even 

though the program is also adjacent to 

other buildings such as local 

community colleges and universities, 

stores and businesses, and residential 

communities. Other commenters 

indicated that proximity to an 

institutional setting should not alone be 

the basis to disqualify a setting as HCB 

and stated that many seniors choose to 

live in a community that offers a range 

of settings. 

Response: We believe that if the 

setting meets the requirements set forth 

in § 441.530(a)(1) and § 441.710(a)(1), is 

not described as prohibited under 

§ 441.530(a)(2) and § 441.710(a)(2), and 

does not exhibit qualities of an 

institutional setting, then the services 

could be provided in settings like those 

to which the commenters refer. 

Comment: A few commenters 

expressed concern that the language in 

the proposed regulation could be 

construed to prohibit the use of HCBS 

to fund appropriate services on a 

campus that provides a variety of day 

habilitation services and employment 

opportunities for individuals with 

intellectual and related disabilities. For 

the commenters this would be an 

unacceptable and radical policy change 

from the perspective of these 

individuals and families who have 

relied on these services for years. The 

commenters believe the location allows 

individuals to be part of the community. 

The program is located adjacent to a 

residential neighborhood and shares a 

parking lot with a college. The 

commenters are concerned that if these 

longstanding programs are no longer 

permissible for these individuals, their 

alternative would be institutional 

placement. The commenters request the 

language ‘‘adjacent to’’ not be included 

in the final regulation or that the 

interpretative language accompanying 

the publication of the final regulation 

explicitly clarify that the circumstances 

described above do not make this type 

of program ineligible for HCBS funding. 

Response: 1915(i) State plan HCBS 

and 1915(k) CFC services (for example, 

residential, day or other) must be 

delivered in a setting that meets the 

HCB setting requirements as set forth in 

this rule. We will provide further 

guidance regarding applying the 

regulations to non-residential HCBS 

settings. In addition, since this authority 

provides states the opportunity to 

provide individuals HCBS and not 

institutional services, individuals 

receiving 1915(i) State plan HCBS or 

1915(k) CFC services must be living in 

settings that comport with the HCB 

setting requirements as set forth in this 

rule regardless of whether they are 


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receiving HCBS in that residence. This 

is consistent with CMS’ longstanding 

policy regarding 1915(c) HCBS. 

Comment: We received many 

comments both in support of and 

opposition to the requirement that 

would have resulted in heightened 

scrutiny over a disability-specific 

housing complex. The comments we 

received on this provision are reflected 

as follows: 

Several commenters recommend the 

regulation be revised to remove 

‘‘disability specific housing complex’’ as 

a setting in which HCBS may not be 

provided. The commenters believe that 

people with disabilities should be able 

to choose to live in disability specific 

housing if the housing addresses their 

needs. One commenter stated that being 

a disability focused apartment building 

does not warrant the need for extra 

scrutiny. There are significant 

differences between an institution and a 

housing development. 

Many commenters requested the rule 

clarify that the reference to a ‘‘disabilityspecific housing complex’’ was 

intended to refer to settings located in 

a disability-specific housing complex— 

as well as on the grounds of, or 

immediately adjacent to, such a 

complex. 

Many commenters expressed concern 

that the proposed regulations would 

eliminate or severely restrict HCB 

services to residents with disabilities in 

supported living arrangements 

authorized under and meeting the 

requirements of HUD Section 811 and 

Section 202 multi-family housing units, 

because the homes built under HUD 

Section 811 or 202 are specifically 

restricted to people with specific 

disabilities. They believe the proposed 

rule appears to conflict with HUD 

policies. 

Several commenters believe that 

regulatory language will result in the 

elimination of longstanding services 

that meet the needs of a large number 

of individuals. The commenters 

recommended that CMS issue 

interpretive guidance accompanying the 

final regulation to explain that a 

program located in a building on the 

premises of a disability-specific housing 

complex may receive HCBS if the 

housing complex is in compliance with 

the underlying laws and implementing 

regulations, including Section 811 of the 

National Affordable Housing Act of 

1990, as amended and implementing 

regulations (supported housing for 

persons with disabilities), the Fair 

Housing Act, and the ADA. 

Many commenters expressed concern 

that the use of the term disability 

specific complex would eliminate or 

severely restrict the provision of HCBS 

in group homes set around a courtyard 

where individuals with disabilities have 

many needed services and supports 

built into their day-to-day living and 

have transportation and other assistance 

to access the general community. 

Many commenters requested the 

regulation provide a definition of the 

term ‘‘disability-specific housing 

complex.’’ Many commenters believe 

that undefined, the term is unclear, and 

too broad. 

Several commenters requested we 

clarify that ‘‘CMS did not intend to 

include group homes located in and 

fully integrated into typical 

neighborhoods within the meaning of 

‘‘disability-specific housing complex.’’ 

A few commenters requested the rule 

clarify whether the presumption that a 

disability-specific complex is not a 

home and community based setting 

applies only if the setting does not meet 

the other criteria established in the 

regulation. 

One commenter believes the potential 

elimination of disability-specific 

housing complexes as home and 

community-based settings will 

compromise viable housing alternatives 

in a housing market that is already in 

crisis, devastate the ability of providers 

to deliver services in settings that 

promote health and safety, and force 

individuals with developmental 

disabilities to move from their homes or 

lose their services and supports. 

One commenter expressed opposition 

to the heightened scrutiny level of 

review, as proposed in the regulation. 

According to the commenter, families 

believe their loved ones benefit from 

these settings. Some planned residential 

communities are much like retirement 

communities where amenities such as 

bowling alleys, theatre, community 

centers, restaurants and shopping are 

readily available, along with necessary 

health care, support staff, vocational 

training. The commenter further stated 

that while the rule seems to embrace 

certain principles of community, such 

as individual choice and personcentered planning, there remains a bias 

that characterizes any sort of programwide structure and safety measures as 

too ‘‘institutional’’ without any regard to 

the input of individuals, their families 

and their legal guardians. This 

commenter also stated that given that 

there is already a Medicaid definition of 

institution, it is improper for CMS to be 

proposing an expansion of current 

Medicaid law redefining the term. 

Another commenter believes that the 

proposed rule that considers a 

‘‘disability-specific housing complex’’ 

an ‘‘institution’’ could be confusing and 

a barrier to effective community housing 

options for those with intellectual 

disabilities. 

Many commenters objected to the 

inclusion of disability specific housing 

as institutional in that many people 

choose, as a function of age, to live with 

others with similar needs. The 

commenters indicated that senior 

housing, assisted living, and other such 

options are freely chosen by seniors 

without disabilities and inquired why 

people with disabilities who are eligible 

for HCBS be denied the same array of 

options available to their peers without 

disabilities. The commenter noted that 

the key is that the person-centered plan 

should provide for individuals making 

free choices in where they live as long 

as they do not include nursing facilities, 

institutions for mental diseases, 

intermediate care facilities for mentally 

retarded, hospitals, or other locations 

that have the qualities of an institutional 

setting as determined by the Secretary. 

Other commenters suggested that 

seniors often choose to live together in 

a variety of settings and request that 

CMS respect this preference by 

establishing exemptions from the 

proposed setting requirements for 

continuing care campuses, assisted 

living settings, and other housing for 

older persons. The commenter stated 

that CMS should not preclude 

successful options for people with 

disabilities simply based on location or 

proximity. Alternatively, one 

commenter indicated that he does not 

have the same philosophy and asserted 

that this provision must remain in these 

regulations. This opinion is based on 

the commenter’s experience with the 

deinstitutionalization of people with 

intellectual and developmental 

disabilities and the commenter’s 

knowledge of recent efforts in certain 

states to try and use waivers to fund 

settings that do not promote full 

inclusion in community life. If CMS 

does decide to create an exception, the 

commenter urges we keep it very 

narrowly tailored to senior communities 

only, so that it cannot be used to limit 

the opportunities of people with 

intellectual and developmental 

disabilities to experience true 

integration. 

A few commenters requested the 

regulation clarify if housing or units 

within general housing, designated for 

persons with dementia or other 

cognitive impairments would meet the 

definition of disability-specific housing 

complexes. Other commenters added 

that it is discriminatory to deny HCBS 

waivers to individuals residing in an 

Assisted Living Facility providing care 

specifically to those with Alzheimer’s 


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and dementia just because of where they 

live. 

Response: As a result of comments we 

received on the use of the term 

disability specific-complex, we have 

revised the rule to remove the term 

‘‘disability-specific housing complex’’ 

and replace it with the following 

language: ‘‘any other setting that has the 

effect of isolating individuals receiving 

Medicaid HCBS from the broader 

community of individuals not receiving 

Medicaid HCBS...’’ We note that we are 

not redefining the term ‘‘institution’’ but 

rather defining what characteristics we 

will see as institutional and not HCB in 

nature. We plan to issue future guidance 

to provide examples of the types of 

settings that will be subject to 

heightened scrutiny. 

Comment: One commenter shared the 

opinion that disability-specific housing 

complexes are established for the 

convenience of service providers, or 

because the developer believes that 

people with disabilities should be 

segregated, or both. The commenter 

further explains that disability-specific 

housing complexes are not integrated at 

all, and therefore certainly not the most 

integrated setting appropriate to 

anyone’s needs. The commenter 

recommends that they must not be 

included as home and community based 

settings. 

Response: We appreciate the 

commenter’s perspective. We do not 

believe that all settings should be 

excluded; however, we do believe a 

close review of such settings may be 

necessary. 

Comment: Many commenters 

indicated that if the rule is finalized 

with application of a rebuttable 

presumption then it should only apply 

to disability-specific housing 

complexes. The commenters 

recommended that CMS should specify 

that the presumption may be rebutted 

only when (1) the setting meets all of 

the requirements for home and 

community-based settings in 

§ 441.530(a)(1) and § 441.656(a)(1), and 

(2) the setting was selected by the 

individual following a meaningful 

opportunity to choose from among 

alternatives, including the most 

integrated setting for the individual as 

documented in the person-centered 

service plan. 

Response: We do not agree with the 

commenter’s recommendations. Section 

441.530(a)(2)(v) and § 441.710(a)(2)(v) 

have been revised to better articulate the 

settings that are presumed institutional 

in nature and will receive heightened 

scrutiny to determine if they can be 

considered home and community-based 

settings. 

Comment: One commenter believes 

the rebuttable presumption language 

also applies to settings where there are 

specialized services for individuals with 

similar diagnoses. Many of these 

programs were designed, developed and 

chosen by consumers to reflect new 

standards of care and treatment. The 

commenter urges CMS to change the 

language in the rule to reflect this model 

of care and not limit these programs to 

only non-Medicaid persons. 

Response: We recognize that there are 

many forms of settings and service 

delivery models serving individuals 

with a need for long term care services 

and supports. Due to this variability 

across the country, we do not believe it 

would be best to carve out certain 

models in this rule. 

Comment: Many commenters were 

concerned about the effect the proposed 

rules would have on settings 

specifically designed for individuals 

with autism. The commenters stated 

that many of these individuals failed to 

thrive in both institutional and totally 

independent settings, but they do thrive 

in certain non-urban community based 

models. The commenters believe the 

proposed rule ignores the community 

based nature of these models and 

inaccurately and unreasonably 

categorizes these settings as institutions. 

One commenter believes the proposed 

regulations will cause downsizing and 

elimination of public and private 

specialized residential facilities for 

persons with severe and profound 

cognitive-developmental disabilities 

Response: We believe that settings 

that are designed to prevent an 

individual from having the opportunity 

to participate in the broader community 

are not home and community-based. We 

believe that individuals, regardless of 

service need, can benefit from having 

the opportunity to participate in the 

broader community. The goal of this 

regulation is not to take services from 

individuals, or make individuals move 

from a location where they have always 

lived, but to describe the qualities of 

settings in which services intended to 

provide an alternative to institutional 

care may be delivered. The goal of this 

regulation is to widen the door of 

opportunity for individuals receiving 

Medicaid HCBS to support the same 

choices to participate in community 

activities as are available to individuals 

not receiving Medicaid HCBS; to have a 

choice in how, when, and where they 

receive services; and to remove 

unnecessary barriers and controls. We 

believe that the Medicaid program 

provides many options for states to 

develop delivery systems that meet the 

needs of individuals regardless of where 

they fall on the continuum of care. 

Comment: A few commenters 

expressed the belief that individuals 

with severe cognitive impairments 

should be allowed to live together, 

because the commenters believe that 

this is not a population that can benefit 

by integration within the community at 

large. The commenter stated that special 

programming and physical plan 

improvements for this population have 

contributed to increased quality of life 

and quality of care for this population. 

The commenters request the rule be 

amended to allow individuals with 

cognitive impairments to live together 

and that this not be considered 

disability-related segregation. 

Response: We disagree with the 

commenter in part. We agree that 

individuals benefit from services that 

are specialized and tailored to meet 

their specific needs. However, we firmly 

believe that all individuals regardless of 

type or degree of disability would 

benefit from opportunities for 

community integration if it is their 

choice to live in the community and not 

an institution. We note that Medicaid 

continues to provide other service 

options that can support individuals 

who choose to receive services in nonHCB settings. 

Comment: One commenter believes 

the proposed changes to the rules would 

prevent an individual from making a 

choice to live in a rural agricultural 

community setting with several homes 

on the property. The commenter 

requested the rules be revised so that 

every person with every type of 

disability is given a choice that would 

meet the individual needs and unique 

characteristics of the person. 

Response: Under the requirements of 

this regulation, for a setting to be home 

and community-based, it may not 

discourage an individual’s integration 

with the broader community. The 

determination would not be based on 

whether the setting was in a rural, 

urban, or suburban community, but on 

whether it has the qualities of home and 

community-based settings as specified 

in this rule. 

Comment: One commenter indicated 

that in their state, there is the option for 

individuals to choose fully accessible 

individual apartments and accessible 

complexes that are disability-specific 

housing settings located in community 

neighborhoods that provide quick 

response and 24-hour onsite coverage. 

The commenter stated that the number 

of these settings has grown and 

consistently includes waiting lists, and 

to eliminate these settings for Medicaid 


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HCBS recipients unfairly limits their 

choice. 

Other commenters expressed concern 

that many seniors living in age-specific 

communities will inadvertently be 

prohibited from receiving HCBS due to 

proximity to a hospital or nursing 

facility. The rule, they believe, will lead 

to more nursing home admissions 

among seniors and limit choices 

available to them to receive services in 

an assisted living facility (ALF). The 

commenters also stated the proposed 

language would likely reduce the 

number of individuals in nursing homes 

who are able to transition to a more 

integrated setting, because many 

individuals transition to ALFs. It should 

be considered desirable that those 

served by Medicaid would have the 

same array of choices as those not on 

Medicaid. 

Response: We have removed the 

references to disability-specific housing 

in the text of the final regulation. 

However, if the settings have the effect 

of isolating individuals receiving 

Medicaid HCBS from the broader 

community, we will apply heightened 

scrutiny to these settings to determine if 

they meet the required qualities for a 

home and community-based setting as 

set forth in this rule. The State could 

present information to CMS to 

demonstrate that the settings have the 

qualities of community-based settings. 

Comment: Several commenters 

supported the language as written, 

stating appreciation that CMS has 

clarified that the term ‘‘community’’ 

refers to the greater community and not 

solely a community of one’s peers and, 

that integration also means more than 

integration in a community of peers. 

They further stated that focusing on the 

purpose of HCBS helps define its 

characteristics. A few commenters 

agreed that a home and community 

setting should facilitate individuals’ full 

access to the greater community as they 

choose, including in the areas noted. 

However, the commenters noted that 

individuals may vary in their choices as 

they seek full access to and 

participation in the greater community, 

and a home and community-based 

setting should facilitate such full access 

consistent with an individual’s choices 

and preferences. The commenters 

recommended adding the following 

language related to access ‘‘based on the 

individual’s needs and preferences.’’ 

Another commenter stated the belief 

that the language is very broad and 

ambiguous and should be defined along 

with ‘‘the greater community.’’ Another 

commenter requested that we define 

‘‘community’’ and suggested the 

language parallel the language used 

under the section pertaining to personcentered service plan, stressing that 

individuals should be given the right to 

obtain services ‘‘from the provider and 

the community of his or her choice.’’ 

Response: We support individual 

choice and agree that individuals may 

vary in their choices as they seek full 

access and participation in the greater 

community. However, in order to 

receive approval of a State plan under 

which it will receive Medicaid funding 

for HCBS, a state must ensure that the 

choices available to individuals meet 

the requirements for community 

integration at § 441.710 of the final rule. 

Comment: Some commenters 

expressed concern with the requirement 

as proposed at § 441.530(a)(1)(i) that the 

setting must permit access to the greater 

community ‘‘in the same manner as 

individuals without disabilities.’’ One 

commenter stated that it would be more 

appropriate to require access ‘‘to the 

same extent’’ and that this language will 

give HCBS providers reasonable 

flexibility in regards to making 

accommodations for disabilities and to 

avoid disputes and possible litigation on 

the exact manner in which such 

accommodation must be provided. 

Other commenters indicated that this 

requirement is not measurable and may 

reduce choice for rural populations. 

Response: After significant 

consideration, we have removed from 

§ 441.530(a)(1)(i) ‘‘in the same manner 

as’’ from this requirement, and replaced 

it with ‘‘to the same degree of access 

as,’’ to best describe our intent to ensure 

access to the greater community that 

includes individuals with and without 

disabilities. 

Comment: One commenter stated that 

licensed facilities may be located in 

both urban and rural settings resulting 

in variation with the amount of 

‘‘integration’’ available. The settings are 

chosen with this in mind, and one that 

seems to be less integrated to CMS may 

be preferred by some over living where 

it appears participation in community 

activities is greater. 

Response: We agree that there is a 

large degree of variance regarding the 

geographical settings where licensed 

homes are located. We agree that an 

individual should be able to exercise 

choice in regard to these settings. We do 

not express preference in regard to the 

proximity of activities to where an 

individual lives; the emphasis is on 

access to those chosen activities and 

whether the individual has the same 

degree of access to such activities as 

individuals not receiving Medicaid 

HCBS. 

Comment: One commenter believes 

that CMS should not disqualify any 

setting from receiving federal financial 

participation (FFP) solely based on the 

fact that it is a congregate setting. 

Response: It is not our intention to 

exclude a state from receiving FFP for 

a setting solely based on the fact that it 

is a congregate setting. Our intention is 

to specify qualities necessary for a 

setting to be considered a HCB setting. 

Congregate settings may be included if 

they meet the HCB setting requirements 

set forth in this rule. 

Comment: Several commenters stated 

that a service provider (for example, a 

job coach), not a setting, facilitates 

employment-seeking opportunities. 

Similarly, a service provider, not a 

setting, assists individuals in managing 

what few disposable resources are 

available to them. One commenter seeks 

clarification regarding what facilitating 

‘‘full access to . . . employment 

opportunities’’ entails and what 

possibilities, if any, would be imposed 

on the housing provider. One 

commenter supports the concept of 

community integration, but believes 

CMS has blurred the distinction 

between the setting and the service 

provider. One commenter believes that 

CMS is wrong to assume that location 

will enforce the goals of integration, for 

example, social interaction, productivity 

and competitive employment. The 

commenter further notes that having the 

ability to access the general community 

is very different from being forced to 

live in a community ‘‘setting’’ that is not 

only unwilling, but unable to provide 

resources for safety, supports, 

interaction, social integration and 

employment in competitive settings. 

One commenter encourages CMS to 

ensure that the settings in which 

residents receive services are designed 

to facilitate the actual integration of the 

recipients into the surrounding 

community. 

Response: We agree that it is the 

responsibility of the service provider 

rendering the services and therefore we 

have added language under personcentered service plan requirements to 

ensure a clear understanding of our 

expectation. We believe the section on 

person-centered planning clarifies CMS’ 

expectations with regard to services 

being delivered in a manner that 

promotes/supports community 

integration to the extent of the 

individual’s preferences and desired 

outcomes. 

Comment: Several commenters 

expressed strong support for the setting 

integration provision, but recommended 

modifying § 441.530(a)(1)(i) to specify 

that the employment-related provision 

apply only to those individuals who are 

interested in being employed. They 


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recommended modifying 

§ 441.530(a)(1)(i) by adding the 

following language ‘‘for those 

individuals interested in being 

employed’’ following the words 

‘‘integrated settings.’’ Another 

commenter recommended the following 

revision to § 441.530(a)(1)(i): ‘‘For 

individuals seeking to enter the job 

market, the setting should include 

opportunities to seek employment and 

work in a competitive integrated setting. 

For all individuals, the setting should 

permit them to engage in. . . .’’ 

Response: We believe that individuals 

should be supported in seeking 

employment when interested in being 

employed and that the statement 

‘‘opportunities to seek employment’’ 

implies choice. In addition, we believe 

that adding the suggested language to 

the regulation text is unnecessary. 

Comment: One commenter offered 

support of CMS’ general approach of 

identifying the characteristics of 

integrated care, but suggested that CMS 

will need to take an active monitoring 

role to ensure that all the individual 

quality requirements are enforceable. 

Response: States are required to 

demonstrate at the time of approval that 

quality measures with a monitoring plan 

are in place. This information must be 

included in the SPA and at a frequency 

to be determined by us or upon request 

by us. The review and monitoring of 

quality requirements will be covered in 

future guidance. 

Comment: One commenter stated that, 

it would be unpatriotic to curtail any 

services in a manner that would 

adversely affect humans with limited 

abilities. 

Response: It is not our intention to 

negatively impact any individuals we 

serve. Rather the purpose of the rule is 

to ensure that states will be better able 

to design and tailor Medicaid services to 

accommodate individual’s needs and 

preferences. 

Comment: Commenters stated that all 

people need meaningful choices about 

where and with whom they live, how 

they spend their time and their 

activities, friends, and services 

(including who provides them). 

Permitting individuals the freedom to 

make their own choices allows them to 

remain as independent as possible. One 

commenter applauded efforts that focus 

on the individual’s ability to choose his 

or her own life setting and one that 

promotes community rather than 

institutions. Several commenters noted 

that while providers may make different 

choices than the client and have a 

different perspective, the provider must 

respect and honor the choices and 

autonomy of people with disabilities. 

One commenter supports the proposed 

language as long as it provides 

assurances that real alternatives exist. 

Additionally, another commenter 

recommends reinforcing the idea that 

states should provide unbiased and 

informed options counseling for 

individuals seeking HCBS so that 

individuals are able to choose the 

setting that best assists them in meeting 

their needs and life goals. 

Response: We agree that meaningful 

choices that allow individuals to make 

decisions that best meet their needs are 

important. In addition, they should be 

addressed as part of the person-centered 

planning process and reflected in the 

individual’s person-centered service 

plan. 

Comment: One commenter stated that 

the proposed regulation would 

eliminate or at least severely restrict 

client and family choice of program 

options and opportunities and that 

consumers and families need more 

options, not fewer during these difficult 

times. Several other commenters 

expressed serious concern that the 

proposed regulation will eliminate 

instead of enhance choice for 

individuals with significant disabilities. 

Response: We disagree. We are not 

eliminating the choice of institutional 

options. We are specifying the qualities 

necessary for settings to be considered 

home and community-based settings. 

Comment: Many commenters stated 

the proposed language in 

§ 441.530(a)(1)(ii) and § 441.656(a)(1)(ii) 

should be modified to more closely 

reflect the tenets of the ADA and the 

Olmstead decision by including 

additional language that conveys the 

individual’s choice of setting must be an 

informed choice, based on more than 

verbal descriptions or pictures of 

alternatives. Modifications should 

include language that permits 

individuals a meaningful opportunity to 

choose from among all available 

alternatives. Commenters conclude that 

the level of specificity with which a 

particular setting must be identified in 

a service plan is not clear and the 

requirement could inappropriately 

prevent individuals from receiving 

services when their desired living 

setting is specifically identified in a 

service plan. 

Response: We believe the final 

regulation language supports these 

principles. Within future guidance, we 

will reinforce the importance of 

complying with other federal 

requirements such as ADA and 

Olmstead. 

Comment: One commenter 

recommends striking the word 

‘‘available’’ from § 441.530(a)(1)(ii) and 

§ 441.656(a)(1)(ii) of the proposed 

regulation. The commenter believes that 

this word could limit choices of HCBS 

settings offered to individuals and offers 

the example of long waiting lists for 

certain section 1915(c) HCBS waiver 

programs/settings not being considered 

and reflected in the person-centered 

plan due to lack of availability. 

Response: We have revised 

§ 441.530(a)(1)(ii) pertaining to CFC 

settings and the final regulation text at 

§ 441.710(a)(1)(ii) and we have removed 

the term ‘‘available.’’ 

Comment: One commenter was 

supportive of this language as written. 

Another commenter supported CMS’ 

proposed list of essential personal rights 

in this section. The commenter stated 

that, in addition to freedom from 

coercion and restraint, people with 

disabilities in a community setting 

should have the freedom to pursue their 

sexuality, voting, and worship. In 

addition, a community setting should 

not be permitted to restrict access to the 

community as a form of punishment. 

Response: We are concerned that one 

of the commenters believes we have 

provided a comprehensive list of rights. 

The factors related to determining 

whether settings are home and 

community-based and the description of 

the rights that individuals must have in 

these settings are not intended to be an 

exhaustive list of all legal rights of the 

individual. Individuals have many other 

legal rights not addressed in this 

regulation. For example, civil rights 

against various forms of discrimination 

are protected under the ADA and 

elsewhere. We regularly work with the 

HHS Office for Civil Rights, Department 

of Justice (DOJ), and others to assure 

that we provide appropriate guidance 

and assistance to states related to civil 

rights issues that bear on Medicaid 

requirements. 

Comment: Many commenters stated 

that the inclusion of ‘‘essential 

personal’’ may create confusion and 

suggest that the term be omitted from 

§ 441.530(a)(1)(iii) to more clearly 

demonstrate intent to protect the 

individuals’ human rights. Several 

commenters indicated that they strongly 

agree that these important personal 

rights should be protected. However, as 

currently written the placement of 

‘‘essential’’ may imply that other rights 

are not essential and thus do not need 

to be protected. These commenters 

recommended removing the term 

‘‘essential’’ from this paragraph. 

Response: We agree with the 

suggested revision to § 441.530(a)(1)(iii) 

and have finalized the provision at 

§ 441.710(a)(1)(iii) by removing the 

words ‘‘essential personal.’’ 


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Comment: One commenter generally 

supports the proposed language, but 

recommends that CMS delete the 

reference to restraint and/or provide an 

exception when the individual has a 

documented history of risk of elopement 

or susceptibility to behavioral flare-ups 

that can only be controlled by 

temporary restraint. 

Response: We disagree with the 

recommendation as this is an important 

protection. 

Comment: Several commenters 

supported the protection of 

independence and the autonomy of 

individuals in making life choices. One 

commenter stated that the postrulemaking implementation must 

ensure that the intent of the proposal is 

carried out in practice. Another 

commenter generally supported the 

proposed concept, but noted that the life 

choices principles are dictated by the 

service provider and not the setting. 

Response: The State Medicaid Agency 

will be responsible for ensuring that the 

HCB setting requirements are met by 

providers who own or control settings 

where individuals reside and/or receive 

services. 

Comment: Some commenters stated 

that the language may potentially result 

in limited choice, scattered living 

proposals, limiting staffing resources 

and increasing costs associated with 

some individuals choosing to live 

secluded from others with disabilities. 

The commenter stated that individuals 

make choices that increase their 

independence (within the resources that 

are provided through Medicaid) based 

on informed experiences to ‘‘live and 

play’’ with others who are 

developmentally disabled because they 

have much in common. Another 

commenter disagreed with this 

proposed requirement and believes that 

individuals should have the right to 

choose where they want to live. 

Commenters stated that one size does 

not fit all and that different populations 

have differing needs. Commenters 

supported an individual’s right to 

choose to reside in a living arrangement 

that best suits his/her needs. The 

commenter also stated that this 

proposed requirement would eliminate 

important options that now contribute 

to the array of settings available to 

adults with disabilities and the elderly 

and the move to a more restrictive 

setting would ignore the participant’s 

choice, diminish the participant’s 

quality of life and increase costs to 

Medicaid. 

Response: We believe that individual 

choice is important and we have worked 

to promote choice in the final rule, 

though we also acknowledge the 

challenge of doing so in a manner that 

addresses the interests of diverse 

populations with differing needs. We 

have revised the language in the final 

rule to be more flexible and less 

prescriptive. Instead of automatically 

excluding certain settings from 

qualifying as HCB, the language in the 

final rule includes a presumption that 

these settings are not HCB. In other 

words, we will assume that certain 

types of settings—specifically, those 

located in a building that is also a 

publicly or privately operated facility 

that provides inpatient institutional 

treatment, on the grounds of or 

immediately adjacent to a public 

institution, or any other setting that has 

the effect of isolating individuals 

receiving HCBS from the broader 

community—are not HCB, but afford 

states the opportunity to refute this 

categorization by providing additional 

information about the characteristics of 

specific settings. We have also included 

language in the final rule that focuses on 

the critical role of person-centered 

planning and addresses fundamental 

protections regarding privacy, dignity, 

respect, and freedoms. 

Comment: Several commenters 

recommended that CMS delete the 

phrase ‘‘and not regimented’’ from the 

proposed language. The commenters 

expressed concern that under the 

proposed language, group programming 

could be viewed as ‘‘regimented’’ 

because it is provided in a congregate 

setting. One commenter noted that 

structured activities and socialization 

opportunities could be deemed 

inappropriate under the proposed 

language since they may be provided in 

a uniform manner. 

Response: We disagree with removing 

this language from the final rule. We do 

not intend to invalidate all activities in 

a congregate setting. Individuals must 

be afforded choice regarding the 

activities in which they wish to 

participate including whether to 

participate in a group activity or to 

engage in other activities which may not 

be pre-planned. 

Comment: One commenter 

recommended adding the following 

language to this provision of the rule: 

‘‘(iv) 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 to the greatest extent possible 

and not regimented.’’ One commenter 

recommended that CMS clarify that the 

term ‘‘optimized’’ refers to the 

individual’s autonomy and does not 

refer to optimizing the institution’s 

promotion of autonomy. Another 

commenter requested that CMS clarify 

who will determine and how to 

determine whether the individual 

initiative, autonomy, and independence 

in making life choices were optimized. 

Response: We do not believe that ‘‘to 

the greatest extent possible’’ adds 

significantly to the term ‘‘optimized.’’ 

We believe the commenter’s concern 

about referencing individual autonomy 

is addressed in the regulation language. 

There are a number of methods inherent 

in the flexibility of the HCBS benefits to 

determine who and how the 

individual’s initiative, autonomy, and 

independence are optimized. 

Comment: Many commenters stated 

that an individual’s choice regarding 

services and supports and who provides 

them is a key element of HCBS and, 

thus, must be ensured. Some 

commenters suggested substituting the 

word ‘‘ensured’’ in place of 

‘‘facilitated.’’ One commenter stated that 

the word ‘‘facilitated’’ establishes a 

weak standard and should be replaced 

with ‘‘maximized.’’ Another commenter 

suggested that individuals be given 

choices about when services are 

provided and recommended deleting ‘‘is 

facilitated’’ and replacing it with ‘‘is 

honored’’ for further assurance. One 

commenter stated that an individual’s 

choice must be ensured, meaning ‘‘made 

certain or safe’’ and stated that in a 

home and community-based setting, 

personal choice should not only be 

brought about, but is safe. Another 

commenter expressed concern that ‘‘is 

facilitated’’ is not used to water down 

individuals exercising choice over 

services, supports, and providers. The 

commenter stated that some individuals 

may need assistance in exercising 

choice and the commenter suggested 

revising this criterion to note that 

support should be provided, as needed, 

to facilitate such choices and to 

acknowledge that an individual’s 

chosen representative may be acting on 

behalf of the individual. 

Response: After consideration of the 

commenters’ thoughtful suggested text 

changes, we believe the proposed text/ 

language reflects the intent of the 

provision. 

Comment: Several commenters 

indicated that provider owned or 

controlled settings licensed by state law 

have requirements that make them 

responsible for the well-being of the 

resident and restrictions on who (in 

addition to the licensed provider) can 

provide services in the setting. 

Commenters stated that residents’ rights 

allow for individuals to supplement 

existing services provided by the 

providers, but not replace them. Several 

commenters recommended revisions to 


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this section of the rule and some of the 

commenters suggested that language be 

included to reference state licensure 

laws and licensing entities. 

Response: We disagree with the 

suggested changes. Some of these were 

too descriptive to include in regulation 

and could have the effect of excluding 

numerous populations served through 

HCBS programs. We will instead 

consider these suggestions in future 

guidance. 

Comment: One commenter requested 

that the rule clarify how a person’s 

choice about the type of services they 

want and who they want to provide 

them ‘‘is facilitated.’’ The commenter 

suggests this can be done by clarifying 

the qualifications that the facilitator 

must possess—for example, the 

facilitator must be knowledgeable of all 

community-based options (not only 

those that are considered readily 

available) and must be able to present 

options in a way that is accessible and 

is sensitive to the person’s disabilityrelated communication needs. 

Response: States are responsible for 

determining the provider qualifications 

of the entities who will conduct the 

assessments and 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 that 

additional guidance should be provided 

to states and we intend to issue future 

guidance regarding the person-centered 

process and how we intend to apply it 

across Medicaid HCBS programs. 

Comment: Several commenters 

supported the additional conditions 

stating that they are critical to ensuring 

that provider-controlled settings 

designated as home and communitybased operate in a way that promoted 

choice, autonomy and independence. 

Response: We appreciate this 

comment of support regarding the 

importance of the additional conditions. 

Comment: One commenter generally 

supported the provisions but suggested 

that the language include ‘‘health 

needs’’ in addition to ‘‘safety needs’’ 

and that the term ‘‘dementia’’ be 

changed to ‘‘cognitive impairment’’ to 

include individuals with severe mental 

illnesses, traumatic brain injuries, and 

developmental disabilities, as well as 

Alzheimer’s and other forms of 

dementia. 

Response: The reference to dementia 

was only included as an example and 

was not meant to convey all of the 

possible situations in which a 

modification of the conditions might be 

supported by a specific assessed and 

documented need. We have, therefore, 

removed this example from regulation 

text as this is more appropriate for us to 

address in future guidance, and we will 

consider these comments in that 

context. 

Comment: Several commenters 

strongly agreed with the proposed 

language requiring that should a 

provider choose to modify conditions, 

changes must be supported by 

documentation in the person’s service 

plan. Another commenter expressed 

support of CMS’ efforts to allow 

necessary flexibility to address 

individual circumstances in providerbased settings, but urged CMS to allow 

flexibility in interpretation of the 

language, ‘‘specific assessed’’ need. Two 

commenters also expressed concern 

over this language, noting that in some 

instances residents may require services 

based on overall condition rather than a 

specific assessed need and suggested 

revision to this subsection of the rule. 

Response: We acknowledge and 

appreciate support of the requirement 

that any modification of the conditions 

for provider-owned or controlled 

residential settings must be supported 

by a specific assessed need and 

documented in the person-centered 

service plan. However, we disagree that 

such modification would be acceptable 

based on a condition that does not also 

result in a specific assessed need of an 

individual. Allowing for modifications 

based on a condition that is not also 

supported by a specific assessed need 

and documented in the person-centered 

service plan could result in decisions 

being made based on global assertions 

as opposed to individual need, and thus 

be contrary to the purpose of this 

section of the rule. Therefore, we have 

not made the requested revision to this 

requirement. 

Comment: Several commenters stated 

that modifications must be related to a 

clearly established assessed need and 

recommended a change to the proposed 

rule so that the requirements must apply 

to all settings where services are 

provided, regardless of whether or not 

they are controlled by the service 

provider. 

Response: We agree that any 

modification of additional conditions 

must be based on the specific assessed 

need of the individual. The regulation 

includes qualities that apply to all home 

and community-based settings, but we 

disagree that the additional 

requirements for provider-owned or 

controlled settings must be required of 

all settings where services are provided, 

regardless of whether or not they are 

provider-owned or operated. The 

additional conditions were designed to 

ensure that individuals who are living 

in settings in which the individual does 

not have ownership or control, will be 

afforded the same opportunities and 

community access as individuals living 

in their own private or family homes. 

Comment: One commenter 

recommended that States should be able 

to detail their own policies and 

practices to address rights and 

restrictions as part of their application 

for HCBS authority, an expectation 

currently embedded in the waiver 

application but not in regulation. 

Response: We disagree that states 

should detail their own policies to 

address rights and restrictions. Based on 

our experience and on input received 

from the public, we believe we must set 

these minimum additional conditions to 

ensure individual rights are protected. 

Comment: Several commenters stated 

that CMS should take into account the 

differences between different 

disabilities in determining when 

departure from the additional 

conditions may be permitted. These 

commenters stated that, if CMS allows 

for the modifications to provider 

requirements, CMS should require that 

the restrictions be directly proportionate 

to a specific safety need and be 

reviewed for effectiveness and 

continuing need. 

Response: Any modifications of the 

conditions can only be considered on an 

individual basis in accordance with the 

person-centered planning process and 

documented in the person-centered 

service plan in accordance with section 

441.725. 

Comment: One commenter 

recommends adding a component 

whereby direct feedback is gathered 

from the beneficiary or the beneficiary’s 

representative regarding initial and 

ongoing overall satisfaction with the 

modification of conditions. 

Response: The rule has been modified 

to require that any modification to the 

additional conditions under 

§ 441.710(a)(1)(vi)(A) through (D) must 

have the informed consent of the 

individual (or representative). 

Comment: One commenter stated that 

a modification may be needed to reflect 

the involvement of an individual’s 

representative, as appropriate, when 

individuals are unable to act on their 

own behalf. 

Response: The regulation already 

specifies the involvement of an 

individual’s representative in the 

evaluation of eligibility (§ 441.715), 

independent assessment (§ 441.720), 

and person-centered service plan 

(§ 441.725). The regulations also include 

a definition for individual’s 

representative in section 441.735 of this 

subpart. Since any modifications of the 


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conditions would need to comply with 

the requirements for these processes, we 

do not believe that modification to the 

regulation text is needed. 

Comment: We received some 

comments related to the difficulty of 

achieving compliance with the 

proposed requirements. A few 

commenters expressed concern that the 

conditions for provider-driven settings 

might exclude assisted living residences 

(ALRs), as it remains unclear whether 

they would meet the proposed criteria. 

Another commenter expressed great 

concern that privately-owned 

residential settings that have proven 

successful in their state would not 

qualify under the proposed guidelines 

since many would not provide separate 

kitchens or sleeping and living areas. 

Another commenter stated that this 

regulation severely restricts program 

options and opportunities because of 

the impact the regulation has on HUD 

financed housing owned by providers, 

and that this regulation would restrict 

the use of HCBS waiver funding for 

services provided in these settings. 

Response: We believe there will be 

residential settings that meet the HCB 

requirements as outlined in this 

regulation. However, we recognize that 

there may be some residential facilities 

that may not currently meet all of the 

HCB setting requirements for providerowned or controlled settings. We will 

allow states a transition/phase-in period 

for states to demonstrate compliance 

with the requirements. In an effort to 

balance those comments that were 

concerned with the loss of a residential 

setting and the subsequent displacement 

of the service recipient based on the 

settings requirements and those 

comments that urged us to draw an 

immediate and clear demarcation for 

HCBS, our expectation is that the 

transition plan would facilitate a brief 

transition period wherever possible. 

However, we will afford states the 

opportunity to propose a transition plan 

that encompasses a period up to five 

years after the effective date of the 

regulation if the state can support the 

need for such a period of time. States 

are expected to demonstrate substantial 

progress toward compliance throughout 

any transition period. 

Comment: One commenter expressed 

concern that the proposed language 

requires full participant direction even 

when such direction may not be 

appropriate for certain populations. 

Response: Self-direction is an 

optional service delivery method, not a 

federal home and community-based 

setting requirement in the proposed or 

the final rule. 

Comment: Many commenters 

indicated that the proposed language 

provides an unchecked and overbroad 

right for a service provider to modify 

any of the requirements, as long as the 

modification is supported by an 

assessed need and documented in a 

service plan. The commenters stated 

that CMS should allow modifications of 

the ‘‘additional conditions’’ only in rare 

and extraordinary circumstances, and 

then only after a provider has 

documented that less intrusive 

measures have already been tried, data 

has been collected on the modification’s 

effectiveness, and the need for the 

modification has been reviewed at least 

quarterly. Many commenters stated that 

allowable modifications should be 

limited to the requirements pertaining 

to access to food and lockable doors. 

Several commenters stated that the only 

appropriate reason to modify any of the 

listed conditions would be to address 

safety needs, and several recommended 

a revision to this subsection of the rule. 

However, other commenters stated that 

there is no reason for an exception/

modification under any circumstances 

for many of the requirements and have 

recommended revisions to the 

regulation. 

Response: We agree with the 

commenters that the basis for 

modifications should be justified 

through the person-centered planning 

process. The service provider does not 

lead the person-centered service 

planning process; it is driven by the 

individual and includes people chosen 

by the individual. We have revised the 

rule to require that any modification to 

the additional conditions under 

§ 441.710(a)(1)(vi)(A) through (D) must 

be supported by a specific assessed need 

and justified in the person-centered 

service plan. We also delineated specific 

requirements to support that 

justification as well as expectations for 

the intervention. 

Comment: Several commenters asked 

how frequently the assessment must be 

made if the condition causing the 

modification of the ‘‘additional 

conditions’’ was not likely to improve. 

One commenter recommended that 

CMS amend the current language to 

clarify that the specific assessed need 

must be of the individual, and should 

indicate that a determination has been 

made regarding the timeframe that the 

modification of conditions will be in 

effect. 

Response: Per the response to the 

previous comments, we have revised the 

rule to require that any modification to 

the additional conditions under 

§ 441.710(a)(1)(vi)(A) through (D) must 

be supported by a specific assessed need 

and justified in the person-centered 

service plan. We also state in the rule 

that reviews and any needed revision of 

the independent assessment and the 

person-centered service plan, must 

occur at least every 12 months, when 

the individual’s circumstances or needs 

change significantly, and at the request 

of the individual. 

Comment: Several commenters stated 

that CMS should not allow any 

departures from or modifications to the 

conditions. 

Response: We disagree as there may 

be reasons why a modification of the 

conditions may be necessary. 

Comment: One commenter offered 

general support of the proposed 

language’s intent and believes that the 

‘‘legally enforceable agreement’’ 

condition should never be limited, or 

modified. 

Response: We appreciate the 

commenter’s support and concern. 

While the final rules maintain the 

ability for a provider to modify this 

condition, we have added that this must 

be supported by a specific assessed need 

and justified in the person-centered 

service plan and delineated specific 

requirements to support that 

justification. 

Comment: Several commenters stated 

that CMS should clarify that all settings 

in which the individual does not have 

a regular lease or full ownership 

(including adult foster care settings) be 

considered provider-controlled. 

Response: For the purposes of this 

rule, a setting is considered providerowned or controlled, when the setting 

in which the individual resides is a 

specific physical place that is owned, 

co-owned, and/or operated by a 

provider of HCBS. 

Comment: Several commenters 

suggest that CMS clarify that all settings 

that require individuals to automatically 

transfer their income to service 

providers for the purpose of SSI/SSDI or 

other disability payments are not HCB 

settings for purposes of the Medicaid 

program. 

Response: Room and board is not 

covered under Medicaid state plan 

HCBS. This rule does not specify how 

payment for room and board should be 

made. 

Comment: One commenter expressed 

that all requirements listed for providerowned or controlled settings should be 

a part of the final rule. The commenter 

also indicated concern that the example 

given in the rule creates the impression 

that addressing safety needs of persons 

with dementia is only one of many 

possible examples of how conditions 

might be modified. 


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Response: This was only intended as 

one example of this provision and is not 

depicting a full range of possible 

situations. To avoid confusion, and to 

clarify that person-centered planning is 

based on the person and not on his/her 

diagnosis, we have deleted this example 

from the regulation text. 

Comment: One commenter stated that, 

in addition to the provisions at 

§ 441.530(a)(1)(vi) and 

§ 441.530(a)(2)(v), other provisions can 

be used to ensure that the settings in 

which residents receive 1915(k) CFC 

services are designed to facilitate the 

actual integration of the residences that 

are provider-owned or controlled for 

providing residential support to 

recipients. 

Response: We agree with the 

commenter. For a setting proposed 

under 1915(k) CFC to be determined 

home and community-based, the setting 

must meet all requirements set forth in 

§ 441.530. 

Comment: One commenter urged 

CMS to give serious consideration to 

striking the ‘‘conditions for providerdriven setting’’ provision. The 

commenter stated that though the rules 

attempt to create a homelike 

environment by proposing conditions, 

no reasonable person would accept 

these conditions as homelike. In 

addition, the commenter stated that 

regardless of the size of a provider 

controlled setting, the very nature of 

these environments isolates, congregates 

and segregates the individuals living 

there, and limits personal freedom. 

Response: We disagree. We believe 

there are provider-owned or controlled 

settings that not only meet the overall 

HCB qualities but also meet the 

additional conditions and allow for full 

integration into the community; 

therefore, we will keep the conditions to 

ensure the standards for HCB settings 

are met. We believe the commenter’s 

request to delete the conditions for 

provider-controlled settings would not 

accomplish the suggested purpose. 

Comment: Several commenters 

suggested that CMS consider giving 

human rights reviewing committees the 

added responsibility of reviewing 

modifications, and requiring a clear 

appeals process for any individual who 

does not agree to the conditions. 

Response: We have amended the 

regulations to include a requirement for 

informed consent and we specified that 

any modification of the additional 

conditions must be supported by a 

specific assessed need and justified in 

the person-centered service plan. We 

will add further descriptions in future 

guidance. 

Comment: Several commenters 

request that CMS specify the 

requirements for provider-controlled 

settings so that providers and 

developers get the message that facilities 

cannot be built or established that are 

not the most integrated settings. 

Response: We believe that all home 

and community based settings should 

be integrated into and allow access to 

the greater community and our 

regulation already outlines additional 

criteria that must be met to qualify as a 

home and community-based setting 

where the setting is provider-controlled. 

Adding further criteria may be too 

prescriptive and could limit individual 

choice of settings. 

Comment: A few commenters believe 

the proposed regulations would 

eliminate or severely restrict HCBS in 

group homes for people with disabilities 

in which providers have adopted 

reasonable policies governing their 

operation designed to respect the 

individual’s rights and at the same time 

respect the rights of other residents. 

Response: Based on our experience 

and significant public input, we believe 

we must set minimum additional 

conditions for provider-owned or 

controlled settings to ensure that they 

are home and community-based. The 

commenters did not indicate which 

conditions would result in this impact, 

nor provide suggestions for minimum 

conditions to meet the intent of this 

provision of the rule. In an effort to 

address the concerns raised by 

commenters who feared loss of current 

residential options and the subsequent 

displacement of the individuals living 

in such settings who receive HCB 

services and the concerns raised by 

other commenters who urged us to draw 

an immediate and clear line of 

demarcation for HCBS, we will permit 

states to propose transition plans for 

existing approved HCBS under 1915(i) 

in accordance with section 

441.710(a)(3). While our expectation is 

that states would transition to 

compliance with this final rule in as 

brief a period as possible, we will allow 

states to propose a transition plan that 

encompasses a period up to five years 

after the effective date of the regulation 

if the state can support the need for 

such a period of time. States are 

expected to demonstrate substantial 

progress toward compliance throughout 

any transition period. 

Comment: One commenter believes 

the proposed regulations are biased 

against provider-owned or controlled 

residential settings through the 

proposed imposition of additional 

regulatory conditions on such settings. 

The commenter believes that many 

provider-owned residential settings are 

developed to assist with improving the 

availability of accessible and affordable 

housing so that individuals with 

developmental disabilities have some 

choice in community housing options 

and can avoid the need for unnecessary 

institutionalization. 

Response: We believe that it is 

appropriate to specify additional 

conditions for provider-owned or 

controlled settings to ensure that all 

individuals receiving HCBS are afforded 

the opportunities that are characteristic 

of living in the community. 

Comment: A few commenters stated 

their belief that the focus should not be 

on the setting, but rather an individual’s 

choices and the person-centered service 

plan. The commenter stated that 

arbitrary geographic or location specific 

criteria are not appropriate, and if a 

provider-based setting can meet all of 

the criteria in § 441.530(a)(1) or 

§ 441.710(a)(1), it should not matter 

where the provider is located. 

Response: We agree with these 

comments and believe the regulatory 

language at § 441.530(a)(1) and 

§ 441.710(a)(1) achieves this purpose. 

Comment: One commenter applauds 

use of the more general term ‘‘providerowned or controlled residential 

settings,’’ but since CMS is creating a 

new technical term defining a class of 

services, it would be prudent to offer 

clearer regulatory guidance regarding 

the reach of such a term. For example, 

would an elderly housing project that 

included service coordination and other 

services be subject to these provisions as 

a provider-owned residential setting? 

CMS may want to consider limiting this 

term to apply to state-licensed or 

certified settings to avoid confusion. 

Response: We are not defining a class 

of services. We are describing the 

conditions that provider-owned or 

controlled settings must meet to be 

considered home and community-based 

settings. If the elderly housing project is 

provider-owned or controlled, it would 

have to meet these additional HCB 

setting conditions. We do not believe 

limiting the application of the term 

‘‘provider-owned or controlled 

residential settings’’ to those licensed or 

certified by the state is in the best 

interests of the individuals served under 

the HCBS programs, nor would that 

approach be adequate to achieve the 

goal of defining the qualities and other 

requirements for settings that are home 

and community-based. 

b. Target Population 

The Affordable Care Act added 

section 1915(i)(7) to the Act, which 

allows states to target the section 1915(i) 


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benefit to specific populations. We 

proposed that target population(s) may 

be based on diagnosis, disability, 

Medicaid eligibility groups, and/or age. 

States may target services only to 

eligible individuals in their chosen 

target groups, or provide different 

services within the 1915(i) benefit to 

different target groups. Due to the ability 

to define targeted populations, a state 

may now propose more than one set of 

section 1915(i) benefits, with each 

benefit package targeted toward a 

specific population. A state may also 

propose one section 1915(i) benefit that 

targets multiple populations, and may 

offer different services to each of the 

defined target groups within the benefit. 

Additionally, a state may propose a 

section 1915(i) benefit that is not 

targeted to a specific population and 

instead uses only the needs-based 

criteria to establish eligibility for the 

benefit. The targeting option does not 

permit states to target the benefit in a 

manner that would not comply with 

section 1902(a)(23) of the Act regarding 

free choice of providers, or that 

forestalls the opportunity for 

individuals to receive services in the 

most integrated setting possible. 

Therefore, targeting criteria cannot have 

the impact of limiting the pool of 

qualified providers from which an 

individual would receive services, or 

have the impact of requiring an 

individual to receive services from the 

same entity from which they purchase 

their housing. For example, we would 

not allow states to establish targeting 

criteria that would restrict eligibility to 

only individuals who reside in 

provider-owned and/or operated 

settings. If a state elects to target the 

benefit to a specific population or 

populations, it must still establish 

needs-based criteria that individuals 

must meet in order to be eligible for 

section 1915(i) of the Act services and 

the state may also establish needs-based 

criteria for individual services within 

the benefit. The needs-based criteria 

may include specific needs that are 

applicable to the targeting criteria, but 

may also include general needs that 

apply across all of the populations 

included in the benefit. 

Comment: One commenter requested 

that CMS not limit people seeking 

mental health treatment. 

Response: We believe this commenter 

has misunderstood the intent of this 

provision of the rule, which does not 

allow states to limit number of 

participants but allows states the option 

to target section 1915(i) of the Act to 

specific population types. So in this 

example, a state could target a section 

1915(i) benefit to individuals with a 

chronic mental illness, but would not be 

able to limit or cap the number of 

people meeting this target criterion. 

Anyone meeting this target criterion, 

and also meeting the other eligibility 

requirements under section 1915(i) of 

the Act, would be eligible to receive any 

needed services included in the state’s 

benefit. 

Comment: A couple of commenters 

pointed out that the reference to target 

criteria in § 441.656(b)(2) of this section 

was incorrect. 

Response: We thank the commenters 

for noting this error and we have 

corrected this reference so that it now 

reads as ‘‘§ 441.710 (e)(2).’’ 

Comment: Two commenters 

expressed concern that allowing 

multiple target groups within one 

1915(i) state plan HCBS benefit might 

result in a net reduction of service 

availability, and lead to institutional 

care. One ‘‘fears that the blending of 

target audiences’’ will ‘‘leave the 

voiceless minority without access to 

adequate services.’’ 

Response: As an optional approach 

available to states, this option is not 

intended to restrict or compromise 

service availability. States can choose 

which services they will offer under a 

1915(i) State plan benefit, regardless of 

whether they take up the additional 

option to target a population(s). As with 

all state plan services, states must offer 

all needed services that they choose to 

include under their benefit to all who 

are eligible. 

Comment: One commenter expressed 

concerns that allowing states to serve 

multiple target populations in one 

benefit will lead to states serving 

‘‘incompatible populations in the same 

service setting.’’ They cited examples in 

states where individuals with one type 

of disability were harmed by others with 

a different disability, and requested 

CMS to expressly prohibit states from 

serving different populations in the 

same location. 

Response: This section of the 

regulation does not speak to combining 

different target groups in the same living 

situations, but rather the inclusion of 

multiple target groups in the overall 

benefit design and operation. Including 

multiple target groups in one benefit 

will not alleviate responsibilities of 

States for quality assurance and 

detailing their quality improvement 

strategies for that benefit. 

Comment: A few commenters 

indicated that we should explicitly state 

that ‘‘a state may propose more than one 

set of section 1915(i) of the Act benefits, 

with each benefit package targeted 

toward a specific population’’ and that 

the state may also target multiple 

populations under one set of benefits or 

offer different services to each of the 

defined target groups within the benefit. 

Response: Under § 441.710(e)(2)(ii) of 

the regulation text, we specify ‘‘The 

State may elect in the State plan 

amendment to limit the availability of 

specific services defined under the 

authority of § 440.182(c) or to vary the 

amount, duration, or scope of those 

services, to one or more of the group(s) 

described in this paragraph.’’ In the 

preamble to the proposed rule, we 

stated ‘‘Due to the ability to define 

targeted populations, a state may now 

propose more than one set of section 

1915(i) benefits, with each benefit 

package targeted toward a specific 

population. A state may also propose 

one set of section 1915(i) benefits that 

targets multiple populations, and may 

offer different services to each of the 

defined target groups within the benefit. 

Additionally, a state may propose a 

section 1915(i) benefit that does not 

choose non-application of comparability 

and instead uses only the needs-based 

criteria to establish eligibility for the 

benefit.’’ A change to the regulation text 

is not necessary but we will include this 

information in future guidance. 

Comment: One commenter recognized 

the benefit of the targeting option as 

‘‘many states will not consider the State 

Plan HCBS benefit if it does not include 

mechanisms to control costs, especially 

given this existing economic climate.’’ 

However, the commenter also noted that 

‘‘generally systems should be designed 

to promote community access over 

institutional access, regardless of 

individuals’ presenting characteristics.’’ 

Response: We agree with this 

commenter and note that the ability to 

target the benefit to specific populations 

is a state option afforded by section 

1915(i) of the Act, and thus, not 

something being made available solely 

through this regulation. 

Comment: A couple commenters 

noted that § 441.656(e)(2)(ii) references 

‘‘§ 440.182(b)’’ which should be 

referenced as § 440.182(c). 

Response: We thank the commenters 

for noting this error and have corrected 

this reference at § 441.710(e)(2)(ii) so 

that it now references services defined 

under the authority of § 440.182(c). 

Comment: A couple of commenters 

requested that the regulation explicitly 

state in § 441.656(e) that states may 

propose a section 1915(i) benefit that 

‘‘does not choose non-application of 

comparability and instead uses only the 

needs-based criteria to establish 

eligibility for the benefit.’’ 

Response: Revision to regulatory text 

is not needed as § 441.710(e)(2) already 

specifies that disregarding 


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comparability is a State option: ‘‘In the 

event that a State elects not to apply 

comparability requirements:* * *’’ And 

§ 441.715 specifies the requirement that 

States establish needs-based criteria for 

determining an individual’s eligibility 

under the State plan for the HCBS 

benefit. 

6. Needs-Based Criteria and Evaluation 

(§ 441.715) (Proposed § 441.659) 

Section 1915(i)(1)(A) of the Act 

requires states to establish needs-based 

criteria for eligibility for the State plan 

HCBS benefit. Institutional level of care 

criteria must be more stringent than the 

needs-based criteria for the State plan 

HCBS benefit. Additionally, the state 

may establish needs-based criteria for 

each specific State plan home and 

community-based service that an 

individual would receive. 

Comment: Some commenters 

supported the use of needs-based 

criteria in determining eligibility for 

State plan HCBS. Several also expressed 

appreciation of the statutory 

requirement that a state notify CMS and 

the public 60 days in advance of any 

proposed restriction on the needs-based 

eligibility criteria (adjustment 

authority), if the number of individuals 

enrolled in the benefit exceeds the 

projected number submitted annually to 

CMS. These commenters agreed that 

notification to CMS should take the 

form of a State plan amendment. 

Response: We appreciate these 

comments supporting this provision of 

the rule. 

Comment: A couple of commenters 

suggested that CMS clarify that a 60-day 

public notice be required for any 

changes in need-based criteria, as well 

as any related level of care changes, and 

to include notifying the individual and 

any authorized representative. They also 

requested that this notice include 

guidance for states on the individual’s 

appeals rights and stipulate that appeals 

information must be included in 

communications to individuals. A 

couple of commenters also 

recommended a formal comment 

period, to provide an established 

mechanism for public input on the state 

proposed modification prior to federal 

action. 

Response: Section 441.715(c)(1) 

requires states to provide at least 60 

days notice of a proposed modification 

of the needs-based criteria to the 

Secretary, the public, and each 

individual enrolled in the State plan 

HCBS benefit. In addition, 

§ 441.715(c)(5) requires any changes in 

service due to the modification of 

needs-based criteria under the 

adjustment authority to be treated as 

actions as defined in § 431.201 and 

these actions are subject to the fair 

hearing requirements of part 431 

subpart E of this chapter. States are also 

required under § 431.12 to provide for a 

medical care advisory committee to 

advise the Medicaid agency director 

about health and medical care services, 

and the committee must have the 

opportunity for participation in policy 

development and program 

administration. We encourage states to 

seek effective public engagement in all 

of their Medicaid 1915(i) activities. 

Comment: A couple of commenters 

recommended a formal comment 

period/participant notice be required 

when a state proposes to change its 

level-of-care criteria for institutional 

care. 

Response: Criteria for institutional 

care (level of care) are set by states as 

a means to determine an individual’s 

medical necessity for a service. These 

criteria are state policy, not approved by 

us, and not articulated in the Medicaid 

State plan, so we do not have an 

opportunity to require notice or 

comment periods. States could adopt 

their own notice and comment 

requirements. We note that to the extent 

a change in level of care would affect 

access to Medicaid services, states are 

required to notify beneficiaries and 

provide an appeal process. We may 

review state institutional level of care 

criteria, for example, to determine if 

stringency requirements are met in 

considering a state plan amendment to 

establish the State Plan HCBS benefit 

under section 1915(i) of the Act. Such 

review is for approval of the proposed 

benefit, not approval of the level of care 

criteria, and our review does not reopen 

state level of care policy for public 

comment. 

Comment: A couple of commenters 

recommended that we change ‘‘will’’ to 

‘‘may’’ in the proposed regulatory 

language so that CMS will retain some 

discretion to adapt to unexpected 

circumstances. 

Response: We agree with this 

recommendation from commenters. 

This sentence in the regulation at 

§ 441.715(c) now reads ‘‘The Secretary 

may approve a retroactive effective date 

for the State plan amendment modifying 

the criteria, as early as the day following 

the notification period required under 

paragraph (c)(1) of this section, if all of 

the following conditions are met . . .’’ 

Comment: One commenter 

recommended that the 60 day written 

notice to the Secretary (for proposals to 

revise needs-based criteria) be provided 

at the same time as tribal notice is made, 

60 days in advance of submission of the 

State plan amendment. 

Response: We acknowledge the 

comment with the following reminders: 

§ 430.16 provides the Secretary 90 days 

to approve or disapprove a State plan 

amendment, or request additional 

information. If the state implements the 

modified criteria prior to the Secretary’s 

final determination with respect to the 

state plan amendment, the state would 

be at risk for any actions it takes that are 

later disapproved. Further, Section 

5006(e) of the American Recovery and 

Reinvestment Act of 2009 (Recovery 

Act), Public Law 111–5, codified at 

section 1902(a)(73), requires states to 

solicit advice from tribes and Indian 

Health Programs prior to the state’s 

submission of any Medicaid or CHIP 

State plan amendment likely to have a 

direct effect on Indians, Indian Health 

Programs, or Urban Indian 

Organizations. The statutory 

requirement is that states must solicit 

this advice prior to submission of a SPA 

or waiver to CMS following the process 

described for soliciting advice from 

Indian Health Providers and Urban 

Indian Organizations in each state’s 

approved State Plan. 

Comment: One commenter requested 

revision to § 441.659(b) to specify that 

there it is not a requirement that 

institutional or home and communitybased waiver criteria be higher than 

their level prior to implementing the 

State plan HCBS benefit. 

Response: We are unable to make this 

revision as it is would not comport with 

section 1915(i)(1)(B) of the Act, which 

requires needs-based criteria for receipt 

of services in nursing facilities, 

intermediate care facilities for 

individuals with intellectual 

disabilities, and hospitals, or waivers 

offering HCBS, to be more stringent than 

the needs-based criteria for the State 

plan HCBS benefit. 

Comment: One commenter indicated 

that their state is attempting to further 

change the Medicaid institutional level 

of care criteria to restrict Medicaid 

eligibility to the lower need individuals 

in several categories of settings, 

including the HCBS setting, and 

expressed concern about how the 

federal proposal would intersect with 

this state proposal, and whether the 

criteria would align, be duplicative, or 

conflicting. 

Response: In order to implement and 

maintain section 1915(i) State plan 

HCBS, the state’s institutional level of 

care criteria must be more stringent than 

the needs-based criteria for the State 

plan HCBS benefit. 

We note that there are issues for states 

to consider other than section 1915(i) of 

the Act that will influence decisions on 

levels of care and needs-based criteria, 


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that are beyond the scope of this 

regulation, for example, statutory 

requirements for maintenance of effort 

(MOE) in effect at the time of this final 

rule, requirements of the ADA and the 

Olmstead decision, and funding 

constraints. Under section 2001(b) of the 

Affordable Care Act, States are not 

permitted to establish eligibility 

standards, methodologies, or procedures 

that are more restrictive than those in 

place on the date of the Affordable Care 

Act’s enactment (March 23, 2010). For 

adults, this requirement lasts until the 

Secretary determines that a health 

insurance exchange is fully operational 

in the state; for children under the age 

of 19, the requirement lasts until 

September 30, 2019. Because the 

application of LOC requirements for 

institutions and HCBS waivers may 

have an impact on Medicaid eligibility 

for some individuals, we encourage 

states interested in using the State plan 

HCBS to contact CMS for technical 

assistance in meeting these statutory 

requirements. 

Comment: While several commenters 

expressed support for grandfathering of 

institutional and waiver participants 

when states increase stringency for 

institutional level of care, they also had 

concerns that the stringency 

requirements might be interpreted to 

allow a state to change the needs-based 

criteria between the institutional and 

waiver level of care and the state plan 

home and community-based level of 

care with the net effect that people 

would not be eligible for either. They 

recommended that CMS revise the 

regulation to require states to 

grandfather HCBS participants who 

would lose Medicaid eligibility due to 

‘‘stringency’’ adjustments. Two other 

commenters also noted that CMS 

misinterpreted the statute where it 

specifies that FFP ‘‘shall’’ continue to be 

available, as a state option stating their 

belief that this indicates a state 

requirement and not an option. 

Response: The statute at section 

1915(i)(5) of the Act does not create a 

mandate for states to continue to 

provide assistance to such individuals 

and to claim FFP. The statute permits 

states the option to continue receiving 

FFP for individuals who are in an 

institution or HCBS waiver, if a state 

needs to modify section 1915(i) needsbased criteria after implementation of a 

section 1915(i) benefit, and also needs 

to modify institutional needs-based 

criteria in order to meet the 1915(i) 

stringency requirement. Therefore, we 

have not adopted this change as 

requested to regulation text language at 

§ 441.715(b)(2). However, we note that 

other legal provisions, such as those 

related to discharge planning, might 

require the continued provision of 

certain services to individuals. 

Comment: One commenter 

recommended deletion of the provision 

at proposed § 441.659(c)(4)(ii). The 

commenter believes that the HCBS 

population has predictable fluctuations 

in status and therefore the 

grandfathering provision should be 

flexible enough to protect individuals 

who go through short-term transitions. 

Response: We disagree with this 

recommendation and have not made 

this revision as requested. Section 

441.715(c)(4)(ii) is an important 

provision that requires states, when they 

revise needs-based criteria after 

implementation of the benefit 

(adjustment authority), to continue 

providing State plan HCBS to 

individuals who were eligible prior to 

the change but no longer meet the state’s 

new needs-based criteria until such time 

as they no longer meet Medicaid 

eligibility requirements or eligibility 

requirements to be served under the 

state’s section 1915(i) benefit. 

Comment: One commenter 

recommended that CMS define the term 

‘‘independent’’ in the regulation. 

Response: This is defined at 

§ 441.730. Section 441.715 already 

indicates that an agent (who performs 

the evaluation) must be independent 

and qualified as defined in § 441.730. 

Comment: A couple of commenters 

commended the inclusion of a 

requirement at § 441.659(d)(3) to consult 

with the individual, but recommend 

this be defined and strengthened to 

include a more central role for the 

individual, including for example 

consultation with providers, social 

service staff, or others identified by the 

individual. Another requested 

§ 441.659(d)(3) be changed to reflect that 

the person-centered service plan should 

have the person ‘‘directing’’ the plan 

whenever possible and suggested that if 

the individual wishes, other people of 

the individual’s choice be consulted. 

Response: This section of the rule 

pertains to the independent evaluation 

to determine eligibility. Therefore, we 

do not believe it is necessary to include 

requirements about the person-centered 

service planning process, for which 

there are separate regulations at 

§ 441.725(a) and which already reflect 

the recommendations of this 

commenter. 

Comment: A couple of commenters 

noticed that § 441.659(b)(2) includes an 

incorrect reference to (c)(7). 

Response: We have corrected the text 

in § 441.715(b)(2) of the final rule to 

change the reference from (c)(7) to (c)(6). 

Comment: One commenter noticed 

that § 441.659(d) incorrectly references 

§ 441.656(a)(1) through (5), and that 

§ 441.659(d)(2) incorrectly references 

§ 441.656(a)(1) through (3) and (b)(2). 

Response: In § 441.715(d), we have 

corrected the reference so that it now 

reads as § 441.715. In § 441.715(d)(2), 

we have also revised the reference so 

that it now reads correctly as § 435.219 

and § 436.219. 

Comment: One commenter requested 

that we eliminate the word ‘‘eligibility’’ 

from § 441.659 and replace it with 

‘‘services’’ to eliminate confusion so 

that eligibility would be centered on 

categorical eligibility while service 

criteria were used for needs-based 

criteria. 

Response: We are unable to make this 

requested revision, since needs-based 

criteria are necessary for eligibility, in 

addition to the other eligibility 

requirements specified in § 435.219 and 

§ 436.219. 

Comment: A couple of commenters 

requested that the regulation include an 

individual’s inability to perform 2 or 

more ADLs or IADLs as a requirement 

for eligibility under section 1915(i) of 

the Act. 

Response: This is not an eligibility 

requirement under the statute and we 

are not able to make this requested 

revision. While 1915(i)(1)(F)(i) requires 

that the independent assessment 

include an objective evaluation of an 

individual’s inability or need for 

assistance to perform 2 or more ADLs, 

this is only a suggested element at 

1915(i)(1)(D)(i) and thus, not required 

for an individual to be determined 

eligible for 1915(i) State plan HCBS. 

Comment: One commenter requested 

that we add a provision to 

§ 441.659(d)(3) to include consultation 

with the parents of a child. 

Response: We believe that the broader 

term ‘‘individual’s authorized 

representative,’’ used in 1915(i) of the 

Act and in this regulation, would 

include, in the case of a child, the 

child’s parents or legal guardian, and 

does not need to be explicitly stated in 

regulation. 

Comment: Another commenter 

recommended that when assessing the 

individual’s support needs for purposes 

of evaluation of eligibility, that informal 

supports arranged by the individual not 

be considered unless the individual 

explicitly chooses to include them. 

Response: This suggestion is already 

captured in § 441.720(a)(2) where the 

regulation requires the assessment to 

‘‘...include the opportunity for the 

individual to identify other persons to 

be consulted, such as, but not limited to, 

the individual’s spouse, family, 


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guardian, and treating and consulting 

health and support professionals 

responsible for the individual’s care.’’ 

Comment: A couple of commenters 

stressed the importance that FFP be 

available for evaluations even when an 

individual is subsequently found 

ineligible for section 1915(i) of the Act 

services. 

Response: As stated in section 

III.N.2.of the preamble to the proposed 

rule, FFP is available for evaluation and 

assessment as administration of the 

approved state plan prior to an 

individual’s determination of eligibility 

for and receipt of other section 1915(i) 

of the Act services. If the individual is 

found not eligible for the State plan 

HCBS benefit, the state may claim the 

evaluation and assessment as 

administration, even though the 

individual would not be considered to 

have participated in the benefit for 

purposes of determining the annual 

number of individuals served by the 

benefit. 

Comment: Some commenters 

requested clarification regarding level of 

need, as defined by the state and 

provider, including whether a state may 

leverage existing and/or specific 

instruments that are used to determine 

HCBS waiver eligibility in order to 

determine whether a beneficiary meets 

the State plan HCBS needs assessment 

criteria for participation, understanding 

that the State plan HCBS benefit 

eligibility criteria must be less stringent 

than that used for HCBS waiver 

programs. 

Response: The state’s process for 

determining eligibility must meet the 

requirements at § 441.715(d). We do not 

require a specific instrument(s) that 

states must use in meeting these 

requirements. 

Comment: One commenter indicated 

that if states establish needs-based 

criteria for each specific service that an 

individual receives, it would add to the 

complexity of the assessment service 

planning, the overall costs of program 

administration, and potential 

beneficiary and family caregiver 

confusion. They stressed that such 

variability in Medicaid across states 

could become extremely difficult to 

track and monitor. 

Response: As specified in the 

regulation, this is optional for states. 

This option could be of benefit for states 

that wish to include services for 

individuals with specific needs within a 

section 1915(i) of the Act benefit that is 

not targeted to a specific population 

group(s) and is designed to provide a 

broad array of services. 

Comment: One commenter requested 

CMS require states to make needs-based 

criteria publicly available, including 

public Web site posting. Another 

inquired how CMS will maintain 

publicly available documents relating to 

the state’s modification proposal, 

approval and denial letters, comments 

submitted and communications with the 

state. 

Response: We agree that web posting 

is an ideal way to make state plans and 

amendments available to the public, and 

we are building a web-based 

information system for all of Medicaid 

and CHIP that will provide immediate 

access to state plan amendments. 

Section 1915(i) of the Act SPAs will be 

part of that system. Until then, SPAs are 

processed on paper and posted 

sometime after approval. We encourage 

states to provide for effective public 

engagement in all of their Medicaid 

program activities, and states are 

required to provide 60 day public notice 

when states change reimbursement 

methodology or revise CMS approved 

section 1915(i) needs-based criteria. 

7. Independent Assessment (§ 441.720) 

(Proposed § 441.662) 

Section 1915(i)(1)(E) of the Act 

describes the relationship of several 

required functions. Section 

1915(i)(1)(E)(i) of the Act refers to the 

independent evaluation of eligibility in 

section 1915(i)(1)(A) and (B) of the Act, 

emphasizing the independence 

requirement. Section 1915(i)(1)(E)(ii) of 

the Act introduces the requirement of an 

independent assessment following the 

independent evaluation. Thus, there are 

two steps to the process: The eligibility 

determination, which requires the 

application of the needs-based criteria 

and any additional targeting criteria the 

state elects to require; and the 

assessment for individuals who were 

determined to be eligible under the first 

step, to determine specific needed 

services and supports. The assessment 

also applies the needs-based criteria for 

each service (if the state has adopted 

such criteria). Like the eligibility 

evaluation, the independent assessment 

is based on the individual’s needs and 

strengths. The Act requires that both 

physical and mental needs and 

strengths are assessed. We note that 

while section 1915(i)(1)(F)(i) of the Act 

requires that the independent 

assessment include an objective 

evaluation of an individual’s inability or 

need for assistance to perform 2 or more 

ADLs, this is only a suggested element 

at section 1915(i)(1)(D)(i) of the Act and 

thus, not required for an individual to 

be determined eligible for 1915(i) State 

plan HCBS. 

These requirements describe a personcentered assessment including 

behavioral health, which will take into 

account the individual’s total support 

needs as well as the need for the HCBS 

to be offered. Section 1915(i)(1)(E)(ii) of 

the Act requires that states use the 

assessment to: determine the necessary 

level of services and supports to be 

provided; prevent the provision of 

unnecessary or inappropriate care; and 

establish a written individualized 

service plan. 

To achieve the three purposes of the 

assessment listed above, the assessor 

must be independent; that is, free from 

conflict of interest with regard to 

providers, to the individual and related 

parties, and to budgetary concerns. 

Therefore, we proposed specific 

requirements for independence of the 

assessor in accordance with section 

1915(i)(1)(H)(ii) of the Act, and we will 

apply these also to the evaluator and the 

person involved with developing the 

person-centered service plan, where the 

effects of conflict of interest would be 

equally deleterious. These 

considerations of independence inform 

the discussion below under section 

1915(i)(1)(H)(ii) of the Act regarding 

conflict of interest standards. 

Comment: Many commenters 

expressed support of the independent 

assessment requirements in this section 

of the rule. One commenter who 

expressed agreement with 

§ 441.662(a)(1), stated that individuals 

with disabilities have a right to choose 

their own lifestyle, just like their peers 

without disabilities. 

Response: We appreciate these 

comments and support. 

Comment: One commenter stated that 

clear assessment standards are 

necessary to ensure that individuals 

deemed eligible for section 1915(i) of 

the Act services receive the services that 

are most appropriate and effective. 

Response: We agree and have 

specified these requirements in 

§ 441.720. 

Comment: A commenter requested 

that we ensure there are assessments of 

need for individuals residing in facilitybased settings before the development of 

their person-centered service plans. 

Response: The requirements of this 

regulation pertain to all section 1915(i) 

of the Act eligible and enrolled 

individuals residing in home and 

community-based settings, regardless of 

the setting. 

Comment: One commenter stated 

concern that § 441.662(a)(1)(i)(A) refers 

to ‘‘health care professionals,’’ given 

that often assessments of support 

needs—such as the Supports Intensity 

Scale and functional-behavioral needs 

assessments—are made by case 


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managers or social workers, rather than 

health care professionals. 

Response: As enrolled Medicaid 

providers of Medicaid services or 

administrative activities, case managers 

and social workers are included in our 

regulation as ‘‘health care 

professionals.’’ 

Comment: A couple of commenters 

requested that CMS add to paragraph 

(a)(2) ‘‘friends’’ as respondents that the 

individual may identify to participate in 

the assessment. They also commented 

that this paragraph should require that 

the assessor actually contact and 

involve individuals identified. 

Response: We do not believe it is 

necessary to add an exhaustive list of all 

the examples of the persons that an 

individual participant may choose to 

include in this process. The requirement 

specifies a few examples but 

emphasizes that these are just examples 

and not a limitation. 

Comment: A couple of commenters 

requested clarification in § 441.662 

(a)(4) on the requirements for a caregiver 

assessment, including what it means, 

the process, and purpose. Another 

commenter suggested its removal, 

stating that it unnecessary since there is 

already an assurance elsewhere in the 

regulations that states must assure the 

enrollees’ health and welfare. However, 

many others expressed their support of 

this provision and stressed the 

importance of its inclusion in the 

regulation; some even urged CMS to 

include this under other Medicaid 

HCBS authorities. One of these 

commenters requested the addition that 

the caregiver assessment will assess the 

training, support and respite needs and 

identifying options for receiving these 

services. Another stated that the 

assessment should evaluate the 

caregiver’s well-being, needs, strengths 

and preferences, as well as the 

consequences of caregiving on the 

caregivers. 

Response: We included this provision 

in the proposed rule as a result of 

comments received in response to the 

first proposed rule pertaining to section 

1915(i) of the Act, which was not 

finalized. Those commenters stated that 

taking into account the capacity of 

primary caregivers to provide for the 

individual’s assessed needs is 

necessary, and some stated that natural 

supports often have declining capacity, 

and to fail to take this into account leads 

to unrealistic plans. We agree that when 

caregivers are being relied upon to 

implement the person-centered service 

plan, it is important that a caregiver 

assessment be required in order to 

acknowledge and support the needs of 

informal family caregivers. We agree 

that caregivers provide critical care and 

support that enables individuals to live 

in their homes and communities. When 

there is a caregiver involved, an 

assessment of the caregiver’s needs is 

essential to facilitate the individual’s 

linkage to needed supports. We 

appreciate the comments regarding 

definition and process, which we will 

consider for future guidance. 

Comment: Many commenters 

requested that CMS add language to the 

rule that specifically addresses 

assessment of needs related to cognitive 

impairment. A couple of commenters 

noted that this is needed to promote 

early diagnosis of memory problems and 

prevent the cycle of under-diagnosis 

and misdiagnosis of Alzheimer’s 

disease. They stated that many 

individuals with dementia need 

supervision and cueing or are unable to 

perform instrumental activities of daily 

living. Others expressed support of a 

more comprehensive approach to 

include social, medical, behavioral, 

emotional, physical and cognitive 

strengths and challenges, and also noted 

that on-going training and coaching in 

understanding cognitive and behavioral 

issues unique to brain injury in the 

planning process should be a part of the 

delivery system. They stated that CMS 

and states will need to work with 

program participants and community 

advocates to determine the appropriate 

depth of assessment, allowing for an 

informed planning process while also 

being respectful of some individuals’ 

desire for a non-intrusive approach. 

They also noted that a range of 

professionals may be suitable for 

assessing cognitive as well as behavioral 

issues, including neuropsychologists, 

psychologists trained in brain injury, 

educators, and speech and language 

therapists. 

Response: We agree with these 

comments and have added ‘‘cognitive’’ 

to § 441.720(a)(4). 

Comment: One commenter expressed 

support of the requirement for a personcentered assessment process. 

Response: We agree that this is 

essential to the assessment and personcentered service planning process. 

Comment: One commenter stated that 

it would be helpful for providers and 

practitioners to have a degree of 

flexibility in prioritization and to 

override recommendations for lower 

levels of care. They noted that this 

could be kept at a particular level (that 

is, no more than 5 percent of the time), 

but there are certain conditions and 

situations that can result in skewed 

assessment results. 

Response: We do not agree with this 

comment. We do not believe it would be 

consistent with the intent of this subsection, or with the person-centered 

process requirements at § 441.725, and 

would enhance the potential for conflict 

of interest. 

Comment: A few commented on the 

statutory requirement regarding 

assessment of an individual’s inability 

to perform two or more ADLs. One 

suggested that the assessor also consider 

cueing as assistance, whether by 

someone, a device or service animal in 

addition to individual assistance or 

assistive technology. Another stated that 

the statute does not set any specific 

needs-based or ADL criteria as a 

standard for eligibility for any HCBS, 

and that CMS should clarify that states 

should not interpret the two ADLs 

evaluation criteria in the assessment to 

mean that two ADLs is the standard for 

eligibility for the state plan option or for 

any specific services under the state 

plan option. One commenter 

recommended that CMS clarify in the 

preamble that while ADL review is a 

required element of the assessment, the 

result of the ADL review cannot be a 

litmus test for access to services. 

Response: An objective evaluation of 

the individual’s inability to perform two 

or more ADLs is, in statute, a required 

element of the independent assessment 

but it is only a permissible element of 

the independent eligibility evaluation. 

The statute does not specify that 

eligibility for state plan HCBS must be 

based on the evaluation of the 

individual’s inability to perform a 

minimum number of ADLs. We 

concluded that partial or complete 

inability to perform two or more ADLs 

is not a statutory prerequisite to 

eligibility for State plan HCBS. 

However, the evaluation of an 

individual’s inability to perform two or 

more ADLs, as required under section 

1915(i)(1)(F)(i) of the Act, is related to 

the state’s responsibility under section 

1915(i)(1)(E)(ii) of the Act to use the 

results of the assessment to determine a 

necessary level of services and supports, 

prevent the provision of unnecessary or 

inappropriate care, and establish an 

individualized care plan. 

Comment: Some commenters 

recommended that in-person 

assessments be required or, 

alternatively, that telemedicine 

assessments be allowed only in very 

limited circumstances when in-person 

assessments cannot practically be 

performed. Other commenters agreed 

that it may be appropriate to use 

technology to conduct assessments in 

certain circumstances, such as for 

individuals in rural or underserved 

areas, but not for beneficiaries for whom 

such circumstances do not create 


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barriers to an in-person and in-home 

assessment. They suggested additional 

language to limit use of technology to 

conduct assessments to individuals in 

rural areas, or other special 

circumstances by requiring states to 

make an individualized determination 

of the need for substituting telemedicine 

for genuinely in-person assessments. 

One commenter stated that it should 

only be allowed if the state makes an 

individualized determination of the 

need for substituting telemedicine for 

genuinely in-person assessments. 

Another stated that assistive technology 

or other alternative or augmentative 

communication should be made 

available for those who would benefit 

from it. A few commenters stated that 

§ 441.662(a)(1)(i)(B) should include, if 

the individual wishes, the presence of 

family, a peer/parent support provider, 

or other people of the individual’s 

choice. 

Response: In our preamble to the 

proposed rule, we indicated that we 

added this provision of the regulation in 

recognition that many states are 

developing infrastructure and policies 

to support the use of telemedicine and 

other ways to provide distance-care to 

individuals in order to increase access 

to services in rural areas or other 

locations with a shortage of providers. 

However, we are concerned that by 

limiting this technology to only these 

circumstances, the regulation may end 

up precluding instances where it may be 

useful, maybe even essential. Therefore, 

we are not adding this limitation to the 

regulation, but will include this 

example in future guidance and monitor 

its use by states. We also note that these 

requirements do not override the other 

requirements for the assessment in this 

section, including the person-centered 

process and consultation with persons 

that the individuals choose to include. 

Comment: A couple of commenters 

stated that § 441.662(a)(7) regarding 

habilitation services specifies that only 

Section 110 of the Rehabilitation Act of 

1973 and the Individuals with 

Disabilities Education Improvement Act 

of 2004 are primary payors and that 

(a)(8) should require documentation 

indicating that State plan HCBS also 

available through other Medicaid 

services or other federally funded 

programs, will not be provided: 

‘‘No State plan HCBS are provided 

which would otherwise be available in 

the same amount, scope, and duration to 

the individual through other Medicaid 

services or other federally funded 

programs available under Section 110 of 

the Rehabilitation Act of 1973 and the 

Individuals with Disabilities Education 

Improvement Act of 2004.’’ 

Response: We do not agree with this 

suggested addition. The broader 

requirement of this provision ensures 

that if the same services are available 

through other sources, then State plan 

HCBS would not be provided. Adding 

the suggested clause would leave the 

possibility for a state to claim FFP for 

a service through section 1915(i) of the 

Act before or instead of claiming it 

through these other authorities/

programs. Since the intent of this 

provision is to ensure that states only 

claim for State plan HCBS when they 

are unavailable through other sources, 

we are unable to incorporate the 

language requested. 

Comment: A couple of commenters 

recommended adding a modification so 

that § 441.662(a)(8) would require that 

the services be ‘‘immediately’’ available 

to the individual. 

Some commenters stated concern that 

a state might deny an individual’s 

ability to choose to receive a service 

through the section 1915(i) of the Act 

benefit, if that service would be 

theoretically available under another 

federal program but the fact that the 

individual was not provided with 

assistance in applying for those services 

would result in delayed access to 

services or no access to services. They 

instead proposed a ‘‘no wrong door’’ 

policy in enrolling individuals in the 

section 1915(i) of the Act State plan 

benefit, so that regardless of their 

eligibility status for services under other 

programs the individual begins 

receiving the services they are 

determined to need through their 

individualized assessment without 

having to apply or complete additional 

eligibility determinations. They also 

stated that individuals should be able to 

utilize the program that best meets their 

needs and preferences, and provides for 

the greatest degree of service 

coordination and administrative 

simplification. 

Response: We developed the 

requirements at § 441.720(a)(7) and (8) 

due to concern over duplication of 

habilitation services and other statedefined services. Additionally, since 

some individuals may be 

simultaneously receiving services 

through a HCBS waiver and the section 

1915(i) benefit, we require in 

§ 441.720(a)(9) documentation that the 

services provided through section 

1915(c) and section 1915(i) of the Act 

authorities are not duplicative for the 

same individual. This will also include 

coordination of assessments, personcentered service plan development, and 

case-management to ensure that 

individuals receiving services under 

both authorities are not subject to 

multiple assessments and personcentered service plans. We believe the 

term ‘‘available,’’ addresses the concern 

and revision is unnecessary. 

Comment: A commenter asked 

whether individuals would be required 

to utilize the State plan HCBS benefit 

first, when those services are 

duplicative of services also offered 

under a HCBS waiver for which that 

individual is eligible, such as 

habilitation services. 

Response: The determination of how 

such services would be provided must 

be made during the development of the 

person-centered service plan. 

Additionally, if the State plan HCBS 

will provide the same amount, duration, 

and scope of service as another covered 

Medicaid service, states must explain in 

their proposed SPA how they will 

ensure against duplication of service 

and payment. 

Comment: Several commenters 

expressed support of the requirement 

for the assessment to be conducted ‘‘in 

consultation with the individual, and if 

applicable, the individual’s authorized 

representative, and include the 

opportunity for the individual to 

identify other persons to be consulted, 

such as, but not limited to, the 

individual’s spouse, family, guardian, 

and treating and consulting health and 

support professionals responsible for 

the individual’s care.’’ However, one of 

these commenters stated this language 

stops short from stating that the 

participant has a role in deciding who 

participates in the assessment process, 

indicating that person-centered 

practices require that participants drive 

the assessment process, and this 

includes decisions pertaining to who is 

part of their team when identifying and 

addressing unmet need. 

Response: We believe this concern is 

fully addressed in the section pertaining 

to the person-centered planning process 

at § 441.725(a), and we have added a 

cross reference to this section to 

§ 441.720(a)(1). 

Comment: A commenter asked 

whether states can set limits on amount/ 

scope/duration of State plan HCBS 

benefits, as approved via the State plan 

amendment process. 

Response: Yes. Section 441.700 

specifies that states are to describe the 

services that they will cover under the 

State plan HCBS benefit, including any 

limitations of the services. 

Comment: One commenter expressed 

that states should have flexibility in 

choosing the independent assessor to 

serve populations. 

Response: States have the flexibility 

to determine the entity that can perform 

this function, consistent with the 


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requirements at § 441.730 regarding 

qualifications and § 441.720 regarding 

the independent assessment. 

Comment: One commenter noted that 

they have seen great variability in 

assessment results for the same 

individual depending on what 

incentives staff have for scoring a child 

or adult into or out of particular 

specialty services. They expressed that 

it needs to be clear which care provider 

or entity is responsible for completion 

of assessment for a particular patient 

and, if there are competing assessment 

results, which provider’s or entity’s 

assessment is prioritized. 

Response: We agree, which is why we 

emphasized the section 1915(i) of the 

Act requirement for conflict of interest 

standards at § 441.730(b). When a state 

proposes a SPA to add section 1915(i) 

of the Act HCBS, we require that the 

state specify the entity that will be 

responsible for the assessment, the 

qualifications of that entity, and how 

the state will meet the conflict of 

interest requirements at § 441.730(b). 

The commenter mentions the presence 

of multiple assessments with competing 

assessment results, so we further note 

that there should be one assessment that 

incorporates the findings of any other 

records or information needed to 

develop the person-centered service 

plan as required in § 441.725. 

Comment: One commenter asked that 

§ 441.662(a)(2) also require that the 

assessor actually contact and involve 

the individuals identified. 

Response: Section 441.720 (a)(1) 

requires the assessment to be a face-toface contact with the individual and to 

be a person-centered process. 

Comment: One commenter stated that 

it will be important for CMS and states 

to incorporate core elements of 

assessment that inform the participant 

direction process and at minimum, are 

not in conflict with participant-directed 

processes. They also stated that 

assessment questions should not lead to 

premature assumptions pertaining to 

who is appropriate for participantdirection simply based on diagnosis, the 

availability of informal caregivers, the 

individual’s functional need, or 

cognitive status. Instead, assessment 

questions should be built on an 

assumption that all individuals, with 

the appropriate level of support, can 

participate in some form of participant 

direction. Assessment questions should 

assist the participant and others 

involved in the assessment process to 

identify unmet needs and the type of 

support that may be beneficial to the 

individual to allow for successful 

participant direction. In addition to 

identifying unmet need (as defined by 

the individual), this could include an 

assessment of strengths, abilities, 

individual goals, need for a 

representative, capacity to self-direct 

with an eye for developing a support 

system to ensure success in selfdirecting, and risks. For a participant 

direction assessment to be successfully 

integrated into a larger assessment 

process, those performing the 

assessment need to be well-informed of 

participant direction programs, benefits, 

and requirements. Those performing 

and overseeing assessment processes 

also need training on the difference 

between traditional and participantdirected paradigms of service delivery. 

State and local leaders need to be 

informed, as well as educate their 

program staff, of the core competencies 

required to effectively support people to 

self-direct. 

Response: We appreciate these 

comments and will consider them in 

future guidance that we develop after 

final publication of this rule. 

Comment: One commenter 

recommended that the requirement to 

use a ‘‘person-centered process’’ in 

§ 441.662(a) cross reference § 441.665, 

and suggests the phrase ‘‘. . . and 

meeting the requirements of § 441.665’’ 

be added to the end of § 441.662(a). 

Response: We agree with this 

recommendation and have added ‘‘that 

meets the requirements at § 441.725(a)’’ 

to § 441.720(a)(1). 

Comment: A couple of commenters 

requested clarification of the 

relationship between the needs-based 

criteria that states must establish for 

determining eligibility for HCBS, and 

for each specific service. One of these 

commenters noted that § 441.662(a)(5) 

implies that need-based criteria must be 

in place for each service and suggested 

moving the term ‘‘(if any)’’ to after the 

word ‘‘criteria,’’ and editing it to ‘‘(if 

any have been established)’’. 

Response: We agree with this 

suggestion and have revised the first 

sentence of § 441.720(a)(5). 

Comment: One commenter stated that 

clarification is needed regarding the 

independent assessment that is 

conducted by a qualified health care 

professional (suggesting a medical 

model approach), and a true personcentered planning process. 

Response: We acknowledge that this 

term used in this paragraph is 

inconsistent with other language in this 

regulation, and have revised 

§ 441.720(a)(1)(i)(A) accordingly. 

Comment: A commenter 

recommended that in § 441.662(a)(6) 

CMS create a stronger regulation to 

promote self-direction of services, and 

recommended the term ‘‘any 

information’’ be modified to ‘‘notice, all 

information, and any supports.’’ 

Response: We did not make the 

changes requested by this commenter. 

This paragraph pertains to what must be 

included in the assessment with regards 

to self-direction if the State offers this 

under the State plan HCBS benefit. 

Other requirements regarding selfdirection of services are contained in 

§ 441.740. 

Comment: Several commenters had 

opinions on the frequency requirements 

of the assessment. One requested that 

CMS expand this to ‘‘at the request of 

the individual,’’ as is similarly provided 

in the regulation at § 441.665(c). 

Another stated that the assessment 

should be required every 3 years if 

clients are stable and engaged in the 

community, to reduce stress on the case 

management system. A couple of others 

just stated that re-assessments should 

occur ‘‘frequently’’ and when an 

individual’s support needs or 

circumstances change significantly. 

Some stressed that the assessment and 

re-assessment process should be based 

primarily on individual need, and not 

place burdensome processes on the 

individual. One stated that for 

individuals unable to communicate via 

spoken, signed, written, or alternative/

augmentative communication, the 

regulations should include language 

that significant changes in behavior 

and/or temperament indicate a need for 

reassessment of services. And another 

stated that CMS should clarify that the 

requirement for reassessment should not 

be interpreted to mean that each 

individual requires a full-scale medical 

re-evaluation, but instead re-assessment 

of services currently being used and 

new services requested by the 

individual or those important to him or 

her. One commenter asked how 

frequently the assessment must be made 

if the individual’s condition is one that 

is not likely to improve. 

Response: The current regulation 

language states ‘‘the re-assessment of 

needs must be conducted at least every 

12 months and as needed when the 

individual’s support needs or 

circumstances change significantly, in 

order to revise the person-centered 

service plan.’’ We believe that this 

language captures some of the concerns 

noted by the commenters. For others, in 

order to accommodate the varying and 

sometimes opposing comments, we 

believe that we should not change this 

requirement as provided in the 

proposed rule. This minimum frequency 

is consistent with the minimum 

frequency requirement for the review of 

the person-centered service plan, which 


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is based on the statute at section 

1915(i)(1)(G)(ii)(III) of the Act. 

Comment: Several commenters noted 

language from the preamble of the 

proposed rule that indicates that an 

assessment of ‘‘needs and strengths’’ is 

more appropriate than needs and 

capabilities, as the words capability and 

ability are historically connected with a 

deficit oriented approach to assessment. 

They requested that CMS add the word 

‘‘strengths’’ to § 441.662(a). Some also 

requested that the reference to needs in 

§ 441.662(a) specifically include 

physical and mental health needs 

stating that it must be made clear in the 

opening paragraph of this sub-section 

that these must also be assessed in order 

to establish a service plan. 

Response: While we agree that these 

are elements that must be included in 

the assessment process, we believe this 

is already captured sufficiently under 

§ 441.720 (a)(4) of this section which 

states, ‘‘Include in the assessment the 

individual’s physical, cognitive, and 

behavioral health care and support 

needs, strengths and preferences, . . .’’ 

Therefore, we have not adopted this 

change as requested. 

Comment: Several commenters stated 

the regulation text should also include 

the language from the preamble that 

indicates that services must be 

furnished to individuals with an 

assessed need, and must not be based on 

available funds. 

Response: This was an explanatory 

statement of the requirement at 

§ 441.677(a)(1)(ii) of the proposed rule, 

which is now at § 441.745 (a)(1)(ii) of 

the final rule, and is not necessary to 

specifically state in regulation. 

Comment: Several expressed that the 

regulation should include language from 

the preamble that states the ‘‘role of the 

assessor is to facilitate free 

communication from persons relevant to 

the support needs of the individual.’’ 

Response: This is an explanatory 

statement in the preamble of the 

requirement already included at 

§ 441.720(a)(2) regarding consultation 

with the individual and if applicable, 

the individual’s authorized 

representative, and others that the 

individual would like to include. We 

will plan to include this explanation in 

future guidance. 

8. Person-Centered Service Plan 

(§ 441.725) (Proposed § 441.665) 

Section 1915(i)(1)(G) of the Act 

requires that the State plan HCBS 

benefit be furnished under an 

individualized care plan based on the 

assessment. The terms ‘‘care plan’’ and 

‘‘service plan’’ are used interchangeably 

in practice. As explained in the May 3, 

2012 proposed rule (77 FR 2012–10385), 

we have adopted the term ‘‘personcentered service plan’’ in this 

regulation. To fully meet individual 

needs and ensure meaningful access to 

their surrounding community, systems 

that deliver HCBS must be based upon 

a strong foundation of person-centered 

planning and approaches to service 

delivery. Thus, we proposed to require 

such a process be used in the 

development of the individualized 

person-centered service plan for all 

individuals to be served by section 

1915(i) of the Act benefit. We proposed 

certain requirements for developing the 

person-centered service plan, but noted 

that the degree to which the process 

achieves the goal of person-centeredness 

can only be known with appropriate 

quality monitoring by the state, which 

should include substantial feedback 

provided by individuals who received 

or are receiving services. 

a. Person-Centered Planning Process 

§ 441.725(a) 

Comment: One commenter requested 

that CMS ensure that there is a plan in 

place and implemented for more than 

medication management for individuals 

residing in facility-based settings. 

Response: The requirements of this 

regulation pertain to all section 1915(i) 

of the Act eligible and enrolled 

individuals residing in home and 

community-based settings, regardless of 

the setting. 

Comment: One commenter states that 

the driver and focus of the personcentered planning process is the 

individual and this concept is presented 

in § 441.665. However, it is not 

referenced at all in the provisions of 

§ 441.659 pertaining to needs-based 

criteria and evaluation, nor in the 

provisions of § 441.662 related to 

independent assessment. 

Response: The needs-based criteria 

established by each state determine an 

individual’s eligibility through an 

independent assessment and evaluation, 

which by its nature, focuses on the 

person. The individual does not drive or 

control these processes; however, the 

individual is the center of this process. 

The regulation at § 441.720(a)(1), 

regarding independent assessment, 

references § 441.725, person-centered 

service plan. 

Comment: One commenter supports 

the expectation that states support 

individuals in the planning process as 

well as monitor the person-centeredness 

of the process itself. The commenter 

requests further refinement of the rule to 

ensure that program participants and 

community stakeholders are actively 

engaged in the states’ design of the 

program as well as its ongoing quality 

management structure so that personcentered processes can be designed and 

monitored with substantial involvement 

of stakeholders. The commenter is also 

pleased to see that as part of the service 

planning process, program participants 

(including those not self-directing) will 

be offered choices pertaining to the 

services and supports they receive. The 

commenter requests that specific 

examples or guidelines be offered to 

states to demonstrate what this choice 

may look like within traditional 

services. 

Response: We agree with the 

commenter’s suggestion and will take it 

into consideration in developing future 

guidance. 

Comment: Some commenters stated 

that it is important that the regulation 

include the statement in the preamble 

that indicates that the service plan 

‘‘should be constructed in a manner that 

promotes service delivery and 

independent living in the most 

integrated setting possible.’’ 

Response: It is our expectation that 

the person-centered process incorporate 

the ideals stated in the preamble and we 

believe that this expectation is 

expressed in the regulation text at 

§ 441.725(b)(1). 

Comment: A few commenters 

recommended the following revision to 

§ 441.665(a)(1), ‘‘Includes people chosen 

by the individual, including a parent 

and a parent support provider in case of 

a child and a youth support provider 

when the individual is under the age of 

25.’’ A few commenters recommended 

the person-centered planning process 

allow HCBS providers and other health 

care providers to participate in service 

plan development and/or be the service 

plan developer. 

Response: We appreciate the 

commenters’ perspective and 

suggestions. We do not want to 

prescribe all people who may be 

included in the planning process since 

that action may unintentionally exclude 

someone who is chosen by the 

individual. 

Comment: Several commenters 

recommended that § 441.665(a) address 

those individuals not able to indicate a 

choice of whom they would like to 

participate in the person-centered 

planning process and that in these 

instances, the process should allow 

inclusion of people who know and care 

about the individual. One commenter 

encourages CMS to note the potential 

role of family members, peers, 

providers, and others during the personcentered service planning for HCBS. 

One commenter recommended that 

individuals who require assistance in 


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making decisions due to profound 

cognitive limitations may need the 

protection of legally-appointed 

guardianship arrangements, preferably 

by a family member or another 

individual who is familiar with an 

individual’s unique needs. In many 

instances, it will not be feasible for 

service planning for individuals with 

brain injury to be furnished by any other 

individual or entity. One commenter 

encourages the use of advance directives 

to assure that a person’s wishes are clear 

in the event he/she needs assistance, but 

is unable to otherwise express himself/ 

herself. 

Response: We believe that the 

regulation text as proposed, and which 

we are finalizing at § 441.725(a)(1), 

encompasses the suggestions that the 

commenter proposes. 

Comment: A few commenters 

recommended that § 441.665(a) of the 

proposed rule should also require that 

person-centered service plans include 

examples and language referring to 

positive strategies to minimize the use 

of all types of restraints (chemical, 

physical, and mechanical) and other 

restrictive procedures. 

Response: We have strengthened the 

language of this section in the final rule 

at § 441.725(b)(13) by indicating that 

any modification of the additional 

conditions must be justified in the 

person-centered service plan and added 

specific requirements about what must 

be documented in the person-centered 

service plan in these instances. 

Comment: Several commenters 

recommend the following revision to 

§ 441.665(a)(2), ‘‘Provides necessary 

information, support and experiences, if 

needed, to ensure that the individual 

directs the process to the maximum 

extent possible, and is provided 

meaningful opportunity to make 

informed choices and decisions.’’ One 

commenter requested that the regulation 

more clearly state that an individual 

must be given information about all 

available supports and services. 

Response: We believe that the 

regulation text at § 441.725(a)(2) is 

complete and clear. 

Comment: A commenter suggested 

that the regulation must more clearly 

state that an individual must be given 

information about all available supports 

and services. The commenter also states 

that the individual must be given 

complete and accurate information 

about his/her right to a fair hearing and 

the regulation should require that this 

information be provided at every 

person-centered planning meeting and 

that a simple easy to use form be 

provided to request a fair hearing. 

Response: It is our expectation that 

during the person-centered planning 

process and development of the personcentered service plan, all services and 

support options available will be 

articulated and discussed with the 

individual. States must adhere to the 

fair hearing requirements at part 431, 

subpart E for all Medicaid programs. 

Comment: A few commenters 

recommended modifying § 441.665(a)(3) 

to read, ‘‘Is timely, flexible, and occurs 

at times and locations of convenience to 

the individual.’’ One commenter 

requested clarification regarding the 

standard against which a state’s 

‘‘person-centered’’ process will be 

reviewed or the timeline for 

development of those criteria. 

Response: We believe that the 

requirement regarding scheduling the 

meeting at the convenience of the 

individual addresses the flexibility issue 

and are not incorporating the suggested 

language. The minimum standards for 

person centered planning are 

enumerated in the regulation. 

Comment: Many commenters 

recommended that the language in the 

regulation text at § 441.665(a)(4) be 

revised to include physical, linguistic 

and cultural accessibility in the personcentered planning process. One 

commenter requested that cultural 

considerations be expanded to include 

‘‘lifestyle’’ choices of the individual. 

Response: We appreciate the 

commenters’ suggestions and note that 

the regulation text at § 441.665(a)(4) 

addresses cultural considerations. We 

have added regulation text at 

§ 441.725(a)(4) to specify that the 

person-centered planning process must 

be accessible to persons who are limited 

English proficient and persons with 

disabilities, consistent with the 

Medicaid programmatic accessibility 

provision at § 435.905(b). Policy 

guidance to promote compliance with 

Title VI’s prohibition against national 

origin discrimination affecting persons 

with limited English proficiency is 

available on the Department of Health 

and Human Services Office for Civil 

Rights Web site at http://www.hhs.gov/ 

ocr/civilrights/resources/laws/

revisedlep.html. 

Comment: Several commenters 

suggest inserting language at 

§ 441.665(a)(2) such as meaningful 

choice, informed decision-making, 

provision of meaningful information 

about settings, including the most 

integrated setting alternatives 

appropriate for that individual. 

Response: We appreciate the 

commenters’ suggestions. While we 

have not made any revisions to 

§ 441.725(a)(2), we have considered 

these comments for other revisions 

made to the regulation. 

Comment: Many commenters agreed 

with the provision at § 441.665(b)(1) 

that the person-centered plan should 

record the alternative home and 

community-based settings that were 

considered by the individual. Another 

commenter requested CMS add a 

requirement that ‘‘all residents have 

selected this setting from a meaningful 

choice of alternatives, including the 

most integrated setting appropriate for 

each resident.’’ One commenter requests 

with respect to § 441.665(a)(8), that this 

provision should be modified to read, 

‘‘Documents how the home and 

community-based settings, services and 

supports, including both residential and 

employment settings and supports, are 

in line with the USDOJ most integrated 

setting mandate under the ADA and 

Olmstead decision, and in cases where 

settings and services are not fully 

aligned with the ‘most integrated 

setting’ mandate, provides full 

documentation regarding why less 

integrated/congregate settings and 

services are being utilized.’’ 

Response: We appreciate the 

commenters’ support. We have 

addressed the concern regarding 

meaningful choice and most integrated 

settings by clarifying that the 

individual’s selection must include nondisability specific housing 

opportunities. We support the mandates 

of the ADA and the Olmstead decision 

and believe the final regulation reflects 

the spirit of these mandates. 

Comment: A commenter supports the 

expectation that states support 

individuals in the planning process as 

well as monitoring the personcenteredness of the process itself. The 

commenter requests further refinement 

of the rule to ensure that program 

participants and community 

stakeholders are actively engaged in the 

states’ design of the program as well as 

its ongoing quality management 

structure so that person-centered 

processes can be designed and 

monitored with substantial involvement 

of stakeholders. The commenter is also 

pleased to see that as part of the service 

planning process, program participants 

(including those not self-directing) will 

be offered choices pertaining to the 

services and supports they receive. The 

commenter requests that specific 

examples or guidelines be offered to 

states to demonstrate what this choice 

may look like within traditional 

services. 

Response: We appreciate the support. 

States are provided the latitude to 

determine how they will operationalize 


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the regulation. We do not wish to be as 

prescriptive as suggested. 

Comment: A few commenters 

recommended that CMS require any 

modifications to the conditions placed 

upon provider-controlled or owned 

residential settings be supported by a 

specific assessed need documented in 

the person’s person-centered plan. One 

commenter stated that they did not 

support unnecessarily restrictive 

methods for providing person-centered 

services and supports even though they 

may be well-meaning. 

Response: We agree with the 

commenters’ statements and have 

strengthened the language of this 

section in the final rule by requiring at 

§ 441.725(b)(13) that any modification of 

the additional conditions must be 

justified in the person-centered service 

plan. We also added specific 

requirements about what must be 

documented in the person-centered 

service plan in these instances. 

Comment: One commenter suggested 

that CMS make the person-centered 

process the critical identification for 

what is determined to be communitybased not where the site is located or 

what it looks like. Another commenter 

states that the person-centered planning 

meeting should be where the needs and 

preferences are matched with 

compatible and appropriate services/

living arrangements and where 

modifications to existing services and 

acceptable compromises are 

determined. They state that maintaining 

a full continuum of services and settings 

is a better plan than limiting options or 

making them harder to access because 

some people might find them 

objectionable. One commenter states 

that specific restrictions on living 

arrangements should not supersede 

supports and services identified through 

the person-centered planning process. 

Response: We believe that our 

regulations need to address the issue of 

what constitutes home and communitybased settings. While the personcentered service plan can and does 

assist individuals with integration into 

the community, it is not the vehicle to 

determine whether a setting meets the 

requirements for being home and 

community-based. 

Comment: One commenter requested 

deletion of the requirement that services 

be based on the needs of the individual 

as indicated in their person-centered 

service plan, stating that these plans are 

often limited by the experience of the 

individuals developing them and the 

most effective treatments/supports may 

not always be included. The commenter 

noted that service needs and ideas for 

how best to offer them evolve, 

particularly as a person progresses and 

service plans often become stale before 

they are reviewed/updated. 

Response: We do not agree with 

removing this requirement, and note 

that it is based on statute at section 

1915(i)(1)(G) of the Act. States are 

responsible for determining that 

requirements related to the 

qualifications of the entities who will 

conduct the assessments and the 

person-centered planning process have 

been met. It is expected that the 

providers would have adequate training 

to perform the function consistent with 

the requirements set forth in the 

regulation. States must ensure the 

person-centered service plan process is 

timely and includes a method for the 

individual to request updates to the 

plan. Additionally, an assessment of 

need must be conducted when the 

individual’s support needs or 

circumstances change significantly and 

revisions to the person centered services 

plan are necessary. 

Comment: Many commenters 

recommend deletion of the language 

that says the requirements are ‘‘based on 

the needs of the individual as indicated 

in their person-centered service plan.’’ 

The commenters believe that without 

deletion or modification of the proposed 

language, it would be too easy for a 

provider to insert certain language in a 

service plan. 

Response: The person centered 

planning process includes provisions to 

protect a person-centered service plan 

from being changed without the 

individual’s consent. We believe the 

inclusion of this language is a necessary 

beneficiary protection; therefore we did 

not revise the regulation to remove this 

requirement. 

b. Person-Centered Service Plan 

§ 441.725(b) 

Comment: One commenter states that 

if CMS defines what a service plan 

should be, it may be in direct conflict 

with how states define their services 

and the commenter does not believe that 

this is the intent of CMS. 

Response: We do not define specific 

services. However, we do define what 

should be included in the personcentered service plan, and by adopting 

the terminology and process of a personcentered service plan, the services and 

supports should reflect the individuals 

preferences based on their needs. 

Comment: One commenter 

recommended, for high-need children 

and older adult beneficiaries, the option 

of further assessment and recommends 

that there be allowable reimbursement 

for these activities necessary for 

developing the service plan, including 

communication with collateral 

treatment partners (that is, pediatrician, 

teacher, school representative, parent) 

as these partners and activities are 

critical for development of a service 

plan for vulnerable beneficiaries and are 

absolutely essential for proper care for 

children and for seniors. 

Response: States may be able to claim 

reimbursement for assessment activity, 

as well as person-centered service plan 

development, as a Medicaid 

administrative activity that is in 

accordance with an approved cost 

allocation plan. 

Comment: One commenter 

recommended enhancing regulation 

language to ensure that states have the 

flexibility to include services and 

supports that are appropriate and 

essential for child and youth 

development, but may not be Medicaid 

reimbursable, including education, 

housing, and transportation, as to 

encompass a comprehensive service 

provision supported by HCBS. 

Response: We believe the language in 

§ 441.725(b)(5) of the final rule supports 

this concept: ‘‘the plan must . . . 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.’’ 

Comment: Commenters supported 

§ 441.665(b) and suggested that equal 

emphasis be placed on what is 

important for the individual and what is 

important to the individual. One 

commenter recommended the following, 

‘‘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, and what is 

important to the individual with regard 

to preferences for the delivery of such 

services and supports, including, but 

not limited to, living arrangement, 

neighborhood, leisure activities, and 

relationships.’’ 

Response: We appreciate the 

commenters’ support. As the language 

of the proposed rule supports this 

concept, we do not believe that the 

suggested revisions for the final rule at 

§ 441.725(b) are necessary. 

Comment: Many commenters stated 

their support of person-centered 

planning and expressed that when the 

individual welcomes the involvement of 

family or other informal caregivers, 

family members should be engaged as 

part of the care planning and care-giving 

teams. They stated that services to be 

provided by family caregivers should 

only be included in the person-and 

family-centered plan if they have agreed 

to provide these services and feel 


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prepared to carry out the actual tasks. 

One commenter agreed with preamble 

language that the service plan should 

neither duplicate, nor compel, natural 

supports, expressing that unpaid 

supports should be provided 

voluntarily. This commenter suggested 

that CMS include this specific language 

in the regulation text. 

Response: We appreciate the support 

of the commenters. The language in 

§ 441.725(b)(5) of this final rule states: 

‘‘Natural supports are unpaid supports 

that are provided voluntarily to the 

individual in lieu of State plan HCBS.’’ 

Comment: One commenter supported 

requirements for the development of a 

person-centered plan but recommends 

that § 441.665(b)(9) should clarify that 

even though the service plan is 

‘‘finalized and agreed to in writing by 

the individual’’ the individual retains 

the right to appeal a denial, reduction, 

suspension, or termination of a service 

described in part 431, subpart E. 

Response: As the fair hearing 

requirements at part 431, subpart E, 

apply to all Medicaid services, it is not 

necessary to revise the text of the 

regulation at § 441.725. 

Comment: Some commenters 

recommended that each person-centered 

service plan include the dollar figures of 

the budget allocations provided to each 

beneficiary, the starting date of services/ 

supports, the scope and duration of 

service, and all other services that are 

not Medicaid reimbursable. 

Response: We agree that the person 

centered service plan should be 

comprehensive and the language in the 

final rule supports this concept. 

Comment: Two commenters were 

against requiring the signatures of all 

individuals and providers responsible 

for implementation of the service plan, 

stating that this is impractical and will 

make the process untenable. They also 

expressed that giving all providers the 

entire service plan would share personal 

health information of the member with 

providers who do not necessarily need 

to see that information. One commenter 

was concerned about liability and who 

is responsible if an individual has risky 

behavior. 

Response: The regulation language at 

§ 441.725(b) gives the flexibility for the 

individual to determine to whom the 

plan will be provided, in whole or in 

part, commensurate with the level of 

need of the individual and the scope of 

the services and supports available. 

Sharing of this information must be 

consistent with federal and state laws 

regarding privacy and confidentiality. 

Comment: Several commenters 

recommended the following revisions 

for § 441.665(c): ‘‘The person-centered 

service plan must be reviewed, and 

revised upon reassessment of functional 

need as required in § 441.662 of this 

subpart, at least every 12 months, when 

the individual’s circumstances or needs 

change significantly, and at the request 

of the individual, an authorized 

representative, or healthcare or support 

providers.’’ One of these commenters 

stated that while having a service plan 

required every 12 months may be 

minimally okay for some populations, it 

is insufficient (too lengthy) for those 

with chronic mental health and 

substance use disorders. Another 

commenter stated that, at a minimum, 

requiring service plan review every 6 

months is adequate. Another commenter 

stated that the reassessment being done 

‘‘at the request of the individual’’ could 

lead to inflated service hours and costs, 

both of which will add unnecessary 

costs to the provision of HCBS. This 

commenter believed the language at 

§ 441.662(b) is better language. Another 

commenter was against requiring 

assessments before the meeting. 

Response: We proposed 12 months as 

the minimum time period for an 

individual’s person-centered service 

plan to be reviewed and revised. We 

agree and support reviews and revisions 

of an individual’s person-centered 

service plan more frequently as needed. 

The person-centered service plan 

should be reviewed and revised when 

the individual’s circumstances or needs 

change significantly and at the request 

of the individual, authorized 

representative or healthcare provider. 

Comment: One commenter did not 

support standardized functional 

assessment. In addition, the commenter 

stated that when service providers use 

a functional assessment, it has been 

typically to establish funding levels, 

which should only be determined by a 

person-centered planning process and 

allowing such an instrument to overrule 

the person-centered plan completely 

negates the person-centered planning 

process. 

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

individual’s assessment of functional 

need. We have not specified the 

instruments or techniques that should 

be used to secure the information 

necessary to determine an individual’s 

functional need, person-centered service 

plan, or service budget. States do have 

the ability to establish limits on amount, 

duration, and scope of services. 

Comment: With respect to 

§ 441.665(b)(6), one commenter stated 

that individual back-up plans have been 

a critical component of participant 

direction. A commenter suggested when 

refining the proposed language, it will 

be important to reflect on the impact the 

traditional paradigm has on the role 

providers and participants play in 

defining, identifying, and addressing 

risk. 

Response: We have strengthened the 

language in the final rule to ensure that 

reducing risk for individuals receiving 

Medicaid HCBS does not involve 

abridgement of their independence, 

freedom, and choice. Restricting 

independence or access to resources is 

appropriate only to reduce specific 

risks, and only when considered 

carefully and reflected in the personcentered service plan. 

9. Provider Qualifications (§ 441.730) 

(Proposed § 441.668) 

In the proposed rule, we proposed to 

require states to provide assurance that 

necessary safeguards have been taken to 

protect the health and welfare of the 

enrollees in State plan HCBS by 

provision of adequate standards for all 

types of providers of HCBS. States must 

define qualifications for providers of 

HCBS, and for those persons who 

conduct the independent evaluation of 

eligibility for State plan HCBS and 

independent assessment of need, and 

who are involved with developing the 

person-centered service plan. We noted 

that we will refer to the individuals and 

entities involved with determining 

access to care as ‘‘agents’’ to distinguish 

this role from providers of services. We 

also noted that the proposal in no way 

preempts broad Medicaid requirements, 

such as an individual’s right to obtain 

services from any willing and qualified 

provider of a service. 

We believe that these qualifications 

are important safeguards for individuals 

enrolled in the State plan HCBS benefit 

and proposed that they be required 

whether activities of the agents are 

provided as an administrative activity or 

whether some of the activities are 

provided as a Medicaid service. At a 

minimum, these qualifications include 

conflict of interest standards, and for 

providers of assessment and personcentered service plan development, 

these qualifications must include 

training in assessment of individuals 

whose physical or mental condition 

may trigger a need for HCBS and 

supports, and an ongoing knowledge of 

current best practices to improve health 

and quality of life outcomes. 

The minimum conflict of interest 

standards we proposed to require would 

ensure that the agent is not a relative of 

the individual or responsible for the 

individual’s finances or health-related 

decisions. The standards also require 

that the agent must not hold a financial 

interest in any of the entities that 


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provide care. Our experience with 

HCBS in waivers indicates that 

assessment and person-centered service 

plan development should not be 

performed by providers of the services 

prescribed. However, we recognize that 

in some circumstances there are 

acceptable reasons for a single provider 

of service that performs all of those 

functions. In this case, the Secretary 

would require the State Plan to include 

provisions assuring separation of 

functions within the provider entity. 

Comment: One commenter questioned 

the reason for defining persons 

responsible for the independent 

evaluation, independent assessment and 

the service plan as ‘‘agents’’ to 

distinguish them from ‘‘providers’’ of 

HCBS. Another commenter indicated 

that it is unclear whether one agent 

performs an assessment, or different 

agents with different expertise. 

Response: In the preamble to the 

proposed rule, we discussed that we 

will refer to persons or entities 

responsible for the independent 

evaluation, independent assessment, 

and the person-centered service plan as 

‘‘agents’’ to distinguish them from 

‘‘providers’’ of home and communitybased services. We also explain that this 

does not preclude the inclusion of input 

from other individuals with expertise in 

the provision of long-term services and 

supports, or the delivery of acute care 

medical services, as long as an 

independent agent retains the final 

responsibility for the evaluation, 

assessment, and person-centered service 

plan functions. 

Comment: A commenter requested 

whether states would be permitted to 

allow a transition period for agents 

conducting the individualized 

independent evaluation, assessment and 

service plan development to attain any 

new qualifications, if necessary. 

Response: We believe that it is 

important for individuals responsible 

for evaluation, assessment, and/or 

person-centered service plan 

development to fully meet the 

qualifications specified at § 441.730(c) 

prior to performing these activities. 

Comment: Several commenters 

recommended adding a requirement to 

this section of the regulation that service 

providers not discriminate against 

recipients on the basis of race, color, 

national origin, religion, sex, sexual 

orientation, gender identity, marital 

status, source of payment, or mental or 

physical disability. Similar protections 

are contained in the regulations for the 

Program for All-Inclusive Care for the 

Elderly (PACE). 

Response: There are already general 

provisions in other regulations that 

pertain to the issues raised by the 

commenters and that prohibit 

discrimination in State Medicaid 

programs on the basis of race, color, 

national origin, disability, etc., (for 

example, see § 430.2, § 435.901, 

§ 435.905, and § 435.908). As these 

regulations apply in determining 

eligibility and administering the 

Medicaid program generally, it is not 

necessary to add a regulation on this 

subject specific to section 1915(i) of the 

Act. 

Comment: Several commenters 

requested further clarification 

pertaining to provider qualifications for 

the participant direction option and 

requested that provider qualifications 

for participant-directed workers not 

limit participants’ access to these 

providers but be defined by the program 

participant receiving services once s/he 

is trained on the program rules and 

expectations. One commenter 

recommended that CMS make provider 

qualifications ‘‘default rules’’ that could 

be waived through an informed and 

affirmative choice, with a signed 

statement, by consumers who are 

directing their own care. Another 

commenter requested that CMS add to 

the regulation ‘‘Such standards shall not 

be construed to limit the ability of selfdirecting individuals who have 

employer authority to hire, train, 

manage, or discharge providers 

pursuant to § 441.674.’’ 

Response: As stated in the proposed 

rule, and retained in the final rule, 

individuals who choose to self-direct 

will be subject to the same requirements 

as other enrollees in the State plan 

HCBS benefit, including § 441.730 for 

provider qualifications. Section 441.730 

requires states to define in writing 

standards for providers (both agencies 

and individuals) of HCBS, and for 

agents conducting individualized 

independent evaluation, independent 

assessment, and person-centered service 

plan development. As with section 

1915(c) of the Act waivers, states have 

to define minimum service provider 

qualifications that apply across the 

service delivery models. 

Comment: Many commenters 

expressed support of the conflict of 

interest provisions of the proposed rule. 

One such commenter stated support of 

standards that will result in service 

plans that have realistic expectations 

and payment for providers while 

adequately addressing the client’s 

individual needs, noting that too often 

costs are driving decisions about the 

appropriate services for the individual. 

One mentioned that it is difficult for a 

system to be completely free of conflict 

of interest, since any assessor that works 

for the state has an interest in 

controlling costs, but stated their belief 

that acknowledging the conflicts helps 

to mitigate the effects. Another 

indicated that guidance should reflect 

administrative safeguards that consider 

each state individually and consider the 

unique characteristics and needs of each 

state, and include conflict free 

protections that address the 

development of the plan and choice of 

providers with an emphasis on 

individual preferences. Another 

requested that this be closely monitored. 

Response: We appreciate the support 

and agree with the commenters. We will 

consider these additional comments as 

we develop future guidance. 

Comment: Several commenters 

requested that § 441.668 exclude a 

managed care organization from 

conducting the independent evaluation 

of individuals. Another stated a 

managed care organization should not 

be permitted to conduct the 

independent assessment of individuals. 

And another requested this section also 

exclude ‘‘the state’’ from conducting the 

independent assessment of individuals. 

Response: We do not believe it is 

necessary to list specific entities that 

would not meet these requirements in 

regulation. We believe the specific 

requirements of § 441.730 capture the 

purpose of these requirements to 

mitigate and prevent conflict of interest. 

Comment: One commenter indicated 

that the requirements regarding an 

independent evaluator would not work 

in a capitation model, and that it adds 

another level of bureaucracy and 

impacts service systems already in place 

by some states that delegate or contract 

out this function to another agency. 

Another commenter stated that the 

requirements would limit states to the 

development or use of models that 

contradict decades of long term care 

policy and efforts to coordinate an 

otherwise fragmented system. They 

expressed that models that consolidate 

evaluation, assessment, care planning, 

case management and the provision of 

services into integrated, single entry 

systems enable beneficiaries to more 

seamlessly access services and receive 

coordinated, integrated plans of care (for 

example, long term home health care 

programs, managed long term care, 

PACE). Another commenter disagreed 

with the independent agent 

requirement, stating there may be cost 

implications if an independent 

contractor is used to develop the 

person-centered service plan and that 

this proposed requirement may work in 

a fee-for-service benefit, but would not 

work in a benefit that is capitated. 


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Response: We disagree and have 

experience with states where this does 

and is working in these models. While 

the evaluation to determine whether an 

individual is eligible for the benefit 

would need to be retained by an 

independent entity that is not the 

provider, providers can contribute 

information to the entity responsible for 

the final determination. Regarding the 

independent assessment of need and 

person-centered service plan, to 

summarize § 441.730(b)(5), states can 

allow providers of State plan HCBS, or 

those who have an interest in or are 

employed by a provider of State plan 

HCBS, to be the entity responsible for 

the assessment and person-centered 

service plan functions, when the state 

demonstrates that they are the only 

willing and qualified agent to perform 

these two functions in a geographic 

area, and the state devises conflict of 

interest protections including separation 

of agent and provider functions within 

provider entities, and a clear and 

accessible alternative dispute resolution 

process for individuals. In summary, the 

requirements at § 441.730, which are 

based on our experience as well as state 

and other public feedback, specify how 

states must comply with statutory 

requirements. Therefore, we are 

retaining the requirements from the 

proposed rule at § 441.730 regarding 

independent evaluation and conflict of 

interest standards, in this final 

regulation. We note that CMS stands 

ready to assist any State Medicaid 

agency in need of technical assistance 

with these requirements. 

Comment: Several commenters 

requested that § 441.668(b)(5) be 

expanded to make it clear that when 

there is only one provider available, the 

provider may serve as the agent 

performing the assessment and the agent 

developing the plan of care, as long as 

the requirements in § 441.668(b)(5) are 

met. Another commenter proposed 

permitting providers in some cases to 

serve as both agent and provider of 

services, but with guarantees of 

independence of function within the 

provider entity. 

Response: We believe that 

§ 441.730(b)(5) already includes this 

requirement: ‘‘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 agent to perform independent 

assessments and develop plans of care 

in a geographic area also provides 

HCBS, and the state devises conflict of 

interest protections including separation 

of agent and provider functions within 

provider entities, which are described in 

the State plan for medical assistance 

and approved by the Secretary, and 

individuals are provided with a clear 

and accessible alternative dispute 

resolution process.’’ 

Comment: A couple of commenters 

recommended deletion of § 441.668 

(b)(5), indicating that this provision to 

waive the conflict of interest standards 

minimizes safeguards to protect 

individual health, welfare, choice, and 

control. They indicate that states should 

be required to develop in all geographic 

areas sufficient systems of independent 

evaluators, independent assessors, and 

providers to develop service plans. They 

noted that since CMS’s experience with 

HCBS waivers has shown that 

assessment and service plan 

development should not be performed 

by service providers, this should be 

carried over and applied to State plan 

HCBS as well. 

Response: Section 441.730 (b)(5) 

requires that service providers not be 

permitted to be the agent responsible for 

these functions, but includes an 

exception to allow a state to permit a 

service provider to serve as the agent 

performing independent assessments 

and development of the person-centered 

service plan when that service provider 

is the only entity available in a certain 

area. This is only permitted to address 

this potential problem of not having any 

entity available that is not a provider to 

perform these essential functions of 

independent assessment and personcentered service plan development 

(under any circumstances, 

determination of eligibility for the State 

plan HCBS benefit cannot be performed 

by a HCBS provider or an entity with an 

interest in providers of HCBS). Without 

this exception, states would be unable 

to make State plan HCBS available to 

participants in these areas. If a state 

employs this exception it must 

guarantee the independence of this 

function(s) within the provider entity. 

In certain circumstances, we may 

require that states develop ‘‘firewall’’ 

policies, for example, separating staff 

that perform assessments and develop 

person-centered service plans from 

those that provide any of the services in 

the plan; and meaningful and accessible 

procedures for individuals and 

representatives to appeal to the state. 

We also will not permit states to 

circumvent these requirements by 

adopting state or local policies that 

suppress enrollment of any qualified 

and willing provider. 

Comment: A couple of commenters 

expressed concerns that an independent 

agent may not have sufficient 

knowledge about the needs of an 

individual, and that providers who have 

longer histories with the individuals are 

better qualified to conduct evaluations 

and assessments and develop care plans 

and would improve individuals’ access 

to the benefit. One indicated that 

independent agents may not have the 

capacity to follow-up with individuals 

who are hard to reach, such as 

individuals experiencing homelessness. 

Another indicated that we should allow 

service providers within supportive 

housing to complete assessments or it 

might unintentionally limit the 

availability of supportive housing for 

HCBS beneficiaries. They suggest that 

CMS engage independent agents in 

oversight activities to ensure 

individuals are made aware of all 

available options and that providers do 

not inappropriately advantage 

themselves. 

Response: We recognize the 

importance of ensuring that the agents 

responsible for the evaluations, 

assessment, and person-centered service 

plans are trained in assessment of 

individual needs for HCBS and 

knowledgeable about best practices. 

That is why we included requirements 

at § 441.730(a) for states to define in 

writing standards for agents, and at 

§ 441.730(c), that these qualifications 

must include training in assessment of 

individuals whose physical or mental 

conditions trigger a potential need for 

home and community-based services 

and supports, and current knowledge of 

best practices to improve health and 

quality of life outcomes. We further note 

that we understand that the process of 

developing appropriate plans of care 

often requires the inclusion of 

individuals with expertise in the 

provision of long-term services and 

supports or the delivery of acute care 

medical services. 

Comment: Another commenter stated 

that CMS’s proposal to remove 

providers from participating in 

assessments, evaluations, and plans of 

care does not appear required by the 

DRA and requested that CMS remove 

this prohibition on providers’ ability to 

carry out these critical functions and 

deliver the needed services to their 

beneficiaries. 

Response: This rule does not prevent 

providers from participating in these 

functions, but requires that an 

independent agent retains the final 

responsibility for the evaluation, 

assessment, and person-centered service 

plan functions. We understand that the 

process of developing appropriate plans 

of care often requires the inclusion of 

individuals with expertise in the 

provision of long-term services and 

supports or the delivery of acute care 


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medical services. In order to meet the 

intent of the statute for standards that 

safeguard against conflict of interest 

standards, we are retaining these 

requirements as proposed. 

Comment: Several commenters 

recommended that minimum 

safeguards/standards be prescribed in 

the regulation, including standards 

related to training, skills, and 

competency, with state flexibility to 

develop additional standards and CMS 

reviewing the state standards for 

approval. One recommended giving 

service providers and agencies rate 

incentives to partner with training 

providers and community colleges to 

ensure that the qualifications of the 

workforce meet the needs of their 

clients. Others recommended adding 

that agents must have current 

knowledge/training in evidence-based 

practices for assessment and evidencebased best practices to improve health 

and quality of life outcomes, personcentered planning, and informed 

decision making. Another 

recommended that CMS identify broad 

competency areas and then identify the 

specific skills associated with each of 

these competency areas. Another noted 

that individuals performing assessments 

will need to be sufficiently trained to 

assess cognitive impairment. 

Response: Section 441.730(a) of the 

proposed rule would require states to 

define in writing standards for agents, 

and at § 441.730(c), that these 

qualifications must include training in 

assessment of individuals whose 

physical or mental conditions trigger a 

potential need for home and 

community-based services and 

supports, and current knowledge of best 

practices to improve health and quality 

of life outcomes. We agree with the 

commenters’ suggestions and have 

added ‘‘cognitive’’ to § 441.730(c). 

Comment: One commenter 

encouraged the addition of language 

that focuses on the qualifications, 

training and outcomes ‘‘of the case 

manager in the areas of case 

management, the populations they are 

serving, funding and resources available 

in their community, the offering of free 

choice of providers and service options 

and training and expectations regarding 

conflict-free case management.’’ 

Response: We note that we are not 

restricting the individuals or entities 

who can perform these administrative 

activities to case managers. We also note 

that conflict of interest requirements are 

found at § 441.730(b). We agree that 

knowledge of available resources, 

service options, and providers is not an 

element specifically captured in the 

proposed regulation language, so we 

have added language to § 441.730(c). 

Comment: A couple of commenters 

requested that CMS revise the regulation 

to provide that the required training of 

agents must include person-centered 

and family driven services planning, as 

well as participant-directed practices. 

Response: We believe that this idea is 

already reflected for purposes in the 

broader phrase ‘‘and current knowledge 

of best practices to improve health and 

quality of life outcomes.’’ 

Comment: One commenter pointed 

out that evaluators should also obtain 

proper training and should be reflected 

in § 441.668(c). 

Response: The independent 

evaluators determine whether or not an 

individual meets the eligibility 

requirements for the benefit, but unless 

they are also the same entity responsible 

for the independent assessment and 

plan of care development, we do not 

believe it would be reasonable to require 

that they meet these minimum training 

requirements that are appropriate 

minimum qualifications for agents 

responsible for independent assessment 

and person-centered service plan 

development (assessment of individuals 

whose physical or mental conditions 

trigger a potential need for HCBS and 

supports, and current knowledge of 

available resources, service options, 

providers, and best practices to improve 

health and quality of life outcomes). 

10. Definition of Individual’s 

Representative (§ 441.735) (Proposed 

§ 441.671) 

In § 441.671, we proposed to define 

the term ‘‘individual’s representative’’ 

to encompass any party who is 

authorized to represent the individual 

for the purpose of making personal or 

health care decisions, either under state 

law or under the policies of the State 

Medicaid agency. We did not propose to 

regulate the relationship between an 

individual enrolled in the State plan 

HCBS benefit and his or her authorized 

representative, but noted that states 

should have policies to assess for abuse 

or excessive control and ensure that 

representatives conform to applicable 

state requirements. We noted that states 

must not refuse to allow a freely-chosen 

person to serve as a representative 

unless the state has tangible evidence 

that the representative is not acting in 

the best interest of the individual, or 

that the representative is incapable of 

performing the required functions. 

General Comments: All commenters 

for this section agreed with this 

provision, and some additionally 

suggested some revision to the language 

as described in the comments below. 

Comment: A couple of commenters 

recommended changing ‘‘family 

member’’ to ‘‘a parent support 

provider.’’ 

Response: The language in this phrase 

is statutory, from section 1915(i)(2) of 

the Act. The commenter did not provide 

any definition of this term or 

explanation. For these reasons, we are 

unable to accept this change as 

requested, but note that this provision at 

§ 441.735(b) is not an exhaustive list. 

Comment: Another commenter 

expressed that an individual’s 

representative may not necessarily be 

the individual’s guardian, but some 

other representative freely chosen by the 

individual and important to him or her. 

Response: We agree and believe the 

language in the regulation supports this 

as an option to the individual. 

Comment: We received many 

comments about the term ‘‘best 

interest.’’ Most of these commenters 

requested that CMS substitute the term 

‘‘substituted judgment’’ instead of ‘‘best 

interest.’’ One cautioned that ‘‘best 

interests’’ may be a highly subjective 

assessment, and stated their belief that 

substantial deference should be 

established for the stated interests of the 

individual and the decisions of their 

chosen representative. Others 

referenced guidelines established by the 

National Guardianship Association 

(NGA), which indicate that substituted 

judgment is a principle of decisionmaking that promotes the selfdetermination of the beneficiary and 

that substitutes, as the guiding force in 

any surrogate decision made by the 

guardian, the decision the beneficiary 

themselves would make based on their 

own preferences and wishes. This 

process involves consultation with the 

individual and those important to the 

individual. If a substituted judgment is 

not available, guardians can implement 

a ‘‘best interest’’ principle, which 

considers all options and alternatives 

and bases the decision on what a 

reasonable person would do in the given 

situation. 

Response: We agree with these 

commenters and have revised this 

section of the regulation, § 441.735(c), 

so that it now reads as follows: 

‘‘When the state authorizes representatives 

in accordance with paragraph (b) of this 

section, the state must have policies 

describing the process for authorization; the 

extent of decision-making authorized; and 

safeguards to ensure that the representative 

uses substituted judgment on behalf of the 

individual. State policies must address 

exceptions to using substituted judgment 

when the individual’s wishes cannot be 

ascertained or when the individual’s wishes 

would result in substantial harm to the 


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individual. States may not refuse to recognize 

the authorized representative that the 

individual chooses, unless in the process of 

applying the requirements for authorization, 

the state discovers and can document 

evidence that the representative is not acting 

in accordance with these policies or cannot 

perform the required functions. States must 

continue to meet the requirements regarding 

the person centered planning process at 

§ 441.725 of the rule.’’ 

Comment: We received one comment 

about state laws regarding guardianship 

and the jurisdiction of the courts, in 

which they stated that guardians are 

appointed by the court, not chosen by 

the individual. 

Response: We believe this concept is 

captured with the use of the term 

‘‘legal’’ prior to ‘‘guardian’’ in the 

language of the final regulation at 

§ 441.735(a) which pertains to a legal 

guardian authorized under State law to 

represent the individual. We note that 

the provision at § 441.735(c) only 

applies to individuals specified at 

§ 441.735(b) who are authorized under 

the policy of the State Medicaid agency 

to represent the individual. 

Comment: A couple of commenters 

confirmed the importance of 

participants’ access to a representative 

option. One requested that CMS add 

‘‘States should ensure that 

representatives conform to good practice 

concerning free choice of the individual, 

and assess for abuse or excessive 

control.’’ Another stated that supports 

providers (for example, consultants, 

support brokers) need to be 

appropriately trained on the participant 

direction paradigm to be prepared to 

successfully identify when a 

representative may be using ‘‘excessive 

control’’ as well as to enforce ‘‘free 

choice’’ of representatives. 

Response: If by ‘‘free choice of the 

individual’’ the commenter means the 

individual’s free choice of providers, 

this Medicaid requirement at section 

1902(a)(23) of the Act is not waived or 

disregarded under section 1915(i) of the 

Act and is not a subject of this rule. We 

believe that the proposed language 

broadly covers the other elements of this 

comment, and we will consider 

addressing this issue further in future 

guidance. 

Comment: One commenter requested 

that the word ‘‘should’’ be replaced with 

‘‘must’’ or ‘‘implement policies to.’’ 

Response: The proposed and final 

regulation language does not contain the 

word ‘‘should.’’ 

Comment: One commenter expressed 

the need for a representative to be 

identified by the participant after s/he is 

well informed of the program and his/ 

her responsibilities. They further 

commented that effective practices for 

identifying and choosing representatives 

should be shared with the participants 

during program orientation and as 

needed. 

Response: We believe this would be 

an example of a good state practice, 

which we will consider for inclusion in 

future guidance. 

Comment: One commenter stated that 

based on the general principles of 

participant direction, states should not 

require that individuals have 

representatives without prior attempts 

to train and support the participant. 

Response: The purpose of this 

provision is not to require an individual 

to have a representative but it is to 

require states to allow the option for an 

individual to choose a representative for 

the purpose of participating in decisions 

related to the person’s care or well-being 

when the individual requires assistance 

in making such decisions, and to have 

policies for the process for 

authorization, the extent of decisionmaking authorized, and safeguards. We 

note that where a legal guardian, 

conservator, or other person has the sole 

authority under state law to make 

decisions related to the individual’s 

care, the state must comply with the 

decisions of the legal surrogate. 

Comment: One commenter requested 

that the following language from the 

preamble of the proposed rule, or 

something similar, be added to the 

actual regulation text: ‘‘. . . process 

should still be focused on the individual 

requiring services, and that supports 

should be provided to allow the 

individual to meaningfully participate 

and direct the process to the maximum 

extent possible.’’ 

Response: We have added the 

following to § 441.735(c) of this rule: 

‘‘States must continue to meet the 

requirements regarding the personcentered planning process at Section 

441.725 of this rule.’’ 

11. Self-Directed Services (§ 441.740) 

(Proposed § 441.674) 

Section 1915(i)(1)(G)(iii)(I) and (II) of 

the Act provides that states may offer 

enrolled individuals the option to selfdirect some or all of the State Plan 

HCBS that they require. Self-directed 

State plan HCBS allow states another 

avenue by which they may afford 

individuals maximum choice and 

control over the delivery of services, 

while comporting with all other 

applicable provisions of Medicaid law. 

We have urged all states to afford waiver 

participants the opportunity to direct 

some or all of their waiver services, 

without regard to their support needs. 

With the release of an updated, revised 

section 1915(c) of the Act waiver 

application in 2008, we refined the 

criteria and guidance to states 

surrounding self-direction (also referred 

to as participant-direction), and 

established a process by which states 

are encouraged, to whatever degree 

feasible, to include self-direction as a 

component of their overall HCBS waiver 

programs. While section 1915(i) of the 

Act does not require that states follow 

the guidelines for section 1915(c) of the 

Act waivers in implementing selfdirection in the State plan HCBS 

benefit, we anticipate that states will 

make use of their experience with 

section 1915(c) of the Act waivers to 

offer a similar pattern of self-directed 

opportunities with meaningful supports 

and effective protections. 

Comment: Several commenters 

recommended that CMS include 

training as one aspect of employerauthority activities that self-directing 

beneficiaries may be allowed to 

exercise. A couple of commenters urged 

CMS to require states to offer training 

for individuals on selecting, hiring, 

supervising and firing service providers, 

in addition to service provider training. 

Response: We agree with this 

recommendation and have added the 

following to the § 441.740(e)(3): 

‘‘Voluntary training on how to select, 

manage, and dismiss providers of State plan 

HCBS.’’ 

We note that many states currently 

have existing training programs 

available that could potentially be 

leveraged or modified to meet such a 

requirement. Training programs should 

be able to meet the needs of individuals 

at varying levels of need with regard to 

selecting, managing, and dismissing 

providers. Consistent with the 

philosophy of self-direction, this 

training must be voluntary, and may not 

be a mandatory requirement for the 

individual to receive services under this 

option. 

Comment: One commenter requested 

training for agents conducting 

evaluations, assessments, and service 

planning. 

Response: Training for agents 

conducting evaluations, assessments, 

and person-centered service planning is 

a requirement that was stipulated under 

the proposed rule at § 441.668, provider 

qualifications, and remains unchanged 

in this final rule at § 441.730. 

Comment: One commenter 

recommended that CMS consider 

requiring states to provide joint 

trainings for both consumers and 

providers, as they have resulted in 

improved services, better 


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communication and a stronger 

relationship. 

Response: We believe that this would 

be more suited as one option that a state 

could put into practice to meet training 

requirements. 

Comment: One commenter indicated 

that states should be provided guidance 

on elements that are important for 

participant direction assessment (for 

example, strengths, abilities, individual 

goals, need for a representative, capacity 

to self-direct with an eye for developing 

a support system to ensure success in 

self-directing, and risks). 

Response: These elements are already 

required under § 441.725(b), pertaining 

to the person-centered service plan. 

Comment: One commenter applauded 

CMS for their inclusion of participant 

direction support functions, stating that 

they are well documented by research 

and that successful participant direction 

opportunities are dependent on the 

appropriate execution of each of these 

support functions. The commenter 

requests that CMS describe within the 

rule the elements of each of these 

functions (as seen with the financial 

management services function). 

Response: We appreciate the support 

of the commenter. Experience with 

section 1915(c) of the Act and other 

Medicaid HCBS authorities have been 

instrumental in demonstrating the 

importance of the availability of 

information, assistance, and support to 

participants who self-direct their HCBS. 

Since the purpose of this regulation is 

to stipulate the minimum requirements 

that states must meet for the section 

1915(i) of the Act authority, we believe 

the commenter’s request will be best 

suited as future sub-regulatory 

guidance/policy. 

Comment: One commenter expressed 

appreciation of well-structured 

definitions for both employer authority 

and budget authority, and 

recommended an edit to the ‘‘employer 

authority’’ definition to ensure its 

consistency with existing best practices: 

replace the ‘‘or’’ in ‘‘the ability to select, 

manage, or dismiss providers of State 

plan HCBS’’ with an ‘‘and’’ since the 

ability to do all three functions is 

critical to the model. 

Response: Since each of these 

functions is optional, and we want to 

ensure that the protections at 

§ 441.740(c) are provided with selection 

of any of these optional functions, we 

are unable to adopt the commenter’s 

recommended revision. 

Comment: Several commenters 

requested revising the provisions related 

to budget authority in § 441.674(d)(5) to 

make it clear that self-directing 

individuals with budget authority may 

be allowed to pay providers directly. 

Another commenter requested revision 

to § 441.674(e)(2)(iii) of the proposed 

rule to clarify that employer-related 

financial transactions, such as paying 

worker wages and taxes, may also be 

made for individuals with employer 

authority. 

Response: Section 1915(i) of the Act 

does not give states the authority to 

allow participants to perform 

transactions or convey cash to the 

individual or representative. It does 

allow for budget authority to grant 

individuals control of expenditures. In 

addition, with sufficient state Medicaid 

agency process and oversight, states 

may choose to employ alternate 

methods to maximize participant 

autonomy within the parameters of the 

section 1915(i) of the Act authority. 

Comment: One commenter requested 

that we add a requirement to 

§ 441.674(b)(4) that ‘‘there are state 

procedures to ensure the continuity of 

services during the transition from selfdirection to other models of service.’’ 

Response: We agree with this 

comment and have added additional 

language to the rule at § 441.740(b)(4). 

Comment: One commenter requested 

that § 441.674(d) regarding budget 

authority require that the service plan 

specify the authority to be assumed by 

the individual, any limits to the 

authority, and specify parties 

responsible for functions outside of the 

authority to be assumed. 

Response: The commenter’s request is 

already addressed in the requirement as 

included in the proposed rule under 

§ 441.674(b)(2), which we are finalizing 

at § 441.740(b)(2). 

Comment: Section § 441.674(e)(2) 

regarding financial management 

supports should clarify that federal 

financial participation (FFP) is available 

for this service. 

Response: States have the option of 

providing this type of activity as a 

Medicaid administrative activity or as a 

Medicaid service, as long as the activity 

meets Medicaid requirements. It is not 

necessary for this to be specified in the 

text of the regulation. We will explain 

these options in future guidance. 

Comment: One commenter requested 

clarification to indicate that a state may 

provide for employer functions itself, or 

through a fiscal/employer agent or other 

state-contracted entity under the state’s 

direction and control. They stated that 

it should also be clear that states have 

the option to offer these supports to 

individuals directly or through a public 

entity. 

Response: States have the option of 

providing this type of activity as a 

Medicaid administrative activity or as a 

Medicaid service, as long as the activity 

meets Medicaid requirements. We do 

not believe that this degree of specificity 

would be appropriate as a requirement 

under regulation text, but will be 

considered in the development of any 

future guidance. 

Comment: Two commenters requested 

CMS to revise the requirement that 

states offer individual supports so that 

it includes peer-to peer support and 

family-driven care. 

Response: While we agree that these 

are important supports that states 

should consider making available to 

individuals, we do not believe that this 

degree of specificity would be 

appropriate as a requirement under 

regulation text. We will however, 

consider this in the future development 

of additional guidance. 

Comment: Two commenters indicated 

that it is unclear what is meant by, and 

stated concerns about, the statement 

that evaluation results will lead to the 

determination of ‘‘ability to self-direct 

[both with and without specific 

supports].’’ One of these commenters 

expressed support of any evaluation 

criteria that encourages an individual to 

personally assess his/her interests and 

abilities to self-direct while not leading 

to professional decisions made in 

isolation based solely on the 

individual’s disability, personal 

characteristics, or experiences. The 

other commenter stated the belief that, 

with appropriate supports, essentially 

all individuals are able to self-direct, 

using Michael Weymeyer’s concept of 

the individual as causal agent in their 

life, and that it is hard to understand the 

purpose of determining the ability of 

someone to self-direct without supports. 

Both agree that a person-centered 

system that includes participant 

direction should be able to support 

people to make informed decisions 

pertaining to their care while providing 

the individualized support s/he needs to 

successfully self-direct. 

Response: The purpose of inclusion of 

‘‘without supports’’ in this paragraph is 

to be inclusive of the individual’s 

option to not avail him/herself of the 

opportunity to use the self-directed 

supports that states are required to offer 

under this option, while also preserving 

the responsibility of states to ensure that 

the individual receives the needed 

services in accordance with his/her 

person-centered service plan. 

Comment: One commenter stated that 

self-directed service plans should be 

aligned with the most integrated setting 

definition under the ADA and Olmstead 

and recommended additional language 

be added under § 441.674(b). 


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Response: This recommendation is 

already captured under § 441.725(b)(1), 

which pertains to all person-centered 

service plans. 

Comment: One commenter expressed 

an opinion about the requirement in the 

proposed rule that the service plan 

indicate not only the services that will 

be self-directed, but also the ‘‘methods 

by which the individual will plan, 

direct, or control these services.’’ The 

commenter expressed that this language 

is dangerously vague, and as a result, 

may lead to specificity within the 

service plan that is not sensitive to the 

flexible and dynamic processes required 

for successful participant direction. 

Response: This language is referring 

to participant preferences with regards 

to how they choose to self-direct their 

services, including employer and/or 

budget authority if elected by the state. 

More detail and requirements regarding 

these two authorities is specified under 

§ 441.740(c) and (d). 

Comment: One commenter stated the 

importance of individualized 

contingency plans as being well stated, 

and appropriate in the proposed 

regulation. Another stated that risk 

management techniques should not 

interfere with the right to self-direct and 

other choices and rights unless there is 

a documented, clear, concrete danger 

present. Another commenter indicated 

that it is important that participant 

direction philosophy inform any risk 

management techniques, which are 

required in the proposed rule to be 

listed in the service plan, with the 

participant leading the process and 

creating back-up plans unique to his/her 

needs. The commenter also supports a 

transparent individual budget 

development and monitoring process, 

but at the same time recognizes the 

importance of providing participants 

with accessible information that is not 

too overwhelming and easy to digest. 

They recommend that any tools for this 

purpose be simple and straight forward, 

making them accessible to all program 

participants. 

Response: We appreciate and agree 

with these comments and will consider 

them for inclusion in future guidance. 

Comment: One commenter indicated 

that states are using the self-directed 

option to save money, and that selfdirected services are often reimbursed at 

a lower rate than agency-directed 

services for no clear reason, causing 

wages for workers in self-directed 

programs to be substantially lower than 

wages for agency-controlled workers. 

Response: Self-directed provision of 

services provides the states with the 

option to give individuals the flexibility 

to negotiate preferred rates for services, 

frequently with individuals that have a 

pre-existing relationship with the 

consumer, for example, a friend or 

neighbor. This may result in costs for 

services that are lower than comparable 

services provided by an agency. The 

rates selected by individuals who are 

self-directing may or may not include 

the administrative overhead that occurs 

when an agency employs individual 

workers to provide services. 

Comment: Several commenters stated 

that self-direction as a delivery method 

and supports to participants to selfdirect, should be required and not state 

options. Another stated that agencybased services should be available only 

for those who cannot manage selfdirection (with supports) and have no 

authorized representative. 

Response: Section 1915(i)(G)(iii) of 

the Act allows states the option to offer 

individual election for self-directed 

services. The statute does not include 

the authority for the Secretary to require 

that the services that states offer under 

section 1915(i) of the Act must be selfdirected. For states that choose to offer 

individual election to self-direct their 

HCBS, states must make information 

and assistance available to those 

individuals to support their direction of 

services. 

Comment: One commenter applauded 

the ability for states to allow 

participants to direct any or all of the 

State plan HCBS benefit, and stated the 

potential for confusion, unnecessary 

complexity, and limited control when 

states decide to limit the ability to selfdirect to one specific service. They 

strongly recommended that states 

receive technical assistance and 

guidance on the benefits of participant 

direction and how to implement 

participant direction opportunities to 

the furthest extent possible, including 

providing access to an individual 

budget model. 

Response: We appreciate these 

comments. We are available to provide 

guidance and assistance to states and 

encourage states to contact us with any 

such requests. 

Comment: One commenter stated that 

the following statement is extremely 

vague and requires clarification: 

‘‘According to the proposed rule, 

individuals who choose to self-direct 

will be subject to the ‘same 

requirements’ as other enrollees in the 

State plan HCBS benefit.’’ They stated 

that it is important that any 

requirements created be sensitive to the 

participant direction philosophy and 

informed by evidence-based participant 

direction practices. 

Response: This statement in the 

preamble was only stating that the other 

requirements of section 1915(i) of the 

Act, such as eligibility, adjustment 

authority, independent evaluation and 

assessment, person-centered service 

plan, etc., are still requirements that 

must be applied for individuals who 

choose to self-direct their services. 

Additional requirements specific to the 

self-direction option were included in 

the proposed rule, and were based on 

our experience with section 1915(c) of 

the Act waivers and other Medicaid 

authorities in order to include a similar 

pattern of self-directed opportunities 

with meaningful supports and effective 

protections. 

Comment: One commenter stated the 

assumption that states have the option 

to provide program participants with 

employer authority or budget authority 

(as opposed to requiring both), but 

indicated that they find the language in 

the proposed rule pertaining to this 

point vague. 

Response: Section 441.740(b)(2) 

already specifies ‘‘and/or’’ to indicate 

this option. 

Comment: One commenter, with a 

reminder that the proposed rule allows 

states to enter into a ‘‘co-employer’’ 

relationship with participants, stated 

that it is important to recognize that 

there is no one standard definition for 

‘‘Agency with Choice,’’ leading to 

inconsistent application and monitoring 

of this model. The commenter strongly 

encouraged CMS, in collaboration with 

the Department of Labor and informed 

by existing state labor laws and 

stakeholders, to set standards for the 

‘‘Agency with Choice’’ model that are 

reflective of the participant direction 

paradigm and the liabilities specific to 

this model. 

Response: We appreciate this 

comment and will take it under 

consideration in the development of 

future guidance. 

Comment: One commenter 

recommended that § 441.674(b) include 

a reference to § 441.674(e) requiring selfdirection supports to be included in the 

service plan, since paragraph (e) is 

cross- referenced in other paragraphs, at 

§ 441.674(c)(2) and § 441.674(d)(4)). 

Response: After consideration of this 

comment, we believe the inclusion of 

this requirement under both 

§ 441.740(c)(2) and (d)(4) is repetitive 

and would be better placed under 

§ 441.740(b) as a new paragraph (5). 

Therefore, we made this addition to 

§ 441.740. 

Comment: One commenter 

recommended that § 441.674(e) should 

explicitly include the requirement 

suggested in the preamble (77 Fed. Reg. 

26373, first column) for an 

‘‘independent advocate.’’ 


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Response: We are not adding this as 

a requirement to this final rule. 

However, we believe the availability of 

an independent advocate to assist the 

individual with the access to and 

oversight of their waiver services, 

including self-direction, is an important 

component of a strong self-directed 

system. 

Comment: One commenter 

recommended that CMS explain, in 

§ 441.674(a), that individuals should be 

encouraged to retain authority over all 

functions (budgeting, staffing, etc.), but 

that individuals could choose only to 

retain authority over specific functions. 

They also recommended that CMS add 

the term ‘‘, but not limited to,’’ after the 

term ‘‘including.’’ 

Response: The purpose of § 441.740(a) 

is to specify the state option to offer the 

election for self-directing HCBS. The 

language that the commenter has 

suggested would not be appropriate for 

this regulation since it would not 

stipulate a state requirement. Regarding 

the second comment, we do not agree 

with leaving this open-ended, and since 

it is unclear what else would be selfdirected in addition to amount, 

duration, scope, provider, and location 

of the HCBS, we are unable to make the 

suggested revision. 

Comment: One commenter urges CMS 

to promote matching service registries 

as robust models of information and 

assistance as a way to assist participants 

with identifying and accessing 

independent providers. 

Response: We appreciate this 

comment and will consider it for 

inclusion in future guidance. 

12. State Plan HCBS Administration: 

State Responsibilities and Quality 

Improvement (§ 441.745) (Proposed 

§ 441.677) 

a. State Responsibilities 

States are required to provide CMS 

annually with the projected number of 

individuals to be enrolled in the benefit, 

and the actual number of unduplicated 

individuals enrolled in the State plan 

HCBS benefit in the previous year. 

Section 1915(i) of the Act authorizes a 

state to elect not to apply comparability 

requirements, thus permitting states to 

target the entire section 1915(i) of the 

Act benefit, specific services within the 

benefit, or both. Under 

§ 441.745(a)(1)(ii), we specify that the 

state may not limit enrollee access to 

services in the benefit for any reason 

other than assessed need or targeting 

criteria. This includes the requirement 

that services be provided to all 

individuals who are assessed to meet 

the targeting criteria and needs-based 

criteria, regardless of income. This is an 

important distinction between the limits 

states place on the services to be offered 

when they design the benefit, as 

opposed to limiting access to the 

services that are in the benefit for 

particular enrolled individuals. As 

discussed in the proposed rule, states 

have a number of permitted methods to 

control utilization. We proposed that 

once an individual is found eligible and 

enrolled in the benefit, access to 

covered services can be limited on the 

basis of the needs-based criteria as 

evaluated by the independent 

assessment and incorporated into the 

person-centered service plan. By not 

limiting access, we mean that an 

enrollee must receive any or all of the 

HCBS offered by the benefit, in scope 

and frequency up to any limits on those 

services defined in the state plan, to the 

degree the enrollee is determined to 

need them. Enrollees should receive no 

more, and no fewer, HCBS than they are 

determined to require. 

b. Administration 

We proposed in § 441.677(a)(2)(i) an 

option for presumptive payment. In 

accordance with section 1915(i) of the 

Act, the state may provide for a period 

of presumptive payment, not to exceed 

60 days, for evaluation of eligibility for 

the State plan HCBS benefit and 

assessment of need for HCBS. This 

period of presumptive payment would 

be available for individuals who have 

been determined to be Medicaid 

eligible, and whom the state has reason 

to believe may be eligible for the State 

plan HCBS benefit. We proposed that 

FFP would be available for evaluation 

and assessment as administration of the 

approved state plan prior to an 

individual’s determination of eligibility 

for and receipt of other section 1915(i) 

of the Act services. If the individual is 

found not eligible for the State plan 

HCBS benefit, the state may claim the 

evaluation and assessment as 

administration, even though the 

individual would not be considered to 

have participated in the benefit for 

purposes of determining the annual 

number of individuals served by the 

benefit. FFP would not be available 

during this presumptive period for 

receipt of State plan HCBS. 

In § 441.677(a)(2)(ii), we proposed 

that a state may elect to phase-in the 

provision of services or the enrollment 

of individuals if the state also elects not 

to apply comparability requirements 

and to target the benefit to specific 

populations. However, there is no 

authority to limit the numerical 

enrollment in the benefit or to create 

waiting lists. Therefore, we proposed 

that any phase-in of services may not be 

based on a numerical cap on enrollees. 

Instead, a state may choose to phase-in 

the benefit or the provision of specific 

services based on the assessed needs of 

individuals, the availability of 

infrastructure to provide services, or 

both. Infrastructure is defined as the 

availability of qualified providers or of 

physical structures and information 

technology necessary to provide any 

service or set of services. A state that 

elects to phase-in the benefit must 

submit a plan, subject to CMS approval, 

that details the criteria used for phasing 

in the benefit. In the event that a state 

elects to phase-in the benefit based on 

needs, all individuals who meet the 

criteria described in the phase-in plan 

must receive covered services. If a state 

elects to phase-in services based upon 

infrastructure, the plan must describe 

the capacity limits, strategies to increase 

capacity, and must assure that covered 

services will be provided to all 

individuals who are able to acquire a 

willing and qualified provider. Any 

phase-in plan must provide assurance 

that the benefit, and all included 

services, will be available statewide to 

all eligible individuals within the first 

5-year approval period. 

In § 441.677(a)(2)(iii), we proposed 

that a state plan amendment submitted 

to establish the State plan HCBS benefit 

must include a reimbursement 

methodology for each covered service. 

In some states, reimbursement methods 

for self-directed services may differ from 

the same service provided without selfdirection. In such cases, the 

reimbursement methodology for the 

self-directed services must also be 

described. 

In § 441.677(a)(2)(iv), we proposed 

that the state Medicaid agency describe 

the line of authority for operating the 

State plan HCBS benefit. The State plan 

HCBS benefit requires several functions 

to be performed in addition to the 

service(s) provided, such as eligibility 

evaluation, assessment, and developing 

a person-centered service plan. To the 

extent that the state Medicaid agency 

delegates these functions to other 

entities, we proposed that the agency 

describe the methods by which it will 

retain oversight and responsibility for 

those activities, and for the operation 

and quality improvement of the benefit 

as a whole. Delegation of 

responsibilities by the state Medicaid 

agency must comply with the single 

state agency requirements of section 

1902(a)(5) of the Act and § 431.10. 

In § 441.677(a)(2)(v), we included a 

provision regarding the effective dates 

of amendments with substantive 

changes. Substantive changes may 


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include, but are not limited to changes 

in eligible populations, constriction of 

service amount, duration or scope, or 

other modifications as determined by 

the Secretary. We added regulatory 

language reflective of our guidance that 

section 1915(i) of the Act amendments 

with changes that CMS determines to be 

substantive may only take effect on or 

after the date when the amendment is 

approved by CMS, and must be 

accompanied by information on how the 

State has assured smooth transitions 

and minimal adverse impact on 

individuals impacted by the change. 

In § 441.677(a)(2)(vi), we indicated 

that State plan amendments including 

targeting criteria are subject to a 5-year 

approval period and that successive 

approval periods are subject to CMS 

approval, contingent upon state 

adherence to federal requirements. In 

order to renew State plan HCBS for an 

additional 5-year period, the state must 

provide a written request for renewal to 

CMS at least 180 days prior to the end 

of each approval period. 

c. Quality Improvement Strategy 

We proposed in § 441.677(b) 

requirements for quality assurance 

which states are required to meet under 

section 1915(i)(1)(H)(i) of the Act. We 

proposed to require a state, for quality 

assurance purposes, to maintain a 

quality improvement strategy for its 

State plan HCBS benefit. The state’s 

quality improvement strategy should 

reflect the nature and scope of the 

benefit the State will provide. We 

proposed that the State plan HCBS 

benefit include a quality improvement 

strategy consisting of a continuous 

quality improvement process, and 

outcome measures for program 

performance, quality of care, and 

individual experience, as approved and 

prescribed by the Secretary, and 

applicable to the nature of the benefit. 

In § 441.677(b), we proposed to require 

states to have program performance 

measures, appropriate to the scope of 

the benefit, designed to evaluate the 

state’s overall system for providing 

HCBS. Program performance measures 

can be described as process and 

infrastructure measures, such as 

whether plans of care are developed in 

a timely and appropriate manner, or 

whether all providers meet the required 

qualifications to provide services under 

the benefit. In § 441.677(b)(1), we also 

proposed to require states to have 

quality of care measures as approved or 

prescribed by the Secretary. Quality of 

care measures may focus on program 

standards, systems performance, and 

individual outcomes. 

Comment: A commenter stated that 

the proposed regulations would result 

in cut backs, loss of jobs, and 

subsequent loss of care for people who 

cannot survive without assistance with 

all their basic needs. 

Response: These regulations explain 

requirements for a new provision that 

provides states with the option to add 

additional HCBS to their state plan. 

Since these regulations allow for new 

additional services, we do not see how 

this would result in the impact that the 

commenter suggests. 

Comment: One commenter requested 

revision to § 441.677(a)(1)(iii) to add to 

the requirements advance written notice 

and the right to appeal denials. 

Response: This provision of this rule 

refers to requirements at part 431, 

subpart E, which is not a subject of this 

regulation. However, since advance 

notice is a topic in part 431, subpart E, 

we have added ‘‘advance notice’’ to this 

regulation at § 441.745(a)(1)(iii). 

Comment: One commenter stated the 

belief that operating different parts of 

the state plan under different rules 

would be burdensome to states, and 

opposition to § 441.677(a)(2)(v), which 

would impose rules for effective dates of 

state plan amendments that differ from 

current state plan amendment policy. 

Response: As explained in the 

preamble to the rule, and as required at 

§ 441.745(a)(2)(v), state plan 

amendments which result in a reduction 

of eligibility or services to section 

1915(i) of the Act participants must be 

submitted with a prospective, rather 

than retroactive, effective date. While 

this requirement differs from current 

SPA procedures, it is consistent with 

section 1915(c) of the Act submissions. 

And as section 1915(i) of the Act allows 

states to add services under section 

1915(c)(4)(B) of the Act, we are 

requiring states submitting section 

1915(i) of the Act SPAs to follow the 

same requirements for those section 

1915(c) services outlined in CMS CMCS 

Bulletin dated April 16, 2012, regarding 

actions that result in reductions. If a 

state submits an amendment or renewal 

to an approved SPA that includes 

reductions, the reductions would be 

effective for the remainder of the 

approved period (once approved), but 

cannot be applied retroactively to the 

SPA action’s approval date. 

Comment: One commenter agreed that 

retroactive amendments should not be 

available for elimination or reductions 

in services, but does not consider 

changes to provider qualifications or 

rate methodologies to be substantive 

changes. The commenter stated that 

defining substantive change to include 

changes to rate methodology or provider 

requirements prevents states from acting 

quickly and efficiently to address 

legislative direction or changing state 

needs. 

Response: We disagree. Since changes 

to provider qualifications and/or rate 

methodologies could negatively impact 

provider availability and result in a 

reduction of services to a participant, 

we are requiring a state to submit such 

SPAs, and receive CMS approval, prior 

to implementing any changes of this 

nature. 

Comment: One commenter stated 

disagreement with § 441.677(a)(2)(vi), 

limiting approval period for SPAs with 

targeting to 5 years and requiring 

submission of renewals 180 days in 

advance of expiration, and indicated 

that these provisions seem contrary to 

requirements for services under the state 

plan and are like the creation of a new 

waiver authority. 

Response: Section 1915(i)(7)(B) of the 

Act specifies that when a state elects to 

target the provision of State plan HCBS 

to specific populations, that this 

election will be for a period of 5 years. 

Therefore, since the 5 year period of 

operation with the option to renew is a 

statutory requirement, we are unable to 

change this provision. Section 

1915(i)(7)(C) of the Act permits states to 

renew for additional 5 year terms if we 

determine prior to the beginning of each 

renewal period that the state has 

adhered to section 1915(i) of the Act 

requirements and that the state has met 

its objectives with respect to quality 

improvement and individual participant 

outcomes. In order for us to determine 

that these requirements are met, states 

must submit renewal SPAs at least 180 

days in advance of expiration in order 

to allow us sufficient time to review. 

The need for this review timeframe is 

consistent with our experience under 

section 1915(c) of the Act renewals. 

Comment: A few commenters 

recommended that CMS add to the 

periods of approval requirement for 

states that elect to target specific 

populations at § 441.677(a)(2)(vi), so 

that it specifically includes the statutory 

renewal requirement at section 

1915(i)(7)(c)(ii) to meet ‘‘the state’s 

objectives with respect to quality 

improvement and beneficiary 

outcomes.’’ They stressed the 

importance of quality improvement and 

good beneficiary outcomes, and 

indicated that a State plan HCBS benefit 

should not be renewed if it cannot meet 

such criteria. 

Response: We agree with these 

commenters and have revised 

§ 441.745(a)(2)(vi) accordingly. 

Comment: We received many 

comments regarding the option for 


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presumptive payment at 

§ 441.677(a)(2)(i), as noted below: 

• ‘‘CMS should clarify that home and 

community-based services furnished to 

individuals in the 3 months prior to a 

final determination of eligibility are also 

eligible for FFP once eligibility has been 

confirmed.’’ 

• ‘‘Presumptive Eligibility is 

confusing, and should not be limited to 

evaluations and assessment; however, if 

someone needed medical data to prove 

eligibility including disability 

determination, those services should be 

provided.’’ 

• ‘‘. . . encourages CMS to take this 

authority one step further to permit, on 

a time limited basis, federal financial 

participation for State plan HCBS 

furnished to consumers who are 

presumptively enrolled.’’ 

• ‘‘Please clarify that the availability 

of Federal financial participation for 

medically necessary State plan HCBS 

benefit payments under this option 

when the individual beneficiary has 

been found not to be eligible, allows 

states to hold the beneficiary harmless 

for the state financial portion.’’ 

• ‘‘We strongly encourage CMS to use 

its discretion, if possible, to include 

payment for the HCBS which a state 

believes the individual would be 

eligible to receive. This expanded 

authority is especially important in 

emergency situations, such as avoiding 

institutional care.’’ 

• ‘‘We support the creation of 

flexibility for states to provide HCBS 

based on presumed eligibility for 

assessment due to the fact that many 

disabilities occur rather suddenly, and 

because there is no guarantee as to when 

informal support networks may give out 

or end.’’ 

• ‘‘We commend the inclusion of 

authority in § 441.677(a)(2) to allow 

presumptive payment for HCBS 

evaluations and assessments, and the 

provision to allow FFP in the cases 

where presumptive payment was made 

based on good faith.’’ 

Response: We appreciate these 

comments. Section 1915(i)(1)(J) of the 

Act gives states the option of providing 

for a period of presumptive eligibility, 

not to exceed 60 days, for individuals 

the state has reason to believe may be 

eligible for the State plan HCBS benefit. 

However, eligibility for services under 

section 1915(i) of the Act is not the 

same as an eligibility determination for 

Medicaid generally, as this provision 

‘‘shall be limited to medical assistance 

for carrying out the independent 

evaluation and assessment’’ under 

section 1915(i)(1)(E) of the Act. 

Therefore, for clarity, we refer to this 

limited option as ‘‘presumptive 

payment.’’ Since individuals not eligible 

for Medicaid may not receive State plan 

HCBS, the statutory phrase ‘‘and if the 

individual is so eligible, the specific 

HCBS that the individual will receive,’’ 

is further describing the assessment 

under section 1915(i)(1)(E) of the Act for 

which presumptive payment is 

available. Payment for State plan HCBS 

is available once the individual is 

determined eligible, and not prior to 

that point. However, FFP would be 

available for both 1905(a) services and 

administrative costs incurred for 

evaluation and assessment activities for 

individuals who are already eligible for 

Medicaid. During any such period of 

presumptive payment, the individual 

would not receive State plan HCBS, and 

would not be considered to be enrolled 

in Medicaid or eligible for the HCBS 

benefit for purposes of computing the 

number of individuals being served 

under the benefit. 

Comment: One commenter requested 

clarification as to how states must 

ensure people are able to move from a 

needs-based criteria benefits package to 

benefits that require a level of care. 

They also requested guidance to states 

as to how they will monitor for 

unexpected changes in services and 

support needs, which might result in 

the need for services associated with an 

institutional level of care. They asked 

that we provide guidance on time lines 

and processes for conducting level of 

care assessments as well as for enrolling 

individuals in a program or benefit that 

requires a level of care that will best 

meet their needs. 

Response: In order to receive approval 

of a section 1915(i) of the Act SPA, 

states must establish that the 

institutional level of care is based on 

needs-based criteria that are more 

stringent than the proposed section 

1915(i) of the Act needs-based criteria. 

Although states are required to establish 

minimum needs-based criteria that an 

individual would have to meet in order 

to receive section 1915(i) benefits, the 

statute did not establish a maximum or 

ceiling. Therefore, states are permitted 

to allow access to those who meet 

institutional needs-based eligibility 

criteria. We also note that § 441.715(e) 

requires states to re-evaluate and reassess individuals receiving the State 

plan HCBS benefit at least every 12 

months, and when the individual’s 

circumstances or needs change 

significantly or at the request of the 

individual. 

Comment: In § 441.677 (a)(1)(i), no 

details are provided about how states 

would ‘‘project’’ HCBS enrollment. This 

is a critical calculation because states 

might have an incentive to understate 

projections to gain the discretion 

associated with over-enrollment. 

Response: We do not believe it is 

necessary to include such details in the 

regulation. We note that this paragraph 

also requires states to report the actual 

numbers of unduplicated individuals 

enrolled in the State plan HCBS benefit 

on an annual basis. 

Comment: One commenter 

commended CMS on the inclusion of 

§ 441.677(a)(1)(ii)(C) prohibiting the 

state from limiting access to HCBS 

based on income, cost, or location. 

Response: We appreciate the support 

of the commenter regarding the 

inclusion of this requirement which is 

now at § 441.745(a)(1)(ii)(C). 

Comment: One commenter 

recommended that CMS require that 

states make publicly available targeting, 

phase-in, and quality improvement 

plans, including by posting on public 

Web sites. 

Response: At this time, we do not post 

state plans on our Web site. We are 

working on a project to make approved 

state plans publicly available. We 

encourage states to provide for effective 

public engagement in all of their 

Medicaid program activities, and states 

are required to provide 60 day public 

notice when states change 

reimbursement methodology or revise 

CMS approved section 1915(i) of the Act 

needs-based criteria. 

Comment: A couple of commenters 

noted that § 441.677(a)(1)(ii)(B) 

incorrectly cross-references 

§ 441.656(b)(2), which should be 

changed to § 441.656(e)(2). 

Response: We appreciate this 

comment and have made a revision to 

this final rule at § 441.745(a)(1)(ii)(B) 

with the corrected cross-reference to 

§ 441.710(e)(2). 

Comment: One commenter expressed 

that CMS should consider requiring 

states to report on quality measures 

related to home and community-based 

settings and community integration for 

HCBS provided under sections 1915(k), 

1915(c), and 1915(i) of the Act. 

Response: We agree. States are 

required to demonstrate at the time of 

approval that they have quality 

measures in place with a monitoring 

plan, must include them in the SPA or 

waiver, and will report to CMS at a 

frequency to be determined by CMS or 

upon request by CMS. 

Comment: One commenter 

emphasized the important role that nonmedical quality measures play in the 

meaningful evaluation of HCBS. The 

commenter stated that quality measures 

should reflect the ultimate mandate 

resulting from the Olmstead decision 

and the importance of quality of life, 


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independence, and community 

integration. The commenter further 

stated that for those who choose 

participant direction, measures sensitive 

to this mode of service delivery need to 

be implemented, including measures 

that recognize the role of participants as 

decision makers and evaluators of the 

quality of services and supports they 

receive. 

Response: We recognize the 

importance of non-medical quality 

measures and will incorporate these 

areas (quality of life, community 

integration and factors specific to 

participant-directed services) in 

development of future guidance. 

Comment: One commenter noted that 

due to reported abuses in some states, 

it must be clear that observation of 

actual conditions, through on-site 

monitoring and review and by 

interviews with service recipients and 

their advocates and family members, 

will be the method used to measure 

compliance; and not simply by 

reviewing policies, procedures, or 

assertions. The commenter further 

stated that it is crucial that the final rule 

contain the details so CMS has the legal 

authority to prevent creation of new 

loopholes or allow for misinterpretation. 

Response: There may be multiple 

methods of monitoring health and 

welfare in a quality monitoring plan. 

States are required by the regulation to 

have a quality improvement strategy 

consisting of a continuous quality 

improvement process, and outcome 

measures for program performance, 

quality of care, and individual 

experience. 

Comment: A commenter inquired 

about the applicability of the state 

assurances for HCBS waiver programs 

required by § 441.302, particularly 

§ 441.302(a) Health and Welfare, noting 

that there is equivalent vulnerability 

potential for individual beneficiaries 

receiving HCBS under state plan 

authority as under section 1915(c) of the 

Act waiver authority. 

Response: The regulations noted by 

this commenter specifically apply to 

section 1915(c) of the Act home and 

community-based waiver services and 

do not specifically apply to section 

1915(i) of the Act State plan HCBS. The 

regulations that implement section 

1915(i)(1)(H)(i) of the Act, which 

requires states to ensure that the 

provision of HCBS meets federal and 

state guidelines for quality assurance, 

can be found in § 441.745(b) and require 

that states have a quality improvement 

strategy consisting of a continuous 

quality improvement process, and 

outcome measures for program 

performance, quality of care, and 

individual experience. 

Comment: One commenter 

encouraged CMS to require states to 

submit their quality improvement 

strategy to CMS at a specific frequency 

and consider making such information 

public. 

Response: We have required through 

these regulations that states make this 

information available to CMS at a 

frequency determined by CMS or upon 

the request of CMS. We will consider 

further specification of these 

requirements in the development of 

future guidance. 

Comment: One commenter 

recommended revision to 

§ 441.677(b)(1)(ii) to include the 

following language from the preamble in 

the text of the final rule: ‘‘Be evidencebased, and include outcome measures 

for program performance, quality of 

care, and individual experience as 

determined by the Secretary.’’ 

Response: This recommendation has 

been adopted in this final rule at 

§ 441.745(b)(1)(ii). 

Comment: One commenter noted that 

in order to determine if there is a 

sufficient infrastructure to effectively 

implement HCBS, it is necessary for 

states to gather direct-care worker data 

such as numbers of direct service 

workers, gaps in services data, stability 

of workforce, and average compensation 

of workers. 

Response: We agree that this would be 

useful data for states to consider in the 

development of a State plan HCBS 

benefit, but we have not required 

specific measures, such as the one 

recommended by the commenter. 

Comment: One commenter further 

encouraged CMS to consider how 

quality principles/requirements would 

work within the management of long 

term services and supports and its 

impact on network adequacy. 

Response: We appreciate the 

commenter’s recommendation and will 

take this under consideration as we 

develop future guidance. 

13. Prohibition Against Reassignment of 

Provider Claims (§ 447.10) 

Regarding the proposed provider 

payment reassignment provision, we 

received a total of 7 timely items of 

correspondence from home care 

provider representatives and other 

professional associations, state 

Medicaid directors, non-profit 

organizations, and other individuals. 

These comments ranged from general 

support for the proposed provision, to 

specific questions and detailed 

comments and recommendations 

regarding the proposed changes. A 

summary of the public comments and 

our responses are set forth below. 

The proposed rule included a 

provision, retained in this final rule, 

that will allow states to enter into third 

party payment arrangements on behalf 

of individual practitioners for health 

and welfare benefit contributions, 

training costs, and other costs 

customary for employees. 

Comment: Several commenters 

expressed support for the proposed 

provision. Two state Medicaid agency 

directors appreciate the clarification 

that third party payments on behalf of 

certain providers are allowed for 

customary benefits. That ability, they 

recommend, is essential and costeffective for a large group of individual 

providers of personal care. 

Response: We appreciate the 

commenters’ support for the proposed 

provision. CMS has long sought to 

ensure maximum state flexibility to 

design state-specific payment 

methodologies that help ensure a strong, 

committed, and well-trained work force. 

Currently, certain categories of 

Medicaid covered services, for which 

Medicaid is a primary payer, such as 

personal care services, suffer from 

especially high rates of turnover and 

low levels of participation. We believe 

the proposed provider payment 

reassignment provision retained in the 

final rule will provide to states 

additional tools to help foster a stable 

and high performing workforce. 

Comment: One commenter stated that 

authorizing payments on behalf of an 

individual practitioner to a third party 

for health and welfare benefit costs, 

training costs, or other benefits 

customary for employees aligns with 

essential elements that they advocate for 

quality direct-care jobs. They stated 

their belief that this will support state 

efforts to expand and improve consumer 

employment and direction of in-home 

personal care workers. They further 

stated that workers need affordable 

health insurance, other familysupportive benefits, and excellent 

training that helps each worker develop 

and hone all skills—both technical and 

relational—necessary to support longterm care consumers in order to ensure 

that all direct-care workers are able to 

provide the highest-quality care to all 

long-term care consumers. They believe 

that for consumer-directed home care 

workers, it is even more vital that states 

assume some of the human resources 

functions of typical employers. 

Response: We appreciate the 

commenter’s support for the proposed 

provision and agree with its potential to 

improve both the stability and the skills 

of the health care provider workforce. 


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The payment arrangements that we are 

permitting will enhance state options to 

provide practitioners with benefits that 

improve their ability to function as 

health care professionals. For the classes 

of practitioners for whom the state is the 

only or primary payer, these payment 

arrangements are an efficient and 

effective method for ensuring that the 

workforce has health and welfare 

benefits and adequate training for their 

functioning. 

Comment: One commenter stated that 

it will be essential for CMS, states, 

advocates, program participants, and 

organizations to understand how this 

proposed rule is appropriately applied 

within a participant direction model. 

The proposed provision, they suggested, 

should by no means be interpreted to 

allow for restrictions on participants’ 

decisions pertaining to what s/he feels 

is critical to the managing of workers. In 

their own training, program participants 

should be informed of the benefits for 

which workers are eligible to ensure 

informed decisions are made. They 

urged that any additional deductions 

should be paid for with increased 

funding for the program rather than be 

paid directly from individuals’ budgets 

already allocated to needed services and 

supports. 

Response: Direct payment of funds by 

states to third parties on behalf of 

practitioners, to ensure benefits that 

support those practitioners and provide 

skills training, may help ensure that 

beneficiaries have greater access to such 

practitioners and higher quality 

services. In addition, if a state elects to 

withhold certain payments from 

practitioners, as the proposed provision 

would allow, and forwards those 

amounts to a third party on behalf of 

that practitioner for health and welfare 

contributions, training programs, or in 

support of other employee benefits, 

there will not necessarily be any impact 

on program budgets. This rule will not 

require any change in state funding to 

the extent that practitioner rates already 

factored in the costs of benefits and 

skills training. This rule will simply 

provide flexibility for states to fund 

such costs directly and ensure uniform 

access to benefits and skills training for 

practitioners. Indeed, there may be cost 

savings resulting from the collective 

purchase of such benefits and greater 

workforce stability. 

Comment: One commenter supports 

CMS’ objective of clarifying the 

prohibition on reassignment in section 

1902(a)(32) of the Act to ensure that it 

is limited to its intended application 

and that it does not have any 

unintended adverse impact on 

important state Medicaid operations. 

They suggested that states have long 

sought this clarification primarily in the 

context of state efforts to expand and 

improve programs that maximize 

consumer choice and independence and 

allow individuals to receive long term 

care services and supports in their 

homes and communities. They stated 

that the health care providers who assist 

these individuals are considered 

independent service practitioners both 

due to their relationship to the state and 

the consumer, and as a result face 

barriers including a lack of access to 

benefits and training. It makes sense, 

therefore, for states to be able to make 

‘‘employer-like payments from the 

Medicaid service fee to fulfill employerlike functions’’ that overcome these 

employment barriers. 

Response: CMS appreciates the 

commenter’s support for the proposed 

provision and agrees that for the classes 

of practitioners for whom the state is the 

sole or primary payer, and has many 

attributes of an employer, the state 

should be afforded flexibilities to help 

ensure a stable, high performing 

workforce. 

Comment: One commenter indicated 

that as a future nurse practitioner, she 

believes the application of this proposed 

provision is timely and she believes it 

will support state efforts to claim 

‘‘excess provider payments that are not 

directly going to the provider but could 

be used to advance statewide practice 

from a global perspective.’’ 

Response: We appreciate the 

commenter’s support for the proposed 

provision. However, we would note that 

the proposed provider payment 

reassignment provision does not involve 

‘‘excess provider payments’’. Rather, as 

in the proposed rule, the final rule will 

offer states flexibility in determining 

appropriate costs to consider in their 

development of payment rate 

methodologies to ensure adequate 

training, health and welfare benefits, 

and other benefits customary for 

employees within the development of 

that rate. States will be permitted to 

directly pay third parties for health and 

welfare benefits, training, and other 

employee benefit costs. These amounts 

would not be retained by the state, but 

would be paid on behalf of the 

practitioner for the stated purpose. In 

fact, we believe that direct payment of 

funds to third parties on behalf of the 

practitioner may be viewed as 

advantageous by the practitioner insofar 

as they have increased opportunities for 

training. In addition, direct payment of 

funds to third parties on behalf of the 

practitioners may ensure that 

beneficiaries have greater access to such 

practitioners and higher quality 

services. 

Comment: One commenter noted that, 

using the proposed provision, Medicaid 

can leverage its dominant role and help 

stabilize the direct care workforce. 

Specifically, the commenter noted that 

by encouraging Medicaid to directly pay 

practitioners for health and welfare 

benefit costs, training, or other benefits 

customary for employees, job quality 

will improve leading to improving 

recruitment and retention of skilled 

direct-care workers and better quality 

care. The commenter also recommended 

that CMS provide states with the 

appropriate technical assistance in order 

to assist them in adequately conducting 

needs assessments of their own directcare workforce. 

Response: We agree that states that 

voluntarily elect to utilize the proposed 

provider payment reassignment 

provision may help improve their own 

health care provider workforce. We also 

agree with the need for states to receive 

adequate technical assistance from us in 

order to implement the provision. States 

with questions regarding the provision 

are encouraged to contact their Regional 

Office for further guidance. 

Comment: One state asked if the third 

parties to whom withheld funds are 

provided would be subject to the 

provisions of part 455, subpart E, 

Provider Screening and Enrollment. 

Response: No. If the state elects to 

reassign provider payments for health 

and welfare costs, training expenses, or 

other employee benefits, the third party 

to whom those payments are assigned 

would be the recipient of such funds, 

but not the provider of record and hence 

not subject to provider qualification 

requirements. The amounts paid to a 

third party would be on behalf of the 

individual practitioner. 

Comment: One commenter seeks 

clarification as to what would constitute 

a health and welfare benefit 

contribution. Specifically, one state 

would like to know if this would 

include amounts for paid time off for 

personal care attendants. 

Response: The proposed change, 

retained in the final rule, permits each 

state the option to elect such payment 

arrangements to the extent that the state 

determines that they are related to 

benefits such as health care, skills 

training and other benefits customary 

for employees. States will need to 

review their individual circumstances 

and workforce needs to determine if the 

measures are related to such benefits, 

and would help serve program 

objectives such as to ensure a stable, 

high performing workforce. We do not 

wish to prescribe the types of benefits 


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the state might wish to include in its 

definition of health and welfare 

benefits, such as paid time off for 

personal care attendants. As in the 

proposed rule, the final rule offers states 

flexibility in determining appropriate 

aspects to consider in their development 

of payment rate methodologies to ensure 

adequate training, health care, and other 

employee benefits for practitioners, as 

defined by the state. 

Comment: One commenter requested 

a modification to the proposed 

regulatory text for the provider payment 

reassignment provision to avoid a 

possible misunderstanding as to its 

coverage. Specifically, the commenter 

recommended a change to clarify that it 

is applicable to providers for whom the 

main source of service revenue is the 

Medicaid program. As proposed, the 

language states that the provider 

payment reassignment exception is ‘‘[in] 

the case of practitioners for which the 

Medicaid program is the primary source 

of revenue . . .’’ Without such 

clarifying language, the commenter 

recommends, a state may not be able to 

make deductions for health care, 

training, and other benefits that it 

provides for individuals who operate 

adult foster care homes in their 

residences. Since the consumer pays the 

provider for room and board in that 

instance, the provider’s primary source 

of revenue may not be considered to be 

the Medicaid program. 

Response: We have clarified the 

language in the final rule by specifying 

that the state must be the primary 

source of service revenue for the 

practitioner. The proposed regulatory 

text would permit states to make 

payment to third parties for provider 

benefits when the state is operating in 

the role of the provider’s employer 

(even if the state is not the employer for 

other purposes). As clarified, the text 

will provide flexibility for a state to look 

at revenue only related to services 

furnished by the practitioner, rather 

than revenue related to shelter and food 

costs. We believe the proposed 

regulatory text, which we are retaining, 

provides the necessary latitude for states 

to determine whether it is acting in the 

role of an employer for a particular class 

of practitioners. 

III. Home and Community-Based 

Services (HCBS) Waivers (Section 

1915(c) of the Act) 

A. Background 

Section 1915(c) of the Social Security 

Act (the Act) authorizes the Secretary of 

Health and Human Services to waive 

certain Medicaid statutory requirements 

so that a state may offer Home and 

Community-Based Services (HCBS) to 

state-specified group(s) of Medicaid 

beneficiaries who otherwise would 

require services at an institutional level 

of care. This provision was added to the 

Act by the Omnibus Budget and 

Reconciliation Act of 1981 (Pub. L. 97– 

35, enacted August 13, 1981) (OBRA’81) 

(with a number of subsequent 

amendments). Regulations were 

published to effectuate this statutory 

provision, with final regulations issued 

on July 25, 1994 (59 FR 37719). In the 

June 22, 2009 Federal Register (74 FR 

29453), we published the Medicaid 

Program; Home and Community-Based 

Services (HCBS) advance notice of 

proposed rulemaking (ANPRM) that 

proposed to initiate rulemaking on a 

number of areas within the section 

1915(c) of the Act program. In the 

proposed rule published on April 15, 

2011 (76 FR 21311–21317), we 

discussed the comments relating to 

questions posed by the ANPRM, which 

are addressed in this final rule. We 

included proposed language for settings 

in which HCBS could be provided to 

elicit further comments on this issue in 

the section 1915(c) of the Act proposed 

rule, in the section 1915(k) of the Act 

proposed rule published on February 

25, 2011 and also in the section 1915(i) 

of the Act proposed rule published on 

May 3, 2012 as we recognize the need 

for a consistent definition of home and 

community-based settings. It is our goal 

to align the final rule language 

pertaining to home and communitybased setting across the sections 

1915(c), 1915(i) and 1915(k) of the Act 

Medicaid HCBS authorities. We further 

sought to use this opportunity to clarify 

requirements regarding timing of 

amendments and public input 

requirements when states propose 

modifications to HCBS waiver programs 

and service rates, and strategies 

available to CMS to ensure state 

compliance with the requirements of 

section 1915(c) of the Act. 

We have earlier explained our 

purpose for proposing definitions 

regarding home and community-based 

settings (see discussion under section 

II.A. of this rule). 

We believe that these final changes 

will have numerous benefits for 

individuals and states alike. In addition 

to addressing individual and 

stakeholder input, these changes will 

improve HCBS waiver programs and 

support beneficiaries by enabling 

services to be planned and delivered in 

a manner driven by individual needs 

rather than diagnosis. These changes 

will enable states to realize 

administrative and program design 

simplification, as well as improve 

efficiency of operation. The changes 

related to clarification of HCBS settings 

will maximize the opportunities for 

waiver participants to have access to the 

benefits of community living and to 

receive services in the most integrated 

setting, and will effectuate the law’s 

intention for Medicaid home and 

community-based services to provide 

alternatives to services provided in 

institutions. 

B. Provisions of the Proposed 

Regulations and Analysis of and 

Responses to Public Comments 

On April 15, 2011, we published a 

proposed rule (76 FR 21311) entitled, 

‘‘Medicaid Program: Home and 

Community-Based Services (HCBS) 

Waivers’’ which proposed revising the 

regulations implementing Medicaid 

home and community-based services 

under section 1915(c) of the Act in 

several key policy areas. First, the 

proposed rule provides states the option 

to combine the existing three waiver 

targeting groups as identified in 

§ 441.301. In addition, we proposed 

changes to the HCBS waiver provisions 

to convey requirements regarding 

person-centered service plans, 

characteristics of settings that are, as 

well as are not, home and communitybased, to clarify the timing of 

amendments and public input 

requirements when states propose 

modifications to HCBS waiver programs 

and service rates, and to describe the 

additional strategies available to us to 

ensure state compliance with the 

statutory provisions of section 1915(c) 

of the Act. 

We received a total of 1653 comments 

from State Medicaid agencies, advocacy 

groups, health care providers, 

employers, health insurers, and health 

care associations. The comments ranged 

from general support or opposition to 

the proposed provisions to very specific 

questions or comments regarding the 

proposed changes. 

Brief summaries of each proposed 

provision, a summary of the public 

comments we received (with the 

exception of specific comments on the 

paperwork burden or the economic 

impact analysis), and our responses to 

the comments are as follows. 

The following summarizes a few 

general comments received regarding 

the notice of proposed rulemaking and 

also comments regarding issues not 

contained in specific provisions. We 

appreciate and thank the commenters 

for these various remarks. We realize 

these commenters raise important 

considerations in support of persons 

receiving Medicaid HCBS living in 

community settings, in integrated 


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settings, and working in jobs with 

meaningful wages. Since these 

important comments did not address 

any specific regulatory provisions in the 

proposed rule, there is no need to 

respond to them further in the final rule: 

Comment: We received many 

comments supporting the proposed 

policies in the proposed rule, as well as 

some comments expressing concerns 

about the various aspects of the rule. 

Response: We appreciate the feedback 

received on the proposed rule and have 

relied heavily on the insights provided 

by states, advocacy groups, consumers 

and health care providers. We 

appreciate the acknowledgement and 

support of the policies. 

Comment: We received several 

comments expressing concern about 

stakeholder input with respect to these 

rules. 

Response: We recognized the need for 

a diversity of stakeholder input. Thus, 

in the June 22, 2009 Federal Register 

(74 FR 29453), we released an advance 

notice of proposed rulemaking that 

proposed to initiate rulemaking on a 

number of areas within the section 

1915(c) of the Act program and to solicit 

diverse comment. Additionally, after we 

published the proposed rule on April 

15, 2011 (76 FR 21311), we continued 

to meet with stakeholders that included 

advocacy groups, states, other federal 

agencies, provider groups and assisted 

living groups as we developed this rule. 

We plan to continue to communicate 

with states and build upon state 

experience as we work with states to 

implement new policies and program 

changes as a means of ensuring a 

successful partnership between states 

and federal government. In addition, we 

will provide technical assistance and 

support to states. We encourage states to 

share across states as implementation 

continues. The public comments we 

receive will inform the development of 

future operational guidance and tools 

that will be designed to support state 

implementation efforts. 

1. Contents of Request for a Waiver 

(§ 441.301) 

a. Person-Centered Planning Process 

§ 441.301(c)(1) (Proposed 

§ 441301(b)(1)(i)(A)) 

The provisions of this final rule will 

apply to all states offering Medicaid 

HCBS waivers under section 1915(c) of 

the Act. Comments were supportive of 

our interest in setting forth requirements 

regarding person-centered service and 

support plans that reflect what is 

important to the individual. The final 

revisions to § 441.301(c)(1) (proposed 

§ 441.301(b)(1)(i)(A)) will require that a 

written services and support plan be 

based on the person-centered approach. 

This provision includes minimum 

requirements for this approach. 

At § 441.301(b)(1)(i)(A) we proposed 

that a state request for a waiver must 

include explanation of how the state 

will use a person-centered process to 

develop a written services and support 

plan, subject to approval by the 

Medicaid agency. We received 286 

comments about person-centered 

planning, most indicating how 

important it is to individuals that HCBS 

are provided in a manner that supports 

their values and preferences, rather than 

to satisfy an impersonal or providercentered plan of care. In the comments 

immediately below we outline the 

suggestions that do not directly affect 

the regulatory language, and indicate in 

some cases where we will consider 

these ideas in developing future 

guidance. Comments that pertain to the 

proposed regulation language will be 

considered in more detail, under the 

corresponding section of proposed text. 

Comment: Many of the comments had 

to do with effective methods for 

conducting an individual personcentered planning meeting. While some 

commenters seemed to favor requiring 

certain features, a variety of commenters 

made the opposite general point, 

cautioning that too many or overly 

specific requirements would cause the 

process to become bureaucratic instead 

of personal. Comments that specific 

proposed provisions are too prescriptive 

are noted in those sections below. A few 

commenters agreed with the concept, 

but not the language of the proposed 

person-centered planning rule. They 

suggested replacing the entire personcentered planning section with the 

language ‘‘contemporary, promising 

practices that result in consumers 

having control over the services, 

resources, and planning of their lives.’’ 

Finally a few commenters believe that 

the proposed changes implement a ‘‘one 

size fits all’’ ideology. 

Response: States administer Medicaid 

and have flexibility in how federal 

Medicaid requirements are 

implemented. Therefore, the language 

we are including in the final rule 

expresses what must occur rather than 

how. The federal regulations set the 

requirements and minimum standards 

for an activity. We may issue, as needed, 

additional guidance to states to assist in 

the interpretation and implementation 

of the rule. 

Comment: Some commenters 

requested general clarification of terms 

and illustration by example. 

Specifically, commenters presented 

questions around how person-centered 

planning is to be implemented and 

whether any substantive rights are 

established for the individual. 

Response: Examples and other 

explanations are generally included in 

the preamble to a notice of proposed or 

final rulemaking rather than in the 

regulation text. The commenter is 

correct that beyond the requirements in 

subparagraph (A) we do not specify how 

the planning process is to be 

implemented, for the reasons given 

immediately above. The commenter did 

not specify the particular rights of 

concern, so we cannot respond 

specifically to that issue. We consider 

the requirements outlined here to confer 

to individuals the right to a personcentered service plan, and a planning 

process, that meets these requirements. 

Individuals also have other rights under 

different authorities, which do not rely 

on this regulation. For example, civil 

rights against various forms of 

discrimination are protected under the 

ADA and elsewhere. CMS regularly 

works with the HHS Office for Civil 

Rights, Department of Justice (DOJ), and 

others to assure that we address civil 

rights issues as they bear on Medicaid 

requirements. 

Comment: Many and varied 

commenters suggested that CMS make 

person-centered planning requirements 

consistent across all the authorities in 

which HCBS may be offered, such as the 

new Community First Choice program 

and the State Plan HCBS benefit. 

Specific language from proposed rules 

for those authorities was recommended. 

Response: We agree that personcentered planning, as well as other 

HCBS requirements, should be 

consistent across authorities. In 

response to comments, proposed rules 

for some HCBS authorities have been 

published in the last several years, 

reflecting development in the concept of 

person-centered planning. We are 

working to bring all rules into harmony. 

We do point out that rules reflect the 

nature of the service—for example, 

planning for Community First Choice 

involves the plan for that particular 

service, and may not involve some of 

the program elements of a section 

1915(c) of the Act HCBS waiver. We 

will endeavor to make the requirements 

parallel across authorities; however, 

they may not be identical due to some 

statutory differences. 

Comment: A variety of commenters 

requested that the planning process 

consider the needs of individuals more 

than satisfying regulations or ‘‘papercompletion.’’ Many asked that the 

regulation focus on outcomes, not 

process. 


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Response: We agree that the planning 

process should not be about filling out 

forms. The final rule requires actions 

and outcomes that result in a very active 

process and an individualized plan that 

is not focused on paper completion. We 

also note that the degree to which the 

process achieves the goal of personcenteredness can only be known with 

appropriate quality monitoring by the 

state, which should include substantial 

feedback provided by individuals who 

received or are receiving services. 

Comment: A commenter believes that 

these requirements will be very 

expensive for states to implement 

because of added staff and IT system 

costs. The requirements should take into 

account states’ current budget problems. 

Response: States are currently 

required to develop a plan of care 

sufficient to meet HCBS waiver 

participants’ assessed needs for health 

and welfare. We do not believe the 

provisions in these regulations will 

significantly increase burden and note 

that investment in effective information 

technology, with federal financial 

participation, will increase efficiency. 

In § 441.301(b)(1)(i)(A)(1) through (7), 

we proposed requirements for the 

Person-Centered Planning Process. 

Following are general comments we 

received on these requirements. 

Comment: Several commenters 

objected to the term ‘‘plan of care,’’ 

which they believe dismisses active 

person controlled service planning, and 

would prefer something about 

outcomes. 

Response: The regulatory text reads, 

‘‘. . . . a written person-centered 

service plan (also called plan of care) 

that is based on a person-centered 

approach. . . .’’ The term plan of care 

is widely used, and reflected in waiver 

application documents. We indicated 

parenthetically that we are not referring 

to another separate process, but to that 

function we have until now called plan 

of care. While we do not agree that 

either term necessarily implies lack of 

individual control, we agree that 

‘‘person-centered service plan’’ is 

superior because it is less medical in 

connotation and conveys that it is a plan 

for long term services and supports and 

it is developed with a person-centered 

process. We will change the term ‘‘plan 

of care’’ to ‘‘person-centered service 

plan.’’ Also, as noted in more specific 

comments below, many commenters 

wanted stronger language about the 

individual leading the process. We 

believe the phrase ‘‘led by the 

individual’’ clearly indicates that the 

individual is leading the process; 

however, we have further revised the 

language to read ‘‘led by the individual 

receiving services and supports’’ instead 

of ‘‘led by the individual receiving 

services.’’ Throughout the rest of the 

section, we will change any references 

to ‘‘services’’ or ‘‘supports’’ to ‘‘services 

and supports.’’ 

Comment: Some commenters objected 

to mandating person-centered planning 

on two grounds: some individuals may 

not want it, and some individuals may 

not be able to do it. They believe that 

CMS was assuming both interest and 

ability would be present in all HCBS 

participants. Some commenters listed 

specific disabilities they believe limit 

cognitive or expressive ability to such 

an extent that the individual could not 

lead the process. 

Response: With regard to the issue of 

choice, the regulation language does not 

require individuals to be more involved 

than they choose to be in their own 

planning processes. Individuals may 

decline to participate in the process if 

they so choose. Regarding the issue of 

ability, we noted that commensurate 

with the level of need of the individual, 

the person-centered service plan must 

reflect the service and support needs as 

identified through a person-centered 

functional assessment. Individuals may 

select another person(s) to assist or 

represent them in the process. In 

addition, where state law confers 

decision-making authority to a legal 

representative, such as a guardian, that 

individual may direct the personcentered planning process on behalf of 

the individual. 

Following are the comments we 

received on § 441.301(b)(1)(i)(A)(1) of 

the proposed rule, which is 

§ 441.301(c)(1)(i) of the final rule. 

Comment: Quite a few commenters 

urged that the individual be allowed to 

choose who attends the meeting. Many 

stated that a person-centered service 

plan should provide freedom from 

unwanted intrusion in preferences and 

choices which could be from family, 

providers and professionals, or others. 

In other words, the individuals should 

have ‘‘veto power.’’ 

Response: We believe the language in 

the final rule clearly indicates that 

individuals are allowed to choose who 

does or does not attend the meeting; we 

are therefore retaining the proposed 

language. 

Comment: Most of the comments 

about assuring that certain persons 

could be present concerned the role of 

guardians and legal representatives or 

chosen surrogates. Some wanted these 

terms defined and roles specified, 

especially ‘‘legal’’ representative and 

attorneys. Others wanted to be sure that 

the rule allows for representatives who 

are not a legally designated 

representative, but might be a family 

member, friend, advocate, or other 

trusted person chosen by the individual. 

Another asked for a statement that a 

public guardian may not act as the 

designated representative due to the 

inherent unavoidable conflict of 

interest. Several commenters believed 

that the participation of various 

surrogates would result in them, not the 

individual, leading the planning 

process. A few also asserted that 

parental and guardian authority 

prevents abuses by professionals in the 

person-centered planning (PCP) process. 

A few commenters believed that the 

proposed rule reduces the authority of 

a parent or guardian in the PCP process, 

as the Medicaid manual previously 

entitled them. Several other very 

specific suggestions were made for 

requirements applicable to 

representatives. 

Response: Our omission of explicit 

mention of representatives and other 

surrogates was not intentional and did 

not signal any intention to exclude them 

from among those whom individuals 

may choose to include in planning. Any 

references in this rule to ‘‘individuals’’ 

include the role of the individual’s 

representative. We are aware of the 

essential role that representatives, 

guardians, and family members play in 

the lives of some individuals with 

receiving Medicaid HCBS. We are also 

aware of the published literature on the 

problem and conflicts of interest that 

occur, particularly with publicly 

appointed guardians in some 

jurisdictions. We proposed in 

§ 441.301(b)(1)(i)(A)(5) a process for 

identifying and resolving conflicts of 

interest. We do not agree with those 

who expressed the belief that guardians 

would lead the planning process, 

instead of the individual. Though we 

recognize that some individuals without 

receptive or expressive communication 

depend on others to determine and 

articulate their needs, we will continue 

to speak of the individual as being in 

the center. Therefore, we have revised 

the rule to clarify the expectation that 

the individual will lead the planning 

process where possible and that the 

legal representative should have a 

participatory role, as needed and as 

defined by the individual, unless state 

law confers decision-making authority 

to the legal representative. We note that 

the term ‘‘individual’s representative’’ is 

also defined under 1915(i) State plan 

HCBS regulations at § 441.735 of this 

rule, and further note that this rule does 

not abridge the legal authority of a 

parent or legal guardian. 

Comment: Two commenters stated 

that CMS appears to attempt to regulate 


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unpaid family members and friendly 

volunteers by including them in the 

rule. Another concern is that including 

lay persons could violate confidentiality 

protections for the individual. 

Response: We do not agree that the 

rule inadvertently regulates unpaid 

participants in the planning process in 

a general or undesirable manner. Rather, 

we intend that individuals have a 

meaningful choice of who can assist 

them in the planning process. We also 

see no reason to believe that states will 

relax their responsibility to protect 

client confidentiality in this process. 

The individual chooses who 

participates in the planning process, 

and thus retains direct control over who 

has access to private information. 

Following are the comments we 

received on § 441.301(b)(1)(i)(A)(2), 

which is now § 441.301(c)(1)(ii) of the 

final rule. 

Comment: Commenters pointed out 

that the proposed language is 

ambiguous. Several commenters 

recognized the intent of the proposed 

regulation to strengthen the personcentered service plan development 

process, but were concerned that the 

language undermines the progress made 

to empower people with disabilities in 

their planning process. Commenters 

expressed concern that playing a 

‘‘meaningful role’’ is not the same thing 

as authority for decision making. 

Several comments indicated a belief that 

at least some HCBS participants cannot 

lead or even contribute to the service 

plan; several specifically mentioned 

people with intellectual disabilities or 

dementia. A few suggested specific 

supports, such as decision making tools 

and communications support. 

Response: We do not intend a shift 

from the individual directing the 

process. We agree that the language 

should be clarified. ‘‘Meaningful’’ is a 

subjective standard. We will clarify that 

the person-centered planning process 

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. We 

believe the language ‘‘to the maximum 

extent possible’’ reflects the level at 

which the individual desires or is able 

to participate. We believe that with 

skillful facilitation, individuals can 

express themselves to their fullest 

extent. 

Many commenters urged us to favor 

empowering the individual; others 

urged empowering those who believe 

they have the best insight into the 

individual’s needs and wishes. The 

regulation does not put these interests 

in competition. This final rule requires 

a process that puts the individual in the 

center, driving the process to the extent 

feasible, and recognizes the other 

persons’ insights into the individual’s 

strengths, needs, and preferences. The 

supports help to identify and sort out 

differing views among those present. At 

§ 441.301(c)(1)(v) we discuss further the 

role of the facilitation process in 

managing disagreements and the 

inherent differences in self-interest 

present in any diverse team. 

We agree that some of the specific 

types of support commenters suggested 

will be valuable for some individuals, 

but we do not prescribe in regulation all 

the specific supports that can be offered. 

These vary according to many factors 

including the type of disability. 

We have revised this final rule to 

read: ‘‘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.’’ 

Comment: We received a few 

comments expressing opposite views on 

professionals participating in the 

planning. Two commenters did not 

believe that a planning process can 

include professionals and be personcentered because the individual will not 

direct the process. Others requested 

adding a provision to assure that the 

planning process is facilitated by a 

professional trained and skilled in 

person-centered planning techniques, 

possibly an independent facilitator. 

Response: Person-centered service 

planning is a complex concept and 

requires both commitment and skill to 

implement. We agree that if 

professionals take control from 

individuals in the planning process, the 

requirements of this rule will not have 

been met. We do not agree that it is 

impossible for professionals to 

participate in the process appropriately. 

Indeed, as in many professional 

disciplines, the values, ethics, and the 

evolution of best practices in the 

profession offer the best means of 

consistently implementing a process 

that supports and serves the individual. 

We require that supports be available to 

assist all individuals in leading the 

planning process, and sometimes those 

supports include professionals skilled 

in facilitation. We believe the revised 

language is sufficiently clear in that it 

states an outcome—the individual 

directs the process, with supports if 

needed. 

Following are the comments we 

received on § 441.301(b)(1)(i)(A)(3), 

which is now § 441.301(c)(1)(iii) of the 

final rule. 

Comment: We received relatively few 

comments in response to this provision. 

Some commenters stated that the time 

and location preference only belonged 

to the individual, or that it should occur 

only in the individual’s home, while 

others pointed out that the logistics 

should be negotiated with all 

participants. Some wanted more 

specificity, including whether the 

process must always be face to face; 

others believe the rule to be too 

prescriptive. We also address here a 

comment that the rule lacks any 

requirement for timeliness. 

Response: As proposed, the regulation 

text aims to address a problem 

significant numbers of waiver 

participants may have experienced: that 

the planning process is scheduled 

entirely at the convenience of the state 

and/or provider agency. This language 

is silent about the convenience or 

preference of other participants, and we 

do not agree that silence precludes 

taking these and other factors into 

account. We agree that timeliness is 

important. When individuals rely 

heavily on services and supports, 

waiting to update a plan in response to 

a changed need could be a significant 

hardship or even a danger. Because the 

need for planning can range from urgent 

to optional, we do not believe it is 

appropriate or helpful to specify time 

frames in regulation. However, we are 

revising this provision in the final rule 

at§ 441.301(c)(1)(iii) as follows: ‘‘Is 

timely and occurs at times and locations 

of convenience to the individual.’’ 

Following are the comments we 

received on § 441.301(b)(1)(i)(A)(4), 

which is now § 441.301(c)(1)(iv) of the 

final rule. 

Comment: Several commenters 

suggested that the regulation be more 

specific and more clearly articulate and 

strengthen ‘‘cultural considerations,’’ 

include more detailed state 

responsibilities, and offer translation 

services in the individual’s first 

language. No comments objected to this 

provision specifically. 

Response: We have added text to 

specify that a State’s waiver request 

include how the person centered 

planning process is accessible to 

persons who are LEP and persons with 

disabilities, consistent with the 

Medicaid programmatic accessibility 

provision at § 435.905(b). 

Following are the comments we 

received on § 441.301(b)(1)(i)(A)(5), 

which is now § 441.301(c)(1)(v) of the 

final rule. 

Comment: Several commenters asked 

that we clarify this statement, including 

how to implement it and the types of 

conflict anticipated. Many comments 


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suggested types of disagreement or 

conflicts of interest to address, 

including interpersonal disagreement, 

denial or reduction in service, failure to 

implement the plan or comply with 

regulations, and whether providers have 

an inherent conflict and should not be 

present. 

Response: We do not think that 

additional clarification is appropriate in 

the regulation. Furthermore, states can 

exercise multiple strategies to comply 

with this requirement. 

We note that some commenters 

confused a provider being in attendance 

with a provider being in charge of the 

process or the plan. The latter (a 

provider being in charge of the process 

or plan) is not appropriate; the former 

(the provider being in attendance) 

depends on the circumstance and is not 

a matter subject to blanket requirements. 

Individuals may choose, or not, to 

include a provider of service in the 

planning team. In some situations a 

direct care worker or a therapist has 

worked so long and closely with the 

individual that his or her perspective is 

very important. Also, some providers 

point out that they should be able to 

voice any limits in what they can 

provide, so that a plan for someone with 

intense need does not commit providers 

to services they are not able to provide. 

In other situations, for example, if the 

individual is anxious about 

repercussions from voicing problems, or 

has a tendency to defer to a provider, 

that provider’s presence would be 

detrimental. Clearly some actions, such 

as intimidating the individual, are 

unacceptable. 

We do not believe it is possible to 

define more specific conflict of interest 

requirements that would be meaningful 

in the variety of arrangements currently 

used to develop person-centered service 

and support plans. We have 

strengthened the language by requiring 

that the state devise clear conflict of 

interest guidelines addressed to all 

parties who participate in the planning 

process. 

Comment: Several commenters asked 

to strengthen the provision by requiring 

case managers to be independent of any 

service provider, as an assurance that 

the individual’s goals and services will 

be appropriate, and will reduce actual 

or potential conflicts of interest. Others 

indicated that we do not define conflict 

of interest. 

Response: We agree that complete 

independence of the person(s) 

facilitating the planning process is 

important to promote the statutory 

objectives. In the final rule, we have 

added an additional requirement to the 

person-centered planning process at 

§ 441.301(c)(1)(vi) to address conflict of 

interest. 

Following are the comments we 

received on § 441.301(b)(1)(i)(A)(6), 

which is now § 441.301(c)(1)(vii) of the 

final rule. 

Comment: One commenter stated that 

current overarching Medicaid 

regulations already require full freedom 

of choice of qualified providers and 

CMS requires that states document that 

individuals have been offered freedom 

of choice. This is duplicative. 

Response: The regulations at § 431.51 

describe the various statutory bases for 

the free choice of provider, and specify 

the requirements and exceptions to the 

principle. The phrase ‘‘full freedom of 

choice,’’ however, is not from existing 

regulation. We assume the commenter’s 

reference to a documentation 

requirement pertains to the section 

1915(c) of the Act requirement that 

waiver participants be offered the 

choice of institutional alternatives to 

HCBS options in the waiver, which is 

unrelated to being informed of noninstitutional service alternatives. Some 

persons with disabilities and their 

advocates have described the experience 

of ‘‘choice’’ in long term services and 

supports as being considerably different 

than that of a Medicaid beneficiary 

looking through a list of participating 

acute or general health care providers. 

We believe that a person-centered 

planning process should include 

providing the individual information 

about the services and supports relevant 

to their particular needs and goals. 

Comment: Individuals receiving long 

term services and supports and their 

families discussed the experience of 

both being presented with options and 

not being given choices. Comments 

noted that individuals wish to be 

respected and offered choices, rather 

than others deciding what may be best 

for them. On the other hand, being 

presented with an exhaustive list of 

theoretical options and a directory of 

providers is overwhelming and not very 

useful, a familiar experience to many 

people negotiating a new health care 

need. One comment stated, ‘‘Ensure the 

person has the support he or she needs 

to understand all of the choices and 

options, their rights, and what they are 

agreeing to.’’ Some commenters 

suggested adding the word ‘‘informed’’ 

before ‘‘choices,’’ as this would be more 

consistent with the ADA. 

Response: We agree that it is difficult 

to articulate a rule that ensures a perfect 

balance between too much and too little 

information. We believe that taken as a 

whole, the requirements in this final 

rule make clear that the process of 

planning services and supports puts the 

person at the center of a highly 

individualized process. We agree with 

the suggestion to change ‘‘Offers 

choices’’ to ‘‘Offers informed choices.’’ 

Individuals should be informed of all 

the possibilities from which they may 

choose, as well as the consequences of 

those choices, in a manner that is 

meaningful to the recipient and easily 

understood. 

Comment: Several suggestions were 

made regarding specific issues or 

special circumstances regarding 

individual choice, including 

documentation of court orders or other 

legal issues, identification of rights, and 

linkage to entitlements or resources 

other than Medicaid. 

Response: These suggestions appear 

to be good practices, but too detailed for 

regulation. We will consider them in the 

context of our ongoing efforts to provide 

information about best practices. 

Following are the comments we 

received on § 441.301(b)(1)(i)(A)(7), 

which is now § 441.301(c)(1)(viii) of the 

final rule. 

Comment: Two commenters pointed 

out that ‘‘as needed’’ may or may not 

include periodic scheduled updates, 

and does not address the timeframe 

within which a requested update be 

accomplished. They suggested changing 

the language to: ‘‘Include opportunities 

for periodic and ongoing plan updates 

as needed and/or requested by the 

individual and a time frame for 

reasonably scheduling meetings 

requested by the individual.’’ One 

suggestion was to define timeliness in 

terms of the individual’s goals. Another 

asked to make explicit that all 

individuals participating in the 

planning process be contacted so that 

they can be kept up to date. 

Response: This section proposed a 

process requirement, having to do with 

informing the individual about what 

steps to take to schedule an update to 

the plan. We do not address timeliness 

regarding the response to request, as we 

are not able to set a single national 

standard that would be applicable 

across all HCBS waivers in the country. 

States must respond to urgent needs 

more quickly than to other types of 

requests, in order to meet the health and 

welfare requirements of the HCBS 

waiver program. States could 

accomplish this through an expedited 

process. Requiring that plan participants 

be notified when an update is scheduled 

has merit. However, given the 

requirements concerning who 

participates in the plan, who should 

sign the plan, and who should have 

copies of the plan, we cannot construct 

a notification policy that respects the 

various levels of confidentiality and 


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disclosure that may be required in some 

cases. At this time we believe that the 

individual or individual and 

representative should control 

notification about updates, consistent 

with the control they have under item 

(1) over who participates in the 

planning process. 

b. Person-Centered Service Plan 

§ 441.301(c)(2) (Proposed 

§ 441.301(b)(1)(i)(B)) 

At § 441.301(b)(1)(i)(B) we proposed 

that the Person-Centered Service Plan 

must include specific content. After 

further review, we believe the 

requirement at § 441.301(b)(1)(i)(A)(3) 

regarding timeliness and this 

requirement at § 441.301(b)(1)(i)(A)(7) 

regarding a method for individuals to 

request updates to the plan are 

sufficient and respectful of the 

individual’s timeframe as reflected in 

the person-centered planning process. 

Therefore, we are removing the 

requirement at § 441.301(b)(1)(i)(A)(3) 

regarding a timeline for review because 

this will now be addressed through the 

requirements at § 441.301(c)(1)(iii) and 

(c)(1)(viii)). 

Following are the comments we 

received on § 441.301(b)(1)(i)(B)(2), 

which is now § 441.301(c)(2)(iii) of the 

final rule. 

Comment: A commenter stated that a 

‘‘person-centered functional 

assessment’’ is superior to a disability or 

diagnosis-based assessment. Another 

pointed out that ‘‘person-centered 

functional assessment’’ is not 

recognized terminology and suggested 

‘‘individual assessment appropriate to 

the age and circumstances of the 

person’’ instead. 

Response: We agree with parts of both 

comments. Applying ‘‘person-centered’’ 

to ‘‘functional assessment’’ is incorrect. 

Although in a general sense all long 

term service and support activities are 

to be centered on the person and not the 

provider, a functional assessment is 

objective. We also agree with the 

comment that ‘‘functional’’ assessment 

imparts an important distinction from 

other forms of evaluation such as 

diagnostic assessment. We therefore 

modify the proposed language to 

‘‘through an assessment of functional 

need.’’ 

Following are the comments we 

received on § 441.301(b)(1)(i)(B)(3), 

which is now § 441.301(c)(2)(iv) of the 

final rule. 

Comment: A commenter pointed out 

that there is no specific mention of 

mental health. Many comments in 

various sections mentioned that the rule 

should focus on outcomes. 

Response: We agree with both 

observations. We recognize that we 

cannot provide an exhaustive list to 

reflect an individual’s identified goals. 

Therefore, we are removing the 

examples and we are revising the final 

rule at § 441.301(c)(2)(iv) by adding 

‘‘desired outcomes.’’ 

Comment: Related to the proposal to 

define home and community-based 

settings, we received many suggestions 

that the person-centered plan address 

the issue of housing and living 

arrangement in a definite manner. The 

proposed list of example goals included 

‘‘community living’’ but this was not 

believed to sufficiently capture the 

complexity of housing and services 

issues. 

Response: We appreciate the 

thoughtful comments and agree that this 

important subject warrants a separate 

item in the list of the plan content. We 

will add a new requirement at 

§ 441.301(c)(2)(i) to read: ‘‘Reflect that 

the setting in which the individual 

resides is chosen by the individual The 

state must ensure that the setting chosen 

by the individual is integrated in, 

supports full access of individuals 

receiving Medicaid HCBS 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 to the same degree of access 

as individuals not receiving Medicaid 

HCBS.’’ 

Following are the comments we 

received on § 441.301(b)(1)(i)(B)(4) 

which is now § 441.301(c)(2)(v) of the 

final rule. 

Comment: We received few comments 

on this requirement. One commenter 

suggested replacing this language with 

‘‘Respect and honor the choices made 

by the individual regarding supports.’’ 

Another suggested adding the ‘‘full 

range’’ of services and supports. Others 

commented on or requested clarification 

about unpaid services, or urged us to 

clarify that unpaid services must not be 

required. 

Response: We believe that natural 

supports and other unpaid services 

must be included in order to have a 

comprehensive plan reflecting all the 

services and supports required. The 

availability of unpaid supports may 

change from time to time and the plan 

must be written so as to be able to adjust 

the proportion of formal and informal 

supports without starting over at 

assessment. The planning process must 

not compel unpaid services. We have 

included the term ‘‘natural supports’’ in 

the regulation text at § 441.301(c)(2)(v) 

and have added the following sentence: 

‘‘Natural supports are unpaid supports 

that are provided voluntarily to the 

individual in lieu of section 1915(c) 

HCBS waiver services and supports.’’ 

We do not believe other wording 

suggestions are required to achieve the 

intended meaning. 

Following are the comments we 

received on § 441.301(b)(1)(i)(B)(5), 

which is now § 441.301(c)(2)(vi) of the 

final rule. 

Comment: Comments supported the 

proposed language. We choose to 

address here similar comments on 

several sections of the proposed rule. 

Some commenters were concerned that 

in taking care to protect freedoms, the 

regulation did not provide for reducing 

risk due to certain kinds of disabilities. 

Dementia was mentioned most often, 

with many examples of why some 

believe individual freedoms may need 

to be curtailed to prevent wandering, 

injury with cooking equipment and so 

on. 

Response: Based on the comments 

received, we conclude that additional 

language is needed to ensure that 

reducing risk for individuals receiving 

Medicaid HCBS does not involve 

abridgement of their independence, 

freedom, and choice either generally or 

at the spontaneous decision of persons 

providing services and supports. 

Restricting independence or access to 

resources is appropriate only to reduce 

specific risks, and only when 

considered carefully in the personcentered service plan. The personcentered planning process required in 

this regulation will engage the 

individual and others involved in the 

planning process as fully as possible in 

making these difficult but necessary 

decisions. As comments indicated, there 

may be a need for immediate action in 

emergent or changing circumstances— 

that is the purpose of backup strategies. 

In thinking through risk, the planning 

team will identify temporary measures 

to be used if needed, and then update 

the plan when needs have stabilized. 

Back-up strategies are to be 

individualized to the unique mix of 

risks, strengths, and supports 

represented by each waiver participant. 

We will articulate this in the final rule 

by amending the language at 

§ 441.301(c)(2)(vi) to read: ‘‘Reflect risk 

factors and measures in place to 

minimize them, including 

individualized backup plans and 

strategies when needed.’’ We have also 

added at § 441.301(c)(2)(xiii) that any 

modification of the additional 

conditions must be supported by a 

specific assessed need and justified in 

the person-centered service plan, and 

specified what must be documented in 


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the person-centered service plan in 

these instances. 

Following are the comments we 

received on § 441.301(b)(1)(i)(B)(6), 

which is now § 441.301(c)(2)(ix) of the 

final rule. 

Comment: Many comments on this 

requirement addressed the variety of 

persons who may be involved in 

formulating the plan and in carrying it 

out, any of whom may have complex 

relationships with the individual and 

each other. Some comments were 

primarily concerned with being 

inclusive, and in clearly communicating 

the plan for services to all involved; 

they noted that a person-centered plan 

is only effective if the people providing 

supports know what is included in the 

plan. Other comments were primarily 

concerned with privacy and control 

over personal information, noting that it 

is inappropriate to have an individual 

commit intimate details to paper (such 

as goals, hopes for personal 

relationships, etc.) and then require 

everyone involved in that person’s 

care—no matter their role—to read, sign, 

and keep a copy. Many comments dealt 

with both signing and distributing the 

plan, but we address these comments 

separately. 

Response: In response to the 

commenters’ concerns about privacy 

and control over personal information, 

we have clarified in the final rule who 

will sign the plan and who will receive 

copies of the plan by revising 

§ 441.301(c)(2)(ix)) as follows: ‘‘Be 

finalized and agreed to, with the 

informed consent of the individual in 

writing, and signed by all individuals 

and providers responsible for its 

implementation.’’ 

Following are the comments we 

received on § 441.301(b)(1)(i)(B)(7), 

which is now at § 441.301(c)(2)(vii) of 

the final rule. 

Comment: The few comments 

received supported the proposed 

language and went on to suggest specific 

examples, including making use of 

interpretation and translation, 

customized communication supports, in 

a format that is easily understood by the 

individual (Braille, ASL video, diagram/ 

pictures, etc.), and taking enough time 

for decision making. 

Response: As with some other 

requirements in this rule, we appreciate 

the examples given, but we do not think 

that CMS can list in regulation all the 

possible specific methods and tools to 

accomplish the desired outcome. For 

clarity purposes, we have added the 

term ‘‘supports’’ to this requirement. 

Following are the comments we 

received on § 441.301(b)(1)(i)(B)(8). 

Most of the comments we received on 

this proposed requirement were more 

applicable to other requirements and are 

summarized under those headings. The 

requirements at § 441.301(c)(1)(iii) 

regarding timeliness and the 

requirements at § 441.301(c)(1)(viii) 

regarding a method for individuals to 

request updates to the plan are 

sufficient and respectful of the 

individual’s timeframe as reflected in 

the person-centered planning process. 

Therefore, we are removing this 

proposed requirement from the final 

rule. We did not receive comments on 

the proposed requirement at 

§ 441.301(b)(1)(i)(B)(9), and adopt it in 

the final rule at § 441.301(c)(2)(viii). 

Following are the comments we 

received on § 441.301(b)(1)(i)(B)(10), 

which is now § 441.301(c)(2)(x) of the 

final rule. 

Comment: Many of the comments on 

this proposed requirement are also 

related to § 441.301(b)(1)(i)(B)(6), 

regarding who must sign the plan. 

Comments offered unique to the issue of 

distribution include suggestions of 

specific parties who should get copies of 

the plan and suggestions for case 

recordkeeping, including court or legal 

documents. Commenters also inquired 

whether distribution meant to every 

entity (for example, a company 

providing long term services and 

supports to the individual), or also 

given to every individual from that 

entity (for example, every direct service 

worker). 

If the latter, concerns were expressed 

that parts of a true person-centered plan 

include very personal information, as 

required in § 441.301(c)(2)(iv) above— 

such as the individual’s needs, 

aspirations, and even complaints— 

making it inappropriate to distribute the 

plan to everyone (that is, a housekeeper 

does not need to know about an 

individual’s relationship goals). 

Response: We appreciate the 

comments on this section of the rule. 

The language in the final rule specifies 

that the person-centered service plan 

will be distributed to the individual and 

other people involved in the plan. We 

have also revised the language in the 

final rule at the § 441.301(c)(2)(iv) to 

remove the examples and added the 

term ‘‘desired outcomes.’’ 

Following are the comments we 

received on § 441.301(b)(1)(i)(B)(11), 

which is now § 441.301(c)(2)(xi) of the 

final rule. 

Comment: Some comments discussed 

‘‘self direction’’ or ‘‘participant 

direction,’’ which while they sound 

similar to ‘‘person-centered’’ are terms 

of art for a different concept, a method 

of managing long term services and 

supports in which the individual 

assumes employer authority and/or 

manages a budget for the services and 

supports. A few comments discussed 

the distinction, while a few were 

confused by these concepts. 

Response: Amendments to this 

regulation do not specifically address 

the issue of self direction. We issued 

extensive sub-regulatory guidance and 

technical assistance on self direction of 

services, to which we refer these 

commenters. We agree with commenters 

who pointed out the importance of a 

person-centered planning process in 

implementing self direction of services, 

and believe that the requirements in this 

rule will facilitate self direction and 

other complexities in planning long 

term services and supports. 

Comment: Several commenters stated 

that this requirement is unclear. One 

commenter thought the proposed 

regulation would require self direction 

for all participants. 

Response: We have clarified that the 

person-centered service plan covers all 

aspects of services and supports, 

including self direction where 

applicable, by rewording the text as 

follows: ‘‘Include those services, the 

purpose or control of which the 

individual elects to self-direct.’’ 

Following are the comments we 

received on § 441.301(b)(1)(i)(B)(12), 

which is now § 441.301(c)(2)(xii) of the 

final rule. 

Comment: One commenter stated that 

the funding for identified supports 

needs to be in place for the plan to be 

implemented. Two other commenters 

asked us to clarify that the full range of 

services authorized by statute and 

included in the state’s waiver proposal 

be made available to program 

participants. 

Response: These observations about 

providing all needed care are the logical 

complement to the proposed language 

about unnecessary care. Taken together 

they address proper utilization of 

services. We agree that states must 

provide needed services to an eligible 

individual enrolled in the waiver. We 

believe the current language 

appropriately indicates that needed 

services must be provided, while 

unnecessary or inappropriate services 

should not; however, we have changed 

the term ‘‘care’’ to ‘‘services and 

supports.’’ 

Comment: One commenter found this 

language to be ambiguous because 

‘‘prevent’’ is imprecise. Services should 

not be unnecessary or inappropriate. 

Response: This requirement does not 

imply that the waiver offers services 

that are inherently inappropriate or 

unnecessary. It refers to the possibility 


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that particular services, or that the scope 

or frequency of them, may be inherently 

inappropriate or unnecessary for a given 

individual, especially as the 

individual’s situation changes. One of 

the purposes of any service plan for 

health or long term care services is to 

specify the services a particular 

individual requires. There is no 

legitimate advantage to the individual or 

to Medicaid in providing unneeded 

services. However, some states or 

particular programs have historically 

had difficulty controlling utilization; 

individuals may all be given the 

maximum scope or frequency of service. 

We think that with the addition noted 

in the response above, the existing 

language adequately conveys the 

concept of appropriate utilization. 

Comment: Some commenters asked 

that the rule include a reference to the 

‘‘most integrated setting appropriate’’ 

standard. Two commenters consider 

this the most important aspect of the 

person-centered service plan. Many 

commenters of all types stated that 

person-centered planning should 

promote choice. However, regarding 

settings there was less agreement on 

what choices should be offered. Many 

who were concerned about preserving 

their present setting suggested they 

should be allowed to choose to live 

wherever they wish, and not have their 

current choice removed by a 

government policy. 

Other commenters addressed the 

process of choice. They agreed with the 

planning process as proposed and stated 

that setting should be addressed, in 

terms of the individual’s needs and 

goals. They asked that in the planning 

process no types of residential provider 

or housing options being offered to 

section 1915(c) of the Act HCBS waiver 

participants be omitted from the 

discussion. They and some others also 

suggested that this subject could be 

raised at regular intervals when 

appropriate, as the person centered 

service plan is updated. Their position 

was that competition among providers 

of residential settings for waiver 

participants is a good thing and will 

promote growth of the types of settings 

CMS seems to want to encourage, but 

will only work if it is a fair competition 

with all approved settings presented 

neutrally to the individual. 

Some comments about settings in 

person-centered planning had more to 

do with the definition of setting than 

with the planning process. 

Response: We agree that the setting 

options in which an individual resides 

should be an element in the personcentered service plan. We have included 

it as a separate item under the list of 

‘‘Person-Centered Planning Process’’ 

requirements at § 441.301(c)(1)(ix). It 

reads: ‘‘Records the alternative home 

and community-based settings that were 

considered by the individual.’’ We 

respond to all of the setting issues, such 

as landlord/tenant relationship, in our 

discussion of that section of the rule. As 

all the comments on this subject make 

clear, the process of choosing among the 

housing and service options actually 

available to a particular waiver 

participant is an extraordinarily multifaceted issue. A truly person-centered 

planning process as required in this rule 

is the best venue for facilitating this 

important choice. 

We also agree that part of meaningful 

choice is to be presented with all 

available options. A person-centered 

planning process is not about promoting 

certain options deemed to be more 

‘‘person-centered’’ or otherwise 

desirable, than other options. A personcentered process is one that puts the 

individual in the center, facilitated to 

make choices that may be agreeable or 

disagreeable to some participating in the 

process. 

Therefore, we will require that the 

process of informed choice be 

documented. Best practices that develop 

will inform future policy. A new 

provision has been added at 

§ 441.301(c)(2)(i) to read: ‘‘Reflect that 

the setting in which the individual 

resides is chosen by the individual. The 

state must ensure that the setting chosen 

by the individual is integrated in, and 

supports full access of individuals 

receiving Medicaid HCBS 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 to the same degree of access 

as individuals not receiving Medicaid 

HCBS.’’ 

Comment: One commenter stated that 

CMS should use the person-centered 

plan to ensure community integration. 

Response: We agree that one of the 

essential purposes of the personcentered service plan is to ensure 

community integration. In the 

regulation at § 441.301(c)(4)(i) we have 

clarified that home and communitybased settings must be integrated in, and 

that individuals have full access to the 

greater community. 

Comment: Other commenters offered 

specific additions to the proposed rule 

that we considered but found to be 

either too prescriptive or too detailed to 

require in regulation. For example, one 

commenter urged CMS to establish 

benchmarks in the rule, as a 

requirement for states to receive FFP for 

person-centered HCBS waivers. 

Response: Many of these comments 

reflect good practice in administering 

services. We believe that states have 

both sufficient incentive and practical 

experience to be following such 

practices. Where they are not, we offer 

a variety of technical assistance services 

to state agencies, at no charge, to assist 

with these sorts of practical strategies. 

We find this approach more productive 

and flexible than specifying detailed 

regulations for operating the program. In 

addition, some of these suggestions we 

have addressed in sub-regulatory 

guidance such as instructions for the 

section 1915(c) waiver application, 

letters or bulletins to State Medicaid 

directors, and other vehicles. 

Comment: One commenter 

recommended that CMS include 

specific language in the final rule that 

updates to person-centered service 

plans must be completed within a 

sufficient timeframe to meet the 

individual’s goals. 

Response: Person-centered service 

plans must be reassessed at least 

annually, and more frequently if the 

condition of the individual changes, as 

indicated in§ 441.365(e). 

2. HCBS Settings § 441.301(b)(1)(iv) 

(final § 441.301(c)(4)) 

Through the proposed rule, we 

proposed to clarify and sought public 

input on how to define the 

characteristics of home and communitybased (HCB) settings where waiver 

participants may receive services. In 

new paragraph, § 441.301(b)(1)(iv), we 

proposed clarifying language regarding 

settings that will not be considered 

home and community-based under 

section 1915(c) of the Act. We clarified 

that HCBS settings are integrated in the 

community and may not include: 

facilities located in a building that is 

also a publicly or privately-operated 

facility that provides inpatient 

institutional treatment or custodial care; 

or in a building on the grounds of, or 

immediately adjacent to, a public or 

private institution; or a disabilityspecific housing complex designed 

expressly around an individual’s 

diagnosis, that is segregated from the 

larger community, as determined by the 

Secretary. 

We noted that this rule change does 

not exclude living settings on tribal 

lands that reflect cultural norms or ALS 

for persons who are older regardless of 

disability, when the conditions noted 

above in the background section are 

met. 

The clarification and request for input 

was partially in response to instances in 


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which states or other stakeholders 

expressed interest in using HCBS 

waivers to serve individuals in 

segregated settings or settings with a 

strong institutional nature, for example, 

some proposed settings on campuses of 

institutional facilities, segregated from 

the larger community. These settings 

often do not allow individuals to choose 

whether or with whom they share a 

room; limit individuals’ freedom of 

choice on daily living experiences such 

as meals, visitors, activities; and limit 

individuals’ opportunities to pursue 

community activities. 

CMS’ definition of HCBS setting 

characteristics has evolved over the past 

four years, based on experience and 

learning from throughout the country 

and feedback about the best way to 

differentiate between institutional and 

community-based care. For example, in 

our April 4, 2008, proposed rule, 

Medicaid Program; Home and 

Community-Based State Plan Services, 

(73 FR 18676), we used the number of 

unrelated people living together in a 

facility to define whether or not a 

setting was HCB. Our April 15, 

2011,proposed rule, Medicaid Program; 

Home and Community-Based Services 

(HCBS) Waivers, (76 FR 21432), no 

longer included the number of residents 

as an HCB characteristic, but did 

include a detailed list of the types of 

settings that do not qualify for HCBS 

waivers because they are not integrated 

into the community. Based on further 

public comment on these proposed 

regulations and on the comments we 

received on the 1915(i) and 1915(k) 

proposed rule, we are moving away 

from defining HCB settings by what they 

are not, and towards defining them by 

the nature and quality of beneficiaries’ 

experiences. These final regulations 

establish a more outcome-oriented 

definition of HCB settings, rather than 

one based solely on a setting’s location, 

geography, or physical characteristics. 

Comment: Many commenters believe 

quite passionately that public funds 

should only be used to support persons 

in ‘‘home and community-based’’ 

settings—not institution-like or 

congregate facilities. A commenter 

wrote, ‘‘Please protect the interests of 

the disabled people of the world and 

stand your ground and allow HCBS 

funds to be used for their intended 

purposes.’’ Another commenter stated, 

‘‘HCBS funds are limited and designed 

to serve specific purposes, not to be 

available to any and all settings which 

operate under the name ‘community’.’’ 

Response: We agree with the general 

statement that waiver funds should only 

be used for their intended purpose of 

supporting individuals in the 

community. HCBS must be delivered in 

a setting that meets the HCB setting 

requirements as set forth in this rule 

(except for HCBS that is permitted to be 

delivered in an institutional setting, 

such as institutional respite), and since 

the purpose of this authority is to 

provide individuals with HCB 

alternatives to institutional settings, 

individuals must be living in settings 

that comport with the HCB setting 

requirements as set forth in this rule. 

We believe the criteria set forth in the 

final rule will enable CMS to 

differentiate between HCBS settings and 

non-HCBS settings for funding 

purposes. 

Comment: Several commenters shared 

the sentiment that true community 

integration is more than being in the 

community, but rather truly 

participating in that community through 

working side by side with others 

without disabilities in community 

activities, such as jobs, clubs and other 

civic activities. 

Response: We agree with this 

comment and believe that the changes 

in the text of the final rule address 

tenets of community integration. A 

home and community-based setting 

must be integrated in, and supports full 

access of individuals receiving 

Medicaid HCBS 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, to the same degree of access 

as individuals not receiving Medicaid 

HCBS. 

Comment: A number of individual 

commenters shared personal stories 

expressing satisfaction with their 

current living arrangements and 

displeasure that new regulations might 

force them to move or dictate where 

they should live. One person wrote, 

‘‘Please allow Medicaid waivers to 

continue to pay for services in planned 

communities similar to retirement 

communities. I want to live in a 

community with my friends.’’ Another 

noted, ‘‘I believe this proposed rule 

would . . . deny access to residential 

care and assisted living for those who 

need it most.’’ Many commenters talked 

about the importance of retaining 

freedom of choice. One commenter 

stated, ‘‘. . . what I am advocating is 

CHOICE. We should be expanding 

options rather than narrowing 

possibilities and options, and we should 

ask those with disabilities and their 

families what they want, not what 

others think they want.’’ Finally, quite 

a few commenters echoed a warning to 

stay away from a ‘‘one size fits all’’ 

approach in defining HCBS and to 

embrace more flexibility: ‘‘The needs 

and circumstances of each individual 

are too diverse to warrant an outright 

ban on HCBS funding for individuals 

who might need specialized care.’’ They 

further challenged CMS that housing 

and setting options should not be 

arbitrarily limited by defining HCBS 

through physical and geographic 

structures, but rather through the 

person-centered plan, personal 

outcomes and satisfaction. 

Response: We very much appreciate 

hearing personal stories as they help us 

better understand how our proposed 

actions will affect individuals receiving 

services under the HCBS waiver 

program. We believe that individual 

choice is important and have worked to 

promote choice in the final rule. In 

addition, it is important to note that 

HCBS waiver funding is only one way 

in which federal Medicaid finances long 

term services and supports; a setting 

that may not meet the HCB definition 

may still qualify for Medicaid financing, 

but not as a home and community based 

service. 

We agree that the definition we 

included in the proposed rule for HCBS 

settings may have had the result of 

restricting the settings in which HCB 

waiver services can be provided in a 

way that we did not intend and in 

narrowing choices for participants. The 

final rule is more flexible and less 

prescriptive in that it does not preclude 

certain settings per se but rather 

establishes affirmative, outcome-based 

criteria for defining whether a setting is 

or is not home and community-based. 

The language in the final rule specifies 

that any setting that is located in a 

building that is also a publicly or 

privately operated facility that provides 

inpatient treatment, or in a building on 

the grounds of, or immediately adjacent 

to, a public institution, or any other 

setting that has the effect of isolating 

individuals receiving Medicaid HCBS 

from the broader community of 

individuals not receiving Medicaid 

HCBS, will be presumed to be a setting 

that has the qualities of an institution 

unless the Secretary determines, 

through heightened scrutiny, based on 

information presented by the state or 

other parties, that the setting does not 

have the qualities of an institution and 

that the setting does have the qualities 

of home and community-based settings. 

Therefore, states and others have the 

opportunity to refute this categorization 

by providing sufficient evidence that the 

individuals in the facility are, in fact, 

integrated in the community in a 

manner that overcomes any institutional 

appearance of the setting. This means 


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that we will continue to be discerning 

about what types of settings qualify for 

waiver funds. We are including 

language in the final rule that focuses on 

the critical role of person-centered 

planning and addresses fundamental 

protections regarding freedom, dignity, 

control, daily routines, privacy and 

community integration. 

Comment: A number of commenters 

cautioned that restricting living 

situations reduces access to long term 

care in the community and may force 

people back into nursing facilities. They 

advised that CMS not include any 

specific restrictions on settings. 

Response: We have made significant 

changes to this section of the rule, but 

still define general tenets and 

characteristics of HCBS that will 

preclude institutional settings from 

qualifying as HCB, although they might 

qualify for Medicaid financing under 

other authorities. We specifically noted 

that home and community-based 

settings do not include: ‘‘a nursing 

facility; an institution for mental 

diseases, an intermediate care facility 

for individuals with intellectual 

disabilities; a hospital, or any other 

locations that have qualities of an 

institutional setting, as determined by 

the Secretary.’’ Statutory requirements 

specify that an individual be offered a 

choice between services in an 

institutional setting or in a HCBS 

setting, therefore making it necessary for 

us to define the difference. We 

recognize that there are limited longterm care options in many communities 

and may be few alternatives beyond 

institutional care. However, states need 

to understand what qualifies as a home 

and community-based setting, and also 

understand that this might trigger 

change and even dislocation. To 

mitigate, we have developed specific 

provisions to allow for a transition 

period, for existing approved HCBS 

waivers under 1915(c) in accordance 

with section 441.301(c)(6). We will 

afford states the opportunity to propose 

a transition plan that encompasses a 

period up to five years after the effective 

date of the regulation if the state can 

support the need for such a period of 

time. States are expected to demonstrate 

substantial progress toward compliance 

throughout any transition period. For 

states that are submitting renewals early 

in the first year after this final regulation 

takes effect, states may submit a request 

for a temporary extension to allow time 

to fully develop the transition plan for 

that HCBS waiver program. 

Comment: A couple of commenters 

expressed concern about negative 

financial impact on providers. 

Response: We appreciate the concerns 

regarding service providers and wish to 

point out that states will have 

tremendous flexibility in how they 

design 1915(c) waivers, including how 

they define services, provider 

qualifications and service rate 

methodologies in their programs. The 

purpose of this regulation is to ensure 

that beneficiaries in Medicaid HCBS 

waivers receive services in home and 

community-based settings that are true 

alternatives to institutional settings and 

that states and providers have a clear 

understanding of how applicable 

definitions will be applied by us. 

Comment: One commenter thought 

that privacy is already protected in 

administrative rules, so it is not 

necessary to address in this rule. 

Response: We disagree with this 

comment and have included a statement 

in the final rule about qualities that 

must be included in HCBS, including 

the right to privacy. 

Comment: A significant number of 

commenters recommended that CMS 

remove the entire section on HCBS 

settings in the proposed rule from the 

final rule. 

Response: CMS has made significant 

changes to this section of the rule, but 

has not eliminated it. We have listened 

to the many concerns expressed by 

commenters regarding the description of 

HCBS settings and have chosen a 

different, more person-centered and 

outcome-driven approach for defining 

settings than what was described in the 

proposed rule. 

Comment: Commenters generally 

liked the CMS prohibition against using 

HCBS waiver funds to provide services 

to individuals living in a setting in 

which they are required to receive and 

participate in services as a condition of 

continued tenancy. Further, some 

commenters wanted CMS to require 

providers to promote aging in place. 

They stated the need for additional 

qualified services and supports should 

not be justification for asking a person 

to leave a setting; however, should the 

person’s needs exceed what legally can 

be provided in the setting, appropriate 

transfer processes and protections must 

be in place. 

Response: There is nothing in this 

rule that negates or waives compliance 

with other Medicaid requirements, not 

specifically waived by section 1915(c) 

authority, such as an individual’s right 

to obtain services from any willing and 

qualified provider of a service. In the 

final rule, we have revised 

§ 441.301(c)(4) by replacing the 

language with new requirements for 

HCBS settings, and at § 441.301(c)(4)(v) 

we have included the following 

requirement that the setting, ‘‘facilitates 

individual choice regarding services and 

supports, and who provides them.’’ This 

requirement applies to all settings 

including provider-owned or controlled 

residential settings. 

Comment: A commenter asked if 

people currently living in settings that 

do not meet the new criteria will have 

a grandfathering period to move out or 

disenroll from the waiver. Many 

commenters strongly encouraged CMS 

to allow sufficient time for states, 

providers, and individual waiver 

participants and their families to make 

the transition away from historic legacy 

settings that may not comport with the 

proposed rule language, in order to 

minimize adverse impacts on 

individuals and systems of services and 

supports. Some commenters suggested 

that if we consider grandfathering noncompliant programs, we should not 

make the grandfathered period 

permanent, but should only allow 

grandfathering of existing homes located 

on the periphery of a campus, but not 

separated by fencing or barriers. 

Response: We understand that time is 

required to adjust to the new 

requirements set forth in the final rule. 

The revised language in the final rule 

includes the requirements for states to 

submit transition plans for coming into 

compliance for existing programs and 

HCBS waivers. 

Comment: One commenter 

emphasized the need to involve 

stakeholders in dialogue as CMS moves 

forward on working with states to 

implement final regulations. Another 

commenter recommended that the 

Department of Defense have the 

opportunity to provide 

recommendations that will enhance 

military families’ access to the waiver as 

they move from state to state. 

Response: We engaged in a public 

input process on the 1915(c) regulation, 

which included both an Advanced 

Notice of Proposed Rulemaking 

(ANPRM) and the Notice of Proposed 

Rulemaking (NPRM), producing well 

over 2500 separate comments. We have 

taken the time to thoroughly analyze 

comments from a wide range of 

stakeholders and incorporate 

stakeholder suggestions in crafting the 

final rule. We have also reviewed 

comments from the proposed rules for 

the 1915(i) and 1915(k) programs and 

have incorporated suggestions into this 

final rule so that all three HCBS 

authorities are aligned. CMS is 

committed to working with states and 

providing technical assistance, as 

needed, with implementation of the 

final rule. 


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Comment: Many commenters 

suggested CMS clearly outline the 

qualities of an institutional setting in 

the regulatory text and not just in the 

preamble. One commenter proposed 

including a list of 12 qualities of an 

institution in the regulatory text. 

Response: Rather than explicitly 

outlining the qualities of an institution, 

we have chosen to more clearly outline 

the qualities of home and communitybased settings in the regulatory text. The 

final language provides a specific list of 

five qualities that must be present in 

order for a setting to be classified as 

home and community-based, as well as 

additional criteria that must be met by 

provider-owned or controlled settings. 

The final rule also notes that home and 

community-based settings do not 

include nursing facilities, institutions 

for mental diseases, intermediate care 

facilities for individuals with 

intellectual disabilities, or hospitals. 

Comment: Several commenters 

wanted more detail in the rule defining 

HCBS ‘‘settings.’’ One commenter 

proposed that the following language be 

added to the description of appropriate 

HCBS ‘‘settings’’ in the rule: ‘‘support 

exercising full rights and 

responsibilities as community citizens’’ 

and ‘‘individualized services and 

supports.’’ Another commenter 

proposed a list of nine person-centered 

attributes that it believes should be 

found in all HCBS settings. The nine 

attributes are: core values and 

philosophy, relationships and sense of 

community, governance/ownership, 

leadership, workforce practices, 

meaningful life and engagement, 

services, environment, and 

accountability. Other commenters also 

provided differing views on whether 

sheltered workshops, adult day care 

services, and other congregate settings 

and non-residential facilities solely for 

persons with disabilities should be 

considered HCB. Some believed that the 

rule should exclude these settings from 

the HCBS definition as they still have 

the qualities of an institution. Others, 

however, believed these settings should 

qualify for waiver funding, stating that 

HCBS characteristics should not apply 

only to residential services. 

Response: 1915(c) HCBS must be 

delivered in a setting that meets the 

HCB setting requirements as set forth in 

this rule. In addition, since the purpose 

of this authority is to provide 

individuals with HCB alternatives to 

institutional settings, individuals 

receiving 1915(c) HCBS must be living 

in settings that comport with the HCB 

setting requirements as set forth in this 

rule regardless of whether they are 

receiving HCBS in that residence. This 

is consistent with CMS’ longstanding 

policy regarding 1915(c) HCBS. 

Comment: Many commenters stated 

that they thought the regulation should 

specify that an HCBS setting must not 

be located on the grounds of, or 

immediately adjacent to, a private as 

well as a public institution. 

Response: We appreciate the 

commenters’ concerns. It is expected 

that all settings, public and private, 

meet the HCB setting requirements of 

this regulation. These final rules 

specifically make reference to a setting 

that is adjacent to a public institution in 

the regulation language due to public 

input that stressed how such settings 

inherently discourage integration with 

the broader community. We will apply 

heightened scrutiny to such settings 

because of the likelihood that they do 

not offer the characteristics of a home 

and community-based setting and 

hinder or discourage integration with 

the broader community. 

Comment: Many commenters thought 

some terms in the proposed rule were 

vague and/or needed further defining. 

For example, many commenters wanted 

the rule to include clearer definitions 

for terms such as ‘‘immediately adjacent 

to a public institution’’ and ‘‘housing 

complex designed expressly around an 

individual’s diagnosis or disability.’’ At 

least one commenter stated that terms 

like ‘‘meaningful access’’ and ‘‘choice’’ 

were too subjective to have a place in 

regulation. 

Response: We appreciate some 

commenters’ desires for more specific 

and clear definitions in the final rule, 

but believe that highly specific, closeended parameters are limiting and often 

prove ineffective. We are instead 

moving towards evaluating outcomes 

and characteristics to determine 

whether or not a particular setting 

produces desirable outcomes—while 

attempting to be as clear and precise as 

possible in describing those outcomes 

and characteristics. Where appropriate, 

CMS has added additional specificity to 

the final rule. 

Comment: Some commenters believe 

that ‘‘immediately adjacent to a public 

institution’’ was unnecessarily 

restrictive. In contrast, another 

commenter believed that use of the term 

‘‘immediately adjacent’’ was not 

restrictive enough, as ‘‘it could allow 

HCBS housing at an institution 

separated by a nature trail, parking lot 

or tree line.’’ One comment included the 

recommendation that we add the 

phrase: ‘‘or sharing common employees 

or management with a public 

institution’’ after the phrase 

‘‘immediately adjacent to a public 

institution.’’ 

Response: We believe that the process 

for heightened scrutiny, as described in 

the final rule, allows us to appropriately 

determine whether such settings meet 

the HCBS requirements. We believe this 

approach will allow us to take into 

account the kinds of issues the 

commenters described. 

Comment: Several commenters 

believed CMS should strike the term 

‘‘custodial care’’ from the rule. Another 

commenter wanted us to clarify whether 

‘‘custodial care’’ prohibits care in foster 

care settings. 

Response: We agree that the term 

‘‘custodial care’’ is unclear and 

confusing and should not be included in 

the final rule. We have deleted it from 

the regulatory text. 

Comment: We received many 

comments that certain settings—such as 

group homes, adult foster care, and 

assisted living facilities—should qualify 

as home and community-based because 

many individuals consider them to be 

their homes and to be a part of the 

community. On the other hand, we also 

received comments from others that 

these types of facilities are never 

appropriate as HCBS settings. 

Response: Given the variability within 

and between types of housing 

arrangements, CMS cannot determine 

simply by the type of group housing, 

whether it complies with HCBS 

characteristics. As a result, particular 

settings, beyond those specifically 

excluded in the regulation text, will not 

automatically be included or excluded, 

but rather will be evaluated using the 

heightened scrutiny approach described 

in the regulation. 

Comment: Commenters stated that the 

regulation should specify that a 

‘‘housing complex designed expressly 

around an individual’s diagnosis or 

disability’’ includes complexes that 

serve individuals with different 

diagnoses or disabilities, as opposed to 

just individuals with a particular 

diagnosis or disability. Another 

commenter requested a definition of a 

housing complex that is designed 

expressly around an individual’s 

diagnosis or disability. 

Response: We appreciated these 

comments, which indicated to us that 

the language means different things to 

different populations and programs. As 

a result of the comments we received, 

we have revised the rule to remove the 

language, ‘‘housing complex designed 

expressly around an individual’s 

diagnosis or disability,’’ In the final 

rule, we have removed this language. 

The regulatory text now includes the 

following language: ‘‘any other setting 

that has the effect of isolating 

individuals receiving Medicaid HCBS 


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from the broader community of 

individuals not receiving Medicaid 

HCBS will be presumed to be a setting 

that has the qualities of an institution 

unless the Secretary determines through 

heightened scrutiny, based on 

information presented by the state or 

other parties, that the setting does not 

have the qualities of an institution and 

that the setting does have the qualities 

of home and community-based 

settings.’’ We intend to issue additional 

guidance to provide examples of the 

types of settings that will be subject to 

heightened scrutiny. The guidance will 

also specify the process we will use to 

determine if a setting meets the home 

and community-based criteria. 

Comment: Commenters disagreed 

with proposed language that would 

exclude ‘‘housing designed expressly 

around an individual’s diagnosis or 

disability’’ from the definition of an 

HCBS setting. They noted that certain 

disabled populations (such as those 

with brain injury and spinal cord 

injuries or Alzheimer’s disease) require 

specialized facilities and care designed 

to meet their specific needs. 

Commenters stated that complexes 

designed around an individual’s 

diagnosis or disability serve as 

alternatives to institutionalized care and 

allow residents to function with greater 

independence. We received a significant 

number of comments from diverse 

groups of individuals commenting that 

there are good reasons to live in 

residential settings specific to 

individuals’ needs. 

Response: As noted above, the final 

rule no longer includes the term 

‘‘housing designed expressly around an 

individual’s diagnosis or disability.’’ 

The new regulatory language is restated 

above. We agree that certain kinds of 

specialized settings may prove highly 

beneficial to particular populations and 

may be well integrated into the 

community. These factors will be taken 

into account when deciding whether or 

not a setting should qualify for HCBS 

waiver funding. 

Comment: Some commenters asked 

CMS to look into HCBS settings’ 

implications for intersection with HUD 

811 and 202 projects and whether this 

will result in people losing housing. 

They encouraged CMS to look at 

potential conflicts with Fair Housing 

rules and work collaboratively with 

HUD and the Department of Agriculture 

so that we better coordinate available 

federally subsidized housing options 

with delivery of waiver services. One 

commenter who believed that HUDfunded independent housing should 

qualify stated, ‘‘We would urge the 

Secretary to use her discretion to 

recognize that even those Section 811 

housing developments that are designed 

‘expressly around an individual’s 

diagnosis or disability’ are often the 

most community-based and inclusive 

housing model available, and it would 

be illogical to deny HCBS waiver funds 

to support services to an individual 

living in such a setting.’’ 

Response: We have worked closely 

with HUD and other federal agencies on 

the impact of this regulation on 

federally supported housing options. 

We believe the changes to the final rule 

allow for the appropriate designation of 

HCBS settings and for sufficient 

transition time for states to comply. 

Comment: One commenter suggested 

that a ‘‘home’’ should not be considered 

‘‘in the community’’ if more than four 

unrelated people live in the home. 

Response: In the 2008 1915(i) Notice 

of Proposed Rulemaking, we did 

propose defining institutional care 

based on the number of residents living 

in the facility. However, we were 

persuaded by public comments that this 

was not a useful or appropriate way to 

differentiate between institutional and 

home and community-based care. As a 

result, we have now determined not to 

include or exclude specific kinds of 

facilities from qualifying as HCBS 

settings based on the number of 

residents in that facility. We have, 

however, established a list of specific 

conditions that must be met in providerowned or controlled residential settings 

in order to qualify as HCBS. 

Comment: A commenter thought CMS 

should not allow clusters of homes in 

gated communities to qualify as an 

HCBS setting. Others objected to 

classifying facilities on campus settings 

or farms as HCBS. On the other hand, 

many people supported categorizing 

these facilities as HCBS, noting that 

cluster or campus living may promote 

health and welfare in emergencies 

because of physical proximity. Many 

commenters expressed concern that the 

proposed rule would exclude rural 

farmsteads and farm communities for 

individuals with autism from receiving 

waiver funds. These commenters noted 

that rural, agricultural settings are 

desirable for people with autism, as they 

provide safe, calm environments— 

whereas urban settings can prove 

dangerous and disorienting. 

Response: The Secretary will 

determine through heightened scrutiny, 

based on information presented by the 

state or other parties, whether such 

complexes do or do not have the 

qualities of an institution and whether 

these complexes have or do not have the 

qualities of home and community-based 

settings. We will evaluate both rural and 

urban settings based on whether they 

have the characteristics required under 

the regulation. 

Comment: Several commenters 

suggested that CMS needed to be careful 

of the unintended consequences of the 

prescriptive language about settings in 

the proposed rule that would force 

people to move from their long term 

homes in the community and lose 

services. Some commenters stated that 

CMS must also be open to unique 

situations and different types of living 

situations that may be designed for 

people in rural areas. 

Response: We have considered the 

many concerns expressed by 

commenters regarding the description of 

HCBS settings in the proposed rule. 

Through the final rule we have chosen 

a different, more person-centered, 

outcomes-based approach than what 

was described in the proposed rule in 

part to address concerns about 

unintended consequences of specific 

language that was used in the proposed 

rule about settings. 

Comment: There were several themes 

that emerged amongst the many 

commenters who agreed with the 

proposed language in the rule regarding 

home and community-based settings. 

Some commended CMS for taking a 

stand on what comprises home and 

community qualities. Others 

appreciated that we were using 

characteristics that will help people 

truly be included in their communities 

and not just focusing on size or location 

of settings. Other commenters 

specifically mentioned that institutions 

and other congregate settings should not 

be a part of a waiver and should not be 

allowed to call themselves HCBS. 

Commenters agreed that use of person 

centered planning, flexibility regarding 

meals and availability of food, control 

over daily activities, free access to 

visitors and privacy are all hallmarks of 

community living. Individual 

commenters and the general public 

focused on the importance of using 

waiver funding for people with 

disabilities to live in the community 

like everyone else and not be shut away 

from other people. 

Response: We concur with much of 

the content from these commenters. 

Through the final rule we have chosen 

to take a somewhat different approach 

from what was described in the 

proposed rule in order to address the 

different commenters with divergent 

views on this issue. Specifically, we 

have chosen to be somewhat less 

prescriptive regarding physical and 

geographical characteristics of settings 

and to focus instead on the critical role 

of person-centered service planning 


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and on characteristics that are 

associated with independence, control, 

daily routines, privacy and community 

integration. Further, with respect to 

certain types of settings, the final rule 

specifies that the Secretary will 

determine through heightened scrutiny, 

based on information presented by the 

state or other parties, that the setting 

does not have the qualities of an 

institution and that the setting does 

have the qualities of home and 

community-based settings. 

Comment: One commenter suggested 

that the proposed language runs counter 

to consumer choice, would restrict 

important specialized programming, 

and is counter to the entire course and 

direction of the waiver program 

recommending that CMS delete the 

proposed section in its entirety and 

begin anew by convening stakeholders 

to discuss this critical definition. The 

commenter added that these conditions 

are a first attempt to regulate federally 

the assisted living environment which 

could and should remain at the state 

level. 

Response: This rule applies to all 

settings where individuals are receiving 

HCBS and does not single out assisted 

living environments. It is intended to 

assure, consistent with the statute, that 

Medicaid financing provided through 

HCBS waivers is available to 

participants who are receiving services 

in settings that are true alternatives to 

institutional care. 

3. Target Groups § 441.301(b)(6) 

Under section 1915(c) of the Act, the 

Secretary is authorized to waive section 

1902(a)(10)(B) of the Act, allowing states 

not to apply requirements that the 

medical assistance available to 

categorically-eligible Medicaid 

individuals must not be less in amount, 

duration or scope than the medical 

assistance made available to any other 

such individual, or the medical 

assistance available to medically needy 

individuals. We have interpreted this 

authority to permit States to target an 

HCBS waiver program to a specified 

group of individuals who would 

otherwise require institutional care. A 

single section 1915(c) waiver may, 

under current regulation, serve one of 

the three target groups identified in 

§ 441.301(b)(6). As provided in the rule, 

these target groups are: ‘‘Aged or 

disabled, or both; Individuals with 

intellectual or developmental 

disabilities, or both; and Mentally ill.’’ 

States must currently develop separate 

section 1915(c) waivers in order to serve 

more than one of the specified target 

groups. A federal regulatory change that 

permits combining targeted groups 

within one waiver will remove a barrier 

for states that wish to design a waiver 

that meets the needs of more than one 

target population. 

This regulatory change will enable 

states to design programs to meet the 

needs of Medicaid-eligible individuals 

and potentially achieve administrative 

efficiencies. For example, a growing 

number of Medicaid-eligible individuals 

with intellectual disabilities reside with 

aging caregivers who are also eligible for 

Medicaid. The proposed change will 

enable the state to design a coordinated 

section 1915(c) waiver structure that 

meets the needs of the entire family 

that, in this example, includes both an 

aging parent and a person with 

intellectual disabilities. In this 

illustration, the family currently would 

be served in two different waivers, but 

with the proposed change, both could 

now be served under the same waiver 

program. 

The revisions to § 441.301(b)(6) will 

allow states, but not require them, to 

combine target groups. Under this rule, 

states must still determine that without 

the waiver, participants will require 

institutional level of care, in accordance 

with section 1915(c) of the Act. The 

regulation will not affect the cost 

neutrality requirement for section 

1915(c) waivers, which requires the 

state to assure that the average per 

capita expenditure under the waiver for 

each waiver year not exceed 100 percent 

of the average per capita expenditures 

that will have been made during the 

same year for the level of care provided 

in a hospital, nursing facility, or ICF/IID 

under the state plan had the waiver not 

been granted. We will provide states 

with guidance on how to demonstrate 

cost neutrality for a waiver serving 

multiple target groups. 

The comments provided on this 

provision were largely positive, advising 

CMS to carefully consider quality 

elements and protections needed to 

ensure that all target groups are 

protected sufficiently in such a 

structure. Through this final rule, we 

include the requirements that each 

individual within the waiver, regardless 

of target group, has equal access to the 

services necessary to meet their unique 

needs. 

Comment: A theme expressed by the 

majority of commenters who disagreed 

with this provision in the rule centered 

around potential negative impact on 

consumers. These included using the 

combining of target groups to limit 

service packages, serve less people 

overall, limit choices and create 

infighting among different disability 

groups. Several commenters were 

concerned that states would make 

decisions based on service/cost, which 

may lead to less adequate services for 

people with disabilities. 

Response: Challenges regarding 

limited resources at the state level 

already exist and will continue to exist 

whether or not a state chooses to pursue 

combining target populations in one 

waiver. This change to the regulation is 

not intended to have any impact on 

payment rates for services. To ensure 

transparency and input, we strongly 

encourage states interested in this 

option to consult with affected 

stakeholders in advance of 

implementation. 

Comment: Several commenters 

expressed concern that combining of 

target groups will lead to frustration for 

states and cause barriers to timely 

innovations. 

Response: The intention in the rule is 

to provide options to states that foster 

creativity and better integration of 

services across populations, which may 

lead to administrative efficiencies in 

state Medicaid agencies. The intent is 

not to prevent or inhibit innovation and 

the decision to combine target groups is 

optional for the state. 

Comment: A few commenters noted 

that people with various disabilities, for 

example people with developmental 

disabilities, people with mental illness 

and frail elders, have different needs 

from each other and should not be 

residing together in housing situations. 

Further, they described how this can 

lead to dangerous situations that may 

threaten the well-being of more 

vulnerable individuals, such as frail 

elders when they reside with younger 

people with disabilities, particularly if 

there is any potential that such 

disabilities would make a person more 

likely to engage in any dangerous or 

aggressive behavior. 

Response: The changes to this section 

of the regulation do not speak to 

combining different target groups in the 

same living situations, but rather to the 

inclusion of multiple target groups in 

the overall waiver design and operation. 

Including multiple target groups in one 

waiver will not alleviate responsibilities 

of states for ensuring the health and 

welfare of all participants and detailing 

their quality improvement strategies for 

that waiver. The final rule at 

§ 441.302(a)(4) specifies that, if a state 

chooses the option to serve more than 

one target group under a single waiver, 

the state must assure that it is able to 

meet the unique service needs that each 

individual may have regardless of the 

target group. 

Comment: A commenter 

recommended that if states are 

permitted to combine target populations 


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in a single waiver, CMS must expressly 

require a right of beneficiary choice. 

Response: Including multiple target 

populations in one waiver does not 

change freedom of choice requirements 

that exist in Medicaid generally and in 

1915(c) waivers specifically. Regardless 

of whether a state includes multiple 

target populations, all included services 

must be made available to those 

enrolled in the waiver who demonstrate 

a need for the services (as indicated in 

the person-centered assessment and 

service plan). 

Comment: A number of commenters 

who disagreed with this provision 

responded to perceived changes that 

were not contemplated in the proposed 

rule. One commenter thought this rule 

would cause cost-neutrality issues 

between populations. Interestingly, 

some commenters thought the proposed 

rule would mandate states to combine 

target populations and believed it 

should be a state choice. 

Response: The concern that cost 

neutrality would become problematic in 

waivers with combined target groups 

should not be a factor, as cost neutrality 

is calculated based on the relevant level 

of care group in the waiver, not by target 

population. For example, people with 

physical disabilities who meet nursing 

facility level of care would need to meet 

that cost neutrality level and people 

with intellectual disabilities would still 

need to meet the cost neutrality for ICF/ 

IID level of care. In fact, multiple levels 

of care are an option currently in 

waivers where a particular target 

population may include multiple levels 

of care within the same waiver. As this 

choice is optional, the state will have 

the opportunity to submit two separate 

waivers if cost neutrality was not 

initially met with one waiver. Neither 

the proposed rule nor the final rule 

mandates states to combine target 

populations, but rather provides this 

option for states. 

Comment: Several commenters were 

concerned that people who are currently 

receiving waiver services would lose 

their services if the state combined 

population specific waivers into one 

waiver that included multiple target 

groups. They suggested that CMS 

require appropriate safeguards to protect 

current participants. 

Response: In an effort to ensure that 

safeguards are in place to protect the 

health and welfare of each waiver 

participant, the requirement in the final 

rule at § 441.302(a)(4) specifies that 

states must assure us that they are able 

to meet the unique service needs that 

particular target groups may present 

when the state elects to serve more than 

one target group under a single waiver. 

In the Instructions and Technical Guide 

for section 1915(c) HCBS waiver 

applications, we currently require a 

transition plan for waiver participants 

who may be adversely affected when a 

change through amendment, renewal 

consolidation, or the termination of a 

waiver occurs. 

Comment: Several commenters asked 

for clearer expectations around quality 

measurement and related 

documentation. 

Response: Combining waiver target 

groups will not alleviate responsibilities 

of states for ensuring the health and 

welfare of all participants and detailing 

their quality improvement strategies for 

that waiver. Further guidance on waiver 

quality improvement strategies is 

addressed in the Instructions and 

Technical Guide for section 1915(c) 

HCBS waiver applications. We believe 

there may be potential for efficiencies 

by having a uniform quality system in 

one waiver that serves multiple target 

populations. 

Comment: Several commenters would 

like to see CMS allow states to define 

different services packages for 

subgroups within combined waivers. 

Other commenters asked CMS to clarify 

that equal access does not mean that 

each individual receives the same type, 

amount, duration or scope of service. In 

addition, one commenter recommended 

that waivers serving multiple target 

groups should not be required to cover 

the array of services specifically needed 

by each of the covered groups as well as 

generic services that will benefit all. 

Another commenter suggested that CMS 

require a common service menu for all 

target populations. 

Response: States may continue to 

design and keep 1915(c) waivers by 

individual target group and not choose 

to combine target groups. If they 

combine target groups in one waiver, 

equal access means that all included 

services must be made available to those 

who need them (as indicated in the 

person-centered assessment and service 

plan). This does not mean that 

individuals with differing needs would 

receive the same array, amount, 

duration or scope of services. Nothing in 

the proposed or final rule changes state 

flexibility in choosing services to meet 

the needs of people in waivers. 

Comment: Several commenters raised 

the issue of waiting lists and the 

potential to crowd out one population 

group due to pent up demand with long 

wait lists for another group; this was 

specifically mentioned in relation to 

older adults not having timely access to 

services. 

Response: One of the options 

available to states to ensure the 

continuation of services to incoming 

multiple target groups under one waiver 

is to reserve capacity. Reserving 

capacity is only a means to hold waiver 

openings for the entrance of specific sets 

of individuals to the waiver. Capacity 

cannot be reserved to limit access to a 

specific waiver service. All individuals 

who enter the waiver must have 

comparable access to the services 

offered under the waiver. For example, 

capacity may not be reserved to limit 

the number of waiver participants who 

may direct some or all of their waiver 

services. 

Comment: Several commenters 

pointed out that due to Medicaid’s 

historic institutional bias, home and 

community-based services are still 

generally under-resourced relative to 

facility-based care. One commenter 

suggested that CMS not allow states to 

use newly combined waivers to cut back 

on HCBS services overall, as such a 

move would be inconsistent with a 

state’s obligations under Olmstead. 

Response: We intend to offer more 

opportunities to states to facilitate their 

participation in HCBS options, not to 

reduce states’ participation in 1915(c) 

waivers or limit HCBS services. Further, 

this regulation change does not alleviate 

states’ independent obligations under 

the Americans with Disabilities Act or 

the Supreme Court’s Olmstead decision. 

Comment: One commenter 

recommended that states be allowed the 

flexibility to create waivers that include 

hybrid care arrangements that have 

some institutional components. 

Response: Since the waivers are 

statutorily designed for the purpose of 

providing HCBS as an alternative to 

institutional care, we disagree with this 

comment. 

Comment: Several commenters agreed 

with this section of the rule but 

recommended that cost neutrality 

calculations be based either on 

combined calculations or on the target 

group with the higher estimated cost— 

not calculated separately for each 

population group. It was also 

recommended that we provide more 

detail on cost neutrality calculations in 

the regulation text, including whether 

states would have the option to combine 

populations with different institutional 

levels of need into one waiver. Several 

other commenters thought that states 

should be able to limit the number of 

waiver participants in each target group 

to maintain fiscal neutrality. 

Response: Combining target groups 

allows states to combine people with 

different levels of care, for example, 

people with ICF/IID level of care and NF 

level of care, in the same waiver. Cost 

neutrality is calculated by level of care, 


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not target group. The Instructions and 

Technical Guide for section 1915(c) 

HCBS waivers provide guidance on 

calculating cost neutrality with multiple 

levels of care in one waiver. The current 

waiver application already prompts the 

user to enter costs for each level of care 

and then aggregates them for one 

combined cost neutrality test. States can 

choose to combine multiple target 

groups in a single waiver or continue to 

use separate waivers for each target 

group. 

Comment: Several commenters shared 

concerns about cost limits negatively 

impacting particular populations by 

either being set too low or too high. 

CMS was also asked to calculate and 

monitor the baseline combined funding 

for individual populations. 

Response: We do not believe that this 

change to regulation will have any 

impact on a state’s choice to select or 

not select individual cost limits. We 

currently require states to report on 

funding for waiver services to ensure 

cost neutrality by waiver. At 

§ 441.302(a)(4)(i), we have also included 

a requirement for states to report 

annually in the quality section of the 

CMS–372, data that indicates the state 

continues to serve multiple target 

groups in a single waiver and that a 

single target group is not being 

prioritized to the detriment of other 

groups. 

Comment: A few commenters 

recommended that CMS require states to 

apply savings from newly combined 

waivers proportionately and equitably 

to target groups affected for the purpose 

of addressing waiting lists and 

expansion of access to waiver services. 

Response: This comment goes beyond 

the statutory scope of what we can 

require in the context of section 1915(c) 

waivers. 

Comment: A commenter asked CMS 

to clarify which state agency(s) will be 

authorized to implement the waiver (for 

example, state agency on aging or state 

agency dealing with ID/DD issues) when 

a state chooses to submit a combined 

waiver. 

Response: In accordance with 

§ 431.10, the Medicaid Agency is 

responsible for ensuring that a waiver is 

operated in accordance with applicable 

federal regulations and the provisions of 

the waiver itself. However, it may 

delegate operational activities and 

functions to another state agency 

(operating agency) to perform under the 

supervision and oversight of the State 

Medicaid Agency. Decisions around the 

design of waiver administrative 

structures rest with the state, subject to 

CMS requirements that the Medicaid 

Agency retains ultimate authority and 

responsibility for the operation of the 

waiver. Greater detail on waiver 

administrative structures is provided in 

the Instructions and Technical Guide for 

section 1915(c) waivers. 

Comment: Several commenters 

indicated that CMS should employ the 

lessons learned through the Aging and 

Disability Resource Center (ADRC) 

model. 

Response: We agree that allowing 

states, at their discretion, to combine 

target groups in one waiver is consistent 

with one of the principles of the ADRC 

model to allow a cross disability 

population approach, as appropriate. 

Further, and as some other commenters 

noted, it is critical that if states choose 

to combine target populations in one 

waiver, they must assure CMS that they 

are able to meet the unique service 

needs that each individual may have 

regardless of target group, and that each 

individual in the waiver has equal 

access to all needed services. 

Comment: Several commenters raised 

clarifying questions about combining of 

target groups. One commenter asked 

how waitlists would be handled—by 

population group, services or in some 

other manner. Several other commenters 

requested further clarification around 

wait lists. 

Response: Through current guidance 

in the Instructions and Technical Guide 

for section 1915(c) waivers, CMS allows 

states to prioritize selection of entrants 

into a waiver, so a state has the 

flexibility to structure prioritization for 

waiver entry. However, once a person 

has entered the waiver all included 

services must be made available to those 

who need them (as indicated in the 

person-centered assessment and service 

plan). 

Comment: One commenter asked 

CMS to clarify what ‘‘equal access’’ 

means. ‘‘Can there be different sets of 

services within a combined waiver 

targeted to specific groups?’’ 

Response: Equal access means that 

once individuals have enrolled in the 

waiver all services in the waiver must 

be made available to them, if needed (as 

indicated in the person-centered 

assessment and service plan). 

Comment: Commenters raised several 

concerns related to case management. 

One commenter stated that the case 

management entity should not be able to 

also be the agency that is administering 

the self-directed hours as the payroll 

agent. Another commenter expressed 

concern about combining disability 

populations in terms of quality of case 

management provided, the number of 

people for whom states can provide case 

management and how states can 

differentiate populations and services. 

Response: We continue to appreciate 

the critical role of case management in 

the lives of waiver participants. How 

states set up their case management 

system for a waiver with combined 

target groups will be an important 

consideration. Through appropriate 

provider qualifications, we believe that 

states will be able to ensure that waiver 

case management services meet the 

needs of populations served. 

Comment: There were several themes 

amongst the many commenters who 

agreed with the proposed language in 

the rule. These themes included 

supporting flexibility to allow a familybased approach to service design and 

delivery, improving access, reducing 

inequities and fragmentation between 

disability groups and improving 

administrative efficiencies at both the 

provider and state levels. Several 

commenters spoke favorably about how 

combining target groups would allow 

both an aging parent and a person with 

intellectual disabilities to be served in 

the same waiver. Other commenters 

commended CMS for breaking down 

‘‘silos’’ between populations of people 

with different disabilities by allowing 

states to combine target groups in 

waivers. A few commenters expressed 

particular support related to the rule 

change’s potential impact on expanding 

opportunities for people with mental 

illness to be served in waivers, as they 

have historically been underserved in 

section 1915(c) of the Act waivers. 

Response: We appreciate these 

comments and are retaining the 

proposed language in this section of the 

rule. 

4. State Assurances (§ 441.302) 

In an effort to ensure that safeguards 

are in place to protect the health and 

welfare of each waiver participant, we 

proposed in a new paragraph 

§ 441.302(a)(4) that to choose the option 

of more than one target group under a 

single waiver, states must assure CMS 

that they are able to meet the unique 

service needs that each individual may 

have regardless of target group, and that 

each individual in the waiver has equal 

access to all needed services. 

Comment: Many commenters who 

agreed with the proposed changes in 

targeting stated that a comprehensive 

service array that ‘‘meets the unique 

service needs’’ of each individual in 

each target group is critical and that 

regulation language needs to be 

strengthened. Additionally, they believe 

that the provider expertise for specialty 

populations needs to be maintained. 

Multiple commenters singled out people 

with ID/DD in this vein as being at risk 

without appropriate safeguards to tailor 


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service packages and provider 

qualifications to meet their needs. 

Response: We agree with this 

comment and strengthened the language 

included in § 441.302(a)(4) that directs 

states to ensure that the unique service 

needs are met. For participants enrolled 

in the same waiver, states cannot restrict 

services to certain target groups or 

choose to provide some services only to 

people with particular diagnoses. The 

language in the final rule at 

§ 441.302(a)(4) will now read, 

‘‘Assurance that the state is able to meet 

the unique service needs of the 

individuals when the state elects to 

serve more than one target group under 

a single waiver, as specified in 

§ 441.301(b)(6).’’ 

Comment: One commenter noted that 

‘‘selects to serve’’ should be changed to 

‘‘elects to serve’’ in regard to state 

choice about combining target 

populations in proposed § 441.302(a)(4). 

Response: We agree and will change 

the regulation text to read ‘‘elects to 

serve’’ instead of ‘‘selects to serve’’ at 

§ 441.302(a)(4). 

In addition, to ensure that services are 

provided in settings that are home and 

community-based, we proposed in a 

new paragraph § 441.302(a)(5) that 

states provide assurance that the 

settings where services are provided are 

home and community based, and 

comport with new paragraph 

§ 441.301(c)(4). While we are not 

changing the existing quality assurances 

through this rule, we clarified that states 

must continue to assure health and 

welfare of all participants when target 

groups are combined under one waiver, 

and assure that they have the 

mechanisms in place to demonstrate 

compliance with that assurance. 

We received no comments on 

§ 441.302(a)(5) and we will adopt the 

proposed language. 

5. Duration, Extension, and Amendment 

of a Waiver (§ 441.304) 

At § 441.304, we made minor 

revisions to the heading to indicate the 

rules addressed under this section. We 

revised § 441.304(d) and redesignated 

current § 441.304(d) as new 

§ 441.304(g). 

a. Waiver Amendments With 

Substantive Changes (§ 441.304(d)) 

The new § 441.304(d) will codify and 

clarify our guidance (Application for a 

section 1915(c) Home and CommunityBased Waiver, V. 3.5, Instructions, 

Technical Guide and Review Criteria, 

January 2008) regarding the effective 

dates of waiver amendments with 

substantive changes, as determined by 

CMS. Substantive changes include, but 

are not limited to changes in eligible 

populations, constriction of service 

amount, duration, or scope, or other 

modifications as determined by the 

Secretary. We added regulatory 

language reflective of our guidance that 

waiver amendments with changes that 

we determine to be substantive may 

only take effect on or after the date 

when the amendment is approved by 

CMS, and must be accompanied by 

information on how the state has 

assured smooth transitions and minimal 

adverse impact on individuals impacted 

by the change. 

CMS received 43 comments regarding 

§ 441.304(d), which will clarify and 

codify existing technical guidance 

governing the effective dates of waiver 

amendments that make substantive 

changes. 

Comment: Several commenters 

expressed concern that this requirement 

could be problematic if a state is 

directed by its legislature to make a 

change to a waiver program prior to 

CMS approval of an amendment 

implementing that change. CMS should 

consider this possibility as it finalizes 

this rule. There is no allowance for 

emergency situations or changes that 

might benefit clients or providers in the 

broad definition of ‘‘substantive.’’ 

Response: The intention in the rule is 

to codify our current practice regarding 

what types of amendments must be 

implemented prospectively. 

Comment: A commenter thought that 

retroactive approvals of waiver 

amendments should never be allowed. 

Response: We believe there are 

situations when a retroactive approval is 

permissible. For example, codifying the 

continuation of the current practice for 

states of being able to increase the 

number of waiver participants served 

retroactively allows states to serve more 

people, while continuing to plan and 

manage waiver growth within their 

budgets. 

Comment: A number of commenters 

wanted CMS to further clarify what 

constitutes a substantive change; 

however, the commenters varied in 

what they believe a substantive change 

should include. Several suggested that 

only changes to eligibility standards, 

procedures, or methodologies should be 

considered substantive; others 

recommended that elimination or 

reduction in services, and changes in 

the scope, amount and duration of 

services, as well as changes in provider 

rates, would always constitute 

‘‘substantive changes.’’ 

Response: Given the range of 

comments on what a list of substantive 

changes should include, we believe it 

prudent to maintain most of the 

language in the proposed rule around 

the types of examples of substantive 

changes, while leaving flexibility to the 

Secretary to determine other types of 

proposed changes that may also be 

considered substantive. We have, 

however, changed the phrase ‘‘change in 

the eligible population’’ to ‘‘constriction 

in the eligible population’’ in the final 

rule to be more specific about the kind 

of change that would constitute a 

‘‘substantive change.’’ We have also 

rewritten the phrase ‘‘changes in the 

scope, amount, and durations of the 

services’’ to read ‘‘reduction in the 

scope, amount, or duration of any 

service’’ to further clarify what 

constitutes a substantive change. We 

also believe that a listing of only 

changes to eligibility standards, 

procedures, or methodologies is too 

broad regarding what constitutes a 

substantive amendment. We do, 

however, make clear that a state must 

submit amendments for prospective 

review and approval by CMS that may 

have a potentially negative impact on 

waiver participants, as well as that the 

amendment must be accompanied by 

information on how the state has 

assured smooth transitions and minimal 

adverse impact on individuals affected 

by the change. 

Comment: Several commenters 

wanted CMS to be more precise with 

language in this section of the rule. One 

asked that the list of examples of 

substantive items not be defined as 

exhaustive and several other 

commenters thought the use of ‘‘may 

include’’ in regard to substantive 

changes, was too permissive. Another 

commenter recommended that CMS 

state that the elimination or reduction in 

services and changes in the scope, 

amount, and duration of services will 

always constitute ‘‘substantive 

changes.’’ 

Response: We agree that the term 

‘‘may include’’ is not sufficiently 

precise to be helpful. We have deleted 

the word ‘‘may’’ from § 441.304(d)(1) 

and have rewritten this section of the 

rule as follows: ‘‘Substantive changes 

include, but are not limited to, revisions 

to services available under the waiver 

including elimination or reduction of 

services, or reduction in the scope, 

amount, and duration of any service, a 

change in the qualifications of service 

providers, changes in rate methodology 

or a constriction in the eligible 

population.’’ We believe the current 

language noting that the list of 

substantive examples is not limited to 

just the changes listed is sufficiently 

clear. 

Comment: A few commenters wanted 

CMS to allow states to gain retroactive 


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approval to the date of the submission 

of the amendment, as opposed to the 

date CMS approved the amendment. 

The commenters noted that using the 

date of CMS approval can present 

significant challenges to a state when it 

is under legislative mandate to make a 

change or implement a budget initiative. 

Response: While we are sympathetic 

to the budgetary challenges faced by 

states, we believe it would not be in the 

best interest of waiver participants to 

allow approval retroactive to the date of 

substantive amendment submissions. 

The rule reflects and maintains our 

current waiver amendment review 

procedures. 

Comment: Commenters agreed with 

several aspects of the proposed language 

in the rule regarding substantive 

changes to amendments. Some liked 

that CMS is not allowing substantive 

changes in an already existing waiver to 

take effect until the waiver has been 

approved by CMS, as this will help 

ensure that waivers fulfill the mandate 

of the HCBS waiver program. A 

commenter agreed with CMS’s 

definition of substantive changes. 

Another commenter noted that he liked 

that a state will need to demonstrate 

how it will ensure smooth transition 

and minimal disruption to service or 

adverse impact of a change on 

beneficiaries. 

Response: We concur with these 

comments. We agree that the rule is 

being changed to achieve the purposes 

outlined by these commenters. 

b. Public Notice and Input (§ 441.304(e) 

and (f)) 

Given the important requirement at 

§ 447.205, which describes states’ 

responsibilities to provide public notice 

when states propose significant changes 

to their methods and standards for 

setting payment rates for services, we 

added a new paragraph § 441.304(e) to 

remind states of their obligations under 

§ 447.205. We further included a new 

paragraph § 441.304(f) directing that 

states establish public input processes 

specifically for HCBS changes. These 

processes, commensurate with the 

change, could include formalized 

information dissemination approaches, 

conducting focus groups with affected 

parties, and establishing a standing 

advisory group to assist in waiver policy 

development. These processes must be 

identified expressly within the waiver 

document and used for waiver policy 

development. The input process must 

be accessible to the public (including 

individuals with disabilities) and states 

must make significant efforts to ensure 

that those who want to participate in the 

process are able to do so. These 

processes must include consultation 

with federally-recognized Indian Tribes 

in accordance with federal requirements 

and the state must seek advice from 

Indian health programs or Urban Indian 

Organizations prior to submission of a 

waiver request, renewal, amendment or 

action that would have a direct effect on 

Indians or Indian health providers or 

Urban Indian Organizations in 

accordance with section 5006(e) of the 

American Recovery and Reinvestment 

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

February 17, 2009). 

We received 102 comments regarding 

§ 441.304(e) and (f), which would clarify 

the public input and notice 

requirements for all section 1915(c) 

waiver actions. 

Comment: One commenter thought 

the description of a public input process 

for any changes in services or operations 

of a waiver was too broad. 

Response: The intent in the rule is to 

strengthen our current practice of 

encouraging states to engage in a public 

input process in order to ensure such 

input without being overly prescriptive 

to states in how that process is 

implemented. The language in the rule 

gives states examples for soliciting such 

public input, while not limiting 

additional methods that may work 

better in particular states and/or for 

particular waivers. 

Comment: Several commenters asked 

CMS to provide more specific 

requirements around process, time 

frames and methods used for public 

input. One suggested adding a provision 

that states must provide public notice of 

waiver amendments and provide 

information, training, and technical 

assistance to stakeholders, including 

individuals enrolled in the waiver and 

their families, when waiver 

amendments include substantive 

changes. Another suggested that we 

require specific activities that would 

ensure real input, participation and 

transparency; such as minimum times 

for posting notice of changes (30 days), 

listing of specific mechanisms or venues 

for posting, a listserv, mandatory 

stakeholder meetings, posting on CMS 

Web sites of all active and pending 

waivers, submission of all public 

comments and state actions to address 

those comments. Other commenters 

suggested more generally that CMS 

establish some threshold for minimum 

public input process elements in the 

regulation. Another approach 

recommended was for CMS to provide 

a standard against which a state will be 

measured to demonstrate that a public 

input process is ‘‘sufficient.’’ 

Response: While we appreciate the 

suggestions of the commenters to 

strengthen the public notice and input 

requirements in the regulation, we 

believe that the level of detail suggested 

in some of the comments is not 

appropriate for regulation; additionally, 

some of these suggestions may be 

addressed in future guidance. However, 

we do agree with the comment 

suggesting implementing a minimum 

amount of time for posting notice of 

changes. In the final rule, we have 

included language stating that we will 

require that the State provide the public 

a period of no less than 30 days in 

which to provide input on a rule change 

prior to implementation of that change 

or submission of the proposed change to 

CMS, whichever comes first. 

Comment: One commenter was 

concerned that extensive public input 

periods could prove challenging. 

Response: We believe that the time 

period specified is not extensive, but 

rather appropriate to allow for 

meaningful public input based on the 

breadth of the changes. 

Comment: A commenter expressed 

concerns that since states are already 

required to develop a process for tribal 

consultation that meets ARRA 

requirements, requiring the state to 

consult with all the tribes would require 

a different process for waiver changes. 

Response: We do not believe that the 

guidance in the rule is in conflict with 

provisions in 5006(e) of the American 

Recovery and Reinvestment Act of 2009 

(ARRA), which required solicitation of 

advice from Indian health programs and 

urban Indian organizations. 

Comment: A number of commenters 

thought CMS should provide further 

clarification on what types of actions are 

considered substantive and would be 

subject to a public input process; 

however, there were differing opinions 

as to what level of change required 

public input. Several commenters 

thought it should include changes in 

policies such as qualifications of service 

providers, eligibility requirements, and 

changes to services covered in the 

waiver. Others thought that any changes 

in services or operations of the waiver 

would require public notice and input. 

Response: Consistent with our 

response to comments regarding waiver 

amendments with substantive changes, 

we believe that it would be difficult to 

come up with an exhaustive list of 

specific items that would be considered 

substantive beyond the general 

categories we listed in the proposed 

rule. Further, what may be a substantive 

change for one waiver may be less 

significant in a different waiver or in a 

different state depending on the waiver 

design and the service package. 

Therefore, we believe that the regulation 


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is currently worded to invite public 

input when it is appropriate; adding 

further detail in the regulation would 

not be beneficial. 

Comment: A number of commenters 

made recommendations about 

accessibility standards to ensure that the 

broadest range of stakeholder input is 

obtained. Most specifically, commenters 

wanted to assure that people with 

disabilities, including people with 

vision and hearing impairments; other 

cognitive, mental, or physical 

disabilities; and people with limited 

English proficiency were included in 

the process in a meaningful way. One of 

the suggestions was to make sure they 

were included on standard advisory 

groups. Again, the suggested methods to 

accomplish this level of accessibility 

varied greatly. A commenter asked that 

CMS include language from the 

preamble in regulatory text that requires 

accessibility for public input. Others 

asked that CMS detail how individuals 

or organizations can submit oral or 

written input. While there were a few 

comments that service providers should 

be required to be part of an input 

process, we received more comments 

about making sure that people with 

disabilities have access to an input 

process. 

Response: By requiring states to detail 

the processes they used to solicit input 

from the public in the waiver 

application, we will have an appropriate 

oversight mechanism to review the 

integrity of a specific waiver and 

specific state processes. We also have a 

mechanism, as noted in the proposed 

rule at § 441.304(f)(1), to specifically 

look at how the process included and 

was made accessible to people with 

disabilities. This requirement specifies 

that, ‘‘this process must be described 

fully in the state’s waiver application 

and be sufficient in light of the scope of 

the changes proposed, to ensure 

meaningful opportunities for input for 

individuals served, or eligible to be 

served, in the waiver.’’ 

Comment: A theme from several 

commenters was that CMS should 

establish specific guidelines and 

accountability mechanisms for states 

around public notice. Some of the types 

of suggestions we received included 

requests for CMS to: add a requirement 

that the agency reply to public 

comments received; file the public 

comments and agency replies with 

CMS; include language to require 

written legal decisions for compliance 

with Open Meetings Act/Sunshine 

Laws; add an accountability measure to 

use a public input process for a state 

agency; and monitor compliance 

through subsequent audits that would 

include interviews with people with 

disabilities and other stakeholders to 

determine the level of public input and 

decision making. 

Response: By requiring states to 

describe in the waiver application the 

processes they used to solicit input from 

the public, we will have an appropriate 

oversight mechanism to review the 

integrity of the process, while allowing 

states flexibility to implement public 

input processes that make sense for the 

specific waiver and the state or are 

required under state law. We will 

consider whether further guidance along 

these lines would be helpful. 

Comment: A commenter wanted CMS 

to clarify that the public input process 

should apply to new waivers and not 

just existing waivers. 

Response: We concur with this 

comment and clarified in the rule that 

the public input process should be for 

both existing waivers that have 

substantive changes proposed, either 

through the renewal or the amendment 

process, and new waivers. We also 

clarified that the public input process 

must be fully described in a state’s 

waiver application. 

Comment: Several other comments 

received went beyond the scope of the 

regulation, such as asking for more 

transparency in negotiations between 

CMS and states regarding review of 

waiver actions. Another asked for an 

assurance that input gathered from the 

public should influence change. 

Response: The scope of the regulation 

was not intended to address our review 

process and review criteria, which is 

addressed further in the Instructions 

and Technical Guide for section 1915(c) 

HCBS waivers. We believe that the 

regulation changes strengthen 

requirements for states to solicit 

meaningful public input prior to waiver 

submissions to CMS, which will help 

states in making decisions about the 

design and operation of their waiver 

programs that benefit the populations to 

be served. 

Comment: Commenters noted CMS 

was not clear on whether there were any 

differences between public input 

regarding rate changes and notice for 

operations and service changes, as these 

two areas were described separately in 

the proposed rule. 

Response: Since there are already 

existing regulations that address notice 

requirements to methods and standards 

of setting payment rates across Medicaid 

authorities, we are reminding states of 

those obligations with the rule. In 

addition, in this rule we are adding new 

provisions regarding public notice for 

HCBS changes that are similar to those 

for setting payment rates. 

Comment: There were several themes 

among the many commenters who 

agreed with the proposed language in 

the rule regarding public notice and 

input. Commenters supported the 

requirement that state agencies must 

provide public notice of any significant 

proposed change in their methods and 

standards for setting payment rates for 

services. They also appreciated the 

inclusion of stakeholders in the process. 

Commenters expressed agreement with 

CMS that public input is important for 

waiver development and that the input 

process must be accessible to the public 

(including persons with disabilities), 

and a state must be required to make 

efforts to ensure that those who want to 

participate can do so. 

Response: We concur with these 

comments. We agree that the rule is 

being changed to achieve the purposes 

outlined by those commenters who 

support the proposed rule change. 

c. Selecting Strategies To Ensure 

Compliance (§ 441.304(g)) 

In new paragraph, § 441.304(g), we 

added language describing additional 

strategies we may employ to ensure 

state compliance with the requirements 

of a waiver, short of termination or nonrenewal. Our regulation at new 

§ 441.304(g) reflects an approach to 

encourage state compliance. We are 

interested in working with states to 

achieve full compliance without having 

to resort to termination of a waiver. 

Therefore, we proposed strategies to 

ensure compliance in serious situations 

short of termination. These strategies 

include use of a moratorium on waiver 

enrollments or withholding federal 

payment for waiver services or 

administration of waiver services in 

accordance with the seriousness and 

nature of the state’s noncompliance. 

These strategies could continue, if 

necessary, as the Secretary determines 

whether termination is warranted. Our 

primary objective is to use such 

strategies rarely, only after other efforts 

to resolve issues to ensure the health 

and welfare of individuals served or to 

resolve other serious non-compliance 

issues have not succeeded. 

Once CMS employs a strategy to 

ensure compliance, the state must 

submit an acceptable corrective action 

plan in order to resolve all areas of 

noncompliance. The corrective action 

plan must include detail on the actions 

and timeframe the state will take to 

correct each area of noncompliance, 

including necessary changes to the 

quality improvement strategy and a 

detailed timeline for the completion and 

implementation of corrective actions. 


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We will determine if the corrective 

action plan is acceptable. 

We received 50 comments on 

§ 441.304(g) regarding the actions we 

can take if a Medicaid agency is 

substantively out of compliance with 

waiver requirements. 

Comment: One commenter stated that 

they believed the standard audit process 

was the best way to achieve compliance. 

Response: Onsite visits and audits are 

a tool we utilize to ensure states clearly 

understand our guidance and adhere to 

regulatory requirements. After 30 years 

of running the section 1915(c) waiver 

program, it has become clear that other 

methods are needed to ensure the 

welfare of our beneficiaries. 

Comment: Commenters stated their 

concern with the potential harm to 

beneficiaries that could result from 

moratoria on waiver enrollments and 

urged us to use the moratoria as a last 

resort. 

Response: We understand the 

potential negative effects a moratorium 

on waiver enrollments may have on 

beneficiaries. Opportunities exist, such 

as technical assistance and corrective 

action plans, to assist a state to achieve 

compliance without the use of a 

moratorium. We will always be ready to 

assist states through these means before 

moving forward with a moratorium. We 

also note that the main compliance tool 

currently available to us, termination of 

the waiver, has the potential to harm an 

even higher number of individuals 

needing HCBS. 

Comment: Many commenters agreed 

with the use of withholding a portion of 

federal payment. 

Response: Certain tools, such as 

withholding a portion of federal 

payment, will only be utilized when 

necessary and after most other options 

have been exhausted. At this time, we 

believe we will see the necessary results 

to be assured that the care of our 

beneficiaries is foremost to states. 

Comment: One commenter 

recommended transparency as to where 

withheld funds will go and how these 

funds will be used. 

Response: We are committed to 

transparency. We will release the 

information we are legally allowed to 

make public. 

Comment: One commenter suggested 

we clarify whether the opportunity for 

a hearing will be afforded when a state 

disputes compliance rulings similar to 

the processes and safeguards specified 

in part 430 subpart D. 

Response: We reiterate that these 

additional enforcement measures are 

part of a broader array of approaches we 

may take to achieve and maintain full 

compliance with the requirements 

specified in section 1915(c) of the Act, 

in addition to waiver termination. States 

will be afforded an opportunity to 

appeal. The procedures specified in 

subpart D of part 430 of this chapter are 

applicable to state requests for hearings 

on all non-compliance actions, 

including terminations. 

Comment: Many commenters wanted 

assurances from CMS that due process 

procedure will be followed before a 

moratorium is set or funds are withheld 

and that enforcements should be waiver 

specific. 

Response: The tools discussed to 

ensure compliance will only be utilized 

after we have tried several other 

remedies, including technical assistance 

and action plans. We will provide states 

with a written notice of the impending 

strategies to ensure compliance for a 

waiver program. The notice of our intent 

to use strategies to ensure compliance 

will include the nature of the 

noncompliance, the strategy to be 

employed, the effective date of the 

compliance strategy, the criteria for 

removing the compliance strategy and 

the opportunity for a hearing as 

specified in subpart D of part 430. 

Comment: One commenter suggested 

that CMS develop a way to cover the 

cost of training while a state is under a 

compliance strategy. 

Response: Compliance is a state’s 

responsibility when accepting federal 

financial funding. That funding may be 

used to ensure compliance measures are 

in place. 

Comment: One commenter expressed 

support for the use of compliance 

strategies other than termination or 

nonrenewal. 

Response: We agree that additional 

options for promoting and ensuring 

state compliance with HCBS waiver 

requirements should be available. We 

have therefore added the phrase ‘‘or 

other actions as determined by the 

Secretary as necessary to address noncompliance with section 1915(c) of the 

Act’’ to the regulation text. 

IV. Provisions of the Final Regulations 

A. 1915(k) Community First Choice and 

1915(i) State Plan Home and 

Community-Based Services 

The provisions proposed as new 

subpart L, consisting of § 441.650 

through § 441.677, added to part 441 

will be codified as subpart M, consisting 

of § 441.700 through § 441.745. 

For the most part, this final rule 

incorporates the provisions of the 

proposed rule. In response to comments 

as explained in the responses in the 

above section, those provisions of this 

final rule that differ from the proposed 

rule are as follows: 

Under § 430.25 (waivers of State plan 

requirements), we added ‘‘and in a 

manner consistent with the interests of 

beneficiaries and the objectives of the 

Medicaid program.’’ This was language 

from the preamble of the proposed rule, 

for which we received a comment 

requesting that it also be incorporated 

into the text of the final regulation. 

In response to many comments 

received, and for the reasons provided 

in the responses above for each specific 

provision, we revised and added new 

language to § 441.530(a), regarding 

home and community-based setting 

requirements for 1915(k) and to 

§ 441.710(a), regarding home and 

community-based setting requirements 

for 1915(i). In addition to those specific 

provisions, we examined the overall 

themes of the commentary received and 

our basis for the HCB settings 

requirements as a whole. All of the 

overall ideas may be found within the 

summary of comments and our 

responses in the above section, which 

are organized by specific provisions of 

the proposed rules. 

In § 440.182(c)(8), which refers to 

conditions set forth at § 440.180 for 

persons with chronic mental illness, we 

have revised this reference to 

§ 440.180(d)(2) to be more precise. 

Under eligibility for home and 

community-based services under 

§ 441.710(d), we corrected the reference 

to target criteria from (b)(2) to (e)(2). 

Under § 441.710(e)(2)(ii), we corrected 

the reference to § 440.182(b) to 

§ 440.182(c). 

We have corrected § 441.715(b)(2) to 

replace the reference to (c)(7) to instead 

specify (c)(6). 

We have corrected § 441.715(c) by 

replacing ‘‘the Secretary will approve’’ 

with ‘‘the Secretary may approve.’’ 

We have corrected § 441.715(d) to 

replace the reference to section 

441.710(a)(1) to § 441.658. 

In § 441.715(d)(2), we have revised 

the reference to § 441.656 so that it now 

reads correctly as a reference to 

§ 435.219 and § 436.219. 

At § 441.720(a)(1), we made a minor 

correction and added a cross reference 

after ‘‘person-centered process’’ to 

§ 441.725(a). 

At § 441.720(a)(1)(i)(A), we revised 

the language to be consistent with other 

language in this regulation. 

We added ‘‘cognitive’’ to 

§ 441.720(a)(4) in response to comments 

received, to specifically include 

assessment of needs related to cognitive 

impairment. 

We have revised the first sentence of 

§ 441.720(a)(5). 

In response to numerous comments 

received regarding the section 1915(i) of 


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the Act person-centered planning 

process and person-centered service 

plan, and in order to align these 

requirements across sections 1915(c) 

and 1915(i) of the Act HCBS, we have 

modified the requirements in § 441.725 

of this final rule. In addition, we 

examined the overall themes of the 

commentary received. An explanation 

of changes to regulation as a result of 

comments received may be found 

within the responses in the section 

above. 

In § 441.730(c), we added ‘‘cognitive’’ 

and current knowledge of ‘‘available 

resources, service options, and 

providers’’ to this requirement. 

We added a new statement to 

§ 441.735(a) regarding the definition of 

individual’s representative to indicate 

that in instances where state law confers 

decision-making authority to the 

individual representative, the 

individual will lead the service 

planning process where possible and 

the individual representative will have 

a participatory role, as needed and as 

defined by the individual. 

We revised § 441.735(c). 

We revised § 441.740(b)(4). 

For clarity, we have moved the 

requirement regarding financial 

management supports that was 

previously at both § 441.674(c)(2) and 

§ 441.674(d)(4) of the proposed rule, to 

a new (5) under § 441.740(b) of this final 

rule. 

We edited employer authority at 

§ 441.740(c) to ensure consistency with 

statutory language, by replacing ‘‘or’’ 

with ‘‘and’’ so that it now reads as ‘‘the 

ability to select, manage, and dismiss 

providers of State plan HCBS.’’ 

We revised § 441.740(e)(3). 

Since advance notice is a topic in part 

431, subpart E, we have added ‘‘advance 

notice’’ to the regulation at 

§ 441.745(a)(1)(iii). 

We revised § 441.745(a)(2)(vi) to 

specify that for renewal, the state’s 

1915(i) benefit must meet the state’s 

objectives with respect to quality 

improvement and beneficiary outcomes. 

We revised § 441.745(b)(1)(ii) to add 

language that was in the preamble of the 

proposed rule. 

B. 1915(c) Home and Community Based 

Services Waivers 

We have outlined in section III of this 

preamble the revisions in response to 

the public comments. Those provisions 

of this final rule that differ from the 

proposed rule are as follows: 

Based upon the complexities of the 

comments received, we have 

reorganized the regulations to finalize 

the provisions proposed at 

§ 441.301(b)(1)(i)(A) through 

§ 441.301(b)(1)(i)(B)(12) as new 

paragraph § 441.301(c). 

At § 441.301(c)(1) and (2), we made 

some general revisions to the 

terminology utilized to strengthen 

language regarding services. We added 

the term ‘‘supports’’ when referencing 

services to now use the language 

‘‘services and supports.’’ We also 

revised person-centered plan as 

‘‘person-centered service plan.’’ 

At § 441.301(c)(1)(i) we added 

language to more clearly define the role 

of the individual’s representative and 

refer to the 1915(i) definition of the 

individual’s representative at § 441.735 

in this rule. 

We have revised § 441.301(c)(i)(ii) to 

more clearly state the individual’s role 

in directing the person-centered 

planning process. 

We have revised § 441.301(c)(1)(iii) to 

include a requirement for timeliness. 

We have revised § 441.301(c)(1)(v) to 

strengthen this language to direct that 

the state devise clear conflict-of-interest 

guidelines addressed to all parties who 

participate in the person-centered 

planning process. 

We have added a new provision at 

§ 441.301(c)(1)(vi) to clarify conflict of 

interest standards pertaining to 

providers of HCBS. The proposed text at 

§ 441.301(b)(1)(i)(A)(6) through (8) all 

shifted down by one number and are 

included in the final rule at 

§ 441.301(c)(1)(vii) through (ix). 

We have revised § 441.301(c)(1)(vii) to 

clarify that individuals should be 

informed of all the possibilities from 

which they may choose regarding 

services, as well as the consequences of 

these choices. 

We added a new provision at 

§ 441.301(c)(1)(ix) to clarify that the 

setting in which an individual resides is 

an important part of the person-centered 

planning process. 

We have revised § 441.301(c)(2) to 

align the language with other HCBS 

authorities. 

We have added a new provision at 

§ 441.301(c)(2)(i) to ensure that the 

individual’s choice of setting is 

documented in the person-centered 

service plan. The proposed text at 

441.301(b)(1)(i)(B)(1) through (5) all 

shifted down by one number and is 

included in the final rule at 

§ 441.301(c)(2)(ii) through (vi). In 

addition, we added language to ensure 

community integration. 

We have revised § 441.301(c)(2)(iii) 

and (iv) to align the language with other 

HCBS authorities. 

We have revised § 441.301(c)(2)(v) by 

adding further clarifying language 

regarding ‘‘natural supports.’’ 

We have revised previously numbered 

§ 441.301(b)(1)(i)(B)(6) to clarify privacy 

and control over personal information 

and have moved this requirement to 

§ 441.301(c)(2)(ix). 

We have revised § 441.301(c)(2)(vi) to 

strengthen the language regarding risks 

for individuals. 

We removed § 441.301(b)(1)(i)(B)(8) 

from the final rule because this 

requirement is a part of the personcentered planning requirements at 

§ 441.301(c)(1)(iii) and (vii). 

We revised § 441.301(c)(2)(xi) to 

provide clarifying language regarding 

the requirement for self-direction of 

services. 

We revised § 441.301(c)(2)(xii) to 

replace the term ‘‘care’’ with the term 

‘‘services and supports.’’ 

We added new language at 

§ 441.301(c)(2)(xiii) and at 

§ 441.301(c)(3) to align with other HCBS 

authorities. 

We revised § 441.301(c)(4) by 

replacing the language with new 

standards for HCBS settings that are 

aligned with other HCBS authorities. 

We added a provision at 

§ 441.301(c)(5) to specify the settings 

that are not home and communitybased. 

We added a new provision at 

§ 441.301(c)(6)to specify the 

requirements for States to achieve 

compliance with the HCB settings 

standards. 

We revised § 441.302(a)(4) to clarify 

the expectations that each individual 

within a waiver, regardless of target 

group, has equal access to the services 

necessary to meet their unique needs. In 

addition, we made a technical 

correction by changing ‘‘selects to 

serve’’ to ‘‘elects to serve.’’ 

We have added a new provision at 

§ 441.302(a)(4)(i) directing states to 

annually report data in the quality 

section of the CMS–372 regarding 

serving multiple target groups in a 

single waiver to ensure that a single 

target group is not being prioritized to 

the detriment of other groups. 

We revised § 441.304(d)(1) to be more 

specific about the kind of change that 

constitutes a ‘‘substantive change’’ 

regarding HCBS waiver amendments. 

We added a new provision at 

§ 441.304(f)(2) to strengthen the public 

notice and input process by including a 

minimum time limit for posting notice 

of changes. 

We added a new provision at 

§ 441.304(f)(3) to clarify when the 

public input process applies. 

We revised § 441.304(g)(3)(i) to clarify 

that additional options for promoting 

and ensuring state compliance with 


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HCBS waiver requirements should be 

allowed. 

V. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 (PRA) requires 

that we solicit comment on the 

following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We solicited public comment on each 

of these issues for the following sections 

of this document that contain 

information collection requirements: 

• ICRs Regarding Individuals Receiving 

State Plan Home and Community-based 

Services (§ 435.219(b) and § 436.219(b)) 

To cover the categorically needy 

eligibility group, the State would be 

required to submit a SPA and may elect 

to cover individuals who meet certain 

requirements in § 435.219(a) or 

§ 436.219(a). The burden associated 

with this requirement is the time and 

effort put forth by the State to complete, 

review, process and transmit/submit the 

pre-print which describes the eligibility 

criteria for the group. We estimate it 

would take each State 30 hours to meet 

this one-time requirement. We estimate 

that on an annual basis, 3 States will 

submit a SPA to meet these 

requirements; therefore, the total annual 

burden hours for this requirement are 90 

hours. We believe that a State employee, 

with pay equivalent to GS–13 step one 

($34.34 per hour) would be responsible 

for this requirement. Thus, the cost for 

each State is anticipated to be $1,030; 

this equates to an annual cost of $3,091. 

• ICRs Regarding Eligibility for State 

Plan HCBS (§ 441.710) (Proposed 

§ 441.656) 

If a State elects to target the benefit to 

specific populations, § 441.710(e)(2) 

requires submission of targeting criteria 

to CMS. The burden associated with this 

requirement is the time and effort put 

forth by the State to establish such 

criteria. We estimate it would take 1 

State 10 hours to meet this one-time 

requirement. We estimate that on an 

annual basis, 3 States will submit a SPA 

to offer the State plan HCBS benefit that 

targets specific populations, and be 

affected by this requirement; therefore, 

the total annual burden hours for this 

requirement is 30 hours. We believe that 

a State employee, with pay equivalent to 

GS–13 step one ($34.34 per hour) would 

be responsible for this requirement. 

Thus, the cost for each State is 

anticipated to be $343; this equates to 

an annual cost of $1,030. 

• ICRs Regarding Needs-Based Criteria 

and Evaluation § 441.715 (Proposed 

§ 441.659) 

Section 441.715(a) requires a State to 

establish needs-based criteria for 

determining an individual’s eligibility 

under the State plan for the HCBS 

benefit, and may establish needs-based 

criteria for each specific service. The 

burden associated with this requirement 

is the time and effort put forth by the 

State to establish such criteria. We 

estimate it would take 1 State 24 hours 

to meet this requirement. We estimate 

that on an annual basis, 3 States will 

submit a SPA to offer the State plan 

HCBS benefit, and be affected by this 

one-time requirement; therefore, the 

total annual burden hours for this 

requirement is 72 hours. We believe that 

a State employee, with pay equivalent to 

GS–13 step one ($34.34 per hour) would 

be responsible for this requirement. 

Thus, the cost for each responding State 

is anticipated to be $824; this equates to 

an annual cost of $2,472. 

Section 441.715(b) reads that if a State 

defines needs-based criteria for 

individual State plan home and 

community-based services, the needsbased institutional eligibility criteria 

must be more stringent than the 

combined effect of needs-based State 

plan HCBS benefit eligibility criteria 

and individual service criteria. Section 

441.715(b)(1)(ii) requires the State to 

submit the more stringent criteria to 

CMS for inspection with the State plan 

amendment that establishes the State 

Plan HCBS benefit. 

The burden associated with this 

requirement is the time and effort for 

the State to define the more stringent 

criteria and submit it to CMS along with 

the State plan amendment that 

establishes the HCBS benefit. We 

anticipate 3 States would be affected by 

this requirement on an annual basis and 

it would require 1 hour to prepare and 

submit this information. The one-time 

burden associated with this requirement 

is 3 hours. We believe that a State 

employee, with pay equivalent to GS–13 

step one ($34.34 per hour) would be 

responsible for this requirement. Thus, 

the cost for each State is anticipated to 

be $34; this equates to an annual cost of 

$102. This would be a one-time burden 

for each responding State. 

Section 441.715(c) reads that a state 

may modify the needs-based criteria 

established under paragraph (a) of this 

section, without prior approval from the 

Secretary, if the number of individuals 

enrolled in the state plan HCBS benefit 

exceeds the projected number submitted 

annually to CMS. 

Section 441.715(c)(1) requires the 

state to provide at least 60 days notice 

of the proposed modification to the 

Secretary, the public, and each 

individual enrolled in the State plan 

HCBS benefit. The State notice to the 

Secretary will be considered an 

amendment to the State plan. 

Section 441.715(c)(2) requires the 

State notice to the Secretary be 

submitted as an amendment to the State 

plan. 

The burden associated with the 

requirements found under § 441.715(c) 

is the time and effort put forth by the 

State to modify the needs-based criteria 

and provide notification of the proposed 

modification to the Secretary. We 

estimate it would take 1 State 24 hours 

to make the modifications and provide 

notification. This would be a one-time 

burden. 

The total annual burden of these 

requirements (§ 441.715(c), 

§ 441.715(c)(1), and § 441.715(c)(2)) 

would vary according to the number of 

States who choose to modify their 

needs-based criteria. We do not expect 

any States to make this modification in 

the next 3 years, thus there is no 

anticipated burden. 

Section 441.715(d) states that 

eligibility for the State plan HCBS 

benefit is determined, for individuals 

who meet the requirements of 

§ 441.710(a)(1) through (5), through an 

independent evaluation of each 

individual that meets the specified 

requirements. Section 441.715(d)(5) 

requires the evaluator to obtain 

information from existing records, and 

when documentation is not current and 

accurate, obtain any additional 

information necessary to draw a valid 

conclusion about the individual’s 

support needs. Section 441.715(e) 

requires at least annual reevaluations. 

The burden associated with this 

requirement is the time and effort put 

forth by the evaluator to obtain 

information to support their conclusion. 

We estimate it would take one evaluator 

2 hours per participant to obtain 


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information as necessary. The total 

annual burden of this requirement 

would vary according to the number of 

participants in each State who may 

require and be eligible for HCBS under 

the State plan. The individuals 

performing this assessment would vary 

based upon State benefit design, but 

will likely include individuals such as 

registered nurses, qualified 

developmental disability professionals, 

qualified mental health professionals, 

case managers, or other professional 

staff with experience providing services 

to individuals with disabilities or the 

elderly. While there is burden 

associated with this requirement, we 

believe the burden is exempt as defined 

in 5 CFR 1320.3(b)(2) because the time, 

effort, and financial resources necessary 

to comply with this requirement would 

be incurred by persons in the normal 

course of their activities. 

• ICRs Regarding Independent 

Assessments § 441.720 (Proposed 

§ 441.662) 

Section 441.720 requires the State to 

provide for an independent assessment 

of need in order to establish a personcentered service plan. At a minimum, 

the person-centered service plan must 

meet the requirements as discussed 

under § 441.725. 

While the burden associated with the 

requirements under § 441.720 is subject 

to the PRA, we believe the burden is 

exempt as defined in 5 CFR 1320.3(b)(2) 

because the time, effort, and financial 

resources necessary to comply with this 

requirement would be incurred by 

persons in the normal course of their 

activities. 

• ICRs Regarding State Plan HCBS 

Administration: State Responsibilities 

and Quality Improvement § 441.745 

(Proposed § 441.677) 

Section 441.745(a)(1)(i) reads that a 

State will annually provide CMS with 

the projected number of individuals to 

be enrolled in the benefit, and the actual 

number of unduplicated individuals 

enrolled in State plan HCBS in the 

previous year. 

The burden associated with this 

requirement is the time and effort put 

forth by the state to annually project the 

number of individuals who will enroll 

in State plan HCBS. We estimate it will 

take one state 2 hours to meet this 

requirement. The total annual burden of 

these requirements would vary 

according to the number of States 

offering the State plan HCBS benefit. 

The maximum total annual burden is 

112 hours (56 States x 2 hours = 112 

hours). We believe that a state 

employee, with pay equivalent to GS–13 

step one ($34.34 per hour) would be 

responsible for this requirement. Thus, 

the anticipated for each state is 

anticipated to be $69; this equates to a 

maximum annual cost of $3,864 if all 56 

states elect to provide this benefit. There 

are currently six states with approved 

State plan HCBS benefits. Thus, we 

anticipate based on current benefits that 

the total annual aggregated burden will 

be $414. 

Section 441.745(a)(2)(iii) reads that 

the SPA to provide State plan HCBS 

must contain a description of the 

reimbursement methodology for each 

covered service. 

The burden associated with this 

requirement is the time and effort put 

forth by the state to describe the 

reimbursement methodology for each 

State plan HCBS. We estimate that it 

will take one state an average of 2 hours 

to determine the reimbursement 

methodology for one covered HCBS. 

This would be a one-time burden. The 

total annual burden for this requirement 

would vary according to the number of 

services that the state chooses to include 

in the state plan HCBS benefit. We 

believe that a state employee, with pay 

equivalent to GS–13 step one ($34.34 

per hour) would be responsible for this 

requirement. Thus, the cost to each state 

for each covered service is anticipated 

to be $69; this would vary based upon 

the number of services covered. This 

would be an annual burden for each 

responding state. Since we have 

estimated that 3 states will annually 

describe the reimbursement 

methodology, the total annual 

aggregated burden associated with this 

requirement is estimated to be $207. 

Section 441.745(a)(2)(iv) reads that 

the SPA to provide State plan HCBS 

must contain a description of the State 

Medicaid agency line of authority for 

operating the State plan HCBS benefit, 

including distribution of functions to 

other entities. 

The burden associated with this 

requirement is the time and effort put 

forth by the state to describe the State 

Medicaid agency line of authority. We 

estimate it will take one state 2 hours to 

meet this requirement. Since we have 

estimated that 3 states will annually 

request State plan HCBS, the total 

annual burden associated with this 

requirement is estimated to be 6 hours. 

This would be a one-time burden for 

each responding state. We believe that 

a state employee, with pay equivalent to 

GS–13 step one ($34.34 per hour) would 

be responsible for this requirement. 

Thus, the cost for each State is 

anticipated to be $69. 

Section 441.745(a)(2)(vi) limits the 

approval period for states that target the 

benefit to specific populations. If a state 

elects to target the benefit, this section 

requires a renewal application every 5 

years in order to continue operation of 

the benefit. Actual time to meet this 

requirement will vary depending on the 

scope of the program and any changes 

the state includes. However, we 

estimate that it will take one state an 

average of 40 hours to meet this 

requirement. This includes reviewing 

the previous submission, making any 

necessary changes to the state plan 

document(s), and communicating with 

CMS regarding the renewal. This burden 

would occur once every five years and 

would be recurring. We estimate that, 

beginning in 2016, 3 states will annually 

request renewal and the total burden 

will be 120 hours. We believe that a 

state employee, with pay equivalent to 

GS–13 step one ($34.34 per hour) would 

be responsible for this requirement. 

Thus, the cost for each State is 

anticipated to be $1,374; this equates to 

an annual cost of $4,122. This would be 

a burden for each State that targets its 

benefit once every 5 years; however, this 

burden will not take effect until 2016. 

Section 441.745(b) requires States to 

develop and implement a quality 

improvement strategy that includes 

methods for ongoing measurement of 

program performance, quality of care, 

and mechanisms for remediation and 

improvement proportionate to the scope 

of services in the State plan HCBS 

benefit and the number of individuals to 

be served, and make this information 

available to CMS upon the frequency 

determined by the Secretary or upon 

request. 

The burden associated with this 

requirement is the time and effort put 

forth by the state to develop and 

implement a quality improvement 

strategy, and to make this information 

available to CMS upon the frequency 

determined by the Secretary or upon 

request. We estimate it will take one 

state 45 hours for the development of 

the strategy, and for making information 

available to CMS. The total annual 

burden of these requirements would 

vary according to the number of states 

offering the state plan HCBS benefit. 

The maximum total annual burden is 

estimated to be 2,520 hours (56 states × 

45 hours = 2,520 hours). We estimate 

that the burden associated with 

implementation of the quality 

improvement strategy will greatly vary, 

as the necessary time and effort to 

perform these activities is dependent 

upon the scope of the benefit and the 

number of persons receiving state plan 

HCBS. We believe that a state employee, 

with pay equivalent to GS–13 step one 

($34.34 per hour) would be responsible 


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for this requirement. Thus, the cost for 

each State is anticipated to be $1,545; 

this equates to a maximum annual cost 

of $86,537. Currently, there are 6 states 

with approved benefits, thus we 

anticipate an annual burden based on 

current States of $9,270. 

TABLE 1—ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS

Regulation section(s) OMB 

Control No. Respondents Responses 

Burden per 

response 

(hours) 

Total 

annual 

burden 

(hours) 

Hourly labor 

cost of 

reporting 

($) 

Total labor 

cost of 

reporting 

($) 

Total 

capital/ 

maintenance 

costs 

($) 

Total cost 

($) 

435.219(b) and 436.219(b) ........... 0938–1148 3 3 30 90 34.34 1,030 0 1,030 

441.656(e)(2) of proposed rule; 

441.710(e)(2) of final rule .......... 0938–1148 3 3 10 30 34.34 1,030 0 1,030 

441.659(a) of proposed rule; 

441.715(a) of final rule .............. 0938–1148 3 3 24 72 34.34 2,472 0 2,472 

441.659(b) of proposed rule; 

441.715(b) of final rule .............. 0938–1148 3 3 1 3 34.34 103 0 103 

441.677(a)(1)(i) of proposed rule; 

441.745 (a)(1)(i) of final rule ..... 0938–1148 6 6 2 12 34.34 414 0 414 

441.677(a)(2)(iii) of proposed rule; 

441.745 (a)(2)(iii) of final rule .... 0938–1148 3 3 2 6 34.34 207 0 207 

441.677(a)(2)(iv) of proposed rule; 

441.745(a)(2)(iv) of final rule ..... 0938–1148 3 3 2 6 34.34 207 0 207 

441.677(b) of proposed rule; 

441.745 of final rule ................... 0938–1148 6 6 45 270 34.34 9,270 0 9,270 

Total ....................................... .................... ........................ .................... .................... 489 .................... 14,733 0 14,733 

VI. Regulatory Impact Analysis 

A. Statement of Need 

The state plan HCBS benefit is 

authorized under section 1915(i) of the 

Act. Section 1915(i) was created by the 

Deficit Reduction Act of 2005 (DRA) 

and was amended by the Affordable 

Care Act of 2010. The resulting statute 

provides states with authority to 

establish state plan HCBS benefits in 

their Medicaid program. 

These regulations are necessary in 

order to include the state plan HCBS 

within the Code of Federal Regulations 

(CFR). Additionally, these regulations 

provide states with direction and clarity 

regarding the framework under which 

the programs can be established. 

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) and 

Executive 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 (March 22, 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. A 

regulatory impact analysis (RIA) must 

be prepared for major rules with 

economically significant effects ($100 

million or more in any one year). This 

final rule has been designated an 

‘‘economically significant’’ rule under 

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

Accordingly, the rule has been reviewed 

by the Office of Management and 

Budget. 

C. Overall Impacts 

We estimate that, as a result of this 

final rule, the Medicaid cost impact for 

provisions under 1915(i) for fiscal year 

(FY) 2014 will be $150 million for the 

federal share and $115 million for the 

state share. The estimates are adjusted 

for a phase-in period during which 

states gradually elected to offer the state 

plan HCBS benefit. Furthermore, the 

estimated total annual collection of 

information requirements cost 

(including fringe benefits and overhead) 

to states is $21,805 (see section V. 

Collection of Information 

Requirements). 

Provisions in this rule pertaining to 

section 2601 of the Affordable Care Act: 

5-Year Period for Demonstration 

Projects (Waivers), Provider Payment 

Reassignments, section 2401 of the 

Affordable Care Act: 1915(k) 

Community First Choice State Plan 

Option: Home and Community-Based 

Setting Requirements, and 1915(c) 

Home and Community-Based Services 

Waivers will not impact federal or state 

Medicaid funding. While States may 

incur costs in coming into compliance 

with these provisions in this rule, given 

the variability in State programs, and 

the varying extent to which some are 

already complying, it is difficult to 

estimate these costs. 

D. Detailed Impacts 

1. State Plan HCBS 

State Medicaid programs will make 

use of the optional flexibility afforded 

by the state plan HCBS benefit to 

provide needed long-term care HCBS to 

eligible individuals the state has not had 

means to serve previously, or to provide 

services to these individuals more 

efficiently and effectively. The state 

plan HCBS benefit will afford states a 

new means to comply with 

requirements of the Olmstead decision, 

to serve individuals in the most 

integrated setting. 

The cost of these services will be 

dependent upon the number of states 

electing to offer the benefit, the scope of 

the benefits states design, and the 

degree to which the benefits replace 

existing Medicaid services. States have 

more control over expenditures for this 

benefit than over other state plan 

services. For states that choose to offer 

these services, states may specify limits 

to the scope of HCBS, target the benefit 

to specific populations, and have the 

option to adjust needs-based criteria 


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requirements if costs escalate too 

rapidly. 

If states elect to include the new 

optional group, eligibility could be 

expanded because the group may 

include individuals who would not 

otherwise be eligible for Medicaid. 

However, costs of the state plan HCBS 

benefit may be offset by lowered 

potential federal and state costs of more 

expensive institutional care. 

Additionally, the requirement for a 

written person-centered service plan, 

and the provision of needed HCBS in 

accordance with the person-centered 

service plan, may discourage 

inappropriate utilization of costly 

services such as emergency room care 

for routine procedures, which may be 

beneficial to Medicare and Medicaid 

when individuals are eligible for both 

programs. If a state targets this benefit, 

only individuals who meet the targeting 

criteria would receive 1915(i) services 

and be eligible for the group, thus 

limiting Medicaid HCBS expansion. 

After considering these factors, we 

assumed that, if all states adopted this 

measure, program expenditures would 

increase by 1 percent of current HCBS 

expenditure projections. We further 

assumed that ultimately, states 

representing 50 percent of the eligible 

population would elect to offer this 

benefit, and that this ultimate level 

would be reached in FY 2014,. Based on 

these assumptions, the federal and state 

cost estimates are shown in Table 2. 

TABLE 2—MEDICAID COST ESTIMATES RESULTING FROM CHANGES TO THE STATE PLAN HCBS BENEFIT

[FYs 2014–2018, in $millions] 

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FYs 2014–2018 

Federal Share .......................................................... $150 $165 $185 $200 $225 $925 

State Share .............................................................. 115 125 140 155 170 705 

Total .................................................................. 265 290 325 355 395 1,630 

The effect on Medicaid beneficiaries 

who receive the state plan HCBS benefit 

will be substantial and beneficial in 

States where optional 1915(i) state plan 

HCBS are included, as it will provide 

eligible individuals with the 

opportunity to receive needed long-term 

care services and supports in their 

homes and communities. 

The state plan HCBS benefit will 

afford business opportunities for 

providers of the HCBS. We do not 

anticipate any effects on other 

providers. Section 1915(i) of the Act 

delinks the HCBS from institutional 

LOC, and requires that eligibility criteria 

for the benefit include a threshold of 

need less than that for institutional 

LOC, so that it is unlikely that large 

numbers of participants in the state plan 

HCBS benefit will be discharged from 

the facilities of Medicaid institutional 

providers. There may be some 

redistribution of services among 

providers of existing non-institutional 

Medicaid services into State plan HCBS, 

but providers who meet qualifications 

for the state plan HCBS benefit have the 

option to enroll as providers of HCBS. 

This rule has no direct effect on the 

Medicare program; however, an indirect 

and beneficial effect may occur if 

individuals eligible for both Medicare 

and Medicaid are enrolled in a state 

plan HCBS benefit. 

E. Alternatives Considered 

This final rule incorporates provisions 

of new section 1915(i) of the Act into 

federal regulations, providing for 

Medicaid coverage of a new optional 

state plan benefit to furnish home and 

community-based state plan services. 

The statute provides states with an 

option under which to draw federal 

matching funds; it does not impose any 

requirements or costs on existing state 

programs, on providers, or upon 

beneficiaries. States retain their 

authority to offer HCBS through the 

existing authority granted under section 

1915(c) waivers and under section 1115 

waivers. States can also continue to 

offer, and individuals can choose to 

receive, some but not all components of 

HCBS allowable under section 1915(i) 

through existing state plan services such 

as personal care or targeted case 

management services. 

1. Not Publishing a Rule 

Section 1915(i) of the Act was 

effective January 1, 2007. States may 

propose state plan amendments (SPAs) 

to establish the state plan HCBS benefit 

with or without this final rule. We 

considered whether this statute could be 

self-implementing and require no 

regulation. Section 1915(i) of the Act is 

complex; many states have contacted us 

for technical assistance in the absence of 

published guidance, and some have 

indicated they are waiting to submit a 

state plan amendment until there is a 

rule. We further considered whether a 

State Medicaid Director letter would 

provide sufficient guidance regarding 

CMS review criteria for approval of an 

SPA. We concluded that section 1915(i) 

of the Act establishes significant new 

features in the Medicaid program, and 

that it was important to provide states 

and the public the published invitation 

for comment provided by the proposed 

rule. Finally, state legislation and 

judicial decisions are not alternatives to 

a federal rule in this case since section 

1915(i) of the Act provides federally 

funded benefits. 

2. Modification of Existing Rules 

We considered modifying existing 

regulations at § 440.180, part 441 

subpart G, Home and Community-Based 

Services: Waiver Requirements, which 

implement the section 1915(c) HCBS 

waivers, to include the authority to offer 

the state plan HCBS benefit. This would 

have the advantage of not duplicating 

certain requirements common to both 

types of HCBS. However, we believe 

that any such efficiency would be 

outweighed by the substantial 

discussion that would be required of the 

differences between the Secretary’s 

discretion to approve waivers under 

section 1915(c) of the Act, and authority 

to offer HCBS under the State plan at 

section 1915(i) of the Act. While 

Congress clearly considered the 

experience to date with HCBS under 

waivers when constructing section 

1915(i) of the Act, it did not choose to 

modify section 1915(c) of the Act, but 

chose instead to create a new authority 

at section 1915(i) of the Act. 

F. Accounting Statement 

As required by OMB Circular A–4 

(available at http:// 

www.whitehouse.gov/omb/ 

circulars_a004_a-4), in the Table 3, we 

have prepared an accounting statement 

showing the classification of the 

transfers and other impacts associated 

with the provisions of this final rule. 

This table provides our best estimate of 

the increase in aggregate Medicaid 

outlays resulting from offering states the 

option to provide the state plan HCBS 


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benefit established in section 1915(i) of 

the Act. 

TABLE 3—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS AND OTHER IMPACTS, FROM FYS 2014 

TO 2018 

[In $millions] a

Category Transfers 

Annualized Monetized Transfers ....................... 3% Units Discount Rate $183.5 ....................... 7% Units Discount Rate $182.1 

From Whom To Whom? .................................... Federal Government to Beneficiaries and/or State Governments b

Category Transfers 

Other Annualized Monetized Transfers ............. 3% Units Discount Rate $138.6 ....................... 7% Units Discount Rate $137.5 

From Whom To Whom? .................................... State Governments to Beneficiaries and/or State Governments b

Category Costs 

Total Annual Collection of Information Requirements Cost to States is $0.02. 

aThe potential benefits of this rule have not been quantified. If beneficiaries who newly use HCBS as a result of this rule are currently being institutionalized at states’ expense, the rule would generate some combination of savings to states (equal to the cost difference between institutionalization and HCBS) and benefits to beneficiaries of being at home or in some other setting in the community, rather than an institution. Similarly, there would be benefits to beneficiaries who newly use HCBS if they are currently not receiving needed services. b If the current status is that beneficiaries are paying for services alternative to HCBS themselves, then transfers are flowing from federal and 

state governments to beneficiaries. If beneficiaries are currently being institutionalized at states’ expense, then transfers are from the federal government to state governments and possibly between pools of money within a state—from one pool with inflexible spending rules that require institutional care to another pool that allows for HCBS. Finally, to the extent that beneficiaries are currently not receiving needed services, then 

some portion of the impacts currently categorized as ‘‘transfers’’ would actually be societal costs. 

G. Conclusion 

We anticipate that states will make 

widely varying use of the section 1915(i) 

state plan HCBS benefit to provide 

needed long-term care services for 

Medicaid beneficiaries. These services 

will be provided in the home or 

alternative living arrangements in the 

community, which is of benefit to the 

beneficiary and is less costly than 

institutional care. Requirements for 

independent evaluation and assessment, 

individualized care planning, and 

requirements for a quality improvement 

program will promote efficient and 

effective use of Medicaid expenditures 

for these services. 

VII. Regulatory Flexibility Act Analysis 

The Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96–354), as 

modified by the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (SBREFA) (Pub. L. 104–121), 

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 providers and suppliers are small 

entities, either by nonprofit status or by 

having revenues of less than $7.0 

million to $34.5 million in any 1 year. 

Medicaid providers are required, as a 

matter of course, to follow the 

guidelines and procedures as specified 

in state and federal laws and 

regulations. Furthermore, this final rule 

imposes no requirements or costs on 

providers or suppliers for their existing 

activities. The rule implements a new 

optional state plan benefit established in 

section 1915(i) of the Act. Small entities 

that meet provider qualifications and 

choose to provide HCBS under the state 

plan will have a business opportunity 

under this final rule. The Secretary has 

determined that this final rule will not 

have a significant economic 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. This final rule 

does not offer a change in the 

administration of the provisions related 

to small rural hospitals. Therefore, 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. 

VIII. Unfunded Mandates Reform Act 

Analysis 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (March 

22, 1995, Pub. L. 104–4) 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 2013, that 

threshold is approximately $141 

million. This final rule does not 

mandate any spending by state, local, or 

tribal governments, in the aggregate, or 

by the private sector, of $141 million. 

IX. Federalism Analysis 

Executive Order 13132 on Federalism 

(August 4, 1999) establishes certain 

requirements that an agency must meet 

when it promulgates a proposed rule 

(and subsequent final rule) that imposes 

substantial direct requirement costs on 

state and local governments, preempts 

state law, or otherwise has federalism 

implications. Since this regulation does 

not impose any costs on state or local 

governments, the requirements of E.O. 

13132 are not applicable. 

List of Subjects 

42 CFR Part 430 

Administrative practice and 

procedure, Grant programs-health, 

Medicaid, Reporting and recordkeeping 

requirements. 


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42 CFR Part 431 

Grant programs-health, Health 

facilities, Medicaid, Privacy, Reporting 

and recordkeeping requirements. 

42 CFR Part 435 

Aid to Families With Dependent 

Children, Grant programs-health, 

Medicaid, Reporting and recordkeeping 

requirements, Supplemental Security 

Income, Wages. 

42 CFR Part 436 

Aid to Families With Dependent 

Children, Grant programs-health, Guam, 

Medicaid, Puerto Rico, Supplemental 

Security Income (SSI), Virgin Islands. 

42 CFR Part 440 

Grant programs-health, Medicaid. 

42 CFR Part 441 

Aged, Family planning, Grant 

programs-health, Infants and children, 

Medicaid, Penalties, Reporting and 

recordkeeping requirements. 

42 CFR Part 447 

Accounting, Administrative practice 

and procedure, Drugs, Grant programshealth, Health facilities, Health 

professions, Medicaid, Reporting and 

recordkeeping requirements, Rural 

areas. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below: 

PART 430—GRANTS TO STATES FOR 

MEDICAL ASSISTANCE PROGRAMS 

■ 1. The authority citation for part 430 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

■ 2. Section 430.25 is amended by 

revising paragraphs (h)(2) to read as 

follows: 

§ 430.25 Waivers of State plan 

requirements. 

* * * * * 

(h) * * * 

(2) Duration of waivers. (i) Home and 

community-based services under section 

1915(c) of the Act. 

(A) The initial waiver is for a period 

of 3 years and may be renewed 

thereafter for periods of 5 years. 

(B) For waivers that include 

individuals who are dually eligible for 

Medicare and Medicaid, 5-year initial 

approval periods may be granted at the 

discretion of the Secretary for waivers 

meeting all necessary programmatic, 

financial and quality requirements, and 

in a manner consistent with the 

interests of beneficiaries and the 

objectives of the Medicaid program. 

(ii) Waivers under section 1915(b) of 

the Act. 

(A) The initial waiver is for a period 

of 2 years and may be renewed for 

additional periods of up to 2 years as 

determined by the Administrator. 

(B) For waivers that include 

individuals who are dually eligible for 

Medicare and Medicaid, 5-year initial 

and renewal approval periods may be 

granted at the discretion of the Secretary 

for waivers meeting all necessary 

programmatic, financial and quality 

requirements, and in a manner 

consistent with the interests of 

beneficiaries and the objectives of the 

Medicaid program. 

(iii) Waivers under section 1916 of the 

Act. The initial waiver is for a period of 

2 years and may be renewed for 

additional periods of up to 2 years as 

determined by the Administrator. 

* * * * * 

PART 431—STATE ORGANIZATION 

AND GENERAL ADMINISTRATION 

■ 3. The authority citation for part 431 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

■ 4. Section 431.54 is amended by 

adding new paragraphs (a)(3) and (h) to 

read as follows: 

§ 431.54 Exceptions to certain State plan 

requirements . 

(a) * * * 

(3) Section 1915(i) of the Act provides 

that a State may provide, as medical 

assistance, home and community-based 

services under an approved State plan 

amendment that meets certain 

requirements, without regard to the 

requirements of sections 1902(a)(10)(B) 

and 1902(a)(10)(C)(i)(III) of the Act, with 

respect to such services. 

* * * * * 

(h) State plan home and communitybased services. The requirements of 

§ 440.240 of this chapter related to 

comparability of services do not apply 

with respect to State plan home and 

community-based services defined in 

§ 440.182 of this chapter. 

PART 435—ELIGIBILITY IN THE 

STATES, DISTRICT OF COLUMBIA, 

THE NORTHERN MARIANA ISLANDS, 

AND AMERICAN SAMOA 

■ 5. The authority citation for part 435 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

■ 6. Section 435.219 is added to subpart 

C under the undesignated center 

heading ‘‘Options for Coverage of 

Families and Children and the Aged, 

Blind, and Disabled’’ to read as follows: 

§ 435.219 Individuals receiving State plan 

home and community-based services. 

If the agency provides State plan 

home and community-based services to 

individuals described in section 

1915(i)(1), the agency, under its State 

plan, may, in addition, provide 

Medicaid to individuals in the 

community who are described in one or 

both of paragraphs (a) or (b) of this 

section. 

(a) Individuals who— 

(1) Are not otherwise eligible for 

Medicaid; 

(2) Have income that does not exceed 

150 percent of the Federal poverty line 

(FPL); 

(3) Meet the needs-based criteria 

under § 441.715 of this chapter; and 

(4) Will receive State plan home and 

community-based services as defined in 

§ 440.182 of this chapter. 

(b) Individuals who— 

(1) Would be determined eligible by 

the agency under an existing waiver or 

demonstration project under sections 

1915(c), 1915(d), 1915(e) or 1115 of the 

Act, but are not required to receive 

services under such waivers or 

demonstration projects; 

(2) Have income that does not exceed 

300 percent of the Supplemental 

Security Income Federal Benefit Rate 

(SSI/FBR); and 

(3) Will receive State plan home and 

community-based services as defined in 

§ 440.182 of this chapter. 

(c) For purposes of determining 

eligibility under paragraph (a) of this 

section, the agency may not take into 

account an individual’s resources and 

must use income standards that are 

reasonable, consistent with the 

objectives of the Medicaid program, 

simple to administer, and in the best 

interests of the beneficiary. Income 

methodologies may include use of 

existing income methodologies, such as 

the SSI program rules. However, subject 

to the Secretary’s approval, the agency 

may use other income methodologies 

that meet the requirements of this 

paragraph. 

PART 436—ELIGIBILITY IN GUAM, 

PUERTO RICO AND THE VIRGIN 

ISLANDS 

■ 7. The authority citation for part 436 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 


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■ 8. Section 436.219 is added to read as 

follows: 

§ 436.219 Individuals receiving State plan 

home and community-based services. 

If the agency provides State plan 

home and community-based services to 

individuals described in section 

1915(i)(1) of the Act, the agency, under 

its State plan, may, in addition, provide 

Medicaid to of individuals in the 

community who are described in one or 

both of paragraphs (a) or (b) of this 

section. 

(a) Individuals who— 

(1) Are not otherwise eligible for 

Medicaid; 

(2) Have income that does not exceed 

150 percent of the Federal poverty line 

(FPL); 

(3) Meet the needs-based criteria 

under § 441.715 of this chapter; and 

(4) Will receive State plan home and 

community-based services as defined in 

§ 440.182 of this chapter. 

(b) Individuals who— 

(1) Would be determined eligible by 

the agency under an existing waiver or 

demonstration project under sections 

1915(c), 1915(d), 1915(e) or 1115 of the 

Act, but are not required to receive 

services under such waivers or 

demonstration projects; 

(2) Have income that does not exceed 

300 percent of the Supplemental 

Security Income Federal Benefit Rate 

(SSI/FBR); and 

(3) Will receive State plan home and 

community-based services as defined in 

§ 440.182 of this chapter. 

(c) For purposes of determining 

eligibility under paragraph (a) of this 

section, the agency may not take into 

account an individual’s resources and 

must use income standards that are 

reasonable, consistent with the 

objectives of the Medicaid program, 

simple to administer, and in the best 

interests of the beneficiary. Income 

methodologies may include use of 

existing income methodologies, such as 

the rules of the OAA, AB, APTD or 

AABD programs. However, subject to 

the Secretary’s approval, the agency 

may use other income methodologies 

that meet the requirements of this 

paragraph. 

PART 440—SERVICES: GENERAL 

PROVISIONS 

■ 9. The authority citation for part 440 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

■ 10. Section 440.1 is amended by 

adding the new statutory basis 1915(i) 

in sequential order to read as follows: 

§ 440.1 Basis and purpose. 

* * * * * 

1915(i) Home and community-based 

services furnished under a State plan to 

elderly and disabled individuals. 

■ 11. Section 440.180 is amended by 

revising the section heading to read as 

follows: 

§ 440.180 Home and community-based 

waiver services. 

* * * * * 

■ 12. Section 440.182 is added to read 

as follows: 

§ 440.182 State plan home and 

community-based services. 

(a) Definition. State plan home and 

community-based services (HCBS) 

benefit means the services listed in 

paragraph (c) of this section when 

provided under the State’s plan (rather 

than through an HCBS waiver program) 

for individuals described in paragraph 

(b) of this section. 

(b) State plan HCBS coverage. State 

plan HCBS can be made available to 

individuals who— 

(1) Are eligible under the State plan 

and have income, calculated using the 

otherwise applicable rules, including 

any less restrictive income disregards 

used by the State for that group under 

section 1902(r)(2) of the Act, that does 

not exceed 150 percent of the Federal 

Poverty Line (FPL); and 

(2) In addition to the individuals 

described in paragraph (b)(1) of this 

section, to individuals based on the 

State’s election of the eligibility groups 

described in § 435.219(b) or § 436.219(b) 

of this chapter. 

(c) Services. The State plan HCBS 

benefit consists of one or more of the 

following services: 

(1) Case management services. 

(2) Homemaker services. 

(3) Home health aide services. 

(4) Personal care services. 

(5) Adult day health services. 

(6) Habilitation services, which 

include expanded habilitation services 

as specified in § 440.180(c). 

(7) Respite care services. 

(8) Subject to the conditions in 

§ 440.180(d)(2), for individuals with 

chronic mental illness: 

(i) Day treatment or other partial 

hospitalization services; 

(ii) Psychosocial rehabilitation 

services; 

(iii) Clinic services (whether or not 

furnished in a facility). 

(9) Other services requested by the 

agency and approved by the Secretary as 

consistent with the purpose of the 

benefit. 

(d) Exclusion. FFP is not available for 

the cost of room and board in State plan 

HCBS. The following HCBS costs are 

not considered room or board for 

purposes of this exclusion: 

(1) The cost of temporary food and 

shelter provided as an integral part of 

respite care services in a facility 

approved by the State. 

(2) Meals provided as an integral 

component of a program of adult day 

health services or another service and 

consistent with standard procedures in 

the State for such a program. 

(3) A portion of the rent and food 

costs that may be reasonably attributed 

to an unrelated caregiver providing 

State plan HCBS who is residing in the 

same household with the recipient, but 

not if the recipient is living in the home 

of the caregiver or in a residence that is 

owned or leased by the caregiver. 

PART 441—SERVICES: 

REQUIREMENTS AND LIMITS 

APPLICABLE TO SPECIFIC SERVICES 

■ 13. The authority citation for part 441 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

■ 14. Section 441.301 is amended by 

revising paragraphs (b)(1)(i) and (b)(6) 

and adding paragraph (c) to read as 

follows: 

§ 441.301 Contents of request for a waiver. 

* * * * * 

(b) * * * 

(1) * * * 

(i) Under a written person-centered 

service plan (also called plan of care) 

that is based on a person-centered 

approach and is subject to approval by 

the Medicaid agency. 

* * * * * 

(6) Be limited to one or more of the 

following target groups or any subgroup 

thereof that the State may define: 

(i) Aged or disabled, or both. 

(ii) Individuals with Intellectual or 

Developmental Disabilities, or both. 

(iii) Mentally ill. 

(c) A waiver request under this 

subpart must include the following— 

(1) Person-Centered Planning Process. 

The individual will lead the personcentered planning process where 

possible. The individual’s 

representative should have a 

participatory role, as needed and as 

defined by the individual, unless State 

law confers decision-making authority 

to the legal representative. All 

references to individuals include the 

role of the individual’s representative. 

In addition to being led by the 

individual receiving services and 

supports, the person-centered planning 

process: 


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(i) Includes people chosen by the 

individual. 

(ii) 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. 

(iii) Is timely and occurs at times and 

locations of convenience to the 

individual. 

(iv) Reflects cultural considerations of 

the individual and is conducted by 

providing information in plain language 

and in a manner that is accessible to 

individuals with disabilities and 

persons who are limited English 

proficient, consistent with § 435.905(b) 

of this chapter. 

(v) Includes strategies for solving 

conflict or disagreement within the 

process, including clear conflict-ofinterest guidelines for all planning 

participants. 

(vi) Providers of HCBS for the 

individual, or those who have an 

interest in or are employed by a 

provider of HCBS for the individual 

must not provide case management or 

develop the person-centered service 

plan, except when the State 

demonstrates that the only willing and 

qualified entity to provide case 

management and/or develop personcentered service plans in a geographic 

area also provides HCBS. In these cases, 

the State must devise conflict of interest 

protections including separation of 

entity and provider functions within 

provider entities, which must be 

approved by CMS. Individuals must be 

provided with a clear and accessible 

alternative dispute resolution process. 

(vii) Offers informed choices to the 

individual regarding the services and 

supports they receive and from whom. 

(viii) Includes a method for the 

individual to request updates to the 

plan as needed. 

(ix) Records the alternative home and 

community-based settings that were 

considered by the individual. 

(2) 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 the State’s 1915(c) 

HCBS waiver, the written plan must: 

(i) Reflect that the setting in which the 

individual resides is chosen by the 

individual. The State must ensure that 

the setting chosen by the individual is 

integrated in, and supports full access of 

individuals receiving Medicaid HCBS 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 to the same degree of 

access as individuals not receiving 

Medicaid HCBS. 

(ii) Reflect the individual’s strengths 

and preferences. 

(iii) Reflect clinical and support needs 

as identified through an assessment of 

functional need. 

(iv) Include individually identified 

goals and desired outcomes. 

(v) 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 are unpaid supports 

that are provided voluntarily to the 

individual in lieu of 1915(c) HCBS 

waiver services and supports. 

(vi) Reflect risk factors and measures 

in place to minimize them, including 

individualized back-up plans and 

strategies when needed. 

(vii) Be understandable to the 

individual receiving services and 

supports, and the individuals important 

in supporting him or her. At a 

minimum, for the written plan to be 

understandable, it must be written in 

plain language and in a manner that is 

accessible to individuals with 

disabilities and persons who are limited 

English proficient, consistent with 

§ 435.905(b) of this chapter. 

(viii) Identify the individual and/or 

entity responsible for monitoring the 

plan. 

(ix) Be finalized and agreed to, with 

the informed consent of the individual 

in writing, and signed by all individuals 

and providers responsible for its 

implementation. 

(x) Be distributed to the individual 

and other people involved in the plan. 

(xi) Include those services, the 

purpose or control of which the 

individual elects to self-direct. 

(xii) Prevent the provision of 

unnecessary or inappropriate services 

and supports. 

(xiii) Document that any modification 

of the additional conditions, under 

paragraph (c)(4)(vi)(A) through (D) of 

this section, must be supported by a 

specific assessed need and justified in 

the person-centered service plan. The 

following requirements must be 

documented in the person-centered 

service plan: 

(A) Identify a specific and 

individualized assessed need. 

(B) Document the positive 

interventions and supports used prior to 

any modifications to the personcentered service plan. 

(C) Document less intrusive methods 

of meeting the need that have been tried 

but did not work. 

(D) Include a clear description of the 

condition that is directly proportionate 

to the specific assessed need. 

(E) Include a regular collection and 

review of data to measure the ongoing 

effectiveness of the modification. 

(F) Include established time limits for 

periodic reviews to determine if the 

modification is still necessary or can be 

terminated. 

(G) Include informed consent of the 

individual. 

(H) Include an assurance that 

interventions and supports will cause 

no harm to the individual. 

(3) Review of the Person-Centered 

Service Plan. The person-centered 

service plan must be reviewed, and 

revised upon reassessment of functional 

need as required by § 441.365(e), at least 

every 12 months, when the individual’s 

circumstances or needs change 

significantly, or at the request of the 

individual. 

(4) Home and Community-Based 

Settings. Home and community-based 

settings must 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: 

(i) The setting is integrated in and 

supports full access of individuals 

receiving Medicaid HCBS 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, to the same degree of access 

as individuals not receiving Medicaid 

HCBS. 

(ii) The setting is selected by the 

individual from among setting options 

including non-disability specific 

settings and an option for a private unit 

in a residential setting. The setting 

options are identified and documented 

in the person-centered service plan and 

are based on the individual’s needs, 

preferences, and, for residential settings, 

resources available for room and board. 

(iii) Ensures an individual’s rights of 

privacy, dignity and respect, and 

freedom from coercion and restraint. 

(iv) Optimizes, but does not regiment, 

individual initiative, autonomy, and 

independence in making life choices, 

including but not limited to, daily 

activities, physical environment, and 

with whom to interact. 


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(v) Facilitates individual choice 

regarding services and supports, and 

who provides them. 

(vi) In a provider-owned or controlled 

residential setting, in addition to the 

qualities at § 441.301(c)(4)(i) through 

(v), the following additional conditions 

must be met: 

(A) The unit or dwelling is a specific 

physical place that can be owned, 

rented, or occupied under a 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. For 

settings in which landlord tenant laws 

do not apply, the State must ensure that 

a lease, residency agreement or other 

form of written agreement will be in 

place for each HCBS participant, and 

that the document provides protections 

that address eviction processes and 

appeals comparable to those provided 

under the jurisdiction’s landlord tenant 

law. 

(B) Each individual has privacy in 

their sleeping or living unit: 

(1) Units have entrance doors lockable 

by the individual, with only appropriate 

staff having keys to doors. 

(2) Individuals sharing units have a 

choice of roommates in that setting. 

(3) Individuals have the freedom to 

furnish and decorate their sleeping or 

living units within the lease or other 

agreement. 

(C) Individuals have the freedom and 

support to control their own schedules 

and activities, and have access to food 

at any time. 

(D) Individuals are able to have 

visitors of their choosing at any time. 

(E) The setting is physically accessible 

to the individual. 

(F) Any modification of the additional 

conditions, under § 441.301(c)(4)(vi)(A) 

through (D), must be supported by a 

specific assessed need and justified in 

the person-centered service plan. The 

following requirements must be 

documented in the person-centered 

service plan: 

(1) Identify a specific and 

individualized assessed need. 

(2) Document the positive 

interventions and supports used prior to 

any modifications to the personcentered service plan. 

(3) Document less intrusive methods 

of meeting the need that have been tried 

but did not work. 

(4) Include a clear description of the 

condition that is directly proportionate 

to the specific assessed need. 

(5) Include regular collection and 

review of data to measure the ongoing 

effectiveness of the modification. 

(6) Include established time limits for 

periodic reviews to determine if the 

modification is still necessary or can be 

terminated. 

(7) Include the informed consent of 

the individual. 

(8) Include an assurance that 

interventions and supports will cause 

no harm to the individual. 

(5) Settings that are not Home and 

Community-Based. Home and 

community-based settings do not 

include the following: 

(i) A nursing facility; 

(ii) An institution for mental diseases; 

(iii) An intermediate care facility for 

individuals with intellectual 

disabilities; 

(iv) A hospital; or 

(v) Any other locations that have 

qualities of an institutional setting, as 

determined by the Secretary. Any 

setting that is located in a building that 

is also a publicly or privately operated 

facility that provides inpatient 

institutional treatment, or in a building 

on the grounds of, or immediately 

adjacent to, a public institution, or any 

other setting that has the effect of 

isolating individuals receiving Medicaid 

HCBS from the broader community of 

individuals not receiving Medicaid 

HCBS will be presumed to be a setting 

that has the qualities of an institution 

unless the Secretary determines through 

heightened scrutiny, based on 

information presented by the State or 

other parties, that the setting does not 

have the qualities of an institution and 

that the setting does have the qualities 

of home and community-based settings. 

(6) Home and Community-Based 

Settings: Compliance and Transition: 

(i) States submitting new and initial 

waiver requests must provide 

assurances of compliance with the 

requirements of this section for home 

and community-based settings as of the 

effective date of the waiver. 

(ii) CMS will require transition plans 

for existing section 1915(c) waivers and 

approved state plans providing home 

and community-based services under 

section 1915(i) to achieve compliance 

with this section, as follows: 

(A) For each approved section 1915(c) 

HCBS waiver subject to renewal or 

submitted for amendment within one 

year after the effective date of this 

regulation, the State must submit a 

transition plan at the time of the waiver 

renewal or amendment request that sets 

forth the actions the State will take to 

bring the specific waiver into 

compliance with this section. The 

waiver approval will be contingent on 

the inclusion of the transition plan 

approved by CMS. The transition plan 

must include all elements required by 

the Secretary; and within one hundred 

and twenty days of the submission of 

the first waiver renewal or amendment 

request the State must submit a 

transition plan detailing how the State 

will operate all section 1915(c) HCBS 

waivers and any section 1915(i) State 

plan benefit in accordance with this 

section. The transition plan must 

include all elements including timelines 

and deliverables as approved by the 

Secretary. 

(B) For States that do not have a 

section 1915(c) HCBS waiver or a 

section 1915(i) State plan benefit due for 

renewal or proposed for amendments 

within one year of the effective date of 

this regulation, the State must submit a 

transition plan detailing how the State 

will operate all section 1915(c) HCBS 

waivers and any section 1915(i) State 

plan benefit in accordance with this 

section. This plan must be submitted no 

later than one year after the effective 

date of this regulation. The transition 

plan must include all elements 

including timelines and deliverables as 

approved by the Secretary. 

(iii) A State must provide at least a 30- 

day public notice and comment period 

regarding the transition plan(s) that the 

State intends to submit to CMS for 

review and consideration, as follows: 

(A) The State must at a minimum 

provide two (2) statements of public 

notice and public input procedures. 

(B) The State must ensure the full 

transition plan(s) is available to the 

public for public comment. 

(C) The State must consider and 

modify the transition plan, as the State 

deems appropriate, to account for public 

comment. 

(iv) A State must submit to CMS, with 

the proposed transition plan: 

(A) Evidence of the public notice 

required. 

(B) A summary of the comments 

received during the public notice 

period, reasons why comments were not 

adopted, and any modifications to the 

transition plan based upon those 

comments. 

(v) Upon approval by CMS, the State 

will begin implementation of the 

transition plans. The State’s failure to 

submit an approvable transition plan as 

required by this section and/or to 

comply with the terms of the approved 

transition plan may result in 

compliance actions, including but not 

limited to deferral/disallowance of 

Federal Financial Participation. 

■ 15. Section 441.302 is amended by 

adding paragraphs (a)(4) and (a)(5) to 

read as follows: 


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§ 441.302 State assurances. 

* * * * * 

(a) * * * 

(4) Assurance that the State is able to 

meet the unique service needs of the 

individuals when the State elects to 

serve more than one target group under 

a single waiver, as specified in 

§ 441.301(b)(6). 

(i) On an annual basis the State will 

include in the quality section of the 

CMS–372 form (or any successor form 

designated by CMS) data that indicates 

the State continues to serve multiple 

target groups in the single waiver and 

that a single target group is not being 

prioritized to the detriment of other 

groups. 

(5) Assurance that services are 

provided in home and community based 

settings, as specified in § 441.301(c)(4). 

■ 16. Section 441.304 is amended by— 

■ A. Revising the section heading as set 

forth below. 

■ B. Redesignating paragraph (d) as new 

paragraph (g). 

■ C. Adding new paragraphs (d), (e), and 

(f). 

■ D. Revising newly designated 

paragraph (g). 

The additions and revisions read as 

follows: 

§ 441.304 Duration, extension, and 

amendment of a waiver. 

* * * * * 

(d) The agency may request that 

waiver modifications be made effective 

retroactive to the first day of a waiver 

year, or another date after the first day 

of a waiver year, in which the 

amendment is submitted, unless the 

amendment involves substantive 

changes as determined by CMS. 

(1) Substantive changes include, but 

are not limited to, revisions to services 

available under the waiver including 

elimination or reduction of services, or 

reduction in the scope, amount, and 

duration of any service, a change in the 

qualifications of service providers, 

changes in rate methodology or a 

constriction in the eligible population. 

(2) A request for an amendment that 

involves a substantive change as 

determined by CMS, may only take 

effect on or after the date when the 

amendment is approved by CMS, and 

must be accompanied by information on 

how the State has assured smooth 

transitions and minimal effect on 

individuals adversely impacted by the 

change. 

(e) The agency must provide public 

notice of any significant proposed 

change in its methods and standards for 

setting payment rates for services in 

accordance with § 447.205 of this 

chapter. 

(f) The agency must establish and use 

a public input process, for any changes 

in the services or operations of the 

waiver. 

(1) This process must be described 

fully in the State’s waiver application 

and be sufficient in light of the scope of 

the changes proposed, to ensure 

meaningful opportunities for input for 

individuals served, or eligible to be 

served, in the waiver. 

(2) This process must be completed at 

a minimum of 30 days prior to 

implementation of the proposed change 

or submission of the proposed change to 

CMS, whichever comes first. 

(3) This process must be used for both 

existing waivers that have substantive 

changes proposed, either through the 

renewal or the amendment process, and 

new waivers. 

(4) This process must include 

consultation with Federally-recognized 

Tribes, and in accordance with section 

5006(e) of the American Recovery and 

Reinvestment Act of 2009 (Pub. L. 111– 

5), Indian health programs and Urban 

Indian Organizations. 

(g)(1) If CMS finds that the Medicaid 

agency is not meeting one or more of the 

requirements for a waiver contained in 

this subpart, the agency is given a notice 

of CMS’ findings and an opportunity for 

a hearing to rebut the findings. 

(2) If CMS determines that the agency 

is substantively out of compliance with 

this subpart after the notice and any 

hearing, CMS may employ strategies to 

ensure compliance as described in 

paragraph (g)(3) of this section or 

terminate the waiver. 

(3)(i) Strategies to ensure compliance 

may include the imposition of a 

moratorium on waiver enrollments, 

other corrective strategies as appropriate 

to ensure the health and welfare of 

waiver participants, or the withholding 

of a portion of Federal payment for 

waiver services until such time that 

compliance is achieved, or other actions 

as determined by the Secretary as 

necessary to address non-compliance 

with 1915(c) of the Act, or termination. 

When a waiver is terminated, the State 

must comport with § 441.307. 

(ii) CMS will provide states with a 

written notice of the impending 

strategies to ensure compliance for a 

waiver program. The notice of CMS’ 

intent to utilize strategies to ensure 

compliance would include the nature of 

the noncompliance, the strategy to be 

employed, the effective date of the 

compliance strategy, the criteria for 

removing the compliance strategy and 

the opportunity for a hearing. 

■ 17. Section 441.530 is added to read 

as follows: 

§ 441.530 Home and Community-Based 

Setting. 

(a) States must make available 

attendant services and supports in a 

home and community-based setting 

consistent with both paragraphs (a)(1) 

and (a)(2) of this section. 

(1) Home and community-based 

settings must 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: 

(i) The setting is integrated in and 

supports full access of individuals 

receiving Medicaid HCBS 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, to the same degree of access 

as individuals not receiving Medicaid 

HCBS. 

(ii) The setting is selected by the 

individual from among setting options, 

including non-disability specific 

settings and an option for a private unit 

in a residential setting. The setting 

options are identified and documented 

in the person-centered service plan and 

are based on the individual’s needs, 

preferences, and, for residential settings, 

resources available for room and board. 

(iii) Ensures an individual’s rights of 

privacy, dignity and respect, and 

freedom from coercion and restraint. 

(iv) Optimizes but does not regiment 

individual initiative, autonomy, and 

independence in making life choices, 

including but not limited to, daily 

activities, physical environment, and 

with whom to interact. 

(v) Facilitates individual choice 

regarding services and supports, and 

who provides them. 

(vi) In a provider-owned or controlled 

residential setting, in addition to the 

above qualities at paragraphs (a)(1)(i) 

through (v) of this section, the following 

additional conditions must be met: 

(A) The unit or dwelling is a specific 

physical place that can be owned, 

rented or occupied under a 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. For 

settings in which landlord tenant laws 

do not apply, the State must ensure that 

a lease, residency agreement or other 

form of written agreement will be in 


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Federal Register / Vol. 79, No. 11 / Thursday, January 16, 2014 / Rules and Regulations 3033 

place for each participant and that the 

document provides protections that 

address eviction processes and appeals 

comparable to those provided under the 

jurisdiction’s landlord tenant law. 

(B) Each individual has privacy in 

their sleeping or living unit: 

(1) Units have entrance doors lockable 

by the individual, with only appropriate 

staff having keys to doors as needed. 

(2) Individuals sharing units have a 

choice of roommates in that setting. 

(3) Individuals have the freedom to 

furnish and decorate their sleeping or 

living units within the lease or other 

agreement. 

(C) Individuals have the freedom and 

support to control their own schedules 

and activities, and have access to food 

at any time. 

(D) Individuals are able to have 

visitors of their choosing at any time. 

(E) The setting is physically accessible 

to the individual. 

(F) Any modification of the additional 

conditions, under paragraphs 

(a)(1)(vi)(A) through (D) of this section, 

must be supported by a specific 

assessed need and justified in the 

person-centered service plan. The 

following requirements must be 

documented in the person-centered 

service plan: 

(1) Identify a specific and 

individualized assessed need. 

(2) Document the positive 

interventions and supports used prior to 

any modifications to the personcentered service plan. 

(3) Document less intrusive methods 

of meeting the need that have been tried 

but did not work. 

(4) Include a clear description of the 

condition that is directly proportionate 

to the specific assessed need. 

(5) Include regulation collection and 

review of data to measure the ongoing 

effectiveness of the modification. 

(6) Include established time limits for 

periodic reviews to determine if the 

modification is still necessary or can be 

terminated. 

(7) Include the informed consent of 

the individual. 

(8) Include an assurance that 

interventions and supports will cause 

no harm to the individual. 

(2) Home and community-based 

settings do not include the following: 

(i) A nursing facility; 

(ii) An institution for mental diseases; 

(iii) An intermediate care facility for 

individuals with intellectual 

disabilities; 

(iv) A hospital providing long-term 

care services; or 

(v) Any other locations that have 

qualities of an institutional setting, as 

determined by the Secretary. Any 

setting that is located in a building that 

is also a publicly or privately operated 

facility that provides inpatient 

institutional treatment, or in a building 

on the grounds of, or immediately 

adjacent to, a public institution, or any 

other setting that has the effect of 

isolating individuals receiving Medicaid 

HCBS from the broader community of 

individuals not receiving Medicaid 

HCBS will be presumed to be a setting 

that has the qualities of an institution 

unless the Secretary determines through 

heightened scrutiny, based on 

information presented by the State or 

other parties, that the setting does not 

have the qualities of an institution and 

that the setting does have the qualities 

of home and community-based settings. 

(b) [Reserved] 

■ 18. A new subpart M, consisting of 

§ 441.700 through § 441.745, is added to 

part 441 to read as follows: 

Subpart M—State Plan Home and 

Community-Based Services for Elderly and 

Disabled Individuals 

Sec. 

441.700 Basis and purpose. 

441.705 State plan requirements. 

441.710 State plan home and communitybased services under section 1915(i)(1) of 

the Act. 

441.715 Needs-based criteria and 

evaluation. 

441.720 Independent assessment. 

441.725 Person-centered service plan. 

441.730 Provider qualifications. 

441.735 Definition of individual’s 

representative. 

441.740 Self-directed services. 

441.745 State plan HCBS administration: 

State responsibilities and quality 

improvement. 

Subpart M—State Plan Home and 

Community-Based Services for the 

Elderly and Individuals with 

Disabilities 

§ 441.700 Basis and purpose. 

Section 1915(i) of the Act permits 

States to offer one or more home and 

community-based services (HCBS) 

under their State Medicaid plans to 

qualified individuals with disabilities or 

individuals who are elderly. Those 

services are listed in § 440.182 of this 

chapter, and are described by the State, 

including any limitations of the 

services. This optional benefit is known 

as the State plan HCBS benefit. This 

subpart describes what a State Medicaid 

plan must provide when the State elects 

to include the optional benefit, and 

defines State responsibilities. 

§ 441.705 State plan requirements. 

A State plan that provides section 

1915(i) of the Act State plan home and 

community-based services must meet 

the requirements of this subpart. 

§ 441.710 State plan home and 

community-based services under section 

1915(i)(1) of the Act. 

(a) Home and Community-Based 

Setting. States must make State plan 

HCBS available in a home and 

community-based setting consistent 

with both paragraphs (a)(1) and (a)(2) of 

this section. 

(1) Home and community-based 

settings must 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: 

(i) The setting is integrated in and 

supports full access of individuals 

receiving Medicaid HCBS 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, to the same degree of access 

as individuals not receiving Medicaid 

HCBS. 

(ii) The setting is selected by the 

individual from among setting options, 

including non-disability specific 

settings and an option for a private unit 

in a residential setting. The setting 

options are identified and documented 

in the person–centered service plan and 

are based on the individual’s needs, 

preferences, and, for residential settings, 

resources available for room and board. 

(iii) Ensures an individual’s rights of 

privacy, dignity and respect, and 

freedom from coercion and restraint. 

(iv) Optimizes, but does not regiment, 

individual initiative, autonomy, and 

independence in making life choices, 

including but not limited to, daily 

activities, physical environment, and 

with whom to interact. 

(v) Facilitates individual choice 

regarding services and supports, and 

who provides them. 

(vi) In a provider-owned or controlled 

residential setting, in addition to the 

above qualities at paragraphs (a)(1)(i) 

through (v) of this section, the following 

additional conditions must be met: 

(A) The unit or dwelling is a specific 

physical place that can be owned, 

rented, or occupied under a 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. For 

settings in which landlord tenant laws 

do not apply, the State must ensure that 


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3034 Federal Register / Vol. 79, No. 11 / Thursday, January 16, 2014 / Rules and Regulations 

a lease, residency agreement or other 

form of written agreement will be in 

place for each HCBS participant and 

that the document provides protections 

that address eviction processes and 

appeals comparable to those provided 

under the jurisdiction’s landlord tenant 

law; 

(B) Each individual has privacy in 

their sleeping or living unit: 

(1) Units have entrance doors lockable 

by the individual, with only appropriate 

staff having keys to doors; 

(2) Individuals sharing units have a 

choice of roommates in that setting; and 

(3) Individuals have the freedom to 

furnish and decorate their sleeping or 

living units within the lease or other 

agreement. 

(C) Individuals have the freedom and 

support to control their own schedules 

and activities, and have access to food 

at any time; 

(D) Individuals are able to have 

visitors of their choosing at any time; 

(E) The setting is physically accessible 

to the individual; and 

(F) Any modification of the additional 

conditions, under paragraphs 

(a)(1)(vi)(A) through (D) of this section, 

must be supported by a specific 

assessed need and justified in the 

person-centered service plan. The 

following requirements must be 

documented in the person-centered 

service plan: 

(1) Identify a specific and 

individualized assessed need. 

(2) Document the positive 

interventions and supports used prior to 

any modifications to the personcentered service plan. 

(3) Document less intrusive methods 

of meeting the need that have been tried 

but did not work. 

(4) Include a clear description of the 

condition that is directly proportionate 

to the specific assessed need. 

(5) Include regular collection and 

review of data to measure the ongoing 

effectiveness of the modification. 

(6) Include established time limits for 

periodic reviews to determine if the 

modification is still necessary or can be 

terminated. 

(7) Include the informed consent of 

the individual. 

(8) Include an assurance that 

interventions and supports will cause 

no harm to the individual. 

(2) Home and community-based 

settings do not include the following: 

(i) A nursing facility. 

(ii) An institution for mental diseases. 

(iii) An intermediate care facility for 

individuals with intellectual 

disabilities. 

(iv) A hospital. 

(v) Any other locations that have 

qualities of an institutional setting, as 

determined by the Secretary. Any 

setting that is located in a building that 

is also a publicly or privately operated 

facility that provides inpatient 

institutional treatment, or in a building 

on the grounds of, or immediately 

adjacent to, a public institution, or any 

other setting that has the effect of 

isolating individuals receiving Medicaid 

HCBS from the broader community of 

individuals not receiving Medicaid 

HCBS will be presumed to be a setting 

that has the qualities of an institution 

unless the Secretary determines through 

heightened scrutiny, based on 

information presented by the State or 

other parties, that the setting does not 

have the qualities of an institution and 

that the setting does have the qualities 

of home and community-based settings. 

(3) Compliance and transition: 

(i) States submitting state plan 

amendments for new section 1915(i) of 

the Act benefits must provide 

assurances of compliance with the 

requirements of this section for home 

and community-based settings as of the 

effective date of the state plan 

amendment; 

(ii) CMS will require transition plans 

for existing section 1915(c) waivers and 

approved state plans providing home 

and community-based services under 

section 1915(i) to achieve compliance 

with this section, as follows: 

(A) For each approved section 1915(i) 

of the Act benefit subject to renewal or 

submitted for amendment within one 

year after the effective date of this 

regulation, the State must submit a 

transition plan at the time of the 

renewal or amendment request that sets 

forth the actions the State will take to 

bring the specific 1915(i) State plan 

benefit into compliance with this 

section. The approval will be contingent 

on the inclusion of the transition plan 

approved by CMS. The transition plan 

must include all elements required by 

the Secretary; and within one hundred 

and twenty days of the submission of 

the first renewal or amendment request 

the State must submit a transition plan 

detailing how the State will operate all 

section 1915(c) HCBS waivers and any 

section 1915(i) State plan benefit in 

accordance with this section. The 

transition plan must include all 

elements including timelines and 

deliverables as approved by the 

Secretary. 

(B) For States that do not have a 

section 1915(c) waiver or a section 

1915(i) State plan benefit due for 

renewal or proposed for amendments 

within one year of the effective date of 

this regulation, the State must submit a 

transition plan detailing how the State 

will operate all section 1915(c) waivers 

and any section 1915(i) State plan 

benefit in accordance with this section. 

This plan must be submitted no later 

than one year after the effective date of 

this regulation. The transition plan must 

include all elements including timelines 

and deliverables as approved by the 

Secretary. 

(iii) A State must provide at least a 30- 

day public notice and comment period 

regarding the transition plan(s) that the 

State intends to submit to CMS for 

review and consideration, as follows: 

(A) The State must at a minimum 

provide two (2) statements of public 

notice and public input procedures. 

(B) The State must ensure the full 

transition plan(s) is available to the 

public for public comment. 

(C) The State must consider and 

modify the transition plan, as the State 

deems appropriate, to account for public 

comment. 

(iv) A State must submit to CMS, with 

the proposed transition plan: 

(A) Evidence of the public notice 

required. 

(B) A summary of the comments 

received during the public notice 

period, reasons why comments were not 

adopted, and any modifications to the 

transition plan based upon those 

comments. 

(v) Upon approval by CMS, the State 

will begin implementation of the 

transition plans. The State’s failure to 

submit an approvable transition plan as 

required by this section and/or to 

comply with the terms of the approved 

transition plan may result in 

compliance actions, including but not 

limited to deferral/disallowance of 

Federal Financial Participation. 

(b) Needs-Based Eligibility 

Requirement. Meet needs-based criteria 

for eligibility for the State plan HCBS 

benefit, as required in § 441.715(a). 

(c) Minimum State plan HCBS 

Requirement. Be assessed to require at 

least one section 1915(i) home and 

community-based service at a frequency 

determined by the State, as required in 

§ 441.720(a)(5). 

(d) Target Population. Meet any 

applicable targeting criteria defined by 

the State under the authority of 

paragraph (e)(2) of this section. 

(e) Nonapplication. The State may 

elect in the State plan amendment 

approved under this subpart not to 

apply the following requirements when 

determining eligibility: 

(1) Section 1902(a)(10)(C)(i)(III) of the 

Act, pertaining to income and resource 

eligibility rules for the medically needy 

living in the community, but only for 

the purposes of providing State plan 

HCBS. 


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(2) Section 1902(a)(10)(B) of the Act, 

pertaining to comparability of Medicaid 

services, but only for the purposes of 

providing section 1915(i) State plan 

HCBS. In the event that a State elects 

not to apply comparability 

requirements: 

(i) The State must describe the 

group(s) receiving State plan HCBS, 

subject to the Secretary’s approval. 

Targeting criteria cannot have the 

impact of limiting the pool of qualified 

providers from which an individual 

would receive services, or have the 

impact of requiring an individual to 

receive services from the same entity 

from which they purchase their 

housing. These groups must be defined 

on the basis of any combination of the 

following: 

(A) Age. 

(B) Diagnosis. 

(C) Disability. 

(D) Medicaid Eligibility Group. 

(ii) The State may elect in the State 

plan amendment to limit the availability 

of specific services defined under the 

authority of § 440.182(c) of this chapter 

or to vary the amount, duration, or 

scope of those services, to one or more 

of the group(s) described in this 

paragraph. 

§ 441.715 Needs-based criteria and 

evaluation. 

(a) Needs-based criteria. The State 

must establish needs-based criteria for 

determining an individual’s eligibility 

under the State plan for the HCBS 

benefit, and may establish needs-based 

criteria for each specific service. Needsbased criteria are factors used to 

determine an individual’s requirements 

for support, and may include risk 

factors. The criteria are not 

characteristics that describe the 

individual or the individual’s condition. 

A diagnosis is not a sufficient factor on 

which to base a determination of need. 

A criterion can be considered needsbased if it is a factor that can only be 

ascertained for a given person through 

an individualized evaluation of need. 

(b) More stringent institutional and 

waiver needs-based criteria. The State 

plan HCBS benefit is available only if 

the State has in effect needs-based 

criteria (as defined in paragraph (a) of 

this section), for receipt of services in 

nursing facilities as defined in section 

1919(a) of the Act, intermediate care 

facilities for individuals with 

intellectual disabilities as defined in 

§ 440.150 of this chapter, and hospitals 

as defined in § 440.10 of this chapter for 

which the State has established longterm level of care (LOC) criteria, or 

waivers offering HCBS, and these needsbased criteria are more stringent than 

the needs-based criteria for the State 

plan HCBS benefit. If the State defines 

needs-based criteria for individual State 

plan home and community-based 

services, it may not have the effect of 

limiting who can benefit from the State 

plan HCBS in an unreasonable way, as 

determined by the Secretary. 

(1) These more stringent criteria must 

meet the following requirements: 

(i) Be included in the LOC 

determination process for each 

institutional service and waiver. 

(ii) Be submitted for inspection by 

CMS with the State plan amendment 

that establishes the State Plan HCBS 

benefit. 

(iii) Be in effect on or before the 

effective date of the State plan HCBS 

benefit. 

(2) In the event that the State modifies 

institutional LOC criteria to meet the 

requirements under paragraph (b) or 

(c)(6) of this section that such criteria be 

more stringent than the State plan HCBS 

needs-based eligibility criteria, States 

may continue to receive FFP for 

individuals receiving institutional 

services or waiver HCBS under the LOC 

criteria previously in effect. 

(c) Adjustment authority. The State 

may modify the needs-based criteria 

established under paragraph (a) of this 

section, without prior approval from the 

Secretary, if the number of individuals 

enrolled in the State plan HCBS benefit 

exceeds the projected number submitted 

annually to CMS. The Secretary may 

approve a retroactive effective date for 

the State plan amendment modifying 

the criteria, as early as the day following 

the notification period required under 

paragraph (c)(1) of this section, if all of 

the following conditions are met: 

(1) The State provides at least 60 days 

notice of the proposed modification to 

the Secretary, the public, and each 

individual enrolled in the State plan 

HCBS benefit. 

(2) The State notice to the Secretary 

is submitted as an amendment to the 

State plan. 

(3) The adjusted needs-based 

eligibility criteria for the State plan 

HCBS benefit are less stringent than 

needs-based institutional and waiver 

LOC criteria in effect after the 

adjustment. 

(4) Individuals who were found 

eligible for the State plan HCBS benefit 

before modification of the needs-based 

criteria under this adjustment authority 

must remain eligible for the HCBS 

benefit until such time as: 

(i) The individual no longer meets the 

needs-based criteria used for the initial 

determination of eligibility; or 

(ii) The individual is no longer 

eligible for or enrolled in Medicaid or 

the HCBS benefit. 

(5) Any changes in service due to the 

modification of needs-based criteria 

under this adjustment authority are 

treated as actions as defined in 

§ 431.201 of this chapter and are subject 

to the requirements of part 431, subpart 

E of this chapter. 

(6) In the event that the State also 

needs to modify institutional level of 

care criteria to meet the requirements 

under paragraph (b) of this section that 

such criteria be more stringent than the 

State plan HCBS needs-based eligibility 

criteria, the State may adjust the 

modified institutional LOC criteria 

under this adjustment authority. The 

adjusted institutional LOC criteria must 

be at least as stringent as those in effect 

before they were modified to meet the 

requirements in paragraph (b) of this 

section. 

(d) Independent evaluation and 

determination of eligibility. Eligibility 

for the State plan HCBS benefit must be 

determined through an independent 

evaluation of each individual according 

to the requirements of this subpart. The 

independent evaluation complies with 

the following requirements: 

(1) Is performed by an agent that is 

independent and qualified as defined in 

§ 441.730. 

(2) Applies the needs-based eligibility 

criteria that the State has established 

under paragraph (a) of this section, and 

the general eligibility requirements 

under § 435.219 and § 436.219 of this 

chapter. 

(3) Includes consultation with the 

individual, and if applicable, the 

individual’s representative as defined 

under § 441.735. 

(4) Assesses the individual’s support 

needs. 

(5) Uses only current and accurate 

information from existing records, and 

obtains any additional information 

necessary to draw valid conclusions 

about the individual’s support needs. 

(6) Evaluations finding that an 

individual is not eligible for the State 

plan HCBS benefit are treated as actions 

defined in § 431.201 of this chapter and 

are subject to the requirements of part 

431 subpart E of this chapter. 

(e) Periodic redetermination. 

Independent reevaluations of each 

individual receiving the State plan 

HCBS benefit must be performed at least 

every 12 months, to determine whether 

the individual continues to meet 

eligibility requirements. 

Redeterminations must meet the 

requirements of paragraph (d) of this 

section. 


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§ 441.720 Independent assessment. 

(a) Requirements. For each individual 

determined to be eligible for the State 

plan HCBS benefit, the State must 

provide for an independent assessment 

of needs, which may include the results 

of a standardized functional needs 

assessment, in order to establish a 

service plan. In applying the 

requirements of section 1915(i)(1)(F) of 

the Act, the State must: 

(1) Perform a face-to-face assessment 

of the individual by an agent who is 

independent and qualified as defined in 

§ 441.730, and with a person-centered 

process that meets the requirements of 

§ 441.725(a) and is guided by best 

practice and research on effective 

strategies that result in improved health 

and quality of life outcomes. 

(i) For the purposes of this section, a 

face-to-face assessment may include 

assessments performed by telemedicine, 

or other information technology 

medium, if the following conditions are 

met: 

(A) The agent performing the 

assessment is independent and qualified 

as defined in § 441.730 and meets the 

provider qualifications defined by the 

State, including any additional 

qualifications or training requirements 

for the operation of required 

information technology. 

(B) The individual receives 

appropriate support during the 

assessment, including the use of any 

necessary on-site support-staff. 

(C) The individual provides informed 

consent for this type of assessment. 

(ii) [Reserved] 

(2) Conduct the assessment in 

consultation with the individual, and if 

applicable, the individual’s authorized 

representative, and include the 

opportunity for the individual to 

identify other persons to be consulted, 

such as, but not limited to, the 

individual’s spouse, family, guardian, 

and treating and consulting health and 

support professionals responsible for 

the individual’s care. 

(3) Examine the individual’s relevant 

history including the findings from the 

independent evaluation of eligibility, 

medical records, an objective evaluation 

of functional ability, and any other 

records or information needed to 

develop the person-centered service 

plan as required in § 441.725. 

(4) Include in the assessment the 

individual’s physical, cognitive, and 

behavioral health care and support 

needs, strengths and preferences, 

available service and housing options, 

and if unpaid caregivers will be relied 

upon to implement any elements of the 

person-centered service plan, a 

caregiver assessment. 

(5) For each service, apply the State’s 

additional needs-based criteria (if any) 

that the individual may require. 

Individuals are considered enrolled in 

the State plan HCBS benefit only if they 

meet the eligibility and needs-based 

criteria for the benefit, and are also 

assessed to require and receive at least 

one home and community-based service 

offered under the State plan for medical 

assistance. 

(6) Include in the assessment, if the 

State offers individuals the option to 

self-direct a State plan home and 

community-based service or services, 

any information needed for the selfdirected portion of the service plan, as 

required in § 441.740(b), including the 

ability of the individual (with and 

without supports) to exercise budget or 

employer authority. 

(7) Include in the assessment, for 

individuals receiving habilitation 

services, documentation that no 

Medicaid services are provided which 

would otherwise be available to the 

individual, specifically including but 

not limited to services available to the 

individual through a program funded 

under section 110 of the Rehabilitation 

Act of 1973, or the Individuals with 

Disabilities Education Improvement Act 

of 2004. 

(8) Include in the assessment and 

subsequent service plan, for individuals 

receiving Secretary approved services 

under the authority of § 440.182 of this 

chapter, documentation that no State 

plan HCBS are provided which would 

otherwise be available to the individual 

through other Medicaid services or 

other Federally funded programs. 

(9) Include in the assessment and 

subsequent service plan, for individuals 

receiving HCBS through a waiver 

approved under § 441.300, 

documentation that HCBS provided 

through the State plan and waiver are 

not duplicative. 

(10) Coordinate the assessment and 

subsequent service plan with any other 

assessment or service plan required for 

services through a waiver authorized 

under section 1115 or section 1915 of 

the Social Security Act. 

(b) Reassessments. The independent 

assessment of need must be conducted 

at least every 12 months and as needed 

when the individual’s support needs or 

circumstances change significantly, in 

order to revise the service plan. 

§ 441.725 Person-centered service plan. 

(a) Person-centered planning process. 

Based on the independent assessment 

required in § 441.720, the State must 

develop (or approve, if the plan is 

developed by others) a written service 

plan jointly with the individual 

(including, for purposes of this 

paragraph, the individual and the 

individual’s authorized representative if 

applicable). 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 and is conducted by 

providing information in plain language 

and in a manner that is accessible to 

individuals with disabilities and 

persons who are limited English 

proficient, consistent with § 435.905(b) 

of this chapter. 

(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 the 

individual receives and from whom. 

(7) Includes a method for the 

individual to request updates to the 

plan, as needed. 

(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 the State plan HCBS 

benefit, the written plan must: 

(1) Reflect that the setting in which 

the individual resides is chosen by the 

individual. The State must ensure that 

the setting chosen by the individual is 

integrated in, and supports full access of 

individuals receiving Medicaid HCBS 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 to the same degree of 

access as individuals not receiving 

Medicaid HCBS. 

(2) Reflect the individual’s strengths 

and preferences. 


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(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 are unpaid supports 

that are provided voluntarily to the 

individual in lieu of State plan HCBS. 

(6) Reflect risk factors and measures 

in place to minimize them, including 

individualized backup plans and 

strategies when needed. 

(7) Be understandable to the 

individual receiving services and 

supports, and the individuals important 

in supporting him or her. At a 

minimum, for the written plan to be 

understandable, it must be written in 

plain language and in a manner that is 

accessible to individuals with 

disabilities and persons who are limited 

English proficient, consistent with 

§ 435.905(b) of this chapter. 

(8) Identify the individual and/or 

entity responsible for monitoring the 

plan. 

(9) Be finalized and agreed to, with 

the informed consent of the individual 

in writing, 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) Include those services, the 

purchase or control of which the 

individual elects to self-direct, meeting 

the requirements of § 441.740. 

(12) Prevent the provision of 

unnecessary or inappropriate services 

and supports. 

(13) Document that any modification 

of the additional conditions, under 

§ 441.710(a)(1)(vi)(A) through (D) of this 

chapter, must be supported by a specific 

assessed need and justified in the 

person-centered service plan. The 

following requirements must be 

documented in the person-centered 

service plan: 

(i) Identify a specific and 

individualized assessed need. 

(ii) Document the positive 

interventions and supports used prior to 

any modifications to the personcentered service plan. 

(iii) Document less intrusive methods 

of meeting the need that have been tried 

but did not work. 

(iv) Include a clear description of the 

condition that is directly proportionate 

to the specific assessed need. 

(v) Include a regular collection and 

review of data to measure the ongoing 

effectiveness of the modification. 

(vi) Include established time limits for 

periodic reviews to determine if the 

modification is still necessary or can be 

terminated. 

(vii) Include informed consent of the 

individual; and 

(viii) Include an assurance that the 

interventions and supports will cause 

no harm to the individual. 

(c) Reviewing the person-centered 

service plan. The person-centered 

service plan must be reviewed, and 

revised upon reassessment of functional 

need as required in § 441.720, at least 

every 12 months, when the individual’s 

circumstances or needs change 

significantly, and at the request of the 

individual. 

§ 441.730 Provider qualifications. 

(a) Requirements. The State must 

provide assurances that necessary 

safeguards have been taken to protect 

the health and welfare of enrollees in 

State plan HCBS, and must define in 

writing standards for providers (both 

agencies and individuals) of HCBS and 

for agents conducting individualized 

independent evaluation, independent 

assessment, and service plan 

development. 

(b) Conflict of interest standards. The 

State must define conflict of interest 

standards that ensure the independence 

of individual and agency agents who 

conduct (whether as a service or an 

administrative activity) the independent 

evaluation of eligibility for State plan 

HCBS, who are responsible for the 

independent assessment of need for 

HCBS, or who are responsible for the 

development of the service plan. The 

conflict of interest standards apply to all 

individuals and entities, public or 

private. At a minimum, these agents 

must not be any of the following: 

(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) Holding financial interest, as 

defined in § 411.354 of this chapter, in 

any entity that is paid to provide care 

for the individual. 

(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 agent to perform independent 

assessments and develop personcentered service plans in a geographic 

area also provides HCBS, and the State 

devises conflict of interest protections 

including separation of agent and 

provider functions within provider 

entities, which are described in the 

State plan for medical assistance and 

approved by the Secretary, and 

individuals are provided with a clear 

and accessible alternative dispute 

resolution process. 

(c) Training. Qualifications for agents 

performing independent assessments 

and plans of care must include training 

in assessment of individuals whose 

physical, cognitive, or mental 

conditions trigger a potential need for 

home and community-based services 

and supports, and current knowledge of 

available resources, service options, 

providers, and best practices to improve 

health and quality of life outcomes. 

§ 441.735 Definition of individual’s 

representative. 

In this subpart, the term individual’s 

representative means, with respect to an 

individual being evaluated for, assessed 

regarding, or receiving State plan HCBS, 

the following: 

(a) The individual’s legal guardian or 

other person who is authorized under 

State law to represent the individual for 

the purpose of making decisions related 

to the person’s care or well-being. In 

instances where state law confers 

decision-making authority to the 

individual representative, the 

individual will lead the service 

planning process to the extent possible. 

(b) Any other person who is 

authorized under § 435.923 of this 

chapter, or under the policy of the State 

Medicaid Agency to represent the 

individual, including but not limited to, 

a parent, a family member, or an 

advocate for the individual. 

(c) When the State authorizes 

representatives in accordance with 

paragraph (b) of this section, the State 

must have policies describing the 

process for authorization; the extent of 

decision-making authorized; and 

safeguards to ensure that the 

representative uses substituted 

judgment on behalf of the individual. 

State policies must address exceptions 

to using substituted judgment when the 

individual’s wishes cannot be 

ascertained or when the individual’s 

wishes would result in substantial harm 

to the individual. States may not refuse 

the authorized representative that the 

individual chooses, unless in the 

process of applying the requirements for 

authorization, the State discovers and 

can document evidence that the 

representative is not acting in 

accordance with these policies or 

cannot perform the required functions. 

States must continue to meet the 

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centered planning process at § 441.725 

of this chapter. 

§ 441.740 Self-directed services. 

(a) State option. The State may choose 

to offer an election for self-directing 

HCBS. The term ‘‘self-directed’’ means, 

with respect to State plan HCBS listed 

in § 440.182 of this chapter, services 

that are planned and purchased under 

the direction and control of the 

individual, including the amount, 

duration, scope, provider, and location 

of the HCBS. For purposes of this 

paragraph, individual means the 

individual and, if applicable, the 

individual’s representative as defined in 

§ 441.735. 

(b) Service plan requirement. Based 

on the independent assessment required 

in § 441.720, the State develops a 

service plan jointly with the individual 

as required in § 441.725. If the 

individual chooses to direct some or all 

HCBS, the service plan must meet the 

following additional requirements: 

(1) Specify the State plan HCBS that 

the individual will be responsible for 

directing. 

(2) Identify the methods by which the 

individual will plan, direct or control 

services, including whether the 

individual will exercise authority over 

the employment of service providers 

and/or authority over expenditures from 

the individualized budget. 

(3) Include appropriate risk 

management techniques that explicitly 

recognize the roles and sharing of 

responsibilities in obtaining services in 

a self-directed manner and assure the 

appropriateness of this plan based upon 

the resources and support needs of the 

individual. 

(4) Describe the process for facilitating 

voluntary and involuntary transition 

from self-direction including any 

circumstances under which transition 

out of self-direction is involuntary. 

There must be state procedures to 

ensure the continuity of services during 

the transition from self-direction to 

other service delivery methods. 

(5) Specify the financial management 

supports, as required in paragraph (e) of 

this section, to be provided. 

(c) Employer authority. If the personcentered service plan includes authority 

to select, manage, or dismiss providers 

of the State plan HCBS, the personcentered service plan must specify the 

authority to be exercised by the 

individual, any limits to the authority, 

and specify parties responsible for 

functions outside the authority the 

individual exercises. 

(d) Budget authority. If the personcentered service plan includes an 

individualized budget (which identifies 

the dollar value of the services and 

supports under the control and 

direction of the individual), the personcentered service plan must meet the 

following requirements: 

(1) Describe the method for 

calculating the dollar values in the 

budget, based on reliable costs and 

service utilization. 

(2) Define a process for making 

adjustments in dollar values to reflect 

changes in an individual’s assessment 

and service plan. 

(3) Provide a procedure to evaluate 

expenditures under the budget. 

(4) Not result in payment for medical 

assistance to the individual. 

(e) Functions in support of selfdirection. When the State elects to offer 

self-directed State plan HCBS, it must 

offer the following individualized 

supports to individuals receiving the 

services and their representatives: 

(1) Information and assistance 

consistent with sound principles and 

practice of self-direction. 

(2) Financial management supports to 

meet the following requirements: 

(i) Manage Federal, State, and local 

employment tax, labor, worker’s 

compensation, insurance, and other 

requirements that apply when the 

individual functions as the employer of 

service providers. 

(ii) Make financial transactions on 

behalf of the individual when the 

individual has personal budget 

authority. 

(iii) Maintain separate accounts for 

each individual’s budget and provide 

periodic reports of expenditures against 

budget in a manner understandable to 

the individual. 

(3) Voluntary training on how to 

select, manage, and dismiss providers of 

State plan HCBS. 

§ 441.745 State plan HCBS administration: 

State responsibilities and quality 

improvement. 

(a) State plan HCBS administration. 

(1) State responsibilities. The State 

must carry out the following 

responsibilities in administration of its 

State plan HCBS: 

(i) Number served. The State will 

annually provide CMS with the 

projected number of individuals to be 

enrolled in the benefit and the actual 

number of unduplicated individuals 

enrolled in State plan HCBS in the 

previous year. 

(ii) Access to services. The State must 

grant access to all State plan HCBS 

assessed to be needed in accordance 

with a service plan consistent with 

§ 441.725, to individuals who have been 

determined to be eligible for the State 

plan HCBS benefit, subject to the 

following requirements: 

(A) A State must determine that 

provided services meet medical 

necessity criteria. 

(B) A State may limit access to 

services through targeting criteria 

established by § 441.710(e)(2). 

(C) A State may not limit access to 

services based upon the income of 

eligible individuals, the cost of services, 

or the individual’s location in the State. 

(iii) Appeals. A State must provide 

individuals with advance notice of and 

the right to appeal terminations, 

suspensions, or reductions of Medicaid 

eligibility or covered services as 

described in part 431, subpart E. 

(2) Administration. 

(i) Option for presumptive payment. 

(A) The State may provide for a 

period of presumptive payment, not to 

exceed 60 days, for Medicaid eligible 

individuals the State has reason to 

believe may be eligible for the State plan 

HCBS benefit. FFP is available for both 

services that meet the definition of 

medical assistance and necessary 

administrative expenditures for 

evaluation of eligibility for the State 

plan HCBS benefit under § 441.715(d) 

and assessment of need for specific 

HCBS under § 441.720(a), prior to an 

individual’s receipt of State plan HCBS 

or determination of ineligibility for the 

benefit. 

(B) If an individual the State has 

reason to believe may be eligible for the 

State plan HCBS benefit is evaluated 

and assessed under the presumptive 

payment option and found not to be 

eligible for the benefit, FFP is available 

for services that meet the definition of 

medical assistance and necessary 

administrative expenditures. The 

individual so determined will not be 

considered to have enrolled in the State 

plan HCBS benefit for purposes of 

determining the annual number of 

participants in the benefit. 

(ii) Option for Phase-in of Services 

and Eligibility 

(A) In the event that a State elects to 

establish targeting criteria through 

§ 441.710(e)(2), the State may limit the 

enrollment of individuals or the 

provision services to enrolled 

individuals based upon criteria 

described in a phase-in plan, subject to 

CMS approval. A State which elects to 

target the State plan HCBS benefit and 

to phase-in enrollment and/or services 

must submit a phase-in plan for 

approval by CMS that describes, at a 

minimum: 

(1) The criteria used to limit 

enrollment or service delivery. 

(2) The rationale for phasing-in 

services and/or eligibility. 

(3) Timelines and benchmarks to 

ensure that the benefit is available 


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Federal Register / Vol. 79, No. 11 / Thursday, January 16, 2014 / Rules and Regulations 3039 

statewide to all eligible individuals 

within the initial 5-year approval. 

(B) If a State elects to phase-in the 

enrollment of individuals based on 

highest need, the phase-in plan must 

use the needs-based criteria described in 

§ 441.715(a) to establish priority for 

enrollment. Such criteria must be based 

upon the assessed need of individuals, 

with higher-need individuals receiving 

services prior to individuals with lower 

assessed need. 

(C) If a State elects to phase-in the 

provision of any services, the phase-in 

plan must include a description of the 

services that will not be available to all 

eligible individuals, the rationale for 

limiting the provision of services, and 

assurance that all individuals with 

access to a willing and qualified 

provider may receive services. 

(D) The plan may not include a cap 

on the number of enrollees. 

(E) The plan must include a timeline 

to assure that all eligible individuals 

receive all included services prior to the 

end of the first 5-year approval period, 

described in paragraph (a)(2)(vi) of this 

section. 

(iii) Reimbursement methodology. 

The State plan amendment to provide 

State plan HCBS must contain a 

description of the reimbursement 

methodology for each covered service, 

in accordance with CMS sub-regulatory 

guidance. To the extent that the 

reimbursement methodologies for any 

self-directed services differ from those 

descriptions, the method for setting 

reimbursement methodology for the 

self-directed services must also be 

described. 

(iv) Operation. The State plan 

amendment to provide State plan HCBS 

must contain a description of the State 

Medicaid agency line of authority for 

operating the State plan HCBS benefit, 

including distribution of functions to 

other entities. 

(v) Modifications. The agency may 

request that modifications to the benefit 

be made effective retroactive to the first 

day of a fiscal year quarter, or another 

date after the first day of a fiscal year 

quarter, in which the amendment is 

submitted, unless the amendment 

involves substantive change. 

Substantive changes may include, but 

are not limited to, the following: 

(A) Revisions to services available 

under the benefit including elimination 

or reduction in services, and changes in 

the scope, amount and duration of the 

services. 

(B) Changes in the qualifications of 

service providers, rate methodology, or 

the eligible population. 

(1) Request for Amendments. A 

request for an amendment that involves 

a substantive change as determined by 

CMS— 

(i) May only take effect on or after the 

date when the amendment is approved 

by CMS; and 

(ii) Must be accompanied by 

information on how the State will 

ensure for transitions with minimal 

adverse impact on individuals impacted 

by the change. 

(2) [Reserved] 

(vi) Periods of approval. 

(A) If a State elects to establish 

targeting criteria through 

§ 441.710(e)(2)(i), the approval of the 

State Plan Amendment will be in effect 

for a period of 5 years from the effective 

date of the amendment. To renew State 

plan HCBS for an additional 5-year 

period, the State must provide a written 

request for renewal to CMS at least 180 

days prior to the end of the approval 

period. CMS approval of a renewal 

request is contingent upon State 

adherence to Federal requirements and 

the state meeting its objectives with 

respect to quality improvement and 

beneficiary outcomes. 

(B) If a State does not elect to 

establish targeting criteria through 

§ 441.710(e)(2)(i), the limitations on 

length of approval does not apply. 

(b) Quality improvement strategy: 

Program performance and quality of 

care. States must develop and 

implement an HCBS quality 

improvement strategy that includes a 

continuous improvement process and 

measures of program performance and 

experience of care. The strategy must be 

proportionate to the scope of services in 

the State plan HCBS benefit and the 

number of individuals to be served. The 

State will make this information 

available to CMS at a frequency 

determined by the Secretary or upon 

request. 

(1) Quality Improvement Strategy. The 

quality improvement strategy must 

include all of the following: 

(i) Incorporate a continuous quality 

improvement process that includes 

monitoring, remediation, and quality 

improvement. 

(ii) Be evidence-based, and include 

outcome measures for program 

performance, quality of care, and 

individual experience as determined by 

the Secretary. 

(iii) Provide evidence of the 

establishment of sufficient 

infrastructure to implement the program 

effectively. 

(iv) Measure individual outcomes 

associated with the receipt of HCBS, 

related to the implementation of goals 

included in the individual service plan. 

(2) [Reserved] 

PART 447—PAYMENTS FOR 

SERVICES 

■ 19. The authority citation for part 447 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

■ 20. Section 447.10 is amended by 

adding new paragraph (g)(4) to read as 

follows: 

§ 447.10 Prohibition against reassignment 

of provider claims. 

* * * * * 

(g) * * * 

(4) In the case of a class of 

practitioners for which the Medicaid 

program is the primary source of service 

revenue, payment may be made to a 

third party on behalf of the individual 

practitioner for benefits such as health 

insurance, skills training and other 

benefits customary for employees. 

* * * * * 

Authority: (Catalog of Federal Domestic 

Assistance Program No. 93.778, Medical 

Assistance Program) 

Dated: September 18, 2013. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: December 9, 2013. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2014–00487 Filed 1–10–14; 11:15 am] 

BILLING CODE 4120–01–P 


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